-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SRLv2vlUQ1QdIwUX/9yrAnAKC6cH56dkikhnPymePaboV9B5pO4sEnLLX90VOXSS ICp9oJNwEvJaSUDqAbcWyQ== 0000350621-96-000007.txt : 19961030 0000350621-96-000007.hdr.sgml : 19961030 ACCESSION NUMBER: 0000350621-96-000007 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 24 CONFORMED PERIOD OF REPORT: 19960628 FILED AS OF DATE: 19960926 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: C COR ELECTRONICS INC CENTRAL INDEX KEY: 0000350621 STANDARD INDUSTRIAL CLASSIFICATION: 3663 IRS NUMBER: 240811591 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-10726 FILM NUMBER: 96635012 BUSINESS ADDRESS: STREET 1: 60 DECIBEL RD CITY: STATE COLLEGE STATE: PA ZIP: 16801 BUSINESS PHONE: 8142382461 MAIL ADDRESS: STREET 1: 60 DECIBEL ROAD CITY: STATE COLLEGE STATE: PA ZIP: 16801 10-K 1 FORM 10-K ANNUAL REPORT 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
The Corporation operates the following principal facilities: 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
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. Name Age Position / Experience 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.
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)
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 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 - - ----------------------------------------------------------------------------------------------------------------------------- (1) Uncollectible accounts written off, net of recoveries, and adjustments. (2) Obsolete inventory disposals. (3) Warranty claims honored during year.
EX-10.(X) 2 SPPL. RETIREMENT PLAN PARTICIPATION AGREEMENT 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 EX-10.(Y) 3 CHANGE OF CONTROL AGREEMENT 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 EX-10.(Z) 4 FORM OF INDEMNIFICATION AGREEMENT 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 EX-10.(AA) 5 SPPL. RETIREMENT PLAN PARTICIPATION AGREEMENT 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 EX-10.(BB) 6 CHANGE OF CONTROL AGREEMENT 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 EX-10.(CC) 7 FORM OF INDEMNIFICATION AGREEMENT 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 EX-10.(DD) 8 AMENDED AND RESTATED EMPLOYMENT AGREEMENT 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) EX-10.(EE) 9 EMPLOYMENT AGREEMENT 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) EX-10.(FF) 10 SPPL. EXECUTIVE RETIREMENT PLAN 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 EX-10.(GG) 11 NOTE AND SECURITY AGREEMENT 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 EX-10.(HH) 12 SPPL. TO NOTE AND SECURITY AGREEMENT 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 EX-10.(II) 13 REVOLVING LINE OF CREDIT AGREEMENT 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 EX-10.(JJ) 14 SPPL. TO REVOLVING LINE OF CREDIT AGREEMENT 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 EX-10.(KK)(I) 15 1988 STOCK OPTION PLAN 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. EX-10.(KK)(II) 16 AMENDMENT TO 1988 STOCK OPTION PLAN 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. EX-10.(LL)(I) 17 1992 STOCK PURCHASE PLAN 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 EX-10.(LL)(II) 18 AMENDMENT TO 1992 STOCK PURCHASE PLAN 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. EX-10.(MM) 19 FY 1997 PROFIT INCENTIVE PLAN 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. EX-11 20 COMPUTATION OF EARNINGS PER SHARE Computation of Earnings Per Share (in thousands except per share data)
Year Ended Year Ended Year Ended June 28, 1996 June 30, 1995 June 24, 1994 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 (1)Adjusted for two-for-one stock split effective December 5, 1994.
EX-13 21 1996 ANNUAL REPORT TO SHAREHOLDERS 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 OF CONTENTS
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
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.
SELECTED FINANCIAL DATA (in thousands of dollars except per share data) Fiscal Year Ended 1996 1995 1994 1993 1992 - - --------------------------------------------------------------------------------------------------------------- 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% - - --------------------------------------------------------------------------------------------------------------- (1) Adjusted to reflect a two-for-one stock split effective December 5, 1994.
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.
NET SALES IN THOUSANDS OF DOLLARS 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
NET INCOME (LOSS) IN THOUSANDS OF DOLLARS 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
NET INCOME (LOSS) PER SHARE(1) IN DOLLARS 1996 .60 1995 .84 1994 .43 1993 .37 1992 .25 1991 (.39) 1990 .63 1989 .60 1988 .33 (1) Adjusted to reflect a two-for-one stock split effective December 5, 1994.
SALES PER EMPLOYEE IN DOLLARS 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
"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. CONSOLIDATED BALANCE SHEETS (in thousands of dollars except per share data)
June 28 June 30 Assets 1996 1995 - - ---------------------------------------------------------------------------------------------------------------- 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 - - ---------------------------------------------------------------------------------------------------------------- See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF INCOME (in thousands except per share data)
Year Ended June 28 June 30 June 24 1996 1995 1994 - - --------------------------------------------------------------------------------------------------------------------- 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 - - --------------------------------------------------------------------------------------------------------------------- See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands of dollars)
Year Ended June 28 June 30 June 24 1996 1995 1994 - - -------------------------------------------------------------------------------------------------------------------------- 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 - - -------------------------------------------------------------------------------------------------------------------------- See notes to consolidated financial statements.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (in thousands of dollars)
Net Unrealized Additional (Loss) Gain on Common Paid-in Retained Translation Marketable Stock Capital Earnings Adjustment Securities - - ------------------------------------------------------------------------------------------------------------------------------------ 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) - - ------------------------------------------------------------------------------------------------------------------------------------ See notes to consolidated financial statements.
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: 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
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
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: 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 - - -------------------------------------------------------------------------------
Maturities of investment securities classified as available-for-sale at June 28, 1996, were as follows: Amortized Fair Cost Value - - ------------------------------------------------------------------------------- Available-for-sale: Due after one year through five years $397 $363 Equity securities 2 1 - - ------------------------------------------------------------------------------- $399 $364 - - -------------------------------------------------------------------------------
C. Inventories June 28 June 30 1996 1995 - - ------------------------------------------------------------------------------- Finished goods $ 4,049 $ 4,751 Work-in-process 4,349 3,826 Raw materials 14,508 16,406 - - ------------------------------------------------------------------------------- $22,906 $24,983 - - -------------------------------------------------------------------------------
D. Property, Plant, and Equipment June 28 June 30 1996 1995 - - ------------------------------------------------------------------------------- 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 - - -------------------------------------------------------------------------------
E. Intangible Assets June 28 June 30 1996 1995 - - ------------------------------------------------------------------------------- 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.
G. Long-term Debt June 28 June 30 1996 1995 - - ------------------------------------------------------------------------------- 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 - - -------------------------------------------------------------------------------
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:
Fiscal year ending - - ------------------------------------------------------------------------------- 1997 $ 829 1998 833 1999 852 2000 872 2001 884 Thereafter 3,760 - - ------------------------------------------------------------------------------- $8,030 - - -------------------------------------------------------------------------------
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:
Fiscal year ending - - ------------------------------------------------------------------------------- 1997 $ 665 1998 518 1999 40 2000 2 - - ------------------------------------------------------------------------------- $ 1,225 - - -------------------------------------------------------------------------------
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. Option information for the three years ended June 28, 1996, is as follows:
Option Price Shares Per Share - - ------------------------------------------------------------------------------- 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 - - -------------------------------------------------------------------------------
I. Income Taxes Income tax expense consists of the following components:
Year Ended June 28 June 30 June 24 1996 1995 1994 - - ------------------------------------------------------------------------------- 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 - - -------------------------------------------------------------------------------
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:
June 28 June 30 1996 1995 - - ------------------------------------------------------------------------------- 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 - - -------------------------------------------------------------------------------
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. A reconciliation of the effective income tax rate with the statutory federal income tax rate is as follows:
Year Ended June 28 June 30 June 24 1996 1995 1994 - - ------------------------------------------------------------------------------- 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% - - -------------------------------------------------------------------------------
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. K. Accrued Liabilities
Year Ended June 28 June 30 1996 1995 - - ------------------------------------------------------------------------------- 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 - - -------------------------------------------------------------------------------
L. Other (Income) and Expense
Year Ended June 28 June 30 June 24 1996 1995 1994 - - ------------------------------------------------------------------------------- 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 - - -------------------------------------------------------------------------------
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) The following is a summary of quarterly results of operations for the 1996 and 1995 fiscal years:
First Second Third Fourth 1996 Quarter Quarter Quarter Quarter - - ------------------------------------------------------------------------------- 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 - - ------------------------------------------------------------------------------- (1) Adjusted to reflect a two-for-one stock split effective December 5, 1994.
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: 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 - - ----------------------------------------------------------------------------------------------------------------
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 DIRECTORS & OFFICERS
Year first elected Directors a director - - ------------------------------------------------------------------------------- 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) (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
Directors Emeriti - - ------------------------------------------------------------------------------- Joseph C. Bates 1982 Dr. John L. McLucas 1982 Dr. Marsh W. White 1963
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: Quarter Ending Price 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
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. EX-21 22 SUBSIDIARIES OF THE REGISTRANT 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 EX-23 23 CONSENT OF AUDITORS 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 EX-27 24 ART. 5-FDS FOR YEAR END 10K
5 1,000 12-MOS JUN-28-1996 JUN-28-1996 1,474 364 21,820 355 22,906 51,477 43,965 18,348 78,407 16,025 0 0 0 960 52,357 78,407 148,898 148,898 111,394 28,022 (172) 0 960 8,694 2,775 5,919 0 0 0 5,919 0.60 0.60
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