-----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, RIznJyHDswKl9yUsw+8+8pm2CfWS2/I4M3ZAWUABS8jc5cwJqAJ1dwbWi0vD2c+G HF0ucFqLAvxOvSMWlB8seA== 0000350621-98-000002.txt : 19980210 0000350621-98-000002.hdr.sgml : 19980210 ACCESSION NUMBER: 0000350621-98-000002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19971226 FILED AS OF DATE: 19980209 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: C COR ELECTRONICS INC CENTRAL INDEX KEY: 0000350621 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 240811591 STATE OF INCORPORATION: PA FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10726 FILM NUMBER: 98525898 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-Q 1 10-Q QUARTER ENDING 12/26/97 United States SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-Q [ X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the thirteen-week period ended: December 26, 1997 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________________ to __________________________ Commission file 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 Identification No.) incorporation or organization) 60 Decibel Road, State College, PA 16801 (Address of principal executive offices) (Zip Code) (814) 238-2461 (Registrant's telephone number, including area code) 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 ----- ----- APPLICABLE ONLY TO CORPORATE ISSUERS Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, $.10 Par Value - 9,153,443 shares as of January 30, 1998. INDEX C-COR ELECTRONICS, INC. PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited). Condensed consolidated balance sheets -- June 27, 1997, and December 26, 1997. Condensed consolidated statements of operations -- thirteen-weeks ended December 26, 1997, and December 27, 1996; twenty-six-weeks ended December 26, 1997, and December 27, 1996. Condensed consolidated statements of cash flows -- twenty-six weeks ended December 26, 1997, and December 27, 1996. Notes to condensed consolidated financial statements -- December 26, 1997. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations. PART II. OTHER INFORMATION Item 4. Submission of matters to a vote of shareholders. Item 6. Exhibits and Reports on Form 8-K. Item 1. Financial Statements
C-COR ELECTRONICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS December 26, June 27, ASSETS 1997 1997 ----------- ---------- (Unaudited) (Note) (000's omitted) CURRENT ASSETS Cash and cash equivalents $ 141 $ 452 Marketable securities 352 359 Accounts receivable 19,549 19,299 ----------- ---------- 20,042 20,110 ----------- ---------- Inventories: Raw materials 16,627 14,358 Work-in-process 2,690 3,346 Finished goods 2,883 1,436 ----------- ---------- Total inventories 22,200 19,140 ----------- ---------- Deferred taxes 2,640 2,616 Other current assets 1,746 1,893 Net current assets of discontinued operations 513 0 ----------- ---------- TOTAL CURRENT ASSETS 47,141 43,759 ----------- ---------- PROPERTY, PLANT, AND EQUIPMENT, NET 26,442 25,060 INTANGIBLE ASSETS AND OTHER LONG-TERM ASSETS, NET 1,068 785 Net noncurrent assets of discontinued operations 457 1,515 ----------- ---------- TOTAL ASSETS $ 75,108 $ 71,119 =========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable and accrued liabilities $ 18,666 $ 15,461 Line-of-credit 2,013 3,466 Current portion of long-term debt 844 834 Noncurrent liabilities of discontinued operations 0 1,253 ----------- ---------- TOTAL CURRENT LIABILITIES 21,523 21,014 ----------- ---------- LONG-TERM DEBT, less current portion 5,942 6,367 DEFERRED TAXES 1,367 1,311 OTHER LONG-TERM LIABILITIES 936 749 ----------- ---------- TOTAL LIABILITIES 29,768 29,441 ----------- ---------- SHAREHOLDERS' EQUITY Common Stock, $.10 par; authorized shares 24,000,000; issued shares of 9,652,738 on 12/26/97, and 9,633,435 on 06/27/97. 965 963 Additional paid-in capital 20,119 19,963 Retained earnings 30,099 26,632 Translation adjustment (69) (101) Net unrealized loss on marketable securities (9) (14) Treasury Stock (5,765) (5,765) ----------- ---------- TOTAL SHAREHOLDERS' EQUITY 45,340 41,678 ----------- ---------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 75,108 $ 71,119 =========== ========== Note: The balance sheet at June 27, 1997, has been derived from audited financial statements at that date. See notes to condensed consolidated financial statements.
C-COR ELECTRONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
Thirteen-Weeks Ended Twenty-Six-Weeks Ended December 26, December 27, December 26, December 27, 1997 1996 1997 1996 ----------- ----------- ----------- ----------- (000's omitted, except per share data) NET SALES $ 37,185 $ 30,701 $ 74,250 $ 62,545 ----------- ----------- ----------- ----------- COSTS AND EXPENSES: Cost of sales 29,124 24,719 57,597 49,366 Selling, general and administrative expenses 3,772 3,761 7,327 7,233 Research and product development costs 1,690 1,402 3,463 2,781 Interest expense 76 54 153 116 Investment income (6) (38) (13) (65) Foreign exchange loss (gain) 165 (29) 144 (27) Other expense (income) (34) 46 289 45 ----------- ----------- ----------- ----------- 34,787 29,915 68,960 59,449 ----------- ----------- ----------- ----------- INCOME FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 2,398 786 5,290 3,096 INCOME TAXES 812 223 1,823 1,000 ----------- ----------- ----------- ----------- INCOME FROM CONTINUING OPERATIONS 1,586 563 3,467 2,096 DISCONTINUED OPERATIONS: Loss from operations of discontinued business segment, less applicable income tax benefit 0 (228) 0 (1,002) ----------- ----------- ----------- ----------- NET INCOME $ 1,586 $ 335 $ 3,467 $ 1,094 =========== =========== =========== =========== NET INCOME (LOSS) PER SHARE - (BASIC): Continuing operations $ 0.17 $ 0.06 $ 0.38 $ 0.22 Discontinued operations 0.00 (0.03) 0.00 (0.11) ----------- ----------- ----------- ----------- NET INCOME PER SHARE $ 0.17 $ 0.03 $ 0.38 $ 0.11 =========== =========== =========== =========== NET INCOME (LOSS) PER SHARE - (ASSUMING DILUTION): Continuing operations $ 0.17 $ 0.06 $ 0.37 $ 0.21 Discontinued operations 0.00 (0.03) 0.00 (0.10) ----------- ----------- ----------- ----------- NET INCOME PER SHARE $ 0.17 $ 0.03 $ 0.37 $ 0.11 =========== =========== =========== =========== See notes to condensed consolidated financial statements.
C-COR ELECTRONICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) Twenty-Six-Weeks Ended December 26, December 27, 1997 1996 ----------- ----------- (000's omitted) OPERATING ACTIVITIES Net Income $ 3,467 $ 1,094 Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities: Depreciation and amortization 3,275 2,640 Provision for deferred retirement salary plan 187 146 Loss on sales of property, plant and equipment - 46 Changes in operating assets and liabilities: Accounts receivable (250) 5,898 Inventories (3,060) (2,944) Other assets (136) 303 Accounts payable 954 1,234 Accrued liabilities 2,251 (2,089) Deferred income taxes 29 566 Discontinued Operations - working capital changes and noncash charges (730) (1,742) NET CASH AND CASH EQUIVALENTS PROVIDED BY ----------- ----------- OPERATING ACTIVITIES 5,987 5,152 ----------- ----------- INVESTING ACTIVITIES Purchase of property, plant and equipment (4,625) (2,768) Purchase of marketable securities - (200) Proceeds from sale of marketable securities 15 5 Proceeds from sales of property, plant, and equipment - 12 Investing activities of discontinued operations 22 (403) NET CASH AND CASH EQUIVALENTS ----------- ----------- USED IN INVESTING ACTIVITIES (4,588) (3,354) ----------- ----------- FINANCING ACTIVITIES Payment of debt and capital lease obligations (415) (419) Proceeds from line-of-credit 26,300 555 Payment of line-of-credit (27,753) (1,702) Tax benefit deriving from exercise and sale of stock option shares - 71 Issue common stock to employee stock purchase plan 24 45 Proceeds from exercise of stock options 134 95 NET CASH AND CASH EQUIVALENTS USED IN ----------- ----------- FINANCING ACTIVITIES (1,710) (1,355) ----------- ----------- INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (311) 443 Cash and cash equivalents at beginning of period 452 1,474 ----------- ----------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 141 $ 1,917 =========== =========== See notes to condensed consolidated financial statements.
C-COR ELECTRONICS, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. The accompanying, unaudited, condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information, and in the opinion of management, contain all adjustments (consisting only of normal, recurring adjustments) necessary to fairly present the Company's financial position as of December 26, 1997, and the results of its operations for the thirteen-week and twenty-six-week periods then ended. Operating results for the thirteen-week and twenty-six week periods are not necessarily indicative of the results that may be expected for the year ending June 26, 1998. For further information, refer to financial statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended June 27, 1997. 2. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities consist of:
December 26, June 27, 1997 1997 ---------------- ---------------- (000's omitted) Accounts payable $ 9,590 $ 8,636 Accrued incentive plan expense 1,257 0 Accrued vacation expense 1,353 1,358 Accrued salary expense 627 569 Accrued payroll and sales tax expense 770 555 Accrued warranty expense 2,368 2,185 Accrued workers compensation self-insurance expense 1,522 1,162 Income taxes payable 103 137 Accrued other 1,076 859 ---------------- ---------------- $18,666 $15,461 ================ ================
=============================================================================== Item 2. Management's Discussion and Analysis of Financial Conditions and Results of Operations General The following discussion addresses the financial condition of the Company as of December 26, 1997, and the results of operations for the thirteen-week and twenty-six-week periods ended December 26, 1997, compared with the corresponding periods of the prior year. This discussion should be read in conjunction with the Management's Discussion and Analysis section for the fiscal year ended June 27, 1997, included in the Company's Annual Report on Form 10-K. Disclosure Regarding Forward-Looking Statements: Some of the information presented in this report constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements concerning the continuation of increased domestic spending for network upgrades, the continuation of competitive pricing pressures, anticipated new product development initiatives, and the continued availability of capital resources. Although the Company believes 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, new product development activities, changes in the cost and availability of parts and supplies, fluctuations in warranty costs, economic conditions affecting domestic and international markets, 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 Company's reports filed on Form 10-K and other reports filed with the Securities and Exchange Commission. Accounting Changes During the quarter, the Company adopted Statement of Financial Accounting Standards No. 128, "Earnings per Share", which establishes standards for computing and presenting earnings per share ("EPS") data. SFAS No. 128 replaces the previous standards for presentation of primary and fully diluted EPS with basic and diluted EPS. Basic EPS excludes dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS includes the dilution of common stock equivalents, and is computed similarly to fully diluted EPS pursuant to APB Opinion 15. All prior periods presented have been restated to reflect this adoption. Results of Operations Net sales for the thirteen-week period ended December 26, 1997, were $37,185,000, an increase of 21% from the prior year's sales of $30,701,000 for the corresponding period. Net sales for the twenty-six-week period ended December 26, 1997, were $74,250,000, an increase of 19% from the prior year's sales of $62,545,000 for the corresponding period. The increases in sales for the 1997 periods were primarily attributable to increased demand for RF distribution products by domestic and international customers in the cable television (CATV) industry. Domestic sales, as a percentage of total consolidated sales, were 69% for the quarter ended December 26, 1997, and 70% for the period year-to-date. This compares to 73% and 77% for the corresponding periods of the prior year. Sales to domestic customers increased 16% during the quarter ended December 26, 1997, and 8% for the period year-to-date, compared to the corresponding periods of the prior year. The Company believes that many domestic CATV operators have increased their capital spending, and as a result, the Company has experienced increased demand for hybrid/fiber coax (HFC) distribution equipment. The Company believes the increased capital spending is driven by customer demands for improved services, affecting not only voice and video requirements, but also demand for high-speed data transmission. This increased demand by CATV operators for improved services has translated into an increased need for higher bandwidth products in order to support these services. International sales, as a percentage of total consolidated sales, were 31% for the quarter ended December 26, 1997, and 30% for the period year-to-date. This compares to 27% and 23% for the corresponding periods of the prior year. Sales to international customers increased 36% during the quarter ended December 26, 1997, and 53% for the period year-to-date, compared to the corresponding periods of the prior year. The increase for the quarter resulted primarily from increased demand in Canada, and Latin America. The increase, year-to-date derives primarily from increased demand in Canada, Asia, and Europe. The Company is continuing to monitor its business activities in the Asian market and the effect that current economic conditions may have on present and future order trends. The international markets continue to represent distinct markets for CATV equipment, and, in general, demand can be highly variable. The Company's backlog of sales orders at December 26, 1997, was approximately $36.8 million, down from approximately $37.9 million at the end of the previous quarter ended September 26, 1997. The Company booked approximately $36.1 million of new sales orders during the quarter ended December 26, 1997. Gross profit percentage for the thirteen-week period ended December 26, 1997, was 21.7% versus 19.5% for the same period the prior year. Gross profit percentage for the twenty-six-week period ended December 26, 1997, was 22.4% versus 21.1% for the same period the prior year. The increase in the gross profit margin for the quarter and year-to-date periods is primarily a result of changes in customer and product sales mix, and efficiencies resulting from higher production volumes. Although pricing pressures continue, the Company has undertaken initiatives to mitigate these pressures. The Company has taken steps to lower manufacturing costs and is continuing efforts to improve manufacturing processes in order to enhance efficiency and productivity, and to redesign products to enhance manufacturability and reduce material costs. As one of these initiatives, the Company has begun manufacturing the power supply component of its RF amplifier products in Tijuana, Mexico. The Company continues to ramp up production at this new manufacturing facility. Selling, general and administrative expenses for the thirteen-week period ended December 26, 1997, were $3,772,000, compared to $3,761,000 for the same period of the prior year. Selling, general and administrative expenses for the twenty-six-week period ended December 26, 1997, were $7,327,000, a 1% increase over the prior year's total of $7,233,000 for the same period. The increases for the quarter and year-to-date periods are primarily the result of an increase in accrued profit incentive expense under the Company's profit sharing plan, and increases in various operating costs to support current business levels. Research and product development costs for the thirteen-week period ended December 26, 1997, were $1,690,000, an increase of 21% over the prior year's total of $1,402,000 for the same period. Research and product development costs for the twenty-six-week period ended December 26, 1997, were $3,463,000, an increase of 25% over the prior year's total of $2,781,000 for the same period. The increase is a result of higher personnel costs, including the aforementioned higher accrued profit incentive expense, and additional expenditures for AM fiber optics and network management product development. Anticipated new product development initiatives are expected to increase research and product development expenses in future periods. A foreign exchange loss of $165,000 was incurred for the thirteen-week period ended December 26, 1997. The loss derived primarily from Canadian dollar transactions. The Canadian dollar weakened versus the U.S. dollar during the quarter, resulting in a foreign exchange loss for the current quarter and year-to-date periods. Other expense for the twenty-six-week period ended December 26, 1997, was $289. This compares to $45 for the same period the prior year. The increase is primarily a result of expense accrued during the previous quarter for the settlement of litigation. The effective income tax rate for the thirteen-week period ended December 26, 1997, was 33.9%. This compares to an effective income tax rate of 28.3% for the corresponding period the prior year. The effective income tax rate for the twenty-six-week period ended December 26, 1997, was 34.5%. This compares to an effective income tax rate of 32.3% for the corresponding period the prior year. The fluctuations in the effective income tax rate from period to period reflect changes in permanent tax differences, the relative profitability related to both U.S. and non-U.S. operations, and differences in statutory rates. Net income for the thirteen-week period ended December 26, 1997, was $1,586,000 or $.17 per share on a diluted basis, versus $335,000 or $.03 per share on a diluted basis for the same period of the prior year. Net income for the second quarter of the prior year reflects income from continuing operations of $786,000 or $.06 per share on a diluted basis, and a loss from discontinued operations of ($228,000), net of applicable tax benefit, or ($.03) per share on a diluted basis. Net income for the twenty-six-week period ended December 26, 1997, was $3,467,000 or $.37 per share on a diluted basis, versus $1,094,000 or $.11 per share on a diluted basis for the same period the prior year. Net income for the six months of the prior year reflects income from continuing operations of $2,096,000 or $.21 per share on a diluted basis, and a loss from discontinued operations of ($1,002,000), net of applicable tax benefit, or ($.10) per share on a diluted basis. Results of Discontinued Operations On July 10, 1997, the Company announced the discontinuation of its digital fiber optic business segment located in Fremont, California, in a phase-down process expected to span nine months. Anticipated wind-down costs were recorded as a loss on disposal of the discontinued segment in the results of discontinued operations for the Company's prior fiscal year ended June 27, 1997. Thus, no wind-down costs from operations of the discontinued business segment were recorded for the quarter and year-to-date periods ended December 26, 1997. This compares to a loss from operations of the discontinued business segment for the same quarter the prior year of ($228,000), net of applicable tax benefit of ($96,000), and a loss year-to-date of ($1,002,000), net of applicable tax benefit of ($473,000). Liquidity and Capital Resources The Company's current ratio at December 26, 1997, was 2.2, an increase from 2.1 at June 27, 1997. The Company's cash and cash equivalents decreased $311,000 during the first 6 months of fiscal year 1998. Net cash provided by operating activities generated $5,987,000, after $730,000 was used for payment of expenses related to discontinued operations. The Company's working capital increased $2,873,000 since June 27, 1997. Inventory levels increased from $19,140,000 to $22,200,000, resulting in a $3,060,000 use of cash, primarily attributable to purchase requirements to meet increased volume levels. Accounts payable and accrued liabilities increased from $15,461,000 at June 27, 1997, to $18,666,000 as of December 26, 1997, due primarily to increased accounts payable resulting from higher inventory purchases and expense accrued under the Company's profit incentive plan. Cash used in investing activities totaled $4,588,000 as of December 26, 1997, compared to $3,354,000 for the corresponding period the prior year. Investing activities consisted primarily of purchases and replacement of property, plant, and equipment. Cash used in financing activities totaled $1,710,000 as of December 26, 1997, compared to $1,355,000 for the corresponding period the prior year. Financing activities consisted primarily of borrowings and payments on the Company's line-of-credit. On September 4, 1997, the Company announced a stock repurchase program to repurchase up to 500,000 shares of C-COR Common Stock. The shares may be purchased from time to time in the open market through block or privately negotiated transactions, or otherwise. The Company intends to use its currently available capital resources to fund the purchases. The repurchased stock is expected to be held by the Company as treasury stock to be used to meet the Company's obligations under its present and future stock option plans and for other corporate purposes. To date, no shares have been repurchased under this new stock repurchase program adopted in September 1997. The Company maintains a line-of-credit with a bank pursuant to which it may borrow the lesser of $23,000,000 or a percentage of eligible accounts receivable and inventory. Borrowings under the line-of-credit are secured by accounts receivable and inventory. The line-of-credit is committed through October 30, 1998, at which time the Company anticipates renewal. The Company had borrowings on the line-of-credit as of December 26, 1997, of $2,013,000. This compares to an outstanding balance of $3,466,000 at the end of the Company's fiscal year ended June 27, 1997. Based upon the Company's analysis of eligible accounts receivable and inventory, an additional $16,497,031 was available under the line-of-credit at December 26, 1997. Management believes that operating cash flow, as well as the line-of-credit, will be adequate to provide for all cash requirements for the foreseeable future, subject to requirements that additional growth or strategic development might dictate. PART II. OTHER INFORMATION Item 4. Submission of matters to a vote of shareholders The Company's annual meeting of shareholders was held on October 14, 1997, at which the holders of at least 8,806,840 shares of common stock of the Company (out of a total of 9,141,514 shares outstanding and entitled to vote at such annual meeting), were present in person or represented by proxy (representing a quorum for the transaction of business). The election of three directors was submitted to a vote of shareholders. Details were provided to shareholders in the form of a Notice of the Annual Meeting of Shareholders dated September 15, 1997, and mailed on or about September 16, 1997. Messrs. Richard E. Perry and Donald M. Cook, Jr. were re-elected as directors of the Company until the year 2000, and Mr. Javad K. Hassan was elected as a director until the year 2000. The voting results for the election of directors are set forth as follows: Name of Nominee Votes For Votes Withheld Richard E. Perry 8,746,669 60,171 Donald M. Cook, Jr. 8,727,302 79,538 Javad K. Hassan 8,723,069 83,771
Item 6. Exhibits and Reports on Form 8-K. The following exhibits are included herein: (10)(a) Notes and Security Agreement effective December 30, 1997, between the Registrant and Mellon Bank, N.A. (10)(b) Supplement to Note and Security Agreement effective December 30, 1997, between the Registrant and Mellon Bank, N.A. (10)(c) Revolving Line of Credit Agreement effective December 30, 1997, between the Registrant and Mellon Bank, N.A. (10)(d) Supplement to Revolving Line of Credit Agreement effective December 30, 1997, between the Registrant and Mellon Bank, N.A. (11) Statement re: computation of earnings per share (27) Financial Data Schedule Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. C-COR ELECTRONICS, INC. (Registrant) Date: February 9, 1998 /s/ CHRIS A. MILLER ----------------------- -------------------------- C.P.A., Vice President-Finance Secretary and Treasurer (Principal Financial Officer) Date: February 9, 1998 /s/ JOSEPH E. ZAVACKY ----------------------- --------------------------- Controller and Assistant Secretary (Principal Accounting Officer) EX-10.(A) 2 NOTE AND SECURITY AGREEMENT Note and Security Agreement $ 23,000,000.00 December 30, 1997 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 Harrisburg, Pennsylvania, the sum of Twenty-Three Million and NO/100 ($ 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"), outstanding balance from the date of this Note and Security Agreement ("Note") at the rate(s) ("Contractual Rate(s)") specified herein. Payment and 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, June 21, 1995, and November 14, 1996, in order to extend the maturity date. 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. After maturity, whether by acceleration or otherwise, interest shall accrue at a rate 2 percent per annum above the Contractual Rate(s) specified until all sums due hereunder are paid. Interest shall continue to accrue after the entry of judgment by confession or otherwise at the Contractual Rate(s) until all sums due hereunder and/or under the judgment are paid, unless the Contractual Rate(s) is (are) altered by Subsequent maturity. Undersigned agrees to pay to Bank, as consideration for Bank's commitment under the Credit Agreement, (i) a commitment fee equal to N/A % per annum on the unborrowed Commitment Amount (as defined in the Credit Agreement), from time to time, for each day of the Commitment Period (as defined in the Credit Agreement), and (ii) a facility fee equal to N/A % per annum in the Commitment Amount (whether borrowed or unborrowed) for each day of the Commitment Period, in each base payable for the preceding period for which such fee has not been paid, (a) on the last day of each N/A, and N/A after the date hereof, (b) on the date of each reduction of the Commitment amount on the amount so reduced, and (c) on the last day of the Commitment Period. 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 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 book's, and records shall be presumed, except in the case or 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, 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. 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; (l) 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 any, such agreement or the discovery by Bank of any false or misleading representation made by any Obligor herein or in any such agreement or in any other information submitted to Bank by any Obligor; (c) with respect to any, Obligor: (1) death or incapacity of any individual or general partner; or (2) dissolution of any partnership or corporation; (d) any assignment for the benefit of creditors by any Obligor; (e) insolvency of any Obligor; (f) the filing or commencement of any petition, action, case or proceeding, voluntary or involuntary, under any state or federal law regarding bankruptcy, insolvency, reorganization, receivership or dissolution, including the Bankruptcy Reform Act of 1978, as amended, by or against any Obligor; (g) default under the terms of any lease of or mortgage on the premises where any Collateral is located; (h) garnishment, attachment or taking by governmental authority of any Collateral or other property of the Undersigned which is in Bank's possession; (i) a determination by bank, which determination shall be conclusive if made in good faith, that a material adverse change has occurred in the financial or business condition of Undersigned; or (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, shall 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 with is reasonably convenient to both parties; (c) Bank may immediately and without demand exercise any of it s 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 of 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. B. 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. (a) 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. (a) 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 individually and collectively, whether or not such partners sign below. Undersigned shall 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. SIGNATURES Attest/Witness: /s/ Joseph E. Zavacky Controller and Assistant Secretary Corporation C-COR Electronics, Inc. /s/ Chris A. Miller VP-Finance Business Address: 60 Decibel Road State College, PA 16801 EX-10.(B) 3 SUPPLEMENT 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 December 30, 1997 of Undersigned payable to MELLON BANK, N.A. ("Bank") in the stated principal amount of TWENTY-THREE Million Dollars and No Cents ($23,000,000.00). Such 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 30, 1998. Accrued interest on the Prime Rate Portion, ABS Rate Portion, and As Offered Rate Portion shall be due and payable on the last Business Day of each calendar month after the date hereof and on October 30, 1998. Interest on each Rate Segment of the LIBOR-Rate Portion shall be due and payable on the last day of the corresponding Rate Period, but in no case less frequently than 90 days after the previous interest payment on account of such LIBOR-Rate Portion. 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 Options. 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 ("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, the ABS Rate Option, the LIBOR-Rate Option, or As-Offered Rate Option is not available, although Bank agrees to make a good faith effort to provide all Interest Rate Options to Borrower, and (b) that subject to the provisions of this Supplement, Undersigned may select any number of Interest Rate 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 LIBOR-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. 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 110 Basis Points. LIBOR-Rate Option: For each Rate Segment of the LIBOR-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 LIBOR-Rate for such Rate Segment for such day plus 110 Basis. As-Offered Rate Option: For each Rate Segment of the As-Offered 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 As-Offered Rate for such Rate Segment for such day plus 110 Basis Points. 3. Rate Periods. At any time when Undersigned selects, converts to or renews the LIBOR-Rate Option or As-Offered Rate Option, Undersigned shall fix a period (the "Rate Period") which shall be one, two, or three months and in the case of the As-offered Rate Option, shall be such number of days as Bank may offer at its sole discretion, which shall be acceptable to Bank in Bank's sole discretion, during which the LIBOR-Rate Option or As-Offered 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 ABS Rate Option, the LIBOR-Rate Option, or the As-Offered Rate Option shall be in a principal amount selected by Undersigned but limited to no more than four interest rate segments at any one time. 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 LIBOR-Rate Portion or the As-Offered Rate Option 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 LIBOR-Rate Option or the As-Offered Rate Option otherwise applicable to such part and (b) thereafter in accordance with the first sentence of this Section 5. 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 any 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 any other Interest Rate Option and may renew the LIBOR-Rate Option as to any Rate Segment: (a) at any time with respect to conversion from the Prime Rate Option or 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 LIBOR-Rate Option or As-Offered Rate Option as to the Rate Segment corresponding to such expiring Rate Period. Whenever Undersigned desires to select, convert or renew the LIBOR-Rate Option or As-Offered Rate Option, Undersigned shall give Bank Standard Notice thereof (which shall be irrevocable), specifying the date, amount and type of the proposed new Interest Rate Option. If such notice has been duly given, and if Bank in its sole discretion (based on a good faith effort to provide all Interest Rate Options) 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 7 hereof automatically shall be converted to the Prime Rate Option. If at any time the ABS Rate Option is determined to exceed the Prime Rate Option, the ABS Rate Portion shall automatically convert to the Prime Rate Option. If Undersigned fails to select, or if Bank fails to approve (because an Interest Option is not available in Bank's good faith determination), an Interest Rate Option to apply to any borrowing evidenced by the Note, such 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, 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 and ABS Rate Portion in whole or in part. Undersigned shall have no right to prepay any part of the LIBOR-Rate Portion or As-Offered 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 LIBOR-Rate Portion or As-Offered 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 Loan Agreement (if any), 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 7 or 9 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 11 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: "ABS Rate" shall mean a per annum rate of interest equal to the rate of interest determined by Bank, in its sole discretion, from time to time, to be its ABS Rate. Such ABS Rate shall change from time to time as of the effective date of each change in the ABS Rate as determined in the sole discretion of Bank. The ABS 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. "As-Offered Rate Option" shall mean a rate per annum offered by Bank in its sole discretion to Undersigned from time to time for such Rate Period for such Rate Segment as Bank may offer in its sole discretion, such interest rate to remain fixed for the duration of such Rate Period. "Business Day" shall mean any day on which Bank is open for business at the location where the Note is payable. "LIBOR-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 maturities comparable to such Rate Period by (B) a number equal to 1.00 minus the LIBOR-Rate Reserve Percentage for such day. The "LIBOR-Rate" may also be expressed by the following formula: (average of rates offered to major ) (money banks in the London inter- ) (bank market estimated by the Bank ) LIBOR-Rate = (subsection (A)(1) I (1-00 - LIBOR-Rate Reserve Percentage] "LIBOR-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 "Euro-currency liabilities") of any maturity. Each LIBOR-Rate shall be adjusted automatically as of the effective date of any change in the LIBOR-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 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 in accordance with the first sentence of Section 5 of this Supplement. "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 ABS Rate Option or in accordance with the first sentence of Section 5 of this Supplement. "LIBOR-Rate Portion" or "As-Offered 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 LIBOR-Rate Option or As-Offered Rate Portion as the case may be, or at a rate determined by reference to the LIBOR-Rate Option pursuant to Section 5 of this Supplement. "Prime Rate" shall mean the interest rate per annum announced from time to time by Banks 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 LIBOR-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 Segments, 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 Business Day which is (i) at least one Business Day in advance in the case of selection of, conversion to or renewal of the Prime Rate Option or prepayment of any Prime Rate Portion; (ii) at least one Business Day in advance in the case of, conversion to or renewal of the ABS Rate Option or prepayment of any ABS Portion: (iii) at least two London Business Days in advance in the case of selection of, conversion to or renewal of the LIBOR-Rate Option or prepayment of any LIBOR-Rate Option or prepayment of any LIBOR-Rate Portion, and (iv) at least one Business Day in advance in the case of selection of, conversion to or renewal of the As-Offered Rate Option or Prepayment of any As-Offered 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 30th day of December, 1997. Attest: /s/ Joseph E. Zavacky Controller & Assistant Secretary C-COR ELECTRONICS, INC. By: /s/ Chris A. Miller Title: Vice President - Finance Address for Notices to Undersigned: 60 Decibel Road State College, PA 16801, MELLON BANK, N.A. By: Milton S. Hefft Address for Notices to Bank: Mellon Bank N.A. Attn: Middle Market Banking P.O. Box 1010 Harrisburg, PA 17108 EX-10.(C) 4 REVOLVING LINE OF CREDIT AGREEMENT Revolving Line of Credit Agreement 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")find, 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 October 31, 1998. Commitment Amount: The lesser of (i) $ 23,000,000.00 or (ii) the sum of 80% of Eligible Accounts (as hereinafter defined) and 20% 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 an 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 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 Borrow as oft a ate 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 proposed date thereof, which notice shall be received by Bank office no later 1:00pm., local time at the place where the proposed loan is payable, on the date (which shall be a day on which the Bank is open 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, on or before the 45 day of each calendar month, a report, as at the end of the preceding calendar month, containing Borrower's account receivable aging and a description of raw material and finished goods, 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 an 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 material litigation, arbitration or governmental proceeding affecting the Borrower, and of any governmental investigation or labor dispute pending or, to the knowledge of Borrower threatened which could reasonably be excepected to interfere substantially with normal operation 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 d 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 of collection or similar transactions in the ordinary course of 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 an 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. 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 sha11 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 30th day of December, 1997. Attest/Witness: /s/ Joseph E. Zavacky Controller and Assistant Secretary 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. By: /s/ Milton S. Hefft P.O. Box 1010 Harrisburg, PA 17108 EX-10.(D) 5 SUPPLEMENT TO REVOLVING LINE OF CREDIT AGREEMENT 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 Borrowers 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 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. E. Maintain minimum net income from continuing operations of $5OO,OOO, to be measured on a rolling four quarter basis. First measurement will be the quarter ending 12/31/97. This net income covenant will exclude the following: - - Exclude impact of discontinued operation in Fremont, California. - - Exclude impact of benefit from possible tax refunds due to operating loss. F. Not permit the outstanding balance and accrued but unpaid interest under Borrower's Line of Credit extended pursuant to the term hereof (The Revolving "Line of Credit") to exceed an amount equal to the sum of 80% of the outstanding dollar amount of Borrower's Eligible Accounts (as defined below) plus 20% of the outstanding dollar amount of Borrower's Eligible Inventory (as defined below), however that at no time shall the portion of loans based on Eligible Inventory exceed $5 million. "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. "Eligible Inventory" shall mean all raw materials and finished goods. 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, upon an event of default as defined in the Revolving Line of Credit Agreement, 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 additional collateral security as Bank in its sole discretion may deem appropriate. G. 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 then (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 therefore, and (v) any unfilled 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). Regulation U: The borrower hereby represents and warrants that it will make no borrowings hereunder for the purpose of buying or carrying any "margin stock", as such term is used in Regulation U of the board of governors of the federal reserve system, as amended from time to time. Neither the Borrower nor any subsidiary owns any "margin stock". Neither the borrower nor any subsidiary is engaged in the business of extending credit to others for such purpose, and no part of the proceeds of any borrowing hereunder will be used to purchase or carry any "margin stock" or to extend credit to others for the purpose of purchasing or carrying any "margin stock". SIGNATURES Witness the due execution hereof intending to be legally bound this 30th day of December, 1997. Attest: By: /s/ Joseph E. Zavacky Controller & Assistant Secretary C-COR Electronics, Inc. By: /s/ Chris A. Miller Vice President - Finance, Secretary & Treasurer Mellon Bank, N.A. P.O. Box 1010 10 S. 2nd Street Harrisburg, PA 17101 By: /s/ Milton S. Hefft EX-11 6 STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Thirteen Weeks Ended Twenty-Six Weeks Ended December 26, December 27, December 26, December 27, 1997 1996 1997 1996 ------------ ------------ ------------ ------------ (000's omitted, except per share data) Basic: Weighted average shares outstanding 9,148 9,613 9,143 9,610 ------------ ------------ ------------ ------------ Total 9,148 9,613 9,143 9,610 Income from continuing operations $ 1,586 $ 563 $ 3,467 $ 2,096 Loss from discontinued operations 0 (228) 0 (1,002) ------------ ------------ ------------ ------------ Net income $ 1,586 $ 335 $ 3,467 $ 1,094 ------------ ------------ ------------ ------------ Net income (loss) per share Continuing operations $ 0.17 $ 0.06 $ 0.38 $ 0.22 Discontinued operations 0.00 (0.03) 0.00 (0.11) ------------ ------------ ------------ ------------ Net income per share $ 0.17 $ 0.06 $ 0.38 $ 0.11 ------------ ------------ ------------ ------------ Diluted: Weighted average shares outstanding 9,148 9,613 9,143 9,610 Weighted average common stock equivalents 288 182 228 189 ------------ ------------ ------------ ------------ Total 9,436 9,795 9,371 9,799 Income from continuing operations $ 1,586 $ 563 $ 3,467 $ 2,096 Loss from discontinued operations 0 (228) 0 (1,002) ------------ ------------ ------------ ------------ Net income $ 1,586 $ 335 $ 3,467 $ 1,094 ------------ ------------ ------------ ------------ Net income (loss) per share Continuing operations $ 0.17 $ 0.06 $ 0.37 $ 0.21 Discontinued operations 0.00 (0.03) 0.00 (0.10) ------------ ------------ ------------ ------------ Net income per share $ 0.17 $ 0.06 $ 0.37 $ 0.11 ------------ ------------ ------------ ------------
EX-27 7 FDS 2ND QUARTER ENDING DECEMBER 26, 1997
5 1000 3-MOS JUN-26-1998 JUN-28-1997 DEC-26-1997 141 352 20,133 584 22,200 47,141 51,358 24,916 75,108 21,523 0 0 0 965 44,375 75,108 37,185 37,185 29,124 5,462 125 0 76 2,398 812 1,586 0 0 0 1,586 .17 .17
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