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 28, 1996
( ) 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 of (I.R.S. Employer
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 6, 1996, the aggregate market value of the voting stock held by
non-affiliates of the Registrant was $147,567,781.
As of September 6, 1996, the Registrant had 9,609,496 shares of Common Stock
outstanding.
Documents Incorporated by Reference:
1) 1996 Annual Report to Shareholders (Parts I, II and IV)
2) Proxy Statement dated September 13, 1996 (Part III)
PART I
Item 1. Business
Some of the information presented in this report constitutes forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Although the Corporation believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors which could cause actual results to
differ from expectations include the timing of orders received from customers,
the gain or loss of significant customers, changes in the mix of products sold,
changes in the cost and availability of parts and supplies, regulatory changes
affecting the telecommunications industry, in general, and the Corporation's
operations, in particular, competition and changes in domestic and international
demand for the Corporation's products and other factors which may impact
operations and manufacturing.
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 (telcos), major broadcast companies and installers of
broadband communication networks for manufacturing plants, offices, campuses,
institutions, airports, and traffic control systems. The Corporation's
headquarters are in State College, Pennsylvania, and its manufacturing
facilities are in State College, Reedsville and Tipton, Pennsylvania, and
Fremont, California. The Corporation also maintains administrative offices in
Fremont, California; Denver, Colorado; Toronto, Canada; Almere, The Netherlands;
and Hong Kong.
The Corporation has been approved for ISO 9001 registration at all four of its
manufacturing facilities. ISO 9001 is the most comprehensive of all ISO 9000
series requirements and includes quality assurance in design, development,
production, installation and servicing. 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(R) 862 MHz and 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 system.
Additions to the product line in fiscal year 1996 included a series of 862 MHz
amplifiers which offer advanced powering capabilities for today's complex
communications networks. Also new was the I-Flex(TM) global product family,
specially designed for fiber intensive architectures that require cabinet and
pedestal mount housings. Featuring 862 MHz bandwidth capability, the I-Flex(TM)
product line consists of amplifiers and fiber optic nodes.
The Corporation's AM fiber optic series includes the new FlexNode(TM), designed
to provide ease of migration to fiber service area subdivision and to support
flexible reverse path networking capability. Other products in this series
include a range of headend and strand-mounted equipment, including rack mount
forward path receivers and reverse path transmitters.
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. Digital fiber optic products include the 3.1 Gb/s
multichannel optical terminals and a series of single channel products. Under
development is the System 4000, a modular, shelf-based design, built on the
Corporation's traditional 194 Mb transmission rate. Its flexible configuration
accommodates a wide variety of applications, such as consolidation of CATV
headends, studio to satellite links, and interconnection of schools for distance
learning.
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 comprised 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, Canada and Europe; and from 13 regional sales
offices located throughout the United States.
For the fiscal year ended June 28, 1996, 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 30, 1995, and June 24,
1994, international sales were 39% and 25%, respectively, of net sales. (See the
discussion of segment information in the Corporation's 1996 Annual Report to
Shareholders, Note P, incorporated herein by reference.)
During the past fiscal year, the Corporation's CATV customers have included
almost all of the largest system operators in the United States. The
Corporation's largest customers during the fiscal year ended June 28, 1996 were
Rogers Cablesystems, Inc. and Time Warner Cable, each accounting for 18% of net
sales. During the fiscal year ended June 30, 1995, the Corporation's largest
customers were Rogers Cablesystems, Inc., accounting for 21% of the 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 net sales. No other customer accounted for 10% or more of net sales
during fiscal years 1994, 1995, and 1996, respectively.
At June 28, 1996, the Corporation's backlog of orders was $27.1 million; at June
30, 1995, it was $54.7 million; and at June 24, 1994, it was $38.9 million.
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 activities that are intended to
advance existing product lines, provide custom-designed variations of existing
product lines, and develop or evaluate new products. Research and development
activities for RF and AM fiber optic products are conducted at the Corporation's
headquarters, while digital fiber optic product development activities are
conducted at the Corporation's Fremont, California facility. 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 fiber optic technology and new RF products.
The Corporation is currently implementing product development process changes in
order to improve cycle time to design, develop and deliver new products; reduce
manufacturing costs; and improve design quality.
During the fiscal years ended June 28, 1996, June 30, 1995, and June 24, 1994,
the Corporation spent approximately $9,401,000, $6,622,000, and $4,337,000,
respectively, on research and development, primarily related to RF distribution
equipment and fiber optic systems. None of the research and product development
expenditures has 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 key criteria 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 research and development 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 believes it offers 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 Broadcast Service, Multipoint Multichannel Distribution Service (MMDS),
Local Multichannel Distribution Service (LMDS), Satellite Master Antenna
Television (SMATV), and Direct Broadcast Satellite Service (DBS). Generally,
these alternative technologies are limited in terms of their ability to
deliver two-way service and local programming. Based upon these limitations, it
is the Corporation's belief that such technologies will mature to the point that
they serve a relatively narrow segment of the market. On the other hand, a CATV
network has two-way capability and has the ability to deliver vast amounts of
information to subscribers. As a result, the Corporation believes that 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 servicing the CATV industry with excellence, the
Corporation believes that it is strategically positioned to grow and expand with
the industry.
External Influences/Industry
The primary market factors affecting the domestic communications industry
include access to financial markets, technology advancements and governmental
regulations. During recent years, the global communications industry grew
rapidly along with the demand for more video, voice, and data services. At the
same time, the regulatory environment in the United States was changing
(reference discussion later in this section), resulting in higher demand for
products offered by the Corporation to construct the networks that would carry
the advanced services.
In recent years, there has been a significant amount of merger and acquisition
activity in the domestic communications industry. Cable companies have bought
other cable companies in order to achieve efficiency through clustering of
properties. Telcos have bought telcos. Telcos have even bought cable companies.
The Corporation believes this consolidation has led to delays in ordering of
products and services, as network planners assess their new situation.
In the area of technology, advancements in the global communications industry
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). The
Corporation believes that HFC networks could have significant strategic
advantages in the future as networks become more interactive in nature.
Several Regional Bell Operating Companies (RBOCs) are considering HFC network
architectures, while others continue to explore their options between HFC and
other approaches and technologies, such as DBS (direct broadcast satellite) and
ADSL (asymmetrical digital subscriber line). 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 interactive multimedia network
industry.
Key provisions of the Telecommunications Act of 1996 are designed to enhance
competition in the industry in 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. The Corporation believes that an enhanced competitive environment in
the communications industry may 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 believes
it stands to benefit as a key equipment provider for those networks.
While the Telecommunications Act of 1996 was viewed by many in the domestic
communications industry as the necessary catalyst to opening up a robust network
building cycle in the United States, the Corporation has not yet experienced a
significant increase in orders to evidence such cycle. Similarly, in the past
twelve months, some of the Corporation's international customers have
experienced some delays in network construction due to revision of aggressive
construction schedules and resolution of certain regulatory issues. As a result,
the Corporation has experienced slower growth than was originally anticipated,
with resulting pricing pressures from overcapacity.
Employees
The Corporation had approximately 1,260 employees as of September 16, 1996, of
whom approximately 70% were engaged in manufacturing, inspection, and quality
control activities. The remainder were engaged in executive, administrative,
sales, product development, research, and technical customer services
activities. The technical 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 two-year degree. None of
the employees is represented by a collective bargaining representative.
Suppliers
The Corporation closely monitors supplier delivery performance and quality 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, fiber optic
laser transmitter assemblies, and standard electronic components. Although a
few of the components used by the Corporation are single sourced, the
Corporation has experienced no significant difficulties to date in obtaining
adequate quantities of their raw materials and component parts.
In fiscal year 1996, the Corporation implemented process changes focused on
order fulfillment. The goal of this corporate-wide effort has been to reduce
cycle time throughout the manufacturing process, reduce inventory, improve
productivity, and enhance product quality. Having achieved the key goals of this
program, the Corporation has moved to implementing similiar techniques to
improve its product development processes. (Reference Research Product
Development in this document.)
Key to the success of inventory reduction is the implementation of in-house
vendor supply relationships. Through this method, the Corporation can gain
access to key parts needed in the manufacturing process on a "just-in-time"
basis. The Corporation has implemented a number of in-house vendor supply
relationships to date.
Item 2. Properties
<TABLE>
<CAPTION>
The Corporation operates the following principal facilities:
<S> <C> <C> <C>
Approximate (O) Owned
Location Principal Use Square Feet (L) Leased
State College, Pennsylvania Administrative Offices
and Manufacturing 133,000 O
Tipton, Pennsylvania Manufacturing 40,000 O
Reedsville, Pennsylvania Manufacturing 60,000 L
Fremont, California Administrative Offices
and Manufacturing 30,000 L
Denver, Colorado Administrative Offices 9,817 L
Almere, The Netherlands Administrative Offices 14,100 L
Ajax, Ontario, Canada Administrative Offices 5,000 L
</TABLE>
The Corporation believes that its current facilities are well maintained and in
good operating condition, and that such facilities are sufficient for its
present operations.
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
then 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. On May
26, 1995, the Corporation filed a motion to dismiss the complaint which was
denied in part and granted in part on December 28, 1995. Plaintiffs have not yet
filed a motion for class certification. Discovery has commenced, but a trial
date has not yet been set.
Item 4. Submission of Matters to a Vote of Securities Holders
There were no matters submitted to a vote of security holders during the fourth
quarter of the fiscal year ended June 28, 1996.
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.
<TABLE>
Name Age Position / Experience
<S> <C> <C>
Richard E. Perry 66 Chairman since June 1986; Chief Executive Officer from July 1985 to August 1996; President from
July 1985 to December 1989.
Scott C. Chandler 35 President and Chief Executive Officer since August 1996. Vice President-General Manager,
U S WEST Cable & Multimedia, Regional Bell Operating Company (RBOC), from September 1995 to August
1996; Vice President-General Manager, !NTERPRISE America, a subsidiary of U S WEST Communications
(RBOC), from January 1994 to August 1995; Director-Vendor Relations/Channel Support, !NTERPRISE
Networking Services, a subsidiary of U S WEST Communications (RBOC), from January 1992 to December
1993; Director, Market Strategy Development, U S WEST, Inc., (RBOC), from June 1990 to December
1991.
Edwin S. Childs 57 Vice President-Human Resources since August 1996; Director, Human Resources from September 1986 to
July 1996.
David J. Eng 43 Vice President-Sales, North, Central and South America since August 1996; Vice President-Sales &
Marketing from August 1994 to August 1996. 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.
Lawrence R. Fisher, Jr. 46 Vice President-Engineering since August 1996; Director, RF Engineering Product Development from
June 1995 to July 1996; Manager, RF Engineering from June 1994 to May 1995. Director of
Engineering, Calan, Inc. from January 1993 to May 1994. Vice President, Bulick & Fisher Sales
Associates from March 1990 to December 1992.
Chris A. Miller 43 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 54 Vice President-Operations & Manufacturing since August 1995;
Plant Manager from September 1987 to August 1995.
Gerhard B. Nederlof 48 Vice President-Sales, Europe and Pacific Rim since August 1996; Vice President-International from
January 1992 to August 1996. Managing Director of DataCable B.V. from November 1981 to January
1992.
</TABLE>
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 1996 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
pages 2 of the Registrant's 1996 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 12 through 14 of the Registrant's 1996 Annual Report to Shareholders.
Item 8. Financial Statements and Supplementary Data
The information required by this item is incorporated herein by reference to
pages 15 through 26 of the Registrant's 1996 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 13, 1996.
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 17 of the
Registrant's Proxy Statement dated September 13, 1996.
Item 11. Executive Compensation
The information required by this item is incorporated herein by reference
to pages 6 through 10 of the Registrant's Proxy Statement dated September 13,
1996.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information required by this item is incorporated herein by reference to
pages 4 and 6 of the Registrant's Proxy Statement dated September 13, 1996.
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 1996, 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 1996
Annual Report to Shareholders for the year ended June 28, 1996,
are incorporated by reference to pages 15 through 26 of the
Registrant's Annual Report to Shareholders.
Consolidated Balance Sheets -- Years Ended June 28, 1996, and
June 30, 1995.
Consolidated Statements of Income -- Years ended June 28, 1996,
June 30, 1995, and June 24, 1994.
Consolidated Statements of Cash Flows -- Years ended June 28,
1996, June 30, 1995, and June 24, 1994
Consolidated Statements of Shareholders' Equity -- Years ended
June 28, 1996, June 30, 1995, June 24, 1994.
Notes to Consolidated Financial Statements
Report of KPMG Peat Marwick LLP
(2) The following financial statement schedule of the Registrant is
filed as a part of this report:
Schedule II -- Valuation and Qualifying Accounts
Report of KPMG Peat Marwick LLP
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.
(3) Exhibits
NUMBER DESCRIPTION OF DOCUMENTS
(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 September 21, 1995 (incorporated by
reference to Exhibit (3) (b) of Registrant's Form 10-K for
the year ended June 30, 1995, Securities and Exchange
Commission File No. 0-10726).
(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 of Form S-1
Registration Statement, File No. 2-70661).
(10) (a) 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) (b) 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) (c) 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) (d) 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) (e) 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) (f) 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) (g) 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) (h) 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) (i) 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) (j) Note and Security Agreement dated June 21, 1995, between the
Registrant and Mellon Bank, N.A. (incorporated by reference
to Exhibit (10) (cc) to the Registrant's Form 10-K for the
year ended June 30, 1995, Securities and Exchange Commission
File No. 0-10726).
(10) (k) Supplement to Note and Security Agreement dated June 21,
1995, between the Registrant and Mellon Bank, N.A.
(incorporated by reference to Exhibit (10) (dd) to the
Registrant's Form 10-K for the year ended June 30, 1995,
Securities and Exchange Commission File No. 0-10726).
(10) (l) Revolving Line of Credit Agreement dated June 21, 1995,
between the Registrant and Mellon Bank, N.A. (incorporated
by reference to Exhibit (10) (ee) to the Registrant's Form
10-K for the year ended June 30, 1995, Securities and
Exchange Commission File No. 0-10726).
(10) (m) Supplement to Revolving Line of Credit Agreement dated June
21, 1995, between the Registrant and Mellon Bank, N.A.
(incorporated by reference to Exhibit (10) (ff) to the
Registrant's Form 10-K for the year ended June 30, 1995,
Securities and Exchange Commission File No. 0-10726).
(10) (n) Change of Control Agreement dated May 23, 1995, between the
Registrant and Joseph E. Zavacky (incorporated by reference
to Exhibit (10) (gg) to the Registrant's Form 10-K for the
year ended June 30, 1995, Securities and Exchange Commission
File No. 0-10726).
(10) (o) Form of Indemnification Agreement dated May 23, 1995,
between the Registrant and Joseph E. Zavacky (incorporated
by reference to Exhibit (10) (hh) to the Registrant's Form
10-K for the year ended June 30, 1995, Securities and
Exchange Commission File No. 0-10726).
(10) (p) Supplemental Retirement Plan Participation Agreement dated
May 22, 1995, between the Registrant and Chris A. Miller
(incorporated by reference to Exhibit (10) (ii) to the
Registrant's Form 10-K for the year ended June 30, 1995,
Securities and Exchange Commission File No. 0-10726).
(10) (q) Change of Control Agreement dated May 22, 1995, between the
Registrant and Chris A. Miller (incorporated by reference to
Exhibit (10) (jj) to the Registrant's Form 10-K for the year
ended June 30, 1995, Securities and Exchange Commission File
No. 0-10726).
(10) (r) Form of Indemnification Agreement dated May 22, 1995,
between the Registrant and Chris A. Miller (incorporated by
reference to Exhibit (10) (kk) to the Registrant's Form 10-K
for the year ended June 30, 1995, Securities and Exchange
Commission File No. 0-10726).
(10) (s) Supplemental Retirement Plan Participation Agreement dated
August 24, 1995, between the Registrant and Donald F. Miller
(incorporated by reference to Exhibit (10) (ll) to the
Registrant's Form 10-K for the year ended June 30, 1995,
Securities and Exchange Commission File No. 0-10726).
(10) (t) Change of Control Agreement dated August 24, 1995, between
the Registrant and Donald F. Miller (incorporated by
reference to Exhibit (10) (mm) to the Registrant's Form 10-K
for the year ended June 30, 1995, Securities and Exchange
Commission File No. 0-10726).
(10) (u) Form of Indemnification Agreement dated August 24, 1995,
between the Registrant and Donald F. Miller (incorporated by
reference to Exhibit (10) (nn) to the Registrant's Form 10-K
for the year ended June 30, 1995, Securities and Exchange
Commission File No. 0-10726).
(10) (v) Lease Agreement dated November 10, 1994, between the
Registrant and Mifflin County Industrial Development
Corporation for a manufacturing building (incorporated by
reference to Exhibit (10) (oo) to the Registrant's Form 10-K
for the year ended June 30, 1995, Securities and Exchange
Commission File No. 0-10726).
(10) (w) Registrant's Retirement Savings and Profit as Amended
July 1, 1989, and including amendments through April 19,
1994. (incorporated by reference to Exhibit 99.B14 to Form
S-8 Registration Statement, File No. 333-02505).
(10) (x) Supplemental Retirement Plan Participation Agreement dated
August 13, 1996, between the Registrant and Edwin S. Childs.
(10) (y) Change of Control Agreement dated August 13, 1996, between
the Registrant and Edwin S. Childs.
(10) (z) Form of Indemnification Agreement dated August 13, 1996,
between the Registrant and Edwin S. Childs.
(10) (aa) Supplement Retirement Plan Participation Agreement dated
August 13, 1996, between the Registrant and Lawrence R.
Fisher, Jr.
(10) (bb) Change of Control Agreement dated August 13, 1996, between
the Registrant and Lawrence R. Fisher, Jr.
(10) (cc) Form of Indemnification Agreement dated August 13, 1996,
between the Registrant and Lawrence R. Fisher, Jr.
(10) (dd) Amended and Restated Employment Agreement dated October 16,
1995, between the Registrant and Richard E. Perry.
(10) (ee) Employment Agreement dated July 2, 1996, between the
Registrant and Scott C. Chandler.
(10) (ff) Registrant's Supplemental Executive Retirement Plan
effective May 1, 1996.
(10) (gg) Note and Security Agreement effective November 2, 1995,
between the Registrant and Mellon Bank, N.A.
(10) (hh) Supplement to Note and Security Agreement effective November
2, 1995, between the Registrant and Mellon Bank, N.A.
(10) (ii) Revolving Line of Credit Agreement effective November 2,
1995, between the Registrant and Mellon Bank, N.A.
(10) (jj) Supplement to Revolving Line of Credit Agreement effective
November 2, 1995, between the Registrant and Mellon Bank,
N.A.
(10)(kk)(i) 1988 Stock Option Plan.
(10)(kk)(ii) Amendment to 1988 Stock Option Plan.
(10)(ll)(i) 1992 Stock Purchase Plan.
(10)(ll)(ii) Amendment to 1992 Stock Purchase Plan.
(10) (mm) Fiscal Year 1997 Profit Incentive Plan.
(11) Statement re Computation of Earnings Per Share.
(13) Annual Report to Shareholders for the year ended June 28,
1996.
(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 1996:
None.
(c) Exhibits: See (a) (3) above.
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 25, 1996
/s/ Scott C. Chandler, President 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 25th day of September 1996.
/s/ Richard E. Perry, Director, Chairman
/s/ Donald M. Cook, Jr., Director
/s/ I.N. Rendall Harper, Jr., Director
/s/ Anne P. Jones, Director
/s/ John J. Omlor, Director
/s/ Frank Rusinko, Jr., Director
/s/ James J. Tietjen, Director
/s/ Philip L. Walker, Jr., Director
/s/ Chris A. Miller, Vice President-Finance,
Secretary and Treasurer (principal
financial officer)
<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 28, 1996
<S> <C> <C> <C> <C> <C>
Reserves deducted from assets to
which they apply:
Allowance for Doubtful Accounts $ 657,000 $ 0 $0 $ 302,000(1) $ 355,000
Reserve for Inventory
Obsolescence 1,449,000 1,092,000 0 1,124,000(2) 1,417,000
- - -----------------------------------------------------------------------------------------------------------------------------
$2,106,000 $1,092,000 $0 $1,426,000 $1,772,000
- - -----------------------------------------------------------------------------------------------------------------------------
Reserves not deducted from assets:
Product Warranty Reserve $1,754,000 $2,007,000 $0 $1,989,000(3) $1,772,000
- - -----------------------------------------------------------------------------------------------------------------------------
Year ended June 30, 1995
Reserves deducted from assets to
which they apply:
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
- - -----------------------------------------------------------------------------------------------------------------------------
Reserves not deducted from assets:
Product Warranty Reserve $ 602,000 $2,358,000 $0 $1,206,000(3) $1,754,000
- - -----------------------------------------------------------------------------------------------------------------------------
Year ended June 24, 1994
Reserves deducted from assets to
which they apply:
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
- - -----------------------------------------------------------------------------------------------------------------------------
Reserves not deducted from assets:
Product Warranty Reserve $ 237,000 $ 699,000 $0 $ 334,000(3) $ 602,000
- - -----------------------------------------------------------------------------------------------------------------------------
<FN>
(1) Uncollectible accounts written off, net of recoveries, and adjustments.
(2) Obsolete inventory disposals.
(3) Warranty claims honored during year.
</FN>
</TABLE>
C-COR Electronics, Inc.
Supplemental Retirement Plan
1.Selection of Participants. 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" means 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" means 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.
(1) 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 ten (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 Section 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 Benefits (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 not 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's estate, shall be
entitled to a survivor benefit. This survivor benefit shall be equal to the
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, and therefore, a Participant's rights under
the Plan shall have not 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-transferrable. 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 for 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 submit 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
31 0.0908
32 0.0848
33 0.0793
34 0.0741
35 0.0694
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 1.0617
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.
I 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 of birth is March 31, 1939.
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 on 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. Jane L. Childs (spouse)
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 13, 1996
/s/ Edwin S. Childs
Participant
C-COR ELECTRONICS, INC.
/s/ Richard E. Perry
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, dated August 13, 1996, by and between: C-COR ELECTRONICS, INC.,
a Pennsylvania corporation (the "Company") and Edwin S. Childs (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 settlement of his rights
hereunder under threat of incurring such expenses. Accordingly, if 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, paragraph 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/ Cherry S. Borger
/s/ Richard E. Perry
Chairman, and Chief
Executive Officer
/s/ Edwin S. Childs
Employee
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of the 13th day of August, 1996 between C-COR
ELECTRONICS, INC., a Pennsylvania corporation ("Corporation") and Edwin S.
Childs with an address at 405 S. Patterson Street, State College, 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
Insurer-Stonewall Surplus Insurance Co.
Amount-$5,000,000 excess of $15,000,000
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 for 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.
(c) No amendment, modification, termination or cancellation of this Agreement
shall be effective unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of
the day and year first above written.
/s/ Richard E. Perry
Chairman,
Chief Executive Officer
/s/ Edwin S. Childs
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" means 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" means 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.
(1) 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 ten (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 Section 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 not 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's 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 and therefore, a Participant's rights under
the Plan shall have not 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 for 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 submit 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
31 0.0908
32 0.0848
33 0.0793
34 0.0741
35 0.0694
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 1.0617
2 1.1714
3 1.2700
4 1.3787
5 OR MORE 1.4986
SOURCE: MODIFIED UP-84 MORTALITY TABLE AT 6.25%
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.
I 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 of birth is June 08, 1950.
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 on 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. Mary Jane Fisher (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 13, 1996
/s/ Lawrence R. Fisher
Participant
C-COR ELECTRONICS, INC.
/s/ Richard E. Perry
CHANGE OF CONTROL AGREEMENT
THIS AGREEMENT, dated August 13, 1996, by and between: C-COR ELECTRONICS, INC.,
a Pennsylvania corporation (the "Company") and Lawrence R. Fisher, Jr.
(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 settlement of his rights
hereunder under threat of incurring such expenses. Accordingly, if 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, paragraph 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/ Edwin S. Childs
/s/ Richard E. Perry
Chairman, and Chief
Executive Officer
/s/ Lawrence R. Fisher, Jr.
Employee
INDEMNIFICATION AGREEMENT
THIS AGREEMENT is made as of the 13th day of August, 1996 between C-COR
ELECTRONICS, INC., a Pennsylvania corporation ("Corporation") and Lawrence R.
Fisher, Jr. with an address at 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
Insurer-Stonewall Surplus Insurance Co.
Amount-$5,000,000 excess of $15,000,000
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 for 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.
(c) No amendment, modification, termination or cancellation of this Agreement
shall be effective unless in writing signed by both parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on and as of
the day and year first above written.
/s/ Richard E. Perry
Chairman,
Chief Executive Officer
/s/ Lawrence R. Fisher
Employee
12/19/95
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 16th day of October 1995, by and between C-COR
ELECTRONICS, INC., a Pennsylvania Business Corporation with its principal place
of business at 60 Decibel Road, State College, Pennsylvania (hereinafter,
"Corporation"), AND RICHARD E. PERRY (hereinafter, "Employee").
BACKGROUND
A. Corporation has employed Employee since July 17, 1985, first as President and
Chief Executive Officer and then as Chairman, President and Chief Executive
Officer.
B. Corporation and Employee entered into an Amended and Restated Employment
Agreement, dated April 1, 1988 for the period commencing on July 17, 1985 and
ending on June 30, 1990.
C. Corporation and Employee entered into an Amended and Restated Employment
Agreement dated October 27, 1989 for the period commencing on July 17, 1985 and
ending on June 30, 1993.
D. Corporation and Employee entered into an Amended and Restated
Employment Agreement dated September 4, 1990 to amend Section 2.05 entitled,
Bonus.
E. Corporation and Employee entered into an Amended and Restated Employment
Agreement dated April 23, 1991 to further amend Section 2.5 entitled, Bonus and
to extend the term hereof.
F. Corporation and Employee entered into an Amended and Restated Employment
Agreement dated April 19, 1994 for the period commencing on July 17, 1985 and
ending on October 31, 1997.
G. Corporation and Employee are also parties to a "Change of Control" Employment
Agreement dated April 30, 1986 and an Amendment to such Agreement dated June 13,
1986 (together referred to herein as the "Change of Control Agreement") , and an
Indemnification Agreement dated October 23, 1986 (the "Indemnification
Agreement").
H. Corporation and Employee desire to further amend and restate the employment
agreement between Corporation and Employee for the purpose of modifying the
terms of the retirement annuity provided for in Section 2.05 hereof and
incorporating herein and amending the terms of the Change of Control Agreement
and the Indemnification Agreement.
NOW, THEREFORE, in consideration of the mutual promises contained herein, and
intending to be legally bound thereby, the parties hereto agree as follows:
SECTION I.
Description of Employment
1.01. Employment and Term. Corporation agrees to employ Employee and
Employee agrees to be so employed for a term which initially commenced on
July 17, 1985 and which will end on October 31, 1997.
1.02. Capacity. For the period commencing on July 1, 1990 and ending on October
31, 1997, Employee shall continue to be employed in the capacity of Chief
Executive Officer until (1) the Board of Directors of Corporation informs
Employee by at least thirty (30) days advance notice in writing that as of a
specified date Employee shall no longer serve as Chief Executive Officer, or (2)
Employee informs Corporation by at least ninety (90) days advance notice in
writing that as of a specified date Employee shall no longer serve as Chief
Executive Officer.
During Employee's tenure as Chief Executive Officer, the President and Chief
Operating Officer, if any, shall report to Employee.
Upon the effective date of Employee's retirement as Chief Executive Officer
pursuant to this Section 1.02, for the remainder of the term of this Amended and
Restated Employment Agreement, Employee shall serve in the capacity of Chairman
of the Board of Directors (if elected to the Board of Directors) and shall
perform such other duties as Employee and the Board of Directors shall mutually
determine.
1.03. Time and Efforts. For the period commencing on July 1, 1990 and ending on
the specified date of Employee's retirement as Chief Executive Officer, as
provided for in Section 1.02 hereof, Employee shall diligently and
conscientiously devote his best efforts and such time and attention as may be
necessary to the discharge of his duties as Chairman of the Board, President and
Chief Executive Officer. For the period commencing on the specified date of
Employee's retirement as Chief Executive Officer and ending on October 31, 1997,
Employee shall diligently and conscientiously devote his best efforts and such
time and attention as may be necessary to the discharge of his duties of
Chairman of the Board and of such other duties as may be determined by mutual
agreement. Employee agrees that during the term of his employment pursuant to
this Agreement as the Chief Executive Officer, he will not have any other
business affiliations without the approval of the Board of Directors of
Corporation.
SECTION II.
Compensation
2.01. Salary. During the period of Employee's employment hereunder as Chief
Executive Officer (irrespective of such other offices or titles as may be held
by Employee) the Corporation shall pay to Employee a salary which beginning on
July 1, 1989, shall be at an annual rate of Two Hundred Thousand ($200,000.00)
Dollars, payable bi-weekly for services rendered. The amount of salary as Chief
Executive Officer shall be reviewed annually by the Compensation Committee of
the Board of Directors, but in no event shall the annual salary be less than Two
Hundred Thousand ($200,000.00) Dollars. During the period of Employee's
employment hereunder beginning on the effective date of his retirement as Chief
Executive Officer, the Corporation shall pay to Employee a salary at an annual
rate of One Hundred Thousand ($100,000.00) Dollars, payable bi-weekly for
services rendered.
2.02. Business Expenses. Employee shall be reimbursed by Corporation for
all reasonable expenses incurred in carrying out his employment duties or in
otherwise promoting the business of Corporation by presenting to the designated
officer of Corporation an itemized expense account report with receipts
attached.
2.03. Incentive Compensation. During the period of Employee's employment
hereunder as Chief Executive Officer, Corporation shall include Employee as a
participant under Corporation's "Profit Incentive Plan". Employee will be
entitled to such awards as are declared from time to time by the Board of
Directors under the terms of the "Profit Incentive Plan".
2.04. Stock Options. As of April 19, 1994, Employee was granted Incentive Stock
Options for 25,000 shares of C-COR common stock. All such Incentive Stock
Options are exercisable at any time (not to exceed ten years after the date of
grant), during Employee's employment by Corporation and for a period of ninety
(90) days thereafter.
2.05 (a) Retirement Annuity. Upon Employee's retirement on October 31, 1997,
Corporation shall pay to Employee a retirement annuity in the amount of Fifty
Thousand and No/100 ($50,000.00) Dollars per year, payable on July 1 of each
year, for the life of Employee. In the event that Employee dies following
retirement and is survived by his spouse, Betty Perry, annuity payments in like
amount shall continue to be paid each July 1 following Employee's death to Betty
Perry for her lifetime. All such annuity payments will cease on Betty Perry's
death.
(b) Pre-retirement Survivor' s Annuity, In the event Employee dies prior to his
retirement from Corporation and is survived by his spouse, Betty Perry,
Corporation shall pay Betty Perry a survivor's annuity in the amount of Fifty
Thousand and No/100 ($50,000.00) Dollars per year, payable on July 1 of each
year, for Betty Perry's lifetime. All such annuity payments will cease on Betty
Perry's death.
(c) Conditions. Nothing contained in this section 2.05 and no actions taken
pursuant to this Agreement shall create or be construed to create a trust of any
kind, or a fiduciary relationship between Corporation and Employee, or his
spouse. Any funds which may be reserved by Corporation to pay for the retirement
and survivors annuity payments provided for herein shall continue for all
purposes to be a part of the general funds of Corporation and no person other
than Corporation shall by virtue of this Agreement have any right to or interest
in such funds. Any bookkeeping reserve accounts for such payments will be
maintained by Corporation solely as a convenience in the administration of this
Agreement. To the extent that any person acquires a right to receive payments
from Corporation under this Section, such right shall be no greater than the
rights of any unsecured general creditor of the Corporation. Neither Employee
nor his 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 be nonassignable and
nontransferable and any attempted assignment or transfer by Employee, or his
spouse, shall be void and of no effect. Title to and beneficial ownership of any
assets, whether cash, investments, life insurance policies or other assets which
Corporation may use to fund its obligation hereunder shall at all times remain
in Corporation.
(d) Insurance Policies. Employee understands that Corporation may make
application to purchase a life insurance policy or policies on his life, or on
the lives of Employee and his spouse in order to fund its obligations under this
section, which policy or policies will be owned by Corporation and under which
Corporation will be the sole beneficiary. Employee agrees 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. Further, Employee shall
use his best efforts to cause his spouse 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 the event the insurance company
to which application is made declines to issue a policy at standard premium
rates, Corporation's obligations under this section 2.05 will be void unless
Corporation decides otherwise. Similarly, upon Employee's death, if the proceeds
of the policy on Employee's life are not paid to Corporation because the
information Employee furnished in connection with the application was materially
false or Employee's or any other insured's death is caused by suicide within two
(2) years of the date on which any policy on Employee's or Employee's spouse's
life was issued, Corporation will be under no obligation to pay the annuity
provided for in this Section 2.05.
2.06. Life Insurance Coverage. Corporation will provide to Employee group term
life insurance in a face amount equal to three times the Employee's salary.
Increases in life insurance coverage will occur at the same time the Employee's
salary is increased pursuant to Paragraph 2.01 hereof.
2.07. Automobile Allowance. Beginning July 1, 1987, Corporation agrees to pay
Employee, on or about the first of each month, a monthly allowance of $600.00 to
be used to defray Employee's automobile expenses.
2.08. Financial and Tax Planning Reimbursement. Corporation agrees to reimburse
Employee for expenses incurred in his personal financial and tax planning up to
an amount not exceeding One Thousand Five Hundred ($1,500.00) Dollars per year
during the term of this Agreement.
2.09. Other Benefit Plans. Employee shall also be eligible to participate in
Corporation's other fringe benefit plans, including both those plans presently
existing and those which may in the future be adopted, in accordance with the
terms and provisions of such plans.
2.10. Vacation. Employee shall be entitled to a reasonable amount of vacation.
2.11. Club Membership. Corporation agrees to reimburse Employee for annual
dues he is required to pay as a condition of membership at the Centre Hills
Country Club during the term of this Agreement.
2.12. Physical Examination. Corporation agrees to reimburse Employee for the
expense of an annual physical examination by a physician selected by Employee.
SECTION III.
Intellectual Property
3.01. Disclosure. Employee agrees to promptly and fully disclose to Corporation
all inventions, improvements, original works of authorship, formulas, processes,
computer programs, techniques, know-how and data (hereinafter collectively
referred to as "Inventions"), whether or not patentable or copyrightable, made
or conceived or first reduced to practice or learned by Employee either alone or
jointly with others, whether or not during Employee's regular hours of
employment and directly or indirectly relating to or capable of being used for
the benefit of Corporation's business. Employee agrees, without compensation
additional to that provided for in Section II of this Agreement, to assign all
rights in and to such inventions to Corporation and to execute, at Corporation's
request, appropriate documents effectuating such assignments.
3.02. Maintenance of Records. Employee agrees to maintain accurate and current
written records of all such Inventions, in the form of notes, sketches,
drawings, or reports which shall be and will remain the property of and
available to Corporation at all times.
3.03. Provision of Assistance. Employee agrees, upon Corporation's request,
during and after the term of employment set forth herein, to assist Corporation,
its attorneys, and nominees at its or their expense in preparing and prosecuting
applications for letters patent on Inventions created by him and applications to
register copyrights on inventions created by him providing, however, that time
actually spent by Employee at such work after termination of employment, at
Corporation's request, shall be paid for by Corporation at a reasonable rate,
and that necessary expenses incurred by Employee in connection with Employee's
duties under this paragraph shall be paid by Corporation.
3.04. Previous Inventions. Employee expressly retains an interest in and
title to Inventions patented or unpatented which Employee conceived prior to
his term of employment with Corporation.
3.05. Term of Obligations. Employee' s termination of employment by Corporation
under this Agreement shall not affect the obligations imposed on Employee by
Paragraphs 3.01, 3.02 and 3.03 and such obligations shall be binding on
Employee's heirs, executors and administrators.
SECTION IV.
Confidentiality and Noncompetition
4.01. Confidentiality. Employee agrees, during and after his term of employment
hereunder, without the prior written consent of Corporation, not to disclose to
any person other than Corporation, by publication or otherwise, or use for his
own benefit, any confidential information of Corporation or any Inventions,
whether conceived in whole or in part by Employee or by others. Employee's duty
under this paragraph includes but is not limited to the nondisclosure of trade
secrets or confidential information, knowledge or data of Corporation which he
may obtain during the course of his employment relating to Corporation's
business, technical or otherwise, including but not limited to manufacturing
methods, processes, techniques, products, engineering development products,
computer programs, customer lists, machines, research, compositions, inventions
or discoveries. Employee agrees that upon leaving the employ of Corporation, he
will not take with him any original or copy of documents, or records relating to
the foregoing matters, without the written consent of Corporation. This Section
does not apply to any Inventions described in Section 3.04 above.
4.02. Noncompetition. In consideration of Corporation's agreement to extend
the term of Employee's employment, for the duration of his employment by
Corporation, and for a period of two (2) years after the termination thereof,
Employee agrees:
(a) Not to, on behalf of himself or any other entity or corporation, directly or
indirectly, as an employee, agent, independent contractor, owner, stockholder,
partner, officer, director or otherwise, engage in the business of the
manufacture or sale of electronic equipment for use in cable television or
broadband data transmission systems in North America, Central America and South
America, Europe, the Middle East and the Far East, including the Pacific Rim.
(b) Not to call on or solicit, on behalf of himself or on behalf of any other
entity or corporation, any of the customers of Corporation for the purpose of
selling or distributing to any of said customers any product or service
comparable to or competitive with products or services developed, sold and/or
distributed by Corporation or products or services which Corporation may have
under development during the period of time Employee was employed by Corporation
("Corporation's Products"); nor will Employee in any way, directly or
indirectly, for himself or on behalf of any other entity or corporation,
solicit, divert or take away any customer of Corporation. For purposes of this
Agreement, "customer" shall mean any person, entity or corporation which has
purchased Corporation's Products, or has received a price quotation from
Corporation for Corporation's Products, at any time within the three (3) year
period prior to the date of termination of Employee's employment.
(c) Not to enter or attempt to enter into an employment or agency relationship
with any person who, at the time of such entry (or attempted entry), or at the
time of termination of Employee's service with Corporation, was an officer,
director, employee, principal or agent of Corporation if, but only if, such
employment or agency relationship is with respect to a business in competition
with Corporation.
(d) Not to induce or attempt to induce any person described in subparagraph (c)
to leave his or her employment, agency, directorship or office with Corporation
to enter into a business in competition with Corporation. It is understood by
and between the parties to this Agreement that the aforesaid covenants set forth
in this Section 4.02 are essential elements of this Agreement, and that, but for
the agreement of Employee to comply with such covenants, Corporation would not
have agreed to the terms of employment set forth in this Agreement. Such
covenants by Employee shall be construed as agreements independent of any other
provision in this Agreement. The existence of any claim or cause of action of
Employee against Corporation, whether predicated on this Agreement or otherwise,
shall not constitute a defense to the enforcement by Corporation of such
covenants. In addition to all other legal remedies available to Corporation for
enforcement of the covenants of this Section 4.02, the parties agree that
Corporation shall be entitled to an injunction by any court of competent
jurisdiction to prevent or restrain any breach or threatened breach thereof. The
parties to this Agreement agree that, if any court of competent jurisdiction
determines the specified time period or the specified geographical area of
application, or the definition of Corporation's Products in such covenants to be
unreasonable, arbitrary or against public policy, then a lesser time period
and/or a smaller geographical area and/or a less encompassing definition of
Corporation's Products which are determined to be reasonable, nonarbitrary and
not against public policy may be enforced against Employee. The parties to this
Agreement agree and acknowledge that they are familiar with the present and
proposed operations of Corporation and believe that the restrictions set forth
in this Section 4.02 are reasonable with respect to its subject matter, duration
and geographical application.
The provisions of this Section 4.02 may be waived, in part or fully, in writing
by Corporation at its option.
These restrictive covenants shall survive the termination of this Agreement.
SECTION V.
Change of Control
5.01. Change of Control. The provisions of Sections 5.02 and 5.03 of this
Agreement shall become operative upon a change of control of Corporation, as
hereinafter defined. For purposes of this Agreement, a "change of 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 Corporation representing thirty
(30%) percent or more of the total voting power of Corporation, or
(b) Corporation shall have merged into or consolidated with another corporation,
or merged another corporation into Corporation, on a basis whereby less than
fifty (50%) percent of the total voting power of the surviving corporation is
represented by shares held by former shareholders of Corporation prior to such
merger or consolidation, or
(c) Corporation shall have sold more than fifty (50%) percent 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 Corporation before such transaction cease to
constitute a majority of directors of Corporation.
5.02. Termination Within Eighteen (18) Months. In the event that the employment
of Employee with Corporation is terminated involuntarily within eighteen (18)
months after a change of 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 as provided for in Section 2.01 hereof 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 Corporation' 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 Corporation was matching prior to Change of Control)
(and 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 amount that would have been awarded to him under the Profit Incentive Plan
of the Company, pursuant to the terms of such plan as in effect immediately
prior to such change in control and regardless of whether such plan may have
been changed thereafter, for the then-current calendar year if such award were
based on 100% of his share under said plan for such calendar year. Such amount
shall be paid at the same time as awards are paid to other participants in said
plan if such plan shall have been continued but in no event later than July 31
of the year following that year in respect of which the award was to have been
paid. If no plan is in effect at the time of change of control, a cash payment
of $40,200 will be paid to the Employee within 10 days after dismissal by the
Company.
(c) Employee shall continue for a period of twenty-four (24) months from the
date of his termination to be covered at the expense of Corporation 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 Corporation's
cost of providing such coverages during such period.
(d) If on the date of termination of employment, Employee was eligible for a
retirement annuity, Employee shall become eligible for the benefits payable
under such annuity and such annuity shall be paid to Employee, or, if
applicable, Employee's spouse, 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 Corporation.
(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.
(f) Corporation shall continue for a period of twenty-four (24) months to pay
Employee's monthly dues and special assessments, if any, of any club of which
Employee was a member at the time of termination and of which Corporation was
paying such dues and shall permit the Employee to continue to use such
membership thereafter, without reimbursement to Corporation of any membership or
initiation fees or assessments, so long as Employee wishes to do so on the basis
that monthly fees and special assessments will thereafter be paid by him.
(g) Corporation shall for a period of twenty-four (24) months continue to pay
Employee Six Hundred and 00/100 ($600.00) Dollars per month for expenses of
operating an automobile owned by Employee.
(h) Within thirty (30) days after Employee's termination of employment as a
result of a change of control, Corporation shall pay to Employee in a lump sum
an amount of cash, net of all federal, state and local income taxes, which shall
be sufficient to enable Employee to purchase a paid-up annuity issuable by a
financially sound and reputable insurance company providing for payment
beginning at age sixty-two (62) of a monthly benefit equal to One Thousand and
00/100 ($1,000.00) Dollars per month for the life of Employee.
5.03 Resignation Within Two Years. In the event the Employee should determine in
good faith that his status or responsibilities with Corporation has or have
diminished subsequent to a change of control, and shall for that reason resign
from his employment with Corporation within two (2) years after such change of
control, Employee shall be entitled to receive all of the payments and enjoy all
of the benefits specified in Section 5.02 hereof as if Employee's employment by
Corporation had terminated on the date of Employee's resignation.
5.04 Agreements Not Exclusive. The specific agreements referred to in this
Section V are not intended to exclude Employee's participation in other benefits
available to executive personnel generally or to preclude other compensation or
benefits as may be authorized by the Board of Directors of Corporation at any
time.
5.05 Enforcement Costs. Corporation is aware that upon the occurrence of a
change of control the Board of Directors or a shareholder of Corporation may
then cause or attempt to cause Corporation to refuse to comply with its
obligations under this Section V, or may cause or attempt to cause corporation
to institute, or may institute, litigation seeking to have this Section V
declared unenforceable, or may take, or attempt to take, other action to deny
Employee the benefits intended under this Section V. In these circumstances, the
purpose of this Section V could be frustrated. It is the intent of Corporation
that Employee not be required to incur the expenses associated with the
enforcement of his rights under this Section V 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
settlement of his rights hereunder under threat of incurring such expenses.
Accordingly, if following a change of control, it should appear to Employee that
Corporation has failed to comply with any of its obligations under this Section
V or in the event that Corporation or any other person takes any action to
declare this Section V void or unenforceable, or institute 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
Corporation, Corporation irrevocably authorizes Employee from time to time to
retain counsel of his choice at the direct expense and liability of Corporation
as provided in this Section 5.05 to represent Employee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against Corporation or any director, officer, shareholder or other person
affiliated with Corporation, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between Corporation and such counsel,
Corporation irrevocably consents to Employee entering into an attorney-client
relationship with such counsel, and in that connection Corporation 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
Corporation 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 of $500,000, said amount 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.
5.06. No Set-Off. Corporation 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 Corporation, 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 Section V 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 Section
V. However, a set-off may be taken by Corporation 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 5. 02 (c);
or for expenses covering monthly dues and special assessments of any club of
which Employee was a member at the time of termination and of which Corporation
was paying dues as set forth in Section 5.02(f); or for expenses related to
monthly automobile allowance as set forth in Section 5.02(g) if such benefits
are paid for the Employee by a new employer after Employee's termination of
employment by Corporation under Section 5.02 hereof or after Employee's
resignation under Section 5.03 hereof.
5.07. Termination. The provisions of this Section V shall continue during the
Term hereof but shall terminate when the employment of Employee with Corporation
shall terminate, so long as such termination was not in anticipation of or
related to a change of control.
SECTION VI
Indemnification for Service as Director
6.01. Indemnity of Employee. In consideration of Employee's service to
Corporation as a director of Corporation since October 23, 1986, Corporation
hereby agrees to hold harmless and indemnify Employee as a director to the full
extent authorized or permitted by the provisions of the Pennsylvania Business
Corporation Law (the "State Statute"), or by any amendment thereof or other
statutory provisions authorizing or permitting such indemnification which is
adopted after the date hereof.
6.02. Maintenance of Insurance and Self-Insurance.
(a) Corporation represents that it presently has in force and effect policies of
Directors and Officers Liability Insurance ("D&O Insurance") in insurance
companies and amounts as follows (the "Insurance Policies"):
Insurer Policy No. Amount
Federal Insurance Co. 8133-97-22 $10,000.000
Lexington Insurance Co. F0089OD95 $ 5,000,000 in
excess of the
above $10,000,000
Stonewall Insurance Co. TDX9823904 $ 5,000,000 in
excess of the
above $15,000,000
Subject only to the provisions of Section 6.02(b) hereof, Corporation hereby
agrees that, so long as Employee shall continue to serve as a director of
Corporation (or shall continue at the request of Corporation to serve as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise) and thereafter so long as Employee 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 Employee was a director of Corporation (or served in any of said other
capacities), Corporation will purchase and maintain in effect for the benefit of
Employee 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 6.02
(b) hereof, Corporation agrees to hold harmless and indemnify Employee to the
full extent of the coverage which would otherwise have been provided for the
benefit of Employee pursuant to the Insurance Policies.
6.03. Additional Indemnity. Subject only to the exclusions set forth in
Section 6.04 hereof, Corporation hereby further agrees to hold harmless and
indemnify Employee:
(a) Against any and all expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by Employee 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 Employee is, was or at any time
becomes a party, or is threatened to be made a party, by reason of the fact that
Employee is, was or at any time becomes a director, officer, employee or agent
of Corporation, or is or was serving or at any time serves at the request of
Corporation as a director, officer, 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 Employee by Corporation under the
non-exclusivity provisions of Section 7-1 of the By-laws of Corporation and the
State Statute.
6.04. Limitations on Additional Indemnity. No indemnity pursuant to
Section 6.03 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 Employee is
indemnified either pursuant to Sections 6.01 or 6.02 hereof or pursuant to any
D&O Insurance purchased and maintained by the Corporation;
(b) in respect to remuneration paid to Employee 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 Employee for an
accounting of profits made from the purchase or sale by Employee 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 Employee'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;
(e) if a final decision by a court of competent jurisdiction shall determine
that such indemnification is not lawful.
6.05. Continuation of Indemnity. All agreements and obligations of Corporation
contained herein shall continue during the period Employee is a director,
officer, employee or agent of Corporation (or is or was serving at the request
of Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Employee 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 Employee was a director of
Corporation or serving in any other capacity referred to herein.
6.06. Notification and Defense of Claim. Promptly after receipt by Employee of
notice of the commencement of any action, suit or proceeding, Employee will, if
a claim in respect thereof is to be made against Corporation under this Section
VI, 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
Employee otherwise than under this Section VI. With respect to any such action,
suit or proceeding as to which Employee 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 Employee.
After notice from Corporation to Employee of its election so to assume the
defense thereof, Corporation will not be liable to Employee under this Section
VI for any legal or other expenses subsequently incurred by Employee in
connection with the defense thereof other than reasonable costs of investigation
or as otherwise provided below. Employee shall have the right to employ
Corporation's 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 Employee unless (i)
the employment of counsel by Employee has been authorized by Corporation, (ii)
Employee shall have reasonably concluded that there may be a conflict of
interest between Corporation and Employee 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 Employee shall have made the conclusion
provided for in (ii) above.
(c) Corporation shall not be liable to indemnify Employee under this Section VI
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 Employee with Employee Is
written consent. Neither Corporation nor Employee will unreasonably withhold its
or his consent to any proposed settlement.
6.07. Repayment of Expenses. Employee will reimburse Corporation for all
reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Employee in the event and only to the extent
that it shall be ultimately determined that Employee is not entitled to be
indemnified by Corporation for such expenses under the provisions of the State
Statute, the By-laws of Corporation, this Section VI or otherwise.
6.08. Enforcement.
(a) Corporation expressly confirms and agrees that it has entered into this
Section VI and assumed the obligations imposed on Corporation hereby in order to
induce Employee to continue as a director of Corporation, and acknowledges that
Employee is relying upon this Section VI in continuing in such capacity.
(b) In the event Employee 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 Employee for all of Employee's reasonable fees and
expenses in bringing and pursuing such action.
SECTION VII.
Miscellaneous
7.01. Use of Name. Employee agrees to allow Corporation to have his name or
picture used by Corporation for advertising or trade purposes during the term of
this Agreement.
7.02. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon Employee and upon Corporation, their successors and assigns,
including, without limitation, any person, partnership, company or corporation
which may acquire substantially all of Corporation, s assets or business or into
which Corporation may be consolidated, merged or otherwise combined.
7.03. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
7.04. Legal Construction. In the event any one or more of the provisions
contained in this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not effect any other provision thereof and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
7.05. Amendment. No amendment, modification or alteration of the terms hereof
shall be binding unless the same be in writing, dated subsequent to the date
hereof and duly executed by the parties hereto.
7.06. Integration. This Agreement constitutes the entire understanding and
agreement between C-COR and Employee with regard to the subject matter hereof
and supersedes all other agreements and understandings between Corporation and
Employee.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement with the
intent to be legally bound thereby on the day and year first above written.
C-COR ELECTRONICS, INC.
By:
/s/ Donald Cook (SEAL)
Chairman, Compensation
Committee
/s/ Richard E. Perry (SEAL)
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made this 2nd day of July, 1996, by and between C-COR
ELECTRONICS, INC., a Pennsylvania Business Corporation with its principal place
of business at 60 Decibel Road, State College, Pennsylvania ("Corporation"), AND
SCOTT C. CHANDLER, an individual, of 6157 E. Long Place, Englewood, CO 80112
("Employee").
BACKGROUND
A. Corporation desires to employ Employee as its President and Chief Executive
Officer and Employee desires to be so employed by Corporation.
B. The parties mutually desire to set forth in this Employment Agreement (the
"Agreement") the terms and conditions under which Employee will be employed by
Corporation.
NOW, THEREFORE, in consideration of the mutual promises contained herein, and
intending to be legally bound thereby, the parties hereto agree as follows:
SECTION 1.
Description of Employment
1.01. Employment and Term. Corporation agrees to employ Employee and Employee
agrees to be employed for a term commencing on 8/ll/1996 and ending on 8/11/1999
(the "Term").
1.02. Capacity. During the Term, Employee shall serve as Corporation's Chief
Executive Officer and President, or in such other offices or capacities as shall
be determined by Corporation's Board of Directors. Further, if elected by
Corporation's shareholders, Employee shall, without additional compensation
therefor, serve as a member of Corporation's Board of Directors.
1.03. Time and Efforts. During the Term, Employee shall diligently and
conscientiously devote his best efforts and his full time and attention to the
discharge of his duties as Chief Executive Officer and President and of such
other duties as may be determined by the Board of Directors of Corporation.
Employee acknowledges that during the period of his employment pursuant to this
Agreement as the Chief Executive Officer and President of Corporation, he will
not have any other employment or business affiliations without the prior
approval of the Board of Directors of Corporation.
SECTION 11.
Compensation
2.01. Salary. During the period of Employee's employment hereunder as Chief
Executive Officer and President (irrespective of such other offices or titles as
may be held by Employee) the Corporation shall pay to Employee a salary at an
annual rate of Two Hundred Thousand ($200,000.00) Dollars, payable bi-weekly,
for services rendered. The amount of Employee's salary shall be reviewed
annually by the Compensation Committee of the Board of Directors.
2.02. Business Expenses. Employee shall be reimbursed by Corporation for all
reasonable expenses incurred in carrying out his employment duties or in
otherwise promoting the business of Corporation by presenting to the designated
officer of Corporation an itemized expense account report with receipts
attached.
2.03. Incentive Compensation. During the Term, Corporation shall include
Employee as a participant under Corporation's 'Profit Incentive Plan'. Employee
will be entitled to such awards as are declared from time to time by the Board
of Directors under the terms of the "Profit Incentive Plan".
2.04. Stock Options. Employee shall be granted an option to purchase Fifty
Thousand (50,000) shares of C-COR common stock (the "Stock Option"). The Stock
Option shall be a non-qualified stock option. The exercisability of the fifty
thousand (50,000) shares shall vest over a period of five (5) years (commencing
on the date of grant of the Stock Option) at the rate of Ten Thousand (10,000)
shares per year. The Stock Option shall be granted under and be subject to all
of the terms and conditions of the C-COR Electronics, Inc. 1988 Stock Option
Plan and a Nonqualified Stock Option Granting Agreement.
2.05. Supplemental Retirement Plan. Employee will be entitled to participate in
Corporation's Supplemental Retirement Plan with an annual supplemental
retirement benefit of Twenty Five Thousand and No/100 (S25,000.00) Dollars
commencing at Employee's retirement and continuing for a period of fifteen years
in accordance with and subject to the terms of such plan and a Participation
Agreement to be entered into between Corporation and Employee under such plan.
(Attachment 1)
2.06. Life Insurance Coverage. Corporation will provide to Employee group term
life insurance in a face amount equal to three times the Employee's salary.
Changes in life insurance coverage will occur at the same time Employee's salary
is changed pursuant to Section 2.01 hereof.
2.07. Automobile Allowance. During the Term, Corporation shall pay
Employee, on or about the first of each month, a monthly allowance of Six
Hundred ($600.00.) Dollars to be used to defray Employee's automobile expenses.
2.08. Financial and Tax Planning Reimbursement. Corporation agrees to reimburse
Employee for expenses incurred in his personal financial and tax planning up to
an amount not exceeding One Thousand Five Hundred ($1,500.00) Dollars per year
during the term of this Agreement.
2.09. Other Benefit Plans. Employee shall also be eligible to participate in
Corporation's other fringe benefit plans, including both those plans presently
existing and those which may in the future be adopted, in accordance with the
terms and provisions of such plans.
2.10. Vacation. Employee shall be entitled to a reasonable amount of vacation
but not less than three (3) weeks per year.
2.11. Club Membership. Corporation agrees to reimburse Employee for annual dues
he is required to pay as a condition of membership at the Centre Hills Country
Club during the term of this Agreement.
2.12. Physical Examination. Corporation agrees to reimburse Employee for the
expense of an annual physical by a physician selected by Employee.
2.13. Sign-On Bonus. Corporation shall pay to Employee a one time sign on bonus
of Fifty Thousand and 00/100 ($50,000.00) Dollars in two (2) equal installments
as follows: Twenty-five thousand and 00/100 ($25,000.00) Dollars shall be paid
upon employment of Employee and the balance of Twenty-five thousand and 00/100
($25,000.00) Dollars shall be paid on January 1, 1997.
SECTION III.
Intellectual Property
3.01. Disclosure. Employee agrees to promptly and fully disclose to Corporation
all inventions, improvements, original works of authorship, formulas, processes,
computer programs, techniques, know-how and data (hereinafter collectively
referred to as 'Inventions'), whether or not patentable or copyrightable, made
or conceived or first reduced to practice or learned by Employee either alone or
jointly with others, whether during Employee's regular hours of employment and
directly or indirectly relating to or capable of being used for the benefit of
Corporation's business. Employee agrees, without compensation additional to that
provided for in Section II of this Agreement, to assign all rights in and to
such inventions to Corporation and to execute, at Corporation's request,
appropriate documents effectuating such assignments.
3.02. Maintenance of Records. Employee agrees to maintain accurate and
current written records of all such Inventions, in the form of notes, sketches,
drawings, or reports which shall be and will remain the property of and be
available to Corporation at all times.
3.03. Provision of Assistance. Employee agrees, upon Corporation's request,
during and after the term of employment set forth herein, to assist Corporation,
its attorneys, and nominees at its or their expense in preparing and prosecuting
applications for letters patent on Inventions created by him and applications to
register copyrights on inventions created by him providing, however, that time
actually spent by Employee at such work after termination of employment, at
Corporation's request shall be paid for by Corporation at a reasonable rate, and
that necessary expenses incurred by Employee in connection with Employee's
duties under this paragraph shall be paid by Corporation.
3.04. Previous Inventions. Employee expressly retains an interest in and title
to Inventions patented or unpatented which Employee conceived prior to his term
of employment with Corporation.
3.05. Term of Obligations. Employees termination of employment by Corporation
under this Agreement shall not affect the obligations imposed on Employee by
Paragraphs 3.01, 3.02 and 3.03 and such obligations shall be binding on
Employee's heirs, executors and administrators.
SECTION IV.
Confidentiality and Noncompetition
4.01. Confidentiality. Employee agrees, during and after his term of employment
hereunder, without the prior written consent of Corporation, not to disclose to
any person other than Corporation, by publication or otherwise, or use for his
own benefit, any confidential information of Corporation or any Inventions,
whether conceived in whole or in part by Employee or by others. Employee's duty
under this paragraph includes but is not limited to the nondisclosure of trade
secrets or confidential information, knowledge or data of Corporation which he
may obtain during the course of his employment relating to Corporation's
business, technical or otherwise, including but not limited to manufacturing
methods, processes, techniques, products, engineering development products,
computer programs, customer lists, machines, research, compositions, inventions
or discoveries. Employee agrees that upon leaving the employ of Corporation, he
will not take with him any original or copy of documents, or records relating to
the foregoing matters, without the written consent of Corporation. This Section
does not apply to any Inventions described in Section 3.04 above.
4.02. Noncompetition. In consideration of Employee's employment, for the
duration of his employment by Corporation, and for a period of two (2) years
after the termination thereof, Employee agrees:
(a) Not to, on behalf of himself or any other entity or corporation,
directly or indirectly, as an employee, agent independent contractor,
owner, stockholder, partner, officer, director or otherwise, engage in
the business of the manufacture or sale of electronic equipment for use
in cable television or broadband data transmission systems in North
America, Central America and South America, Europe, the Middle East and
the Far East, including the Pacific Rim.
(b) Not to call on or solicit, on behalf of himself or on behalf of any
other entity or corporation, any of the customers of Corporation for
the purpose of selling or distributing to any of said customers any
product or service comparable to or competitive with products or
services developed, sold and/or distributed by Corporation or products
or services which Corporation may have under development during the
period of time Employee was employed by Corporation ("Corporation's
Products"); nor will Employee in any way, directly or indirectly, for
himself or on behalf of any other entity or corporation, solicit divert
or take away any customer of Corporation. For purposes of this
Agreement, "customer" shall mean any person, entity or corporation
which has purchased Corporation's Products, or has received a price
quotation from Corporation for Corporation's Products, at any time
within the three (3) year period prior to the date of termination of
Employee's employment.
(c) Not to enter or attempt to enter into an employment or agency
relationship with any person who, at the time of such entry (or
attempted entry), or at the time of termination of Employee's service
with Corporation, was an officer, director, employee, principal or
agent of Corporation if, but only if, such employment or agency
relationship is with respect to a business in competition with
Corporation.
(d) Not to induce or attempt to induce any person described in
subparagraph (c) to leave his or her employment, agency, directorship
or office with Corporation to enter into a business in competition with
Corporation.
It is understood by and between the parties to this Agreement that the aforesaid
covenants set forth in this Section 4.02 are essential elements of this
Agreement, and that, but for the agreement of Employee to comply with such
covenants, Corporation would not have agreed to the terms of employment set
forth in this Agreement. Such covenants by Employee shall be construed as
agreements independent of any other provision in this Agreement. The existence
of any claim or cause of action of Employee against Corporation, whether
predicated on this Agreement or otherwise, shall not constitute a defense to the
enforcement by Corporation of such covenants.
In addition to all other legal remedies available to Corporation for enforcement
of the covenants of this Section 4.02, the parties agree that Corporation shall
be entitled to an injunction by any court of competent jurisdiction to prevent
or restrain any breach or threatened breach thereof.
The Parties to this Agreement agree that, if any court of competent jurisdiction
determines the specified time period or the specified geographical area of
application, or the definition of Corporation's Products in such covenants to be
unreasonable, arbitrary or against public policy, then a lesser time period
and/or a smaller geographical area and/or a less encompassing definition of
Corporation's Products which are determined to be reasonable, nonarbitrary and
not against public policy may be enforced against Employee. The parties to this
Agreement agree and acknowledge that they are familiar with the present and
proposed operations of Corporation and believe that the restrictions set forth
in this Section 4.02 are reasonable with respect to its subject matter, duration
and geographical application.
The provisions of this Section 4.02 may be waived, in part or fully, in writing
by Corporation at its option.
These restrictive covenants shall survive the termination of this Agreement.
SECTION V.
Change of Control
5.01. Change of Control. The Provisions of Sections 5.02 and 5.03 of this
Agreement shall become operative upon a change of control of Corporation, as
hereinafter defined. For purpose of this Agreement, a "change of 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
Corporation representing thirty (30%) percent or more of the total
voting power of Corporation, or
(b) Corporation shall have merged into or consolidated with another
corporation, or merged another corporation into Corporation, on a basis
whereby less than fifty (50%) percent of the total voting power of the
surviving corporation is represented by shares held by former
shareholders of Corporation prior to such merger or consolidation, or
(c) Corporation shall have sold more than fifty (50%) percent 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 Corporation
before such transaction cease to constitute a majority of directors of
Corporation.
5.02. Termination Within Eighteen (18) Months. In the event that the
employment of Employee with Corporation is terminated involuntarily within
eighteen (18) months after a change of 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 as provided for
in Section 2.01 hereof 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 Corporation'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
Corporation was matching prior to Change of Control)
(and 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 amount that would have been awarded to him under the
Profit Incentive Plan of the Company, pursuant to the terms of such
plan as in effect immediately prior to such change in control and
regardless of whether such plan may have been changed thereafter, for
the then-current calendar year if such award were based on 100% of his
share under said plan for such calendar year. Such amount shall be paid
at the same time as awards are paid to other participants in said plan
if such plan shall have been continued but in no event later than July
31 of the year following that year in respect of which the award was to
have been paid.
(c) Employee shall continue for a period of twenty-four (24) months
from the date of his termination to be covered at the expense of
Corporation 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 Corporation's cost of
providing such coverages during such period.
(d) If on the date of termination of employment, Employee were eligible
for a retirement annuity under Corporation's Supplemental Retirement
Plan, Employee shall become eligible for the benefits payable under
such plan and such annuity shall be paid to Employee, or, if
applicable, Employee's spouse, 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
Corporation.
(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.
(f) Corporation shall continue for a period of twenty-four (24) months
to pay Employee's monthly dues and special assessments, if any, of any
club of which Employee was a member at the time of termination and of
which Corporation was paying such dues and shall permit the Employee to
continue to use such membership thereafter, without reimbursement to
Corporation of any membership or initiation fees or assessments, so
long as Employee wishes to do so on the basis that monthly fees and
special assessments will thereafter be paid by him.
(g) Corporation shall for a period of twenty-four (24) months continue
to pay Employee Six Hundred and 00/100 ($600.00) Dollars per month for
expenses of operating an automobile owned by Employee.
5.03. Resignation Within Two Years. In the event the Employee should determine
in good faith that his status or responsibilities with Corporation has or have
diminished subsequent to a change of control, and shall for that reason resign
from his employment with Corporation within two (2) years after such change of
control, Employee shall be entitled to receive all of the payments and enjoy all
of the benefits specified in Section 5.02 hereof as if Employee's employment by
Corporation had terminated on the date of Employee's resignation.
5.04. Agreements Not Exclusive. The specific agreements referred to in this
Section V are not intended to exclude Employee's participation in other benefits
available to executive personnel generally or to preclude other compensation or
benefits as may be authorized by the Board of Directors of Corporation at any
time.
5.05. Enforcement Cost. Corporation is aware that upon the occurrence of a
change of control the Board of Directors or a shareholder of Corporation may
then cause or attempt to cause Corporation to refuse to comply with its
obligations under this Section V, or may cause or attempt to cause corporation
to institute, or may institute, litigation seeking to have this Section V
declared unenforceable, or may take, or attempt to take, other action to deny
Employee the benefits intended under this Section V. In these circumstances, the
purpose of this Section V could be frustrated. It is the intent of Corporation
that Employee not be required to incur the expenses associated with the
enforcement of his rights under this Section V 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
settlement of his rights hereunder under threat of incurring such expenses.
Accordingly, if following a change of control, it should appear to Employee that
Corporation has failed to comply with any of its obligations under this Section
V or in the event that Corporation or any other person takes any action to
declare this Section V void or unenforceable, or institute 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
Corporation, Corporation irrevocably authorizes Employee from time to time to
retain counsel of his choice at the direct expense and liability of Corporation
as provided in this Section 5.05 to represent Employee in connection with the
initiation or defense of any litigation or other legal action, whether by or
against Corporation or any director, officer, shareholder or other person
affiliated with Corporation, in any jurisdiction. Notwithstanding any existing
or prior attorney-client relationship between Corporation and such counsel,
Corporation irrevocably consents to Employee entering into an attorney-client
relationship with such counsel, and in that connection Corporation 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
Corporation 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 of $500,000, said amount 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.
5.06. No Set-Off. Corporation shall not be entitled to set-off against the
amount payable to Employee any amounts earned by Employee in other employment
after on of his employment with Corporation, 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 Section V 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 Section
V. However, a set-off may be taken by Corporation 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 5.02(c); or
for expenses covering monthly dues and special assessments of any club of which
Employee was a member at the time of termination and of which Corporation was
paying dues as set forth in Section 5.02(f); or for expenses related to monthly
automobile allowance as set forth in Section 5.02(g) if such benefits are paid
for the Employee by a new employer after Employee's termination of employment by
Corporation under Section 5.02 hereof or after Employee's resignation under
Section 5.03 hereof.
5.07. Termination. The provisions of this Section V shall continue during the
Term hereof but shall terminate when the employment of Employee with Corporation
shall terminate, so long as such termination was not in anticipation of or
related to a change of control.
SECTION VI
Indemnification for Service as Director and Officer
6.01. Indemnity of Employee. Should Employee serve Corporation as a director
or officer during the Term, Corporation shall hold harmless and indemnify
Employee as a director or officer to the full extent authorized or permitted by
the provisions of the Pennsylvania Business Corporation Law (the "State
Statute"), or by any amendment thereof or other statutory provisions authorizing
or permitting such indemnification which is adopted after the date hereof.
6.02. Maintenance of Insurance and Self-Insurance.
(a) Corporation represents that it presently has in force and effect
policies of Directors and Officers Liability Insurance("D&O Insurance")
in insurance companies and amounts as follows (the "Insurance
Policies"):
Insurer Policy No. Amount
Federal Insurance Co. 8133-97-22 $10,000,000
Lexington Insurance Co. F00890D95 $5,000,000 in excess of the
above $10,000,000
Stonewall Insurance Co. TDX9823904 $5,000,000 in excess of the
above $15,000,000
Subject only to the provisions of Section 6.02(b) hereof, Corporation
hereby agrees that, so long as Employee shall serve as a director or
officer of Corporation (or shall continue at the request of Corporation
to serve as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise) and
thereafter so long as Employee 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 Employee
was a director or officer of Corporation (or served in any of said
other capacities), Corporation will purchase and maintain in effect for
the benefit of Employee 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 6.02(b) hereof, Corporation agrees to hold harmless and
indemnify Employee to the full extent of the coverage which would
otherwise have been provided for the benefit of Employee pursuant to
the Insurance Policies.
6.03. Additional Indemnity. Subject only to the exclusions set forth in
Section 6.04 hereof, Corporation hereby further agrees to hold harmless and
indemnify Employee:
(a) Against any and all expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably
incurred by Employee 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 Employee is, was or at any time becomes a
party, or is threatened to be made a party, by reason of the fact that
Employee is, was or at any time becomes a director, officer, employee
or agent of Corporation, or is or was serving or at any time serves at
the request of Corporation as a director, officer, 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 Employee by
Corporation under the non-exclusivity provisions of Section 7-1 of the
By-laws of Corporation and the State Statute.
6.04. Limitations on Additional Indemnity. No indemnity pursuant to Section
6.03 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 Employee is indemnified either pursuant to Sections 6.01 or 6.02
hereof or pursuant to any D&O Insurance purchased and maintained by the
Corporation;
(b) in respect to remuneration paid to Employee 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
Employee for an accounting of profits made from the purchase or sale by
Employee 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 Employee'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;
(e) if a final decision by a court of competent jurisdiction shall
determine that such indemnification is not lawful.
6.05. Continuation of Indemnity. All agreements and obligations of Corporation
contained herein shall continue during the period Employee is a director,
officer, employee or agent of Corporation (or is or was serving at the request
of Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise) and shall continue
thereafter so long as Employee shall be subject to any possible claim or
threatened, pending or completed action, suit or proceeding, whether civil, or
criminal investigative, by reason of the fact that Employee was a director of
Corporation or serving in any other capacity referred to herein.
6.06. Notification and Defense of Claim. Promptly after receipt by Employee of
notice of the commencement of any action, suit or proceeding, Employee will, if
a claim in respect thereof is to be made against Corporation under this Section
VI, 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
Employee otherwise than under this Section VI. With respect to any such action,
suit or proceeding as to which Employee 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 Employee. After notice from Corporation to Employee of
its election so to assume the defense thereof, Corporation will not be
liable to Employee under this Section VI for any legal or other
expenses subsequently incurred by Employee in connection with the
defense thereof other than reasonable costs of investigation or as
otherwise provided below. Employee shall have the right to employ
Corporation's 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
Employee unless (I) the employment of counsel by Employee has been
authorized by Corporation, (ii) Employee shall have reasonably
concluded that there may be a conflict of interest between Corporation
and Employee 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 Employee shall
have made the conclusion provided for in (ii) above.
(c) Corporation shall not be liable to indemnify Employee under this
Section VI 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 Employee with Employee's written consent. Neither
Corporation nor Employee will unreasonably withhold its or his consent
to any proposed settlement.
6.07. Repayment of Expenses. Employee will reimburse Corporation for all
reasonable expenses paid by Corporation in defending any civil or criminal
action, suit or proceeding against Employee in the event and only to the extent
that it shall be ultimately determined that Employee is not entitled to be
indemnified by Corporation for such expenses under the provisions of the State
Statute, the By-laws of Corporation, this Section VI or otherwise.
6.08. Enforcement
(a) Corporation expressly confirms and agrees that it has entered into
this Section VI and assumed the obligations imposed on Corporation
hereby in order to induce Employee to, if elected, serve as a director
of Corporation, and acknowledges that Employee is relying upon this
Section VI in agreeing to serve Corporation in such capacity.
(b) In the event Employee 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 Employee for all of
Employee's reasonable fees and expenses in bringing and pursuing such
action.
SECTION VII.
Miscellaneous
7.01. Use of Name. Employee agrees to allow Corporation to have his name or
picture used by Corporation for advertising or trade during the term of this
Agreement.
7.02. Relocation to State College, Pennsylvania. Within twelve (12) months
after the commencement of the Term, Employee shall relocate his principal
residence to Centre County, Pennsylvania. Further, throughout the Term,
Employee shall reside in Centre County, Pennsylvania.
7.03. Binding Effect. This Agreement shall inure to the benefit of and be
binding upon Employee and upon Corporation, their successors and assigns,
including, without limitation, any person, partnership, company or corporation
which may acquire substantially all of Corporation's assets or business or into
which Corporation may be consolidated, merged or otherwise combined.
7.04. Governing Law. This Agreement shall be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania.
7.05. Legal Construction. In the event any one or more of the provisions
contained in this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not effect any other provision thereof and this Agreement shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
7.06. Amendment. No amendment, modification or alteration of the terms hereof
shall be binding unless the same be in writing, dated subsequent to the date
hereof and duly executed by the parties hereto.
7.07. Intergration. This Agreement constitutes the entire understanding and
agreement between Corporation and Employee with regard to the subject matter
hereof and supersedes all other agreements and understandings between
Corporation and Employee.
IN WITNESS WHEREOF, the parties hereto have this Agreement with the intent to be
legally bound thereby on the day and year above written.
C-COR ELECTRONICS, INC.
By:
/s/ Richard E. Perry (SEAL)
/s/ Scott C. Chandler (SEAL)
C-COR ELECTRONICS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
EFFECTIVE MAY 1, 1996
Page
ARTICLE I - PURPOSE 1
ARTICLE II - DEFINITIONS
2.1 Accrued Benefit 1
2.2 Beneficiary 1
2.3 Board 1
2.4 Code 1
2.5 Committee 1
2.6 Compensation 1
2.7 Deferred Compensation 1
2.8 Deferred Compensation Account 2
2.9 Deferred Compensation Agreement 2
2.10 Deferred Compensation Contribution 2
2.11 Disability Retirement 2
2.12 Distributable Amount 2
2.13 Effective Date 2
2.14 Eligible Employee 2
2.15 Employee 2
2.16 Employer 2
2.17 Employer Matching Contribution 2
2.18 Employer Matching Contribution Account 3
2.19 Entry Date 3
2.20 401(k) Plan 3
2.21 Late Retirement 3
2.22 Normal Retirement 3
2.23 Participant 3
2.24 Plan Benefit 3
2.25 Plan Year 3
2.26 Termination of Service 3
2.27 Trust 3
2.28 Valuation Date 3
2.29 Year of Service 3
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.1 Eligibility 4
3.2 Participation 4
C-COR ELECTRONICS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE IV - ACCRUED BENEFITS
4.1 Deferred Compensation 4
4.2 Employer Matching Contributions 4
4.3 Vesting 5
4.4 Forfeitures 5
4.5 Participant Directed Investment Options 5
4.6 Statement of Account 5
ARTICLE V - PLAN BENEFITS
5.1 Annual Distribution 5
5.2 Termination Benefits 6
5.3 Retirement Benefits 6
5.4 Death Benefits 6
5.5 Valuation of Accrued Benefit for Distributions 6
5.6 Hardship Distributions 6
5.7 Election of Form of Benefit Payment 6
5.8 Form of Benefit Payments 6
5.9 Withholding for Payroll Taxes 7
5.10 Commencement of Payments 7
5.11 Full Payment of Benefits 7
5.12 Payment to Guardian 7
ARTICLE VI - BENEFICIARY DESIGNATION
6.1 Beneficiary Designation 7
6.2 Amendments 7
6.3 No Beneficiary Designation 8
6.4 Effect of Payment 8
6.5 Death of Beneficiary 7
ARTICLE VII - ADMINISTRATION
7.1 Committee 8
7.2 Agents 9
7.3 Binding Effect of Decisions 8
7.4 Indemnity of Committee 8
C-COR ELECTRONICS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE VIII - CLAIMS PROCEDURE
8.1 Claim 8
8.2 Denial of Claim 8
8.3 Review of Claim 9
8.4 Final Decision 9
ARTICLE IX - AMENDMENT AND TERMINATION OF PLAN
9.1 Amendment of Plan 9
9.2 Merger of Plan 9
9.3 Termination of Plan 9
ARTICLE X - MISCELLANEOUS
10.1 Unfunded Plan 10
10.2 Unsecured General Creditor 10
10.3 Nonassignability 10
10.4 Not a Contract of Employment 10
10.5 Participant Cooperation 10
10.6 Terms 10
10.7 Captions 10
10.8 Governing Law 10
10.9 Validity 11
10-10 Notice 11
10-11 Successors 11
C-COR ELECTRONICS, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
PURPOSE
The purpose of this Supplemental Executive Retirement Plan (hereinafter referred
to as the "Plan") is to provide accumulation of supplemental funds for
retirement or death on a tax-deferred basis for a select group of management or
highly compensated employees (and their beneficiaries) of C-COR Electronics,
Inc. (the "Corporation"). It is intended that the Plan will aid in retaining and
attracting employees by providing such individuals with these benefits.
ARTICLE II
DEFINITIONS
For the purposes of this Plan, the following words and phrases shall have the
meanings indicated, unless the context clearly indicates otherwise:
2.1 Accrued Benefit. "Accrued Benefit" means the sum of a Participant's
Deferred Compensation Account and Employer Matching Contribution Account.
2.2 Beneficiary. "Beneficiary" means the person, persons, entity, or
entities designated by the Participant to receive any amounts payable from the
Participant's Accrued Benefit after the Participant's death.
2.3 Board. "Board" means the Board of Directors of C-COR Electronics, Inc.
2.4 Code. "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
2.5 Committee. "Committee" means those individuals appointed by the Board
of Directors to administer this Plan.
2.6 Compensation. "Compensation" means the total compensation paid by the
Employer to a Participant during the Plan Year, including bonuses and amounts
not includible in income by reason of a Participant's agreement to defer
Compensation under the terms of this Plan or a Participant's election under the
401(k) Plan or a cafeteria plan described in Section 125 of the Code.
2.7 Deferred Compensation. "Deferred Compensation" means the amount of
Compensation not yet earned during the Plan Year which the Participant and the
Employer mutually agree shall be deferred in accordance with the provisions of
this Plan.
2.8 Deferred Compensation Account. "Deferred Compensation Account" means the
individual account maintained on the books of the Employer to which Deferred
Compensation for each Participant is credited, and to which, as of each
Valuation Date, interest, dividends, and investment gains are added and the
amount of any distributions, investment loses, and expenses are deducted.
Interest, dividends, and investment gains and losses shall reflect the
investment direction made by the Participant.
2.9 Deferred Compensation Agreement. "Deferred Compensation Agreement" means
the agreement between the Employer and the Employee to defer Compensation under
the terms of the Plan.
2.10 Deferred Compensation Contribution. "Deferred Compensation Contribution"
means the contribution credited to the Participant's Deferred Compensation
Account, determined in accordance with the Deferred Compensation Agreement.
2.11 Disability Retirement. "Disability Retirement" means retirement from
service from the Employer by a Participant who has satisfied the requirements
for benefits under the Employer's Long Term Disability Plan.
2.12 Distributable Amount. "Distributable Amount" means the lesser of (i) a
percentage of the maximum amount of additional elective contributions that could
be made for the current plan year on behalf of a Participant to the 401(k) Plan
consistent with Code Section 402(g), Code Section 415, and the limitations of
Code Sections 401(k)(3) and 401(m), or (ii) a Participant's Deferred
Compensation for the current Plan Year (exclusive of any earnings thereon). The
percentage referred to in (i) above shall be determined in a manner to maximize
the elective deferrals under the 401(k) Plan of "highly compensated employees"
who are not eligible to participate in this Plan.
2.13 Effective Date. "Effective Date" means May 1, 1996.
2.14 Eligible Employee. "Eligible Employee" means an Employee who the Committee
determines is a highly compensated employee or a select member of management
who, by virtue of their position with the Employer, is uniquely informed as to
the Employer's operations and has the ability to materially affect the
Employer's profitability and operations.
2.15 Employee. "Employee" means an individual employed as a common law employee
of the Employer.
2.16 Employer. "Employer" means C-COR Electronics, Inc., a Pennsylvania
corporation, and all members of the controlled group of corporations as defined
under Code Section 1563 and who have adopted the 401 (k) Plan, or any successors
to the business thereof.
2.17 Employer Matching Contribution. "Employer Matching Contribution" means the
contribution credited to the Participant's Employer Matching Contribution
Account and determined in accordance with the provisions of this Plan (without
regard to the Code Section 401(a)(17) limitation on compensation).
2.18 Employer Matching Contribution Account. "Employer Matching Contribution
Account" means the individual account maintained on the books of the Employer to
which Employer Matching Contributions for each Participant are credited, and to
which, as of each Valuation Date, interest, dividends, and investment gains are
added and the amount of any distributions, investment loses, and expenses are
deducted. Interest, dividends, and investment gains and losses shall reflect the
investment direction made by the Participant.
2.19 Entry Date. "Entry Date" means the first day of the month immediately
following the Plan Year quarter during which the eligibility requirements are
first met.
2.20 401(k) Plan. "401(k) Plan" means the C-COR Electronics, Inc. Retirement
Savings and Profit Sharing Plan.
2.21 Late Retirement. "Late Retirement" means retirement from service with the
Employer after the Participant has attained age 65.
2.22 Normal Retirement. "Normal Retirement" means retirement from service of
the Employer as of the date the Participant attains age 65.
2.23 Participant. "Participant" means any individual who is participating or
has participated in this Plan and whose Accrued Benefit has not yet been
completely distributed.
2.24 Plan Benefit. "Plan Benefit" means the benefit payable to a Participant
as determined in accordance with the provisions of this Plan.
2.25 Plan Year. "Plan Year" means the twelve (12) consecutive month period
beginning January lst and ending December 31st.
2.26 Termination. "Termination of Service" means the severance of a
Participant's employment prior to Normal Retirement.
2.27 Trust. "Trust" means the grantor trust established by the Employer (if any)
for the purpose of accepting contributions under the Plan and to which interest,
dividends, and investment gains are added and from which the amount of any
distributions, investment loses, and expenses are deducted.
2.28 Valuation Date. "Valuation Date" means the last business day of each
calendar quarter.
2.29 Year of Service. "Year of Service" means a year of service as defined in
the 401(k) Plan.
ARTICLE III
ELIGIBILITY AND PARTICIPATION
3.1 Eligibility. Eligibility to participate in the Plan is limited to Eligible
Employees of the Employer who are designated by the Committee and who have
completed six consecutive months of employment.
3.2 Participation.
(a) Form of Deferral. An Eligible Employee may become a Participant by properly
executing a Deferred Compensation Agreement and filing such Agreement with the
Committee. The Deferred Compensation Agreement shall be effective as of the
first day of the payroll period immediately following the first day of the next
Plan Year or, if earlier, the first day of the first payroll period immediately
following the Participant's Entry Date.
(b) Modification of Deferred Compensation Agreements. A Deferred Compensation
Agreement will remain in effect for the initial Plan Year and each Plan Year
thereafter, until it is revoked. A Deferred Compensation Agreement may not be
changed with respect to the Plan Year, except that such Agreement may be revoked
in its entirety for the remainder of the Plan Year. In this instance, a new
Deferred Compensation Agreement may not be executed until an election for the
next Plan Year can be made.
ARTICLE IV
ACCRUED BENEFITS
4.1 Deferred Compensation. The amount of Compensation that a Participant elects
to defer pursuant to a Deferred Compensation Agreement shall be made by payroll
deduction and credited to the Participant's Deferred Compensation Account as the
non-deferred compensation becomes payable. The Deferred Compensation shall be
credited to the Deferred Compensation Account no later than the date that the
amounts would have been credited to the 401(k) Plan if they were elective
deferrals to that plan. The amount of Compensation that a Participant may elect
to defer must be stated in whole percentages and is limited to 20% of
Compensation. Participants may, if they wish, elect different percentages for
Profit Incentive Plan payments than they elect for other Compensation.
4.2 Employer Matching Contributions. The Employer will contribute an Employer
Matching Contribution on behalf of each Participant. The amount of the Employer
Matching Contribution will be equal to the 401(k) Plan employer matching
contribution, as defined in the 401(k) Plan (but ignoring the Code Section
401(a)(17) compensation limitation), applied to the sum of the Participant's
Deferred Compensation under this Plan and the Participant's elective deferrals
to the 401(k) Plan, less matching contributions made by the Employer to the
401(k) Plan. The Employer Matching Contribution will be credited to the
Participant's Employer Matching Contribution Account at the same time it would
have been contributed to the Participant's account in the 401(k) Plan.
4.3 Vesting. A Participant will always be 100% vested in his Deferred
Compensation Account. A Participant will vest in his Employer Matching
Contribution Account on the following schedule:
Completed Years of Service Vested Percentage
Less than 1 year 0%
1 year but less than 2 years 20%
2 years but less than 3 years 40%
3 years but less than 4 years 60%
4 years but less than 5 years 80%
5 years or more 100%
4.4 Forfeitures. If a Participant receives a distribution from the Plan, any
portion of his Accrued Benefit that is not vested will be forfeited. If such
nonvested amounts are held in the Trust, they will either be used to pay
expenses of the Plan or to offset the Employer's obligation to make Employer
Matching Contributions for other Participants.
4.6 Participant Directed Investment Options. Each Participant shall have the
opportunity to direct the investment of his Accrued Benefit among the investment
options selected by the Committee in multiples of 10%. Transfers among
investment options may be made on a quarterly basis throughout the Plan Year, to
be effective as of the last day of each calendar quarter.
4.7 Statement of Account. The Committee shall submit to each Participant, as
soon as practicable after each Valuation Date and at such other time as
determined by the Committee, a statement setting forth the balance to the credit
of the Accrued Benefit maintained for a Participant.
ARTICLE V
PLAN BENEFITS
5.1 Annual Distribution. The Employer shall pay the Distributable Amount to each
Participant by March 15 of the following Plan Year, unless the Participant has
elected pursuant to a properly executed salary reduction agreement to contribute
some or all of such Distributable Amount to the 401(k) Plan. In the event that a
Participant has properly executed such a salary reduction agreement, the
appropriate portion of the Distributable Amount and the corresponding Employer
Matching Contribution (exclusive of earnings) shall be paid to the 401 (k) Plan.
5.2 Termination Benefits. The Employer shall pay a Plan Benefit equal to the
amount of the Participant's vested Accrued Benefit to each Participant upon
Termination of Service.
5.3 Retirement Benefits. The Employer shall pay a Plan Benefit equal to the
amount of the Participant's Accrued Benefit to each participant who separates
from service on account of Disability, Normal, or Late Retirement.
5.4 Death Benefits. Upon the death of a Participant, the Employer shall pay to
the Participant's Beneficiary an amount determined as follows:
(a) If the Participant dies after separation from employment with the Employer,
the amount payable shall be equal to the remaining unpaid balance of the
Participant's Accrued Benefit.
(b) If the Participant dies prior to separation from employment with the
Employer, the amount payable shall be the Participant's Accrued Benefit at the
time death occurs.
5.5 Valuation of Accrued Benefit for Distribution. For purposes of making
distributions, Plan Benefits shall be valued as of the Valuation Date
immediately following the date as of which a Participant becomes eligible for a
Plan Benefit unless the Committee, in its sole discretion, decides otherwise.
5.6 Hardship Distributions. Upon a finding that a Participant has suffered a
financial hardship, the Committee may, in its sole discretion, allow
distributions from the Participant's vested Accrued Benefit prior to the time
specified for payment of benefits under the Plan. The amount of such
distribution shall be limited to the amount reasonably necessary to meet the
Participant's requirements during the financial hardship. Following a hardship
distribution, a Participant's Deferred Compensation Agreement will be canceled
and no further Compensation may be deferred for the remainder of the Plan Year.
5.7 Election of Form of Benefit Payment. Plan Benefits shall be paid in one of
the forms provided in Paragraph 5.8 as elected by the Participant, unless the
Committee, in its sole discretion, selects an alternative method. The
Participant shall elect the form of benefit payment prior to filing his initial
Deferred Compensation Agreement with the Committee. A participant who fails to
elect the form of benefit payment shall be deemed to have elected a Plan Benefit
in the form of a lump-sum payment. The Participant's form of benefit election
shall be irrevocable, unless the Committee, in its sole discretion, decides
otherwise. Plan Benefits payable pursuant to paragraph 5.4(a) shall be paid in
the same form as prior to the Participant's death, unless the Committee in its
sole discretion decides to pay benefits in a lump-sum.
5.8 Form of Benefit Payments.
(a) Annual installments over a period not extending beyond the shorter of (i) 10
years or (ii) the Participant's life expectancy or the joint and last survivor
expectancy of the Participant and his Beneficiary. Payment shall be determined
each year based upon the amount of the Participant's Accrued Benefit as of the
prior December 31 and the remaining number of payment periods, or
(b) A lump-sum payment.
5.9 Withholding for Payroll Taxes. The Employer shall withhold from Plan
Benefits any income or employment taxes required to be withheld from a
Participant's wages.
5.10 Commencement of payments. Payment shall commence as soon as practicable
following the end of the Plan Year quarter in which a Participant becomes
eligible for a Plan Benefit, unless the Committee, in its sole discretion,
decides otherwise.
5.11 Full Payment of Benefits. Notwithstanding any other provision of this Plan,
payment of benefits shall commence no later than sixty (60) days following a
Participant's Late Retirement date.
5.12 Payment to Guardian. If a Plan Benefit is payable to a minor or a person
declared incompetent or to a person incapable of handling the disposition of
property, the Committee may direct payment of such Plan Benefit to the guardian,
legal representative or person having the care and custody of such minor or
incompetent person. The Committee may require proof of incompetence, minority,
incapacity or guardianship as it may deem appropriate prior to distribution of
the Plan Benefit. Such distribution shall completely discharge the Committee and
the Employer from all liability with respect to such Plan Benefit.
ARTICLE VI
BENEFICIARY DESIGNATION
6.1 Beneficiary Designation. Each Participant shall have the right, at any time,
to designate any person, persons, entity or entities as his Beneficiary (both
primary and contingent) to whom payment under this Plan shall be paid in the
event of death prior to complete distribution of the Participant's Plan Benefit.
Each beneficiary designation shall be in a written form prescribed by the
Committee and will be effective only when filed with the Committee during the
Participant's lifetime.
6.2 Amendments. Any Beneficiary designation may be changed by a Participant
without the consent of any designated Beneficiary by the filing of a new
Beneficiary Designation with the Committee. The filing of a new Beneficiary
Designation form will cancel all Beneficiary Designations previously filed.
6.3 No Beneficiary Designation. If any Participant fails to designate a
Beneficiary in the manner provided above, or if the Beneficiary designated by a
deceased Participant predeceases the Participant, the Committee, in its
discretion, shall direct the Employer to distribute such Participant's Plan
Benefit to the Participant's estate.
6.4 Effect of Payment. Payment to the Beneficiary or payment as provided in
Section 6.3 above shall completely discharge the Employer's obligations under
this Plan.
6.5 Death of Beneficiary. Following commencement of payment of Plan Benefits, if
the Beneficiary designated by a deceased Participant dies before receiving
complete distribution of the Plan Benefit, the Committee shall direct the
Employer to distribute the balance of such Plan Benefit:
(a) As designated by the Beneficiary in a written form prescribed by the
Committee which is effective only when filed with the Committee during the
Beneficiary's lifetime; or
(b) If the Beneficiary shall not have made such designation, then to the
Beneficiary's estate.
ARTICLE VII
ADMINISTRATION
7.1 Committee. This Plan shall be administered by the Committee. Members of
the Committee may be Participants under the Plan.
7.2 Agents. The Committee may appoint an individual to be the Committee's agent
with respect to the day-to-day administration of the Plan. In addition, the
Committee may, from time to time, employ other agents and delegate to them such
administrative duties as it sees fit, and may from time to time consult with
counsel who may be counsel to the Employer.
7.3 Binding Effect of Decisions. The decision or action of the Committee with
respect to any question arising out of or in connection with the administration,
interpretation and application of the Plan and the rules and regulations
promulgated hereunder shall be final and binding upon all persons having any
interest in the Plan.
7.4 Indemnity of Committee. The Employer shall indemnify and hold harmless each
of the members of the Committee against any and all claims, loss, damage,
expense or liability arising from any action or failure to act with respect to
this Plan, except in the case of gross negligence or willful misconduct by such
members of the Committee.
ARTICLE VIII
CLAIMS PROCEDURE
8.1 Claim. Any person claiming a Plan Benefit, requesting an interpretation or
ruling under the Plan, or requesting information under the Plan shall present
the request in writing to the Committee which shall respond in writing as soon
as practicable.
8.2 Denial of Claim. If the claim or request is denied, the written notice of
denial shall be made within ninety (90) days of the date of receipt of such
claim or request by the Committee and shall state:
(a) The reason for denial, with specific reference to the Plan provisions on
which the denial is based.
(b) A description of any additional material or information required and an
explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
8.3 Review of Claim. Any person whose claim or request is denied or who has not
received a response within ninety (90) days may request review by notice given
in writing to the Committee within sixty (60) days of receiving a response or
one hundred fifty (150) days from the date the claim was received by the
Committee. The claim or request shall be reviewed by the Committee who may, but
shall not be required to, grant the claimant a hearing. On review, the claimant
may have representation, examine pertinent documents, and submit issues and
comments in writing.
8.4 Final Decision. The decision on review shall normally be made within sixty
(60) days after the Committee's receipt of a request for review. If an extension
of time is required for a hearing or other special circumstances, the claimant
shall be notified and the time limit shall be one hundred twenty (120) days
after the Committee's receipt of a request for review. The decision shall be in
writing and shall state the reasons and relevant Plan provisions. All decisions
on review shall be final and bind all parties concerned.
ARTICLE IX
AMENDMENT, MERGER AND TERMINATION OF PLAN
9.1 Amendment of Plan. The Board may at any time amend the Plan in whole or in
part, provided, however, that no amendment shall be effective to decrease or
restrict any Accrued Benefit maintained pursuant to any existing Deferred
Compensation Agreement under the Plan.
9.2 Merger of Plan. The Board may at any time merge the Plan and its related
Trust (if any) into another non-qualified plan maintained by the Employer or any
member of the controlled group of corporations as defined in Code Section 1563.
9.3 Termination of Plan. The Board may at any time terminate the Plan with
respect to new deferral elections or in its entirety if, in its judgment, the
tax, accounting, or other effects of the continuance of the Plan or potential
payments thereunder would not be in the best interests of the Employer. If the
Plan is terminated in its entirety, each Participant shall be 100% vested in the
value of their Accrued Benefit. Upon such termination, each participant will
receive the value of their Accrued Benefit in the form of a lump-sum payment to
be made no later than 120 days following the termination date.
ARTICLE X
MISCELLANEOUS
10.1 Unfunded Plan. This plan is intended to be an unfunded Plan maintained
primarily to provide Deferred Compensation benefits for a select group of
management employees or highly compensated employees. This Plan is not intended
to create an investment contract, but to provide tax planning opportunities and
retirement benefits to Eligible Employees who have elected to participate in the
Plan.
10.2 Unsecured General Creditor. Employer's obligation under the Plan shall be
merely that of an unfunded and unsecured promise of Employer to pay money in the
future.
10.3 Nonassignability. Neither a Participant nor any other person shall have any
right to commute, sell, assign, transfer, pledge, anticipate, mortgage or
otherwise encumber, transfer, hypothecate or convey in advance of actual receipt
the amounts, if any, payable hereunder, or any part thereof, which are, and all
rights to which are, expressly declared to be unassignable and non transferable.
No part of the amounts payable shall, prior to actual payment, be subject to
seizure or separation for the payment of any debts, judgments, alimony or
separate maintenance owed by a Participant or any other person, nor be
transferable by operation of law in the event of a Participant's or an other
person's bankruptcy or insolvency.
10.4 Not a Contract of Employment. The terms and conditions of this Plan shall
not be deemed to constitute a contract of employment between the Employer and
the Participant, and the Participant (or the Participant's Beneficiary) shall
have no rights against the Employer except as may otherwise be specifically
provided herein. Moreover, nothing in this Plan shall be deemed to give a
Participant the right to be retained in the service of the Employer or to
interfere with the right of the Employer to discipline or discharge the
Participant at any time.
10.5 Participant Cooperation. A Participant will cooperate with the Employer by
furnishing any and all information requested by the Employer in order to
facilitate the payment of benefits hereunder and such other action as may be
requested by the Employer.
10.6 Terms. Whenever any words are used herein in the masculine, they shall be
construed as though they were used in the feminine in all cases where they would
so apply; and wherever any words are used herein in the singular or in the
plural, they shall be construed as though they were used in the plural or the
singular, as the case may be, in all cases where they would so apply.
10.7 Captions. The captions of articles, sections and paragraphs of this Plan
are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
10.8 Governing Law. The provisions of this Plan shall be construed and
interpreted according to the laws of the State of Pennsylvania.
10.9 Validity. In case any provision of this Plan shall be held illegal or
invalid for any reason, said illegality or invalidity shall not affect the
remaining parts hereof, but this Plan shall be construed and enforced as if such
illegal and invalid provision had never been inserted herein.
10.10 Notice. Any notice or filing required or permitted to be given to the
Committee under the Plan shall be sufficient if in writing and hand delivered,
or sent by registered or certified mail, to any member of the Committee, the
President of the Employer, or the Employer's Statutory Agent. Such notice shall
be deemed given as of the date of delivery or, if delivery is made by mail, as
of three (3) days following the date shown on the postmark or on the receipt for
registration or certification.
10.11 Successors. The provisions of this Plan shall bind and inure to the
benefit of the Employer and its successors and assigns. The term successors as
used herein shall include any corporate or other business entity which shall,
whether by merger, consolidation, purchase or otherwise acquire all or
substantially all of the business and assets of the Employer, and successors of
any such corporation or other business entity.
IN WITNESS WHEREOF, and pursuant to resolution of the Board of Directors of the
undersigned corporation, such corporation has caused this instrument to be
executed by its duly authorized officer effective as of May 1, 1996.
C-COR ELECTRONICS, INC.
By:
/s/ Chris A. Miller
Vice President Finance
Mellon Bank
Note and Security Agreement
AMENDED AND RESTATED
$ 23,000,000.00 November 2, 1995
For value received, and intending to be legally bound, Undersigned, as defined
below, promises to pay to Mellon Bank, N.A. ("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
August 31, 1994 (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, April 3, 1995, and June
21, 1995, in order to increase the Note amount. This is not a novation of the
prior Note and Security Agreement(s). All prior security interests granted shall
carry to this Note and Security 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, choses in
action, instruments, chattel paper, documents (including all documents of title
and warehouse receipts) and all rights 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. ss.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 and 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 respect to 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;(j) 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 interests 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 any
default hereunder or under the terms of a 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 (j) 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 or all of the Undersigned
individually or jointly, or to such 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 any judgment entered on
account of the indebtedness evidenced hereby, as well as any security interest
previously granted to secure repayment of the indebtedness evidenced hereby, 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. (h) 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 in 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/ Mary Tate Drawl
(Corporate Seal)
Corporation or Other Entity
C-COR Electronics, Inc.
By:
/s/ Chris A. Miller VP-Finance
(Seal)
Business Address
60 Decibel Road, State College, PA 16801
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 November 2, 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, 1996. 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, 1996. 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 120
Basis Points.
ABS-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 ABS Rate for such day plus
120 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 Euro-
Rate 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 interbank market
estimated by the Bank 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.
"Rate Segment" of the Euro-Rate Portion at any time shall mean the
entire principal amount of such Portion to which at such time there is
applicable a particular Rate Period beginning on a particular day and ending on
another particular day. (By definition, each Portion is at all times composed of
an integral number of discrete Rate Seqments, each corresponding to a particular
Rate Period, and the sum of the principal amounts of all Rate Segments of a
particular Portion at any time equals the principal amount of such Portion at
such time).
"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 2nd day of
November 1, 1995.
Attest/Witness:
/s/ Mary Tate Drawl
(Seal)
(Corporate Seal)
C-COR ELECTRONICS, INC.
By:
/s/Chris A. Miller
Vice President - Finance
Business Address:
60 Decibel Road
State College, PA 16801
By:
MELLON BANK, N.A.
/s/ Linda R. Burns
Assistant Vice President
Office Address:
P.O. Box 19
State College, PA 16804-0019
Mellon Bank
Revolving Line of Credit
AMENDED AND RESTATED
C-COR Electronics, Inc. ("Borrower") has requested Mellon Bank, N.A. ("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, 1996.
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 or 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.
(c) 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 Bank 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
unsatisfactory to Bank.
(b) Accounts Receivable and Inventory Reporting. Furnish to Bank, each fiscal
quarter, a report, as at the end of the preceding quarter, 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 be
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 or 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 had
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 2nd day of
November, 1995.
Attest/Witness:
/s/ Mary Tate Drawl
(Corporate Seal)
Corporation or Other Entity
C-COR Electronics, Inc.
By:
/s/ Chris A. Miller VP-Finance
Business Address:
60 Decibel Road, State College, PA 16801
MELLON BANK, N.A.
Linda R. Burns, AVP
P.O. Box 19, State College, PA 16804-0019
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
August 31, 1994 (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:
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 1.
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 and Canadian 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.
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) (omitted)
i) 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 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. mechanic's, 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 material
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 June
21, 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, 1996.
Signatures
Witness the due execution hereof intending to be legally bound the 2nd day of
November, 1995.
Attest/Witness:
/s/ Mary Tate Drawl
(Corporate Seal)
Corporation or Other Entity
C-COR Electronics, Inc.
By: /s/ Chris A. Miller, 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
C-COR ELECTRONICS, INC.
1988 Stock Option Plan
1. Purpose. The purpose of the C-COR Electronics, Inc. 1988 Stock Option Plan
(the "Plan") is to benefit C-COR Electronics, Inc. (the "Company"), a
Pennsylvania corporation, by providing increased incentive to key employees
(including officers) and to aid the Company in retaining its present management,
and should circumstances require it, to attract additional personnel. This
objective will be effectuated through the granting of certain stock options. It
is intended that some of the options granted under this Plan will qualify as
"Incentive Stock Options" within the meaning of Section 422A of the Internal
Revenue Code of 1986, as amended (the "Code"), and that other options
(designated "Nonqualified Stock Options") will not so qualify.
2. Effectiveness. This Plan shall become effective upon the later of its
approval and adoption by the Board of Directors of the Company or its
ratification by the shareholders of the Company in accordance with the Company's
By-laws.
3. Administration. The Plan shall be administered by the Compensation Committee
(the "Committee") which shall be composed of at least three members of the Board
of Directors (the "Board") designated by the Board. No member or former member
of the Committee shall be liable, in the absence of bad faith or misconduct, for
any act or omission with respect to his service on the Committee. Service on the
Committee shall constitute service as a Director of the Company so that members
of the Committee shall be entitled to indemnification and reimbursement as
Directors of the Company pursuant to its By-Laws. Subject to the express
provisions of paragraph 4 of the Plan with respect to eligibility, the Committee
shall determine the persons to whom, and the time or times at which, options
shall be granted and the number of shares to be subject to each option. No
member of the Committee, while serving as a Committee member, shall be eligible
to receive any grant under the Plan. Decisions and determinations by the
Committee shall be final and binding upon all parties, including the Company,
shareholders, participants and other employees. The Committee shall have full
power and authority to determine the terms and provisions of all options (which
terms and provisions need not be the same in each case) subject to the
applicable provisions of the Plan, and to interpret the provisions and supervise
the administration of the Plan, provided that:
(a) in the case of Incentive Stock Options, except as provided in paragraph 9,
the aggregate fair market value (determined as of the time each option is
granted) of shares for which any optionee may be granted Incentive Stock Options
under the Plan exercisable for the first time by such optionee during any
calendar year (under this Plan and all other plans of the Company and any parent
or subsidiary corporations) shall not exceed $100,000 less the aggregate fair
market value (determined as of the time the option was granted) of shares for
which such optionee was granted after December 31, 1986, a prior option first
exercisable in such year determined in accordance with the provisions of the
Code applicable to Incentive Stock Options (the "$100,000 Annual Limit"), except
as otherwise provided in paragraph 9;
(b) no option intended to be an Incentive Stock option shall be granted for a
term to exceed ten years (or five years if such option is granted to an owner of
more than 10 percent of the Company's stock (or of the stock of any parent or
subsidiary corporation) within the meaning of the provisions of the Code
applicable to Incentive Stock Options); and
(c) no option intended to be a Nonqualified Stock Option shall be granted for a
term to exceed ten years and shall clearly state that it is intended to be a
Nonqualified Stock Option.
All decisions and selections made by the Committee pursuant to the provisions of
the Plan shall be made by a majority of its members. Any decision reduced to
writing and signed by a majority of the members shall be fully effective as if
it had been made by a majority at a meeting duly held.
4. Designation of Participants. The persons eligible to participate in the Plan
as recipients of options shall include only key employees of the Company. The
term "key employees" shall mean any salaried or supervisory employee of the
Company or any present or future subsidiary who is deemed by the Committee to be
performing services of importance to the management, operation or development of
the Company. The directors of the Company shall not be eligible to participate
in the Plan as directors, but directors otherwise qualified shall be eligible to
participate. An employee who has been granted an option hereunder may be granted
an additional option or options, if the Committee shall so determine.
5. Stock Reserved For Plan. Subject to adjustment as provided in paragraph 10
hereof, a total of 300,000 shares of the Company's Common Stock, $.10 par value,
shall be subject to the Plan. The shares subject to the Plan shall consist of
unissued shares or previously issued shares reacquired and held by the Company.
Any of such shares which may remain unsold and which are not subject to
outstanding options at the termination of the Plan shall cease to be reserved
for the purpose of the Plan, but until termination of the Plan, the Company
shall at all times reserve a sufficient number of shares to meet the
requirements of the Plan. Should all or any portion of an option granted
hereunder expire, terminate or be cancelled prior to its exercise in full, the
shares theretofore subject to such option (or portion thereof) shall again
become available for purposes of the Plan.
6. Terms and Conditions; Option Agreements. In granting options, the Committee
shall determine exercise price of each share, which may not be less than the
fair market value of such share, as determined in accordance with paragraph 7
hereof, on the last business day prior to the date the option is granted;
provided, that if an option designated as an Incentive Stock Option is granted
to an owner of more than 10% of the Company's stock (or of the stock of any
parent or subsidiary corporation) within the meaning of the provisions of the
Code applicable to Incentive Stock Options, the minimum exercise price of each
share shall not be less than 110% of the fair market value of such share, as
determined in accordance with paragraph 7 hereof, on the last business day prior
to the date the option is granted. The Committee shall, subject to paragraph
3(b), determine the duration, any conditions precedent to the vesting of the
right to exercise options and other terms or conditions of the options
(including any restrictions to be placed on transferability of shares upon
exercise of options, and any provisions the Committee considers appropriate from
the standpoint of possible tax consequences). Each grant of an option shall be
reflected in an agreement in such form as the Committee shall determine.
7. Fair Market Value. The "fair market value" of a share shall be the closing
selling price on the applicable date of grant or exercise (the "Valuation Date")
if the shares were traded on a stock exchange on the Valuation Date; if the
shares were not so traded, fair market value shall be the mean of closing bid
and asked prices on the Valuation Date. If there were no sales or reported bid
and asked prices on the Valuation Date, the Committee shall determine the fair
market value.
8. Limitations, Exercise of Options.
(a) All options granted pursuant to this Plan shall be granted prior to ten
years from the earlier of the date that the Plan is first adopted by the Board
of Directors or the date it is approved by the shareholders of the Company as
specified in paragraph 2.
(b) Options may be exercised solely by the optionee during his lifetime or after
his death by the person or persons entitled thereto under his will or the laws
of descent and distribution.
(c) In the event of termination of an optionee's employment with the Company for
any reason (including retirement) other than death, all options granted to an
optionee shall thereupon be deemed cancelled, unless the Committee, in its
discretion, at any time decides otherwise.
(d) If an optionee dies while in the employ of the Company, his options shall be
exercisable only to the extent of the shares which were immediately purchasable
by him thereunder at the date of death, but such options shall expire unless
exercised by his personal representative within one year after the date of death
(regardless of the earlier or later expiration set forth in the option);
provided, however, that no Incentive Stock Option shall be exercisable after the
last date on which it could have expired under paragraph 3(b).
(e) The option price shall be payable to the Company as follows:
(i) in United States dollars in cash or by certified check, bank draft or money
order payable to the order of the Company; or
(ii) at the discretion of the Committee, through the delivery of shares of the
Company's Common Stock having a fair market value, determined in accordance with
paragraph 7 hereof, as of the last business day prior to the date of exercise
equal to the option price; or
(iii) at the discretion of the Committee, by any combination of (i) and (ii)
above.
9. Mergers, Consolidations, Dissolutions, and Liquidations. Each agreement
granting options pursuant to this Plan shall contain provisions such that, if
the Board announces a dissolution or liquidation of the Company or a merger or
consolidation in which the Company is not the surviving corporation (the
"Event"), the rules set forth in paragraphs (a) and (b), below, shall apply
unless the Board provides otherwise in connection with such Event:
(a) Any unexercised, unexpired option granted pursuant to this Plan, to the
extent it does not otherwise expire pursuant to the terms of agreement by which
it is granted, shall expire on an accelerated expiration date, which shall be
the later of the effective date of the Event, or the thirtieth day after written
notice of such Event is given to the optionee (or other person entitled to
exercise such option, to the extent permitted in paragraph 8(d) of this
Agreement).
(b) Except as provided in paragraph 8(d), above, to the extent any option
granted pursuant to this Plan does not otherwise become exercisable pursuant to
the terms of agreement by which it is granted, such option shall become
exercisable on an accelerated exercise date, which shall be the date thirty days
prior to its accelerated expiration date under paragraph 9(a), above.
Such agreement may, however, include the following additional rules:
(c) The accelerated exercise date described in paragraph 9(b) of the Plan, shall
be delayed (but not beyond the accelerated expiration date described in
paragraph (a)) to the extent necessary to permit as many Incentive Stock Options
as possible to become exercisable in each calendar year without exceeding the
$100,000 Annual Limit.
(d) To the extent acceleration of exercisability of any option granted pursuant
to this Plan causes the $100,000 Annual Limit to be exceeded, such option shall
be recharacterized as a Nonqualified Stock Option.
(e) In lieu of the acceleration provided for in paragraphs (a) and (b), the
Board may, with respect to a number of Shares determined by the Board in its
absolute discretion, make a cash award to optionee (or other person entitled to
exercise the option) in an amount equal to the excess of the then fair market
value of such Shares over the exercise price of such option. Upon such payment,
the option with respect to such Shares shall be cancelled.
10. Capital Change of Company. If the outstanding shares of the Company's Common
Stock shall at any time be changed or exchanged by declaration of a stock
dividend, split-up, combination of shares, or recapitalization, the number and
kind of shares subject to the Plan or subject to any options theretofore
granted, and the option prices, shall be appropriately and equitably adjusted so
as to maintain the proportionate number of shares without changing the aggregate
price; provided, however, no adjustment shall be made by reason of the
distribution of subscription rights on outstanding stock.
11. Purchase for Investment. Unless the shares covered by the Plan are
effectively registered under the Securities Act of 1933, as amended, under a
then current prospectus at the time of an exercise, or the Company has
determined that such registration is unnecessary, each person exercising an
option under the Plan may be required by the Company as a condition to the
issuance of shares pursuant to such option, to give a representation in writing
satisfactory to the Company or its counsel that he is acquiring such shares for
his own account, for investment and not with a view to, or for sale in
connection with, the distribution of any part thereof.
12. Amendments. The Board may amend, alter, or discontinue the Plan, except that
no amendment or alteration shall be made which would impair the rights of any
participant under any option theretofore granted, without his consent, and
except that no amendment or alteration shall be made which, without the approval
of the shareholders, would:
(a) Increase the total number of shares reserved for the purpose of the Plan,
except as is provided in paragraph 10;
(b) With respect to any Incentive Stock Option, decrease the option price
provided for in paragraph 6;
(c) Change the class of employees eligible to participate in the Plan from that
provided in paragraph 4; or
(d) With respect to any Incentive Stock Option, extend expiration of the option
beyond the end of the term described in paragraph 3(b).
13. Government Regulations. The Plan, and the granting and exercise of options
thereunder, and the obligation of the Company to sell and deliver shares under
such options, shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.
14. Other Rights not Affected.
(a) Nothing herein contained shall affect the right of the Company to terminate
the optionee's employment, services, responsibilities, duties or authority to
represent the Company or any subsidiary at any time for any reason whatsoever.
(b) Nothing herein contained shall affect the right of the optionee to
participate in and receive benefits under and in accordance with the then
current provisions of any pension insurance, bonus, profit sharing or other
benefit plan or program of the Company.
RESOLVED, that the C-COR Electronics, Inc. 1988 Stock option Plan be and it
hereby is, amended to define:
Purpose. The purpose of the C-COR Electronics, Inc. 1988 Stock Option Plan (the
"Plan") is to benefit C-COR Electronics, Inc. (the "Company"), a Pennsylvania
corporation, by providing increased incentive to employees (including officers)
and to aid the Company in retaining its present management, and should
circumstances require it, to attract additional personnel. This objective will
be effectuated through the granting of certain stock options. It is intended
that some of the options granted under this Plan will qualify as "Incentive
Stock Options" within the meaning of Section 422A of the Internal Revenue Code
of 1986, as amended (the "Code"), and that other options (designated
"Nonqualified Stock Options") will not so qualify.
Designation of Participants. The persons eligible to participate in the Plan as
recipients of options shall include only employees of the Company. The term
"employees" shall mean any employee of the Company or any present or future
subsidiary who is deemed by the Committee to be performing services of
importance to the management, operation or development of the Company. The
directors of the Company shall not be eligible to participate in the Plan as
directors, but directors otherwise qualified shall be eligible to participate.
An employee who has been granted an option hereunder may be granted an
additional option or options, if the Committee shall so determine.
C-COR ELECTRONICS, INC.
1992 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose. The purpose of this 1992 Employee Stock Purchase Plan of
C-COR Electronics, Inc., a Pennsylvania corporation (the "Corporation"), is to
secure for the Corporation and its shareholders the benefits of the incentive
which an interest in the ownership of shares of common stock of the Corporation
will provide to its employees, who will be responsible for the Corporation's
future growth and continued success.
2. Definitions. As used herein:
"Account" means a bookkeeping account established by the Committee on behalf of
a Participant to hold Payroll Deductions.
"Approved Leave of Absence" means a leave of absence that has been approved by
the applicable Participating Corporation in such a manner as the Board may
determine from time to time.
"Board" means the Board of Directors of the Corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Committee" means the Committee appointed pursuant to section 14 of the Plan.
"Compensation" means an Employee's cash compensation payable for services to a
Participating Corporation during a fiscal quarter.
"Election Form" means the form acceptable to the Committee which an Employee
shall use to make an election to purchase Shares through Payroll Deductions
pursuant to the Plan.
"Eligible Employee" means an Employee who meets the requirements for eligibility
under section 3 of the Plan.
"Employee" means a person who is an employee of a Participating Corporation.
"Fair Market Value" means the closing price per share of the Shares on the
principal national securities exchange on which the Shares are listed or
admitted to trading or, if not listed or traded on any such exchange, on the
National Market System of the National Association of Securities Dealers
Automated Quotation System ("NASDAQ"), or if not listed or traded on any such
exchange or system, the fair market value as reasonably determined by the Board,
which determination shall be conclusive.
"Five Percent Owner" means an Employee who, with respect to a Participating
Corporation, is described in section 423(b)(3) of the Code.
"Offering" means an offering of Shares to Eligible Employees pursuant to the
Plan.
"Offering Commencement Date" means the first day of each calendar quarter
beginning on or after January 1, 1993, until the Plan Termination Date.
"Offering Period" means the period extending from an Offering Commencement Date
through the following Offering Termination Date.
"Offering Termination Date" means the last day of each fiscal quarter following
an Offering Commencement Date.
"Option Price " means 85 percent of the Fair Market Value per Share on the
Offering Termination Date.
"Participant" means an Employee who meets the requirements for eligibility under
section 3 of the Plan and who has timely delivered an Election Form to the
Committee.
"Participating Corporation" means the Corporation and the parent and
subsidiaries of the Corporation, within the meaning of sections 424(d) and (e)
of the Code, if any, that are approved by the Board and whose employees are
designated as Employees by the Board.
"Payroll Deductions" means amounts withheld from a Participant's Compensation
pursuant to the Plan as described in section 5 of the Plan.
"Plan" means the C-COR Electronics, Inc. 1992 Employee Stock Purchase Plan, as
set forth in this document, and as may be amended from time to time.
"Plan Administrator" means the administrator appointed by the Board of Directors
or the Committee pursuant to section 14 of the Plan.
"Plan Termination Date"' means the earlier of
(I) the Offering Termination Date for the Offering in which the maximum number
of Shares specified in section 10.1 of the Plan have been issued pursuant to the
Plan, or
(ii) the date as of which the Board chooses to terminate the Plan as provided in
section 15 of the Plan.
"Shares" means shares of the Common Stock of the Corporation, par value $. 10
per share.
"Successor-in-Interest" means the person or entity described in section 8.7 of
the Plan.
"Termination Form" means the form acceptable to the Committee which an Employee
shall use to withdraw from an Offering pursuant to section 8.1 of the Plan.
3. Eligibility and Participation.
3.1 Initial Eligibility.
3.1.1. Except as provided in section 3.1.2 of the Plan, each Employee shall be
eligible to participate in the Plan.
3.1.2. An Employee shall not be eligible to participate in the Plan if
such Employee:
3.1.2.1. Is a Five Percent Owner,
3.1.2.2. Is a temporary Employee;
3.1.2.3. Has been employed by a Participating Corporation for less than a
six-consecutive month period ending on the last day of the calendar quarter
immediately preceding the effective date of an election to purchase Shares
pursuant to the Plan;
3.1.2.4. Has not customarily worked in excess of 20 hours a week during such
six-consecutive month period; and
3.1.2.5. Is an ineligible Employee under section 8.3 of the Plan.
3.2 Leave of absence. For purposes of participation in the Plan, an Employee on
an Approved Leave of Absence shall be deemed to be an Employee for the first 90
days of such Approved Leave of Absence and such Employee's eligibility shall be
deemed to have terminated for purposes of participation under the Plan at the
close of business on the 90th day of such Approved Leave of Absence unless such
Employee shall have returned to regular non-temporary employment before the
close of business on such 90th day. Termination by a Participating Corporation
of an Employee's Approved Leave of Absence, other than termination or return to
non-temporary employment, shall terminate an Employee's employment for all
purposes of the Plan and shall terminate such Employee's participation in the
Plan and the right to exercise any option.
3.3 Restrictions on Participation. Notwithstanding any provisions of the Plan to
the contrary, no Employee shall be granted an option to participate in the Plan
if:
3.3.1 immediately after the grant, such Employee would be a Five Percent Owner;
or
3.3.2 such option would permit such Employee's rights to purchase stock under
all employee stock purchase plans of each Participating Corporation which meet
the requirements of section 423(b) of the Code to accrue at a rate which exceeds
$25,000 in fair market value (as determined pursuant to section 423(b)(8) of the
Code) for each calendar year in which such option is outstanding.
3.4 Commencement of Participation. An employee who meets the eligibility
requirements of section 3.1 of the Plan and whose participation is not
restricted under section 3.3 of the Plan shall become a Participant by
completing an Election Form and filing it with the Committee on or before the
15th day of the month immediately preceding the Offering Commencement Date for
the first Offering to which such Election Form applies. Payroll Deductions for a
Participant shall commence on the applicable Offering Commencement Date when his
or her authorization for Payroll Deductions becomes effective, and shall end on
the Plan Termination Date, unless sooner terminated by the Participant pursuant
to section 8.1 of the Plan.
4. Offerings.
4.1 Shares Per Offering. The Plan shall be implemented by a series of Offerings
that shall terminate on the Plan Termination Date. Offerings shall be made with
respect to Compensation payable for each calendar quarter of the Corporation for
the period commencing with January 1, 1993 and ending with the Plan Termination
Date. Shares available for any Offering shall be the difference between the
maximum number of Shares that may be issued under the Plan, as determined
pursuant to section 10.1 of the Plan, for all of the Offerings, less the actual
number of Shares purchased by Participants pursuant to prior Offerings. If the
total number of Shares for which options are exercised on any Offering
Termination Date exceeds the maximum number of Shares available, the Committee
shall make a pro rata allocation of Shares available for delivery and
distribution in as nearly a uniform manner as practicable, and as it shall
determine to be fair and equitable, and the unapplied Account balances shall be
returned to Participants as soon as practicable following the Option Termination
Date.
5. Payroll Deductions.
5.1 Amount of Payroll Deductions. An Eligible Employee who wishes to participate
in the Plan shall file an Election Form with the Committee at least 15 days
before the Offering Commencement Date for the first Offering for which such
Election Form is effective on which he or she may elect to have Payroll
Deductions of any amount from $5 to $250 (in even dollar amounts) made from his
or her Compensation on each regular payday during the time he or she is a
Participant in the Plan.
5.2 Participants' Accounts. All Payroll Deductions with respect to a Participant
pursuant to section 5.1 of the Plan shall be credited to the Participant's
Account under the Plan.
5.3 Changes in Payroll Deductions. A Participant may discontinue his or her
participation in the Plan as provided in section 8.1 of the Plan, but no other
change can be made during an Offering, including, but not limited to, changes in
the amount of Payroll Deductions for such Offering. A Participant may change the
amount of Payroll Deductions for subsequent Offerings by giving written notice
of such change to the Committee on or before the 15th day of the month
immediately preceding the Offering Commencement Date for the Offering for which
such change is effective.
5.4 Leave of Absence. A Participant who goes on an Approved Leave of Absence
before the Offering Termination Date after having filed an Election Form with
respect to such Offering may
5.4.l. withdraw the balance credited to his or her Account pursuant to section
8.1 of the Plan;
5.4.2. discontinue contributions to the Plan but remain a Participant in the
Plan through the Offering Termination Date;
5.4.3. remain a Participant in the Plan during such Approved Leave of Absence
through the Offering Termination Date and continue the authorization for the
applicable Participating Corporation to make Payroll Deductions for each payroll
period out of continuing payments to such Participant, if any.
6. Granting of Option. On each Offering Termination Date, each Participant shall
be deemed to have been granted an option to purchase a minimum of 10 Shares and
a maximum number of Shares that shall be a number of whole Shares equal to the
quotient obtained by dividing the balance credited to the Participant's Account
as of the Offering Termination Date, by the Option Price.
7. Exercise of Option.
7.l Automatic Exercise. With respect to each Offering, a Participant's option
for the purchase of Shares granted pursuant to section 6 of the Plan shall be
deemed to have been exercised automatically on the Offering Termination Date
applicable to such Offering.
7.2 Fractional Shares and Minimum Number of Shares. Fractional Shares shall not
be issued under the Plan. Amounts credited to an Account remaining after the
application of such Account to the exercise of options for a minimum of 10 full
Shares shall be credited to the Participant's Account for the next succeeding
Offering, or, at the Participant's election, returned to the Participant as soon
as practicable following the Offering Termination Date, without interest.
7.3 Transferability of Option. No option granted to a Participant pursuant to
the Plan shall be transferable other than by will or by the laws of descent and
distribution, and no such option shall be exercisable during the Participants
lifetime other than by the Participant.
7.4 Delivery of Certificates for Shares. The Corporation shall deliver
certificates for Shares acquired on the exercise of options during an Offering
Period as soon as practicable following the Offering Termination Date.
8. Withdrawals.
8.1 Withdrawal of Account. A Participant may elect to withdraw the balance
credited to the Participant's Account by providing a Termination Form to the
Plan Administrator at any time before the Offering Termination Date applicable
to any Offering.
8.2 Amount of Withdrawal. A Participant may withdraw all but not less than all
the amounts credited to the Participant's Account by giving a Termination Form
to the Plan Administrator. All amounts credited to such Participant's Account
shall be paid as soon as practicable following the Plan Administrator's receipt
of the Participant's Termination Form, and no further Payroll Deductions will be
made with respect to the Participant.
8.3 Effect of Withdrawal on Subsequent Participation. A Participant who elects
to withdraw from an Offering pursuant to section 8.1 of the Plan shall be deemed
to have elected not to participate in each of the four succeeding Offerings
following the date on which the Participant gives a Termination Form to the Plan
Administrator.
8.4 Termination of Employment. Upon termination of a Participant's employment
for any reason other than death or continuation of a leave of absence beyond 90
days, all amounts credited to such Participant's Account shall be returned to
the Participant. In the event of a Participant's death after termination of
employment but before the Participant's Account has been returned, the Account
shall be returned to the Participant's Successor-in-Interest.
8.5 Termination of Employment Due to Death. Upon termination of a Participant's
employment because of death, the Participant's Successor-in-Interest shall have
the right to elect, by written notice to the Plan Administrator before the
earlier of the Offering Termination Date or the 60th day following the
Participant's date of death, either:
8.5.1 To withdraw the amount credited to the Participant's Account; or
8.5.2 To exercise the Participant's option for the purchase of Shares on the
Offering Termination Date next following the Participant's death for the
purchase of that number of Shares which the amount credited to such Account will
purchase at the applicable option price, and to have any excess amount paid to
the Participant's Successor-in-Interest as soon as practicable without interest.
If a timely written notice is not filed with the Plan Administrator pursuant to
this section 8.4 of the Plan, the Successor-in-Interest shall be paid the amount
credited to the Participant's Account in cash, without interest.
8.6 Leave of Absence. A Participant who is on an Approved Leave of Absence
shall, subject to the Participant's election pursuant to section 5.4 of the
Plan, continue to be a Participant in the Plan until the end of the first
Offering ending after commencement of such Approved Leave of Absence. A
Participant who has been on an Approved Leave of Absence for more than 90 days
shall not be eligible to participate in any Offering that begins on or after the
commencement of such Approved Leave of Absence so long as such leave of absence
continues.
8.7 Successor-in-Interest. The Successor-in-Interest of a Participant who dies
shall be the Participant's executor or administrator, or such other person or
entity to whom the Participant's rights under the Plan shall have passed by will
or the laws of descent and distribution.
9. Interest. No interest shall be paid or allowed with respect to amounts paid
into the Plan or credited to any Participant's Account.
10.1 Maximum Number of Shares. No more than 200,000 Shares may be issued under
the Plan. Such Shares may be unissued shares or treasury shares of the
Corporation. The number of Shares available for any Offering and all Offerings
shall be adjusted if the number of outstanding Shares of the Corporation is
increased or reduced by split-up, reclassification, stock dividend or the like.
Notwithstanding the foregoing, the maximum fair market value of Shares that can
be offered pursuant to this Plan in any calendar year shall not exceed
$2,000,000. All Shares issued pursuant to the Plan shall be validly issued,
fully paid and nonassessable.
10.2 Participant's Interest in Shares. A Participant shall have no interest in
Shares subject to an option until such option has been exercised.
10.3 Registration of Shares. Shares to be delivered to a Participant under the
Plan shall be registered in the name of the Participant.
10.4 Restrictions on Exercise. The Board may, in its discretion, require as
conditions to the exercise of any option such conditions as it may deem
necessary to assure that the exercise of options is in compliance with
applicable securities laws.
11. Expenses. Each Participating Corporation shall pay all fees and expenses
incurred (excluding individual Federal, state, local or other taxes) in
connection with the Plan. No charge or deduction for any such expenses will be
made to a Participant upon the termination of his or her participation under the
Plan or upon the distribution of certificates representing Shares purchased with
his or her contributions.
12. Taxes. Each Participating Corporation shall have the right to withhold from
each Participant's Compensation an amount equal to all Federal, state, city or
other taxes as the Participating Corporation shall reasonably determine are
required to be withheld by them pursuant to any statute or other governmental
regulation or ruling. In connection with such withholding, the Participating
Corporation may make any such arrangements as are consistent with the Plan as it
may deem appropriate, including the right to withhold from Compensation paid to
a Participant other than in connection with the Plan.
13. Plan and Contributions Not to Affect Employment. The Plan shall not confer
upon any Eligible Employee any right to continue in the employ of any
Participating Corporation.
14. Administration. The Plan shall be administered by the Board, which may
delegate responsibility for such administration to a committee of the Board (the
"Committee"). If the Board fails to appoint the Committee, any references in the
Plan to the Committee shall be treated as references to the Board. The Board, or
the Committee, shall have authority to interpret the Plan, to prescribe, amend
and rescind rules and regulations relating to it, and to make all other
determinations deemed necessary or advisable in administering the Plan,
including the appointment of the Plan Administrator, with or without the advice
of counsel. The determinations of the Board or the Committee on the matters
referred to in this paragraph shall be conclusive and binding upon all persons
in interest.
15. Amendment and Termination. The Board may terminate the Plan at any time and
may amend the Plan from time to time in any respect; provided, however, that
upon any termination of the Plan, all Shares or Payroll Deductions (to the
extent not yet applied to the purchase of Shares) under the Plan shall be
distributed to the Participants, provided further, that no amendment to the Plan
shall affect the right of a Participant to receive his or her proportionate
interest in the Shares or his or her Payroll Deductions (to the extent not yet
applied to the purchase of Shares) under the Plan, and provided further, that
the Corporation may seek shareholder approval of an amendment to the Plan if
such approval is determined to be required by or advisable under the regulations
of the Securities and Exchange Commission or the Internal Revenue Service, the
rules of any stock exchange or system on which the shares are listed or other
applicable law or regulation.
16. Effectiveness. The Plan shall be effective on January 1, 1993, subject to
approval by the Corporation's shareholders within one year of the adoption of
the Plan by the Board.
17. Government and Other Regulations. The purchase of Shares under the Plan
shall be subject to all applicable laws, rules and regulations, and to such
approvals by any governmental agencies as may be required.
18. Non-Alienation. No Participant shall be permitted to assign, alienate, sell,
transfer, pledge or otherwise encumber his or her interest under the Plan prior
to the distribution to him or her of share certificates. Any attempt at
assignment, alienation, sale, transfer, pledge or other encumbrance shall be
void and of no effect.
19. Notices. Any notice required or permitted hereunder shall be sufficiently
given only if delivered personally, or sent by registered or certified mail,
postage prepaid, addressed to:
C-COR Electronics, Inc.
60 Decibel Road
State College, PA 16801
Attention: Employee Stock Purchase Plan Administrator
and to the Participant at the address on file with the Corporation from time to
time, or to such other address as either party may hereafter designate in
writing by notice similarly given by one party to the other.
20. Successors. The Plan shall be binding upon and inure to the benefit of any
successor, successors or assigns of the Corporation.
21. Severability. If any part of this Plan shall be determined to be invalid or
void in any respect, such determination shall not affect, impair, invalidate or
nullify the remaining provisions of this Plan which shall continue in full force
and effect.
22. Acceptance. The election by any Eligible Employee to participate in this
Plan constitutes his or her acceptance of the terms of the Plan and his or her
agreement to be bound hereby.
23. Applicable Law. This Plan shall be construed in accordance with the laws of
the Commonwealth of Pennsylvania, to the extent not preempted by applicable
Federal law.
IN WITNESS WHEREOF, the foregoing Plan is adopted this 18th day of August, 1992.
[CORPORATE SEAL) C-COR ELECTRONICS, INC.
Attest: /s/ Jack B. Andrews By: /s/ Richard E. Perry
RESOLVED, that the C-COR Electronics, Inc. 1992 Employee Stock Purchase Plan be,
and it hereby is, amended to define:
"Offering Commencement Date" means the first day of each calendar month
beginning on or after January 1, 1993, until the Plan Termination Date,
commencing with Offering Commencement Dates of January 1, 1997, and later; and
"Offering Termination Date" means the last day of each calendar month following
an Offering Commencement Date occurring on or after January 1, 1997.
FY 97 - 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>
Computation of Earnings Per Share
(in thousands except per share data)
<CAPTION>
Year Ended Year Ended Year Ended
June 28, 1996 June 30, 1995 June 24, 1994
<S> <C> <C> <C>
Primary
Average Shares Outstanding 9,554 9,332 9,133
Net effect of dilutive stock
options-based on the
treasury stock method using
average market price 314 527 221
Total(1) 9,868 9,859 9,354
Net income $5,919 $8,315 $4,032
Net income per share(1) $0.60 $0.84 $0.43
Fully Diluted
Average Shares Outstanding 9,554 9,332 9,133
Net effect of dilutive stock
options-based on the
treasury stock method using
the greater of the average
market price or the year-end
market price 314 568 306
Total(1) 9,869 9,900 9,439
Net income $5,919 $8,315 $4,032
Net income per share(1) $0.60 $0.84 $0.43
<FN>
(1)Adjusted for two-for-one stock split effective December 5, 1994.
</FN>
</TABLE>
C-COR ELECTRONICS, INC. The Network Company
1996 ANNUAL REPORT - GLOBAL COMMUNICATIONS
BUILDING BUSINESS PARTNERSHIPS
- - -CHINA -KOREA -JAPAN
- - -HONG KONG -THAILAND -PHILIPPINES
- - -SINGAPORE -NEW ZEALAND -CANADA
- - -UNITED STATES -BRAZIL -ARGENTINA
- - -CHILE -NORWAY -GERMANY
- - -SWEDEN -POLAND -HUNGARY
- - -UNITED KINGDOM -TURKEY -ISRAEL
- - -SPAIN -BELGIUM -NETHERLANDS
...AROUND THE WORLD
C-COR is a leading supplier of radio frequency (RF) and fiber optic products and
services that support and maintain the transmission of voice, video, and data
over networks around the world. As the global communications market is
expanding, C-COR is pursuing opportunities to apply its experience, expertise,
and enthusiasm to achieve its corporate goals:
- - - Responsive service and high quality products for our customers
- - - A good work environment for our employees
- - - Enhanced profitability and value for our shareholders
We are proud to be a part of an industry that will bring significant, positive
change to our world in the next millennium.
"At C-COR, we are encouraged by the exciting opportunities in the international
marketplace."
David Eng, Vice President
Sales - North, Central and South America
Gerhard Nederlof, Vice President
Sales - Europe and Pacific Rim
<TABLE>
TABLE OF CONTENTS
<CAPTION>
<S> <C>
Corporate Profile 2
Selected Financial Data 2
Letter to Shareholders 4
Europe 7
Latin America 8
Asia 9
North America 10
Management's Discussion & Analysis 12
Consolidated Balance Sheets 15
Consolidated Statements of Income 16
Consolidated Statements
of Cash Flows 17
Consolidated Statements
of Shareholders' Equity 18
Notes to Consolidated
Financial Statements 19
Reports 26
Directors & Officers 27
Corporate Data 28
Mission Statement 29
</TABLE>
For over 40 years, C-COR has taken pride in its ability to design and
manufacture high-quality electronic equipment used in a variety of communication
networks worldwide. Principal customers include cable television operators,
telephone companies, major broadcast companies, and installers of broadband
communication networks for manufacturing plants, offices, campuses,
institutions, airports, and traffic control systems. In support of its products,
C-COR offers a full line of technical customer services, including network
analysis, design, installation and maintenance assistance and training. For
emergency assistance, customers can call the 24-hour hotline, staffed with
highly-trained technical support personnel. Sales efforts are conducted from
headquarters in State College, Pennsylvania; from regional offices throughout
the United States, in Canada, and in The Netherlands; and through numerous
distributors worldwide.
<TABLE>
<CAPTION>
SELECTED FINANCIAL DATA
(in thousands of dollars except per share data)
Fiscal Year Ended 1996 1995 1994 1993 1992
- - ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Income statement data:
Net Sales $148,898 $137,441 $75,046 $55,985 $52,171
Net Income 5,919 8,315 4,032 3,389 2,280
Net Income Per Share(1) $ 0.60 $ 0.84 $ 0.43 $ 0.37 $ 0.25
Balance Sheet data
(at period end):
Working Capital $ 35,452 $ 24,442 $25,061 $22,072 $18,824
Total Assets 78,407 87,661 49,493 37,316 33,915
Total Indebtedness 9,177 22,623 501 588 930
Shareholders' Equity 53,317 44,725 34,139 29,499 25,728
Return On Equity 12.1% 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>
Some of the information presented in this report constitutes forward looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Although the Company believes that its expectations are based on
reasonable assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not differ
materially from its expectations. Factors which could cause actual results to
differ from expectations include the timing of orders received from customers,
the gain or loss of significant customers, changes in the mix of products sold,
changes in the cost and availability of parts and supplies, regulatory changes
affecting the telecommunications industry, in general, and the Company's
operations, in particular, competition and changes in domestic and international
demand for the Company's products and other factors which may impact operations
and manufacturing. For additional information concerning these and other
important factors which may cause the Company's actual results to differ
materially from expectations and underlying assumptions, please refer to the
reports filed by the Company with the Securities and Exchange Commission.
<TABLE>
<CAPTION>
NET SALES IN THOUSANDS OF DOLLARS
<S> <C>
1996 148,898
1995 137,441
1994 75,046
1993 55,985
1992 52,171
1991 32,732
1990 60,279
1989 53,755
1988 36,480
</TABLE>
<TABLE>
<CAPTION>
NET INCOME (LOSS) IN THOUSANDS OF DOLLARS
<S> <C>
1996 5,919
1995 8,315
1994 4,032
1993 3,389
1992 2,280
1991 (3,452)
1990 5,520
1989 5,195
1988 2,739
</TABLE>
<TABLE>
<CAPTION>
NET INCOME (LOSS) PER SHARE(1) IN DOLLARS
<S> <C>
1996 .60
1995 .84
1994 .43
1993 .37
1992 .25
1991 (.39)
1990 .63
1989 .60
1988 .33
<FN>
(1) Adjusted to reflect a two-for-one stock split effective December 5, 1994.
</FN>
</TABLE>
<TABLE>
<CAPTION>
SALES PER EMPLOYEE IN DOLLARS
<S> <C>
1996 106,280
1995 118,178
1994 115,455
1993 110,224
1992 105,438
1991 69,791
1990 82,236
1989 84,843
1988 75,242
</TABLE>
"C-COR's REVENUE GROWTH IN RECENT YEARS HAS BEEN COUPLED WITH A STEADY INCREASE
IN INTERNATIONAL SALES." Richard E. Perry
Chairman of the Board
Scott C. Chandler, President
and Chief Executive Officer
DEAR C-COR
SHAREHOLDERS:
C-COR, along with many others in the industry, entered fiscal year 1996 with
optimism, looking for a continuation of the momentum from the previous year.
Impending passage of major telecommunications reform legislation offered the
hope of a more competitive, domestic marketplace. The global market was
expanding rapidly. Promising new technologies would enable the consumer to touch
the world through enhanced forms of communications. While many advances were
made in the industry during fiscal year 1996, a number of factors slowed the
growth that had originally been anticipated. Key legislation was not passed
until February 1996, well into C-COR's fiscal year. Then the impact of the Bill
had to be assessed. Buying decisions normally reached over the winter months
were delayed, as major consolidation in the domestic market continued. The
deployment of new technologies, in many cases, was postponed. The pace of
international network construction slowed for some, as aggressive construction
schedules had to be revised. Also on the international front, buying decisions
were placed on hold as privatization issues were being resolved.
As a result, C-COR's fiscal year 1996 revenues increased modestly to
$148,898,000, versus $137,441,000 posted the previous year. Profitability
suffered, however, due to underutilized manufacturing capacity, product sales
mix, and pricing pressures. Net income for fiscal year 1996 was $5,919,000, and
net income per share was $.60 compared to $.84 for the previous year.
As the fiscal year closed, C-COR and others in the global communications market
began to see signs of improvement. The telecommunications reform legislation was
being analyzed and activity increased. The consolidation of domestic players
continued. Cable companies were buying other cable companies in order to
geographically cluster properties. Telcos merged with telcos. Telcos and cable
companies also joined forces. All of this was in the interest of gaining market
advantage in the enhanced competitive environment. The goal, quite simply, was
"gain market share" and "produce new revenue streams." As a leading supplier to
this dynamic market, C-COR looks forward to playing an active role in helping
its customers meet these goals.
Technology advanced as fiscal year 1996 drew to a close. More powerful, more
reliable distribution electronics were introduced, and end-user products, like
cable modems, became available. C-COR participated by introducing a number of
new products. Extended bandwidth requirements were met with the introduction of
the new 800 Series FlexNet(R) 862 MHz amplifiers. A special feature of this
product group is enhanced powering, 90 volt, 15 amp current passing, to meet the
needs of advanced, interactive networks. For cabinet mount applications in the
global market, C-COR introduced the I-Flex(TM) family of amplifiers and fiber
optic nodes. An expanded AM fiber optic line includes FlexNode(TM), ideally
suited for today's fiber rich, two-way architectures. C-COR's cable network
management system features the AIP (Automatic Inventory and Provisioning) module
which enables the network operator to poll for detailed information about
equipment in the network. C-COR's new System 4000 digital fiber optic product
family, in its final stages of development, will offer a convenient, modular,
shelf-based design. To support the ever-growing demand for service, training and
support around the globe, C-COR has added repair centers in Japan, England and
Hong Kong; field engineering resources; and seminar opportunities. Network
engineering and design services have grown to meet the needs of both domestic
and international, cable television and telco customers.
Two major projects at C-COR this past year presented many challenges and
accompanying opportunities for improved operations. First, we successfully
completed the installation of the fully-integrated corporate information system,
which has allowed us to facilitate communications among all functional
departments and with all of our North American facilities. Increased efficiency,
flexibility, and capacity facilitate our ability to offer first-rate customer
service. Now that the initial phases of this project have been completed, we can
incorporate ongoing enhancements that will enable us to be responsive to the
marketplace as we grow.
The other major project undertaken at C-COR in fiscal
year 1996 was the RapidCycle(R) Order Fulfillment Program. The goals of this
initiative centered around implementing corporate-wide process improvements,
spanning the time a product is ordered until the finished goods are shipped to
the customer. Using teamwork as the basis for accomplishing these goals, the
program involved:
- - - Reduction of manufacturing cycle time, leading to improved customer
deliveries
- - - Reduction of inventory
- - - Improved quality, resulting in reduction of scrap and rework
- - - Improved productivity
We are pleased to report that we have met the corporate goals established in
these four areas. Key to this achievement was our people, who responded with
tremendous enthusiasm to the program.
Due to the successful implementation of the RapidCycle(R) Order Fulfillment
program, similar principles are now being applied to product development at
C-COR. We have developed new processes to improve cycle time to design, develop
and deliver a new product; reduce manufacturing costs; and improve design
quality.
Reflecting on C-COR's fiscal year 1996, we are pleased to report that we have
prepared ourselves well to compete in the changing global market. A new standard
for product quality has been achieved. Internal training initiatives have
resulted in achievement of one hundred percent employee certification on
soldering skills. Our steadfast commitment to product development holds promise
for future technological advances. Because of our successful debt reduction
plan, we have increased flexibility to take advantage of strategic opportunities
to enhance future growth. We seek further challenges and accomplishments as we
play a role in changing the way the world communicates. Thank you for your
continued support and the trust that you have placed in the employees of C-COR.
Sincerely,
Richard E. Perry
Chairman of the Board
Scott C. Chandler
President and
Chief Executive Officer
August 19, 1996
"By reducing inventories, we free up cash to grow the business."
Chris A. Miller
Vice President
Finance
The Order Fulfillment Program helped reduce inventory on the manufacturing
floor, compared to the previous floor layout.
"Our employees responded with enthusiasm to process changes - a new culture is
in place." Donald F. Miller
Vice President
Operations and Manufacturing
Process improvements include progressive lines, which help improve quality and
reduce scrap and rework, and the two-bin system, which makes parts readily
available to workers.
E U R O P E
C-COR's installed base in Europe includes RF amplifiers and/or AM fiber optic
transmitters and nodes in Belgium, Germany, Hungary, The Netherlands, Norway,
Poland, Sweden, Turkey, and the United Kingdom (U.K.). Digital fiber optic
equipment has been supplied to Israel, Spain, and the U.K.
Europe holds promise as a growth market, with two key situations developing: the
deregulation of the telecommunications market within two years and the opening
of new markets in eastern Europe. Countries on the leading edge of growth and
change in their telecommunications infrastructure include the Baltic States, the
Czech Republic, Hungary, Poland, Russia, and Turkey in eastern Europe, and
Belgium, Germany, Italy, The Netherlands, Spain, and the U.K. in western Europe.
C-COR offers a new global family of I-Flex(TM) amplifiers and AM fiber optics
specifically designed for the fiber-rich architectures used in the European
market, where cabinet-mount equipment is required for underground installation.
C-COR's digital fiber optics are well-suited for supertrunking applications in
the U.K. and digital broadcast opportunities in Germany.
I-Flex (TM)
Today's fiber-intensive global network architectures are evolving rapidly
as network planners seek maximum efficiency, while offering flexibilty for
advanced services. C-COR's I-FLEX (TM) family of RF and fiber optic transmission
equipment provides 862 MHz capability, cabinet and pedestal mount housings, an
active reverse option, field upgradability for future flexibility, and full
integration into C-COR's network management system.
L A T I N A M E R I C A
Overall economic growth in Latin America is driving the demand for more
video services. Expanded programming offerings, coupled with access by more
people to televisions, should expand the need for equipment like that provided
by C-COR. C-COR's 750 MHz FlexNet(R) products have been installed in Argentina,
Brazil, and Chile in recent years. Looking ahead, there appear to be
opportunities for both amplifier and AM fiber optic sales as the architecture of
choice in Latin America is hybrid fiber/coax (HFC). C-COR's digital equipment
has been installed in Chile in the past, and Argentina and Brazil offer the
potential for further marketing of C-COR's digital fiber solutions. A strong
foreign investment climate in Latin America should promote network upgrades and
new builds over the next five years.
System 4000 Digital Fiber Optics
C-COR provides high quality transmission of video signals through the System
4000 Series of products. This product line features a modular, shelf-based
design, built upon C-COR's traditional 194 Mb/s transmission rate. Its flexible
configuration accommodates a wide variety of applications, including
broadcast-quality video delivery and DS3 data transport. The System 4000
products interface with existing Series 3000 optical terminals for additions and
upgrades to currently operating networks. Applications include consolidation of
CATV headends, studio to satellite links, and interconnection of schools for
distance learning.
A S I A
The opportunities in the Asian and Pacific markets could be significant as
economic growth has been driving the demand for telephony and video services. In
recent years, C-COR has supplied 550, 750 and 862 MHz amplifiers and, in some
cases, AM fiber optics, to China, Hong Kong, Japan, Korea, New Zealand, the
Philippines, Singapore, and Thailand. C-COR's digital fiber optics have been
used in supertrunking applications in Korea and Singapore.
The growth trend should continue as the currently low telephony penetration is
producing demand for both voice and video networks. More programming choices
should also serve to spur the video market. Since a fiber-intensive HFC
architecture is most frequently employed, countries with the greatest potential
for C-COR in the near future include China, Hong Kong, India, Japan, Korea, New
Zealand, the Philippines, Singapore, and Thailand.
FlexNet (R)
C-COR's FlexNet (R) amplifier series meets the needs of today's advanced
architectures by providing flexible, reliable, cost-effective solutions. A
variety of bandwidth options are available, including 550 MHz in the 700 Series
and 750 MHz and 862 MHz in the 800 Series, which allow for delivery of both
analog and digital channels. This increased power-passing capability of the 800
Series accommodates centralized powering of the network and interactive
services. C-COR's network management option provides a computer-based tool for
monitoring and controlling hybrid fiber/coax (HFC) network equipment.
N O R T H A M E R I C A
For over four decades, C-COR has been a key supplier of high-quality
distribution electronics (RF amplifiers and fiber optics) and support services
to the North American continent. Innovation has characterized the product
development philosophy, resulting in many industry "firsts". A steadfast focus
on what we know best has allowed C-COR to gain the confidence of the
marketplace. The result is a broad base of installed equipment throughout the
United States and Canada. Over the years, C-COR has supplied advanced network
equipment for builds in Brooklyn-Queens, Chicago, Cincinnati, Dallas, Houston,
Minneapolis, Pittsburgh, San Antonio, San Francisco, St. Louis, and others. In
Canada, C-COR has been a major supplier to the aggressive network building that
has occurred in the past decade.
Looking ahead, the traditional cable television market in the U.S. appears very
strong. Network rebuilds and upgrades to 750 and even 862 MHz are meeting the
growing demand for advanced voice, video, and data services. More channels, more
programming variety, more educational content, more data capacity (Internet,
cable modems) and telephony are driving the process.
While we have yet to see the robust activity from many telephone companies that
we expected pending passage of the telecommunications reform bill, C-COR has
successfully marketed its products to several Regional Bells and a number of
independent telcos in recent years. As trials by this market group continue, the
benefits of the HFC architecture are becoming more widely acknowledged.
In Canada, the cable industry has been extremely active in the past two years,
stepping up the deployment of fiber to prepare for more video offerings,
educational programming, telephony, and high speed data services. C-COR
anticipates that opportunities to serve this market will continue in the coming
years. Through direct sales and two strong distributors, C-COR will work to
maintain its dominance as a key provider of equipment and services to the
Canadian market.
FlexNode (TM)
The FlexNode (TM) AM fiber optic node provides for ease of migration to
fiber service area subdivision and supports flexible reverse path networking
capability. Key features include 750 MHz capability, maximum performance with RF
and optics in one module, simplified internal fiber management, telephony
support with fully redundant forward and reverse fiber, plus 90 volt powering,
and full integration into C-COR's network management system.
MANAGEMENT'S DISCUSSION & ANALYSIS
(in thousands of dollars)
Results of Operations
C-COR's worldwide sales of telecommunications equipment and services increased
8% in fiscal year 1996 to $148,898 from $137,441 in fiscal year 1995, and
increased 98% compared to sales of $75,046 in fiscal year 1994. This sales
growth was attributable to the Company's efforts in pursuing new business
opportunities around the world and increased demand for the Company's products
and services, primarily to customers in the cable television (CATV) and
telephone (telco) industries.
Sales in the United States increased 9% in fiscal year 1996 to $91,050 from
$83,864 in fiscal year 1995, and increased 63% compared to sales of $56,013 in
fiscal year 1994. The increase in domestic sales in fiscal year 1996 over fiscal
year 1995 was primarily due to increased RF product sales to customers in the
telephone industry. Domestic sales in fiscal year 1995 increased 50% compared to
fiscal year 1994's U.S. domestic sales, as competition among cable television
(CATV) operators and telephone companies to improve their networks resulted in
increased demand for a variety of products.
International sales increased 8% for fiscal year 1996 to $57,848 from $53,577 in
fiscal year 1995, and increased 204% compared to sales of $19,033 for fiscal
year 1994. Growth in the international markets resulted primarily from sales of
the Company's products and services to Canada, Asia, Europe, and Latin America.
The international sales increase was a result of broadening the Company's sales
and distribution channels to pursue new market opportunities, including those
created by economic growth in developing countries. The Company anticipates
continued growth of international markets and expects sales and marketing
efforts to increase accordingly.
Several factors impacted the domestic telecommunications industry during fiscal
year 1996. Telecommunications reform legislation became a reality during fiscal
year 1996. The Telecommunications Act of 1996 was signed into law in February
1996, allowing the telcos and cable companies to compete for delivery of
services. Although passage of the legislation may enhance competition and reduce
regulatory uncertainty, no immediate surge of new orders materialized with its
passage. Another factor affecting the telecommunications industry has been
consolidation and merger activity by and among cable operators and telephone
companies. The Company believes uncertainty caused by the new legislation and
the consolidation activity has slowed order activity, as customers develop new
construction strategies and capital equipment budgets.
The Company's backlog of sales orders declined to approximately $27,095 at June
28, 1996, compared to $54,739 as of June 30, 1995. The Company's backlog at June
30, 1995, had risen due to increased demand for the Company's 750 MHz line of RF
and AM fiber optic products and new business with telco and international
customers. New order activity slowed during fiscal year 1996 compared to fiscal
year 1995 in both the domestic U.S. and international markets. The factors
described above slowed order activity in the domestic U.S. telecommunications
market. In the international markets, revisions to aggressive network
construction schedules and depletion of on-hand inventory by customers resulted
in decreased new orders during fiscal year 1996 compared to 1995.
Gross profit margin for fiscal year 1996 was 25.2%. This compares to 28.4% in
fiscal year 1995 and 32.1% in fiscal year 1994. The decrease in gross profit
margin relative to the prior two fiscal years was attributed primarily to fixed
costs relating to underutilized capacity and product sales mix. In addition,
excess capacity among suppliers continued to drive competitive pricing
pressures, particularly on RF coaxial cable amplifiers. Pricing pressures are
expected to continue in the global marketplace as competition increases. The
reduction in gross margin in fiscal year 1995, versus fiscal year 1994, was
primarily the result of decreased operating efficiencies and start-up and
training costs associated with opening the Company's manufacturing facility in
Reedsville, Pennsylvania.
Selling and administrative expenses for fiscal year 1996 were $18,621 or
13% of net sales, compared to $19,077 or 14% of net sales for fiscal year 1995,
and $13,319 or 18% of net sales for fiscal year 1994. The decrease in selling
and administrative expenses for fiscal year 1996 compared to fiscal year 1995
was primarily due to lower administrative personnel costs, and reflects the
Company's continued efforts to manage and reduce overhead expenses. For fiscal
year 1995, selling and administrative expenses included start-up costs
associated with establishment and staffing of a new sales office in Denver,
Colorado. Selling and administrative expenses increased for fiscal year 1995
compared to fiscal year 1994, due to higher payroll and human resources expense
resulting from personnel additions and expanded domestic and international sales
activities.
Research and product development expenses for fiscal year 1996 were $9,401 or 6%
of net sales, compared to $6,622 or 5% of net sales for fiscal year 1995, and
$4,337 or 6% of net sales for fiscal year 1994. The increase in research and
product development expenses for fiscal year 1996 over fiscal year 1995 was due
to increased investment for development of new fiber optic products. The Company
continued to increase development funding for both its digital and AM fiber
optic product lines in fiscal year 1996. In addition, development expenses
increased with the introduction of a new 800 Series FlexNet(R) 862 MHz extended
bandwidth amplifier. The increase in research and product development expense
for fiscal year 1995 over fiscal year 1994 related to new product development
efforts in introducing the Company's own line of AM fiber optic products and
increased digital fiber optic development.
Interest expense for fiscal year 1996 was $960 compared to $706 for fiscal year
1995 and $26 for fiscal year 1994. The rise in interest expense for fiscal year
1996 compared to fiscal year 1995 was primarily a result of higher outstanding
borrowings during the year on the Company's line-of-credit. The higher
borrowings were principally a result of equipment purchases and facility
expansions begun during fiscal year 1995 and completed during the first half of
fiscal year 1996. During fiscal year 1996, permanent financing of $6,452 was
obtained, at an interest rate of 2%, that was used to pay down borrowings on the
Company's line-of-credit. The increased interest expense for fiscal year 1995
compared to fiscal year 1994 was also a result of the aforementioned expansion
activity.
Other income for fiscal year 1996 was $172, compared to other expense for fiscal
year 1995 of $281, and other expense for fiscal year 1994 of $337. The increase
in other income for fiscal year 1996 compared to other expense in fiscal year
1995 and fiscal year 1994 was due primarily to a reduction in amortization
expense as a result of the full amortization at the end of fiscal year 1995 of a
covenant not-to-compete associated with the purchase of COMLUX in July 1990.
The Company's effective income tax rate for fiscal year 1996 was 31.9%. This
compares to 32.9% for fiscal year 1995 and 33.3% for fiscal year 1994. The
provision for income taxes related to both U.S. and non-U.S. operations. The
decrease in the effective tax rate for fiscal year 1996 compared to fiscal year
1995 and 1994 was due to tax benefits arising out of increased foreign sales
activity and changes in the applicable statutory tax rates used for both state
and federal taxes. A tax receivable balance of $1,397 was included in the
Company's balance sheet at June 28, 1996, as part of other current assets, for
refund of current year tax payments.
Financial Condition
C-COR's balance sheet at June 28, 1996, compared to June 30, 1995, reflected
several significant changes in assets and liabilities. Accounts receivable
decreased 35% to $21,465 at June 28, 1996, down from $33,142 at June 30, 1995.
This decrease was a result of lower fourth quarter revenues compared to fourth
quarter revenues the previous year. Accounts payable also decreased at the end
of fiscal year 1996 as a result of decreased inventory purchases. The Company
implemented several inventory management programs during fiscal year 1996. The
Company is working with several component suppliers to consign inventories
on-site and establish replenishment systems to reduce procurement lead times and
lower on-hand inventory balances, thereby improving working capital. Accrued
liabilities decreased 20% to $7,191 at June 28, 1996. The decrease was primarily
attributable to a reduction in accrued Profit Incentive Plan expense (PIP), as a
result of lower accrued PIP payments for fiscal year 1996 compared to fiscal
year 1995.
Liquidity and Sources of Capital
Cash, cash equivalents, and marketable securities at June 28, 1996, totaled
$1,838 compared to $1,938 at June 30, 1995. The Company's current ratio at June
28, 1996, increased to 3.2 from 1.6 at the end of fiscal year 1995.
Net cash provided by operating activities increased to $18,673 in fiscal year
1996, compared to cash used in operations of $10,400 in fiscal year 1995, and
$980 in fiscal year 1994. The increase in cash provided by operating activities
for fiscal year 1996 is primarily attributable to reductions in accounts
receivable and inventory compared to fiscal year 1995. In addition, the Company
implemented process improvements during fiscal year 1996 with the RapidCycle(R)
Order Fulfillment Program. These process improvements contributed to increased
operating efficiencies leading to improvements in working capital. Cash provided
by operations was used to purchase property, plant, and equipment and
contributed to reducing the outstanding balance on the Company's line-of-credit
during fiscal year 1996.
Capital expenditures were $8,028 for fiscal year 1996 compared to $15,371 for
fiscal year 1995. The decrease in capital expenditures in fiscal year 1996
compared to fiscal year 1995 was a result of lower capital spending on machinery
and equipment and improvements to facilities. Capital spending increased in
fiscal year 1995 as a result of equipment purchases and facility expansions.
The Company maintains a line-of-credit under which it may borrow the lesser of
$23,000 or a percentage of eligible accounts receivable. The Company had
outstanding borrowings of $1,147 at June 28, 1996. The balance on this
line-of-credit was $20,451 at June 30, 1995. The borrowings were principally a
result of equipment purchases and facility expansions begun during fiscal year
1995 and completed during the first half of fiscal year 1996. The line-of-credit
carried a weighted average interest rate of 6.90% at June 28, 1996, and 7.65% at
June 30, 1995, and requires compliance with certain covenants. Borrowings are
collateralized by accounts receivable and inventory. The line-of-credit
agreement is committed through October 31, 1996, and the Company anticipates
renewing this line-of-credit agreement upon expiration. Based upon the Company's
analysis of eligible accounts receivable, an additional $15,271 was available to
borrow at June 28, 1996.
The Company obtained $6,452 in low interest funding during fiscal year 1996.
Funding of $1,952 was received through the Pennsylvania Industrial Development
Authority (PIDA) for 40% of the cost of building expansion at its manufacturing
facility in State College, Pennsylvania. The interest rate on this borrowing is
2%, which is contingent on meeting certain job creation commitments. The
borrowing has a maturity of 15 years and is collateralized by certain property,
plant, and equipment. Additional funding of $4,500 was received during fiscal
year 1996 through the Pennsylvania "Sunny Day" fund for expansion and renovation
of the Company's State College, Pennsylvania, facility. This funding is also at
an interest rate of 2%, which is contingent on meeting certain job creation
commitments. This funding is evidenced by two notes. The first note is for $488,
maturing in approximately 15 years. The second note is for $4,012, with a
maturity of 7 years. This funding is collateralized by certain equipment.
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.
RapidCycle(R) is a registered trademark of The George Group.
<TABLE>
CONSOLIDATED BALANCE SHEETS
(in thousands of dollars except per share data)
<CAPTION>
June 28 June 30
Assets 1996 1995
- - ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents (Note A) $ 1,474 $ 1,545
Marketable securities (Notes A and B) 364 393
Accounts receivable, less allowance of $355 in 1996;
$657 in 1995 (Notes F and M) 21,465 33,142
Inventories (Notes C and F) 22,906 24,983
Deferred taxes (Note I) 3,304 2,873
Other current assets 1,964 1,210
- - ----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT ASSETS 51,477 64,146
PROPERTY, PLANT, AND EQUIPMENT, NET (Notes D and G) 25,617 22,129
INTANGIBLE ASSETS AND OTHER LONG-TERM ASSETS, NET OF ACCUMULATED
AMORTIZATION OF $1,214 IN 1996; $1,001 IN 1995 (Notes A and E) 1,313 1,386
- - ----------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $78,407 $87,661
- - ----------------------------------------------------------------------------------------------------------------
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $ 6,727 $ 9,286
Accrued liabilities (Note K) 7,191 8,959
Income taxes 131 872
Line-of-credit (Note F) 1,147 20,451
Current portion of long-term debt (Note G) 829 136
- - ----------------------------------------------------------------------------------------------------------------
TOTAL CURRENT LIABILITIES 16,025 39,704
LONG-TERM DEBT, less current portion (Note G) 7,201 2,036
DEFERRED TAXES (Note I) 1,367 828
OTHER LONG-TERM LIABILITIES 497 368
Commitments and Contingent Liabilities (Note N)
- - ----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 25,090 42,936
- - ----------------------------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY (Notes A and H)
Preferred Stock, no par; authorized 2,000,000 shares; issued, none
Common Stock, $.10 par; authorized shares 24,000,000;
issued shares of 9,602,528 in 1996 and 9,450,272 in 1995 960 945
Additional paid-in capital 19,602 16,915
Retained earnings 32,810 26,891
Translation adjustment (34) (7)
Net unrealized loss on marketable securities (21) (19)
- - ----------------------------------------------------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 53,317 44,725
- - ----------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $78,407 $87,661
- - ----------------------------------------------------------------------------------------------------------------
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share data)
<CAPTION>
Year Ended
June 28 June 30 June 24
1996 1995 1994
- - ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET SALES $148,898 $137,441 $75,046
COST AND EXPENSES
Cost of sales 111,394 98,359 50,981
Selling and administrative 18,621 19,077 13,319
Research and product development 9,401 6,622 4,337
Interest 960 706 26
Other (income) expense, net (Note L) (172) 281 337
- - ---------------------------------------------------------------------------------------------------------------------
140,204 125,045 69,000
- - ---------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 8,694 12,396 6,046
INCOME TAXES (Note I)
Current 2,667 5,054 2,223
Deferred 108 (973) (209)
- - ---------------------------------------------------------------------------------------------------------------------
2,775 4,081 2,014
- - ---------------------------------------------------------------------------------------------------------------------
NET INCOME $ 5,919 $ 8,315 $ 4,032
- - ---------------------------------------------------------------------------------------------------------------------
NET INCOME PER SHARE (Note A) $ 0.60 $ 0.84 $ 0.43
Weighted Average Common Shares and Common Share Equivalents 9,868 9,859 9,354
- - ---------------------------------------------------------------------------------------------------------------------
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands of dollars)
<CAPTION>
Year Ended
June 28 June 30 June 24
1996 1995 1994
- - --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
NET INCOME $ 5,919 $ 8,315 $ 4,032
Adjustments to reconcile net income to net cash
and cash equivalents provided by (used in) operating activities:
Depreciation and amortization 4,726 3,921 2,347
Provision (benefit) for deferred retirement salary plan 129 49 (85)
Loss on sale of marketable securities 0 68 12
(Gain) loss on sale of property, plant, and equipment (3) 13 (36)
Changes in operating assets and liabilities:
Accounts receivable 11,677 (17,502) (7,281)
Inventories 2,077 (8,519) (7,018)
Other assets (894) (647) (210)
Accounts payable (2,559) 1,253 5,453
Accrued liabilities (1,768) 3,780 1,577
Income taxes payable (741) (158) 339
Deferred income taxes 110 (973) (110)
- - --------------------------------------------------------------------------------------------------------------------------
NET CASH AND CASH EQUIVALENTS PROVIDED BY (USED IN) OPERATING ACTIVITIES 18,673 (10,400) (980)
- - --------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Purchase of property, plant, and equipment (8,028) (15,371) (4,106)
Purchase of marketable securities 0 0 (2,588)
Proceeds from sale of marketable securities 0 3,184 1,725
Proceeds from maturity of marketable securities 25 115 178
Proceeds from sale of property, plant, and equipment 3 12 11
- - --------------------------------------------------------------------------------------------------------------------------
NET CASH AND CASH EQUIVALENTS USED IN INVESTING ACTIVITIES (8,000) (12,060) (4,780)
- - --------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Payment of debt and capital lease obligations (594) (56) (87)
Proceeds from long-term debt borrowing 6,452 0 0
Proceeds from line-of-credit 39,029 58,707 1,300
Payment of line-of-credit (58,333) (38,256) (1,300)
Tax benefit deriving from exercise and sale of stock option shares 1,454 898 156
Issue common stock to retirement plan 0 0 65
Issue common stock to employee stock purchase plan 107 67 41
Proceeds from exercise of stock options 1,141 1,284 388
- - --------------------------------------------------------------------------------------------------------------------------
NET CASH AND CASH EQUIVALENTS (USED IN) PROVIDED BY FINANCING ACTIVITIES (10,744) 22,644 563
- - --------------------------------------------------------------------------------------------------------------------------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (71) 184 (5,197)
Cash and cash equivalents at beginning of year 1,545 1,361 6,558
- - --------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 1,474 $ 1,545 $ 1,361
- - --------------------------------------------------------------------------------------------------------------------------
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
<TABLE>
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands of dollars)
<CAPTION>
Net Unrealized
Additional (Loss) Gain on
Common Paid-in Retained Translation Marketable
Stock Capital Earnings Adjustment Securities
- - ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
BALANCE, JUNE 25, 1993 $455 $14,505 $14,544 ($ 5) $ 0
Net income 4,032
Exercise of stock options 4 384
Tax benefit deriving from exercise
and sale of stock option shares 156
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 1,265
Tax benefit deriving from exercise
and sale of stock option shares 898
Issue shares to employee stock purchase plan 67
Two-for-one stock split 466 (466)
Foreign currency translation adjustment 2
Net unrealized gain on marketable securities 20
- - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1995 945 16,915 26,891 (7) (19)
Net income 5,919
Exercise of stock options 15 1,126
Tax benefit deriving from exercise
and sale of stock option shares 1,454
Issue shares to employee stock purchase plan 107
Foreign currency translation adjustment (27)
Net unrealized loss on marketable securities (2)
- - ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 28, 1996 $960 $19,602 $32,810 ($ 34) ($21)
- - ------------------------------------------------------------------------------------------------------------------------------------
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(in thousands of dollars except share and per share data)
June 28, 1996 and June 30, 1995
Description of Business:
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 companies, 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 28, 1996, June 30, 1995, and June 24, 1994. These years contained 52, 53,
and 52 weeks, respectively.
Use of Estimates: The preparation of the consolidated financial statements, in
conformity with generally accepted accounting principles, requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments: The carrying value of cash, accounts
receivable, accounts payable, and accrued liabilities approximate their fair
value due to the short-term nature of those instruments.
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. Cost includes interest
associated with capital additions. Capitalized interest was $23 in fiscal year
1996. Depreciation or amortization is calculated on the straight-line method for
financial statement purposes based upon the following estimated useful lives:
<TABLE>
<S> <C>
Building and improvements under capital lease 15 years
Building 15 to 25 years
Machinery and equipment under capital lease 5 years
Machinery and equipment 3 to 10 years
Leasehold improvements 10 to 15 years
</TABLE>
Intangible Assets: Intangible assets include goodwill arising from excess of the
purchase price paid over the fair value of the net assets acquired with the
purchases of COMLUX in July 1990 and DataCable B.V. in January 1992. The Company
periodically evaluates realizability of goodwill based upon expected future cash
flows and operating income for each subsidiary having a material goodwill
balance. Based upon its most recent analysis, the Company believes that no
material impairment of goodwill exists at June 28, 1996. These intangibles are
being amortized using the straight-line method over periods of 5 to 12 years.
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of"
(Statement 121), is effective for financial statements for fiscal years
beginning after December 15, 1995. It is anticipated that adoption of Statement
121 will not significantly impact the financial position of the Company.
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 presented
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 28, 1996, 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.
Net Income Per Share: Net income per share is determined by
dividing net income by the weighted average number of common shares, including
common share equivalents outstanding.
B. Marketable Securities
<TABLE>
<CAPTION>
Marketable securities as of June 28, 1996, and June 30, 1995, consisted of the
following:
Gross Gross
Unrealized Unrealized
Amortized Holding Holding Fair
Cost Gains Losses Value
- - -------------------------------------------------------------------------------
June 28, 1996
Available-for-sale:
<S> <C> <C> <C> <C>
Municipal bonds $397 $ -0- ($34) $363
Equity securities 2 -0- ( 1) 1
- - -------------------------------------------------------------------------------
$399 $ -0- ($35) $364
- - -------------------------------------------------------------------------------
June 30, 1995
Available-for-sale:
Municipal bonds $422 $ -0- ($30) $392
Equity securities 2 -0- ( 1) 1
- - -------------------------------------------------------------------------------
$424 $ -0- ($31) $393
- - -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Maturities of investment securities classified as available-for-sale at June 28,
1996, were as follows:
Amortized Fair
Cost Value
- - -------------------------------------------------------------------------------
<S> <C> <C>
Available-for-sale:
Due after one year
through five years $397 $363
Equity securities 2 1
- - -------------------------------------------------------------------------------
$399 $364
- - -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
C. Inventories
June 28 June 30
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Finished goods $ 4,049 $ 4,751
Work-in-process 4,349 3,826
Raw materials 14,508 16,406
- - -------------------------------------------------------------------------------
$22,906 $24,983
- - -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
D. Property, Plant, and Equipment
June 28 June 30
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Land $ 468 $ 417
Building and improvements
under capital lease 1,727 1,727
Building 9,270 7,410
Machinery and equipment
under capital lease 124 137
Machinery and equipment 31,640 25,580
Leasehold improvements 735 665
- - -------------------------------------------------------------------------------
43,964 35,936
Less accumulated depreciation
and amortization 18,347 13,807
- - -------------------------------------------------------------------------------
$25,617 $22,129
- - -------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
E. Intangible Assets
June 28 June 30
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Cost of intangibles:
Goodwill - COMLUX $ 1,752 $ 1,752
Goodwill - DataCable B.V. 224 224
- - -------------------------------------------------------------------------------
1,976 1,976
- - -------------------------------------------------------------------------------
Less accumulated amortization:
Goodwill - COMLUX 1,012 844
Goodwill - DataCable B.V. 202 157
- - -------------------------------------------------------------------------------
1,214 1,001
- - -------------------------------------------------------------------------------
Net Book Value $ 762 $ 975
- - -------------------------------------------------------------------------------
F. Line-of-credit
At June 28, 1996, the Company had short-term borrowings of $1,147 under a
revolving line-of-credit. 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 1.20%. The weighted average interest rate equaled 6.90% at
June 28, 1996 and 7.65% at June 30, 1995, and requires compliance with certain
covenants. Interest is payable in 30 and 90 days as billed. The line-of-credit
agreement is committed through October 31, 1996. Borrowings are collateralized
by accounts receivable and inventory. Based upon the Company's analysis of
eligible accounts receivable, an additional $15,271 was available to borrow at
June 28, 1996. The line-of-credit balance at June 30, 1995, was $20,451,
principally as a result of equipment purchases and facility expansions.
</TABLE>
<TABLE>
<CAPTION>
G. Long-term Debt
June 28 June 30
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Notes payable $6,369 $ 402
Capital lease obligations 1,661 1,770
- - -------------------------------------------------------------------------------
8,030 2,172
Less current portion 829 136
- - -------------------------------------------------------------------------------
$7,201 $2,036
- - -------------------------------------------------------------------------------
</TABLE>
Notes Payable: The Company obtained funding through the Pennsylvania Industrial
Development Authority (PIDA) of $539 for construction of the Tipton,
Pennsylvania, manufacturing facility. The PIDA borrowing has an interest rate of
3%, which is contingent upon meeting certain job creation commitments. Monthly
payments of principal and interest of $4 are required through the year 2006. The
borrowing is collateralized by certain property, plant, and equipment. The
principal balance at June 28, 1996, was $369.
The Company has obtained funding through the Pennsylvania Industrial Development
Authority (PIDA) of $1,952 for 40% of the cost of building expansion at its
manufacturing facility in State College, Pennsylvania. The PIDA borrowing has an
interest rate of 2%, which is contingent upon meeting certain job creation
commitments. Monthly payments of principal and interest of $13 are required
through the year 2010. The borrowing is collateralized by certain property,
plant, and equipment. The principal balance at June 28, 1996, was $1,877.
Additional funding of $4,500 for the expansion and renovation of the State
College facility has been obtained from the Pennsylvania "Sunny Day Fund." This
funding has an interest rate of 2%, which is also contingent upon meeting
certain job creation commitments. The funding is evidenced by two notes. The
first note is for $488 maturing in approximately 15 years, and the second is for
$4,012 maturing in 7 years. Monthly payments of principal and interest of $3 and
$51, respectively, are required on these notes. The borrowing is collateralized
by certain equipment. The principal balances at June 28, 1996, were $469 and
$3,654, respectively.
Capital Lease Obligations: The Company has a Lease/Option to Purchase Agreement
with the Mifflin County Industrial Development Corporation (MCIDC) for a
building and improvements located in Mifflin County, Pennsylvania. The Company
is the guarantor of several borrowing commitments by the MCIDC for financing the
$1,727 cost of the project. The lease calls for a monthly payment of $14, which
is equal to the monthly principal and interest of the various borrowing
commitments by 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 borrowing commitments plus closing costs. The
borrowing 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 in fiscal year 1995.
Long-term debt at June 28, 1996, has scheduled maturities as follows:
<TABLE>
<CAPTION>
Fiscal year ending
- - -------------------------------------------------------------------------------
<S> <C>
1997 $ 829
1998 833
1999 852
2000 872
2001 884
Thereafter 3,760
- - -------------------------------------------------------------------------------
$8,030
- - -------------------------------------------------------------------------------
</TABLE>
Total interest paid on the line-of-credit (described in Note F) and long-term
debt was $958, $608, and $25 during fiscal years 1996, 1995, and 1994,
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>
1997 $ 665
1998 518
1999 40
2000 2
- - -------------------------------------------------------------------------------
$ 1,225
- - -------------------------------------------------------------------------------
</TABLE>
Rent expense was $803, $980, and $710 for fiscal years ended 1996, 1995, and
1994, 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 percent 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.
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (Statement 123), is effective for financial statements for fiscal
years beginning after December 15, 1995. It is anticipated that adoption of
Statement 123 will not significantly impact the financial statements of the
Company.
<TABLE>
Option information for the three years ended June 28, 1996, is as
follows:
<CAPTION>
Option Price
Shares Per Share
- - -------------------------------------------------------------------------------
<S> <C> <C>
OPTIONS OUTSTANDING
AT JUNE 25, 1993 707,320
Granted 365,240 $ 6.00 to $11.625
Exercised ( 76,840) $ 1.375 to $ 7.375
Terminated ( 81,590) $ 3.0625 to $ 9.25
- - -------------------------------------------------------------------------------
OPTIONS OUTSTANDING
AT JUNE 24, 1994 914,130
Granted 198,894 $11.6875 to $34.50
Exercised (254,640) $ 1.375 to $11.6875
Terminated (105,924) $ 3.0625 to $26.375
- - -------------------------------------------------------------------------------
OPTIONS OUTSTANDING
AT JUNE 30, 1995 752,460
Granted 222,765 $15.00 to $33.75
Excercised (147,243) $ 2.75 to $25.00
Terminated ( 61,940) $ 3.0625 to $31.25
- - -------------------------------------------------------------------------------
OPTIONS OUTSTANDING
AT JUNE 28, 1996 766,042 $ 2.75 to $34.50
Total options exercisable at
June 28, 1996 were 344,841
- - -------------------------------------------------------------------------------
</TABLE>
<TABLE>
I. Income Taxes
Income tax expense consists of the following components:
<CAPTION>
Year Ended
June 28 June 30 June 24
1996 1995 1994
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $2,268 $3,692 $1,916
State 117 787 316
Foreign 282 575 ( 9)
- - -------------------------------------------------------------------------------
2,667 5,054 2,223
- - -------------------------------------------------------------------------------
Deferred:
Federal 95 ( 807) ( 182)
State 13 ( 166) ( 27)
- - -------------------------------------------------------------------------------
108 ( 973) ( 209)
- - -------------------------------------------------------------------------------
$2,775 $4,081 $2,014
- - -------------------------------------------------------------------------------
</TABLE>
<TABLE>
The tax effects of temporary differences that give rise to significant portions
of the deferred tax assets and deferred tax liabilities at June 28, 1996, and
June 30, 1995, are presented below:
<CAPTION>
June 28 June 30
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Gross deferred tax assets:
Accounts receivable, due to
allowance for doubtful accounts $ 129 $ 208
Inventories, due to additional costs
inventoried for tax purposes pursuant
to the Tax Reform Act of 1986 1,015 724
Inventories, due to accrual for
obsolescence 445 484
Vacation expense accrual for
accounting purposes 454 415
Workers' compensation expense
accrual for accounting purposes 280 221
Warranty expense accrual for
accounting purposes 705 695
Employee benefit plan accrual
for accounting purposes 186 147
Other 276 126
- - -------------------------------------------------------------------------------
Total gross deferred tax assets 3,490 3,020
Less valuation allowance -0- -0-
- - -------------------------------------------------------------------------------
Net total deferred tax assets 3,490 3,020
- - -------------------------------------------------------------------------------
Gross deferred tax liabilities:
Plant and equipment principally due to
differences in depreciation (1,553) ( 975)
- - -------------------------------------------------------------------------------
Total gross deferred tax liabilities (1,553) ( 975)
- - -------------------------------------------------------------------------------
Net deferred tax assets $1,937 $2,045
- - -------------------------------------------------------------------------------
Reflected on attached consolidated
balance sheets as:
Current deferred asset $3,304 $2,873
Non-current deferred liability, net (1,367) ( 828)
- - -------------------------------------------------------------------------------
Net deferred tax asset $1,937 $2,045
- - -------------------------------------------------------------------------------
</TABLE>
Under Statement 109, a valuation allowance is recognized if, based on the weight
of available evidence, it is more likely than not that some portion or all of
the deferred tax asset will not be realized. Based on the weight of all
available evidence, the Company concludes that a valuation allowance is not
needed.
The Company has not recognized a deferred tax liability for the basis
differences and the undistributed earnings related to its foreign subsidiaries
since the investment is essentially permanent in duration. Undistributed
earnings were approximately $960 at June 28, 1996.
<TABLE>
A reconciliation of the effective income tax rate with the statutory federal
income tax rate is as follows:
<CAPTION>
Year Ended
June 28 June 30 June 24
1996 1995 1994
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Statutory rate 35.0% 35.0% 34.0%
State income taxes,
net of federal tax 1.0 3.3 4.8
Tax effect of foreign
income and losses 2.4 1.9 -0-
Tax effect of
foreign sales
corporation (4.1) (2.7) (3.2)
Other (2.4) (4.6) (2.3)
- - -------------------------------------------------------------------------------
31.9% 32.9% 33.3%
- - -------------------------------------------------------------------------------
</TABLE>
Cash paid for income taxes was $2,646 in 1996, $3,652 in 1995, and $1,468 in
1994.
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.
Also, during 1996, the Company implemented a Deferred Compensation Plan
providing officers and key executives with the opportunity to participate in an
unqualified deferred compensation plan. This plan does not qualify under Section
401 of the Internal Revenue Code. The total of net participant deferrals, which
is reflected in other long-term liabilities, was $28 at June 28, 1996.
The Company also has a deferred retirement salary plan which is limited to
certain officers.
Total expenses for these plans were $1,341, $808, and $321 for fiscal years
ended 1996, 1995, and 1994, respectively.
<TABLE>
K. Accrued Liabilities
<CAPTION>
Year Ended
June 28 June 30
1996 1995
- - -------------------------------------------------------------------------------
<S> <C> <C>
Accrued incentive plan expense $ 318 $2,416
Accrued vacation expense 1,532 1,295
Accrued salary expense 752 819
Accrued salary and sales
tax expense 942 855
Accrued warranty expense 1,772 1,754
Accrued workers' compensation
self-insurance expense 704 553
Accrued other 1,171 1,267
- - -------------------------------------------------------------------------------
$7,191 $8,959
- - -------------------------------------------------------------------------------
</TABLE>
<TABLE>
L. Other (Income) and Expense
<CAPTION>
Year Ended
June 28 June 30 June 24
1996 1995 1994
- - -------------------------------------------------------------------------------
<S> <C> <C> <C>
Investment income ($114) ($126) ($352)
Loss on sale/writedown
of investments -0- 68 99
(Gain) loss on foreign
currency transactions ( 166) ( 158) 63
Amortization
of intangibles 213 614 614
Other, net ( 105) ( 117) ( 87)
- - -------------------------------------------------------------------------------
($172) $281 $337
- - -------------------------------------------------------------------------------
</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
condition and generally does not require collateral. June 28, 1996, and June 30,
1995, accounts receivable from customers in the CATV industry were approximately
$19,501 and $29,279, 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 $27,002 (18%) and $26,184 (18%), respectively in
1996. Sales to two customers were $29,326 (21%) and $26,040 (19%), respectively
in 1995. Sales to two customers were $18,711 (25%) and $12,709 (17%),
respectively in 1994.
N. Commitments and Contingencies
The Company had an established letter of credit of $900 at June 28, 1996, for
its self-insured workers' compensation program.
O. Quarterly Results of
Operations (Unaudited)
<TABLE>
The following is a summary of quarterly results of operations for the 1996 and
1995 fiscal years:
<CAPTION>
First Second Third Fourth
1996 Quarter Quarter Quarter Quarter
- - -------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $39,640 $35,657 $36,904 $36,697
Gross profit 10,831 8,337 8,964 9,372
Net income 2,631 696 1,362 1,230
Net income
per share $ 0.27 $ 0.07 $ 0.14 $ 0.12
- - -------------------------------------------------------------------------------
First Second Third Fourth
1995 Quarter Quarter Quarter Quarter
- - -------------------------------------------------------------------------------
Net sales $27,554 $29,730 $29,985 $50,172
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
- - -------------------------------------------------------------------------------
<FN>
(1) Adjusted to reflect a two-for-one stock split effective December 5, 1994.
</FN>
</TABLE>
<TABLE>
<CAPTION>
P. Segment Information
The Company and subsidiaries operate in one industry segment, but in various
geographic areas as indicated by the following:
U.S. Canada Europe Eliminations Consolidated
- - ----------------------------------------------------------------------------------------------------------------
Year Ended June 28, 1996
- - ----------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers:
<S> <C> <C> <C> <C> <C>
Domestic $ 91,050 $ 8,589 $ 6,086 $ 0 $105,725
Export 43,173 0 0 0 43,173
Transfers between geographic areas 11,078 0 0 ( 11,078) 0
- - ----------------------------------------------------------------------------------------------------------------
Total revenue $145,301 $ 8,589 $ 6,086 ($11,078) $148,898
- - ----------------------------------------------------------------------------------------------------------------
Pretax income $ 4,578 $ 3,595 $ 521 $ 0 $ 8,694
- - ----------------------------------------------------------------------------------------------------------------
Identifiable assets at June 28, 1996 $ 73,298 $ 3,464 $ 1,645 $ 0 $ 78,407
- - ----------------------------------------------------------------------------------------------------------------
Year ended June 30, 1995
- - ----------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers:
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
- - ----------------------------------------------------------------------------------------------------------------
Sales to unaffiliated customers:
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 (loss) $ 5,057 $ 1,249 ($ 260) $ 0 $ 6,046
- - ----------------------------------------------------------------------------------------------------------------
Identifiable assets at June 24, 1994 $ 46,009 $ 1,659 $ 1,825 $ 0 $ 49,493
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
Most transfers between geograhic 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.
Financial Report
To The Shareholders:
The management of C-COR Electronics, Inc. is responsible for the preparation of
all financial statements in this Annual Report. These statements were prepared
in accordance with generally accepted accounting principles from the books and
records maintained by the Company. Adequate accounting systems and financial
controls are maintained to assure that these records reflect the transactions of
the Company and that its assets are protected from loss or unauthorized use. In
addition, the Audit Committee of the Board of Directors meets periodically with
management and KPMG Peat Marwick LLP to discuss financial reporting matters, the
internal controls, and the scope and results of the audit.
/s/ Chris A. Miller
Vice President-Finance, Secretary and Treasurer
August 9, 1996
Independent Auditors' Report
To the Board of Directors
C-COR Electronics, Inc.
and Subsidiaries:
We have audited the accompanying consolidated balance sheets of C-COR
Electronics, Inc. and Subsidiaries as of June 28, 1996 and 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 28, 1996. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of C-COR Electronics,
Inc. and Subsidiaries as of June 28, 1996 and June 30, 1995, and the results of
their operations and their cash flows for each of the years in the three-year
period ended June 28, 1996, in conformity with generally accepted accounting
principles.
/s/ KPMG Peat Marwick LLP
State College, Pennsylvania
August 9, 1996
<TABLE>
DIRECTORS & OFFICERS
<CAPTION>
Year first
elected
Directors a director
- - -------------------------------------------------------------------------------
<S> <C>
Richard E. Perry 1985
Chairman of the Board (2,4)
Donald M. Cook, Jr. 1988
Retired President and Chief Operating Officer,
SEMCOR, Inc. (2,3)
I.N. Rendall Harper, Jr. 1982
President, Chief Executive Officer and Treasurer,
American Micrographics Company, Inc. (1,4)
Anne P. Jones, Esq. 1989
Telecommunications Consultant (1,4)
John J. Omlor 1989
President and Chief Executive Officer,
John J. Omlor Associates, Ltd.;
Executive Vice President and Chief Financial Officer,
Paper Manufacturers Company (2,4)
Dr. Frank Rusinko, Jr. 1990
Senior Scientist and Director,
Carbon Research Center,
College of Earth and Mineral Sciences
of The Pennsylvania State University (1,3)
Dr. James J. Tietjen 1987
Head, Department of Management
and Engineering Management,
The Stevens Institute of Technology (3,4)
Dr, Philip L. Walker, Jr. 1960
Evan Pugh Professor Emeritus
of Material Science,
The Pennsylvania State University (1,4)
<FN>
(1) Member of the Audit Committee
(2) Member of the Executive Committee
(3) Member of the Compensation Committee
(4) Member of the Strategic Planning Committee
</FN>
</TABLE>
<TABLE>
Directors Emeriti
- - -------------------------------------------------------------------------------
<S> <C>
Joseph C. Bates 1982
Dr. John L. McLucas 1982
Dr. Marsh W. White 1963
</TABLE>
Officers
- - -------------------------------------------------------------------------------
Scott C. Chandler
President and Chief Executive Officer
Edwin S. Childs
Vice President
Human Resources
David J. Eng
Vice President
Sales - North, Central and South America
Lawrence R. Fisher, Jr.
Vice President
Engineering
Chris A. Miller
Vice President
Finance, Secretary and Treasurer
Donald F. Miller
Vice President
Operations and Manufacturing
Gerhard B. Nederlof
Vice President
Sales - Europe and Pacific Rim
Joseph E. Zavacky
Controller and Assistant Secretary
CORPORATE DATA
Annual Meeting of Shareholders
October 15, 1996 at 9:00 a.m.
Headquarters
C-COR Electronics, Inc.
60 Decibel Road
State College, Pennsylvania
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>
Quarter Ending Price
<S> <C>
September 30, 1994 High 19 5/8
Low 11 1/2
December 31, 1994 High 36
Low 20 1/2
March 31, 1995 High 31 3/8
Low 18 3/4
June 30, 1995 High 28
Low 17 1/2
September 30, 1995 High 36
Low 22 3/4
December 31, 1995 High 29 7/8
Low 21
March 31, 1996 High 24
Low 15
June 30, 1996 High 24
Low 15
</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
28, 1996, there were 658 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.
MISSION STATEMENT
C-COR is dedicated to responsive customer service, innovative design, and the
manufacture of quality products. We will be a leader in communication
technology. The Company will research and develop market opportunities within
our expertise to enhance profitable growth.
WHAT WE STAND FOR
At C-COR, our business practices are guided by a respect for ourselves and a
profound sense of responsibility to our employees, shareholders and customers.
EMPLOYEES
Nothing is more important to C-COR than the people who work here. To our people
we pledge a good work environment, fair compensation, recognition of
accomplishments, honesty in communications and understanding. In return, we
expect a positive attitude, an honest effort in the workplace and a dedication
to principles that we espouse.
CUSTOMERS
We realize the value of our customers and we have committed ourselves to
delivering a quality product at a fair price, to respond promptly to our
customers' requests, to provide superior service and support, and most of all,
to respect them and their needs.
SHAREHOLDERS
We recognize our responsibility to protect and nurture the investments of our
shareholders. We will manage C-COR in a manner that will produce a fair return
on investment while manifesting itself in capital appreciation. Our management
will be cost-effective and efficient. We will be open and honest in
communicating with shareholders and we will conduct our business in an ethical
manner.
SUPPLIERS
The criteria for choosing suppliers will be on the basis of quality, price and
performance; we expect of them what our customers expect of us.
COMMUNITY
C-COR is dedicated to being a good corporate citizen wherever we do business.
And, we believe in encouraging our employees to become involved in civic
affairs. We expect our employees to conduct business in an ethical manner, be
dedicated in their efforts on behalf of the Company and to work to improve the
quality of life in the workplace and the communities in which they live.
C-COR ELECTRONICS, INC.
The Network Company
WORLD HEADQUARTERS
60 Decibel Road
State College, PA 16801
800-233-2267
814-238-2461
Fax 814-238-4065
CALIFORNIA OPERATION
47323 Warm Springs Boulevard
Fremont, CA 94539-7462
510-440-0330
Fax 510-440-0218
EUROPEAN OFFICE
P.O. Box 10.265
1301 AG Almere
The Netherlands
+31-36-536 4199
Fax +31-36-536 4255
DENVER OFFICE
12742 East Caley Avenue, Suite A
Englewood, CO 80111
303-799-1100
Fax 303-643-1743
CANADIAN OFFICE
377 MacKenzie Avenue, Unit 5
Ajax, Ontario L1S 2G2
905-427-0366
Fax 905-428-0927
REGIONAL SALES OFFICES
California, Georgia, Indiana, Minnesota, Missouri, Ohio, Oregon, Pennsylvania,
Rhode Island and Texas
Printed in the U.S.A.
All rights reserved.
(C) 1996, C-COR Electronics, Inc.
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.
The audits referred to in our report dated August 9, 1996, included the related
financial statement schedule as of June 28, 1996, and for each of the years in
the three-year period ended June 28, 1996, included in the annual report on form
10-K. 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.
We consent to the incorporation by reference in the registration statements
(Nos. 2-95959, 33-27440, 33-35208, 33-66590 and 333-02505) on form S-8 of C-COR
Electronics, Inc. and Subsidiaries of our reports, related to the consolidated
balance sheets of C-COR Electronics, Inc. and Subsidiaries as of June 28, 1996
and June 30, 1995, and the related consolidated statements of income,
shareholders' equity and cash flows and related financial statement schedule for
each of the years in the three-year period ended June 28, 1996, which reports
are incorporated by reference in or appears in the June 28, 1996 annual report
on form 10-K of C-COR Electronics, Inc. and Subsidiaries.
/s/ KPMG Peat Marwick LLP
State College, Pennsylvania
September 25, 1996
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-28-1996
<PERIOD-END> JUN-28-1996
<CASH> 1,474
<SECURITIES> 364
<RECEIVABLES> 21,820
<ALLOWANCES> 355
<INVENTORY> 22,906
<CURRENT-ASSETS> 51,477
<PP&E> 43,965
<DEPRECIATION> 18,348
<TOTAL-ASSETS> 78,407
<CURRENT-LIABILITIES> 16,025
<BONDS> 0
0
0
<COMMON> 960
<OTHER-SE> 52,357
<TOTAL-LIABILITY-AND-EQUITY> 78,407
<SALES> 148,898
<TOTAL-REVENUES> 148,898
<CGS> 111,394
<TOTAL-COSTS> 28,022
<OTHER-EXPENSES> (172)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 960
<INCOME-PRETAX> 8,694
<INCOME-TAX> 2,775
<INCOME-CONTINUING> 5,919
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,919
<EPS-PRIMARY> 0.60
<EPS-DILUTED> 0.60
</TABLE>
