ARRIS GROUP, INC.
As filed with the Securities and Exchange Commission on
November 7, 2007
Registration
No. 333-146683
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C.
20549
Amendment No. 1
to
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
ARRIS GROUP, INC.
(Exact name of Registrant as
specified in its charter)
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Delaware
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3663
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58-2588724
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification Number)
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ARRIS Group, Inc.
3871 Lakefield Drive
Suwanee, Georgia 30024
(678) 473-2000
(Address, including zip code,
and telephone number, including area code, of registrants
principal executive offices)
Lawrence A. Margolis
ARRIS Group, Inc.
3871 Lakefield Drive
Suwanee, Georgia 30024
(678) 473-2000
(Address, including zip code,
and telephone number, including area code, of agent for
service)
Copies to:
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W. Brinkley Dickerson, Jr.
Patrick W. Macken
Troutman Sanders LLP
600 Peachtree Street, NE, Suite 5200
Atlanta, Georgia 30308-2216
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Robert C. Gerlach
Brian D. Doerner
Ballard Spahr Andrews & Ingersoll, LLP
1735 Market Street,
51st
Floor
Philadelphia, Pennsylvania 19103
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Approximate date of commencement of proposed sale to the
public: As soon as practicable after the
effective date of this Registration Statement and upon
consummation of the merger described herein.
If the securities being registered on this form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check the
following
box. o
If this form is filed to register additional securities of an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with section 8(a)
of the Securities Act of 1933 or until this Registration
Statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said
section 8(a), may determine.
The
information in this preliminary joint proxy statement/prospectus
is not complete and may be changed. These securities may not be
sold until the registration statement filed with the Securities
and Exchange Commission is effective. This document is not an
offer to sell and is not soliciting an offer to buy these
securities in any jurisdiction where the offer or sale is not
permitted.
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PRELIMINARY
COPY SUBJECT TO COMPLETION, DATED NOVEMBER 7,
2007
November 8, 2007
Dear ARRIS shareholders and C-COR shareholders:
The Boards of Directors of ARRIS Group, Inc. and C-COR
Incorporated have approved a merger of the two companies that
they believe will create a leading pure play cable solutions
company with highly scalable, revenue producing technologies for
high speed data, telephony, optical and network access
infrastructure and video management solutions.
Under the merger agreement, C-COR shareholders will have the
right to elect to receive either $13.75 in cash or 0.9642 of a
share of ARRIS common stock for each share of C-COR common stock
they own. The stock portion of the merger consideration is
subject to adjustment in the event the average closing price of
ARRIS common stock over the ten
trading-day
period ending three trading days prior to the closing of the
merger is less than $12.83 or more than $15.69 per share. ARRIS
and C-COR have agreed that approximately 49% of the shares of
C-COR common stock outstanding immediately before completion of
the merger will be converted into the right to receive the stock
consideration (although a small portion of that consideration
may be paid in cash) and the remaining approximately 51% of the
shares will be converted into the right to receive the cash
consideration. Therefore, the cash and stock elections that
C-COR shareholders make with respect to their shares will be
subject to proration to achieve this allocation.
Based on the current price of ARRIS common stock, ARRIS expects
to pay approximately $371.7 million in cash and to issue
approximately 28.3 million shares of ARRIS common stock to
C-COR shareholders in the merger. Former C-COR shareholders are
expected to own approximately 20% of the outstanding ARRIS
shares immediately after the merger. ARRIS common stock is
listed on the NASDAQ Global Select Market under the symbol
ARRS. C-COR common stock is listed on the NASDAQ
Global Select Market under the symbol CCBL.
Each company is holding a special meeting of its shareholders in
order to obtain the shareholder approval necessary to complete
the merger. The accompanying joint proxy statement/prospectus
provides a detailed description of the proposed merger and the
merger consideration. In addition, it provides you with
important information regarding the special meetings of
shareholders. We urge you to read the enclosed materials (and
any documents incorporated by reference into this joint proxy
statement/prospectus) carefully. Please pay particular attention
to the Risk Factors section beginning on
page 15.
We cannot complete the merger without the approval of the
shareholders of both of our companies. Your vote is very
important, regardless of the number of shares you own. Whether
or not you expect to attend your companys special meeting,
please vote all proxy cards that you receive as soon as possible
to ensure that your shares are represented at the applicable
special meeting. Shareholders of record and most
shareholders holding shares through a bank or broker may vote
their shares by using a toll-free telephone number or the
Internet. Instructions for using these convenient services are
provided on the accompanying proxy card. Of course, you may
still vote your shares by marking your vote on the accompanying
proxy card, signing and dating it and mailing it in the
postage-paid envelope provided. If you are a shareholder of both
ARRIS and C-COR, you will receive two separate packages of proxy
materials and should respond to both. If you have any questions
or need assistance voting your shares, please call Morrow &
Co., LLC, who is assisting ARRIS, toll free at 1-800-607-0088,
if you are an ARRIS shareholder, or D.F. King
& Co. Inc., who is assisting
C-COR, toll
free at 1-888-644-6071, if you are a C-COR shareholder.
The ARRIS board of directors recommends that ARRIS
shareholders vote FOR the proposal to approve the issuance of
ARRIS common stock to be issued to C-COR shareholders pursuant
to the merger agreement.
The C-COR
board of directors recommends that C-COR shareholders vote FOR
the proposal to adopt the merger agreement.
Sincerely,
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Chairman and Chief Executive Officer
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Chairman and Chief Executive Officer
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ARRIS Group, Inc.
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C-COR Incorporated
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Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of the
securities to be issued in connection with the merger or passed
upon the adequacy or accuracy of this joint proxy
statement/prospectus. Any representation to the contrary is a
criminal offense.
This joint proxy statement/prospectus is dated November 8,
2007, and is first being sent to ARRIS shareholders and
C-COR
shareholders on or about November 9, 2007.
ARRIS
Group, Inc.
3871 Lakefield Drive
Suwanee, Georgia 30024
(678) 473-2000
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 14, 2007
To the Shareholders of ARRIS Group, Inc.:
A special meeting of shareholders of ARRIS Group, Inc., a
Delaware corporation (ARRIS), will be held at
10:00 a.m. (local time) on Friday, December 14, 2007,
at ARRIS corporate headquarters, located at
3871 Lakefield Drive, Suwanee, Georgia 30024, for the
following purposes:
1. To consider and vote upon a proposal to approve the
issuance of ARRIS common stock in the merger of C-COR
Incorporated, a Pennsylvania corporation (C-COR),
with and into Air Merger Subsidiary, Inc., a Delaware
corporation and a wholly owned subsidiary of ARRIS (Merger
Sub), as contemplated by the Agreement and Plan of Merger,
dated as of September 23, 2007, by and among ARRIS, C-COR
and Merger Sub, as that agreement may be amended;
2. To consider and vote on any adjournment or postponement
of the special meeting, if necessary, to solicit additional
proxies in favor of the proposal to approve the issuance of
shares of ARRIS common stock pursuant to the merger
agreement; and
3. To transact any other business as may properly come
before the special meeting or any properly reconvened meeting
following an adjournment or postponement of the special meeting.
Holders of record of ARRIS common stock at the close of business
on November 7, 2007, are entitled to notice of and to vote
at the special meeting and any adjournment or postponement of
the special meeting. A list of these shareholders will be
available for inspection by any shareholder for any purpose
germane to the special meeting during ordinary business hours
for ten days prior to the special meeting at the offices of
ARRIS and will also be available at the special meeting.
Your vote is very important. Your proxy is being solicited by
the ARRIS board of directors. The issuance of new shares of
ARRIS common stock must be authorized by the shareholders of
ARRIS in order for the merger to be completed.
By Order of the ARRIS board of directors,
Lawrence A. Margolis
Secretary
Suwanee, Georgia
November 8, 2007
IMPORTANT NOTICE
If you do not plan to attend the special meeting to vote your
shares, please complete, date, sign and promptly mail the
enclosed proxy card in the return envelope provided. No postage
is necessary if mailed in the United States. Shareholders of
record and many shareholders holding shares through a bank or
broker may also give their proxy by telephone or through the
Internet in accordance with the instructions accompanying the
proxy card. Any person giving a proxy has the power to revoke it
at any time, and shareholders who are present at the special
meeting may withdraw their proxies and vote in person.
C-COR
Incorporated
60 Decibel Road
State College, Pennsylvania 16801
(814) 238-2461/(800)
233-2267
NOTICE OF
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 14, 2007
To the Shareholders of C-COR Incorporated:
A special meeting of shareholders of C-COR Incorporated, a
Pennsylvania corporation (C-COR), will be held at
9:00 a.m. (local time) on Friday, December 14, 2007, at
1735 Market Street, 42nd floor, Philadelphia, Pennsylvania
19103, for the following purposes:
1. To consider and vote upon a proposal to adopt the
Agreement and Plan of Merger, dated as of September 23,
2007, by and among C-COR, ARRIS Group, Inc., a Delaware
corporation (ARRIS), and Air Merger Subsidiary,
Inc., a Delaware corporation and wholly owned subsidiary of
ARRIS (Merger Sub), as that agreement may be amended;
2. To consider and vote on any adjournment or postponement
of the special meeting, if necessary, to solicit additional
proxies in favor of the proposal to adopt the merger
agreement; and
3. To transact other business that may properly come before
the special meeting or any properly reconvened meeting following
an adjournment or postponement of the special meeting.
Shareholders of record at the close of business on
November 7, 2007, are entitled to notice of and to vote at
the special meeting and any postponement or adjournment of the
special meeting. Your vote is important. Please complete, date
and sign the enclosed proxy and return it promptly, or if you
prefer, you may cast your vote by Internet or telephone. If you
attend the special meeting, you may vote in person.
By Order of the board of directors of C-COR,
William T. Hanelly
Chief Financial Officer, Secretary and Treasurer
State College, Pennsylvania
November 8, 2007
IMPORTANT NOTICE
If you do not plan to attend the special meeting to vote
your shares, please complete, date, sign and promptly mail the
enclosed proxy card in the return envelope provided. No postage
is necessary if mailed in the United States. Shareholders of
record and many shareholders holding shares through a bank or
broker may also give their proxy by telephone or through the
Internet in accordance with the instructions accompanying the
proxy card. Any person giving a proxy has the power to revoke it
at any time, and shareholders who are present at the special
meeting may withdraw their proxies and vote in person.
REFERENCE
TO ADDITIONAL INFORMATION
This joint proxy statement/prospectus incorporates by reference
important business and financial information about ARRIS and
C-COR from documents that are not included in or delivered with
this joint proxy statement/prospectus. For a listing of the
documents incorporated by reference into this joint proxy
statement/prospectus, see Where You Can Find Additional
Information beginning on page 94. This information is
available to you without charge upon your written or oral
request. You can obtain documents related to ARRIS and C-COR
that are incorporated by reference into this joint proxy
statement/prospectus, without charge, from the SECs
website (www.sec.gov) or by requesting them in writing or by
telephone from the appropriate company.
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ARRIS Group, Inc.
3871 Lakefield Drive
Suwanee, Georgia 30024
(678) 473-2647
Attn: Investor Relations
www.arrisi.com
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C-COR Incorporated
60 Decibel Road
State College, Pennsylvania 16801
(800) 233-2267 ext. 4402
Attn: Investor Relations
www.c-cor.com
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(All website addresses given in this joint proxy
statement/prospectus are for information only and are not
intended to be an active link or to incorporate any website
information into this joint proxy statement/prospectus.)
Please note that copies of the documents provided to you will
not include exhibits, unless the exhibits are specifically
incorporated by reference into the documents or this joint proxy
statement/prospectus.
In order to receive timely delivery of requested documents in
advance of the special meetings, you should make your request no
later than December 5, 2007.
ABOUT
THIS JOINT PROXY STATEMENT/PROSPECTUS
This joint proxy statement/prospectus, which forms part of a
registration statement on
Form S-4
filed with the SEC by ARRIS (File
No. 333-146683),
constitutes a prospectus of ARRIS under Section 5 of the
Securities Act of 1933, as amended, which we refer to as the
Securities Act, with respect to the ARRIS common stock to be
issued to C-COR shareholders as required by the merger
agreement. It also constitutes a notice of meeting and a joint
proxy statement under Section 14(a) of the Securities
Exchange Act of 1934, as amended, which we refer to as the
Exchange Act, with respect to the special meeting of ARRIS
shareholders, at which ARRIS shareholders will be asked to
consider and vote upon a proposal to approve the issuance of
ARRIS common stock required to be issued to C-COR shareholders
pursuant to the merger agreement, and, with respect to the
special meeting of C-COR shareholders, at which C-CORs
shareholders will be asked to consider and vote upon a proposal
to adopt the merger agreement.
TABLE OF
CONTENTS
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1
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8
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10
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12
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13
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14
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15
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20
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24
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28
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57
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74
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78
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91
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94
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94
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95
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95
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P-1
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ANNEX A Agreement and Plan
of Merger by and among ARRIS Group, Inc., C-COR Incorporated,
and Air Merger Subsidiary, Inc.
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A-1
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ANNEX B Opinion of UBS
Securities LLC, dated September 23, 2007
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B-1
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ANNEX C Opinion of Merrill
Lynch, Pierce, Fenner & Smith Incorporated, dated
September 23, 2007
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C-1
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EX-23.1 CONSENT OF ERNST & YOUNG LLP |
EX-23.2 CONSENT OF KPMG LLP |
EX-99.3 FORM OF PROXY CARD |
EX-99.4 FORM OF PROXY CARD |
EX-99.5 MERGER CONSIDERATION ELECTION FORM AND LETTER OF TRANSMITTAL |
QUESTIONS
AND ANSWERS ABOUT THE MERGER AND THE MEETINGS
General
Questions and Answers
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What are ARRIS and C-COR proposing? |
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A: |
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On September 23, 2007, ARRIS, C-COR and Merger Sub entered
into a merger agreement providing for the acquisition of C-COR
by means of a merger of C-COR into Merger Sub, a wholly owned
subsidiary of ARRIS, and Merger Sub will change its name to
C-COR Incorporated. We refer to this transaction as
the merger. Following the merger, existing shareholders of ARRIS
will own approximately 80% of ARRIS and former shareholders of
C-COR will own approximately 20% of ARRIS. Also, following the
merger, ARRIS will take all reasonable steps to insure that one
designee of C-COR will be appointed to the board of directors of
ARRIS. |
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What will C-COR shareholders receive in the merger? |
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In the merger, shareholders of C-COR will receive either $13.75
in cash or 0.9642 of a share of ARRIS common stock for each
share of C-COR common stock based on the shareholders
election and subject to adjustment, which we refer to as the
merger consideration, in exchange for each share of common stock
of C-COR they own.
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The implied value of the stock consideration to be received by
C-COR shareholders as a result of the merger will fluctuate as
the market price of ARRIS common stock fluctuates. As a result,
ARRIS and C-COR have agreed that the number of shares of ARRIS
common stock that each C-COR shareholder may elect to receive
for each share of C-COR common stock will (i) increase in
the event the closing price of ARRIS common stock decreases
below a 10% threshold, or (ii) decrease in the event the
closing price of ARRIS common stock increases above a 10%
threshold, subject in each case to certain limitations. See
The Merger Agreement Merger Consideration and
Shareholder Elections beginning on page 57 for more
detailed information. |
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Are C-COR shareholders guaranteed to receive their election
of cash or ARRIS common stock? |
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No. Under the merger agreement, approximately 49% of the
shares of C-COR common stock outstanding immediately before
completion of the merger will be converted into the stock
consideration and the remaining approximately 51% of the shares
will be converted into the cash consideration, although a small
portion of the consideration that would otherwise be payable in
stock may be paid in cash as described under The Merger
Agreement Merger Consideration and Shareholder
Election Stock Consideration Adjustment.
Therefore, the cash and stock elections that C-COR shareholders
make with respect to their shares will be subject to proration
to meet this requirement. See The Merger
Agreement Merger Consideration and Shareholder
Elections beginning on page 57 for more detailed
information. |
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Do ARRIS shareholders make an election? |
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No. ARRIS shareholders will continue to own their existing
shares of ARRIS common stock, which will not change or
otherwise convert into other securities or cash. |
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When and how must a C-COR shareholder elect the type of
merger consideration? |
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The procedure for electing the type of merger consideration that
a C-COR shareholder wants to receive is specified in an election
form and letter of transmittal that will be seperately mailed to
you at the same time as this joint proxy statement/prospectus.
You should carefully review and follow the instructions set
forth in that election form and letter of transmittal. These
instructions require that a properly completed and signed
election form be received by the exchange agent by the election
deadline, which is 5:00 p.m., New York City time, on
December 13, 2007. Holders of record who do not submit a
properly completed and signed election form and letter of
transmittal, together with your C-COR stock certificates, to the
exchange agent by the election deadline will have no control
over the type of merger consideration they receive.
If your shares of C-COR common stock are held in a stock
brokerage account or by a bank or other nominee, you must follow
your brokers, banks, or other nominees
procedures for electing the type of merger |
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consideration that you want to receive in the merger. If you do
not properly follow these instructions for election, you will
have no control over the type of merger consideration you
receive. |
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In all events, the amount of cash and ARRIS common stock that
you receive will reflect the election forms that are received
from other shareholders, i.e. the more of one form of
consideration that other shareholders elect, the less of that
form you will receive. |
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Can I change my election after I submit my election form? |
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Yes. A holder of record of C-COR common stock can revoke an
election and submit new election materials before the election
deadline by submitting a written notice to Mellon Investor
Services, the exchange agent, that is received prior to the
election deadline at either of the following addresses: |
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By Overnight and Hand Delivery:
Newport Office Center VII
480 Washington Boulevard
Mail Drop Reorg
Attn: Reorganization Dept., 27th Floor
Jersey City, New Jersey 07310
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By Mail:
P.O. Box 3301
South Hackensack, New Jersey 07606
Attn: Reorganization Dept.
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The revocation must specify the account name and such other
information as the exchange agent may request, and revocations
may not be made in part. New elections must be submitted in
accordance with the election procedures described in this joint
proxy statement/prospectus.
If you instructed a broker, bank, or other nominee to submit an
election for your shares, you must follow your brokers,
banks, or other nominees directions for changing
those instructions. |
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Do I need to send in my stock certificates now? |
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Yes. A letter of transmittal will be included with the election
form that is being mailed seperately to
C-COR
shareholders and C-COR shareholders should send their
C-COR stock
certificates and the completed letter of transmittal when they
send in their election form. The method of transmitting the
C-COR stock
certificates is at your option and risk, but if delivery is by
mail, then registered mail with return receipt requested,
properly insured, is suggested. In the event the merger is not
completed, your
C-COR stock
certificates will be returned to you. Completion of the
letter of transmittal is necessary for an election to be
valid. |
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How do the ARRIS and C-COR Boards of Directors recommend that
I vote regarding the merger? |
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ARRIS board of directors recommends that ARRIS
shareholders vote FOR the issuance of ARRIS common stock
pursuant to the merger agreement.
C-CORs board of directors unanimously recommends that
C-CORs shareholders vote FOR the adoption of the
merger agreement. |
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Why are ARRIS and C-COR proposing to merge? |
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The ARRIS board of directors has concluded that the merger
offers significant benefits to its shareholders. The C-COR board
of directors has concluded that the merger offers significant
benefits to C-COR and its shareholders. See The
Merger Factors Considered by the ARRIS Board of
Directors and Factors Considered by the C-COR
Board of Directors, beginning on page 33 for more
information. |
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Are there risks I should consider in deciding whether to vote
for the merger? |
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Yes. The merger is subject to a number of risks and
uncertainties. Before deciding whether to vote for or against
the merger, you should carefully consider the risks set forth in
Risk Factors and other information included or
incorporated by reference in this joint proxy
statement/prospectus. |
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What will happen to C-COR stock options and warrants in the
merger? |
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All C-COR stock options outstanding at the time of the merger
will become fully vested and will be converted into options to
acquire ARRIS common stock. The number of shares subject to such
converted stock |
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options will be adjusted by multiplying the number of shares
subject to such C-COR stock option by 0.9642, subject to
adjustment in certain circumstances, and the exercise price will
be adjusted accordingly. The options to acquire ARRIS common
stock will be subject to the same terms and conditions as were
applicable under the
C-COR plans
pursuant to which they initially were issued (except that all
options other than options awarded by
C-COR to new
employees after September 23, 2007 will vest on the date of
the merger and except to the extent that such terms and
conditions may be altered to reflect the merger).
All C-COR warrants outstanding and unexercised immediately prior
to the effective time of the merger will expire and no merger
consideration will be paid with respect to any unexercised
warrants. As a result, holders of outstanding C-COR warrants
must exercise their warrants prior to the effective time of the
merger or they will receive no merger consideration. |
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If I want to exercise my C-COR options, what do I do? |
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A. |
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You are under no obligation to exercise your C-COR options
before the completion of the merger. However, your warrants will
terminate by their terms at the closing of the merger. If you
hold exercisable C-COR options and wish to exercise them prior
to the merger in order to be eligible to elect to receive cash
consideration for such shares, then prior to 4:00 p.m.
(local time) on the second trading day immediately prior to the
date of closing of the merger you should exercise your options
by submitting a completed and executed Stock Option Cash
Exercise Letter of Authorization along with payment for the
shares and any applicable taxes to C-COR Incorporated, 60
Decibel Road, State College, Pennsylvania 16801, to the
attention of Mark Savereno. Questions or a request for a Stock
Option Cash Exercise Letter of Authorization may be directed to
Mr. Savereno at msavereno@c-cor.com or
(800) 233-2267,
ext. 4749. You may also execute a cashless exercise of
outstanding exercisable options prior to the deadline set forth
above. |
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If I want to exercise my C-COR warrants, what do I do? |
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A. |
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You are under no obligation to exercise your C-COR warrants
before the completion of the merger. However, if you hold C-COR
warrants and wish to exercise them to acquire C-COR common stock
in order to receive the merger consideration, then prior to
4:00 p.m. (local time) on the second trading day
immediately prior to the date of closing of the merger you
should exercise your warrants by sending the warrant, with the
completed and executed Notice of Exercise and payment to C-COR
Incorporated, 60 Decibel Road, State College, Pennsylvania
16801, to the attention of Mark Savereno. Questions or a request
for a Notice of Exercise may be directed to Mr. Savereno at
msavereno@c-cor.com or
(800) 233-2267,
ext. 4749. You may also execute a cashless exercise of
outstanding exercisable warrants as specified by the provisions
of your warrants prior to the deadline set forth above. |
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Q: |
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Am I entitled to dissenter or appraisal rights in connection
with the merger? |
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No. Shareholders do not have dissenter or appraisal rights
in connection with the merger. |
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Where will the ARRIS common stock be listed? |
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A: |
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ARRIS will remain listed on the NASDAQ Global Select Market
following the merger. The stock symbol for ARRIS is
ARRS. |
|
Q: |
|
When do ARRIS and C-COR expect to complete the merger? |
|
|
|
A: |
|
ARRIS and C-COR will complete the merger when all of the
conditions to completion of the merger have been satisfied or
waived. ARRIS and C-COR are working toward satisfying these
conditions and completing the merger as quickly as possible.
ARRIS and C-COR currently expect to complete the merger in
December 2007. Because the merger is subject to a number of
conditions, some of which are beyond ARRIS and
C-CORs control, the exact timing cannot be predicted. |
|
|
|
Q: |
|
Where can I find more information about the companies? |
|
A: |
|
You can find more information about ARRIS and C-COR from various
sources described under Where You Can Find Additional
Information. |
iii
ARRIS
Shareholder Meeting Questions and Answers
|
|
|
Q: |
|
When and where is the Special Meeting of the ARRIS
shareholders? |
|
|
|
A: |
|
ARRIS will hold a special meeting of shareholders on Friday,
December 14, 2007, at 10:00 a.m. (local time), at the
Companys headquarters located at 3871 Lakefield
Drive, Suwanee, Georgia 30024, which we refer to as the
ARRIS meeting. |
|
|
|
Q: |
|
On what am I being asked to vote? |
|
A: |
|
ARRIS shareholders are being asked to approve the following
proposals at the ARRIS meeting: |
|
|
|
to approve the issuance of ARRIS common stock to be
issued pursuant to the Agreement and Plan of Merger, dated as of
September 23, 2007, by and among ARRIS, C-COR and Merger
Sub;
|
|
|
|
to consider and vote on any adjournment or
postponement of the ARRIS meeting, if necessary, to solicit
additional proxies in favor of the proposal to approve the
issuance of shares of ARRIS common stock pursuant to the merger
agreement; and
|
|
|
|
to transact any other business that may properly
come before the ARRIS meeting or any properly reconvened meeting
following an adjournment or postponement of the ARRIS meeting.
|
|
Q: |
|
What vote is required by the ARRIS shareholders to approve
the issuance of the shares of ARRIS common stock in the
merger? |
|
|
|
A: |
|
Approval of the issuance of ARRIS common stock in the merger
will require the affirmative vote of a majority of the votes
cast by the holders of ARRIS common stock entitled to vote at
the ARRIS meeting. Each share of ARRIS common stock is entitled
to one vote on this proposal and on all other matters scheduled
to come before the ARRIS meeting.
As of the record date, ARRIS directors and executive officers
owned and were entitled to vote 499,589 ARRIS common stock,
representing approximately % of the
shares outstanding on the record date. The directors and
officers of ARRIS have informed ARRIS that they intend to vote
all of their shares of ARRIS common stock FOR the
approval of the issuance of ARRIS common stock in the merger. |
|
|
|
Q: |
|
How do I vote on the proposals to be presented at the ARRIS
meeting? |
|
A: |
|
First, please review the information contained in this joint
proxy statement/prospectus, including the annexes. This joint
proxy statement/prospectus contains important information about
ARRIS, C-COR, Merger Sub and the merger. It also contains
important information about what the boards of directors of
ARRIS and C-COR considered in evaluating the merger. |
|
|
|
Second: |
|
|
|
|
|
If you are a registered holder of ARRIS common
stock, please submit your proxy card promptly by telephone, via
the Internet or by signing, dating and returning the appropriate
enclosed proxy card in the postage-paid envelope provided so
that your shares can be voted at the ARRIS meeting. You may also
attend in person and vote at the ARRIS meeting, even if you have
already submitted a proxy card.
|
|
|
|
|
|
If you hold your ARRIS common stock in
street name, you must contact your broker or other
nominee to obtain a broker voting instruction form (if you did
not receive one together with this joint proxy
statement/prospectus) and for other instructions as to how to
vote your shares.
|
|
|
|
If you hold your ARRIS common stock in both
registered and street name, you will receive both a
proxy card and a broker voting instruction form. To ensure that
all your shares are represented at the ARRIS meeting, please
submit a vote by telephone, via the Internet or by mail for each
proxy card or broker voting instruction form you receive.
|
|
Q: |
|
What happens if I dont indicate how to vote on my
signed proxy card or broker voting instruction form? |
|
A: |
|
If you sign and send in your proxy card but do not include
instructions on how to vote your properly signed form, your
shares will be voted FOR the issuance of ARRIS common
stock in the merger and FOR any adjournment or
postponement of the ARRIS meeting to solicit additional proxies.
|
iv
|
|
|
|
|
If you are a non-registered holder and your shares of ARRIS
common stock are held in street name and you do not
provide voting instructions to your broker or other nominee,
which we refer to as a broker non-vote, your shares
will not be considered to have been voted for the issuance of
ARRIS common stock in the merger or for any adjournment or
postponement of the ARRIS meeting to solicit additional proxies.
However, if you sign and send in your voting instruction form
but do not include instructions on how to vote, your shares will
be voted, FOR the issuance of ARRIS common stock in the
merger and FOR any adjournment or postponement of the
ARRIS meeting to solicit additional proxies.
Given that only a majority of votes cast is required to approve
the proposal, shares not voted for the issuance of ARRIS common
stock in the merger will have no effect on that proposal. Broker
non-votes, if any, will be deemed present for quorum purposes. |
|
|
|
Q: |
|
Can I change my vote after I have mailed my signed proxy card
or broker voting instruction form? |
|
A. |
|
Yes. You can change your vote before your proxy card or broker
voting instruction form is voted at the ARRIS meeting. |
|
|
|
|
|
Registered Holders. If you are a registered
holder, you can change your vote in one of three ways: |
|
|
|
First, before the ARRIS meeting, you can deliver a
signed notice of revocation of proxy to the Secretary of ARRIS
or to the offices of ARRIS proxy solicitor at the
addresses specified below at any time up to and including the
last business day before the ARRIS meeting.
|
|
|
|
Second, you can complete and submit a later-dated
proxy card no later than 5:00 p.m. (local time) on the last
business day before the ARRIS meeting.
|
|
|
|
Third, you can attend the ARRIS meeting and vote in
person. Your attendance at the ARRIS meeting alone will not
revoke your proxy; rather, you must vote at the ARRIS meeting in
order to revoke your previously submitted proxy card.
|
|
|
|
|
|
If you are a registered holder and want to change your proxy
directions by mail or by fax, you should send any notice of
revocation or your completed new proxy card, as the case may be,
to ARRIS at the following address: |
ARRIS Group, Inc.
P.O. Box 11340
New York, New York 10203-0340
Fax: (212) 815-6979
Attention: Maggie Villani
|
|
|
|
|
Non-Registered Holders. If a broker, bank,
trust company or other nominee holds your shares in street
name and you have instructed such nominee to vote your
shares and wish to change your vote, you must follow directions
received from such nominee to change those instructions.
You may also revoke or change your proxy or broker voting
instructions by telephone or via the Internet by following the
instructions set forth below under Can I vote by telephone
or electronically? |
|
|
|
Q: |
|
Can I vote by telephone or electronically? |
|
|
|
A: |
|
Yes, in most cases. To vote by telephone, please call the number
shown on your proxy card or voting instruction form from a
touch-tone phone and follow the instructions. To vote via the
Internet, please go to the website shown on your proxy card or
broker voting instruction form and follow the instructions on
the screen. Please note that you will need to refer to the
control number indicated on your proxy card or voting
instruction form to identify yourself in the electronic voting
system. Please also refer to the instructions on your proxy card
or broker voting instruction form for information regarding the
deadline for voting your shares electronically. If you hold your
ARRIS common stock through a broker or other nominee, you should
check your voting instruction form forwarded to you by such
nominee to see which options are available. |
v
|
|
|
Q: |
|
If my broker or other nominee holds my shares in street
name, will my broker or other nominee vote my shares for
me? |
|
|
|
A: |
|
No. Your broker or other nominee will not vote your shares
unless it receives your specific instructions in a signed voting
instruction form. However, if you sign and send in your voting
instruction form but do not include instructions on how to vote,
your shares will be voted FOR the issuance of ARRIS
common stock in the merger and FOR any adjournments or
postponement of the ARRIS meeting to solicit additional proxies.
After carefully reading and considering the information
contained in this joint proxy statement/prospectus, including
the annexes, please follow the directions provided by your
nominee with respect to voting procedures and complete a broker
voting instruction form. Please ensure that your broker voting
instruction form is submitted to your nominee in sufficient time
to ensure that your vote is received by ARRIS on or before
5:00 p.m. (local time) on December 13, 2007. If you
have instructed a nominee to vote your shares and wish to change
your vote, you must follow directions received from your nominee
to change those instructions. |
|
|
|
Q: |
|
Who can help answer my questions about the merger? |
|
|
|
A: |
|
Morrow & Co., LLC is acting as the proxy solicitor for
ARRIS. If you have any questions about the merger or about how
to vote your shares, please call Morrow & Co., LLC
toll free at
1-800-607-0088. |
vi
C-COR
Shareholder Meeting Questions and Answers
|
|
|
Q: |
|
When and where is the Special Meeting of the C-COR
shareholders? |
|
|
|
A: |
|
We will hold the special meeting of the shareholders of C-COR on
December 14, 2007, at 9:00 a.m. (local time), at
1735 Market Street, 42nd Floor, Philadelphia, Pennsylvania
19103, which we refer to as the C-COR meeting. |
|
|
|
Q: |
|
On what am I being asked to vote? |
|
A: |
|
C-COR shareholders are being asked to approve the following
proposals at the C-COR meeting: |
|
|
|
to adopt the Agreement and Plan of Merger, dated as
of September 23, 2007, by and among ARRIS, C-COR and Merger
Sub;
|
|
|
|
to consider and vote on any adjournment or
postponement of the C-COR meeting, if necessary, to solicit
additional proxies in favor of the proposal to adopt the merger
agreement; and
|
|
|
|
to transact any other business that may properly
come before the C-COR meeting or any properly reconvened meeting
following an adjournment or postponement of the C-COR meeting.
|
|
Q: |
|
What vote is required to approve the merger agreement at the
C-COR meeting? |
|
A. |
|
Adoption of the merger agreement requires the affirmative vote
of the majority of the votes cast by the holders of C-COR common
stock entitled to vote at the C-COR meeting. Each share of C-COR
common stock is entitled to one vote on this proposal and on all
other matters scheduled to come before the
C-COR
meeting. |
|
|
|
|
|
As of the record date, C-COR directors and executive officers
owned and were entitled to vote 4,587,714 shares of C-COR
common stock, representing approximately
% of the C-COR common stock outstanding
on that date. The directors and officers of C-COR have informed
C-COR that they intend to vote all of their shares of C-COR
common stock FOR the adoption of the merger agreement. |
|
|
|
Q: |
|
How do I vote on the proposals to be presented at the C-COR
meeting? |
|
A: |
|
First, please review the information contained in this joint
proxy statement/prospectus, including the annexes. This joint
proxy statement/prospectus contains important information about
ARRIS, C-COR, Merger Sub and the merger. It also contains
important information about what the Boards of Directors of
ARRIS and C-COR considered in evaluating the merger. |
|
|
|
Second: |
|
|
|
|
|
If you are a registered holder of C-COR common
stock, please submit your proxy card promptly by telephone, via
the Internet or by signing, dating and returning the enclosed
appropriate proxy card in the postage-paid envelope provided so
that your shares can be voted at the C-COR meeting. You may also
attend in person and vote at the C-COR meeting, even if you have
already submitted a proxy card.
|
|
|
|
|
|
If you hold your C-COR common stock in
street name, you must contact your broker or other
nominee to obtain a broker voting instruction card or form (if
you did not receive one together with this joint proxy
statement/prospectus) and for other instructions as to how to
vote your shares.
|
|
|
|
If you hold your C-COR common stock in both
registered and street name, you will receive both a
proxy card and a broker voting instruction card or form.
|
|
|
|
To ensure that all of your shares are represented at
the C-COR meeting, please submit a vote by telephone, via the
Internet or by mail for each proxy card or broker voting
instruction card or form you receive.
|
|
Q: |
|
What happens if I dont indicate how to vote on my
signed proxy card or broker voting instruction card or form? |
|
A: |
|
If you sign and send in your proxy card but do not include
instructions on how to vote your properly signed form, your
shares will be voted FOR the adoption of the merger
agreement and FOR any adjournment or postponement of the
C-COR meeting to solicit additional proxies. |
vii
|
|
|
|
|
If your shares of C-COR are held in street name and
you do not provide voting instructions to your broker or other
nominee, which we refer to a broker non-vote, your shares will
not be considered to have been voted for the adoption of the
merger agreement or any adjournment or postponement of the C-COR
meeting to solicit additional proxies. However, if you sign and
send in your voting instruction form but do not include
instructions on how to vote, your shares will be voted
FOR the adoption of the merger agreement and FOR
any adjournment or postponement of the
C-COR
meeting to solicit additional proxies. |
|
|
|
|
|
Because the required vote of C-COR shareholders is based upon
the number of votes cast, rather than upon the number of shares
of C-COR common stock outstanding, any shares for which a holder
does not submit a proxy or vote in person at the C-COR meeting,
including abstentions and broker non-votes, will not be counted
in connection with the adoption of the merger agreement. Broker
non-votes will be deemed present for quorum purposes. |
|
|
|
|
|
|
Q: |
|
Can I change my vote after I have mailed my signed proxy card
or broker voting instruction card or form? |
|
|
|
A: |
|
Yes. You can change your vote before your proxy card or broker
voting instruction card or form is voted at the C-COR meeting. |
|
|
|
Registered Holders. If you are a registered
holder, you can change your vote in one of three ways: |
|
|
|
First, before the C-COR meeting, you can deliver a
signed notice of revocation of proxy to the Secretary of C-COR
at the address specified below at any time up to and including
the last business day before the C-COR meeting.
|
|
|
|
Second, you can complete and submit a later-dated
proxy card at any time up to and including the last business day
before the C-COR meeting.
|
|
|
|
Third, you can attend the C-COR meeting and vote in
person. Your attendance at the C-COR meeting alone will not
revoke your proxy; rather, you must also vote at the C-COR
meeting in order to revoke your previously submitted proxy card.
|
|
|
|
If you are a C-COR shareholder and want to change your proxy
directions by mail or by fax, you should send any notice of
revocation or your completed new proxy card, as the case may be,
to C-COR at the following address: |
Secretary
C-COR Incorporated
c/o American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Fax:
(718) 765-8730
|
|
|
|
|
Non-Registered Holders. If a broker, bank, trust company
or other nominee holds your shares in street name
and you have instructed such nominee to vote your shares and
wish to change your vote, you must follow directions received
from such nominee to change those instructions. |
|
|
|
You may also revoke or change your proxy or broker voting
instructions by telephone or via the Internet by following the
instructions set forth below under Can I vote by telephone
or electronically? |
|
Q: |
|
Can I vote by telephone or electronically? |
|
|
|
A: |
|
Yes, in most cases. To vote by telephone, please call the number
shown on your proxy card or voting instruction card or form from
a touch-tone phone and follow the instructions. To vote via the
Internet, please go to the website shown on your proxy card or
voting instruction card or form and follow the instructions on
the screen. Please note that you will need to refer to the
control number indicated on your proxy card or voting
instruction card or form to identify yourself in the electronic
voting system. Please also refer to the instructions on your
proxy card or broker voting instruction card or form for
information regarding the deadline for voting your shares by
telephone or electronically. If you hold your shares of C-COR
common stock through a broker or other nominee, you should also
check your voting instruction card or form forwarded to you by
such nominee to see which options are available. |
viii
|
|
|
Q: |
|
If my broker or other nominee holds my shares of C-COR common
stock in street name, will my broker or other
nominee vote my shares for me? |
|
|
|
A: |
|
No. Your broker or other nominee will not vote your shares
unless it receives your specific instructions in a signed voting
instruction form. However, if you sign and send in your voting
instruction form but do not include instructions on how to vote,
your shares will be voted FOR the adoption of the merger
agreement and FOR any adjournment or postponement of the
C-COR
meeting to solicit additional proxies. After carefully reading
and considering the information contained in this joint proxy
statement/prospectus, including the annexes, please follow the
directions provided by your nominee with respect to voting
procedures and complete a voting instruction form. Please ensure
that your voting instruction form is submitted to your nominee
in sufficient time to ensure that your vote is received by C-COR
on or before 5:00 p.m. (local time) on December 13,
2007. If you have instructed a nominee to vote your shares and
wish to change your vote, you must follow directions received
from your nominee to change those instructions. |
|
|
|
Q. |
|
What are the U.S. federal income tax consequences of the
merger to holders of C-COR common stock? |
|
A. |
|
The transaction will generally be tax-free to C-COR shareholders
who receive solely ARRIS common stock for their C-COR common
stock. C-COR shareholders who receive solely cash for their
C-COR common stock generally will recognize gain or loss equal
to the difference between the amount of cash received and their
tax basis in their shares of C-COR common stock. C-COR
shareholders who receive both ARRIS common stock and cash for
their C-COR common stock generally will recognize gain equal to
the lesser of (i) the amount of cash received and
(ii) the excess of the amount realized in the
transaction (i.e., the fair market value of the ARRIS common
stock at the effective time of the merger plus the amount of
cash received) over their tax basis in their C-COR common stock.
For more information, see Material U.S. Federal Income Tax
Consequences of the Merger Tax Consequences of the
Merger to
C-COR
Shareholders. |
|
Q: |
|
Who can help answer my questions about the merger? |
|
|
|
A: |
|
D.F. King & Co., Inc. is acting as the proxy solicitor
for C-COR. If you have any questions about the merger or about
how to vote your shares or options, please call D.F.
King & Co., Inc. toll free at the following number:
1-888-644-6071. |
ix
This summary highlights selected information from this joint
proxy statement/prospectus and may not contain all the
information that is important to you. To understand the merger
fully and for a more complete description of the legal terms of
the merger, you should read carefully this entire joint proxy
statement/prospectus, including the annexes, and the other
documents to which we have referred you. For information on how
to obtain the documents that we have filed with the SEC, see
Where You Can Find Additional Information.
ARRIS
Group, Inc.
3871 Lakefield Drive
Suwanee, Georgia 30024
(678) 473-2000
ARRIS provides broadband local access networks with
best-in-class
video, high-speed data, mobile and fixed-line telephony systems
for the delivery of voice, video and data to their residential
and small-to-medium sized business customers. ARRIS
complete solutions enhance the reliability and value of
converged services from the network to the end-user.
Additionally, ARRIS provides a complete set of tools and cable
system infrastructure products. Headquartered in Atlanta,
Georgia, ARRIS has research and development centers in Atlanta,
Chicago, Cork, Ireland and Shenzhen, China and operates support
and sales offices throughout the world.
ARRIS common stock is listed on the NASDAQ Global Select
Market and trades under the symbol ARRS. ARRIS was
organized as a corporation under the laws of the State of
Delaware.
For additional information about ARRIS and its business, see
Where You Can Find Additional Information.
C-COR
Incorporated
60 Decibel Road
State College, Pennsylvania 16801
(814) 238-2461
C-COR, headquartered in State College, Pennsylvania, is a global
provider of integrated network solutions that include products,
content and operations management systems, and professional
services for broadband networks. Its core strategy is to lead
network operators through the transition to Internet
Protocol-based networks by leveraging its extensive global
installed base of products and experienced workforce to deliver
network solutions that meet the business needs of its customers.
C-CORs common stock is listed on the NASDAQ Global Select
Market and trades under the symbol CCBL. C-COR was
organized as a corporation under the laws of the Commonwealth of
Pennsylvania.
For additional information about C-COR and its business, see
Where You Can Find Additional Information.
Air
Merger Subsidiary, Inc.
Merger Sub, a wholly owned subsidiary of ARRIS, is a Delaware
corporation. Merger Sub does not currently conduct any
activities other than those contemplated by the merger
agreement. Merger Sub is the surviving entity of a
reorganization merger between Keptel, Inc. and the original
corporation formed by ARRIS for the purpose of effecting the
merger. ARRIS undertook the reorganization in November 2007 for
future tax planning purposes.
1
The transaction will be implemented by means of a merger of
C-COR with and into Merger Sub. Following completion of the
merger, Merger Sub will change its name to C-COR
Incorporated and will remain a wholly owned subsidiary of
ARRIS.
Merger
Consideration (page 57)
Under the merger agreement, C-COR shareholders will have the
right to elect to receive either $13.75 in cash, without
interest, or 0.9642 of a share of ARRIS common stock, for each
share of C-COR common stock that they own. For example, if a
C-COR shareholder owns 100 shares of C-COR common stock, he
or she could elect to receive cash in exchange for
40 shares and shares of ARRIS common stock in exchange for
the other 60 shares.
However, regardless of the elections made by individual C-COR
shareholders, ARRIS and C-COR have agreed to fix the number of
shares of C-COR common stock that will be converted into shares
of ARRIS common stock and the number of shares that will be
converted into cash. Under the merger agreement, approximately
49% of the shares of C-COR common stock outstanding immediately
before completion of the merger will be converted into the right
to receive the stock consideration and the remaining
approximately 51% of the shares will be converted into the right
to receive the cash consideration, although a small portion of
the consideration that would otherwise be payable in stock may
be paid in cash as described under The Merger
Agreement Merger Consideration and Shareholder
Elections Stock Consideration Adjustments.
Therefore, the cash and stock elections that C-COR shareholders
make with respect to their shares will be subject to proration
to achieve this required ratio of cash and stock consideration.
Specifically, if C-COR shareholders elect to receive more stock
consideration or cash consideration than is provided for under
the merger agreement, elections for the over-subscribed form of
merger consideration will be prorated so that the overall
approximate 51/49 split of the merger consideration is achieved.
For example, if C-COR shareholders elect, in the aggregate, to
exchange more than 49% of the outstanding C-COR shares for
shares of ARRIS common stock, then C-COR shareholder elections
to receive ARRIS common stock for shares of C-COR common stock
will be adjusted on a pro rata basis and, since it is unlikely
that C-COR shareholders collectively will elect exactly the
51/49 split, a portion of the shares electing ARRIS common stock
will receive the cash consideration instead. As a result, C-COR
shareholders are likely to receive cash or shares of ARRIS stock
for greater or fewer C-COR shares than they specify in their
election. See the table on page 60 for examples of the
potential effects of the proration on C-COR shareholder
elections.
The implied value of the stock consideration will fluctuate as
the market price of ARRIS common stock fluctuates. As a result
of this fluctuation in the implied value, ARRIS and C-COR have
agreed that, in the event the average closing price of
ARRIS common stock on the NASDAQ Global Select Market for
the ten-trading day period ending three trading days before the
anticipated closing date, which we refer to as the average
closing price, is less than $12.83, the exchange ratio for the
conversion of C-COR common stock into ARRIS common stock will be
increased so that the per share stock consideration will equal
$12.38, based on the average closing price. The per share cash
consideration will remain $13.75. The $12.83 threshold
represents a 10% decrease from the $14.26 closing price of
ARRIS common stock on the NASDAQ Global Select Market on
the last trading day before the merger agreement was signed. The
increase in the exchange ratio will result in an increase in the
number of shares of ARRIS common stock issued as stock
consideration. However, instead of issuing those additional
shares, ARRIS may, at its option and subject to certain
limitations, pay the incremental amount in cash to the C-COR
shares receiving the stock consideration. No additional increase
in the stock consideration will be made in the event the average
closing price is less than $11.41. In such circumstances, ARRIS
will use an average closing price of $11.41 and the exchange
ratio will be fixed at 1.0848 shares of ARRIS common stock
for each share of C-COR common stock receiving the stock
consideration. In addition, if the average closing price is less
than $11.41, both ARRIS and C-COR will have the right to
terminate the merger agreement. See The Merger
Agreement Termination beginning on
page 71 for more information.
2
Similarly, in the event the average closing price is more than
$15.69, the exchange ratio for the conversion of C-COR common
stock into ARRIS common stock will be decreased so that the per
share stock consideration will equal $15.13, based on the
average closing price. The per share cash consideration will
remain $13.75. The $15.69 threshold represents a 10% increase
over the $14.26 closing price of ARRIS common stock on the
NASDAQ Global Select Market on the last trading day before the
merger agreement was signed. This decrease in the exchange ratio
will result in a reduction in the number of shares of ARRIS
common stock issued as stock consideration. No additional
decrease in the exchange ratio will be made, however, in the
event the average closing price is more than $17.11. In such
circumstances, ARRIS will use an average closing price of $17.11
and the exchange ratio will be fixed at 0.8839 shares of ARRIS
common stock for each share of C-COR common stock receiving the
stock consideration.
The table below provides examples of the consideration that will
be paid to each C-COR shareholder electing to receive cash
consideration and stock consideration, assuming the average
closing price of the ARRIS common stock is as indicated. The
table assumes that in the event the average closing price is
less than $12.83, ARRIS elects to pay the additional
consideration in shares of ARRIS common stock.
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
100% Cash
|
|
|
Pro Rata Values Reflecting 51% Cash/49% Stock Consideration
Mix
|
|
ARRIS
|
|
|
100% Stock Election
|
|
|
Election
|
|
|
|
|
|
Implied Stock
|
|
|
Cash
|
|
|
Average
|
|
Average
|
|
|
|
|
|
Value per
|
|
|
Value per
|
|
|
|
|
|
Consideration
|
|
|
Consideration
|
|
|
Implied Value
|
|
Closing
|
|
|
Exchange
|
|
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C-COR
|
|
|
C-COR
|
|
|
Exchange
|
|
|
Value per
|
|
|
Value per
|
|
|
per C-COR
|
|
Price
|
|
|
Ratio
|
|
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Share
|
|
|
Share
|
|
|
Ratio
|
|
|
C-COR Share
|
|
|
C-COR Share
|
|
|
Share
|
|
|
$
|
18.54
|
|
|
|
0.8839x
|
|
|
$
|
16.39
|
|
|
$
|
13.75
|
|
|
|
0.4339
|
x
|
|
$
|
8.04
|
|
|
$
|
7.00
|
|
|
$
|
15.04
|
|
$
|
17.11
|
(1)
|
|
|
0.8839x
|
|
|
$
|
15.13
|
|
|
$
|
13.75
|
|
|
|
0.4339
|
x
|
|
$
|
7.43
|
|
|
$
|
7.00
|
|
|
$
|
14.43
|
|
$
|
16.40
|
|
|
|
0.9223x
|
|
|
$
|
15.13
|
|
|
$
|
13.75
|
|
|
|
0.4528
|
x
|
|
$
|
7.43
|
|
|
$
|
7.00
|
|
|
$
|
14.43
|
|
$
|
15.69
|
|
|
|
0.9642x
|
|
|
$
|
15.13
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
7.43
|
|
|
$
|
7.00
|
|
|
$
|
14.43
|
|
$
|
14.97
|
|
|
|
0.9642x
|
|
|
$
|
14.43
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
7.09
|
|
|
$
|
7.00
|
|
|
$
|
14.09
|
|
$
|
14.26
|
|
|
|
0.9642x
|
|
|
$
|
13.75
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
6.75
|
|
|
$
|
7.00
|
|
|
$
|
13.75
|
|
$
|
13.55
|
|
|
|
0.9642x
|
|
|
$
|
13.07
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
6.41
|
|
|
$
|
7.00
|
|
|
$
|
13.41
|
|
$
|
12.83
|
|
|
|
0.9642x
|
|
|
$
|
12.38
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
6.08
|
|
|
$
|
7.00
|
|
|
$
|
13.08
|
|
$
|
12.12
|
|
|
|
1.0210x
|
|
|
$
|
12.38
|
|
|
$
|
13.75
|
|
|
|
0.5012
|
x
|
|
$
|
6.08
|
|
|
$
|
7.00
|
|
|
$
|
13.08
|
|
$
|
11.41
|
(2)
|
|
|
1.0848x
|
|
|
$
|
12.38
|
|
|
$
|
13.75
|
|
|
|
0.5325
|
x
|
|
$
|
6.08
|
|
|
$
|
7.00
|
|
|
$
|
13.08
|
|
$
|
9.98
|
|
|
|
1.0848x
|
|
|
$
|
10.83
|
|
|
$
|
13.75
|
|
|
|
0.5325
|
x
|
|
$
|
5.32
|
|
|
$
|
7.00
|
|
|
$
|
12.32
|
|
|
|
|
(1)
|
|
No further adjustment will be made
to the exchange ratio above the $17.11 per share threshold.
|
|
(2)
|
|
No further adjustment will be made
to the exchange ratio below the $11.41 per share threshold.
|
ARRIS common stock trades on the NASDAQ Global Select
Market under the ticker symbol ARRS. C-COR common
stock trades on the NASDAQ Global Select Market under the ticker
symbol CCBL. You may obtain current market price
quotations for each companys common stock from newspapers,
over the Internet, or from other sources.
Holders of C-COR common stock who receive shares of ARRIS common
stock in the merger will not receive any fractional shares of
ARRIS common stock. Instead, the total number of shares of ARRIS
common stock that a C-COR shareholder will receive in the merger
will be rounded down to the nearest whole number and ARRIS will
pay cash for any resulting fractional share of ARRIS common
stock that a C-COR shareholder otherwise would be entitled to
receive. The amount of cash payable for a fractional share of
ARRIS common stock will be determined by multiplying the
fraction by the average closing price.
Treatment
of C-COR Stock Options and Warrants in the Merger
(page 62)
All C-COR options outstanding at the time of the merger, except
for any options awarded subsequent to September 23, 2007
(the date the merger agreement was signed) will become fully
vested as a result of the merger. In addition, options granted
to C-COR non-employee directors in October 2007, as part of
C-CORs customary annual grant, will become fully vested as
a result of the merger. Any options that are not exercised prior
to the effective time of the merger will be converted into
options to acquire shares of ARRIS common
3
stock and both the number of shares underlying the option and
the exercise price will be adjusted to reflect the stock
consideration (or exchange ratio).
As of the effective time of the merger, each outstanding warrant
to purchase shares of C-COR common stock will be cancelled. As a
result, holders of outstanding C-COR warrants must exercise such
warrants prior to the effective time of the merger in order to
be entitled to receive any merger consideration.
In reaching their respective conclusions to approve the merger
and the merger agreement and recommend, with respect to ARRIS,
that the ARRIS shareholders vote FOR approval of the
issuance of ARRIS common stock issued pursuant to the merger
agreement, and, with respect to C-COR, that the C-COR
shareholders vote FOR adoption of the merger agreement,
the ARRIS and C-COR boards of directors independently considered
a number of factors. The strategic advantages of the merger and
financial incentives of the merger in comparison to a
stand-alone strategy for each company were carefully weighed
against the potential risks of the merger to ARRIS, C-COR and
their respective shareholders. For a detailed description of the
factors considered by the ARRIS board of directors, see
The Merger Factors Considered by the ARRIS
Board of Directors beginning on page 33. For a
detailed description of the factors considered by the C-COR
board of directors, see The Merger Factors
Considered by the C-COR Board of Directors beginning on
page 41.
Recommendations
of the Boards of Directors
ARRIS. After careful consideration, the ARRIS
board of directors determined that the merger agreement and the
transactions it contemplates are fair to and in the best
interests of ARRIS and its shareholders and approved and adopted
the merger agreement and the issuance of ARRIS common stock in
the merger. The ARRIS board of directors recommends that the
ARRIS shareholders vote FOR the proposal to authorize the
issuance of ARRIS common stock pursuant to the merger.
In evaluating the merger agreement, the ARRIS board of directors
consulted with ARRIS senior management and ARRIS
legal and financial advisors and considered a number of
strategic, financial and other considerations referred to under
The Merger Factors Considered by the ARRIS
Board of Directors beginning on page 33.
C-COR. After careful consideration, the C-COR
board of directors unanimously determined that the merger
agreement and the transactions it contemplates are fair to and
in the best interests of C-COR and its shareholders and approved
the merger agreement. The C-COR board of directors recommends
that C-CORs shareholders vote FOR adoption of the
merger agreement.
In reaching its decision to adopt the merger agreement and to
recommend that C-COR shareholders vote to adopt the merger
agreement, the C-COR board of directors consulted with
C-CORs management and
C-CORs
financial and legal advisors and considered a number of
strategic, financial and other considerations referred to under
The Merger Factors Considered by the C-COR
Board of Directors beginning on page 41.
Opinions
of Financial Advisors (page 34)
ARRIS. In connection with the merger,
ARRIS board of directors received an opinion, dated
September 23, 2007, from ARRIS financial advisor, UBS
Securities LLC, which we refer to as UBS, as to the fairness,
from a financial point of view and as of the date of such
opinion, to ARRIS of the per share merger consideration to be
paid by ARRIS. The full text of UBS written opinion, dated
September 23, 2007, is attached to this joint proxy
statement/prospectus as Annex B. Holders of shares
of ARRIS common stock are encouraged to read this opinion
carefully in its entirety for a description of the assumptions
made, procedures followed, matters considered and limitations on
the review undertaken. UBS opinion was provided for the
benefit of ARRIS board of directors in connection with,
and for the purpose of, its evaluation of the merger
consideration from a financial point of view, does not address
any other aspect of the merger and does not constitute a
recommendation to any shareholder as to how such shareholder
should vote or act with respect to the merger. UBS opinion
does not address the relative merits of the merger as
4
compared to other business strategies or transactions that
might be available to ARRIS or ARRIS underlying business
decision to effect the merger. For purposes of UBS
opinion, the term per share merger consideration
refers to the per share value of the merger consideration of
$13.75 based on the cash election consideration of $13.75 and
the implied value, utilizing the closing price of ARRIS common
stock on September 21, 2007, of the stock election
consideration of 0.9642 of a share of ARRIS common stock.
C-COR. On September 23, 2007, Merrill
Lynch, Pierce, Fenner & Smith Incorporated, which we
refer to as Merrill Lynch, delivered to C-CORs board of
directors its oral opinion, which opinion was subsequently
confirmed in writing, to the effect that, as of that date and
based upon the assumptions made, matters considered and limits
of review set forth in its written opinion, the merger
consideration to be received by holders of C-COR common stock
pursuant to the merger was fair, from a financial point of view,
to those holders. A copy of Merrill Lynchs written opinion
is attached to this joint proxy statement/prospectus as
Annex C. C-COR encourages its shareholders to read
Merrill Lynchs opinion carefully and in its entirety for a
description of the assumptions made, matters considered and
limits on the scope of review undertaken by Merrill Lynch.
Merrill Lynchs opinion was intended for the use and
benefit of C-CORs board of directors, does not address the
merits of the underlying decision by C-COR to engage in the
merger, and does not constitute a recommendation to any C-COR
shareholder as to how that shareholder should vote on the
proposed merger or any related matter or as to what form of
merger consideration such shareholder should elect.
Interests
of Directors and Management in the Merger
(page 52)
In considering the recommendation of the C-COR board of
directors with respect to the adoption of the merger agreement,
C-COR shareholders should be aware that some of the directors
and officers of C-COR have interests in the merger that are
different from, or are in addition to, the interests of C-COR
shareholders generally. For example, Mr. David A. Woodle,
Chairman and Chief Executive Officer of C-COR, has an employment
agreement and each of the other executive officers of C-COR has
a change of control agreement with C-COR that provide for
severance payments and the acceleration of certain benefits if
the executive is terminated involuntarily within 18 months
after a change of control. In addition, under the C-COR
Incentive Plan, pursuant to which stock options held by the
executive officers and directors of C-COR were issued, all
unvested stock options will vest upon consummation of the merger.
Under the merger agreement, ARRIS must take such steps as are
reasonably necessary to insure that a nominee to the board of
directors of ARRIS as selected by C-COR (and reasonably
acceptable to ARRIS) is appointed to the board of directors of
ARRIS. At the time the C-COR board of directors approved the
merger agreement, the C-COR board of directors had not
determined whom it would propose as a nominee to the ARRIS board
of directors.
C-CORs board of directors was aware of these interests and
considered them, among other matters, in approving the merger
agreement and the merger and making its recommendation that the
C-COR shareholders adopt the merger agreement.
For a further discussion of interests of directors and executive
officers of C-COR in the merger, see The
Merger Interests of C-CORs Directors and
Management in the Merger.
Material
Income Tax Consequences of the Merger (page 74)
Neither ARRIS nor C-COR will be required to complete the merger
unless it receives an opinion from its respective legal counsel
to the effect that the merger will qualify as a
reorganization for United States federal income tax
purposes. Therefore, the transaction generally will be tax-free
to holders of C-COR common stock for federal income tax purposes
except to the extent that they receive cash, including
consideration in the merger and any cash that they receive
instead of fractional shares of ARRIS common stock.
Those holders receiving solely cash for their C-COR common stock
generally will recognize gain or loss equal to the difference
between the amount of cash received and their tax basis in their
shares of C-COR
5
common stock. Those holders receiving both ARRIS common stock
and cash for their C-COR common stock generally will recognize
gain equal to the lesser of (i) the amount of cash received
and (ii) the excess of the amount realized in
the transaction (i.e., the fair market value of the ARRIS common
stock at the effective time of the merger plus the amount of
cash received) over their tax basis in their C-COR common stock.
In certain circumstances, the gain or, in the case of recipients
of cash only, the entire amount of cash received, could be
taxable as ordinary dividend income rather than as a capital
gain.
No
Dissenters or Appraisal Rights (page 55)
Under Pennsylvania law, C-COR shareholders are not entitled to
dissenters or appraisal rights in connection with the
merger because shares of C-COR common stock are listed on the
NASDAQ Global Select Market.
Conditions
to Completion of the Merger (page 68)
The respective obligations of ARRIS and C-COR to effect the
merger and the other transactions contemplated by the merger
agreement are subject to the satisfaction and waiver of various
conditions as more fully described under The Merger
Agreement Conditions to Completion of the
Merger. These conditions include:
|
|
|
|
|
adoption by C-COR shareholders of the merger agreement;
|
|
|
|
approval by ARRIS shareholders of the issuance of ARRIS common
stock pursuant to the merger;
|
|
|
|
absence of legal prohibitions on consummating the merger and the
transactions contemplated by the merger agreement or other legal
issues that would have a material adverse effect on ARRIS or
C-COR;
|
|
|
|
termination or expiration of the waiting period under the
Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended, which we refer to
as the HSR Act;
|
|
|
|
receipt of consent and approval, by each of C-COR and ARRIS, of
any person whose consent or approval is required under any
agreement or instrument in order to permit the consummation of
the merger and the transactions contemplated by the merger
agreement;
|
|
|
|
material accuracy of the representations and warranties of ARRIS
and C-COR with specified exceptions;
|
|
|
|
material performance of the other party to the merger agreement
of all agreements and covenants required by the merger
agreement; and
|
|
|
|
receipt of tax opinions by Ballard Spahr Andrews &
Ingersoll, LLP and Troutman Sanders LLP substantially to the
effect that the merger will constitute a reorganization within
the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended, which we refer to as the Code.
|
Neither ARRIS nor C-COR can give any assurances when and if all
of the conditions to the merger will either be satisfied or
waived or that the merger will occur.
6
Termination
of the Merger Agreement (page 71)
Under the merger agreement, either party may terminate the
agreement and abandon the merger prior to the effective time of
the merger, whether before or after the approval by shareholders
of C-COR and ARRIS, as authorized by the board of directors of
the terminating party under certain circumstances as more fully
described in The Merger Agreement
Termination. In the event of termination of the merger
agreement and abandonment of the merger, ARRIS or C-COR may be
required to pay to the other party a termination fee equal to
$22.5 million. The circumstances under which either party
may be required to pay a termination fee are more fully
described in The Merger Agreement Termination
Fee.
Differences
in Rights of C-COR Shareholders After the Merger
(page 78)
C-COR shareholders who receive ARRIS common stock in the merger
will become ARRIS shareholders as a result of the merger. Their
rights as shareholders after the merger will be governed by
Delaware law and by ARRIS certificate of incorporation and
bylaws. The rights of ARRIS shareholders are different in
certain respects from the rights of C-CORs shareholders.
Some of the principal differences are described in this joint
proxy statement/prospectus under Certain Differences in
Rights of Shareholders.
7
SELECTED
HISTORICAL FINANCIAL DATA
Selected
Historical Consolidated Financial Data of ARRIS
The following selected financial data of ARRIS for each of the
fiscal years in the five-year period ended December 31,
2006 have been derived from the audited consolidated financial
statements of ARRIS and the following selected historical
financial data of ARRIS for each of the nine-month periods ended
September 30, 2007 and 2006 have been derived from the
unaudited consolidated financial statements of ARRIS. This
information is only a summary and should be read in conjunction
with the audited consolidated financial statements of ARRIS and
the notes thereto and the Managements Discussion and
Analysis of Financial Condition and Results of Operations
included in ARRIS Annual Report on
Form 10-K
filed with the SEC on March 1, 2007, and the unaudited
consolidated financial statements of ARRIS and the notes thereto
and the Managements Discussion and Analysis of
Financial Condition and Results of Operations included in
ARRIS Quarterly Report on
Form 10-Q
filed with the SEC on November 2, 2007, which are
incorporated by reference into this joint proxy
statement/prospectus. See Where You Can Find Additional
Information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
|
|
|
September 30,
|
|
|
Year Ended December 31,
|
|
|
|
2007
|
|
|
2006
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
|
|
|
(In thousands, except per share data)
|
|
|
Consolidated Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
742,633
|
|
|
$
|
656,980
|
|
|
$
|
891,551
|
|
|
$
|
680,417
|
|
|
$
|
490,041
|
|
|
$
|
433,986
|
|
|
$
|
651,883
|
|
Net income (loss) from continuing operations
|
|
$
|
88,440
|
|
|
$
|
71,911
|
|
|
$
|
142,066
|
|
|
$
|
51,275
|
|
|
$
|
(30,510
|
)
|
|
$
|
(47,664
|
)
|
|
$
|
(114,413
|
)
|
Net income (loss) per common share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.81
|
|
|
$
|
0.67
|
|
|
$
|
1.32
|
|
|
$
|
0.53
|
|
|
$
|
(0.36
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(1.40
|
)
|
Diluted
|
|
$
|
0.79
|
|
|
$
|
0.66
|
|
|
$
|
1.30
|
|
|
$
|
0.52
|
|
|
$
|
(0.36
|
)
|
|
$
|
(0.62
|
)
|
|
$
|
(1.40
|
)
|
Weighted average common shares and common share equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
109,354
|
|
|
|
107,007
|
|
|
|
107,268
|
|
|
|
96,581
|
|
|
|
85,283
|
|
|
|
76,839
|
|
|
|
81,934
|
|
Diluted
|
|
|
111,595
|
|
|
|
109,311
|
|
|
|
109,490
|
|
|
|
98,264
|
|
|
|
85,283
|
|
|
|
76,839
|
|
|
|
81,934
|
|
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
1,098,242
|
|
|
$
|
630,037
|
|
|
$
|
1,013,557
|
|
|
$
|
529,403
|
|
|
$
|
450,678
|
|
|
$
|
451,859
|
|
|
$
|
563,412
|
|
Long-term debt and capital lease obligations, less current
portion
|
|
$
|
276,000
|
|
|
$
|
|
|
|
$
|
276,000
|
|
|
$
|
|
|
|
$
|
75,000
|
|
|
$
|
125,092
|
|
|
$
|
158
|
|
8
Selected
Historical Consolidated Financial Data of C-COR
The following selected financial data of C-COR for each of the
fiscal years ended June 29, 2007, June 30, 2006,
June 24, 2005, June 25, 2004 and June 27, 2003,
have been derived from the audited consolidated financial
statements of C-COR and the following selected financial data of
C-COR for
each of the
13-week
periods ended September 28, 2007 and September 29,
2006 have been derived from the unaudited consolidated financial
statements of
C-COR. This
information is only a summary and should be read in conjunction
with the audited consolidated financial statements of C-COR and
the notes thereto and the Managements Discussion and
Analysis of Financial Condition and Results of Operations
included in C-CORs Annual Report on
Form 10-K
filed with the SEC on September 12, 2007, as amended on
October 11, 2007 and the unaudited consolidated financial
statements of
C-COR and
the notes thereto and the Managements Discussion and
Analysis of Financial Condition and Results of Operations
included in
C-CORs
Quarterly Report on
Form 10-Q
filed with the SEC on November 6, 2007, which is
incorporated by reference into this joint proxy
statement/prospectus. See Where You Can Find Additional
Information.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
13-Week Period Ended
|
|
|
Fiscal Year Ended
|
|
|
|
September 28,
|
|
|
September 29,
|
|
|
June 29,
|
|
|
June 30,
|
|
|
June 24,
|
|
|
June 25,
|
|
|
June 27,
|
|
|
|
2007
|
|
|
2006
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
|
(In thousands, except per share data)
|
|
|
Consolidated Operating Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
71,927
|
|
|
$
|
60,366
|
|
|
$
|
277,329
|
|
|
$
|
213,946
|
|
|
$
|
199,237
|
|
|
$
|
197,770
|
|
|
$
|
179,105
|
|
Income (loss) from continuing operations(1)
|
|
$
|
5,526
|
|
|
$
|
2,174
|
|
|
$
|
25,649
|
|
|
$
|
(30,072
|
)
|
|
$
|
(26,433
|
)
|
|
$
|
36,803
|
|
|
$
|
(138,425
|
)
|
Income (loss) per share from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.11
|
|
|
$
|
0.04
|
|
|
$
|
0.53
|
|
|
$
|
(0.63
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
0.95
|
|
|
$
|
(3.81
|
)
|
Diluted
|
|
$
|
0.11
|
|
|
$
|
0.04
|
|
|
$
|
0.51
|
|
|
$
|
(0.63
|
)
|
|
$
|
(0.58
|
)
|
|
$
|
0.92
|
|
|
$
|
(3.81
|
)
|
Weighted average common shares and common share equivalents
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
50,229
|
|
|
|
48,048
|
|
|
|
48,762
|
|
|
|
47,891
|
|
|
|
45,325
|
|
|
|
38,832
|
|
|
|
36,384
|
|
Diluted
|
|
|
53,916
|
|
|
|
48,529
|
|
|
|
52,565
|
|
|
|
47,891
|
|
|
|
45,325
|
|
|
|
40,223
|
|
|
|
36,384
|
|
Selected Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
374,524
|
|
|
$
|
322,854
|
|
|
$
|
376,720
|
|
|
$
|
313,129
|
|
|
$
|
337,755
|
|
|
$
|
266,885
|
|
|
$
|
143,017
|
|
Long-term debt and capital lease obligations, less current
portion
|
|
$
|
35,870
|
|
|
$
|
36,260
|
|
|
$
|
35,968
|
|
|
$
|
35,966
|
|
|
$
|
35,617
|
|
|
$
|
772
|
|
|
$
|
938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Income (loss) from continuing operations in fiscal years 2007,
2006, 2005, 2004 and 2003 includes a number of significant
charges and recoveries, including charges associated with
business combinations (see Notes 4, 5, 6, 8 and 22 to the
consolidated financial statements of C-COR included in its
Form 10-K
for the fiscal year ended June 29, 2007, which is
incorporated by reference into this joint proxy
statement/prospectus). |
9
SELECTED
UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
The following selected unaudited pro forma combined financial
data have been derived from and should be read together with the
unaudited pro forma combined financial statements and related
notes included elsewhere in this joint proxy
statement/prospectus under the heading, Unaudited Pro
Forma Combined Financial Statements. The unaudited pro
forma statement of operations data for the nine months ended
September 30, 2007, and for the year ended
December 31, 2006, give effect to the merger as if it
occurred on January 1, 2006. The unaudited pro forma
combined balance sheet data were computed as if the merger had
been completed on September 30, 2007. This information is
based on the historical consolidated balance sheets and related
adjusted historical consolidated statements of income of ARRIS
and C-COR and gives effect to the merger using the purchase
method of accounting for business combinations. The pro forma
financial information assumes that no adjustments are made to
the stock consideration as a result of the average closing price
of ARRIS common stock being less than $12.83 or more than
$15.69 or otherwise.
The companies may have performed differently had they been
combined at the date or for the periods presented. You should
not rely on the selected unaudited pro forma combined financial
data as being indicative of the historical results that would
have been achieved had the companies always been combined or the
future results that ARRIS will experience after the merger.
|
|
|
|
|
|
|
|
|
|
|
Year Ended
|
|
|
Nine Months
|
|
|
|
December 31,
|
|
|
Ended September 30,
|
|
|
|
2006
|
|
|
2007
|
|
|
|
(In millions, except
|
|
|
|
per share data)
|
|
|
Net sales
|
|
$
|
1,128.4
|
|
|
$
|
962.0
|
|
Cost of sales
|
|
|
774.2
|
|
|
|
652.5
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
354.2
|
|
|
|
309.5
|
|
Gross margin %
|
|
|
31.4
|
%
|
|
|
32.2
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses
|
|
|
149.6
|
|
|
|
125.5
|
|
Research and development expenses
|
|
|
100.1
|
|
|
|
80.2
|
|
Restructuring and impairment charges
|
|
|
9.3
|
|
|
|
1.0
|
|
Gain on sale of product lines
|
|
|
(1.7
|
)
|
|
|
|
|
Amortization of intangibles
|
|
|
59.6
|
|
|
|
44.5
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
316.9
|
|
|
|
251.2
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
37.3
|
|
|
|
58.3
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
6.3
|
|
|
|
5.1
|
|
Gain on investments
|
|
|
|
|
|
|
(4.9
|
)
|
Loss (gain) on foreign currency
|
|
|
(2.0
|
)
|
|
|
(0.1
|
)
|
Interest and investment income
|
|
|
(2.9
|
)
|
|
|
(9.5
|
)
|
Gain related to terminated acquisition, net of expenses
|
|
|
|
|
|
|
(22.8
|
)
|
Gain on sale of bankruptcy trade claims
|
|
|
(9.7
|
)
|
|
|
|
|
Other expense (income), net
|
|
|
(2.6
|
)
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
48.2
|
|
|
|
90.6
|
|
Income tax expense (benefit)
|
|
|
(57.6
|
)
|
|
|
22.0
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
$
|
105.8
|
|
|
$
|
68.6
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.80
|
|
|
$
|
0.51
|
|
Diluted
|
|
$
|
0.78
|
|
|
$
|
0.50
|
|
Weighted average common shares:
|
|
|
|
|
|
|
|
|
Basic
|
|
|
132.4
|
|
|
|
134.5
|
|
Diluted
|
|
|
135.5
|
|
|
|
138.0
|
|
10
|
|
|
|
|
|
|
At
|
|
|
|
September 30, 2007
|
|
|
|
(In millions)
|
|
|
BALANCE SHEET DATA:
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
247.9
|
|
Marketable securities
|
|
$
|
71.5
|
|
Accounts receivable, net
|
|
$
|
172.2
|
|
Total current assets
|
|
$
|
710.8
|
|
Goodwill
|
|
$
|
472.3
|
|
Intangibles, net
|
|
$
|
309.1
|
|
Total assets
|
|
$
|
1,623.3
|
|
Current liabilities
|
|
$
|
136.7
|
|
Long term debt, net of current portion
|
|
$
|
276.9
|
|
Total stockholders equity
|
|
$
|
1,076.3
|
|
11
COMPARATIVE
PER SHARE DATA
The following table summarizes unaudited per share information
for ARRIS and C-COR on a historical basis, a pro forma combined
basis for ARRIS, giving effect to the pro forma effects of the
merger, and an equivalent pro forma combined basis for C-COR. It
has been assumed for purposes of the pro forma financial
information provided below that the merger was completed on
January 1, 2006, for income statement purposes, and on
September 30, 2007, for balance sheet purposes. The
following information should be read in conjunction with the
audited consolidated financial statements of ARRIS and C-COR as
of and for the fiscal years ended December 31, 2006 and
June 29, 2007, respectively, the unaudited consolidated
financial statements of ARRIS at and for the nine months ended
September 30, 2007, and the unaudited consolidated
financial statements of C-COR at and for the 13-week period
ended September 28, 2007 and the 26-week period ended
December 29, 2006, all of which are incorporated by
reference into this joint proxy statement/prospectus, and the
Unaudited Pro Forma Combined Financial Statements as
of and for the year ended December 31, 2006 and the
nine-month period ended September 30, 2007 beginning on
page P-1.
The pro forma information below is presented for illustrative
purposes only and is not necessarily indicative of the income
per share and book value that would have occurred if the merger
had been completed as of the beginning of the periods presented,
nor is it necessarily indicative of the future operating results
or financial position of the combined company.
The historical book value per share is computed by dividing
total shareholders equity by the number of shares of
common stock outstanding at the end of the period. The pro forma
income per share from continuing operations of the combined
company is computed by dividing the pro forma income from
continuing operations available to holders of the combined
companys common stock by the pro forma weighted-average
number of shares outstanding over the period. The pro forma
combined book value per share is computed by dividing total pro
forma shareholders equity by the pro forma number of
shares of common stock outstanding at the end of the period.
C-COR equivalent pro forma combined per share amounts are
calculated by multiplying the pro forma combined per share
amounts by the exchange ratio of 0.9642, the number of shares of
ARRIS common stock that would be exchanged for each share of
C-COR common stock in the merger. The C-COR equivalent per share
amounts do not include the benefits of the cash component of the
merger consideration and assume that no adjustments are made to
the stock consideration as a result of the average closing price
of ARRIS common stock being less than $12.83 or more than
$15.69 or otherwise.
|
|
|
|
|
|
|
|
|
|
|
As of and for the
|
|
|
As of and for the
|
|
|
|
Twelve Months Ended
|
|
|
Nine Months Ended
|
|
|
|
December 31, 2006
|
|
|
September 30, 2007
|
|
|
ARRIS Historical
|
|
|
|
|
|
|
|
|
Historical per common share:
|
|
|
|
|
|
|
|
|
Income per share from continuing operations (diluted)
|
|
$
|
1.30
|
|
|
$
|
0.79
|
|
Dividends declared per common share
|
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
5.52
|
|
|
$
|
6.46
|
|
C-COR Historical
|
|
|
|
|
|
|
|
|
Historical per common share:
|
|
|
|
|
|
|
|
|
Income per share from continuing operations (diluted)
|
|
$
|
0.22
|
|
|
$
|
0.43
|
|
Dividends declared per common share
|
|
|
|
|
|
|
|
|
Book value per share
|
|
$
|
4.29
|
|
|
$
|
5.02
|
|
Unaudited Pro Forma Combined
|
|
|
|
|
|
|
|
|
Unaudited pro forma per common share:
|
|
|
|
|
|
|
|
|
Income per share from continuing operations (diluted)
|
|
$
|
0.78
|
|
|
$
|
0.50
|
|
Dividends declared per common share
|
|
|
|
|
|
|
|
|
Book value per share
|
|
|
N.A.
|
(1)
|
|
$
|
7.96
|
|
Unaudited Pro Forma C-COR Equivalents
|
|
|
|
|
|
|
|
|
Unaudited pro forma per equivalent C-COR share:
|
|
|
|
|
|
|
|
|
Income per share from continuing operations (diluted)
|
|
$
|
0.75
|
|
|
$
|
0.48
|
|
Dividends declared per common share
|
|
|
|
|
|
|
|
|
Book value per share
|
|
|
N.A.
|
(1)
|
|
$
|
7.67
|
|
|
|
|
(1) |
|
For the pro forma balance sheet presentation, it was assumed
that the merger was completed on September 30, 2007, and,
therefore, the pro forma book values for the twelve months ended
December 31, 2006 are not presented. |
12
COMPARATIVE
MARKET PRICE INFORMATION
ARRIS common stock is listed on the NASDAQ Global Select Market
under the symbol ARRS. The C-COR common stock is
listed on the NASDAQ Global Select Market under the symbol
CCBL. The following table presents trading
information for ARRIS and C-COR common stock on
September 21, 2007, the last trading day before the public
announcement of the execution of the merger agreement, and
November 6, 2007, the latest practicable trading day before
the date of this joint proxy statement/prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS Common Stock
|
|
C-COR Common Stock
|
|
|
High
|
|
Low
|
|
Close
|
|
High
|
|
Low
|
|
Close
|
|
September 21, 2007
|
|
$
|
14.70
|
|
|
$
|
14.25
|
|
|
$
|
14.26
|
|
|
$
|
9.97
|
|
|
$
|
9.80
|
|
|
$
|
9.88
|
|
November 6, 2007
|
|
$
|
11.44
|
|
|
$
|
11.11
|
|
|
$
|
11.26
|
|
|
$
|
12.09
|
|
|
$
|
11.80
|
|
|
$
|
12.05
|
|
For illustrative purposes, the following table provides C-COR
equivalent per share information on each of the relevant dates
and are calculated:
|
|
|
|
|
for a mixed election by adding (1) the product of
approximately 49% (representing the stock portion of the merger
consideration) of the ARRIS per share amounts by the exchange
ratio under the merger agreement of (a) 0.9642 for
September 21, 2007 and (b) 1.0848 for November 6,
2007 and (2) $7.00 (representing the cash price per share
multiplied by approximately 51% which is the approximate cash
portion of the merger consideration); and
|
|
|
|
|
|
for an all-stock election by multiplying the ARRIS per share
amounts by the exchange ratio of (a) 0.9642 for
September 21, 2007 and (b) 1.0848 for November 6,
2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C-COR Common Stock
|
|
C-COR Common Stock
|
|
|
Mixed Equivalent
|
|
Stock Equivalent
|
|
|
High
|
|
Low
|
|
Close
|
|
High
|
|
Low
|
|
Close
|
|
September 21, 2007
|
|
$
|
13.96
|
|
|
$
|
13.74
|
|
|
$
|
13.75
|
|
|
$
|
14.17
|
|
|
$
|
13.74
|
|
|
$
|
13.75
|
|
November 6, 2007
|
|
$
|
13.09
|
|
|
$
|
12.92
|
|
|
$
|
13.00
|
|
|
$
|
12.41
|
|
|
$
|
12.05
|
|
|
$
|
12.21
|
|
The table below sets forth, for the calendar quarters indicated,
the high and low sales prices per share reported on the NASDAQ
Global Select Market for ARRIS and C-COR common stock. No
dividends were declared on either the ARRIS common stock or the
C-COR common stock during the periods presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARRIS Common Stock
|
|
C-COR Common Stock
|
Calendar Year
|
|
High
|
|
Low
|
|
High
|
|
Low
|
|
2005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
7.27
|
|
|
$
|
5.45
|
|
|
$
|
9.75
|
|
|
$
|
5.88
|
|
Second Quarter
|
|
|
9.18
|
|
|
|
6.28
|
|
|
|
7.50
|
|
|
|
5.57
|
|
Third Quarter
|
|
|
12.17
|
|
|
|
8.50
|
|
|
|
8.82
|
|
|
|
6.27
|
|
Fourth Quarter
|
|
|
12.79
|
|
|
|
7.12
|
|
|
|
7.00
|
|
|
|
4.77
|
|
2006
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
14.30
|
|
|
$
|
9.50
|
|
|
$
|
8.97
|
|
|
$
|
4.87
|
|
Second Quarter
|
|
|
14.22
|
|
|
|
10.66
|
|
|
|
8.88
|
|
|
|
6.13
|
|
Third Quarter
|
|
|
13.12
|
|
|
|
9.25
|
|
|
|
8.86
|
|
|
|
6.30
|
|
Fourth Quarter
|
|
|
13.80
|
|
|
|
10.84
|
|
|
|
11.46
|
|
|
|
8.55
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
15.45
|
|
|
$
|
12.32
|
|
|
$
|
15.00
|
|
|
$
|
11.19
|
|
Second Quarter
|
|
|
17.74
|
|
|
|
13.93
|
|
|
|
15.06
|
|
|
|
11.25
|
|
Third Quarter
|
|
|
17.89
|
|
|
|
11.21
|
|
|
|
16.00
|
|
|
|
9.40
|
|
Fourth Quarter (through November 6, 2007)
|
|
|
12.75
|
|
|
|
10.88
|
|
|
|
12.69
|
|
|
|
10.81
|
|
We urge you to obtain current market quotations before you make
your decision regarding the merger. Because the exchange ratio
with respect to the stock consideration will be adjusted only in
the event the average closing price of the ARRIS common stock is
less than $12.83 or more than $15.69, and will not be adjusted
further if the average closing price of the ARRIS common stock
is less than $11.41 or more than $17.11, the market value of the
shares of ARRIS common stock that holders of C-COR common stock
will receive in the merger may vary significantly from the
market value of such shares on the date of the merger agreement,
this joint proxy statement/prospectus, or the special meetings
of the shareholders of ARRIS and
C-COR.
13
FORWARD-LOOKING
STATEMENTS
This joint proxy statement/prospectus, including information
incorporated by reference in this joint proxy
statement/prospectus (see Where You Can Find Additional
Information), contains certain statements that are not
historical facts and are forward-looking statements because they
are based on our managements beliefs, certain assumptions
and current expectations with respect to the financial
condition, results of operations, plans, objectives, future
performance and businesses of each of ARRIS and C-COR, as well
as certain statements relating to the merger. These
forward-looking statements include, without limitation:
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|
|
|
|
statements relating to the future and pro forma financial and
operating results of ARRIS and statements relating to ARRIS
after the merger;
|
|
|
|
statements regarding the significant benefits from the merger,
including strategic considerations and our ability to generate
expected synergies and efficiencies, improve product quality and
breadth, develop new products and better serve our customers;
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|
|
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statements regarding our plans, objectives, expectations and
intentions regarding ARRIS products and services and the
future development of ARRIS business after the merger;
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|
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statements regarding the expected timetable for completing the
merger;
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|
|
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statements relating to our ability to secure necessary
regulatory and shareholder approvals for the merger; and
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|
|
|
other statements identified by the use of forward-looking
terminology such as the words expects,
projects, intends, believes,
anticipates and other terms with similar meanings
indicating possible future events or actions or potential impact
on the businesses or shareholders of ARRIS and the shareholders
of C-COR.
|
The management of each of ARRIS and C-COR believe that these
forward-looking statements are reasonable; however, you should
not place undue reliance on these statements, as they are based
on our managements current expectations and beliefs and
are subject to a number of risks and uncertainties that could
cause actual results to differ materially from those described
in the forward-looking statements. The following factors, among
others, could cause actual results to differ materially from
those described in the forward-looking statements:
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|
|
|
|
the risk factors described under Risk Factors;
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|
|
|
the cost savings and other expected synergies from the merger
may not be fully realized or may take longer to realize than
expected;
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|
|
|
the businesses may not be integrated successfully or the
anticipated improved financial performance, product quality and
development may not be achieved, the costs or difficulties
related to the integration of the businesses of ARRIS and C-COR
may be greater than expected or disruptions from the merger may
make it more difficult to maintain relationships with customers,
employees and suppliers;
|
|
|
|
the failure of the ARRIS or C-COR shareholders to approve the
merger;
|
|
|
|
the failure to satisfy the other conditions required for closing
the merger;
|
|
|
|
the timing of the introduction and the performance of new
products and manufacturing or product development problems;
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|
|
|
an inability to absorb or adjust costs in response to lower
sales volumes than are anticipated; and
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|
|
|
decisions by our larger customers to cancel contracts or orders
as they are entitled to do, or not enter into new contracts or
orders with ARRIS because of dissatisfaction, technological or
competitive changes, the merger, or other reasons.
|
Additional factors that could cause results to differ materially
from those described in the forward-looking statements can be
found in the periodic reports filed by ARRIS and C-COR with the
SEC. Except for their ongoing obligations to disclose material
information under U.S. federal securities laws and
regulations, both ARRIS and C-COR disclaim any obligation to
release publicly any revisions to any forward-looking
statements, to report events or circumstances after the date of
this joint proxy statement/prospectus or to report the
occurrence of unanticipated events.
14
We urge you to consider carefully all of the information we
have included and incorporated by reference in this joint proxy
statement/prospectus before you vote. See Where You Can
Find Additional Information beginning on page 94. You
should also read and consider the risks associated with each of
the businesses of ARRIS and C-COR because these risks will
affect the resulting company. These risks can be found, with
respect to ARRIS, in the ARRIS Quarterly Report on
Form 10-Q
filed with the SEC on November 2, 2007, and, with respect
to C-COR, in the C-COR Annual Report on
Form 10-K
filed with the SEC on September 12, 2007 and the
C-COR
Quarterly Report on
Form 10-Q
filed with the SEC on November 6, 2007, and may be updated
by ARRIS or C-COR in subsequent quarterly reports on
Form 10-Q
and current reports on
Form 8-K,
which are filed with the SEC and incorporated by reference into
this joint proxy statement/prospectus. In addition, we urge you
to consider carefully the following material risks relating to
the merger and the business of the resulting company.
ARRIS
may fail to realize the anticipated revenue and earnings growth
and other benefits expected from the merger, which could
adversely affect the value of shares of ARRIS common stock after
the merger.
The merger involves the integration of two companies that
previously operated independently. The integration of two
previously independent companies is a challenging,
time-consuming and costly process.
The value of shares of ARRIS common stock following completion
of the merger will be affected by the ability of ARRIS to
achieve the benefits expected to result from the merger.
Achieving the benefits of the merger will depend in part upon
meeting the challenges inherent in the successful combination of
two business enterprises of the size and scope of ARRIS and
C-COR, and the possible resulting diversion of management
attention for an extended period of time. It is possible that
the process of combining the companies could result in the loss
of key employees, the disruption of each companys ongoing
businesses, or inconsistencies in standards, controls,
procedures, and policies that adversely affect the ability of
the companies to maintain relationships with customers,
suppliers, and employees, or to achieve the anticipated benefits
of the merger. In addition, the successful combination of the
companies will require the dedication of significant management
resources, which could temporarily divert attention from the
day-to-day business of the combined company.
There can be no assurance that these challenges will be met and
that the diversion of management attention will not negatively
impact the operations of the combined company following the
merger. Delays encountered in the transition process could have
a material adverse effect on the revenues, expenses, operating
results, and financial condition of the combined company
following the merger. Although ARRIS and C-COR expect
significant benefits, such as revenue and earnings growth, to
result from the merger, there can be no assurance that the
combined company will actually realize any of these anticipated
benefits. See The Merger Factors Considered by
the ARRIS Board of Directors beginning on page 33 and
Factors Considered by the C-COR Board of
Directors beginning on page 41.
Because
the market price of ARRIS common stock will fluctuate, C-COR
shareholders cannot be sure of the market value of the ARRIS
common stock that they will receive in the merger.
Upon completion of the merger, approximately 49% of the
outstanding shares of C-COR common stock will be converted into
shares of ARRIS common stock. The ratio at which those shares
will be converted will only be adjusted if the average closing
price of ARRIS common stock is less than $12.83 or more
than $15.69. However, even in such event, the adjustments to the
exchange ratio are limited and, in the case of a decline in the
price of ARRIS stock, will not provide C-COR shareholders
receiving ARRIS common stock the same value for such shares as
was contemplated when the merger agreement was signed.
Accordingly, the market value of the ARRIS common stock that
C-COR
shareholders will be entitled to receive upon completion of the
merger will depend on the market value of ARRIS common stock at
the time of the completion of the merger and could vary
significantly from the market value on the date of this joint
proxy statement/prospectus or the dates of the ARRIS and C-COR
special meetings.
The market value of the ARRIS common stock that C-COR
shareholders will be entitled to receive in the merger also will
continue to fluctuate after the completion of the merger. For
example, from January 1, 2007
15
through the date of this joint proxy statement/prospectus, the
sale price of ARRIS common stock has ranged from a low of $10.88
to a high of $17.89, all as reported on the NASDAQ Global Select
Market. See Comparative Market Price Information
beginning on page 13.
Such variations could be the result of changes in the business,
operations, or prospects of ARRIS or
C-COR before
the merger, or the combined company following the merger, market
assessments of the likelihood that the merger will be completed
or the timing of the completion of the merger, regulatory
considerations, general market and economic conditions, and
other factors both within and beyond the control of ARRIS and
C-COR. Because the date that the merger is completed could be
later than the date of the ARRIS and C-COR special meetings, at
the time of the special meetings C-COR shareholders may not know
with certainty the value of the shares of ARRIS common stock
that they will receive upon completion of the merger.
ARRIS
and C-COR may elect to proceed with the merger even if the
average closing price of the ARRIS common stock is less than
$11.41.
Under the merger agreement, either ARRIS or C-COR may terminate
the merger agreement in the event that the average closing price
of ARRIS common stock is less than $11.41. However,
termination of the merger agreement in such circumstance is at
the discretion of the boards of directors of ARRIS and C-COR and
no assurance can be provided that either ARRIS or C-COR will
terminate the merger agreement in such circumstance. If the
average closing price of ARRIS common stock is less than
$11.41, the boards of directors of ARRIS and C-COR may still
determine that the merger remains in the best interests of their
respective companies and shareholders and, therefore, elect to
proceed with the merger. In that event, under the terms of the
merger agreement, no further adjustment will be made to the
exchange ratio for the stock consideration and, as a result, the
value of the ARRIS shares a C-COR shareholder receives in the
merger could be significantly lower than the value of those
shares at the time the merger agreement was signed or at the
time of either the ARRIS meeting or the C-COR meeting.
The
pendency of the merger could materially adversely affect the
future business and operations of ARRIS and C-COR.
In connection with the pending merger, some customers of ARRIS
and C-COR may delay or defer decisions, which could negatively
impact revenues, earnings, and cash flows of ARRIS and C-COR, as
well as the market prices of ARRIS common stock and C-COR common
stock, regardless of whether the merger is completed. Similarly,
current and prospective employees of ARRIS and C-COR may
experience uncertainty about their future roles with the
combined company following the merger, which may materially
adversely affect the ability of ARRIS and C-COR to attract and
retain key management, sales, marketing, technical, and other
personnel.
Directors
and executive officers of C-COR may have potential conflicts of
interest in recommending that C-COR shareholders vote in favor
of the merger agreement.
Some of the directors and executive officers of C-COR have
interests in the merger that are different from, and are in
addition to, the interests of C-COR shareholders generally.
These interests relate to the treatment of options held by
directors and executive officers of C-COR in the merger, the
payment of severance benefits to certain executive officers of
C-COR under certain circumstances following completion of the
merger, the appointment of a nominee of C-COR as a director of
ARRIS after the merger, ARRIS commitment to assume the
current employment agreements of C-CORs executive
officers, and ARRIS agreement to indemnify C-COR directors
and officers from certain claims and to continue certain
insurance coverage. You should consider these interests in
connection with your vote, including whether these interests may
have influenced these directors and executive officers to
recommend or support the merger. See The
Merger Interests of C-CORs Directors and
Management in the Merger beginning on page 52.
16
C-COR
shareholders may receive a combination of consideration
different from what they elect, and while such elections are
being calculated, may not be able to transfer the shares of
ARRIS common stock, if any, to which they may be
entitled.
While each C-COR shareholder may elect to receive all cash, all
ARRIS common stock, or a combination of cash and ARRIS common
stock in the merger, the pools of cash and ARRIS common stock
available for all C-COR shareholders will be fixed amounts.
Accordingly, depending on the elections made by other C-COR
shareholders, even if you elect to receive all cash in the
merger, you may receive a portion of your consideration in ARRIS
common stock and even if you elect to receive all ARRIS common
stock in the merger, you may receive a portion of your
consideration in cash. If you elect to receive a combination of
cash and ARRIS common stock in the merger, you are likely to
receive cash and ARRIS common stock in a proportion different
from what you elected. The tax consequences to you from the
transaction may be less favorable than you anticipated in the
event you receive a greater portion of your consideration in
cash than you elected. See Material U.S. Federal
Income Tax Consequences of the Merger for more
information. If you do not submit a properly completed and
signed election form to the exchange agent by the election
deadline, you will have no control over the type of merger
consideration you may receive.
Within five business days of the closing of the merger, ARRIS
and the exchange agent will calculate the number and amount of
valid cash and stock elections made by C-COR shareholders. The
validity of any election will be determined solely by ARRIS, in
the exercise of its reasonable discretion. Until ARRIS and the
exchange agent complete this calculation, a former holder of
C-COR common stock may not be able to sell or otherwise dispose
of the shares of ARRIS common stock, if any, to which such
holder is entitled.
The
merger agreement restricts both C-CORs and ARRIS
ability to pursue alternatives to the merger.
The merger agreement contains no shop provisions
that, subject to limited fiduciary exceptions, restrict
C-CORs ability to directly or indirectly initiate,
solicit, encourage, facilitate, discuss, or commit to competing
third-party proposals to acquire all or a significant portion of
C-COR. Further, there are only limited exceptions to
C-CORs agreement that the C-COR board of directors will
not withdraw, modify, or qualify in any manner adverse to ARRIS
its approval of the merger agreement or its recommendation to
holders of
C-COR common
stock that they vote in favor of the adoption of the merger
agreement, or recommend any other acquisition proposal. Although
the C-COR board of directors is permitted to take these actions
if it determines in good faith, after consultation with outside
legal counsel, that failure to do so would be inconsistent with
its fiduciary duties under applicable law in connection with a
superior proposal, doing so in specified situations could
entitle ARRIS to terminate the merger agreement and to be paid
by C-COR a termination fee of $22.5 million in cash.
Similarly, in the event a third party makes a proposal to
acquire all or a significant portion of ARRIS, and the merger
agreement is terminated and ARRIS completes the third-party
transaction within 12 months of the termination of the
merger agreement, ARRIS could be required to pay C-COR a
termination fee of $22.5 million in cash.
ARRIS and C-COR agreed to these restrictions to induce the other
party to enter into the merger agreement. However, these
provisions could discourage a potential third-party acquiror
that might have an interest in acquiring all or a significant
part of either C-COR or ARRIS from considering or proposing that
acquisition, or might result in a potential acquiror proposing
to pay a lower per share price to acquire either C-COR or ARRIS
than it might otherwise have proposed to pay because of the
added cost of the termination fee that may become payable to
either ARRIS or C-COR in certain circumstances.
The
market price of the shares of ARRIS common stock and the results
of operations of ARRIS after the merger may be affected by
factors different from those affecting C-COR or ARRIS
currently.
The businesses of ARRIS and C-COR differ in some respects and,
accordingly, the results of operations of the combined company
and the market price of the combined companys shares of
common stock may be affected by factors different from those
currently affecting the independent results of operations and
market prices of each of ARRIS or C-COR. For example, as a
result of the purchase accounting requirements under
17
GAAP, ARRIS will not be able to recognize a significant amount
of the deferred revenues currently recognized by C-COR, which
will have a significant impact on the combined companys
financial results over approximately the first year of combined
operations. For a discussion of the businesses of ARRIS and
C-COR see the documents incorporated by reference in this joint
proxy statement/prospectus and referred to under Where You
Can Find Additional Information beginning on page 94.
Purchase
accounting adjustments required under GAAP will have a
significant impact on ARRIS GAAP earnings after the
merger, which could impact the trading price of ARRIS
common stock.
Under U.S. generally accepted accounting principles, or GAAP,
ARRIS is required to account for the merger using a set of
accounting rules known as purchase accounting,
whereby assets and liabilities of an acquired entity are
recorded at fair value as of the date of acquisition. ARRIS
expects that certain adjustments made as a result of the
purchase accounting requirements will have a significantly
adverse effect on ARRIS GAAP earnings for at least the
first year after the merger. These adjustments will include, but
may not be limited to, fair market value adjustments to
C-CORs inventory, intangible assets, in-process research
and development, and deferred revenue. For instance, deferred
revenue currently reflected as a liability in C-CORs
financial statements and that, absent the merger, would be
recognized over time as revenue will be substantially
eliminated, thereby resulting in reduced revenue until the level
of deferred revenue (or revenue that is instead recognized on a
current basis) again builds to its current level. The initial
purchase accounting adjustments, and their subsequent impact on
financial results, do not necessarily reflect future expected
cash flows of the combined company following the merger;
however, the negative impact of such adjustments on ARRIS
GAAP earnings after the merger could have a material adverse
effect on the market price of ARRIS common stock.
ARRIS
results of operations after the merger could be adversely
affected as a result of goodwill impairment.
Under GAAP, when ARRIS acquires a business, purchase accounting
principles require that it record an asset called
goodwill in an amount equal to the excess amount it
pays for the business, including liabilities assumed, over the
fair value of the tangible and intangible assets of the
business. ARRIS expects that the merger will result in the
recognition of approximately $321.7 million in additional
goodwill as of September 30, 2007. Statement of Financial
Accounting Standards (SFAS) No. 142 Goodwill and
Other Intangible Assets requires that goodwill and other
intangible assets that have indefinite useful lives not be
amortized, but instead be tested at least annually for
impairment, and that intangible assets that have finite useful
lives be amortized over their useful lives. In testing for
impairment, SFAS No. 142 provides specific guidance
for testing goodwill and other
non-amortized
intangible assets for impairment. SFAS No. 142
requires ARRIS management to make certain estimates and
assumptions, including, among other things, an assessment of
market conditions and projections of cash flows, investment
rates and cost of capital and growth rates. These estimates and
assumptions can significantly impact the reported value of
goodwill and other intangible assets. Absent any impairment
indicators, ARRIS performs its impairment tests annually during
the fourth quarter. Any future impairments would negatively
impact ARRIS results of operations for the period in which
the impairment is recognized.
ARRIS
and C-CORs stockholders will be diluted by the
merger.
The merger will dilute the ownership position of the current
shareholders of ARRIS. ARRIS expects to issue approximately
28.3 million shares of ARRIS common stock (based on the
trading price of ARRIS common stock on the date of this
joint proxy statement/prospectus) to C-COR shareholders in the
merger. As a result, ARRIS shareholders and
C-CORs
shareholders are expected to hold approximately 80% and 20%,
respectively, of the combined companys common stock
outstanding immediately following the completion of the merger.
18
Any
delay in completing the merger may reduce or eliminate the
benefits expected.
In addition to the required shareholder approvals and regulatory
clearances and approvals, the merger is subject to a number of
other conditions beyond the control of ARRIS and C-COR that may
prevent, delay, or otherwise materially adversely affect its
completion. We cannot predict whether and when these other
conditions will be satisfied. Further, the requirements for
obtaining the required clearances and approvals could delay the
completion of the merger for a period of time or prevent it from
occurring. Any delay in completing the merger could cause ARRIS
not to realize some of the benefits that ARRIS expects to
achieve following the merger if it successfully completes the
merger within its expected timeframe and integrates C-CORs
business.
The
rights of C-COR shareholders will change when they become
shareholders of ARRIS upon completion of the
merger.
Upon completion of the merger, C-COR shareholders who receive
ARRIS shares in the merger will become ARRIS shareholders. There
are numerous differences between the rights of a shareholder of
C-COR, a Pennsylvania corporation, and the rights of a
shareholder of ARRIS, a Delaware corporation. For a detailed
discussion of these differences, see Certain Differences
in Rights of Shareholders beginning on page 78.
The
costs and expenses incurred in connection with the integration
of ARRIS and C-CORs businesses may affect the
combined companys operating results.
The combined company will incur certain costs and expenses in
connection with the integration of ARRIS and C-CORs
businesses. These costs and expenses will have a negative effect
on the combined companys results of operations.
19
SPECIAL
MEETING OF ARRIS SHAREHOLDERS
The accompanying ARRIS proxy card is solicited on behalf of
ARRIS management for use at the ARRIS meeting.
Date,
Time and Place of the ARRIS Meeting
The ARRIS meeting is scheduled to be held as follows:
Date: Friday, December 14, 2007
Time: 10:00 a.m., local time
Place: 3871 Lakefield Drive, Suwanee, Georgia 30024
Purpose
of the ARRIS Meeting
At the ARRIS meeting, ARRIS shareholders will be asked to:
1. consider and vote upon a proposal to approve the
issuance of ARRIS common stock to be issued in the merger as
further described under The Merger and The
Merger Agreement;
2. consider and vote on any adjournment or postponement of
the ARRIS meeting, if necessary, to solicit additional proxies
in favor of the proposal to approve the issuance of shares of
ARRIS common stock pursuant to the merger agreement; and
3. transact such other business that may properly come
before the ARRIS meeting or any adjournment or postponement of
the ARRIS meeting.
The agreement and plan of merger is attached to this joint proxy
statement/prospectus as Annex A. ARRIS shareholders
are encouraged to read the merger agreement in its entirety and
the other information contained in this joint proxy
statement/prospectus, including the other annexes, carefully
before deciding how to vote.
Recommendation
of the ARRIS Board of Directors
THE ARRIS BOARD OF DIRECTORS RECOMMENDS THAT ARRIS SHAREHOLDERS
VOTE FOR THE PROPOSAL TO APPROVE THE ISSUANCE OF
ARRIS COMMON STOCK TO BE ISSUED IN THE MERGER AND FOR ANY
PROPOSAL TO ADJOURN OR POSTPONE THE ARRIS MEETING TO
SOLICIT ADDITIONAL PROXIES. For further details regarding the
reasons for this recommendation, see The
Merger Factors Considered by the ARRIS Board of
Directors.
Record
Date, Voting Securities and Entitlement to Vote
The ARRIS board of directors has fixed the close of business on
November 7, 2007 as the record date for determining ARRIS
shareholders entitled to notice of, and to vote at, the ARRIS
meeting. As of the record date, there
were shares of ARRIS common stock outstanding
and entitled to vote at the ARRIS meeting. Each share of ARRIS
common stock carries the right to one vote on each proposal.
ARRIS will prepare, at least ten days prior to the ARRIS
meeting, a list of the holders of ARRIS common stock entitled to
vote at the ARRIS meeting. The list of ARRIS shareholders will
be available for inspection for ten days prior to the ARRIS
meeting at the offices of ARRIS during usual business hours and
will also be available at the ARRIS meeting.
On the record date, directors and executive officers of ARRIS
and their affiliates beneficially owned and had the right to
vote 499,589 shares of common stock, representing
approximately of the shares outstanding on the
record date. The directors and officers of ARRIS have informed
ARRIS that they intend to vote all of their shares of ARRIS
common stock FOR the approval of the issuance of ARRIS
common stock to be issued in the merger.
20
Quorum
and Votes Required
Attendance in person or by proxy of holders of a majority of the
issued and outstanding ARRIS common stock will constitute a
quorum for the transaction of business at the ARRIS meeting. If
a quorum is present, the affirmative vote of a majority of the
votes cast is necessary to approve the issuance of ARRIS common
stock in the merger and any proposal to adjourn the meeting to
solicit additional proxies.
If a quorum is not present, the ARRIS meeting may be adjourned
to allow additional time for obtaining additional proxies or
votes. At any subsequent reconvening of the ARRIS meeting, all
proxies will be voted in the same manner as the proxies would
have been voted at the original convening of the ARRIS meeting,
except for any proxies that have been effectively revoked or
withdrawn prior to the subsequent meeting.
Withheld
Votes and Abstentions
ARRIS common stock represented at the ARRIS meeting but not
voting, including ARRIS common stock for which proxies have been
received but for which holders of shares have abstained, will be
treated as present at the ARRIS meeting for purposes of
determining the presence or absence of a quorum for the
transaction of all business.
Given that only a majority of votes cast is required to approve
both the proposal to approve the issuance of ARRIS common stock
in the merger and any proposal to adjourn or postpone the ARRIS
meeting to solicit additional proxies, withheld votes and
abstentions will have no effect on the proposals.
Proxies
and Broker Voting Instruction Forms
Your vote is very important. Registered holders of ARRIS common
stock can vote in person by completing the ballot at the ARRIS
meeting, or you can vote before the ARRIS meeting by proxy. Even
if you plan to attend the meeting, we encourage you to vote your
shares as soon as possible by proxy. Registered holders of ARRIS
common stock can vote by proxy by mail, using the Internet, or
by telephone, as discussed below.
Vote by Mail: Registered holders of ARRIS
common stock may vote by mail by signing the enclosed proxy card
and promptly returning it in the postage-paid envelope provided.
For a proxy to be valid, you (or your attorney-in-fact, who must
be authorized in writing) must sign it and must either return it
in the postage-paid envelope provided or deliver it to P.O.
Box 11340, New York, New York
10203-0340
before the polls close at the ARRIS meeting or any adjournment
or postponement thereof. An undated but executed proxy card will
be deemed to be dated the date of this joint proxy
statement/prospectus.
Vote by Internet or Telephone: Registered
holders of ARRIS common stock may also vote by proxy via the
Internet at the website indicated on your proxy card or by
telephone by calling the toll-free number shown on your proxy
card and following the instructions. You must do so not later
than 5:00 p.m. (local time) on the business day prior to
the ARRIS meeting or any adjournment or postponement thereof.
You will also need your control number located on the front of
your proxy card to identify yourself to the system. If you vote
via the Internet or by telephone, please do NOT return a
signed proxy card. A signed and completed proxy card or properly
submitted telephone or Internet proxies received by ARRIS prior
to or at the ARRIS meeting will be voted as instructed.
A proxy card for ARRIS shareholders is enclosed with this joint
proxy statement/prospectus. Signing the enclosed proxy card will
not affect a shareholders right to attend the ARRIS
meeting. ARRIS common stock represented by proxies on the
accompanying card will be voted in accordance with the
holders instructions. If you need an additional proxy
card, please contact our proxy solicitor, Morrow &
Co., Inc. toll free at
1-800-607-0088.
If you hold your ARRIS common stock in street name,
you must contact your broker or other nominee to obtain a voting
instruction form (if you did not receive one together with this
joint proxy statement/prospectus) and for other instructions as
to how to vote your shares. If you hold ARRIS common stock in
both registered and street name, you will receive
both a proxy card and a voting instruction form. To ensure that
21
all your shares are represented at the ARRIS meeting, please
submit a vote by telephone, via the Internet or by mail for each
proxy card or voting instruction form you receive.
If the ARRIS meeting is adjourned to a different place, date or
time, ARRIS need not give notice of the new place, date or time
if the new place, date or time is announced at the ARRIS meeting
before adjournment, unless the adjournment is for more than
30 days after the date fixed for the ARRIS meeting. If a
new record date is or must be set for the adjourned meeting,
notice of the adjourned meeting shall be given to persons who
are shareholders as of the new record date.
Voting
of Proxies and Broker Voting Instruction Forms
The individuals named in the enclosed proxy card will vote the
ARRIS common stock represented by the proxy in accordance with
the instructions of the ARRIS shareholder who appointed them. If
you submit a validly executed proxy card without providing
instructions, the ARRIS common stock represented by the proxy
will be voted FOR the proposal to approve the issuance of
the shares of ARRIS common stock in the merger and FOR
any proposal to adjourn or postpone the ARRIS meeting to
solicit additional proxies. The enclosed proxy card, when
properly completed and signed, confers discretionary authority
on the appointed individuals to vote as they see fit on any
amendment or variation to any of the matters identified in the
notice of ARRIS meeting and on any other matter that may
properly be brought before the ARRIS meeting.
Your broker or other nominee will not vote your shares unless it
receives a signed instruction form from you. If you sign and
send in your broker instruction form but do not include
instructions on how to vote your properly signed form, your
shares will be voted FOR the proposal to approve the
issuance of the shares of ARRIS common stock in the merger and
FOR any proposal to adjourn or postpone the ARRIS meeting
to solicit additional proxies.
At the date of this joint proxy statement/prospectus, neither
the ARRIS board of directors nor management of ARRIS is aware of
any variation, amendment or other matter to be presented for a
vote at the ARRIS meeting.
Revocation
of Proxies and Broker Voting Instruction Forms
If you are a registered holder giving a proxy pursuant to this
solicitation, you have the power to revoke and change it at any
time before the ARRIS meeting. It may be revoked by filing a
written notice with ARRIS at the address below or by submitting
in writing a proxy bearing a later date, in either case prior to
the polls closing at the ARRIS meeting or any adjournment or
postponement thereof, or by attending the ARRIS meeting and
voting in person. Attendance at the ARRIS meeting will not, by
itself, revoke a proxy.
If you are a registered holder and want to change your proxy
directions by mail or by fax, you should send a notice of
revocation or your completed new proxy card, as the case may be,
to ARRIS at the following address:
ARRIS Group, Inc.
P.O. Box 11340
New York, New York 10203-0340
Fax: (212) 815-6979
Attention: Maggie Villani
You may also revoke a proxy via the Internet at the website
indicated on your proxy card or by telephone by calling the
toll-free number shown on your proxy card and following the
instructions.
If a broker or other nominee holds your shares in street
name and you have instructed a nominee to vote your shares
and wish to change your vote, you must follow directions
received from your nominee to change those instructions.
22
ARRIS will bear the expenses in connection with the solicitation
of proxies from ARRIS shareholders, except that C-COR and ARRIS
have agreed to share equally out-of-pocket expenses related to
the printing and filing of this joint proxy
statement/prospectus. ARRIS has retained Morrow & Co.,
LLC a proxy solicitation firm, for assistance in connection with
the solicitation of proxies and anticipates paying a fee not
exceeding $20,000 plus additional charges related to telephone
calls and other services. No solicitation fees will be payable
if the merger is not completed. Arrangements will also be made
with brokerage houses and other custodians, nominees and
fiduciaries for the forwarding of solicitation material to the
beneficial owners of ARRIS common stock held of record by these
persons and ARRIS may reimburse them for their reasonable
transaction and clerical expenses.
Solicitation of proxies may also be made by mail, in person, or
by telephone, email, Internet, facsimile, telegram or other
means of communication, by ARRIS directors, officers and
employees, who will receive no additional compensation for these
services, but will be reimbursed for any transaction expenses
incurred by them in connection with these services.
23
SPECIAL
MEETING OF C-COR SHAREHOLDERS
The accompanying C-COR proxy card is solicited on behalf of
C-CORs management for use at the
C-COR
meeting.
Date,
Time and Place of the C-COR Meeting
The C-COR meeting is scheduled to be held as follows:
Date: Friday, December 14, 2007
Time: 9:00 a.m., local time
Place: 1735 Market Street, 42nd floor, Philadelphia,
Pennsylvania 19103
Purpose
of the C-COR Meeting
At the C-COR meeting, C-COR shareholders will be asked to:
1. consider and vote on a proposal to adopt the Agreement
and Plan of Merger, dated as of September 23, 2007, by and
among C-COR, ARRIS and Merger Sub, as that agreement may be
amended, as further described under The Merger and
The Merger Agreement;
2. consider and vote on any adjournment or postponement of
the special meeting, if necessary, to solicit additional proxies
in favor of the proposal to adopt the merger agreement; and
3. transact such other business that may properly come
before the C-COR meeting or any properly reconvened meeting
following an adjournment or postponement of the C-COR meeting.
The agreement and plan of merger is attached to this joint proxy
statement/prospectus as Annex A.
C-COR
shareholders are encouraged to read the merger agreement in its
entirety and the other information contained in this joint proxy
statement/prospectus, including the other annexes, carefully
before deciding how to vote.
Recommendation
of the C-COR Board of Directors
THE C-COR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT C-COR
SHAREHOLDERS VOTE FOR THE PROPOSAL TO ADOPT THE
AGREEMENT AND PLAN OF MERGER AND FOR ANY PROPOSAL TO
ADJOURN OR POSTPONE THE C-COR MEETING TO SOLICIT ADDITIONAL
PROXIES. For further details regarding the reasons for this
recommendation, see The Merger Factors
Considered by the C-COR Board of Directors.
Record
Date, Voting Securities and Entitlement to Vote
The C-COR board of directors has fixed the close of business on
November 7, 2007 as the record date for determining C-COR
shareholders entitled to notice of, and to vote at, the C-COR
meeting. As of the record date, there
were shares of C-COR common stock outstanding
and entitled to vote at the C-COR meeting. Each share of C-COR
common stock carries the right to one vote on each proposal.
C-COR will prepare, at least 5 days prior to the C-COR
meeting, a list of the holders of C-COR common stock entitled to
vote at the C-COR meeting. The list of C-COR shareholders will
be available for inspection at C-CORs registered office
during usual business hours.
On the record date, directors and executive officers of C-COR
and their affiliates beneficially owned and had the right to
vote 4,587,714 shares of C-COR common stock, representing
approximately % of the C-COR shares outstanding
on the record date. The directors and officers of C-COR have
informed C-COR that they intend to vote all of their shares of
C-COR common stock FOR the adoption of the merger
agreement.
24
Quorum
and Votes Required
Attendance in person or by proxy of C-COR shareholders entitled
to cast at least a majority of the votes that all holders of
issued and outstanding C-COR common stock are entitled to cast
on the merger will constitute a quorum for the transaction of
business at the C-COR meeting. If a quorum is present, the
affirmative vote of the majority of the votes cast by all
shareholders entitled to vote at the C-COR meeting is necessary
to adopt the merger agreement.
If a quorum is not present, the C-COR meeting may be adjourned
to allow additional time for obtaining additional proxies or
votes. At any subsequent reconvening of the C-COR meeting, all
proxies will be voted in the same manner as the proxies would
have been voted at the original convening of the C-COR meeting,
except for any proxies that have been effectively revoked or
withdrawn prior to the subsequent meeting.
Withheld
Votes and Abstentions
C-COR common stock represented at the C-COR meeting but not
voting, including C-COR common stock for which proxies have been
received but for which holders of shares have abstained, will be
treated as present at the C-COR meeting for purposes of
determining the presence or absence of a quorum for the
transaction of all business.
Only shares affirmatively voted for adoption of the merger
agreement, and any proposal to adjourn or postpone the C-COR
meeting to solicit additional proxies including properly
executed proxies, will be counted as favorable votes for such
proposals. An abstention or failure to vote, because they are
not treated as votes cast, will have no effect on the vote for
either the proposal to adopt the merger agreement or any
proposal to adjourn or postpone the
C-COR
meeting.
Proxies
and Broker Voting Instruction Forms
Your vote is very important. Registered holders of C-COR common
stock can vote before the C-COR meeting by proxy, or you can
vote in person by completing the ballot at the C-COR meeting.
Even if you plan to attend the meeting, we encourage you to vote
your shares as soon as possible by proxy. Registered holders of
C-COR common stock can vote by proxy by mail, using the
internet, or by telephone, as discussed below.
Vote by Mail: Registered holders of C-COR
common stock may vote by mail by signing the enclosed proxy card
and promptly returning it in the postage-paid envelope provided.
For a proxy to be valid, you (or your attorney-in-fact, who must
be authorized in writing) must sign it and must either return it
in the postage-paid envelope provided or deposit it at the
offices of American Stock Transfer and Trust Company before the
polls close at the C-COR meeting or any adjournment or
postponement thereof. An undated but executed proxy card will be
deemed to be dated the date of this joint proxy
statement/prospectus.
Vote by Internet or Telephone: Registered
holders of C-COR common stock may also cast their vote by proxy
via the Internet at the website indicated on your proxy card or
by telephone by calling the toll-free number shown on your proxy
card and following the instructions. You must do so not later
than 11:59 p.m. (local time) on the calendar day prior to
the C-COR meeting or any adjournment or postponement thereof.
You will also need your control number located on the front of
your proxy card to identify yourself to the system. If you vote
via the Internet or by telephone, please do NOT return a
signed proxy card. A signed and completed proxy card or properly
submitted telephone or Internet proxies received by C-COR prior
to or at the C-COR meeting will be voted as instructed.
A proxy card for C-COR shareholders is attached to this joint
proxy statement/prospectus. Signing the enclosed proxy card will
not affect a shareholders right to attend the C-COR
meeting. C-COR common stock represented by proxies on the
accompanying card will be voted in accordance with the
holders instructions. If you need an additional proxy
card, please contact our proxy solicitor,
D.F. King & Co., Inc. toll free at
1-888-644-6071.
If you hold your C-COR common stock in street name,
you must contact your broker or other nominee to obtain a voting
instruction form (if you did not receive one together with this
joint proxy statement/
25
prospectus) and for other instructions as to how to vote your
shares. If you hold C-COR common stock in both registered and
street name, you will receive both a proxy card and
a voting instruction form. To ensure that all your shares are
represented at the C-COR meeting, please submit a vote by
telephone, via the Internet or by mail for each proxy card or
voting instruction form you receive.
If the C-COR meeting is adjourned to a different place, date or
time, C-COR need not give notice of the new place, date or time
if the new place, date or time is announced at the C-COR meeting
before adjournment. If a new record date is or must be set for
the adjourned meeting, notice of the adjourned meeting shall be
given to persons who are shareholders as of the new record date.
Voting
of Proxies and Broker Voting Instruction Forms
The individuals named in the enclosed proxy card will vote the
C-COR common stock represented by the proxy in accordance with
the instructions of the C-COR shareholder who appointed them. If
you submit a validly executed proxy card without providing
instructions, the C-COR common stock represented by the proxy
will be voted FOR the proposal to adopt the merger
agreement and FOR any proposal to adjourn or postpone the
C-COR meeting to solicit additional proxies. The enclosed proxy
card, when properly completed and signed, confers discretionary
authority on the appointed individuals to vote as they see fit
on any amendment or variation to any of the matters identified
in the notice of C-COR meeting and on any other matter that may
properly be brought before the C-COR meeting.
Your broker or other nominee will not vote your shares unless it
receives a signed instruction form from you. If you sign and
send in your broker instruction form but do not include
instructions on how to vote your properly signed form, your
shares will be voted FOR the proposal to adopt the merger
agreement and FOR any proposal to adjourn or postpone the
C-COR meeting to solicit additional proxies.
At the date of this joint proxy statement/prospectus, neither
the C-COR board of directors nor management of C-COR is aware of
any variation, amendment or other matter to be presented for a
vote at the C-COR meeting.
Revocation
of Proxies and Broker Voting Instruction Forms
If you are a registered holder giving a proxy pursuant to this
solicitation you have the power to revoke and change it at any
time before the C-COR meeting. It may be revoked by filing a
written notice with the Secretary of C-COR at the address below
or by submitting in writing a proxy bearing a later date, in
either case, prior to the closing of the polls at the C-COR
meeting or any adjournment or postponement thereof, or by
attending the C-COR meeting and voting in person. Attendance at
the C-COR meeting will not, by itself, revoke a proxy.
If you are a registered holder and want to change your proxy
directions by mail or by fax, you should send a notice of
revocation or your completed new proxy card, as the case may be,
to C-COR at the following address:
Secretary
C-COR Incorporated
c/o American Stock Transfer & Trust Company
6201 15th Avenue
Brooklyn, New York 11219
Fax: (718)
765-8730
You may also revoke a proxy via the Internet at the website
indicated on your proxy card or by telephone by calling the
toll-free number shown on your proxy card and following the
instructions.
If a broker or other nominee holds your shares in street
name and you have instructed a nominee to vote your shares
and wish to change your vote, you must follow directions
received from your nominee to change those instructions.
26
C-COR will bear the expenses in connection with the solicitation
of proxies from C-COR shareholders, except that ARRIS and C-COR
have agreed to share equally out-of-pocket expenses related to
the printing and filing of this joint proxy
statement/prospectus. C-COR has retained
D.F. King & Co., Inc., a proxy solicitation firm,
for assistance in connection with the solicitation of proxies
and anticipates paying a fee not exceeding $20,000 plus
additional charges related to telephone calls and other
services. Arrangements will also be made with brokerage houses
and other custodians, nominees and fiduciaries for the
forwarding of solicitation material to the beneficial owners of
C-COR common stock held of record by these persons and C-COR may
reimburse them for their reasonable transaction and clerical
expenses.
Solicitation of proxies may also be made by mail, in person, or
by telephone, email, Internet, facsimile, telegram or other
means of communication, by C-CORs directors, officers and
employees, who will receive no additional compensation for these
services, but will be reimbursed for any transaction expenses
incurred by them in connection with these services.
27
The board of directors of C-COR has historically reviewed its
strategic alternatives on a continual basis. During late 2005
and early 2006, the board of directors of C-COR began to
reassess the strategic plan for
C-COR in
light of developments in the broadband communications industry.
On the customer front, Verizon and AT&T announced plans to
make major investments in their network infrastructures to
enable them to offer video services that would compete directly
with C-CORs main customers, the cable operators. On the
competitive front, C-CORs largest competitor, Scientific
Atlanta, agreed to be acquired by Cisco in order to more
effectively compete in the future. The board considered risks
facing C-COR, including competitive risks, market risks and
execution risks, and the potential impact on C-COR of various
scenarios regarding the increasing competition between telcos
and cable operators. Several alternative courses of action were
evaluated, including continuing on its present course with
C-CORs existing product portfolio, adding to the product
portfolio by acquisition, divesting certain product lines and
increasing investment in others, and seeking opportunities to
become part of a larger entity.
After several months of strategic planning discussions,
C-CORs board of directors decided to seek the assistance
of a financial advisor. On April 18, 2006, the board
unanimously voted to form a selection committee, whose role was
to select a financial advisor. Mr. Fink, Mr. Ibarguen,
Mr. Royse, directors of
C-COR, and
Mr. Woodle, Chairman, President and Chief Executive Officer
of C-COR, were appointed to the selection committee. After
meeting with two other financial advisors, the selection
committee invited Merrill Lynch to the next board meeting.
On May 2, 2006, the board of directors of C-COR met to
discuss various trends, including consolidation in the broadband
communications sector and the alternatives for increasing
shareholder value. At the request of the board of directors,
representatives of Merrill Lynch attended the meeting to provide
a review of current trends in the broadband communications
industry and a general review of potential strategic
alternatives for
C-COR. On
May 12, 2006, C-COR engaged Merrill Lynch to act as the
exclusive financial advisor to C-CORs board of directors
in connection with any proposed sale of C-COR.
On June 20, 2006, C-CORs board of directors met,
together with Merrill Lynch to review C-CORs plan for its
upcoming fiscal year 2007, which started in July. The board of
directors discussed the strategic positioning of each business
unit, the long-term strategic plan, by segment and for C-COR as
a whole, and the changes in the industry. At the meeting,
Merrill Lynch updated the board of directors on various
strategic options potentially available to C-COR, including
discussion as to anticipated interest with respect to potential
bidders.
Acquisitions have been and continue to be an important part of
ARRIS strategic growth plan. In that regard, ARRIS has
actively sought out possible acquisition targets and has
conducted extensive due diligence investigations and analyses of
various target companies. On November 6, 2006, ARRIS issued
$276 million of senior convertible notes to strengthen its
position as a potential acquirer, and, in January 2007,
initiated a tender offer for the shares of TANDBERG Television
for cash and stock, which tender offer was subsequently
terminated as the result of a higher competing bid made by a
third party. ARRIS also briefly considered the acquisition of
C-COR in 2005. However, the price ranges suggested by the
parties were not mutually acceptable and the discussions
regarding a potential transaction were terminated in
June 2005.
During the August 15, 2006 meeting, the C-COR board of
directors authorized Merrill Lynch to undertake an auction
process. Commencing in late August 2006, and continuing for
several weeks, Merrill Lynch contacted, on behalf of C-COR,
approximately 22 potential strategic buyers or merger of equals
partners. Of the parties contacted, eight parties, including
ARRIS, executed confidentiality agreements and began conducting
preliminary due diligence, including participating in
discussions with management and receiving limited non-public
information concerning C-COR.
On October 16, 2006, C-CORs board of directors met,
together with Merrill Lynch, to discuss the solicitation
process. At that meeting, the board of directors and Merrill
Lynch also discussed the next steps in
28
the process, including conducting management meetings and
soliciting non-binding indications of value on November 10,
2006.
In early November 2006, Merrill Lynch provided the parties that
had executed confidentiality agreements with C-CORs
financial results for the first quarter of fiscal year 2007 and
an updated fiscal year 2007 budget. Based on this preliminary
information and the initial discussions, ARRIS did not to submit
an indication of interest.
On November 15, 2006, C-CORs board of directors met,
together with its legal counsel and Merrill Lynch, to discuss
the submission of one non-binding indication of interest and
verbal updates from four other parties (none of whom submitted a
non-binding indication of interest). The non-binding indication
of interest suggested either an acquisition of the
Access & Transport business line or the acquisition of
C-COR in conjunction with a financial party. The non-binding
indication of interest did not include a valuation for either
the Access & Transport business line or C-COR.
C-CORs board of directors discussed potential
alternatives, including a sale of the Access &
Transport business line to the interested party if the
interested party could arrange a transaction with a financial
partner that would result in the sale of the entire company.
The board of directors discussed the reasons it believed C-COR
did not receive any indications of value and what this meant to
C-COR both in the near and long term. These reasons included
lack of interest in all business segments by one party and lack
of proven profitable performance to justify an acceptable
valuation. The board of directors discussed alternative
structures and the challenges of selling pieces of C-COR or
entering into a transaction with a private equity firm. The
board of directors also explored potential synergies that C-COR
could bring to a deal.
Of the parties that indicated they were willing to continue
discussions, one was interested in the video on demand business
line, another indicated that it had reviewed a merger of equals
transaction with its board of directors and may continue to
consider a transaction of that nature outside of C-CORs
current process, and a third indicated that it may be interested
in pursuing a transaction with C-COR in the future, but the
closing and integration of other acquisitions prevented it from
making any decisions at that time.
At the conclusion of the meeting, the board of directors of
C-COR unanimously decided to terminate the process of
identifying a strategic buyer, to inform the four parties that
indicated a willingness to continue discussions that C-COR would
consider future non-binding letters of interest that included a
valuation of the company, to develop strategic alternatives
other than a sale of C-COR for presentation at the January 2007
board meeting, and to focus on executing C-CORs current
business plan. Following the meeting, Merrill Lynch, on behalf
of C-CORs board of directors, suggested to the interested
party that a sale of the entire company might be possible if the
interested party could arrange a financial partner, and provided
authorization for the interested party to conduct discussions
with third parties which the interested party had identified to
C-COR.
In December 2006, the interested party notified Merrill Lynch
that, after further internal strategic discussions, it would not
be submitting a non-binding indication of value for either the
Access & Transport business segment or C-COR in
conjunction with a third party. Later in December 2006, Merrill
Lynch met with representatives of C-COR to review additional
strategic alternatives, other than the sale of C-COR,
potentially available to C-COR, including potential acquisition
opportunities.
On January 23, 2007, C-CORs board of directors
convened to discuss the best ways to enhance shareholder value.
The board considered whether C-COR should remain cable centric,
and, if C-COR were to expand into different areas, what those
markets should be. The board recognized that it had discussed
these issues on a number of occasions over the past year and
believed it should formalize its decision making process. The
board developed a written decision tree which it
would use to analyze all decisions regarding the strategic
direction of C-COR. At the request of C-CORs board,
Mr. Woodle presented an analysis, which had been prepared
with the assistance of Merrill Lynch and reviewed by members of
C-CORs management, of the competitive landscape and the
product and service offerings of selected potential acquisition
candidates and merger partners. The board also reviewed the
proposed ARRIS/TANDBERG Television transaction and its likely
impact on the industry landscape.
29
The board of directors discussed the challenges and rationales
for growing C-COR either through a merger of equals or through
the acquisition of smaller companies. The board identified five
potential parties and discussed the financial position,
strengths and potential synergies of each company. Subsequently,
Mr. Woodle asked Merrill Lynch to provide more detailed
information on three of the potential parties for the board to
review at its upcoming meetings.
On April 24, 2007, the board of directors of C-COR met
again to discuss strategic alternatives. The board had an
extensive discussion on various alternatives, including growing
the business organically by revising
C-CORs
service model, by growing its video business through
acquisitions or by expanding the operations support system (OSS)
business through acquisitions. The directors agreed that C-COR
should proceed with divesting its field services business. Also,
the board requested that C-CORs management team develop
strategies and funding alternatives for growing the video
business line. At the request of the board, Mr. Woodle made
a presentation, which had been prepared with the assistance of
Merrill Lynch and reviewed by members of C-CORs
management, of two companies the board was considering acquiring
to grow the video business line.
Following the April 24, 2007, board meeting,
Mr. Woodle spoke informally with the chief executive
officer of one of the target companies considered at the
meeting. After that discussion, Mr. Woodle determined that
that company was not a viable target for C-CORs strategic
goals because it was likely to be a dilutive transaction.
On May 3, 2007, Merrill Lynch reviewed with Mr. Woodle
and other members of C-CORs management team information
regarding a potential merger of equals. C-COR also revisited a
potential video acquisition that was discussed at the previous
board meeting. Mr. Woodle and the management team reviewed
the pros and cons of each company and potential transaction,
discussed potential financing alternatives and discussed various
approaches to entering into a definitive agreement with either
company. The management team determined that the best initial
approach was for Mr. Woodle to speak to the chief executive
officers of the two companies.
Thereafter, Mr. Woodle spoke to the chief executive
officers of both companies. The chief executive officer of the
video target indicated he was not interested in a transaction
with C-COR at that time. The other expressed an interest in a
potential merger of equals transaction. The potential merger of
equals partner had been identified by C-CORs board of
directors and Merrill Lynch when the board of directors began
the formal strategic alternatives review and had indicated in
November 2006 that it was interested in continued discussions.
Throughout early May, Mr. Woodle and the chief executive
officer of the potential merger partner engaged in preliminary
discussions regarding deal terms, diligence, timeline and
process. On May 14, 2007, C-CORs board of directors
authorized C-COR to enter into a confidentiality agreement with
the potential merger partner. On May 23, 2007, the
management of both C-COR and the potential merger partner, and
their respective financial advisors, conducted initial
reciprocal business, financial and synergy related due diligence.
On May 31, 2007, the boards of directors of both C-COR and
the potential merger partner met separately to discuss the
potential transaction and decide whether to enter into an
exclusive dealing agreement. C-CORs board of directors
reviewed the preliminary structure, the proposed board
composition, executive chairman and president positions, the
transition process and time line. After discussing the strategic
alternatives review process that the board had conducted over
the past nine months and considering the fact that an exhaustive
search had not revealed a potential buyer for C-COR, the board
agreed that a merger of equals in light of the growing
competition, larger competitors and converging technologies made
sense from both a strategic and operational point of view. The
board noted that a number of the companies products were
complementary and a combination would give C-COR and the
combined company access to new markets. After much discussion,
C-CORs board of directors authorized C-COR to enter into
an exclusive dealing agreement for a transaction with the
potential merger partner.
Following its board meeting, the chief executive officer of the
potential merger partner contacted Mr. Woodle to inform him
that his board was not prepared to enter into exclusive
negotiations at that time, but
30
indicated it would reconsider the potential merger of equals
transaction at its strategic planning meeting later that summer.
Mr. Woodle and the chief executive officer of the potential
merger partner continued to discuss a potential merger of equals
transaction throughout the summer.
Throughout the summer of 2007, Merrill Lynch, on behalf of
C-COR, continued to conduct informal discussions with selected
interested parties. In July 2007, the chief executive officer of
the potential merger partner informed Mr. Woodle that his
board had reconsidered a merger of equals transaction with
C-COR, but decided not to pursue a transaction at that time.
In a social telephone call made by Mr. Stanzione, Chairman
and Chief Executive Officer of ARRIS, to Mr. Woodle in
early August 2007, the prospect of combining the two
companies was raised, and a prompt
follow-up
call was arranged for August 10, 2007. On the August 10,
2007 call, Mr. Woodle described C-CORs
long-term
strategic plan and its 2008 financial plan to Mr. Stanzione
and other members of ARRIS management.
On August 14, 2007, the ARRIS board of directors met in a
regularly scheduled meeting. During that meeting, the status of
various ARRIS strategic opportunities were discussed and the
board reviewed the current status of the financing markets
available to ARRIS. ARRIS management specifically reviewed
with the board of directors the possible strategic benefits of
an acquisition of C-COR and the board determined that management
should proceed with discussions of possible transactions,
including with C-COR. Over the next several days, ARRIS and
C-COR continued their preliminary reviews. ARRIS also
subsequently engaged UBS as its financial advisor in connection
with a possible acquisition of C-COR.
On August 21, 2007, C-CORs board of directors met to
discuss the competitive landscape. The board recognized that the
industry continued to be dominated by two large companies, an
issue that was being compounded by consolidation at the customer
level. The board again reviewed its strategic alternatives,
including potential acquisition targets and merger of equal
partners. At the conclusion of this meeting, the board
determined that Mr. Woodle should continue discussions with
ARRIS.
On August 28, 2007, Mr. Stanzione phoned
Mr. Woodle to express ARRIS interest in a transaction
with C-COR. On August 29, 2007, C-CORs board of
directors met telephonically to discuss a potential merger with
ARRIS. At the conclusion of this meeting, the board of directors
determined that Mr. Woodle should continue discussions with
ARRIS.
Between August 28, 2007 and August 31, 2007 Messrs.
Stanzione and Woodle had several brief conversations regarding
the possibility of combining the companies. On August 31,
2007, ARRIS sent C-COR a letter of intent that proposed a merger
pursuant to which ARRIS would acquire all of C-CORs
outstanding shares of common stock. The letter of intent
proposed merger consideration of between $14.00 and $15.00 per
share, which would be comprised of 50% cash and 50% shares of
ARRIS common stock, subject to due diligence and market
conditions. That day, the board of directors authorized C-COR to
enter into an exclusivity agreement with ARRIS, pursuant to
which C-COR agreed that it would not solicit or engage in
discussions with a third party concerning a transaction
involving the sale of C-COR by way of merger, spin off or sale
of stock or assets through September 30, 2007.
On September 7, 2007, the management team of ARRIS met with
the management team of C-COR in State College, Pennsylvania to
discuss certain diligence matters related to C-COR. C-CORs
and ARRIS respective legal and financial advisors also
attended. During the week of September 10, 2007,
representatives of ARRIS visited several C-COR locations,
including its manufacturing plant in Tijuana, Mexico. Throughout
September, both ARRIS and C-COR conducted business, legal and
accounting due diligence and negotiated a merger agreement.
On September 17, 2007, representatives of both ARRIS and
C-COR met to discuss diligence matters relating to ARRIS.
C-CORs and ARRIS respective legal and financial
advisors also attended. The board of directors of C-COR thought
it was important to conduct a due diligence review of ARRIS
given that C-COR shareholders would receive shares of ARRIS
common stock in the merger. At this diligence meeting,
Mr. Stanzione proposed a new per share merger
consideration, which would still be comprised of 50% stock
31
and 50% cash. Mr. Stanzione indicated that the proposed
merger consideration was lower than the range stated in the
letter of intent due to changes in the market prices of the
common stock of both ARRIS and C-COR.
On September 18, 2007, on behalf of Mr. Woodle,
Merrill Lynch contacted UBS, ARRIS financial advisor, to
notify them that the consideration proposed by ARRIS the day
before was considered too low and presented a counter-proposal,
which included a collar mechanism to adjust the stock component
of the consideration to protect C-COR shareholders from
significant changes in the market price of ARRIS common
stock. On September 20, 2007, Mr. Stanzione contacted
Mr. Woodle to further discuss the amount of merger
consideration.
Between August 28, 2007 and September 20, 2007,
Mr. Stanzione remained in frequent contact with the members
of the ARRIS board regarding the status of ARRIS review of
C-CORs operations and negotiations with C-COR. On
September 19, 2007, ARRIS board of directors met to
discuss the proposed transaction with C-COR. Members of
ARRIS management and representatives of ARRIS legal
and financial advisors also attended this meeting. At the
meeting, ARRIS management reviewed with the board its due
diligence review of C-COR and ARRIS financial advisor
discussed with the board financial aspects of the proposed
transaction. Following discussions, the board of directors
authorized Mr. Stanzione to continue negotiations with
C-COR.
On September 20, 2007, C-CORs board of directors met
to consider the transaction with ARRIS. The board reviewed its
strategic alternatives process, the industry landscape and the
strategic rationale of a combination with ARRIS. Merrill Lynch
then reviewed with the board of directors a financial analysis
of the proposed transaction. Representatives of KPMG LLP,
C-CORs independent accounting firm, presented their due
diligence review of ARRIS financial statements and related
matters. Representatives of Ballard Spahr Andrews &
Ingersoll, LLP, C-CORs legal counsel, reviewed with the
board its fiduciary obligations, presented their legal due
diligence review and summarized the terms and conditions of the
merger agreement. The board reviewed and discussed various
provisions of the merger agreement and discussed the risks and
benefits of entering into the merger agreement. After extensive
discussions, the board authorized Mr. Woodle to enter into
a merger agreement at $13.75 per share, but requested that he
try to negotiate a higher cash component and protect
C-CORs downside risk.
On September 21, 2007, after additional negotiations
regarding the merger consideration, Mr. Stanzione and
Mr. Woodle agreed that the merger consideration would be
$13.75 per share, of which $7.00 would be paid in cash and the
remainder would be paid in ARRIS common stock. The parties
also agreed that C-CORs shareholders may elect to take
cash, stock or a combination of the two, subject to proration if
the elections exceeded approximately 51% cash or approximately
49% stock. The parties also agreed to the previously proposed
collar mechanism, whereby the stock component of the merger
consideration would be subject to adjustment in the event that
the average closing price of ARRIS common stock for the
ten
trading-day
period ending three trading days prior to the anticipated
closing date is less than $12.83 or more than $15.69. The
parties also agreed that no further adjustments would be made in
the event the average closing price of the ARRIS stock is less
than $11.41 or more than $17.11.
From September 21 through September 23, the parties
continued to negotiate various provisions of the merger
agreement and complete their due diligence.
On the afternoon of September 23, 2007, the ARRIS board of
directors met to consider the merger agreement and the merger.
At this meeting, representatives of Troutman Sanders LLP
summarized the terms of the merger agreement and reviewed with
the board its fiduciary duties. UBS reviewed with ARRIS
board of directors its financial analysis of the $13.75 per
share merger consideration and delivered to ARRIS board of
directors an oral opinion, which opinion was confirmed by
delivery of a written opinion dated September 23, 2007, to
the effect that, as of that date and based on and subject to
various assumptions, matters considered and limitations
described in its opinion, the $13.75 per share merger
consideration to be paid by ARRIS was fair, from a financial
point of view, to ARRIS. The ARRIS board of directors discussed
the risks and benefits of entering into the merger agreement and
how this transaction fit within the strategic plan for ARRIS.
After much discussion, the ARRIS board of directors voted to
enter into the merger agreement. All of the ARRIS directors,
except for Mr. Best, voted in favor of the transaction. Mr. Best
recused himself from the
32
consideration of, and vote on, the transaction because Mr. Best
also serves as a director of a company that competes directly
with C-COR.
On the evening of September 23, 2007, C-CORs board of
directors met to consider approval of the merger agreement.
Merrill Lynch made a financial presentation and delivered an
oral opinion to the board of directors, subsequently confirmed
in writing, to the effect that, as of September 23, 2007,
and based on the assumptions made, matters considered and limits
of review set forth in its written opinion, the merger
consideration to be received by holders of C-COR common stock
pursuant to the merger agreement was fair from a financial point
of view to those holders. Representatives of Ballard Spahr
Andrews & Ingersoll, LLP updated the board regarding
its review of the legal due diligence and provided an updated
summary of the merger agreement. The C-COR board of directors
discussed the risks and benefits of entering into the merger
agreement and how this transaction fit within the strategic plan
for C-COR. After much discussion, the
C-COR board
of directors unanimously voted to enter into the merger
agreement.
Subsequent to the board meetings, C-COR and ARRIS entered into
the merger agreement and issued a joint press release announcing
the transaction.
Factors
Considered by the ARRIS Board of Directors
In reaching its conclusion to approve the merger and the merger
agreement and recommend that ARRIS shareholders vote FOR
approval of the issuance of ARRIS common stock pursuant to
the merger agreement, the ARRIS board of directors considered a
number of factors as set forth below.
Strategic Considerations. The ARRIS board of
directors considered a number of strategic advantages of the
merger in comparison to a stand-alone strategy, including, but
not limited to, the views of the ARRIS board of directors that:
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the merger will significantly expand ARRIS product line,
giving ARRIS the ability to deploy and manage multiple
technologies from the combined company to provide end-to-end
solutions;
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the merger will strengthen ARRIS position as the leading
pure play cable solutions provider;
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the merger will expand ARRIS addressable market and
accelerate its video growth strategy;
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an expanded portfolio will differentiate ARRIS from smaller
niche players;
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the expanded product offerings that ARRIS will be able to
provide following the merger will strengthen ARRIS
relationships with significant customers such as Comcast,
TimeWarner, Charter and Liberty; and
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the expanded product line will improve ARRIS ability to
compete with larger competitors and improve its positioning as
an industry consolidator.
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Financial Incentives. The ARRIS board of
directors also considered certain financial advantages to the
merger including, but not limited to, the following factors:
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the merger is projected to result in a significant increase in
sales and will make ARRIS the largest independent cable
equipment player;
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C-CORs Optical and Access businesses have higher gross
margins than ARRIS existing gross margins, and revenues
from these businesses are expected to improve ARRIS gross
margin in the long term;
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the merger is anticipated to provide meaningful cost synergies
by consolidating public company and administrative costs as well
as sales force and research and development optimization
costs; and
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the merger will diversify revenues received from ARRIS
core multiple system operator relationships.
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Other Factors. The ARRIS board of directors
also considered the following factors, among others:
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ARRIS and C-CORs respective historical businesses
and financial results and prospects, including the results of
ARRIS due diligence investigation of C-COR;
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33
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the ability of the two companies to effectively integrate their
businesses and cultures;
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the opinion of UBS, ARRIS financial advisor, dated
September 23, 2007, to ARRIS board of directors as to
the fairness, from a financial point of view and as of the date
of the opinion, to ARRIS of the $13.75 per share merger
consideration to be paid by ARRIS, as more fully described in
The Merger Opinion of ARRIS Financial
Advisor; and
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the terms of the merger agreement that create a strong
commitment on the part of C-COR to complete the merger.
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Potential Risks. The ARRIS board of directors
considered a variety of risks and other potentially negative
factors concerning the merger, including, without limitation,
the following factors:
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the risks of integrating the operations of C-COR and ARRIS,
including the risks that integration costs may be greater, and
synergy benefits lower, than anticipated by ARRIS management;
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as a result of the merger and under purchase accounting, ARRIS
will not be able to recognize most of C-CORs deferred
revenue balance, resulting in a significant negative impact on
the combined companys financial statements and near-term
results of operations;
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a significant portion of C-CORs business remains with
radio frequency/optical infrastructure, which is a highly
competitive market segment;
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C-CORs in-house manufacturing in Tijuana, Mexico adds
potential earnings volatility in the event of an industry
down-cycle (relative to ARRIS outsourcing approach);
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the merger provides only limited customer expansion beyond
ARRIS existing cable customers and only moderate
opportunity international growth; and
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competition is expected to intensify in C-CORs high margin
businesses, which will put pressure on
C-CORs
more favorable gross margins as prices decrease.
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The foregoing discussion of the factors considered by
ARRIS board of directors is not intended to be exhaustive,
but, rather, includes the material factors considered by
ARRIS board of directors. In reaching its decision to
approve the merger agreement, the merger and the other
transactions contemplated by the merger agreement, ARRIS
board of directors did not quantify or assign any relative
weights to the factors considered, and individual directors may
have given different weights to different factors. ARRIS
board of directors considered all these factors as a whole, and
overall considered the factors to be favorable to, and
supportive of, its determination.
Opinion
of ARRIS Financial Advisor
On September 23, 2007, at a meeting of ARRIS board of
directors held to evaluate the proposed merger, UBS delivered to
ARRIS board of directors an oral opinion, which opinion
was confirmed by delivery of a written opinion dated
September 23, 2007, to the effect that, as of that date and
based on and subject to various assumptions, matters considered
and limitations described in its opinion, the $13.75 per share
merger consideration to be paid by ARRIS was fair, from a
financial point of view, to ARRIS.
The full text of UBS opinion describes the assumptions
made, procedures followed, matters considered and limitations on
the review undertaken by UBS. This opinion is attached as
Annex B and is incorporated into this joint proxy
statement/prospectus by reference. UBS opinion was
provided for the benefit of ARRIS board of directors in
connection with, and for the purpose of, its evaluation of the
merger consideration from a financial point of view, does not
address any other aspect of the merger and does not constitute a
recommendation to any shareholder as to how such shareholder
should vote or act with respect to the merger. The opinion does
not address the relative merits of the merger as compared to
other business strategies or transactions that might be
available to ARRIS or ARRIS underlying business decision
to effect the merger. Holders of shares of ARRIS common stock
are encouraged to read this opinion carefully in its entirety.
The summary of UBS opinion described below is
qualified in its entirety by reference to the full text of its
opinion.
34
In arriving at its opinion, among other things, UBS:
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reviewed certain publicly available business and financial
information relating to C-COR and ARRIS;
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reviewed certain internal financial information and other data
relating to C-CORs business and financial prospects that
were provided to UBS by C-CORs management and not publicly
available, including financial forecasts and estimates prepared
by C-CORs management as adjusted by ARRIS management;
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reviewed certain internal financial information and other data
relating to ARRIS business and financial prospects that
were provided to UBS by ARRIS management and not publicly
available, including financial forecasts and estimates prepared
by ARRIS management;
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conducted discussions with members of the senior managements of
ARRIS and C-COR concerning the businesses and financial
prospects of ARRIS and C-COR;
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reviewed publicly available financial and stock market data with
respect to certain other companies UBS believed to be generally
relevant;
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compared the financial terms of the merger with the publicly
available financial terms of certain other transactions UBS
believed to be generally relevant;
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reviewed current and historical market prices of C-COR common
stock and ARRIS common stock;
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considered certain pro forma effects of the merger on
ARRIS financial statements, both before and after giving
effect to the accounting treatment under purchase accounting of
certain deferred revenue of C-COR as estimated by ARRIS
management;
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reviewed the merger agreement; and
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conducted such other financial studies, analyses and
investigations, and considered such other information, as UBS
deemed necessary or appropriate.
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In connection with its review, with the consent of ARRIS
board of directors, UBS did not assume any responsibility for
independent verification of any of the information provided to
or reviewed by UBS for the purpose of its opinion and, with the
consent of ARRIS board of directors, UBS relied on such
information being complete and accurate in all material
respects. In addition, with the consent of ARRIS board of
directors, UBS did not make any independent evaluation or
appraisal of any of the assets or liabilities, contingent or
otherwise, of ARRIS or C-COR, nor was UBS furnished with any
such evaluation or appraisal. With respect to the financial
forecasts, estimates and pro forma effects referred to above,
UBS assumed, at the direction of ARRIS board of directors,
that they had been reasonably prepared on a basis reflecting the
best currently available estimates and judgments of the
managements of C-COR and ARRIS, as the case may be, as to the
future performance of C-COR and ARRIS and such pro forma
effects. In addition, UBS assumed, with the approval of
ARRIS board of directors, that the financial forecasts and
estimates referred to above would be achieved at the times and
in the amounts projected. UBS assumed, with the consent of
ARRIS board of directors, that the merger would qualify
for U.S. federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code. UBS
opinion was necessarily based on economic, monetary, market and
other conditions as in effect on, and the information available
to UBS as of, the date of its opinion.
At the direction of ARRIS board of directors, UBS was not
asked to, and it did not, offer any opinion as to the terms,
other than the $13.75 per share merger consideration to the
extent expressly specified in UBS opinion, of the merger
agreement, the form of the merger or the form of the merger
consideration. UBS expressed no opinion as to what the value of
ARRIS common stock would be when issued pursuant to the merger
or the prices at which ARRIS common stock or C-COR common stock
would trade at any time. In rendering its opinion, UBS assumed,
with the consent of ARRIS board of directors, that
(i) ARRIS and
C-COR would
comply with all material terms of the merger agreement, and
(ii) the merger would be consummated in accordance with the
terms of the merger agreement without any adverse waiver or
amendment of any material term or condition of the merger
agreement. UBS also assumed that all governmental,
35
regulatory or other consents and approvals necessary for the
consummation of the merger would be obtained without any
material adverse effect on ARRIS, C-COR or the merger. Except as
described above, ARRIS imposed no other instructions or
limitations on UBS with respect to the investigations made or
the procedures followed by UBS in rendering its opinion.
In connection with rendering its opinion to ARRIS board of
directors, UBS performed a variety of financial and comparative
analyses that are summarized below. The following summary is not
a complete description of all analyses performed and factors
considered by UBS in connection with its opinion. The
preparation of a financial opinion is a complex process
involving subjective judgments and is not necessarily
susceptible to partial analysis or summary description. With
respect to the selected companies analysis and the selected
precedent transactions analysis summarized below, no company or
transaction used as a comparison was either identical or
directly comparable to C-COR, ARRIS or the merger. These
analyses necessarily involve complex considerations and
judgments concerning financial and operating characteristics and
other factors that could affect the public trading or
acquisition values of the companies concerned.
UBS believes that its analyses and the summary below must be
considered as a whole and that selecting portions of its
analyses and factors or focusing on information presented in
tabular format, without considering all analyses and factors or
the narrative description of the analyses, could create a
misleading or incomplete view of the processes underlying
UBS analyses and opinion. UBS did not draw, in isolation,
conclusions from or with regard to any one factor or method of
analysis for purposes of its opinion, but rather arrived at its
ultimate opinion based on the results of all analyses undertaken
by it and assessed as a whole.
The forecasts and estimates of the future performance of ARRIS
and C-COR provided by the managements of ARRIS and C-COR in or
underlying UBS analyses are not necessarily indicative of
future results or values, which may be significantly more or
less favorable than those estimates. In performing its analyses,
UBS considered industry performance, general business and
economic conditions and other matters, many of which were beyond
the control of ARRIS and C-COR. Estimates of the financial value
of companies do not purport to be appraisals or necessarily
reflect the prices at which companies actually may be sold.
The merger consideration was determined through negotiation
between ARRIS and C-COR and the decision to enter into the
merger was solely that of ARRIS board of directors.
UBS opinion, including its financial analyses, were only
one of many factors considered by ARRIS board of directors
in its evaluation of the merger and should not be viewed as
determinative of the views of ARRIS board of directors or
management with respect to the merger or the merger
consideration.
The following is a brief summary of the material financial
analyses performed by UBS and reviewed with ARRIS board of
directors on September 23, 2007 in connection with
UBS opinion. The financial analyses summarized below
include information presented in tabular format. To fully
understand UBS financial analyses, the tables must be read
together with the text of each summary. The tables alone do not
constitute a complete description of the financial analyses.
Considering the data below without considering the full
narrative description of the financial analyses, including the
methodologies and assumptions underlying the analyses, could
create a misleading or incomplete view of UBS financial
analyses. For purposes of the C-COR Financial
Analyses summarized below, the per share merger
consideration refers to the per share value of the merger
consideration of $13.75 based on the cash election consideration
of $13.75 and the implied value, utilizing the closing price of
ARRIS common stock on September 21, 2007, of the stock
election consideration of 0.9642 of a share of ARRIS common
stock.
C-COR
Financial Analyses
Selected Companies Analysis. UBS compared
selected financial and stock market data of C-COR with
corresponding data, to the extent publicly available, of the
following 14 publicly traded communications equipment companies:
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ADC Telecommunications, Inc.
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ADTRAN, Inc.
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ARRIS
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BigBand Networks, Inc.
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Cisco Systems, Inc.
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CommScope, Inc.
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Concurrent Computer Corporation
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Harmonic Inc.
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Motorola, Inc.
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NDS Group plc
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OpenTV Corp.
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SeaChange International, Inc.
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Tellabs, Inc.
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Thomson SA
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UBS reviewed, among other things, the enterprise value of each
selected company (calculated as diluted equity value based on
the closing stock price on September 21, 2007, plus book
value of debt and minority interests, plus preferred stock at
liquidation value, less cash and cash equivalents), as a
multiple of the respective selected companys revenue,
earnings before interest, taxes, depreciation and amortization,
referred to as EBITDA, and earnings before interest and taxes,
referred to as EBIT, for the latest 12 months, and as
estimated for calendar years 2007 and 2008. UBS also reviewed
the closing stock price of each selected company on
September 21, 2007 as a multiple of calendar years 2007 and
2008 estimated earnings per share, referred to as EPS. UBS then
compared these multiples derived for the selected companies to
corresponding multiples implied for C-COR based on the closing
price of C-COR common stock on September 21, 2007 and on
the $13.75 per share merger consideration, utilizing both
publicly available research analysts forecasts, referred
to as C-COR street forecasts, and internal estimates of
C-CORs management as adjusted by ARRIS management,
referred to as C-COR adjusted management forecasts. Estimated
financial data of the selected companies were based on publicly
available research analysts estimates. This analysis
indicated the following implied mean, median, high and low
multiples for the selected companies, as compared to
corresponding multiples implied for C-COR based on the closing
price of C-COR common stock on September 21, 2007 and
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based on the $13.75 per share merger consideration, utilizing
both C-COR adjusted management forecasts and C-COR street
forecasts:
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Implied Multiples for C-COR
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Based on Closing Stock
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Based on $13.75 per Share
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Price on September 21, 2007
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Merger Consideration
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C-COR
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C-COR
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Implied Multiples for
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C-COR
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Adjusted
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C-COR
|
|
|
Adjusted
|
|
|
|
Selected Companies
|
|
|
Street
|
|
|
Management
|
|
|
Street
|
|
|
Management
|
|
|
|
Mean
|
|
|
Median
|
|
|
High
|
|
|
Low
|
|
|
Forecasts
|
|
|
Forecasts
|
|
|
Forecasts
|
|
|
Forecasts
|
|
|
Enterprise Value as Multiple of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest 12 Months
|
|
|
2.2
|
x
|
|
|
1.7
|
x
|
|
|
5.6
|
x
|
|
|
0.8
|
x
|
|
|
1.6
|
x
|
|
|
1.6
|
x
|
|
|
2.3
|
x
|
|
|
2.3
|
x
|
Estimated Calendar Year 2007
|
|
|
2.1
|
x
|
|
|
1.7
|
x
|
|
|
5.2
|
x
|
|
|
0.8
|
x
|
|
|
1.5
|
x
|
|
|
1.5
|
x
|
|
|
2.2
|
x
|
|
|
2.2
|
x
|
Estimated Calendar Year 2008
|
|
|
1.8
|
x
|
|
|
1.6
|
x
|
|
|
4.4
|
x
|
|
|
0.7
|
x
|
|
|
1.4
|
x
|
|
|
1.3
|
x
|
|
|
2.0
|
x
|
|
|
1.9
|
x
|
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest 12 Months
|
|
|
13.5
|
x
|
|
|
13.7
|
x
|
|
|
24.9
|
x
|
|
|
5.2
|
x
|
|
|
11.0
|
x
|
|
|
11.0
|
x
|
|
|
16.3
|
x
|
|
|
16.3
|
x
|
Estimated Calendar Year 2007
|
|
|
15.4
|
x
|
|
|
12.5
|
x
|
|
|
30.1
|
x
|
|
|
5.4
|
x
|
|
|
7.7
|
x
|
|
|
9.7
|
x
|
|
|
11.4
|
x
|
|
|
14.3
|
x
|
Estimated Calendar Year 2008
|
|
|
10.4
|
x
|
|
|
10.6
|
x
|
|
|
15.4
|
x
|
|
|
5.2
|
x
|
|
|
6.3
|
x
|
|
|
7.3
|
x
|
|
|
9.4
|
x
|
|
|
10.9
|
x
|
EBIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest 12 Months
|
|
|
17.4
|
x
|
|
|
15.5
|
x
|
|
|
31.5
|
x
|
|
|
10.0
|
x
|
|
|
12.7
|
x
|
|
|
12.7
|
x
|
|
|
18.9
|
x
|
|
|
18.9
|
x
|
Estimated Calendar Year 2007
|
|
|
16.9
|
x
|
|
|
15.4
|
x
|
|
|
28.5
|
x
|
|
|
9.9
|
x
|
|
|
10.5
|
x
|
|
|
11.0
|
x
|
|
|
15.7
|
x
|
|
|
16.3
|
x
|
Estimated Calendar Year 2008
|
|
|
14.6
|
x
|
|
|
14.7
|
x
|
|
|
25.1
|
x
|
|
|
8.2
|
x
|
|
|
8.3
|
x
|
|
|
8.3
|
x
|
|
|
12.4
|
x
|
|
|
12.3
|
x
|
Equity Value as Multiple of EPS:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Calendar Year 2007
|
|
|
21.4
|
x
|
|
|
21.2
|
x
|
|
|
29.0
|
x
|
|
|
15.1
|
x
|
|
|
12.8
|
x
|
|
|
12.6
|
x
|
|
|
17.9
|
x
|
|
|
18.1
|
x
|
Estimated Calendar Year 2008
|
|
|
20.1
|
x
|
|
|
18.0
|
x
|
|
|
43.7
|
x
|
|
|
12.1
|
x
|
|
|
15.0
|
x
|
|
|
13.1
|
x
|
|
|
20.8
|
x
|
|
|
18.8
|
x
|
Selected Precedent Transactions Analysis. UBS
reviewed transaction values in the following 13 selected
transactions involving communications equipment companies:
|
|
|
|
|
Announcement Date
|
|
Acquiror
|
|
Target
|
|
07/2007
|
|
The Swarth Group and Ashmore
Investment Management Limited
|
|
ECI Telecom Ltd.
|
06/2007
|
|
CommScope, Inc.
|
|
Andrew Corporation
|
06/2007
|
|
TPG Partners V, L.P. and Silver
Lake
Partners III, L.P.
|
|
Avaya Inc.
|
04/2007
|
|
Mitel Networks Corporation
|
|
Inter-Tel (Delaware), Incorporated
|
04/2007
|
|
Motorola, Inc.
|
|
Terayon Communication Systems, Inc.
|
02/2007
|
|
Telefonaktiebolaget LM Ericsson (publ)
|
|
TANDBERG Television ASA
|
12/2007
|
|
Motorola, Inc.
|
|
Tut Systems, Inc.
|
12/2006
|
|
Telefonaktiebolaget LM Ericsson (publ)
|
|
Redback Networks Inc.
|
09/2006
|
|
Motorola, Inc.
|
|
Symbol Technologies, Inc.
|
04/2006
|
|
Alcatel
|
|
Lucent Technologies Inc.
|
11/2005
|
|
Cisco Systems, Inc.
|
|
Scientific-Atlanta, Inc.
|
10/2005
|
|
Telefonaktiebolaget LM Ericsson (publ)
|
|
Marconi Corporation plc.
(Telecommunications business)
|
05/2004
|
|
Tellabs, Inc.
|
|
Advanced Fibre Communications, Inc.
|
For each of the selected transactions, UBS calculated and
compared the resulting enterprise value as a multiple of latest
12 months and estimated next 12 months
revenue and EBITDA as of the time of the respective transaction.
UBS also reviewed the per share purchase price of each of the
target companies as a
38
multiple of latest 12 months and estimated next
12 months EPS as of the time of the respective
transaction. UBS then compared these multiples derived from the
selected transactions to corresponding multiples implied for
C-COR based on the $13.75 per share merger consideration,
utilizing both C-COR street forecasts and
C-COR
adjusted management forecasts. Multiples for the selected
transactions were based on publicly available information at the
time of announcement of the relevant transaction. This analysis
indicated the following implied mean, median, high and low
multiples for the selected transactions, as compared to
corresponding multiples implied for C-COR based on the $13.75
per share merger consideration, utilizing both C-COR adjusted
management forecasts and C-COR street forecasts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied Multiples for
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C-COR Based on
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$13.75 per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger Consideration
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C-COR
|
|
|
|
Implied Multiples for
|
|
|
C-COR
|
|
|
Adjusted
|
|
|
|
Selected Transactions
|
|
|
Street
|
|
|
Management
|
|
|
|
Mean
|
|
|
Median
|
|
|
High
|
|
|
Low
|
|
|
Forecasts
|
|
|
Forecasts
|
|
|
Transaction Value as Multiple of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest 12 Months Revenue
|
|
|
2.3
|
x
|
|
|
1.7
|
x
|
|
|
7.7
|
x
|
|
|
1.2
|
x
|
|
|
2.3
|
x
|
|
|
2.3
|
x
|
Estimated Next 12 Months Revenue
|
|
|
2.0
|
x
|
|
|
1.5
|
x
|
|
|
5.6
|
x
|
|
|
1.1
|
x
|
|
|
2.1
|
x
|
|
|
2.0
|
x
|
Latest 12 Months EBITDA
|
|
|
17.8
|
x
|
|
|
13.1
|
x
|
|
|
58.0
|
x
|
|
|
9.1
|
x
|
|
|
16.3
|
x
|
|
|
16.3
|
x
|
Estimated Next 12 Months EBITDA
|
|
|
10.9
|
x
|
|
|
10.3
|
x
|
|
|
15.1
|
x
|
|
|
8.0
|
x
|
|
|
11.5
|
x
|
|
|
12.6
|
x
|
Equity Value as Multiple of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest 12 Months EPS
|
|
|
28.0
|
x
|
|
|
25.6
|
x
|
|
|
42.8
|
x
|
|
|
12.4
|
x
|
|
|
20.9
|
x
|
|
|
20.9
|
x
|
Estimated Next 12 Months EPS
|
|
|
26.2
|
x
|
|
|
24.2
|
x
|
|
|
43.0
|
x
|
|
|
14.9
|
x
|
|
|
19.7
|
x
|
|
|
18.4
|
x
|
Discounted Cash Flow Analysis. UBS performed a
discounted cash flow analysis of C-COR to calculate the
estimated present value as of September 30, 2007 of the
standalone unlevered, after-tax free cash flows that C-COR was
projected to generate from the second quarter of fiscal year
2008 through the full fiscal year 2012 based on C-COR adjusted
management forecasts. UBS calculated a range of terminal values
by applying a range of EBITDA terminal value multiples of 10.0x
to 14.0x to C-CORs fiscal year 2012 estimated EBITDA. The
unlevered, after-tax free cash flows, adjusted to reflect the
present value of C-CORs net operating loss carryforwards
anticipated by ARRIS management to be available, and
terminal values were then discounted to present value using
discount rates ranging from 14.5% to 18.5%. This analysis
indicated an implied per share equity reference range for C-COR
of approximately $12.45 to $17.60, as compared to the $13.75 per
share merger consideration.
ARRIS
Financial Analysis
Selected Companies Analysis. UBS compared
selected financial and stock market data of ARRIS with
corresponding data, to the extent publicly available, of the
following eight publicly traded communications equipment
companies:
|
|
|
|
|
BigBand Networks, Inc.
|
|
|
|
C-COR
|
|
|
|
Cisco Systems, Inc.
|
|
|
|
D-Link Corporation
|
|
|
|
Harmonic Inc.
|
|
|
|
Motorola, Inc.
|
|
|
|
NETGEAR, Inc.
|
|
|
|
Thomson SA
|
39
UBS reviewed, among other things, the enterprise value of each
selected company as a multiple of the respective selected
companys revenue, EBITDA and EBIT for the latest
12 months and as estimated for calendar years 2007 and
2008. UBS also reviewed the closing stock price of each selected
company on September 21, 2007 as a multiple of calendar
years 2007 and 2008 estimated EPS. UBS then compared these
multiples derived for the selected companies to corresponding
multiples implied for ARRIS based on the closing price of ARRIS
common stock on September 21, 2007, utilizing both publicly
available research analysts forecasts, referred to as
ARRIS street forecasts, and the high and low range
of ARRIS managements internal estimates, referred to as
ARRIS management forecasts. Estimated financial data
of the selected companies were based on publicly available
research analysts estimates. This analysis indicated the
following implied mean, median, high and low multiples for the
selected companies, as compared to corresponding multiples
implied for ARRIS based on the closing price of ARRIS common
stock on September 21, 2007, utilizing both ARRIS
management forecasts and ARRIS street forecasts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Implied Multiples for ARRIS
|
|
|
|
|
Based on Closing Stock Price on
|
|
|
|
|
|
|
|
|
|
|
September 21, 2007
|
|
|
|
|
|
|
|
|
|
|
ARRIS
|
|
ARRIS Management
|
|
|
Implied Multiples for Selected Companies
|
|
Street
|
|
Forecasts
|
|
|
Mean
|
|
Median
|
|
High
|
|
Low
|
|
Forecasts
|
|
High
|
|
Low
|
Enterprise Value as Multiple of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest 12 Months
|
|
|
2.1
|
x
|
|
|
1.5
|
x
|
|
|
5.6
|
x
|
|
|
0.8
|
x
|
|
|
1.3
|
x
|
|
|
1.3
|
x
|
|
|
1.3
|
x
|
Estimated Calendar Year 2007
|
|
|
2.0
|
x
|
|
|
1.4
|
x
|
|
|
5.2
|
x
|
|
|
0.8
|
x
|
|
|
1.3
|
x
|
|
|
1.3
|
x
|
|
|
1.3
|
x
|
Estimated Calendar Year 2008
|
|
|
1.7
|
x
|
|
|
1.3
|
x
|
|
|
4.4
|
x
|
|
|
0.7
|
x
|
|
|
1.1
|
x
|
|
|
1.1
|
x
|
|
|
1.2
|
x
|
EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest 12 Months
|
|
|
14.1
|
x
|
|
|
14.2
|
x
|
|
|
24.9
|
x
|
|
|
5.2
|
x
|
|
|
9.7
|
x
|
|
|
9.7
|
x
|
|
|
9.7
|
x
|
Estimated Calendar Year 2007
|
|
|
14.5
|
x
|
|
|
13.9
|
x
|
|
|
26.3
|
x
|
|
|
5.4
|
x
|
|
|
9.2
|
x
|
|
|
9.6
|
x
|
|
|
10.4
|
x
|
Estimated Calendar Year 2008
|
|
|
10.2
|
x
|
|
|
10.8
|
x
|
|
|
15.4
|
x
|
|
|
5.2
|
x
|
|
|
7.6
|
x
|
|
|
7.7
|
x
|
|
|
8.7
|
x
|
EBIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Latest 12 Months
|
|
|
17.1
|
x
|
|
|
17.9
|
x
|
|
|
24.9
|
x
|
|
|
10.0
|
x
|
|
|
10.5
|
x
|
|
|
10.5
|
x
|
|
|
10.5
|
x
|
Estimated Calendar Year 2007
|
|
|
17.3
|
x
|
|
|
15.9
|
x
|
|
|
28.5
|
x
|
|
|
10.5
|
x
|
|
|
9.9
|
x
|
|
|
10.5
|
x
|
|
|
11.4
|
x
|
Estimated Calendar Year 2008
|
|
|
13.4
|
x
|
|
|
13.0
|
x
|
|
|
19.2
|
x
|
|
|
8.3
|
x
|
|
|
8.2
|
x
|
|
|
8.2
|
x
|
|
|
9.4
|
x
|
Equity Value as Multiple of EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Calendar Year 2007
|
|
|
19.4
|
x
|
|
|
17.3
|
x
|
|
|
28.6
|
x
|
|
|
12.8
|
x
|
|
|
16.2
|
x
|
|
|
17.0
|
x
|
|
|
18.3
|
x
|
Estimated Calendar Year 2008
|
|
|
17.5
|
x
|
|
|
16.8
|
x
|
|
|
27.5
|
x
|
|
|
12.1
|
x
|
|
|
13.8
|
x
|
|
|
13.6
|
x
|
|
|
15.8
|
x
|
Accretion/Dilution
Analysis
UBS reviewed the potential pro forma financial impact of the
merger on ARRIS fiscal year 2008 estimated non-GAAP
earnings per share, referred to as non-GAAP EPS, both
before and after giving effect to the accounting treatment under
purchase accounting of certain deferred revenue of C-COR as
estimated by ARRIS management. Estimated financial data of
ARRIS and other information were provided by ARRIS
management (which data, at the direction of ARRIS
management, did not include potential future synergies that
could result from the merger) and estimated financial data of
C-COR were based on C-COR adjusted management forecasts. Based
on the $13.75 per share merger consideration, this analysis
indicated that (i) before giving effect to such accounting
treatment, the merger would be accretive to ARRIS fiscal
year 2008 estimated non-GAAP EPS based on the low range of
ARRIS management forecasts and dilutive to ARRIS fiscal
year 2008 estimated non-GAAP EPS based on the high range of
ARRIS management forecasts and (ii) after giving effect to
such accounting treatment, the merger would be dilutive to
ARRIS fiscal year 2008 estimated non-GAAP EPS based
on both the low and high range of ARRIS management forecasts.
Actual results may vary from projected results and the
variations may be material.
40
Miscellaneous
UBS has acted as financial advisor to ARRIS in connection with
the merger and will receive a fee for its services, a portion of
which was payable in connection with UBS opinion and a
significant portion of which is contingent upon consummation of
the merger. In addition, ARRIS has agreed to reimburse UBS for
its reasonable expenses, including fees, disbursements and other
charges of counsel, and to indemnify UBS and related parties
against liabilities, including liabilities under federal
securities laws, relating to, or arising out of, its engagement.
In the past, UBS provided investment banking services to ARRIS
unrelated to the proposed merger, for which UBS received
compensation. In the ordinary course of business, UBS, its
successors and affiliates may hold or trade, for their own
accounts and the accounts of their customers, securities of
ARRIS and C-COR and, accordingly, may at any time hold a long or
short position in such securities.
ARRIS selected UBS as its financial advisor in connection with
the merger because UBS is an internationally recognized
investment banking firm with substantial experience in similar
transactions. UBS is continually engaged in the valuation of
businesses and their securities in connection with mergers and
acquisitions, leveraged buyouts, negotiated underwritings,
competitive bids, secondary distributions of listed and unlisted
securities and private placements.
Factors
Considered by the C-COR Board of Directors
In reaching its conclusion to approve the merger agreement and
the merger and recommend that
C-COR shareholders
vote FOR adoption of the merger agreement, the C-COR
board of directors, at its meeting held on September 23,
2007, considered the merger agreement and determined it to be
fair to, advisable and in the best interests of C-COR and its
shareholders. In evaluating the merger, C-CORs board of
directors consulted with management, as well as its legal and
financial advisors, and considered a number of factors as set
forth below.
Strategic Considerations. The C-COR board of
directors considered a number of strategic advantages of the
merger in comparison to a stand-alone strategy, including, but
not limited to, the following factors:
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the thorough,
12-month
review conducted by C-CORs board of directors of the
strategic options available to the company, including remaining
an independent public company, pursuing various recapitalization
or acquisition strategies, that as part of the review, the
company, with the assistance of its financial advisor, contacted
22 potential strategic buyers and that the merger agreement was
the most favorable proposal received by C-COR, including as to
price and certainty;
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the possible alternatives to the merger (including the
possibility of continuing to operate C-COR as an independent
entity and the desirability and perceived risks of that
alternative), the range of potential benefits to C-CORs
shareholders of the possible alternatives and the timing and
likelihood of accomplishing such alternatives, and C-CORs
board of directors assessment that none of such
alternatives were reasonably likely to present superior
opportunities for C-COR or to create greater value for its
shareholders, taking into account risks of execution as well as
business, competitive, industry and market risks, of the
alternatives and the merger;
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the continued consolidation of the industry and the competitive
effects of the increased consolidation on smaller companies such
as C-COR;
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the strength of ARRIS financial position, in particular
its significant cash position, which will enable it to make
future acquisitions;
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ARRIS products are complementary to the products of C-COR
and should enable the combined companies to better meet demands
of its customers;
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the favorable long-term impact of the merger upon C-CORs
employees by joining a company that will be larger and better
able to compete; and
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the positive impact upon C-CORs customers by merging with
ARRIS to produce a more stable company with more extensive
product offerings.
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41
Financial Advantages. The C-COR board of
directors also considered certain financial advantages to the
merger including, but not limited to, the following factors:
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the financial terms of the merger, including the fact that,
based on the closing price of its common stock as reported on
the NASDAQ Global Market on September 21, 2007 (the last
business day prior to announcement of the merger agreement), the
$13.75 per share merger consideration represented an approximate
19% premium to the
30-day
trading average of C-CORs common stock and a 39% premium
as of that date; and
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both companies expect that ARRIS will be able to achieve
significant operational savings after the completion of the
merger as it integrates C-CORs operations.
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Other Factors. The C-COR board of directors
also considered the following factors, among others:
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the ability of C-CORs shareholders to elect to receive the
merger consideration in cash, ARRIS common stock or a
combination of cash and ARRIS common stock, subject to
pro-ration if the elections exceed approximately 51% cash or
approximately 49% stock, and the fact that, to the extent
shareholders receive ARRIS common stock, the transaction will be
tax free;
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the financial presentation of Merrill Lynch, including the
opinion of Merrill Lynch to C-CORs board of directors to
the effect that, as of September 23, 2007 and based on the
assumptions made, matters considered and limits of review set
forth in its written opinion, the merger consideration to be
received by holders of C-COR common stock pursuant to the merger
was fair, from a financial point of view, to those holders;
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its review of C-CORs business, operations, financial
condition and earnings on an historical and a prospective basis;
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the evaluation by C-CORs board of directors of its
business plan and the risks and uncertainties associated with
the implementation of the plan compared to the risks and
benefits from the proposed merger;
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the downside protection through the collar and the ability of
C-COR to
terminate the merger agreement if the ARRIS stock price drops
below $11.41;
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the ability of C-COR to receive a termination fee in the amount
of $22.5 million if a third party makes a proposal to
acquire ARRIS, the shareholders of ARRIS do not approve the
issuance of shares by ARRIS in the merger and within twelve
months of the termination date, ARRIS enters into a transaction
to be acquired;
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the C-COR board of directors has the right under the merger
agreement to consider unsolicited superior proposals and to
change its recommendation, and terminate the merger agreement,
provided C-COR pays to ARRIS a termination fee in the amount of
$22.5 million;
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the regulatory and other approvals required in connection with
the merger and the likelihood that such approvals would be
received without unacceptable conditions; and
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the fact that some of C-CORs directors and executive
officers have other financial interests in the merger that are
in addition to their interests as shareholders, including as a
result of employment and compensation arrangements with C-COR
and the manner in which they would be affected by the merger.
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Potential Risks. The C-COR board of directors
considered a variety of risks and other potentially negative
factors concerning the merger, including, without limitation,
the following factors:
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the risk that potential benefits of the merger, including
possible synergies, might not be realized;
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the possibility that the consummation of the merger may be
delayed, or not occur;
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the incurrence of substantial expenses related to the merger,
including transaction expenses and integration costs; and
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42
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the other potential risks about the merger and the business of
ARRIS following a merger as described under the heading
Risk Factors in this joint proxy
statement/prospectus.
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The foregoing discussion of the factors considered by
C-CORs board of directors is not intended to be
exhaustive, but, rather, includes the material factors
considered by C-CORs board of directors. In reaching its
decision to approve the merger agreement, the merger and the
other transactions contemplated by the merger agreement,
C-CORs board of directors did not quantify or assign any
relative weights to the factors considered, and individual
directors may have given different weights to different factors.
C-CORs board of directors considered all these factors as
a whole, and overall considered the factors to be favorable to,
and supportive of, its determination.
Opinion
of C-CORs Financial Advisor
On September 23, 2007, Merrill Lynch delivered to
C-CORs board of directors its oral opinion, which opinion
was subsequently confirmed in writing, to the effect that, as of
that date and based upon the assumptions made, matters
considered and limits of review set forth in its written
opinion, the merger consideration to be received by holders of
C-COR common stock pursuant to the merger was fair, from a
financial point of view, to those holders. A copy of Merrill
Lynchs written opinion is attached to this joint proxy
statement/prospectus as Annex C.
Merrill Lynchs written opinion sets forth the
assumptions made, matters considered and limits on the scope of
review undertaken by Merrill Lynch. C-COR encourages its
shareholders to read Merrill Lynchs opinion carefully and
in its entirety. Merrill Lynchs opinion was intended for
the use and benefit of C-COR board of directors, does not
address the merits of the underlying decision by C-COR to engage
in the merger, and does not constitute a recommendation to any
C-COR shareholder as to how that shareholder should vote on the
proposed merger or any related matter or as to what form of
merger consideration such shareholder should elect. Merrill
Lynch was not asked to address, and its opinion does not
address, the fairness to, or any other consideration of, the
holders of any class of securities, creditors or other
constituencies of C-COR, other than the holders of C-COR common
stock. Merrill Lynchs opinion does not express any opinion
as to the prices at which C-COR common stock or ARRIS common
stock will trade following the announcement or consummation of
the merger. This summary of Merrill Lynchs opinion is
qualified in its entirety by reference to the full text of the
opinion attached to this joint proxy statement/prospectus as
Annex C.
In arriving at its opinion, Merrill Lynch, among other things:
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reviewed certain publicly available business and financial
information relating to C-COR and ARRIS that it deemed to be
relevant;
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reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets,
liabilities and prospects of C-COR, as well as the amount and
timing of the cost savings and related expenses and synergies
expected to result from the merger furnished to Merrill Lynch by
C-COR, which
are referred to below as the Expected Synergies, and
certain information relating to the business, earnings, cash
flow, assets, liabilities and prospects of ARRIS, furnished to
Merrill Lynch by ARRIS, including financial forecasts for fiscal
years 2007 and 2008 only, Merrill Lynch having been informed by
ARRIS that ARRIS has not prepared financial forecasts beyond
that period;
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conducted discussions with members of senior management and
representatives of C-COR and ARRIS concerning the matters
described in the preceding two bullet points, as well as their
respective businesses and prospects before and after giving
effect to the merger and the Expected Synergies;
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reviewed the market prices and valuation multiples for C-COR
common stock and ARRIS common stock and compared them with those
of certain publicly-traded companies that it deemed to be
relevant;
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reviewed the results of operations of C-COR and ARRIS and
compared them with those of certain publicly-traded companies
that it deemed to be relevant;
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43
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compared the proposed financial terms of the merger with the
financial terms of certain other transactions that it deemed to
be relevant;
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participated in certain discussions and negotiations among
representatives of C-COR and ARRIS and their financial and legal
advisors;
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reviewed the potential pro forma impact of the merger;
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reviewed the merger agreement; and
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reviewed such other financial studies and analyses and took into
account such other matters as were deemed necessary, including
its assessment of general economic, market and monetary
conditions.
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In preparing its opinion, Merrill Lynch assumed and relied on
the accuracy and completeness of all information supplied or
otherwise made available to it, discussed with or reviewed by or
for it, or publicly available, and Merrill Lynch did not assume
any responsibility for independently verifying such information
or undertake an independent evaluation or appraisal of any of
the assets or liabilities of C-COR or ARRIS and was not
furnished with any such evaluation or appraisal, nor did it
evaluate the solvency or fair value of
C-COR or
ARRIS under any state or federal laws relating to bankruptcy,
insolvency or similar matters. In addition, Merrill Lynch did
not assume any obligation to conduct any physical inspection of
the properties or facilities of C-COR or ARRIS. With respect to
the financial forecast information and the Expected Synergies
furnished to or discussed with Merrill Lynch by C-COR or ARRIS,
Merrill Lynch assumed that such financial forecast information
and the Expected Synergies were reasonably prepared and
reflected the best currently available estimates and judgment of
C-CORs or ARRIS management as to the expected future
financial performance of C-COR or ARRIS, as the case may be, and
the Expected Synergies. Merrill Lynch further assumed that the
merger would qualify as a tax-free reorganization
for U.S. federal income tax purposes.
Merrill Lynchs opinion was necessarily based upon market,
economic and other conditions as they existed and could be
evaluated on, and on the information made available to it as of,
the date thereof. Merrill Lynch assumed that in the course of
obtaining the necessary regulatory or other consents or
approvals (contractual or otherwise) for the merger, no
restrictions, including any divestiture requirements or
amendments or modifications, would be imposed that would have a
material adverse effect on the contemplated benefits of the
merger.
At the September 23, 2007 meeting of the C-COR board of
directors and in connection with preparing its opinion, Merrill
Lynch made a presentation of certain financial analyses of the
merger. The following is a summary of the material analyses
contained in the presentation that was delivered to the C-COR
board of directors. Some of the summaries of financial analyses
include information presented in tabular format. In order to
understand fully the financial analyses performed by Merrill
Lynch, the tables must be read together with the accompanying
text of each summary. The tables alone do not constitute a
complete description of the financial analyses, including the
methodologies and assumptions underlying the analyses, and if
viewed in isolation could create a misleading or incomplete view
of the financial analyses performed by Merrill Lynch.
The fact that any specific analysis has been referred to in the
summary below is not meant to indicate that such analysis was
given more weight than any other analysis; in reaching its
conclusion, Merrill Lynch arrived at its ultimate opinion based
on the results of all analyses undertaken by it and assessed as
a whole and believes the totality of the factors considered and
performed by Merrill Lynch in connection with its opinion
operated collectively to support its determinations as to the
fairness from a financial point of view of the merger
consideration to the holders of C-COR common stock pursuant to
the merger. Merrill Lynch did not draw, in isolation,
conclusions from or with regard to any one factor or method of
analysis.
In arriving at its opinion, Merrill Lynch made its determination
as to the fairness, from a financial point of view, as of the
date of the opinion, of the consideration to be received by
holders of C-COR common stock on the basis of the financial
analyses described below. The following summary is not a
complete description of all of the analyses performed and
factors considered by Merrill Lynch in connection with its
opinion, but rather is a summary of the material financial
analyses performed and factors considered by Merrill Lynch. The
44
preparation of a fairness opinion is a complex process involving
subjective judgments and is not necessarily susceptible to
partial analysis.
With respect to the comparable company and comparable
transactions analyses summarized below, such analyses reflect
selected companies and transactions, and not necessarily all
companies or transactions, that may be considered relevant in
evaluating the merger. In addition, no company or transaction
used as a comparison is either identical or directly comparable
to C-COR, ARRIS or the merger. These analyses involve complex
considerations and judgments concerning financial and operating
characteristics and other factors that could affect the public
trading or acquisition values of the companies concerned.
The estimates of future performance of C-COR provided by
C-CORs management and of ARRIS provided by ARRIS
management in or underlying Merrill Lynchs analyses are
not necessarily indicative of future results or values, which
may be significantly more or less favorable than those
estimates. In performing its analyses, Merrill Lynch considered
industry performance, general business and economic conditions
and other matters, many of which are beyond C-CORS and
ARRIS control. Estimates of the financial value of
companies do not purport to be appraisals or reflect the prices
at which such companies actually may be sold.
The consideration payable in the merger was determined through
negotiation between C-COR and ARRIS and the decision to enter
into the merger agreement was solely that of C-COR and ARRIS.
The opinion and financial analyses of Merrill Lynch were only
one of many factors considered by C-COR in its evaluation of the
merger and should not be viewed as determinative of the views of
C-COR with respect to the merger or the consideration offered.
Transaction
Overview
Based upon the $14.26 closing price of ARRIS common stock on
September 21, 2007, the exchange ratio pursuant to the
merger of 0.9642 shares of ARRIS common stock per share of
C-COR common stock (in the case of a C-COR shareholder receiving
the merger consideration in the form of shares of ARRIS common
stock and assuming no proration), or $13.75 in cash per share of
C-COR common stock (in the case of a
C-COR
shareholder receiving the merger consideration in the form of
cash and assuming no proration), Merrill Lynch noted that the
implied value of the merger consideration to be received,
whether in shares of ARRIS common stock or in cash, per share of
C-COR common stock as of that date was $13.75, which is referred
to below as the implied consideration value. Based
upon the implied consideration value, approximately
54.3 million diluted shares of C-COR common stock
outstanding (calculated using the treasury stock method) and
assuming that stock options are exercised and convertible debt
is converted prior to closing, and approximately
$107.0 million of net cash based on $108.4 million in
cash and $1.4 million in debt (which excludes convertible
debt currently outstanding), Merrill Lynch also noted that the
merger implied a net offer value of approximately
$747.3 million, and a transaction value of approximately
$640.3 million, which is referred to below as the
implied transaction value.
Merrill Lynch compared the implied consideration value to the
closing price of C-COR common stock on September 21, 2007
and to the average daily closing price of C-COR common stock for
the one month period ending on that date and noted the following
implied offer premia:
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C-COR
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Common
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Implied
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Time Period
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Stock Price
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Premium*
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Current (September 21, 2007)
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$
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9.88
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39.2
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%
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1-month
average
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$
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10.91
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26.1
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%
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* |
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Based upon the implied consideration value of $13.75 |
Analysis
of C-COR
Historical Trading Performance. Merrill Lynch
reviewed the historical closing prices for C-COR common stock on
a yearly basis since January 1, 2005 as reported by FactSet
to provide background information on the prices at which C-COR
common stock has historically traded. FactSet is an online
45
investment research and database service used by many financial
institutions. This review indicated the following:
C-COR
Stock Price by Calendar Year
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Year
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High
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Low
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Mean
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2005
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$
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9.56
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$
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4.83
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$
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6.79
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2006
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$
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11.33
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$
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5.04
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$
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7.97
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2007*
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$
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15.76
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$
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9.59
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$
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13.25
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* |
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Through September 21, 2007 |
These trading prices compared to the closing price of C-COR
common stock on September 21, 2007 of $9.88 and the implied
consideration value of $13.75.
Comparable Public Companies Analysis. Merrill
Lynch performed a comparable public companies analysis to
estimate the implied equity value ranges per share of C-COR
common stock on both an enterprise value basis and on a
sum-of-the-parts basis. Using publicly available information,
Merrill Lynch compared certain financial and operating
information, ratios and valuation multiples for C-COR with
corresponding financial and operating information, ratios and
valuation multiples for the following five cable equipment
companies that Merrill Lynch deemed relevant to its analysis,
which are referred to below as the Comparable Cable
Equipment Companies, and to the six non-cable
telecommunications companies that Merrill Lynch deemed relevant
to its analysis, which are referred to below as the
Comparable Non-Cable Telecommunications Companies:
The Comparable Cable Equipment Companies were comprised of:
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ARRIS
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Harmonic Inc.
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BigBand Networks Inc.
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SeaChange International Inc.
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Concurrent Computer Corp.
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The Comparable Non-Cable Telecommunications Companies were
comprised of:
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ADC Telecommunications Inc.
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CIENA Corp.
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ADTRAN Inc.
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Harris Corp.
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Adva AG Optical Networking
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Tellabs Inc.
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Using publicly available information and research estimates,
Merrill Lynch reviewed for each of these companies, the ratio of
enterprise value, defined as the market capitalization plus
total debt, minority interests, preferred stock, and any
one-time costs, less cash and marketable securities, to
estimated earnings before interest, taxes, depreciation and
amortization, or EBITDA, for calendar year 2008,
which is referred to below as Enterprise Value/2008E
EBITDA.
46
This analysis showed the following:
Comparable
Cable Equipment Companies
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Multiple
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High
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Low
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Mean
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Median
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Enterprise Value/2008E EBITDA
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13.5
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x
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6.4
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x
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9.6
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x
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8.4x
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Comparable
Non-Cable Telecommunications Companies
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Multiple
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High
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Low
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Mean
|
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Median
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Enterprise Value/2008E EBITDA
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20.5
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x
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7.3
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x
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11.8
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x
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10.7x
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Merrill Lynch estimated implied equity value ranges per share of
C-COR common stock based upon estimated 2008 EBITDA for C-COR
provided by C-COR management. Using a reference range of 8.0x to
10.0x C-CORs estimated EBITDA for calendar year 2008,
after adding net cash and dividing by the fully diluted shares
of C-COR common stock outstanding (calculated using the treasury
stock method), this analysis indicated implied values per share
of C-COR common stock, rounded to the nearest $0.25, of
approximately $10.75 to $13.00, compared to the closing price of
C-COR common stock on September 21, 2007 of $9.88 and the
implied consideration value of $13.75.
Using publicly available information, Merrill Lynch also
compared certain financial and operating information for
C-CORs three principal businesses, Access &
Transport, On Demand and OSS, on a sum-of-the-parts basis with
the financial and operating information, ratios and valuation
multiples from companies in similar lines of business which
Merrill Lynch deemed relevant to its analysis, which are
referred to as the Access & Transport Comparable
Companies, the On Demand Comparable Companies
and the OSS Comparable Companies.
The Access & Transport Comparable Companies were
comprised of:
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ADC Telecommunications Inc.
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ARRIS
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ADTRAN, Inc.
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Harmonic Inc.
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Adva AG Optical Networking
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The On Demand Comparable Companies were comprised of:
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BigBand Networks Inc.
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SeaChange International Inc.
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Concurrent Computer Corp.
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The OSS Comparable Companies were comprised of:
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Amdocs Ltd.
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|
Convergys Corp.
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Comverse Technology Inc.
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CSG Systems International Inc.
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Using publicly available information and research estimates,
Merrill Lynch separately calculated for each of these companies
the ratio of enterprise value to estimated revenues for calendar
year 2008. For C-CORs Access & Transport
business, this ratio is referred to below as Enterprise
Value/2008E Revenue (Access & Transport Comparable
Companies), for C-CORs On Demand business, this
ratio is referred to below as Enterprise Value/2008E
Revenue (On Demand Comparable Companies), and for
C-CORs OSS business, this ratio is referred to as
Enterprise Value/2008E Revenue (OSS Comparable
Companies).
47
This analysis showed the following:
C-COR
Sum-of-the-parts Analysis
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Multiple
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High
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Low
|
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Mean
|
|
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Median
|
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|
Enterprise Value/2008E Revenue (Access & Transport
Comparable Companies)
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2.84
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x
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0.91
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x
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1.75
|
x
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1.53
|
x
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Enterprise Value/2008E Revenue (On Demand Comparable Companies)
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|
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1.72
|
x
|
|
|
0.86
|
x
|
|
|
1.20
|
x
|
|
|
1.02
|
x
|
Enterprise Value/2008E Revenue (OSS Comparable Companies)
|
|
|
2.08
|
x
|
|
|
0.80
|
x
|
|
|
1.63
|
x
|
|
|
1.82x
|
|
Merrill Lynch estimated implied equity value ranges per share of
C-COR common stock, based upon financial forecasts provided by
C-COR management on a sum-of-the-parts basis for C-CORs
three businesses referred to above. Using a reference range of
1.25x to 1.75x C-CORs estimated calendar year 2008
revenues for Access & Transport, 1.50x to 2.00x
C-CORs estimated calendar year 2008 revenues for On
Demand, and 1.50x to 2.00x C-CORs estimated calendar year
2008 revenues for OSS, after adding net cash and dividing by the
fully diluted shares of C-COR common stock outstanding
(calculated using the treasury stock method), this analysis
indicated implied values per share of C-COR common stock,
rounded to the nearest $0.25, of approximately $10.00 to $13.25,
compared to the closing price of C-COR common stock on
September 21, 2007 of $9.88 and the implied consideration
value of $13.75.
No company used in the above analysis is identical to C-COR. In
evaluating companies identified by Merrill Lynch as comparable
to C-COR or C-CORs businesses or otherwise relevant to its
analysis of
C-COR,
Merrill Lynch made judgments and assumptions with regard to
industry performance, general business, economic, market and
financial conditions and other matters, many of which matters
are beyond
C-CORs
control. A complete analysis involves complex considerations and
judgments concerning differences in financial and operating
characteristics of the companies identified above and other
factors that could affect the public trading values of such
companies.
48
Selected Acquisition Comparables
Analysis. Using publicly available information,
Merrill Lynch examined the following transactions involving
communications equipment companies announced since
January 1, 2002. The transactions considered and the month
and year each transaction was announced were as follows:
|
|
|
|
|
|
|
|
|
Month and Year of
|
Acquiror
|
|
Target
|
|
Announcement
|
|
Commscope Inc.
|
|
Andrew Corporation
|
|
June 2007
|
Silver Lake Partners and TPG Capital
|
|
Avaya Inc.
|
|
June 2007
|
Motorola Inc.
|
|
Terayon Communication Systems, Inc.
|
|
April 2007
|
LM Ericsson Telefon AB
|
|
TANDBERG Television Ltd
|
|
February 2007
|
LM Ericsson Telefon AB
|
|
Redback Networks, Inc.
|
|
December 2006
|
Harmonic Inc.
|
|
Entone Technologies, Inc.
|
|
August 2006
|
Cisco Systems, Inc.
|
|
Arroyo Video Solutions, Inc.
|
|
August 2006
|
Motorola Inc.
|
|
Broadbus Technologies, Inc.
|
|
July 2006
|
Powerwave Technologies Inc.
|
|
Filtronic PLC (Wireless Infrastructure Division)
|
|
June 2006
|
ADC Telecommunications Inc.
|
|
Andrew Corporation
|
|
May 2006
|
Alcatel
|
|
Lucent Technologies Inc.
|
|
April 2006
|
Cisco Systems, Inc.
|
|
Scientific-Atlanta, Inc.
|
|
November 2005
|
Ericsson
|
|
Marconi Corp. plc (Certain Assets)
|
|
October 2005
|
Harris Corp.
|
|
Leitch Technology Corporation
|
|
August 2005
|
ADC Telecommunications Inc.
|
|
Fiber Optic Network Solutions (FONS) Corp.
|
|
July 2005
|
JDS Uniphase Corporation
|
|
Acterna Inc.
|
|
May 2005
|
C-COR
|
|
nCUBE Corporation
|
|
October 2004
|
Avaya Inc.
|
|
Tenovis GmbH
|
|
October 2004
|
Tektronix Inc.
|
|
Inet Technologies, Inc.
|
|
July 2004
|
Tellabs Inc.
|
|
Advanced Fibre Communications, Inc.
|
|
May 2004
|
Advanced Fibre Communications, Inc.
|
|
Marconi Communications, Inc. (North American Access Group)
|
|
January 2004
|
Powerwave Technologies Inc.
|
|
LGP Allgon Holding AB
|
|
December 2003
|
Juniper Networks, Inc.
|
|
Unisphere Networks, Inc.
|
|
May 2003
|
Cisco Systems, Inc.
|
|
The Linksys Group, Inc.
|
|
March 2003
|
Andrew Corporation
|
|
Allen Telecom Inc.
|
|
February 2003
|
LGP Telecom Holding AB
|
|
Allgon AB
|
|
January 2003
|
CIENA Corp.
|
|
ONI Systems Corp.
|
|
February 2002
|
Proxim Corporation
|
|
Western Multiplex Corporation
|
|
January 2002
|
In its analysis, Merrill Lynch derived and compared multiples
for C-COR and the selected transactions, calculated as follows:
|
|
|
|
|
the ratio of transaction value to estimated revenues for the
next-twelve-months following announcement of the transaction,
which is referred to below as Transaction
Value/Next-Twelve-Month Revenues, and
|
|
|
|
the ratio of transaction value to estimated EBITDA for the
next-twelve-months following announcement of the transaction,
which is referred to below as Transaction
Value/Next-Twelve-Month EBITDA.
|
49
This analysis indicated the following:
Selected
Comparable Acquisition Multiples
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple
|
|
High
|
|
|
Low
|
|
|
Mean
|
|
|
Median
|
|
|
Transaction Value/Next-Twelve-Month
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
|
5.2
|
x
|
|
|
0.7
|
x
|
|
|
2.0
|
x
|
|
|
1.6
|
x
|
Transaction Value/Next-Twelve-Month
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
21.1
|
x
|
|
|
7.5
|
x
|
|
|
12.6
|
x
|
|
|
12.1
|
x
|
Using a reference range of 1.50x to 2.00x C-CORs estimated
revenues for fiscal year 2008, after adding net cash and
dividing by the fully diluted shares of C-COR common stock
outstanding (calculated using the treasury stock method), this
analysis indicated implied values per share of C-COR common
stock, rounded to the nearest $0.25, of approximately $10.75 to
$13.75. Using a reference range of 10.0x to 13.0x, C-CORs
estimated EBITDA for fiscal year 2008, after adding net cash and
dividing by the fully diluted shares of
C-COR common
stock outstanding (calculated using the treasury stock method),
this analysis indicated implied values per share of C-COR common
stock, rounded to the nearest $0.25, of approximately $11.50 to
$14.25. These ranges of implied values per share of C-COR common
stock compared, in each case, to the closing price of C-COR
common stock on September 21, 2007 of $9.88 and the implied
consideration value of $13.75.
No selected comparable company or transaction is identical to
C-COR or the merger. Accordingly, an analysis of the resulting
multiples of the selected transactions necessarily involves
complex considerations and judgments concerning differences in
financial and operating characteristics of the companies and the
selected transactions and other factors that may have affected
the selected transactions
and/or
affect the merger.
Discounted Cash Flow Analysis. Merrill Lynch
performed a discounted cash flow, or DCF, analysis for C-COR,
using financial forecasts provided by C-COR management, on a
sum-of-the-parts basis for C-CORs three principal
businesses. Merrill Lynch estimated the present value of the
standalone, unlevered, after-tax free cash flows that each of
the businesses of C-COR could produce over the fiscal years 2008
through 2012 before giving effect to the Expected Synergies. The
range of terminal values was derived by applying perpetuity
growth rates ranging from 4.0% to 6.0% for Access &
Transport, 6.0% to 8.0% for On Demand and 5.0% to 7.0% for OSS
to fiscal year 2012 estimated free cash flow for each of the
businesses. In order to derive implied equity value per share
ranges for C-COR, Merrill Lynch discounted the free cash flows
and terminal values of each of the businesses to present value
using discount rates ranging from 13.0% to 15.0% for
Access & Transport, 13.0% to 15.0% for On Demand and
12.0% to 14.0% for OSS. After adding net cash and the estimated
net present value of C-CORs net operating losses and
dividing by the fully diluted shares of C-COR common stock
outstanding (calculated using the treasury stock method), this
analysis indicated a range of implied equity value per share of
C-COR common stock, rounded to the nearest $0.25, of
approximately $9.50 to $14.00, compared to the closing price of
C-COR common stock on September 21, 2007 of $9.88 and the
implied consideration value of $13.75.
Analysis
of ARRIS
Comparable Public Companies Analysis. Using
financial forecasts provided by ARRIS management and publicly
available information, Merrill Lynch compared certain financial
and operating information, ratios and valuation multiples for
ARRIS with corresponding financial and operating information,
ratios and valuation multiples for the following eight
companies, which are referred to as the ARRIS comparable
companies:
|
|
|
BigBand Networks Inc.
|
|
Harmonic Inc.
|
|
|
|
C-COR
|
|
Motorola Inc.
|
|
|
|
Cisco Systems Inc.
|
|
NETGEAR Inc.
|
|
|
|
Concurrent Computer Corp.
|
|
SeaChange International Inc.
|
50
Using publicly available information and research estimates,
Merrill Lynch reviewed for each of these companies, including a
subset of these companies which excluded both Cisco Systems Inc.
and Motorola Inc.:
|
|
|
|
|
the ratio of enterprise value to estimated EBITDA for calendar
year 2007, which is referred to below as Enterprise
Value/2007E EBITDA;
|
|
|
|
the ratio of enterprise value to estimated EBITDA for calendar
year 2008, which is referred to below as Enterprise
Value/2008E EBITDA;
|
|
|
|
the ratio of enterprise value to estimated revenue for calendar
year 2007, which is referred to below as Enterprise
Value/2007E Revenue;
|
|
|
|
the ratio of enterprise value to estimated revenue for calendar
year 2008, which is referred to below as Enterprise
Value/2008E Revenue;
|
|
|
|
the ratio of the share price to the estimated earnings per share
for calendar year 2007, which is referred to below as the
2007E P/E; and
|
|
|
|
the ratio share price to the estimated earnings per share for
calendar year 2008, which is referred to below as the
2008E P/E.
|
This analysis showed the following:
ARRIS
Comparable Public Companies Analysis
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple
|
|
High
|
|
|
Low
|
|
|
Mean
|
|
|
Median
|
|
|
ARRIS
|
|
|
Enterprise Value/2007E EBITDA
|
|
|
24.9
|
x
|
|
|
9.4
|
x
|
|
|
16.5
|
x
|
|
|
15.5
|
x
|
|
|
9.9
|
x
|
Enterprise Value/2008E EBITDA
|
|
|
13.6
|
x
|
|
|
6.4
|
x
|
|
|
10.1
|
x
|
|
|
10.0
|
x
|
|
|
8.1
|
x
|
Enterprise Value/2007E Revenue
|
|
|
5.21
|
x
|
|
|
0.96
|
x
|
|
|
1.99
|
x
|
|
|
1.37
|
x
|
|
|
1.28
|
x
|
Enterprise Value/2008E Revenue
|
|
|
4.54
|
x
|
|
|
0.86
|
x
|
|
|
1.73
|
x
|
|
|
1.22
|
x
|
|
|
1.15
|
x
|
2007E P/E
|
|
|
29.5
|
x
|
|
|
13.0
|
x
|
|
|
21.7
|
x
|
|
|
22.4
|
x
|
|
|
17.6
|
x
|
2008E P/E
|
|
|
32.8
|
x
|
|
|
14.7
|
x
|
|
|
21.6
|
x
|
|
|
19.1
|
x
|
|
|
14.6
|
x
|
ARRIS
Comparable Public Companies Analysis (Excluding Cisco and
Motorola)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Multiple
|
|
High
|
|
|
Low
|
|
|
Mean
|
|
|
Median
|
|
|
ARRIS
|
|
|
Enterprise Value/2007E EBITDA
|
|
|
20.8
|
x
|
|
|
9.4
|
x
|
|
|
15.0
|
x
|
|
|
15.2
|
x
|
|
|
9.9
|
x
|
Enterprise Value/2008E EBITDA
|
|
|
13.5
|
x
|
|
|
6.4
|
x
|
|
|
9.4
|
x
|
|
|
8.7
|
x
|
|
|
8.1
|
x
|
Enterprise Value/2007E Revenue
|
|
|
2.62
|
x
|
|
|
0.96
|
x
|
|
|
1.61
|
x
|
|
|
1.37
|
x
|
|
|
1.28
|
x
|
Enterprise Value/2008E Revenue
|
|
|
2.31
|
x
|
|
|
0.86
|
x
|
|
|
1.39
|
x
|
|
|
1.22
|
x
|
|
|
1.15
|
x
|
2007E P/E
|
|
|
29.5
|
x
|
|
|
13.0
|
x
|
|
|
21.5
|
x
|
|
|
21.7
|
x
|
|
|
17.6
|
x
|
2008E P/E
|
|
|
32.8
|
x
|
|
|
14.7
|
x
|
|
|
21.8
|
x
|
|
|
18.9
|
x
|
|
|
14.6
|
x
|
Research Analyst Price Targets. Merrill Lynch
reviewed the most recent Wall Street research equity analyst per
share target prices for ARRIS common stock, which ranged from
$19.00 to $21.00, compared to the closing price of ARRIS common
stock on September 21, 2007 of $14.26.
Pro Forma Analysis. Merrill Lynch analyzed the
potential pro forma effect of the merger on C-COR shareholders
for the years 2007 through 2010 using financial forecasts
provided by C-COR management, both including and excluding the
Expected Synergies. The financial forecasts that included the
Expected Synergies assumed, among other factors, that the
combined company would achieve the Expected Synergies in the
amounts and at the times indicated. The financial forecasts did
not make any adjustment for the combined company as related to
projected tax rates or to deferred revenue resulting from
purchase accounting. This analysis indicated that the merger
would be accretive to earnings to ARRIS shareholders throughout
the period both including and excluding the Expected Synergies.
51
Miscellaneous. C-CORs board of directors
selected Merrill Lynch to act as its financial advisor with
respect to the possible sale of C-COR because Merrill Lynch is
an internationally recognized investment banking firm with
substantial experience in transactions similar to the merger. As
part of its investment banking business, Merrill Lynch is
continually engaged in the valuation of businesses and their
securities in connection with mergers and acquisitions,
leveraged buyouts, negotiated underwritings, secondary
distributions of listed and unlisted securities and private
placements.
Merrill Lynch is acting as financial advisor to C-COR in
connection with the merger and will receive a fee from C-COR for
its services pursuant to a letter agreement dated May 12,
2006, as amended. Pursuant to this letter agreement, C-COR
agreed to pay Merrill Lynch a fee for its services, a portion of
which was payable upon delivery of its opinion and a significant
portion of which is payable contingent upon consummation of the
merger. In addition, C-COR has agreed to indemnify Merrill Lynch
for certain liabilities arising out of its engagement. C-COR has
also agreed to reimburse Merrill Lynch for its reasonable
expenses, including attorneys fees and disbursements.
In the ordinary course of its business, Merrill Lynch may
actively trade C-COR common stock and other securities of C-COR,
as well as the ARRIS common stock and other securities of ARRIS,
for its own account and for the accounts of customers and,
accordingly, may at any time hold a long or short position in
such securities.
Interests
of C-CORs Directors and Management in the Merger
In considering the recommendation of the C-COR board of
directors with respect of the adoption of the merger agreement,
C-COR shareholders should be aware that the merger agreement
includes an agreement that ARRIS shall take such steps as are
reasonably necessary to ensure that a nominee to the board of
directors of ARRIS as selected by C-COR (and reasonably
acceptable to ARRIS) is appointed to the board of directors of
ARRIS. At the time the C-COR board of directors approved the
merger agreement, the C-COR board of directors had not yet
determined who it would propose as a nominee for the ARRIS board
of directors. The members of the board of directors of Merger
Sub, none of whom are members of the C-COR board of directors,
will serve as the directors of the surviving corporation after
the closing of the merger. The terms of the C-COR Amended and
Restated Incentive Plan, under which stock options held by the
non-employee directors are granted, provide that the vesting of
all unvested stock options held by non-employee directors will
accelerate upon any change of control transaction. In addition,
all outstanding stock options held by non-employee directors
shall remain exercisable until the expiration of their original
term. The merger will constitute a change of control
transaction. The C-COR non-employee directors currently hold
70,000 unvested stock options. If the merger had occurred
on November 6, 2007, the aggregate in-the-money value of
such accelerated stock options would have been $65,000. In
addition, options granted to
C-COR
non-employee
directors in October 2007, as part of
C-CORs
customary annual grant, will become fully vested as a result of
the merger. Unlike any other option grants made to C-COR
employees after September 23, 2007, the vesting of the
options granted to the non-employee directors will accelerate as
a result of the merger.
C-CORs Chairman and Chief Executive Officer,
Mr. David A. Woodle, has an Amended and Restated Employment
Agreement dated March 5, 2007, which we refer to as the
Woodle Employment Agreement, that provides certain benefits be
paid to Mr. Woodle in the event he is terminated in
connection with a change of control. If Mr. Woodles
employment is terminated, other than for cause (as defined in
the Woodle Employment Agreement), within 18 months after a
change of control occurs (the merger will constitute a change of
control transaction under the Woodle Employment Agreement),
Mr. Woodle is entitled to receive the following severance
payments: (i) three times his annual salary at the rate on
the date of the termination of his employment (but not less than
three times his annual salary prior to the change of control);
(ii) three times the C-CORs matching and
discretionary contributions to its 401(k) Plan and the
Supplemental Executive Retirement Plan, which we refer to as the
SERP (if the termination occurs during a plan year for which
C-COR makes
a discretionary contribution to the 401(k) Plan, an amount equal
to the contribution he would have received); (iii) 100%
vesting on all 401(k) Plan and SERP contributions to the extent
not already vested; (iv) three times the average Profit
Incentive Plan payment made to Mr. Woodle over the past
three years; and (v) three years of health, dental,
accident, life and disability insurance coverage. If payments by
C-COR
52
pursuant to the Woodle Employment Agreement are deemed excess
compensation related to a change of control, such that, as a
result, he becomes subject to excise tax under
Section 4999 of the Code, C-COR must pay Mr. Woodle an
additional gross up amount as required to make Mr.
Woodle whole with respect to the excise tax, as well as federal
and state income tax with respect to the gross up amount.
Pursuant to the C-COR Incentive Plan, all outstanding but
unvested options held by Mr. Woodle become fully vested
upon the occurrence of a change of control. In addition, all
outstanding stock options shall remain exercisable until their
original expiration date. In addition, Mr. Woodle is
entitled to a supplemental retirement benefit with an annual
benefit of $50,000, commencing on Mr. Woodles
retirement and continuing until his death in accordance with,
and subject to, definitions of retirement as outlined in the
C-COR Incentive Plan. Under the Woodle Employment Agreement, if
Mr. Woodles employment is terminated by C-COR within
three months prior to a change of control, but such termination
was in connection with a change of control, Mr. Woodle is
entitled to receive all payments and benefits to which he would
otherwise be entitled if such termination had actually occurred
within 18 months after such change of control. If
Mr. Woodle resigns within 18 months after a change of
control, he is entitled to the same benefits as from an
involuntary termination if: (a) he determines there has
been a significant change in his responsibilities or duties;
(b) his base salary is reduced by more than 10%; or
(c) he is required to relocate more than 40 miles from
his former place of work.
All of C-CORs executive officers, other than
Mr. Woodle, have change of control agreements, which we
refer to as the Change of Control Agreements. Pursuant to the
Change of Control Agreements, in the event an executive is
terminated involuntarily within 18 months after a change of
control, the executive is entitled to receive: (i) two
times his or her annual salary (Mr. Hanelly, the Chief
Financial Officer, Treasurer and Secretary of C-COR, would
receive three times his annual salary) payable in a lump sum;
(ii) two times C-CORs annual matching contribution to
the Retirement Savings and Profit Sharing Plan, the 401(k) Plan
and discretionary and matching contributions to the SERP
(Mr. Hanelly would receive three times C-CORs
contributions) payable in a lump sum; (iii) the sum of the
prior two years awards from the Profit Incentive Plan then
in effect (Mr. Hanelly would receive three years
awards) payable in a lump sum; (iv) 24 months of
coverage under C-CORs various health, dental, life and
disability insurance plans (Mr. Hanelly would receive
36 months of coverage) or, at the executives
discretion, a lump sum payment in an amount equal to
C-CORs cost of providing such coverages during such
period; and (v) unreduced benefits payable under
C-CORs Supplemental Retirement Plan, which we refer to as
CSRP, even if the executive has not yet attained age 55,
payable in monthly installments over 15 years. In addition,
under the Change of Control Agreements, all outstanding stock
options shall remain exercisable until their original expiration
date. Pursuant to the C-COR Amended and Restated Incentive Plan,
all outstanding but unvested options held by executive officers
become fully vested upon the occurrence of a change of control.
If the executive resigns within 18 months after a change of
control, the executive is entitled to the same benefits as from
an involuntary termination if: (a) the executive determines
there has been a significant change in
his/her
responsibilities or duties; (b) the executives base
salary is reduced by more than 10%; or (c) the executive is
required to relocate more than 40 miles from
his/her
former place of work.
If payments by C-COR pursuant to a Change of Control Agreement
are deemed excess compensation related to a change of control
and, as a result, the executive becomes subject to excise
tax under Section 4999 of the Code,
C-COR will
pay such executive an additional amount required to make the
executive whole with respect to such excise tax, as well as
federal and state income taxes or the gross up amount. to
gross up such amount paid by the executive in excise
taxes. Additionally, C-COR is responsible for the fees and
expenses of counsel (up to a maximum of $500,000) and any
additional amount required to gross up the amount
paid to cover federal and state income taxes payable by such
executive relating to such payments that the executive incurs in
the enforcement of his or her rights under the agreement by
litigation or other legal action.
C-COR committed in its initial offer letter to Mr. Pohl,
dated December 22, 2004, that should his employment change
significantly within 36 months of his date of hire
(January 1, 2005), that he would be entitled to enhanced
severance benefits. The enhanced severance benefits in the event
of such significant change in employment status include: twelve
months severance based upon base salary at time of termination,
payment of Profit Incentive Plan should a payment be authorized
by the board of directors at the conclusion of the fiscal year
during which
53
employment is terminated, and immediate vesting of CSRP payments
constituting normal retirement age/service requirements ($18,000
annually for fifteen years, payable in equal monthly
installments).
Based on a hypothetical termination date of November 6,
2007, the value of salary, bonus and accelerated stock which
would be paid to C-CORs executive officers in the event of
a change of control have been set forth in the following table:
|
|
|
Change
of Control Payments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
280G Tax
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
C-COR
|
|
|
Insurance
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Gross-Up
|
|
|
|
|
|
|
Multiple
|
|
|
Salary(1)
|
|
|
Compensation(2)
|
|
|
Contributions(3)
|
|
|
Benefits(4)
|
|
|
Perquisites(5)
|
|
|
CSRP(6)
|
|
|
Acceleration(8)
|
|
|
Payments(7)
|
|
|
Total
|
|
|
David A. Woodle
|
|
|
3
|
|
|
$
|
1,500,000
|
|
|
$
|
691,587
|
|
|
$
|
500,467
|
|
|
$
|
161,129
|
|
|
$
|
76,500
|
|
|
$
|
1,350,000
|
|
|
$
|
975,625
|
|
|
$
|
1,136,780
|
|
|
$
|
6,392,088
|
|
William T. Hanelly
|
|
|
3
|
|
|
$
|
849,000
|
|
|
$
|
265,173
|
|
|
$
|
230,233
|
|
|
$
|
162,266
|
|
|
$
|
21,300
|
|
|
$
|
270,000
|
|
|
$
|
299,975
|
|
|
$
|
746,797
|
|
|
$
|
2,844,744
|
|
Michael J. Pohl
|
|
|
2
|
|
|
$
|
680,000
|
|
|
$
|
309,054
|
|
|
$
|
181,735
|
|
|
$
|
104,276
|
|
|
$
|
14,200
|
|
|
$
|
270,000
|
|
|
$
|
584,475
|
|
|
$
|
723,720
|
|
|
$
|
2,867,460
|
|
John O. Caezza
|
|
|
2
|
|
|
$
|
600,000
|
|
|
$
|
279,519
|
|
|
$
|
162,265
|
|
|
$
|
125,161
|
|
|
$
|
14,200
|
|
|
$
|
270,000
|
|
|
$
|
300,200
|
|
|
$
|
756,345
|
|
|
$
|
2,507,690
|
|
Steven T. Gropp
|
|
|
2
|
|
|
$
|
460,000
|
|
|
$
|
9,200
|
|
|
$
|
132,030
|
|
|
$
|
105,328
|
|
|
$
|
14,200
|
|
|
$
|
270,000
|
|
|
$
|
377,438
|
|
|
$
|
556,268
|
|
|
$
|
1,924,454
|
|
Mary Beahm
|
|
|
2
|
|
|
$
|
332,000
|
|
|
$
|
123,323
|
|
|
$
|
81,010
|
|
|
$
|
125,974
|
|
|
$
|
14,200
|
|
|
$
|
270,000
|
|
|
$
|
161,625
|
|
|
$
|
408,630
|
|
|
$
|
1,516,762
|
|
Ken Wright
|
|
|
2
|
|
|
$
|
510,000
|
|
|
$
|
234,442
|
|
|
$
|
137,044
|
|
|
$
|
126,133
|
|
|
$
|
14,200
|
|
|
$
|
270,000
|
|
|
$
|
215,500
|
|
|
$
|
585,341
|
|
|
$
|
2,092,660
|
|
Joseph Zavacky
|
|
|
2
|
|
|
$
|
321,000
|
|
|
$
|
121,509
|
|
|
$
|
78,963
|
|
|
$
|
127,063
|
|
|
$
|
14,200
|
|
|
$
|
270,000
|
|
|
$
|
65,750
|
|
|
$
|
351,761
|
|
|
$
|
1,350,246
|
|
|
|
|
(1) |
|
Amounts shown in the Salary column are calculated as current
annual salary multiplied by the multiple shown in first column. |
|
|
|
(2) |
|
Amounts shown in the Incentive Compensation column for
Mr. Woodle and Mr. Hanelly include the actual
incentive payments for the last 3 years; amounts shown for
the other executives include the actual incentive payments for
the last 2 years. The amounts shown also include an
estimate for a six-month payment that would be made to each of
the executives, other than Mr. Gropp, under the fiscal year
2008 PIP plan. |
|
|
|
(3) |
|
Amounts shown in the C-COR Contributions columns are calculated
based upon the current deferral rates for the executive officers
for the 401(k) and SERP plans and the relevant C-COR matches and
contributions for those plans times the sum of the current
annual salary and incentive compensation award times the
multiple in Column 1. For Mr. Gropp, the C-COR
contributions also includes discretionary contributions in the
amount of $65,054, the vesting of which would accelerate on a
change of control. The discretionary contributions require five
years of service for 100% vesting with no partial vesting prior
to that time other than in a change of control or other events
as set forth in the in the plan. Mr. Gropp did not meet the
five-year vesting requirement as of November 6, 2007. |
|
|
|
(4) |
|
Amounts shown in the Insurance Benefits column represent
C-CORs payments for continuing the health, dental,
disability and life insurance coverage for the named executives
for the number of years shown in the Multiple column. |
|
|
|
(5) |
|
Represents the estimated cost of perquisites that will continue
to be provided to each executive for the number of years shown
in the Multiple column. For each of the executives, such amounts
include tax preparation fees, annual physical examination and a
computer and cellular telephone allowance. For Mr. Woodle,
such amount also includes an estimate for a continued car
allowance and country club annual fees. |
|
|
|
(6) |
|
The amount shown in the CSRP column for Mr. Woodle is the
estimated amount payable under his employment agreement
calculated based upon a $50,000 annual payment beginning
June 29, 2007 and continuing for a life expectancy of 78.
These payments are due to Mr. Woodle in the event that he
terminates employment for any reason, whether his employment was
terminated voluntarily or involuntarily, not only in the case of
change of control. The amounts shown for the other named
executives are the sum of full payments due under the CSRP if
the named executive retired at age 65. In the event of
termination after a change in control, these payments become due
as if the named executive had retired at age 65. As |
54
|
|
|
|
|
Mr. Woodle is eligible for this retirement benefit under
his employment agreement, such amounts are not included for
purposes of calculating his estimated tax gross-up payment. |
|
|
|
(7) |
|
The amounts in the Equity Acceleration column represent the
value of all unvested stock options at the closing price on
November 6, 2007, minus any applicable strike price. In the
event of a change of control, such as the merger, these options
vest immediately. Each of Mr. Woodle, Mr. Hanelly,
Mr. Pohl and Mr. Zavacky are eligible for retirement
under the Incentive Plan, so the value of their respective
options was not included for purposes of their respective
estimated tax gross-up payments. |
|
|
|
(8) |
|
Consists of payments of an amount equal to Section 4999
excise tax and an additional amount to cover taxes on such
excise tax payment. |
C-CORs officers will serve as the officers of the
surviving company after the closing; however, ARRIS may decide
to terminate certain officers at or after the closing.
C-COR, prior to the effective time of the merger, and each of
ARRIS and Merger Sub, following the effective time of the
merger, have agreed to indemnify and hold harmless the present
and former directors and officers of C-COR and its subsidiaries
for costs, expenses (including reasonable attorneys fees),
judgments, fines, losses, claims, damages, or liabilities,
arising out of matters existing at or prior to the merger to the
same extent those individuals are indemnified or have the right
to advancement or expenses, as of the date of the merger
agreement, by C-COR pursuant to its articles of incorporation
and bylaws, to the fullest extent permitted by law. Prior to the
closing, Merger Sub, as the surviving company, or in lieu
thereof, C-COR, will obtain directors and officers
tail insurance policies with a claims period of at
least six years from the effective time of the merger, subject
to certain limitations.
C-CORs board of directors was aware of these interests and
considered them, among other matters, in approving the merger
and making its recommendation that the C-COR shareholders adopt
the merger agreement.
No
Dissenters or Appraisal Rights
Under Pennsylvania law, the holders of C-COR common stock are
not entitled to dissenters or appraisal rights with
respect to the merger. Therefore, although holders of C-COR
common stock may vote against the merger, they will not have the
right under Pennsylvania law to demand from C-COR an appraisal
proceeding to determine the fair value of their
shares. A holder of C-COR common stock who receives shares of
ARRIS common stock in the merger and who does not wish to be an
ARRIS shareholder may elect to sell his or her shares at any
time in the public market at the value set by the market.
The merger is subject to the requirements of the HSR Act and the
rules promulgated under the HSR Act by the U.S. Federal
Trade Commission, or the FTC, which prevent transactions such as
the merger from being completed until required information and
materials are furnished to the U.S. Department of Justice,
or DOJ, and the FTC and the applicable waiting period is
terminated or expires. On October 11, 2007, ARRIS and
C-COR filed
the requisite Pre-Merger Notification and Report Forms under the
HSR Act with the DOJ and the FTC. On October 26, 2007, the
FTC notified ARRIS and
C-COR that
the FTC has granted early termination of the waiting period
under the HSR Act.
Although early termination of the waiting period has been
granted, the DOJ, the FTC and others may still challenge the
merger on antitrust grounds. Accordingly, at any time before or
after the completion of the merger, any of the DOJ, the FTC or
others could take action under the antitrust laws as it deems
necessary or desirable in the public interest, including without
limitation seeking to enjoin the completion of the merger or
permitting completion subject to regulatory concessions or
conditions. We cannot assure you that a challenge to the merger
will not be made or that, if a challenge is made, it will not
succeed.
55
ARRIS is required to account for the merger as a purchase
transaction under GAAP. Under the purchase method of accounting,
the assets (including identifiable intangible assets) and
liabilities (including executory contracts and other
commitments) of C-COR will be recorded, as of completion of the
merger, at their respective fair values and added to those of
ARRIS. Any excess of purchase price over the net fair value of
C-CORs
assets and liabilities is recorded as goodwill (excess purchase
price). Financial statements and reported results of operations
of ARRIS issued after completion of the merger will reflect
these values, but will not be restated retroactively to reflect
the historical financial position or results of operations of
C-COR. The results of operations of C-COR will be included in
the results of operations of ARRIS following the effective time
of the merger.
ARRIS has agreed to use its reasonable efforts to cause the
shares of ARRIS common stock to be issued pursuant to the merger
to be approved for listing on the NASDAQ Global Select Market
before the completion of the merger, subject to official notice
of issuance and regulatory approval.
It is a condition to the merger that the ARRIS common stock
issuable in the merger be approved for listing on the NASDAQ
Global Select Market. Upon completion of the merger, ARRIS
common stock will continue to trade under the symbol
ARRS and C-COR common stock will cease to be listed
on the NASDAQ Global Select Market and its shares will be
deregistered under the Exchange Act.
Issue
and Resale of Shares of ARRIS Common Stock Received In the
Merger
In general, ARRIS common stock issued to C-COR shareholders
pursuant to the merger agreement will be freely transferable,
except for any shares received by persons who may be deemed to
be affiliates of the parties under the Securities
Act. Affiliates generally include individuals or entities that
control, are controlled by, or are under common control with a
person. Affiliates may sell their ARRIS common stock only
pursuant to an effective registration statement under the
Securities Act covering the resale of those shares, an exemption
under Rule 145(d) of the Securities Act or any other
applicable exemption under the Securities Act. ARRIS
registration statement on
Form S-4,
of which this joint proxy statement/prospectus constitutes a
part, does not cover the resale of ARRIS common stock held by
affiliates after the merger.
56
The following is a summary of the material provisions of the
merger agreement and certain other related matters. This summary
is qualified in its entirety by reference to the merger
agreement which is incorporated by reference in its entirety and
attached to this joint proxy statement/prospectus as
Annex A. We encourage you to read the merger agreement in
its entirety.
The ARRIS board of directors and the C-COR board of directors
each approved the merger agreement, the merger, and the other
transactions contemplated by the merger agreement. The merger
agreement contemplates the merger of C-COR with and into Merger
Sub. At the effective time of the merger, the separate corporate
existence of C-COR will cease, and Merger Sub will continue as
the surviving entity and a wholly owned subsidiary of ARRIS.
Each share of ARRIS common stock issued and outstanding at the
effective time of the merger will remain issued and outstanding
as one share of common stock of ARRIS, and each share of C-COR
common stock issued and outstanding at the effective time of the
merger will be converted into the right to receive either cash
or ARRIS common stock, subject to the election, proration and
adjustment procedures described below. See
Merger Consideration and Shareholder Elections below.
Merger Subs articles of incorporation and bylaws will be
the articles of incorporation and bylaws of the surviving
corporation after the effective time of the merger. After the
merger is complete, Merger Sub will file an amendment to its
articles of incorporation to change its name to C-COR
Incorporated. In addition, at the effective time of the
merger, a designee of C-COR (reasonably acceptable to ARRIS),
who has not yet been determined, will be appointed to the ARRIS
board of directors. The directors of Merger Sub will continue as
the directors of the surviving corporation after the merger and
the officers of C-COR immediately prior to the merger will
become the officers of the surviving corporation.
Merger
Consideration and Shareholder Elections
Under the merger agreement, C-COR shareholders will have the
right to elect to receive either $13.75 in cash, without
interest, or 0.9642 of a share of ARRIS common stock, for each
share of C-COR common stock that you own. For example, if a
C-COR shareholder owns 100 shares of C-COR common stock, he
or she could elect to receive cash in exchange for
40 shares and shares of ARRIS common stock in exchange for
the other 60 shares.
However, regardless of the elections made by individual C-COR
shareholders, ARRIS and C-COR have agreed to fix the number of
shares of C-COR common stock that will be converted into shares
of ARRIS common stock, and the number of shares that will be
converted into cash. Under the merger agreement, approximately
49% of the shares of C-COR common stock outstanding immediately
before completion of the merger will be converted into the right
to receive stock consideration, and the remaining approximately
51% of the shares will be converted into the right to receive
the cash consideration, although a small portion of the
consideration that would otherwise be payable in stock may be
paid in cash as described below under
Stock Consideration Adjustments.
Therefore, the cash and stock elections that C-COR shareholders
make with respect to their shares will be subject to proration
to achieve this required ratio of cash and stock consideration.
Specifically, as described in more detail below under
Election Limitations, if C-COR
shareholders elect to receive more stock or cash consideration
than is provided for under the merger agreement, elections for
the over-subscribed form of merger consideration will be
prorated so that the overall approximate 51/49 split of the
merger consideration is achieved. For example, if C-COR
shareholders elect in the aggregate to exchange more than 49% of
the outstanding C-COR shares for shares of ARRIS common stock,
then the
C-COR
shareholders elections to receive ARRIS common stock for
shares of C-COR common stock will be adjusted on a pro rata
basis and, since it is unlikely that C-COR shareholders
collectively will elect exactly the 51/49 split, a portion of
those shares electing ARRIS common stock will receive the cash
consideration instead. As a result, C-COR shareholders are
likely to receive cash or shares of ARRIS stock for greater or
fewer C-COR shares than they specify in their election.
57
Stock
Consideration Adjustments
The implied value of the stock consideration will fluctuate as
the market price of ARRIS common stock fluctuates and, because
elections are subject to proration as described below under
Election Limitations, there can be no
assurance that a C-COR shareholder will receive ARRIS common
stock, rather than cash, for each share of C-COR common stock
for which he or she makes a stock election. As a result of this
fluctuation in the implied value, ARRIS and C-COR have agreed
that, in the event the average closing price is less than
$12.83, the exchange ratio for the conversion of C-COR common
stock into ARRIS common stock will be increased so that the per
share stock consideration will equal $12.38, based on the
average closing price. The per share cash consideration will
remain $13.75. The $12.83 threshold represents a 10% decrease
from the $14.26 closing price of ARRIS common stock on the
NASDAQ Global Select Market on the last trading day before the
merger agreement was signed. The increase in the exchange ratio
will result in an increase in the number of shares of ARRIS
common stock issued as stock consideration. However, instead of
issuing those additional shares, ARRIS may, at its option and
subject to certain limitations, pay the incremental amount in
cash to the C-COR shares receiving the stock consideration. No
additional increase in the stock consideration will be made in
the event the average closing price is less than $11.41. In such
circumstances, ARRIS will use an average closing price of $11.41
and the exchange ratio will be fixed at 1.0848 shares of
ARRIS common stock for each share of
C-COR common
stock receiving the stock consideration. In addition, if the
average closing price is less than $11.41, both ARRIS and C-COR
will have the right to terminate the merger agreement. See
Termination.
Similarly, in the event the average closing price is more than
$15.69, the exchange ratio for the conversion of C-COR common
stock into ARRIS common stock will be decreased so that the per
share stock consideration will equal $15.13, based on the
average closing price. The per share cash consideration will
remain $13.75. The $15.69 threshold represents a 10% increase
over the $14.26 closing price of ARRIS common stock on the
NASDAQ Global Select Market on the last trading day before the
merger agreement was signed. This decrease in the exchange ratio
will result in a reduction in the number of shares of ARRIS
common stock issued as stock consideration. No additional
decrease in the exchange ratio will be made, however, in the
event the average closing price is more than $17.11. In such
circumstances, ARRIS will use an average closing price of $17.11
and the exchange ratio will be fixed at 0.8839 shares of ARRIS
common stock for each share of C-COR common stock receiving the
stock consideration.
The table below provides examples of the consideration that will
be paid to each C-COR shareholder electing to receive cash
consideration and stock consideration, assuming the average
closing price of the ARRIS common stock is as indicated. The
table assumes that, in the event the average closing price is
less than $12.83, ARRIS elects to pay the additional
consideration in shares of ARRIS common stock.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
100% Stock Election
|
|
|
|
|
|
Pro Rata Values Reflecting 51% Cash/49% Stock Consideration
Mix
|
|
|
|
|
|
|
|
|
|
|
100% Cash
|
|
|
|
|
|
Implied Stock
|
|
|
|
|
|
|
|
ARRIS
|
|
|
|
|
|
Value
|
|
|
Election
|
|
|
|
|
|
Consideration
|
|
|
Cash
|
|
|
Average Implied
|
|
Average
|
|
|
|
|
|
per
|
|
|
Value
|
|
|
|
|
|
Value per
|
|
|
Consideration
|
|
|
Value
|
|
Closing
|
|
|
Exchange
|
|
|
C-COR
|
|
|
per C-COR
|
|
|
Exchange
|
|
|
C-COR
|
|
|
Value per C-COR
|
|
|
per C-COR
|
|
Price
|
|
|
Ratio
|
|
|
Share
|
|
|
Share
|
|
|
Ratio
|
|
|
Share
|
|
|
Share
|
|
|
Share
|
|
|
$
|
18.54
|
|
|
|
0.8839x
|
|
|
$
|
16.39
|
|
|
$
|
13.75
|
|
|
|
0.4339
|
x
|
|
$
|
8.04
|
|
|
$
|
7.00
|
|
|
$
|
15.04
|
|
$
|
17.11
|
(1)
|
|
|
0.8839x
|
|
|
$
|
15.13
|
|
|
$
|
13.75
|
|
|
|
0.4339
|
x
|
|
$
|
7.43
|
|
|
$
|
7.00
|
|
|
$
|
14.43
|
|
$
|
16.40
|
|
|
|
0.9223x
|
|
|
$
|
15.13
|
|
|
$
|
13.75
|
|
|
|
0.4528
|
x
|
|
$
|
7.43
|
|
|
$
|
7.00
|
|
|
$
|
14.43
|
|
$
|
15.69
|
|
|
|
0.9642x
|
|
|
$
|
15.13
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
7.43
|
|
|
$
|
7.00
|
|
|
$
|
14.43
|
|
$
|
14.97
|
|
|
|
0.9642x
|
|
|
$
|
14.43
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
7.09
|
|
|
$
|
7.00
|
|
|
$
|
14.09
|
|
$
|
14.26
|
|
|
|
0.9642x
|
|
|
$
|
13.75
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
6.75
|
|
|
$
|
7.00
|
|
|
$
|
13.75
|
|
$
|
13.55
|
|
|
|
0.9642x
|
|
|
$
|
13.07
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
6.41
|
|
|
$
|
7.00
|
|
|
$
|
13.41
|
|
$
|
12.83
|
|
|
|
0.9642x
|
|
|
$
|
12.38
|
|
|
$
|
13.75
|
|
|
|
0.4734
|
x
|
|
$
|
6.08
|
|
|
$
|
7.00
|
|
|
$
|
13.08
|
|
$
|
12.12
|
|
|
|
1.0210x
|
|
|
$
|
12.38
|
|
|
$
|
13.75
|
|
|
|
0.5012
|
x
|
|
$
|
6.08
|
|
|
$
|
7.00
|
|
|
$
|
13.08
|
|
$
|
11.41
|
(2)
|
|
|
1.0848x
|
|
|
$
|
12.38
|
|
|
$
|
13.75
|
|
|
|
0.5325
|
x
|
|
$
|
6.08
|
|
|
$
|
7.00
|
|
|
$
|
13.08
|
|
$
|
9.98
|
|
|
|
1.0848x
|
|
|
$
|
10.83
|
|
|
$
|
13.75
|
|
|
|
0.5325
|
x
|
|
$
|
5.32
|
|
|
$
|
7.00
|
|
|
$
|
12.32
|
|
|
|
|
(1)
|
|
No further adjustment will be made
to the exchange ratio above the $17.11 per share threshold.
|
|
(2)
|
|
No further adjustment will be made
to the exchange ratio below the $11.41 per share threshold.
|
58
In deciding to make any increase in the stock consideration in
cash, shares of ARRIS common stock or both, ARRIS may not make
such increase in cash if it would result in counsel for either
ARRIS or C-COR being unable to issue its opinion that the merger
will qualify as a reorganization under the Internal
Revenue Code of 1986 (referred to herein as the Code). See
Material U.S. Federal Income Tax Consequences of the
Merger.
ARRIS common stock trades on the NASDAQ Global Select
Market under the ticker symbol ARRS. C-COR common
stock trades on the NASDAQ Global Select Market under the ticker
symbol CCBL. You may obtain current market price
quotations for each companys common stock from newspapers,
over the Internet, or from other sources.
Non-Electing
Shares
C-COR shareholders who make no election, or who do not make a
valid election, with respect to any or all of their shares of
C-COR common stock will be deemed not to have made an election
as to those shares. C-COR shareholders holding shares of C-COR
common stock as to which no election has been made may receive,
in respect of those shares, cash, ARRIS common stock, or a mix
of cash and shares of ARRIS common stock depending on, and after
giving effect to, the number of valid cash elections and stock
elections that have been made by other C-COR shareholders using
the proration adjustment described below.
In addition, under the terms of the merger agreement, all of the
C-COR shares held in C-CORs retirement plans, including
both its plans qualified under Section 401(a) of the Code
and its non-qualified plans, will be deemed
non-electing C-COR shares and participants under
such plans will not have the right to make an election with
respect to the shares of C-COR common stock held by them under
the retirement plans.
Election
Limitations
The number of shares of C-COR common stock that will be
converted into the stock consideration in the merger is fixed at
approximately 49% of the total number of shares of C-COR common
stock outstanding immediately before completion of the merger,
although a small portion of the consideration that would
otherwise be payable in stock may be paid in cash as described
above under Stock Consideration
Adjustments. The remainder of the shares will be converted
into $13.75 per share in cash, without interest. Therefore, the
cash and stock elections made by C-COR shareholders are subject
to proration to achieve this ratio of the total number of shares
of ARRIS common stock to be issued and the aggregate amount of
cash to be paid in the merger. As a result, depending on the
overall elections made by
C-COR
shareholders, they could receive cash or ARRIS common stock for
more or fewer C-COR shares than specified in their elections.
However, except with respect to C-COR treasury shares or C-COR
shares owned by ARRIS, each share of
C-COR common
stock held by a C-COR shareholder will be converted into either
the stock or cash consideration described herein upon completion
of the merger.
Proration if Too Much Stock is Elected. If
C-COR shareholders elect to receive more shares of ARRIS common
stock than ARRIS is required to issue in the merger, then:
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C-COR shareholders who elect to receive cash or who have made no
election for shares of C-COR common stock will receive cash for
their shares of C-COR common stock; and
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|
C-COR shareholders who elect to receive ARRIS common stock for
shares of C-COR common stock will receive ARRIS common stock for
a prorated portion of their shares and cash for those shares of
C-COR common
stock not converted into ARRIS common stock.
|
Proration if Too Much Cash is Elected. If
C-COR shareholders elect to receive fewer shares of ARRIS common
stock than ARRIS is required to issue in the merger, then C-COR
shareholders who elected to receive ARRIS common stock for
shares of C-COR common stock will receive ARRIS common stock for
their shares
59
of C-COR common stock, and those C-COR shareholders who have
elected cash or have made no election for shares of C-COR common
stock will be treated in the following manner:
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If the number of shares held by C-COR shareholders as to which
no election has been made is sufficient to make up the shortfall
in the number of shares of ARRIS common stock that ARRIS is
required to issue in the merger under the merger agreement, then
all C-COR shareholders who elected cash for their shares of
C-COR common stock will receive cash for those shares of C-COR
common stock, and those shareholders who made no election for
their shares of C-COR common stock will receive, pro rata, a
combination of cash and ARRIS common stock for those shares of
C-COR common stock in whatever proportion is necessary to make
up the shortfall.
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If the number of shares held by C-COR shareholders as to which
no election has been made is insufficient to make up the
shortfall, then all of those shares will be converted into ARRIS
common stock and those C-COR shareholders who elected to receive
cash for their shares of C-COR common stock will receive, pro
rata, a combination of cash and ARRIS common stock.
|
The table below illustrates some, but not all of the potential
outcomes for the amount of stock consideration
and/or cash
consideration a C-COR shareholder could receive depending on the
percentage of
C-COR shares
as to which an election has been made to receive the stock
consideration or the cash consideration. The calculations in the
table below assume that no adjustment is made to the stock
consideration as a result of the average trading price of
ARRIS common stock, that valid elections have been made in
respect of all of the outstanding C-COR shares and do not give
effect to the payment of cash for fractional shares. The
table below is for illustrative purposes only. Because the
proration will be done on a share by share basis, unless ARRIS
elects to pay a portion of the stock consideration in cash in
the event the average closing price is less than $12.83, no
single share of C-COR common stock will actually receive both
shares of ARRIS common stock and cash (other than cash in lieu
of fractional shares).
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Percentage of C-COR
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Percentage of C-COR
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Aggregate Consideration
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Aggregate Consideration
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Shares Requesting
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|
Shares Requesting
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|
Received for Each C-COR
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Received for Each C-COR
|
Cash Consideration
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|
Stock Consideration
|
|
Cash Election Share
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|
Stock Election Share
|
|
|
100
|
%
|
|
|
0
|
%
|
|
$7.00 in cash and 0.4733 shares of ARRIS common stock
|
|
$7.00 in cash and 0.4733 shares of ARRIS common stock
|
|
90
|
%
|
|
|
10
|
%
|
|
$7.78 in cash and 0.4188 shares of ARRIS common stock
|
|
0.9642 shares of ARRIS common stock
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|
80
|
%
|
|
|
20
|
%
|
|
$8.75 in cash and 0.3506 shares of ARRIS common stock
|
|
0.9642 shares of ARRIS common stock
|
|
70
|
%
|
|
|
30
|
%
|
|
$10.00 in cash and 0.2630 shares of ARRIS common stock
|
|
0.9642 shares of ARRIS common stock
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|
60
|
%
|
|
|
40
|
%
|
|
$11.67 in cash and 0.1461 shares of ARRIS common stock
|
|
0.9642 shares of ARRIS common stock
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|
51
|
%(1)
|
|
|
49
|
%(1)
|
|
$13.75 in cash
|
|
0.9642 shares of ARRIS common stock
|
|
40
|
%
|
|
|
60
|
%
|
|
$13.75 in cash
|
|
$2.50 in cash and 0.7889 shares of ARRIS common stock
|
|
30
|
%
|
|
|
70
|
%
|
|
$13.75 in cash
|
|
$4.11 in cash and 0.6762 shares of ARRIS common stock
|
|
20
|
%
|
|
|
80
|
%
|
|
$13.75 in cash
|
|
$5.31 in cash and 0.5917 shares of ARRIS common stock
|
|
10
|
%
|
|
|
90
|
%
|
|
$13.75 in cash
|
|
$6.25 in cash and 0.5259 shares of ARRIS common stock
|
|
0
|
%
|
|
|
100
|
%
|
|
$7.00 in cash and 0.4733 shares of ARRIS common stock
|
|
$7.00 in cash and 0.4733 shares of ARRIS common stock
|
|
|
|
(1)
|
|
Represents agreed upon ratio of
cash consideration and stock consideration.
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60
Treasury
Shares and Shares Held by ARRIS or C-COR
Any shares of C-COR common stock owned immediately prior to the
completion of the merger by
C-COR or
ARRIS (other than shares held by C-COR pursuant to the
Supplemental Executive Retirement Plan) will be cancelled and
retired and will cease to exist, and there will be no payment or
consideration for those shares.
Conversion
of Shares; Exchange of Certificates; Elections as to Form of
Consideration
Conversion of C-COR common stock into the right to receive the
merger consideration will occur automatically upon completion of
the merger. Prior to the closing of the merger, ARRIS will
deposit in trust with the exchange agent certificates
representing the shares of ARRIS common stock issuable in the
merger and cash sufficient to pay the cash consideration and the
cash to be paid instead of fractional shares of ARRIS common
stock.
As soon as reasonably practicable after the effective time of
the merger, and promptly following its calculation of the number
and amount of valid stock and cash elections and its receipt of
properly completed transmittal materials, Mellon Investor
Services, as exchange agent, will exchange certificates
representing shares of C-COR common stock for the merger
consideration pursuant to the terms of the merger agreement.
Election
Form
An election form and letter of transmittal will be mailed
separately to the C-COR shareholders at the same time as this
joint proxy statement/prospectus. The election form will allow a
C-COR shareholder to elect to receive cash or ARRIS common stock
for each share of C-COR common stock held by the holder, subject
to proration. The election form and letter of transmittal
contains instructions on how to surrender the shares of
C-COR common
stock. The exchange agent will also make available election
forms and letters of transmittal to holders of C-COR common
stock who request such forms before the election deadline
described below.
Shareholders of C-COR who wish to elect the type of merger
consideration they will receive if the merger is completed
should carefully review and follow the instructions set forth in
the election form. Shareholders who hold their shares in
street name should follow the instructions of their
broker, bank, or other nominee to make an election with respect
to those shares. The election deadline is 5:00 p.m., New
York City time, on December 13, 2007, which is the day
prior to the date of the special meeting of the C-COR
shareholders. Shares of C-COR common stock as to which the
holder has not made a valid election before the election
deadline will be treated as though no election has been made.
Since the election deadline will occur before the date the
merger is completed, a C-COR shareholder will not know what the
market price of a share of ARRIS common stock will be, and
accordingly may not know what the indicated value of the merger
consideration for each share of C-COR common stock that is
converted in the merger into a share of ARRIS common stock will
be as of completion of the merger. We expect that the market
price of ARRIS common stock will fluctuate both before and after
the election deadline and the completion of the merger.
To make an election, a holder of C-COR common stock must submit
a properly completed election form and return it, along with a
properly completed letter of transmittal and the certificates,
if any, for the holders C-COR common stock, so that the
election form and letter of transmittal is actually received by
the exchange agent at or before the election deadline in
accordance with the instructions on the election form and letter
of transmittal.
Generally, an election may be revoked or changed, but only by
written notice received by the exchange agent before the
election deadline (accompanied by a new properly completed and
signed election form in the event of a changed election).
Shareholders will not be entitled to revoke or change their
elections following the election deadline. Shares of C-COR
common stock as to which a holder has not made a valid election
prior to the election deadline, including as a result of
revocation, will be deemed non-electing shares. If it is
determined that any purported election was not properly made,
the purported election will be deemed to be of no force or
effect and the holder making the purported election will be
deemed not to have made an election for these purposes, unless a
proper election is subsequently made on a timely basis.
61
Within five business days of the closing of the merger, ARRIS
and the exchange agent will calculate the number and amount of
valid cash and stock elections made by C-COR shareholders. The
validity of any election will be determined solely by ARRIS, in
the exercise of its reasonable discretion. Until ARRIS and the
exchange agent complete this calculation, a former holder of
C-COR common stock may not be able to sell or otherwise dispose
of the shares of ARRIS common stock, if any, to which such
holder is entitled.
Letter
of Transmittal
The election form also includes a letter of transmittal that
contains instructions on how to surrender shares of C-COR common
stock in exchange for the merger consideration the holder is
entitled to receive. If a certificate for C-COR common stock has
been lost, stolen, or destroyed, the exchange agent will issue
the merger consideration properly payable following its receipt
of an affidavit of that fact by the person claiming that such
certificate is lost, stolen or destroyed and, if required by
ARRIS, the posting of a bond as indemnity against any claim made
against ARRIS with respect to the certificate. Completion of
the letter of transmittal is required in order for an election
to be valid.
Dividends
and Distributions
Until C-COR common stock certificates (or other appropriate
evidence of share ownership) are surrendered for exchange, any
dividends or other distributions declared after the
effectiveness of the merger with respect to ARRIS common stock
into which shares of C-COR common stock may have been converted
will accrue but will not be paid. When duly surrendered, ARRIS
will pay any unpaid dividends or other distributions, without
interest. After the effective time, there will be no transfers
on the stock transfer books of C-COR of any shares of C-COR
common stock.
Withholding
The exchange agent will be entitled to deduct and withhold from
the merger consideration payable to any C-COR shareholder the
amounts it is required to deduct and withhold under any federal,
state, local, or foreign tax laws.
ARRIS will not issue fractional shares to shareholders in
connection with the merger. Rather, shareholders will receive
cash, without interest, equal to such fractional part of a share
of ARRIS common stock multiplied by the average closing price.
Treatment
of C-COR Stock Options and Warrants
As of the effective time of the merger, each outstanding option
to purchase shares of C-COR common stock granted under
C-CORs stock-based compensation and benefit plans will
become fully vested (except for options granted by C-COR to new
employees hired after September 23, 2007, the date of the
merger agreement) and will be converted into an option to
acquire a number of shares of ARRIS common stock (rounded down
to the nearest whole number of shares) obtained by multiplying
the number of shares of C-COR common stock subject to the C-COR
stock option immediately prior to the effective time of the
merger by 0.9642, which we refer to as the option exchange
ratio. However, in the event the average closing price is less
than $12.83, the option exchange ratio will be calculated by
dividing $13.08 by the average trading price of the ARRIS common
stock and in the event the average closing price is more than
$15.69, the option exchange ratio will be calculated by dividing
$14.43 by the average trading price of the ARRIS common stock.
In no event, however, is ARRIS required to use an average
trading price of less than $11.41 or more than $17.11.
The exercise price per share for the converted options will be
obtained by dividing the exercise price per share of C-COR
common stock of such C-COR stock option immediately prior to the
effective time of the merger by the applicable option exchange
ratio (rounded up to the nearest cent).
62
Following the merger, each option will continue to be governed
by the same terms and conditions as were applicable to the
option immediately prior to the merger; provided, that each
C-COR option will be converted into an option to acquire ARRIS
common stock.
As of the effective time of the merger, each outstanding warrant
to purchase shares of C-COR common stock will expire. As a
result, holders of outstanding C-COR warrants must exercise such
warrants prior to the effective time of the merger in order to
be entitled to receive any cash or stock merger consideration.
Closing
and Effective Time
Closing
The closing of the merger will take place as soon as practicable
after all closing conditions have been satisfied or waived
(other than any conditions which by their terms cannot be
satisfied until the closing date, but subject to the
satisfaction or, where permitted, waiver of those conditions as
of the closing date) or another time as agreed to in writing by
the parties. See The Merger Agreement
Conditions to Completion of the Merger.
Effective
Time
ARRIS and Merger Sub will file a certificate of merger with the
Secretary of State of the State of Delaware in accordance with
the Delaware General Corporation Law and C-COR will file
articles of merger with the Department of State of the
Commonwealth of Pennsylvania in accordance with the Pennsylvania
Business Corporation Law. The merger will become effective upon
the effective time as set forth in the certificate of merger and
the articles of merger.
Representations
and Warranties
The merger agreement contains various representations and
warranties of ARRIS and C-COR. The assertions embodied in those
representations and warranties were made for purposes of the
merger agreement and are subject to qualifications and
limitations agreed to by ARRIS and C-COR in connection with
negotiating the terms of the merger agreement. In addition,
certain representations and warranties were made as of a
specified date or may be subject to a contractual standard of
materiality different from what might be viewed as material to
shareholders, or may have been used for the purpose of
allocating risk between the respective parties rather than
establishing matters as facts. For the foregoing reasons, you
should not rely on the representations and warranties as
statements of factual information.
Mutual Representations of ARRIS and
C-COR. Representations and warranties made by and
to ARRIS and C-COR in the merger agreement relate generally to:
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organization, existence, good standing and corporate or similar
power of each party and its subsidiaries and the ownership by
each party of its subsidiaries;
|
|
|
|
incorporation documents and bylaws;
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|
|
|
capitalization;
|
|
|
|
the corporate authorization of the merger agreement and the
transactions contemplated by the merger agreement, the due
execution and enforceability of the merger agreement and actions
of such partys board of directors with respect to the
merger agreement and the transactions contemplated by the merger
agreement;
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|
|
|
material contracts;
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|
|
|
the absence of conflicts with applicable law in connection with
the parties performance under the merger agreement and
related agreements;
|
|
|
|
required consents and required government approvals;
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|
|
|
compliance with laws and possession of permits;
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63
|
|
|
|
|
proper filings of documents with the SEC, the accuracy of
information contained in those documents, the accuracy of
financial statements included in those documents, compliance
with the Sarbanes-Oxley Act and matters relating to disclosure
and internal controls;
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|
|
|
the absence of any material adverse effect and certain other
changes or events since, for C-COR, the end of C-CORs last
fiscal year (June 29, 2007) and, for ARRIS, the end of
ARRIS second quarter (June 30, 2007);
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|
|
absence of undisclosed liabilities and litigation;
|
|
|
|
the accuracy of information supplied for inclusion in securities
filings in connection with the merger, including in this joint
proxy statement/prospectus;
|
|
|
|
pension and employee benefits compliance matters;
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|
|
|
employees and employment agreements;
|
|
|
|
tax matters;
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|
|
|
customer matters;
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|
|
|
environmental matters;
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|
|
|
intellectual property matters;
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|
|
the Foreign Corrupt Practices Act;
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|
|
financial advisor opinions;
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|
absence of obligations to pay certain brokers or similar
fees;
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|
approval of the merger by the board of directors;
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|
|
shareholder votes required in connection with the
merger; and
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|
the inapplicability of each partys shareholder rights plan
in connection with the merger.
|
Additional Representations of C-COR. In
addition to the representations and warranties described above,
C-COR also provided representations and warranties that relate
generally to:
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|
|
|
labor matters;
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|
|
restrictions on business activities;
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|
title to properties;
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|
supplier relations;
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|
inventory;
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|
product warranties and product liabilities;
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|
insurance matters;
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|
the inapplicability of Pennsylvania anti-takeover
statutes; and
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|
import and export control laws.
|
Additional Representations of ARRIS. In
addition to the representations and warranties described above,
ARRIS also provided representations and warranties that relate
generally to financial capacity to consummate the merger.
Although both ARRIS and C-COR provide a representation and
warranty with respect to several of the same categories, the
C-CORs representations and warranties with respect to
intellectual property are generally more comprehensive than
those provided by ARRIS, and C-COR provided certain
representations and warranties that were not also provided by
ARRIS. Certain representations and warranties of ARRIS and
C-COR are
qualified as to materiality or material
adverse effect. For purposes of the merger agreement,
64
material adverse effect means, with respect to ARRIS or C-COR or
any of their respective subsidiaries, any change or effect which
individually, or in the aggregate is or will be materially
adverse to the business, operations, prospects, properties
(including intangible properties), condition (financial or
otherwise), assets, liabilities or regulatory status of such
party and its subsidiaries taken as a whole, but does not
include the effects of changes that are generally applicable in:
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|
the United States economy;
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|
the United States securities markets;
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|
|
the announcement of the merger agreement and the transactions
contemplated thereby;
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|
the taking of any action required under the merger agreement or
the transactions contemplated thereby;
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|
changes in GAAP;
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|
changes in laws of general applicability or interpretations
thereof by courts or governmental entities;
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|
changes in C-CORs and ARRIS industry; or
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|
any acts of terrorism or any outbreak of war.
|
Most references to material adverse effect on ARRIS or its
subsidiaries refers solely to ARRIS and its subsidiaries without
including its ownership of C-COR and its subsidiaries after the
merger. Generally, the representations and warranties of each of
the parties to the merger agreement will expire upon the
effective time.
Conduct of C-COR Pending the Merger. The
merger agreement contains certain covenants of
C-COR and
its subsidiaries concerning the operation of their business
between the date of the merger agreement and continuing until
the earlier of the termination of the merger agreement or the
effective time of the merger.
C-COR has
agreed that, unless ARRIS otherwise consents in writing (which
consent may not be unreasonably withheld), during such period,
C-COR will carry on its business in the ordinary course
consistent with past practice and, to the extent consistent with
the conduct of its business in the ordinary course, use
commercially reasonable efforts to preserve intact its current
business organizations, keep available the services of its
current officers, employees and consultants and preserve its
relationships with customers, suppliers and other persons with
which C-COR or any of its subsidiaries has significant business
relations. In addition to and without limiting the generality of
the foregoing, C-COR will not during the period from the date of
the merger agreement and continuing until the earlier of the
termination of the merger agreement or the effective time of the
merger (except as specifically contemplated in the merger
agreement), directly or indirectly, without the consent of
ARRIS, which shall not be unreasonably withheld, do any of the
following:
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|
|
amend its articles of incorporation or bylaws;
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|
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|
issue, sell, pledge, dispose or encumber, or authorize the
issuance, sale, pledge, disposition or encumbrance of, any
shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire
any shares of capital stock, or any other ownership interest
(including without limitation, any phantom interest), except as
provided in the merger agreement;
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sell, pledge, dispose of or encumber any assets of C-COR, or any
of its subsidiaries, except for (i) sales of assets in the
ordinary course of business and in a manner consistent with past
practice, (ii) disposition of obsolete or worthless assets,
and (iii) sales of immaterial assets not in excess of
$500,000;
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declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect
of, any of its capital stock, except that a wholly owned
subsidiary of C-COR may declare and pay a dividend or make
advances to C-COR;
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split, combine or reclassify any of its capital stock or issue
or authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, other than options for new hires and directors;
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amend the terms or change the period of exerciseability of
purchase, repurchase, redeem, or otherwise acquire, or permit
any subsidiary to purchase repurchase redeem or otherwise
acquire, any of its securities or any securities of its
subsidiaries;
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acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business
organization or division thereof;
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incur any indebtedness for borrowed money, except as provided in
the merger agreement, or issue any debt securities or assume,
guarantee or endorse or otherwise as an accommodation become
responsible for, the obligations of any person or, except in the
ordinary course of business consistent with past practices or in
connection with purchase of equipment or capital improvements,
make any loans or advances (other than loans or advances to or
from direct or indirect wholly owned subsidiaries);
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enter into or amend any material contract or agreement other
than in the ordinary course of business;
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authorize any capital expenditures or purchase fixed assets,
which are, in the aggregate, in excess of $8.1 million;
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increase the compensation payable or to become payable to its
officers or employees, except for increases in salary or wages
of employees of C-COR in accordance with past practice or,
except in the ordinary course of business, grant any severance
or termination pay to, or enter into any employment or severance
agreement with any director, officer or other employee of C-COR,
or establish, adopt, enter into or amend any collective
bargaining, bonus, profit sharing, thrift, compensation, stock
option, restricted stock, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any current or former directors, officers or employees, except,
in each case, as may be required by law, to establish the rate
of contributions under certain benefit plans, and to amend the
terms of employment agreements, change in control agreements,
and stock option and nonqualified deferred compensation plans
and arrangements to the extent necessary or desirable to conform
to the requirements of section 409A of the Internal Revenue
Code or to satisfy an exception to section 409A of the Code;
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take any action to change accounting policies or procedures
(including, without limitation, procedures with respect to
revenue recognition, payments of accounts payable and collection
of accounts receivable) or any action that would prevent or
impede the merger from qualifying as a tax-free reorganization
under Section 368 of the Code;
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make any material tax election inconsistent with past practice
or settle or compromise any material federal, state, local or
foreign tax liability or agree to an extension of a statute of
limitations, except to the extent the amount of any such
settlement has been reserved for in the financial statements
contained in C-CORs reports filed with the SEC prior to
the date of the merger agreement;
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pay, discharge or satisfy any material claims, liabilities or
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or
satisfaction in the ordinary course of business and consistent
with past practice of liabilities reflected or reserved against
in the financial statements contained in C-CORs reports
filed with the SEC prior to the date of the merger agreement or
incurred in the ordinary course of business and consistent with
past practice;
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make any significant change in any tax or accounting methods or
systems of internal accounting controls, except as may be
appropriate to conform to changes in tax laws or regulatory
accounting requirements or GAAP; or
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take, or agree in writing to take, any of the actions described
above, or any action which would make any of the representations
or warranties of C-COR contained in the merger agreement untrue
or incorrect or prevent C-COR from performing or cause C-COR not
to perform its covenants under the merger agreement.
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No Solicitation. The merger agreement includes
provisions prohibiting C-COR from seeking a competing
transaction, subject to certain exceptions described below.
Under these no shop provisions, C-COR has
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agreed that it will not, directly or indirectly, and will not
authorize or permit any of its officers, directors, employees,
advisors or other representatives to take any of the following
actions:
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solicit, initiate, facilitate, respond to or encourage,
including by way of furnishing non-public information, any
inquiries regarding or relating to, or the submission of, any
takeover proposal (as defined below);
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participate in any discussions or negotiations, furnish to any
person any information or data relating to C-COR or its
subsidiaries, provide access to any of the properties, books,
records or employees of
C-COR or its
subsidiaries or take any other action, in each such case
regarding or to facilitate the making of any proposal that
constitutes, or may reasonably be expected to lead to, any
takeover proposal;
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enter into any letter of intent, memorandum of understanding,
agreement in principle, acquisition agreement, merger agreement
or other similar agreement or commitment with respect to any
takeover proposal or agree to, approve, endorse or resolve to
recommend or approve any takeover proposal, except in the
circumstances described below;
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grant any waiver or release under any standstill or similar
agreement by any third party who has made a takeover
proposal; or
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take any action to exempt any third party from the restrictions
on business combinations contained in Subchapters
C through J of Chapter 25 of
Pennsylvania law.
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However, prior to the adoption of the merger agreement and
approval of the transactions contemplated by the C-COR
shareholders at the C-COR meeting, C-COR may, so long as such
information is contemporaneously provided to ARRIS, furnish
information to and enter into discussions and negotiations with
any person that makes an unsolicited bona fide acquisition
proposal that the C-COR board of directors in good faith, after
consultation with its outside counsel and financial advisors,
concludes is likely to result in a superior proposal (as defined
below) if the C-COR board of directors determines that such
action is required to discharge the
C-COR board
of directors fiduciary duties to C-CORs shareholders.
C-COR has agreed to promptly notify ARRIS telephonically and in
writing of any proposal, discussion, negotiation or inquiry
received by C-COR that is or could reasonably be expected to
constitute or lead to a takeover proposal. C-COR must notify
ARRIS of any superior proposal, specifying the terms and
conditions of such proposal, the name of the party making such
proposal and provide a copy of the superior proposal, to the
extent permitted. If ARRIS does not make an offer that is at
least as favorable as the superior proposal to
C-COR
shareholders within three business days of receiving such
notification, and the adoption of the merger agreement at the
C-COR meeting has not yet occurred, the C-COR board of directors
may withdraw or change its recommendation
and/or
approve or recommend the superior proposal if the board of
directors has determined in good faith, after receiving advice
from its outside counsel and financial advisors, that such
action is required to discharge the C-COR board of
directors fiduciary duties to C-COR shareholders.
A takeover proposal is any inquiry, proposal, offer or
indication of interest (including any inquiry, proposal, offer
or indication of interest to its shareholders), whether in
writing or otherwise, from a third party that constitutes, or
could reasonably be expected to lead to any transaction, other
than the transactions contemplated by the merger agreement, to
acquire beneficial ownership of:
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assets that constitute 20% or more of the consolidated revenues,
net income or assets of C-COR and its subsidiaries; or
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20% or more (in number or voting power) of any class of equity
securities or other capital stock of
C-COR
pursuant to any transaction or series of transactions, including:
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a merger, consolidation, share exchange, or other business
combination involving C-COR or any of its subsidiaries;
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a sale, issuance, exchange, transfer or other disposition of
shares of capital stock of C-COR or any of its subsidiaries;
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a sale, lease, license, exchange, transfer or other disposition
of assets of C-COR or any of its subsidiaries; or
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a tender offer, exchange offer or similar transaction with
respect to either C-COR or any of its subsidiaries, including
any single or multi-step transaction or series of related
transactions, which is structured to permit such third party or
another third party to acquire beneficial ownership of assets
that constitute 20% or more of the consolidated revenues, net
income or assets of C-COR and its subsidiaries, or 20% or more
of the equity interest in either C-COR or any of its
subsidiaries.
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A superior proposal is an unsolicited written proposal or offer
(whether a takeover proposal or otherwise) by a third party to
acquire (whether by way of merger, acquisition or otherwise),
directly or indirectly, greater than 50% of the shares of C-COR
common stock then outstanding (or the effect of which would be
that the shareholders of C-COR beneficially own less than 50% of
the voting power of the combined or ongoing entity), or to
acquire all or substantially all of the assets of C-COR and
(i) otherwise on terms which the board of directors of
C-COR determines in good faith, after consultation with its
financial advisors, and taking into account all terms and
conditions of the proposal or offer that it deems relevant
(including all legal, financial, regulatory and other aspects,
including any financing condition and time to consummation), to
be more favorable to C-CORs shareholders from a financial
point of view than the merger, and (ii) that, in the good
faith reasonable judgment of the board of directors of C-COR, is
reasonably likely to be consummated.
Conduct of ARRIS Pending the Merger. The
merger agreement contains certain covenants of ARRIS and its
subsidiaries concerning the operation of their business between
the date of the merger agreement and continuing until the
earlier of the termination of the merger agreement or the
effective time of the merger. ARRIS has agreed that, unless
C-COR otherwise consents in writing (which consent may not be
unreasonably withheld), during such period, ARRIS will carry on
its business in the ordinary course consistent with past
practice and, to the extent consistent with the conduct of its
business in the ordinary course, use commercially reasonable
efforts to preserve intact its current business organizations,
keep available the services of its current officers, employees
and consultants and preserve its relationships with customers,
suppliers and other persons with which ARRIS or any of its
subsidiaries has significant business relations. In addition,
ARRIS will not, during the period from the date of the merger
agreement and continuing until the earlier of the termination of
the merger agreement or the effective time of the merger,
directly or indirectly, do any of the following:
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amend its certificate of incorporation or bylaws;
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declare, set aside or pay any dividends on, or make any other
distributions (whether in cash, stock or property) in respect
of, any of its capital stock, except that a wholly owned
subsidiary of ARRIS may declare and pay a dividend or make
advances to ARRIS;
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split, combine or reclassify any of its capital stock or issue
or authorize the issuance of any other securities in respect of,
in lieu of or in substitution for shares of its capital stock;
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take, or agree in writing to take, any of the actions described
above, or any action which would make any of the representations
or warranties of ARRIS contained in the merger agreement untrue
or incorrect or prevent ARRIS from performing or cause ARRIS not
to perform its covenants under the merger agreement; or
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take any other action that would reasonably be expected to
interfere with, or delay the consummation of, the merger or
otherwise breach the merger agreement.
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Conditions
to Completion of the Merger
Conditions to Each Partys Obligations to Effect the
Merger. The respective obligations of ARRIS and
C-COR to effect the merger and the other transactions
contemplated by the merger agreement are subject to the
satisfaction and waiver of various conditions that include, in
addition to other customary closing conditions, the following:
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adoption by C-COR shareholders of the merger agreement;
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approval by ARRIS shareholders of the issuance of ARRIS common
stock pursuant to the merger;
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absence of legal prohibitions on consummating the merger and the
transactions contemplated by the merger agreement or other legal
issues that would have a material adverse effect on ARRIS or
C-COR;
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expiration or termination of the waiting period under the HSR
Act, which termination was received on October 26, 2007;
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receipt of all consents, approvals and authorizations of any
governmental authority required of ARRIS, C-COR or any of their
respective subsidiaries to consummate the transactions
contemplated by the merger agreement, other than matters
described in the two preceding bullet points, the failure of
which to be obtained or taken, individually or in the aggregate,
would have a material adverse effect on ARRIS or C-COR or
prevent the parties from realizing in all material respects the
economic benefit of the transactions contemplated by the merger
agreement;
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effectiveness under the Securities Act of the registration
statement on
Form S-4
in which this joint proxy statement/prospectus is included, the
absence of any stop order suspending such effectiveness, and the
absence of any proceedings by the SEC for such purpose;
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obtainment of consent and approval, by each of C-COR and ARRIS,
of any person whose consent or approval is required under any
agreement or instrument in order to permit the consummation of
the merger and the transactions contemplated by the merger
agreement;
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approval for listing on the NASDAQ Global Select Market of the
shares of ARRIS common stock into which the C-COR shares will be
converted;
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receipt of a tax opinion by C-COR from Ballard Spahr
Andrews & Ingersoll, LLP substantially to the effect
that the merger will qualify as a reorganization within the
meaning of Section 368(a) of the Code; and
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receipt of a tax opinion by ARRIS from Troutman Sanders LLP
substantially to the effect that the merger will qualify as
reorganization within the meaning of Section 368(a) of the
Code.
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Additional Conditions to Obligations of
ARRIS. The obligations of ARRIS to effect the
merger and the other transactions contemplated by the merger
agreement are subject to the satisfaction or waiver of the
following:
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the representations and warranties made by C-COR in the merger
agreement being true and correct in all material respects as of
the date of the merger agreement and as of the effective time of
the merger (except to the extent the representation and warranty
speaks as of an earlier date) except where the failure of such
representations and warranties to be true and correct would not
have a material adverse effect on C-COR or ARRIS; and
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C-COR having performed or complied in all material respects with
all agreements and covenants required by the merger agreement.
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Additional Conditions to Obligations of
C-COR. The obligations of C-COR to effect the
merger and the other transactions contemplated by the merger
agreement are subject to the satisfaction or waiver of the
following:
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the representations and warranties made by ARRIS in the merger
agreement being true and correct in all material respects as of
the date of the merger agreement and as of the effective time
(except to the extent the representation and warranty speaks as
of an earlier date) except where the failure of such
representations and warranties to be true and correct would not
have a material adverse effect on ARRIS; and
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ARRIS having performed or complied in all material respects with
all agreements and covenants required by the merger agreement.
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The merger agreement contains other mutual agreements, in
addition to the covenants related to the conduct of business
described above, including the following mutual agreements of
ARRIS and C-COR:
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to promptly prepare and file all necessary documentation to
effect all applications, notices and filings, including this
joint proxy statement/prospectus and the registration statement
to which this joint proxy statement/prospectus is a part, to
hold special shareholder meetings;
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to agree to be bound by the confidentiality agreement entered
into between the two parties prior to execution of the merger
agreement, including following termination of the merger
agreement;
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to provide each other with reasonable access to properties,
books, contracts, commitments and records;
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to use all commercially reasonable efforts to obtain all
approvals, including any consents, waivers and approvals from
any governmental entity or under any agreements, contracts
licenses or leases with third parties, required to be obtained
in connection with or satisfied under the merger agreement;
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to take all commercially reasonable actions to consummate the
merger and make effective the transactions contemplated by the
merger agreement; and
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not to issue or cause to issue the publication of a press
release or other public announcement with respect to the merger,
the merger agreement or the other transactions contemplated
thereby without the prior approval of the other party, except
such disclosures as may be required by law or by NASDAQ
regulations or listing requirements.
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Registration Statement on
Form S-8. C-COR
options that have not been exercised prior to the effective time
of the merger will be converted into options to acquire shares
of ARRIS common stock. Within ten business days following the
effective time of the merger, ARRIS must file a registration
statement on
Form S-8
under the Securities Act with respect to the ARRIS common stock
underlying such exchanged options.
Indemnification, Directors, and Officers
Insurance. C-COR, prior to the effective time of
the merger, and each of ARRIS and Merger Sub, following the
effective time of the merger, have agreed to indemnify and hold
harmless the present and former directors and officers of C-COR
and its subsidiaries for costs, expenses (including reasonable
attorneys fees), judgments, fines, losses, claims,
damages, or liabilities, arising out of matters existing or
occurring at or prior to the effective time of the merger to the
same extent these individuals are indemnified or have the right
to advancement of expenses, as of the date of the merger
agreement, by
C-COR
pursuant to its articles of incorporation and bylaws and any
indemnification agreements between
C-COR and
its officers, to the fullest extent permitted by law. Prior to
the closing, Merger Sub, as the surviving corporation, or in
lieu thereof, C-COR, shall obtain directors and
officers tail insurance policies with a claims
period of at least six years from the effective time of the
merger, in amount and scope at least as favorable as
C-CORs existing policies for claims arising from facts on
or before the effective time, subject to certain limitations.
Employee Benefit Plans. ARRIS has agreed that
it will initially provide, or cause Merger Sub to provide, each
employee of C-COR with at least the same level of base salary
and, taken as a whole, cash incentive compensation and other
variable cash compensation as was provided to each employee
immediately prior to the effective time of the merger. ARRIS has
also agreed initially to provide the C-COR employees with
benefits that are no less favorable in the aggregate than those
provided to similarly situated employees of ARRIS.
Change of Control, Severance and Employment
Agreements. ARRIS shall cause Merger Sub to
honor, in accordance with their terms, all of C-CORs
employment agreements and change of control agreements, except
in the event the individuals covered under such agreements enter
into new agreements with ARRIS, and, for a period of
18 months following the effective time of the merger,
C-CORs severance plans.
ARRIS has agreed to honor existing participant elections as to
timing and forms of benefits under C-CORs Supplemental
Executive Retirement Plan. C-COR has agreed to cooperate
reasonably with ARRIS and Merger Sub in accelerating to the
earlier of the effective time of the merger or December 31,
2007, benefits
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under any existing change of control agreements, benefits to be
paid in the event of a change of control under any existing
employment agreements, bonuses or other incentive compensation
reasonably likely to be earned and benefits under any
nonqualified deferred compensation arrangements.
Tax-free Reorganization. Each of ARRIS and
C-COR has agreed to use its commercially reasonably efforts to
cause the merger agreement to qualify as a
reorganization within the meaning of
Section 368(a) of the Code.
Subject to applicable law, at any time prior to the effective
time, ARRIS and C-COR may amend the merger agreement by written
agreement authorized by their respective boards of directors.
However, after ARRIS shareholder approval or C-COR shareholder
approval is obtained, no amendment requiring further approval by
the ARRIS shareholders or the C-COR shareholders, as the case
may be, may be effected without that further approval.
The merger agreement may be terminated and the merger may be
abandoned at any time prior to the effective time of the merger,
whether before or after the approval by shareholders of C-COR
and ARRIS, as authorized by the board of directors of the
terminating party, if any of the following occurs:
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by mutual agreement of ARRIS and C-COR;
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by either ARRIS or C-COR if:
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the merger is not completed by March 31, 2008;
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the adoption of the merger agreement by C-COR shareholders or
the approval of the issuance of ARRIS common stock pursuant to
the merger by ARRIS shareholders is not obtained at a duly held
shareholders meeting;
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any order permanently restraining, enjoining or otherwise
prohibiting consummation of the merger becomes final and
non-appealable, whether before or after the shareholders meeting
of either party; or
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the average closing price of ARRIS common stock on the NASDAQ
Global Select Market for the ten
trading-day
period ending the third trading day prior to the anticipated
closing date is less than $11.41;
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however, the right to terminate the merger agreement by either
ARRIS or C-COR under the first two circumstances will not be
available to any party that has breached or failed to perform in
any material respect its obligations under the merger agreement
in any manner that has been the principal cause of or primarily
resulted in the failure of the merger to be consummated.
The merger agreement may be terminated and the merger may be
abandoned at any time prior to the effective time of the merger
by ARRIS, as authorized by its board of directors, if:
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one of the following events, which we refer to as a C-COR
triggering event, has occurred:
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the board of directors of C-COR fails to recommend approval of
the merger agreement and the merger in this joint proxy
statement/prospectus, a change in recommendation occurs or the
board of directors of C-COR resolves to make a change in its
recommendation;
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the board of directors of C-COR recommends to the shareholders
of C-COR a competing transaction or publicly announces that it
intends to do so or enters into any alternative acquisition
agreement accepting any acquisition proposal;
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a tender offer or exchange offer for the outstanding shares of
capital stock of C-COR is commenced (other than pursuant to the
transactions contemplated by the merger agreement), and the
board of directors of C-COR fails to recommend against (or
maintain such recommendation against) acceptance of such tender
offer or exchange offer by its shareholders;
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the board of directors of C-COR, upon request of ARRIS following
receipt of a proposal or offer for a competing transaction,
fails to reaffirm to ARRIS the approval or recommendation of the
merger and the merger agreement within five business days after
such request; or
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C-COR or any of its officers, directors, representatives, or
agents knowingly and materially breaches its non-solicitation
obligations; or
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there has been a breach of any representation, warranty,
covenant or agreement made by C-COR in the merger agreement, or
any such representation or warranty becomes untrue after the
date of the merger agreement (unless the failure of such
representation or warranty to be true would not have a material
adverse effect on ARRIS or C-COR) and such breach is not cured
within 20 days after written notice thereof; provided
however, that the right to terminate under this condition will
not be available if ARRIS or Merger Sub is at that time in
material breach of the merger agreement.
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The merger agreement may be terminated and the merger may be
abandoned at any time prior to the effective time of the merger
by C-COR as authorized by its board of directors if:
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prior to, but not after, the time the vote is taken with respect
to the adoption of the merger agreement at the shareholders
meeting of either party (i) C-CORs board of directors
has approved or recommended to the shareholders of C-COR any
superior proposal and (ii) prior to or upon termination,
C-COR paid
the termination fee; provided, however, that (A) C-COR
notified ARRIS in writing promptly of its intention to terminate
the merger agreement and to enter into a binding alternative
acquisition agreement concerning a superior proposal promptly
following the waiting period (as defined below), and
(B) ARRIS did not make, within three business days after
its receipt of such written notification (the waiting period),
an offer that the board of directors of C-COR determined is at
least as favorable to the shareholders of C-COR from a financial
point of view as such superior proposal; or
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there has been a breach of any representation, warranty,
covenant or agreement made by ARRIS in the merger agreement, or
any such representation or warranty becomes untrue after the
date of the merger agreement (unless the failure of such
representation or warranty to be true would not have a material
adverse effect on ARRIS) and such breach is not cured within
20 days after written notice thereof; provided however,
that the right to terminate under this condition will not be
available if C-COR is at that time in material breach of the
merger agreement.
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In the event of termination of the merger agreement and the
abandonment of the merger, the merger agreement becomes void and
of no effect with no liability or obligation on the part of any
party (or any of its directors, officers, employees, agents,
legal and financial advisors or other representatives);
provided, however, except as otherwise provided in the merger
agreement, no termination relieves any party of any liability or
damages resulting from any fraud or willful or intentional
breach of the merger agreement. Termination of the merger
agreement will not affect the obligations under the separate
confidentiality agreement between ARRIS and C-COR.
C-COR must pay a termination fee of $22.5 million to ARRIS
no later than:
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the date of the first to occur of the execution of an
alternative acquisition agreement, approval or recommendation to
the C-COR shareholders of a competing transaction, failure to
oppose a competing transaction or the consummation of a
competing transaction, if the merger agreement is terminated by
ARRIS or C-COR due to failure to obtain the approval of C-COR
shareholders and if:
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prior to the shareholder meeting of either party, any third
party makes a takeover proposal to
C-COR or
publicly discloses or announces an intention to make a takeover
proposal (as defined in The Merger Agreement
Covenants, substituting 35% for the 20% threshold in the
definition); and
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within 12 months of termination, C-COR enters into an
alternative acquisition agreement to consummate, or consummates,
or approves or recommends to the shareholders of C-COR or
otherwise does not oppose, a competing transaction with such
third party;
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the date of termination of the merger agreement if the merger
agreement is terminated by C-COR, in the event that a C-COR
triggering event has occurred prior to the date of the
shareholders meeting of either party or board of directors has
approved or recommended to the shareholders of C-COR any
superior proposal; or
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two business days after termination of the merger agreement if
the merger agreement is terminated by ARRIS, in the event that a
C-COR triggering event has occurred.
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ARRIS must pay a termination fee of $22.5 million no later
the date of the first to occur of the execution of an
alternative acquisition agreement, approval or recommendation to
the ARRIS shareholders of a competing transaction, failure to
oppose a competing transaction or the consummation of a
competing transaction, if the merger agreement is terminated by
ARRIS or C-COR due to failure to obtain the approval of ARRIS
shareholders and if:
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prior to the shareholder meeting of either party, any third
party makes a takeover proposal to ARRIS or publicly discloses
or announces an intention to make a takeover proposal; and
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within 12 months of termination, ARRIS enters into an
alternative acquisition agreement to consummate, or consummates,
or approves or recommends to the shareholders of C-COR or
otherwise does not oppose, a competing transaction with such
third party.
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All expenses incurred in connection with the merger agreement
and the transactions contemplated by the merger agreement will
be paid by the party incurring those expenses, except that
expenses incurred in connection with the printing of the joint
proxy statement/prospectus and the registration statement, of
which it is a part, as well as the filing fees related thereto
and any filing fee required in connection with the filing of
Pre-Merger Notifications under the HSR Act, will be shared
equally by ARRIS and C-COR.
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MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
The following is a summary of material U.S. federal income
tax consequences applicable to C-COR shareholders that receive
ARRIS common stock or cash in the merger (or both ARRIS common
stock and cash). This summary is based upon the provisions of
the Code, applicable Treasury regulations thereunder, judicial
decisions, and current administrative rulings, all as in effect
on the date of this joint proxy statement/prospectus and all of
which are subject to change, possibly with retroactive effect.
This discussion addresses only those C-COR shareholders that
hold their shares as capital assets (generally, property held
for investment). In addition, this discussion does not address
all the U.S. federal income tax consequences that may be
relevant to these shareholders in light of their particular
circumstances, or the U.S. federal income tax consequences
to those shareholders that are subject to special rules, such
as, without limitation:
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partnerships, subchapter S corporations and other
pass-through entities (and the holders of interests therein);
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foreign persons and entities;
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banks, thrifts, mutual funds and other financial institutions;
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tax-exempt organizations and pension funds;
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insurance companies;
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dealers or traders in securities;
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shareholders who received their shares of common stock through a
benefit plan or a tax-qualified retirement plan or through the
exercise of employee stock options or similar derivative
securities or otherwise as compensation;
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shareholders whose shares are qualified small business stock for
purposes of section 1202 of the Code;
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shareholders who may be subject to the alternative minimum tax
provisions of the Code;
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shareholders whose functional currency is not the
U.S. dollar; and
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shareholders who hold their shares other than as a capital asset
or who hold their shares as part of a hedge, appreciated
financial position, straddle, synthetic security, conversion
transaction or other integrated investment.
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Furthermore, this discussion does not address any tax
consequences arising under the laws of any state, locality or
foreign jurisdiction. This discussion does not purport to be a
comprehensive analysis or description of all potential
U.S. federal income tax consequences of the proposed
transaction.
ARRIS and C-COR anticipate that the merger will qualify as a
reorganization within the meaning of
Section 368(a) of the Code. It is a condition to the
completion of the merger that ARRIS receive a written opinion of
Troutman Sanders LLP and that
C-COR
receive a written opinion of Ballard Spahr Andrews &
Ingersoll, LLP, dated as of the effective date of the merger, to
the effect that the merger will qualify as a
reorganization within the meaning of
Section 368(a) of the Code. Neither ARRIS nor C-COR
currently intends to waive this condition. The opinions of
Troutman Sanders LLP and Ballard Spahr Andrews &
Ingersoll, LLP will be based upon representation letters of
ARRIS, Merger Sub and C-COR, and upon customary assumptions. Any
inaccuracy in the representations or assumptions, or any actions
by ARRIS, Merger Sub or C-COR contrary to the representations or
assumptions, could adversely affect the conclusions reached in
the opinions and the tax discussion set forth below.
The opinions represent the best judgment of Troutman Sanders LLP
and Ballard Spahr Andrews & Ingersoll, LLP,
respectively, as to the U.S. federal income tax treatment
of the merger and as to the U.S. federal
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income tax consequences of the merger to the C-COR shareholders,
but will not be binding on the IRS or the courts. No rulings
have been or will be requested from the IRS with respect to any
of the matters discussed herein. There can be no assurance that
future legislation, regulations, administrative rulings or court
decisions will not adversely affect the accuracy of the
statements in this summary. The following discussion assumes
that the foregoing factual conditions are met, and therefore,
the merger qualifies as a reorganization within the
meaning of Section 368(a) of the Code.
Tax
Consequences of the Merger to C-COR Shareholders
Exchange
of C-COR Common Stock for Cash
A C-COR shareholder that exchanges shares of C-COR common stock
solely for cash will recognize capital gain or loss on the
difference between the cash received and the adjusted basis of
the C-COR common stock, and such gain or loss will be long-term
capital gain or loss if the C-COR shareholders holding
period is more than one year as of the date of the merger. A
C-COR shareholder must recognize gain or loss separately for
each identifiable block of shares that is surrendered in the
exchange, and the C-COR shareholder may not offset a loss
recognized on one block of the shares against a gain recognized
on another block of the shares.
In determining whether a C-COR shareholder has exchanged his or
her shares solely for cash, a shareholder will, under
constructive ownership rules, be deemed to own stock that is
owned by certain related persons or entities or with respect to
which the shareholder owns options, in addition to stock
actually owned by that shareholder. Thus, for any C-COR
shareholder that received solely cash in exchange for C-COR
shares he or she actually owns, but that also constructively
owns C-COR common stock that is exchanged for common stock of
ARRIS in the merger, or otherwise owns common stock of ARRIS
actually or constructively after the merger, the consequences to
such C-COR shareholder may be similar to the consequences
described below under the headings Exchange of
C-COR Common Stock for a Combination of ARRIS Common Stock and
Cash and Possible Treatment of Cash to
the Extent of Gain as a Dividend. Because the application
of the constructive ownership rules is complex, a C-COR
shareholder should consult its own tax advisor as to the
applicability of the rules and the resulting tax consequences.
Exchanges
of C-COR Common Stock for ARRIS Common Stock
A C-COR shareholder that exchanges shares of C-COR common stock
solely for shares of ARRIS common stock in the merger will not
recognize gain or loss, except with respect to any cash received
instead of fractional share interests in ARRIS common stock. The
aggregate tax basis of the ARRIS common stock received by a
C-COR shareholder in the merger will be the same as the
aggregate tax basis of the C-COR common stock for which it is
exchanged, less any tax basis attributable to fractional share
interests in ARRIS common stock for which cash is received. The
holding period of ARRIS common stock received in exchange for
shares of C-COR common stock will include the holding period of
the C-COR common stock surrendered in exchange therefor. For the
consequences of receipt of cash instead of a fractional share
interest in ARRIS common stock, see Cash
Received Instead of a Fractional Share below.
Exchange
of C-COR Common Stock for a Combination of ARRIS Common Stock
and Cash
A C-COR shareholder that exchanges shares of C-COR common stock
for a combination of cash and shares of ARRIS common stock in
the merger will not recognize loss on the exchange. However,
such a C-COR
shareholder will recognize gain equal to the lesser of the
amount of cash received and the gain realized. The gain realized
will be the excess of the sum of the fair market value of the
shares of ARRIS common stock (determined as of the effective
time of the merger) and the amount of cash received by a
C-COR
shareholder over the shareholders adjusted tax basis in
the shares of C-COR common stock that were surrendered in the
merger. For this purpose, a C-COR shareholder must calculate
gain or loss separately for each identifiable block of shares of
C-COR common stock that is surrendered in the exchange, and the
C-COR
shareholder may not offset a loss recognized on one block of the
shares against gain recognized on
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another block of the shares. For the consequences of receipt of
cash instead of a fractional share interest in ARRIS common
stock, see Cash Received Instead of a
Fractional Share below.
Any gain recognized generally will be treated as capital gain.
However, as discussed below under the section captioned
Possible Treatment of Cash to the Extent of
Gain as a Dividend, if the receipt of the cash has
the effect of the distribution of a dividend for
U.S. federal income tax purposes, any gain recognized by
the C-COR shareholder will be treated as ordinary dividend
income to the extent of the shareholders ratable share of
the earnings and profits of C-COR accumulated through the date
of the exchange. Any gain that is treated as capital gain will
be long-term capital gain if the C-COR shareholder held the
C-COR common stock that is surrendered in the exchange for more
than one year as of the date of the merger.
The aggregate tax basis of the shares of ARRIS common stock
received by a C-COR shareholder (including, for this purpose,
any fractional share of ARRIS common stock for which cash is
received pursuant to the Merger Agreement) in exchange for
shares of C-COR common stock in the merger will be equal to the
aggregate tax basis of the surrendered C-COR common stock,
decreased by the amount of cash received (excluding any cash
received instead of a fractional share), and increased by the
amount of gain recognized, (including any portion of the gain
that is treated as a dividend and excluding any gain recognized
as a result of the receipt of cash instead of a fractional
share). The holding period of the ARRIS common stock received
will include the holding period of the shares of C-COR common
stock surrendered in exchange therefor.
Possible
Treatment of Cash to the Extent of Gain as a
Dividend
In general, the determination of whether gain recognized by a
C-COR shareholder will be treated as capital gain or a dividend
distribution will depend upon whether, and to what extent, the
receipt of cash rather than stock in the transaction reduces the
C-COR shareholders deemed percentage stock ownership
interest in ARRIS. For purposes of this determination, a C-COR
shareholder will be treated as if it first exchanged all of its
C-COR common stock solely for ARRIS common stock (instead of the
combination of ARRIS common stock and cash actually received),
and then ARRIS immediately redeemed a portion of that ARRIS
common stock in exchange for the cash the C-COR shareholder
received in the merger transaction. The gain recognized in the
exchange followed by the deemed redemption will be treated as
capital gain if, with respect to the
C-COR
shareholder, the deemed redemption is substantially
disproportionate or not essentially equivalent to a
dividend.
In general, the deemed redemption will be substantially
disproportionate with respect to a C-COR shareholder if
the C-COR shareholder experiences more than a 20% reduction in
its percentage ownership of ARRIS common stock as a result of
the deemed redemption. In order for the deemed redemption to be
not essentially equivalent to a dividend, the deemed
redemption must result in a meaningful reduction in
the C-COR
shareholders deemed percentage stock ownership of ARRIS
common stock. The IRS has indicated that a minority shareholder
in a publicly traded corporation whose relative stock interest
is minimal and who exercise no control with respect to corporate
affairs will experience a meaningful reduction if
that shareholder experiences any reduction in its percentage
ownership. In applying the foregoing tests, a shareholder will,
under constructive ownership rules, be deemed to own stock that
is owned by certain related persons or entities or with respect
to which the shareholder owns options, in addition to the stock
actually owned by that shareholder. Moreover, the tests are
applied after taking into account any related transactions
undertaken by a C-COR shareholder under a single, integrated
plan. Thus, dispositions or acquisitions by a holder of common
stock of ARRIS before or after the merger that are part of such
C-COR shareholders plan may be taken into account. Because
the application of these tests may be complex in many cases,
each C-COR
shareholder should consult its own tax advisor as to the
applicability of these rules.
Cash
Received Instead of a Fractional Share
No fractional shares of ARRIS common stock will be issued in
connection with the merger. Instead, ARRIS will make a cash
payment without interest to each C-COR shareholder who would
otherwise receive a
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fractional share. A C-COR shareholder who receives cash instead
of a fractional share of ARRIS common stock will be treated as
having received the fractional share pursuant to the merger, and
then as having exchanged the fractional share for cash in a
redemption by ARRIS. Any gain or loss attributable to this
deemed redemption will be capital gain or loss. The amount of
this gain or loss will be equal to the difference between the
portion of the tax basis of the C-COR common stock surrendered
in the merger transaction that is allocated to the fractional
share and the cash received therefor. Any capital gain or loss
of this type will constitute long-term capital gain or loss if
the holding period for the C-COR common stock surrendered is
greater than one year as of the date of the merger.
Information
Reporting and Backup Withholding
Cash payments received by a C-COR shareholder in the merger may,
under certain circumstances, be subject to information reporting
and backup withholding (currently at the rate of 28%) of the
cash payable to such shareholder, unless such shareholder
provides proof of an applicable exemption or furnishes its
taxpayer identification number, and otherwise complies with all
applicable requirements of the backup withholding rules. Any
amounts withheld from payments to C-COR shareholders under the
backup withholding rules are not an additional tax and will be
allowed as a refund or credit against such shareholders
federal income tax liability provided that the required
information is timely furnished to the IRS.
This U.S. federal income tax discussion is for general
information only and may not apply to all
C-COR
shareholders. C-COR shareholders are strongly urged to consult
their own tax advisors as to the specific tax consequences of
the proposed transaction to them, including state, local and
foreign tax consequences.
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CERTAIN
DIFFERENCES IN RIGHTS OF SHAREHOLDERS
C-COR is a Pennsylvania corporation subject to the provisions of
the Pennsylvania Business Corporation Law, which we refer to in
this joint proxy statement/prospectus as Pennsylvania law. ARRIS
is a Delaware corporation subject to the provisions of the
Delaware General Corporation Law, which we refer to in this
joint proxy statement/prospectus as Delaware law. If the merger
is completed, C-COR shareholders, whose rights are currently
governed by the C-COR articles of incorporation, the C-COR
bylaws and Pennsylvania law, will, if they receive ARRIS common
stock as merger consideration, become shareholders of ARRIS and
their rights will be governed by the ARRIS certificate of
incorporation, the ARRIS bylaws and Delaware law.
The following description summarizes material differences that
may affect the rights of ARRIS shareholders and C-COR
shareholders but does not purport to be a complete statement of
all those differences, or a complete description of the specific
provisions referred to in this summary. The identification of
specific differences is not intended to indicate that other
equally or more significant differences do not exist.
Shareholders should read carefully the relevant provisions of
Delaware law, Pennsylvania law, the ARRIS certificate of
incorporation, the ARRIS bylaws, the C-COR articles of
incorporation and the C-COR bylaws.
C-COR is a registered corporation under Pennsylvania
law because C-COR common stock is registered under the Exchange
Act.
ARRIS
The authorized capital stock of ARRIS consists of
(i) 320,000,000 shares of ARRIS common stock and
(ii) 5,000,000 shares of preferred stock,
$1.00 par value per share, none of which is issued and
outstanding and none of which is reserved for issuance. As of
November 7, 2007, shares of ARRIS common
stock were issued and outstanding. ARRIS also has
$276.0 million in senior unsecured convertible notes
outstanding. The notes bear interest at 2% per year, which is
payable in arrears twice a year. The notes are senior unsecured
obligations and rank equally with all existing and future senior
unsecured indebtedness. The Notes will be effectively
subordinated to all future secured indebtedness.
C-COR
The authorized capital stock of C-COR consists of
(i) 100,000,000 shares of C-COR common stock and
(ii) 2,000,000 shares of preferred stock, no par value
per share, none of which is issued and outstanding and none of
which is reserved for issuance. C-COR also has
$35.0 million of 3.5% senior unsecured convertible
notes due on December 31, 2009. As of November 7,
2007, shares of C-COR common stock were issued
and outstanding.
Number,
Election, Vacancy and Removal of Directors
ARRIS
The ARRIS bylaws provide that the total number of ARRIS
directors will be fixed from time to time by action of the
shareholders or directors or, if not so fixed, the number shall
be three. ARRIS currently has seven directors, all of whom serve
one year terms. Under Delaware law, directors are elected by a
plurality of the votes of the shares present at the meeting.
The ARRIS bylaws provide that vacancies on the ARRIS board of
directors may be filled by the vote of a majority of the
remaining directors then in office, although less than a quorum,
or by the sole remaining director. Delaware law provides that
any director or the entire board of directors may be removed,
with or without cause, by the holders of a majority of the
shares then entitled to vote at an election of directors.
C-COR
The C-COR bylaws provide that the total number of C-COR
directors will not be less than six nor more than 15, as
determined by the C-COR board of directors from time to time.
C-COR currently has nine
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directors. The board is divided into three classes, with the
directors of each class elected for three-year terms and the
term of one class expiring each year. A class of directors is
elected at each annual meeting of shareholders to serve until
the end of the term to which they are elected and until their
successors are elected and qualified. Under Pennsylvania law,
candidates for director who receive the highest number of
affirmative votes are elected.
The C-COR bylaws provide that vacancies on the C-COR board of
directors may be filled by a majority vote of the directors then
in office.
C-CORs bylaws provide that directors may not be removed
without cause. C-COR shareholders may remove any director, class
of directors or may remove the entire board of directors for
cause, by the vote of shareholders entitled to cast at least
two-thirds of the votes entitled to be cast at any annual
election of directors. In the event any directors are so
removed, new directors may be elected at the same time.
Amendments
to Charter Documents
ARRIS
Under Delaware law, all proposed amendments to a
corporations certificate of incorporation require
(i) approval by its board of directors and
(ii) adoption by an affirmative vote of a majority of the
outstanding stock entitled to vote on the amendment (subject to
any class voting rights required by the corporations
certificate of incorporation, the terms of any preferred stock,
or Delaware law).
The certificate of incorporation of ARRIS provides that ARRIS
may amend, alter or repeal the certificate of incorporation as
permitted by Delaware law.
C-COR
Under Pennsylvania law, every amendment to a registered
corporations articles of incorporation must be
(i) proposed or approved by the corporations board of
directors and (ii) with certain exceptions, adopted by an
affirmative vote of a majority of the votes cast by shareholders
entitled to vote on the amendment (subject to any class voting
rights required by the corporations articles of
incorporation, the terms of any preferred stock, or Pennsylvania
law), unless the corporations articles of incorporation or
a specific provision of Pennsylvania law requires a greater
vote. The C-COR articles of incorporation provide that
two-thirds of shares entitled to vote generally in the election
of directors is required to approve any amendment relating to
the approval requirements for certain business combinations.
Under Pennsylvania law, unless the corporations articles
of incorporation restrict the power, a corporations board
of directors, without shareholder approval, may amend the
corporations articles of incorporation to:
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change the corporations name;
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provide for perpetual existence of the corporation;
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in certain circumstances, reflect a reduction in authorized
shares effected in connection with an acquisition by the
corporation of its own shares;
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add or delete a provision authorizing that shares of the
corporation not be represented by certificates;
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add, change or eliminate the par value of any class or series of
shares, if the par value does not have any substantive effect on
the terms of any shares of the corporation; and/or
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under certain circumstances, split the corporations voting
shares and/or, subject to certain limitations, increase the
number of authorized voting shares of the corporation in
connection with a stock split or stock dividend of the
corporations voting shares.
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The C-COR articles of incorporation do not restrict this power
of the C-COR board of directors.
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ARRIS
The ARRIS certificate of incorporation and bylaws provide that
the power to amend, alter, or repeal the bylaws and to adopt new
bylaws may be exercised by the board of directors or by the
shareholders. The ARRIS bylaws do not require a supermajority
vote to approve any amendment to the bylaws.
C-COR
The C-COR bylaws provide that, except for those provisions
discussed below, the bylaws may be changed at any meeting of
shareholders a majority of the votes which all shareholders are
entitled to cast thereon, or by the board of directors by a
majority vote of the directors present at any regular or special
meeting. This authority of the board of directors is subject to
the authority of the shareholders of C-COR to further alter,
amend or repeal the bylaws.
A vote of shareholders holding two-thirds of shares entitled to
vote thereon is required to approve an amendment to the bylaws
relating to (i) the number and term of directors;
(ii) removal of directors; and (iii) liability of
directors.
Action
by Written Consent
ARRIS
Under Delaware law, unless otherwise provided in the certificate
of incorporation, any action required or permitted to be taken
at a meeting of shareholders may be taken without a meeting,
without prior notice and without a vote, upon the written
consent of shareholders who would have been entitled to cast the
minimum number of votes that would be necessary to authorize or
take such action at a meeting at which all shares entitled to
vote thereon were present and voted. The ARRIS bylaws
specifically provide for shareholder action by written consent.
C-COR
Under Pennsylvania law, any action required or permitted to be
taken at a meeting of shareholders may be taken without a
meeting by consent by all the shareholders entitled to vote on
the action and delivered to the corporation, unless otherwise
provided in the articles of incorporation or bylaws.
Pennsylvania law allows shareholder action without a meeting for
registered corporations such as C-COR by less than unanimous
consent of the shareholders only if provided for in the
corporations articles of incorporation. The C-COR articles
of incorporation do not contain provisions with respect to
shareholder action by written consent.
Notice
of Shareholder Meetings and Actions
ARRIS
Delaware law and the ARRIS bylaws provide that written notice of
the time, place and purpose or purposes of any annual or special
meeting of shareholders must be given not less than 10 days
and not more than 60 days before the date of the meeting to
each shareholder entitled to vote at the meeting.
C-COR
Pennsylvania law provides that written notice of the time, place
and date of a meeting of shareholders must be given or sent to
each shareholder of record entitled to vote at the meeting at
least 10 days prior to the day named for a meeting that
will consider a fundamental change or five days
prior to the day named for the meeting in any other case. The
C-COR bylaws require that notice of a meeting of shareholders be
sent to each shareholder entitled to vote at the meeting at
least five days before the meeting. A notice of a special
meeting must state the purpose or purposes of the meeting.
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The C-COR bylaws require a shareholder who intends to nominate a
person to the board of directors bring any matter before an
annual meeting to provide advance notice of such intended action
not less than 50 nor more than 75 days prior to the date of
the meeting.
Special
Shareholder Meetings
ARRIS
Under Delaware law, a special meeting of shareholders may be
called by the board of directors or by any other person
authorized to do so in the certificate of incorporation or the
bylaws. A notice must be sent to shareholders of the meeting
stating the purpose or purposes for which the meeting is called.
Under the ARRIS bylaws, a special meeting of the shareholders
may be called by the directors or by any officer upon the
direction of the directors.
C-COR
Under the C-COR bylaws, a special meeting of shareholders may be
called at any time by the president of the corporation, a
majority of the board of directors, or by shareholders entitled
to cast a majority of the votes which all shareholders are
entitled to cast at the meeting.
Under Pennsylvania law, shareholders of registered companies do
not have a statutory right to call special meetings, except that
an interested shareholder (generally, a beneficial
owner of shares entitling the shareholder to cast 20% of the
votes that all shareholders are entitled to cast in an election
of directors, or certain affiliates or associates of the
corporation) may call a special meeting for the purpose of
approving certain business combinations.
Limitation
of Personal Liability and Indemnification of Directors and
Officers
ARRIS
Under Delaware law, a corporation may indemnify any directors,
officers, employees and agents of the corporation against
expenses and, except in the case of an action by or in the right
of the corporation, liabilities actually and reasonably incurred
by such person in connection with any action, suit or proceeding
involving such person by reason of the fact that the person is
or was a director, officer, employee or agent of the
corporation, provided that (i) such person acted in good
faith and in a manner the person reasonably believed to be in or
not opposed to the best interests of the corporation, and, with
respect to any criminal proceeding, such person had no
reasonable cause to believe his conduct was unlawful and
(ii) in the case of an action by or in the right of the
corporation, no indemnification of expenses may be made in
respect of any matter as to which such person is adjudged liable
to the corporation unless and only to the extent such
indemnification is approved by a court. Delaware law mandates
such indemnification of expenses to the extent that a present or
former director or officer of the corporation has been
successful in defense of any proceeding described above, and
permits advancement of expenses to a director or officer if the
corporation receives an undertaking that the amount advanced
will be repaid if it is determined that such person is not
entitled to indemnification. Delaware law also provides that the
permitted indemnifications described above are not exclusive.
Delaware law permits a corporation to include in its certificate
of incorporation a provision eliminating or limiting the
personal liability of a director of a corporation to the
corporation or its shareholders for monetary damages for breach
of fiduciary duty as a director, provided that such provision
shall not eliminate or limit the liability of a director
(i) for any breach of the directors duty of loyalty
to the corporation or its shareholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) for acts
relating to unlawful payment of a dividend or an unlawful stock
purchase or redemption or (iv) for any transaction from
which the director derived an improper personal benefit.
The ARRIS bylaws provide for indemnification of officers and
directors of the corporation in the following circumstances: If
any person is made a party to any suit or proceeding because of
such persons
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status as a director or officer of the corporation, where such
director or officer acted in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best
interests of the corporation, and, with respect to criminal
matters, had no reasonable cause to believe his or her conduct
was unlawful.
If a director or officer is made a party to any suit by the
corporation arising from the fact that he or she was an officer
or director of the corporation, where such director or officer
acted in good faith and reasonably believed to be in, or not
opposed to, the best interests of the company; except that no
indemnification shall be made for any matter where a person is
found liable to the corporation, unless a court determines that
despite such liability, such person is fairly and reasonably
entitled to indemnification.
ARRIS may also, at its discretion, provide the same benefits of
indemnification to any employee or agent of the corporation,
including a director or officer of the corporation who is
serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise.
C-COR
Under Pennsylvania law, unless otherwise restricted in its
articles of incorporation or bylaws, a corporation may indemnify
any directors, officers, employees and agents of the corporation
against expenses and, except in the case of an action by or in
the right of the corporation, liabilities actually and
reasonably incurred by such person in connection with any action
or proceeding by reason of the fact that the person is or was a
director, officer, employee or agent of the corporation,
provided that (i) such person acted in good faith and in a
manner the person reasonably believed to be in, or not opposed
to, the best interests of the corporation and, with respect to
any criminal proceeding, such person had no reasonable cause to
believe his conduct was unlawful and (ii) in the case of an
action by or in the right of the corporation, no indemnification
of expenses may be made in respect of any matter as to which
such person is adjudged liable to the corporation unless and
only to the extent such indemnification is approved by a court.
Pennsylvania law mandates such indemnification of expenses to
the extent the present or former director, officer, employee or
agent has been successful in defense of any action or proceeding
described above, and permits advancement of expenses to a
director or officer if the corporation receives an undertaking
that the amount advanced will be repaid if it is determined that
such person is not entitled to indemnification. Pennsylvania law
also provides that the permitted indemnifications described
above are not exclusive.
The C-COR bylaws provide that C-COR shall indemnify any director
or officer of the corporation against expenses, judgments, fines
and amounts paid in settlement to the fullest extent permitted
under Pennsylvania law by reason of the fact that the person is
or was a director or officer of the corporation or is or was
serving on behalf of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
The board of directors may similarly indemnify any person who is
not a director or officer for liabilities incurred in connection
with services rendered for or at the request of the corporation.
ARRIS
Under Delaware law, subject to any restrictions contained in the
corporations certificate of corporation, the board of
directors of a corporation may declare and pay dividends and
other distributions to the corporations shareholders
either out of surplus (generally net assets in excess of
capital) or, if there is no surplus, out of its net profits for
the current or preceding fiscal year in which the dividend is
declared. However, a distribution out of net profits is not
permitted if a corporations capital is less than the
amount of capital represented by the issued and outstanding
shares of all classes having a preference upon the distribution
of assets, until the deficiency has been repaid.
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C-COR
Under Pennsylvania law, a board of directors of a corporation
may not authorize and pay dividends to its shareholders if after
giving it effect:
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the corporation would not be able to pay its debts as they
become due in the usual course of business; or
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the corporations total assets would be less than the sum
of its total liabilities plus (unless otherwise provided in the
articles of incorporation) the amount that would be needed to
satisfy the preferential rights upon dissolution of shareholders
whose preferential rights are superior to those receiving the
dividend if the corporation were to be dissolved at the time
this valuation is measured.
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ARRIS
Under the ARRIS shareholder rights plan dated October 3,
2002, each outstanding share of ARRIS common stock has an
associated preferred stock purchase right. Each right represents
the right to purchase one one-thousandth of a share of
Series A Participating Preferred Stock and becomes
exercisable only if a person or group acquires beneficial
ownership of 15% or more of ARRIS common stock or announces a
tender or exchange offer for 15% or more of ARRIS common stock
or under other similar circumstances. See Description of
ARRIS Capital Stock Shareholder Rights
Plan.
C-COR
Under the C-COR shareholder rights agreement, dated
August 17, 1999, each outstanding share of the
companys common stock has an associated preferred share
purchase right. The rights are exercisable only if a person or
group acquires 20% or more of
C-CORs
outstanding common stock. If the rights became exercisable, the
rights would allow C-COR shareholders (other than the acquiring
person or group) to purchase one one-hundredth of a share of
Series A Junior Participating Preferred Stock, no par value
per share, of the company at a price of $150.00 per one
one-hundredth of a share of Series A Junior Participating
Preferred Stock, subject to adjustment. Holders of shares of the
Series A Junior Participating Preferred Stock are entitled
to a preferential quarterly dividend, voting rights and a
stipulated return in the event of a merger or similar
transaction.
On September 23, 2007, prior to the execution of the merger
agreement, the C-COR shareholder rights agreement was amended in
order to exempt the merger and related transactions from the
C-COR rights agreement and to provide that the rights issued
thereunder will expire immediately prior to the effective time
of the merger.
Voting
Rights; Required Vote for Authorization of Certain
Actions
ARRIS
Voting Rights. Each holder of ARRIS common
stock is entitled to one vote for each share held of record.
Merger, Consolidation or Sale of Assets
General. Under Delaware law, the consummation of
a merger or consolidation requires the approval of the board of
directors of the corporation which desires to merge or
consolidate and requires that the agreement and plan of merger
be adopted by the affirmative vote of a majority of the stock of
the corporation entitled to vote thereon at an annual or special
meeting for the purpose of acting on the agreement. However, no
such approval and vote are required if such corporation is the
surviving corporation and:
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such corporations certificate of incorporation is not
amended;
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the shareholders of the surviving corporation whose shares were
outstanding immediately before the effective date of the merger
will hold the same number of shares, with identical
designations, preferences, limitations, and rights, immediately
after the effective date of the merger; and
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either no shares of common stock of the surviving corporation
and no shares, securities or obligations convertible into such
stock are to be issued or delivered under the plan of merger, or
the authorized unissued shares or the treasury shares of common
stock of the surviving corporation to be issued or delivered
under the plan of merger do not exceed 20% of the shares of
common stock of such corporation outstanding immediately prior
to the effective date of the merger.
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Under Delaware law, a sale of all or substantially all of a
corporations assets requires the approval of such
corporations board of directors and the affirmative vote
of a majority of the outstanding stock of the corporation
entitled to vote thereon.
Business Combinations with Interested
Shareholder. ARRIS is subject to Section 203
of Delaware law (Section 203), which, subject
to certain exceptions, prohibits a Delaware corporation from
engaging in any business combination with an
interested shareholder for a period of 3 years
following the time that such shareholder became an interested
shareholder, unless:
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prior to the time that such shareholder became an interested
shareholder, the board of directors of the corporation approves
either the business combination or the transaction that resulted
in the shareholder becoming an interested shareholder;
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upon the closing of the transaction that resulted in the
shareholder becoming an interested shareholder, the interested
shareholder owned at least 85% of the voting stock of the
corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares
outstanding those shares owned (i) by persons who are
directors and also officers and (ii) by employee stock
plans in which employee participants do not have the right to
determine confidentially whether shares held subject to the plan
will be tendered in a tender or exchange offer; or
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at or subsequent to the time that such shareholder became an
interested shareholder, the business combination is approved by
the board of directors and authorized at an annual or special
meeting of shareholders, and not by written consent, by the
affirmative vote of at least
2/3
of the outstanding voting stock that is not owned by the
interested shareholder.
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Subject to certain exceptions, an interested
shareholder is a person or group who or which owns 15% or
more of the corporations outstanding voting stock
(including any rights to acquire stock pursuant to an option,
warrant, agreement, arrangement or understanding, or upon the
exercise of conversion or exchange rights, and stock with
respect to which the person has voting rights only), or is an
affiliate or associate of the corporation and was the owner of
15% or more of such voting stock at any time within the previous
three years. In general, Section 203 defines a
business combination to include:
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any merger or consolidation involving the corporation and the
interested shareholder;
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any sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with the interested shareholder of assets of
the corporation having an aggregate market value equal to 10% or
more of either the aggregate market value of all the assets of
the corporation determined on a consolidated basis or the
aggregate market value of all the outstanding stock of the
corporation;
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subject to certain exceptions, any transaction that results in
the issuance or transfer by the corporation of any stock of the
corporation to the interested shareholder;
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any transaction involving the corporation that has the effect of
increasing the proportionate share of the stock of any class or
series of the corporation beneficially owned by the interested
shareholder; or
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the receipt by the interested shareholder of the benefit of any
loans, advances, guarantees, pledges or other financial benefits
provided by or through the corporation.
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A Delaware corporation may opt out of
Section 203 with an express provision in its original
certificate of incorporation or an express provision in its
certificate of incorporation or bylaws resulting from a
shareholders amendment approved by at least a majority of
the outstanding voting shares. ARRIS has not opted
out of this provision.
Disgorgement of Profits by Certain Controlling
Persons. Delaware law does not have a
disgorgement statute similar to that described below
under C-COR.
Control-Share Acquisitions. Delaware law does
not have a control share statute similar to that
described below under C-COR.
C-COR
Voting Rights. Except as provided below under
Control-Share Acquisitions each
holder of C-COR common stock is entitled to one vote for each
share held of record.
Merger, Consolidation or Sale of Assets
General. Under Pennsylvania law, the consummation
of a merger or consolidation generally requires the approval of
the board of directors of the corporation of the plan of merger
or consolidation and, except where the approval of shareholders
is not required, the adoption of the plan by a majority of the
votes cast by all shareholders of the corporation entitled to
vote thereon. Approval of the shareholders of a constituent
Pennsylvania corporation is not required if:
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whether or not the constituent corporation is the surviving
corporation:
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the surviving or new corporation is a Pennsylvania corporation
and, except for amendments the board of directors is authorized
to make without shareholder approval, its articles of
incorporation are identical to the articles of incorporation of
the constituent corporation;
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each share of the constituent corporation outstanding
immediately prior to the effective date of the merger or
consolidation will continue as or be converted into, except as
may otherwise be agreed by the shareholder, an identical share
of the surviving or new corporation after the effective date of
the merger or consolidation; and
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the plan of merger or consolidation provides that the
shareholders of the constituent corporation will hold in the
aggregate shares of the surviving or new corporation to be
outstanding immediately after the effectiveness of the merger or
consolidation entitled to cast at least a majority of the votes
entitled to be cast generally for the election of directors;
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immediately prior to the adoption of the plan of merger or
consolidation and at all times after the adoption and prior to
its effective date, another corporation that is a party to the
plan owns 80% or more of the outstanding shares of each class of
the constituent corporation; or
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no shares of the constituent corporation have been issued prior
to the adoption of the plan of merger or consolidation by the
board of directors.
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Under Pennsylvania law, a sale of all or substantially all of a
corporations assets generally requires the approval of the
corporations board of directors and the affirmative vote
of a majority of the votes cast by all shareholders entitled to
vote on the transaction.
Business Combinations with Interested
Shareholder. Under Pennsylvania law, in
connection with a business combination an interested
shareholder of a registered corporation (which includes
C-COR) is (i) any person that is the beneficial owner,
directly or indirectly, of shares of the corporation entitled to
cast at least 20% of the votes all shareholders would be
entitled to cast in an election of directors of the corporation
or (ii) an affiliate or associate of such corporation and
at any time within the five-year period immediately prior to the
date in question was the beneficial owner, directly or
indirectly, of shares entitled to cast at least 20% of the votes
all shareholders would be entitled to cast in an election of
directors of the corporation. Certain shares
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outstanding since the beginning of 1983, and certain shares
distributed with respect of those shares, may be excluded for
purposes of calculating the 20% voting power. A business
combination generally includes:
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a merger, consolidation, share exchange or division of the
corporation or a subsidiary of the corporation with an
interested shareholder, or with, involving or resulting in any
other corporation which is, or after such transaction would be,
an affiliate or associate of the interested shareholder;
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a sale, lease, exchange, mortgage, pledge, transfer or other
disposition to or with the interested shareholder, or any
affiliate or associate of the interested shareholder, of assets
of the corporation or a subsidiary having an aggregate market
value equal to 10% or more of the market value of all the assets
or outstanding shares of the corporation or representing 10% or
more of the earning power or net income of the corporation;
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with certain exceptions, the issuance or transfer by the
corporation or a subsidiary to the interested shareholder or an
affiliate or associate of the interested shareholder of shares
of the corporation or subsidiary having an aggregate market
value equal to 5% or more of the market value of all the
outstanding shares of the corporation;
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adoption of any plan or proposal for the liquidation or
dissolution of the corporation that was proposed by or pursuant
to any agreement or understanding with the interested
shareholder or an affiliate or associate of the interested
shareholder;
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a split, reverse split, dividend or distribution of shares,
other reclassification of securities, recapitalization or other
transaction proposed by or pursuant to any agreement or
understanding with the interested shareholder or an affiliate or
associate of the interested shareholder that has the effect of
increasing the interested shareholders or its
affiliates or associates proportionate share,
whether owned directly or indirectly, of the outstanding shares
of any class or series of voting shares, or securities
convertible into voting shares, of the corporation or a
subsidiary of the corporation; and
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the receipt by the interested shareholder or any affiliate or
associate of the interested shareholder of the benefit, directly
or indirectly, of any loans, advances, guarantees, pledges or
other financial assistance or any tax credits or other tax
advantages provided by or through the corporation, other than
such a benefit received proportionately as a shareholder of the
corporation.
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Pennsylvania law provides for a five-year moratorium on business
combinations between a registered corporation and any person
that is an interested shareholder of the corporation, unless:
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the board of directors of the corporation had approved the
acquisition of shares that made the person an interested
shareholder of the corporation before the interested shareholder
became an interested shareholder of the corporation; or
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the proposed business combination was approved by (i) the
board of directors of the corporation before the person became
an interested shareholder of the corporation, or (ii) all
of the holders of the outstanding shares of common stock of the
corporation, or (iii) the holders of shares entitled to
cast a majority of the votes all shareholders would be entitled
to cast in an election of directors of the corporation (not
including any shares of voting stock beneficially owned by the
interested shareholder or its affiliates or associates) at a
meeting called for such purpose no earlier than three months
after the interested shareholder became the beneficial owner,
directly or indirectly, of shares entitled to cast at least 80%
of the votes all shareholders would be entitled to cast in an
election of directors of the corporation, if the interested
shareholder at the time of the meeting is the beneficial owner,
directly or indirectly, of shares entitled to cast at least 80%
of the votes all shareholders would be entitled to cast in an
election of directors of the corporation and certain other
criteria.
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Following expiration of the five-year moratorium, a business
combination between a registered corporation and an interested
shareholder is still prohibited, unless it is approved at a
shareholders meeting called for such purpose no earlier than
five years after the interested shareholder became an interested
shareholder of the
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corporation and the business transaction meets certain per share
consideration criteria and meets certain other requirements.
Disgorgement of Profits by Certain Controlling
Persons. Pennsylvania law regarding disgorgement
of profits by certain controlling persons applies in the event
that (i) any person or group publicly discloses that the
person or group may acquire control of the corporation, or
(ii) a person or group acquires (or publicly discloses an
intent to acquire) 20% or more of the voting power of the
corporation and, in either case, sells shares within
18 months thereafter. In certain cases, profits from sales
of equity securities of the corporation received by the person
or group during such
18-month
period will belong to the corporation if the securities that
were sold were acquired during the
18-month
period or within 24 months prior thereto.
Control-Share/Cash-Out Statute. Under
Pennsylvania law, if a person, or group of persons acting in
concert, acquires voting control over 20% of a companys
voting stock, such control person or group must
notify other holders and such other holders may require the
controlling person or group to purchase their shares at
fair value. Fair value means not less
than the highest price paid by the controlling person or group
during the
90-day
period prior to the control transaction, plus a control premium.
This statute does not apply in certain situations, such as
(i) shares acquired directly from the corporation by an
underwriter in an offering registered under the Securities Act
in a transaction exempt from the registration requirements of
the Securities Act; (ii) where a person holds voting power
in good faith and not for the purpose of circumventing the
statute as an agent, bank, broker nominee or trustee for one or
more beneficial owners who do not individually (or, if they are
a group acting in concert, as a group) have voting power over
20%; and (iii) a one-step merger (since the obligation to
notify holders does not arise until after the control
transaction, at which time the acquirer will own
100%).
Control-Share Acquisitions. Under Pennsylvania
law, subject to various exceptions, a control-share acquisition
is an acquisition in which a person acquires, directly or
indirectly, voting power over shares of certain registered
corporations that are entitled to vote generally in the election
of directors of the corporation which, when added to all voting
power the person and the persons affiliates and associates
have over other such voting shares of the corporation, entitle
the acquiring person to vote or direct the voting of at least
20%, at least
331/3%
or more than 50% of the votes that all shareholders would be
entitled to cast in an election of directors of the corporation.
Certain shares outstanding since the beginning of 1988, and
certain shares distributed with respect of those shares, may be
excluded for purposes of calculating the voting power of the
acquiring person. Two or more persons acting in concert may
constitute an acquiring person for purposes of these
provisions of Pennsylvania law. Under Pennsylvania law and for
purposes of this description, an acquiring person may be a
person who has acquired control shares or who has not acquired
control shares but proposes to acquire control shares in a
control-share acquisition.
Control shares are the shares the acquiring person acquires in
the control-share acquisition that cause the acquisition to
constitute a control-share acquisition, plus any voting shares
of the corporation that the acquiring person acquired either
within 180 days of the control-share acquisition or with
the intention of making a control-share acquisition. Under
Pennsylvania law, control shares have no voting rights until
their voting rights have been restored by two shareholder votes
as described below or until they have been transferred to a
person in whose hands the shares do not constitute control
shares.
The acquiring person may request that the question of restoring
the voting rights of his control shares be submitted to the
shareholders of the corporation at the next annual or special
meeting of the shareholders. The acquiring person may accelerate
consideration of the question by requesting a special meeting of
the shareholders for that purpose and agreeing to pay or
reimburse the corporation for expenses of the special meeting.
In either case, the acquiring person must furnish to the
corporation an information statement containing certain
information. With the notice of the shareholders meeting, the
shareholders must be given copies of the acquiring persons
information statement and a statement disclosing the board of
directors position with respect to the restoration of the voting
rights of the control shares.
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Restoration of the voting rights of control shares will be
approved by the shareholders of the corporation only if it is
approved by two separate shareholder votes. To be approved, a
resolution to restore the voting rights must be approved by the
affirmative vote of the holders of a majority of the voting
power of (i) all the disinterested shares of
the corporation and also (ii) all shares of the corporation
that would be entitled to vote in an election of directors of
the corporation.
Unless prohibited by the corporations articles of
incorporation in effect before the control-share acquisition
occurred, the corporation may redeem the control shares from the
acquiring person within 24 months after (i) the date
the control-share acquisition occurs, unless within 30 days
after the control-share acquisition takes place the acquiring
person properly requests that the question of restoring the
voting rights of the control shares be presented to the
shareholders or (ii) the proposal of restoring the voting
rights of the control shares is submitted to but not approved by
the shareholders or (iii) such voting rights are restored
and subsequently lapse under certain circumstances. Such
redemption of the control shares shall be at the average of the
high and low prices of the shares on a national exchange or
quotation system or similar service.
Pennsylvania law contains certain other provisions applicable to
C-COR that require certain severance payments to terminated
employees and the preservation of labor contracts in a control
share acquisition.
The merger agreement provides that the anti-takeover provisions
of Pennsylvania law discussed above will not apply to the
execution, delivery or performance of the merger agreement and
the transactions contemplated by the merger agreement (including
the merger).
In addition to the foregoing provisions of Pennsylvania law,
C-CORs articles of incorporation requires the affirmative
vote of two-thirds of all shares entitled to vote to approve
certain transactions between C-COR and shareholder who
beneficially owns more than 10% of the outstanding shares of any
class of stock of
C-COR.
Other
Corporate Constituencies
ARRIS
Delaware law does not have an other constituency
statute similar to that described below under
C-COR.
C-COR
Under Pennsylvania law, in discharging the duties of their
respective positions, the board of directors of a corporation
and individual directors may consider, to the extent they deem
appropriate, the effects of any action on shareholders,
employees, suppliers, customers, creditors, the communities in
which offices or other establishments of the corporation are
located and any other factors that they consider pertinent.
Directors are not required to redeem any rights or render
inapplicable any shareholder rights plan or any antitakeover
protections available to the corporation under Pennsylvania law
or to take or decline to take any action solely because of the
effect that the action might have on a potential acquisition of
control of the corporation or the consideration that may be
offered or paid to shareholders in such an acquisition.
Pennsylvania law explicitly provides that there will be no
different or higher degree of scrutiny imposed upon director
actions relating to or affecting potential changes in control.
Appraisal
Rights and Dissenters Rights
ARRIS
Under Delaware law, shareholders have the right to dissent from
any plan of merger or consolidation to which the corporation is
a party, and to demand payment for the fair value of their
shares pursuant to, and in compliance with procedures set forth
in, the appraisal rights provisions of Delaware law.
However, unless
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the certificate of incorporation otherwise provides, Delaware
law states that shareholders do not have such appraisal rights
in connection with a merger or consolidation with respect to
shares:
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listed on a national securities exchange or held of record by
more than 2,000 holders; and
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for which, pursuant to the plan of merger or consolidation,
shareholders will receive only (i) shares or depository
receipts of another corporation which at the effective date of
the merger or consolidation will be either listed on a national
securities exchange or held of record by more than 2,000
holders, (ii) shares of stock or depositary receipts of the
surviving corporation in the merger or consolidation,
(iii) cash in lieu of fractional shares or (iv) any
combination of the foregoing.
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In addition, Delaware law provides that, unless the certificate
of incorporation provides otherwise, shareholders of a surviving
corporation do not have appraisal rights in connection with a
plan of merger if the merger did not require for its approval
the vote of the surviving corporations shareholders. The
ARRIS certificate of incorporation does not contain any
provisions with respect to appraisal rights.
C-COR
Under Pennsylvania law, unless the articles of incorporation or
bylaws provide otherwise, shareholders of a Pennsylvania
corporation generally are not entitled to dissenters
rights if the shares that would otherwise give rise to such
rights are listed on a national securities exchange, or held
beneficially or of record by more than 2,000 persons, on
the record date fixed to determine the shareholders entitled to
notice of and vote at the meeting at which a merger or
consolidation will be voted upon. Neither the C-COR articles of
incorporation nor the C-COR bylaws contain provisions with
respect to dissenters rights.
C-COR shareholders will not be entitled to dissenters
rights in connection with the merger because shares of C-COR
common stock are listed on the NASDAQ Global Select Market.
ARRIS
Delaware law provides that no contract or transaction between a
corporation and one or more of its directors or officers, or
between a corporation and any other corporation, partnership,
association, or other organization in which one or more of its
directors or officers are directors or officers, or have a
financial interest, will be void or voidable solely for this
reason, or solely because the director or officer is present at
or participates in the meeting of the board of directors or
committee of the board of directors which authorizes the
contract or transaction, or solely because his or their votes
are counted for such purpose if (i) the material facts as
to his or their relationship or interest and as to the contract
or transaction are disclosed or are known to the board of
directors or the committee, and the board of directors or
committee in good faith authorizes the contract or transaction
by the affirmative votes of a majority of the disinterested
directors, even though the disinterested directors are less than
a quorum; or (ii) the material facts as to his or their
relationship or interest and as to the contract or transaction
are disclosed or are known to the shareholders entitled to vote
thereon, and the contract or transaction is specifically
approved in good faith by vote of the shareholders; or
(iii) the contract or transaction is fair as to the
corporation as of the time it is authorized, approved or
ratified by the board of directors, committee or shareholders.
C-COR
Pennsylvania law provides that a contract or transaction between
a corporation and one or more of its directors or officers, or
between a corporation and any other corporation, partnership,
joint venture, trust or other enterprise in which one or more of
its directors or officers are directors or officers or have a
financial or other interest shall not be void or voidable solely
for that reason, or solely because the director or officer is
present at or participates in the meeting of the board of
directors that authorizes the contract or transaction, or solely
because his or their votes are counted for that purpose if
(i) the material facts as to the relationship or
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interest and as to the contract or transaction are disclosed or
are known to the board of directors and the board of directors
authorizes the contract or transaction by the affirmative votes
of a majority of the disinterested directors, even if the
disinterested directors are less than a quorum; or (ii) the
material facts as to his relationship or interest and as to the
contract or transaction are disclosed or are known to the
shareholders entitled to vote thereon and the contract or
transaction is specifically approved in good faith by vote of
those shareholders; or (iii) the contract or transaction is
fair as to the corporation as of the time it is authorized,
approved or ratified by the board of directors or the
shareholders.
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DESCRIPTION
OF ARRIS CAPITAL STOCK
ARRIS authorized capital stock is 325,000,000 shares
consisting of 320,000,000 shares of common stock, par value
$0.01 per share, and 5,000,000 shares of preferred stock,
par value $1.00 per share, in such series and with such voting
powers, designations, preferences and relative, participating,
optional or other special rights, and qualifications,
limitations or restrictions thereof, as may be fixed from time
to time by the ARRIS board of directors for each series. The
following summary description of certain provisions of
ARRIS certificate of incorporation and its Bylaws does not
purport to be complete and is qualified in its entirety by
reference to said provisions.
Holders of ARRIS common stock are entitled to one vote for each
share held on all matters submitted to a vote of the ARRIS
shareholders and do not have cumulative voting rights. Holders
of a majority of the shares of common stock entitled to vote in
any election of ARRIS directors may elect all of the directors
standing for election. Holders of ARRIS common stock are
entitled to receive ratably such dividends, if any, as may be
declared by the ARRIS board of directors out of funds legally
available therefor, subject to any preferential dividend rights
of outstanding preferred stock. Upon ARRIS liquidation,
dissolution or winding up, the holders of common stock are
entitled to receive ratably ARRIS net assets available
after the payment of all debts and other liabilities and subject
to the prior rights of any outstanding preferred stock. Holders
of ARRIS common stock have no preemptive, subscription,
redemption or conversion rights.
The outstanding shares of ARRIS common stock are fully paid and
non-assessable.
The rights, preferences and privileges of holders of ARRIS
common stock are subject to, and may be adversely affected by,
the rights of the holders of shares of any series of preferred
stock which ARRIS may designate and issue.
ARRIS has authorized 5,000,000 shares of preferred stock
which may be issued with such preferences and voting rights as
the ARRIS board of directors, without further approval by the
ARRIS shareholders, may determine by duly adopted resolution.
See Certain Charter and By-Law
Provisions. ARRIS has no shares of preferred stock issued
and outstanding. At the time of the adoption of ARRIS
shareholder rights plan on October 3, 2002, ARRIS
designated 320,000 shares of preferred stock as
Series A Participating Preferred Stock.
Each share of ARRIS common stock issued and outstanding prior to
a distribution date under ARRIS Rights Agreement, dated as
of October 3, 2002, between ARRIS and The Bank of New York,
as rights agent (the Rights Agreement), includes one
right, which right entitles the registered holder to purchase
from ARRIS one one-thousandth of a share of Series A
Participating Preferred Stock, par value $0.01 per share, at a
purchase price of $37.00, subject to adjustment. The description
and terms of the rights are set forth in the Rights Agreement.
Initially, the rights will be attached to all ARRIS common stock
certificates representing shares then outstanding, and no
separate rights certificates will be distributed. The rights
will separate from the ARRIS common stock and a distribution
date will occur upon the earlier of (i) ten business days
following a public announcement that a person or group of
affiliated or associated persons has (subject to certain
exceptions) acquired, or obtained the right to acquire,
beneficial ownership of 15% or more of the outstanding shares of
ARRIS common stock, other than as a result of repurchases of
stock by ARRIS (such person, subject to certain exceptions, an
acquiring person), or (ii) ten business days
(or such later date as the ARRIS board shall determine)
following (x) the commencement of a tender offer or
exchange offer that, if successfully
91
completed, would result in a person or group becoming an
acquiring person of such outstanding shares of ARRIS
common stock or (y) the date of the public announcement of
the interest of any person or group (subject to certain
exceptions) to commence a tender offer or exchange offer that,
if successfully completed, would result in the person becoming
an acquiring person of such outstanding shares of ARRIS
common stock.
The Rights Agreement provides that, until the distribution date
(or the earlier expiration or redemption of the rights), ARRIS
will issue one new right for each share of common stock issued
by ARRIS after the record date. Accordingly, a right will be
issued for each share of ARRIS common stock issued in the
merger. The rights are not exercisable until the distribution
date and will expire at the close of business on October 3,
2012, unless earlier redeemed by ARRIS.
Each share of ARRIS Series A Participating Preferred Stock
purchasable upon exercise of the rights will have a preferential
dividend equal to 1,000 times the aggregate per share amount of
all cash dividends declared on the ARRIS common stock, and 1,000
times the aggregate per share amount of all non-cash dividends
or other distributions (other than a dividend payable in shares
of ARRIS common stock or a subdivision of the outstanding ARRIS
common stock) declared on the shares of ARRIS common stock. In
the event of ARRIS liquidation, dissolution or winding up,
the holders of the Series A Participating Preferred Stock
will be entitled to receive an aggregate amount per share equal
to 1,000 times the aggregate amount distributed per share to
each holder of shares of ARRIS common stock plus any accrued and
unpaid dividends on the Series A Participating Preferred
Stock. In the event of any merger, consolidation, combination or
other transaction in which shares of ARRIS common stock are
exchanged, each share of Series A Participating Preferred
Stock will be similarly exchanged in an amount per share equal
to 1,000 times the amount and type of consideration received per
share of ARRIS common stock. The rights of the shares of ARRIS
Series A Participating Preferred Stock as to dividends and
liquidation, and in the event of a merger or consolidation, are
protected by antidilution provisions.
In the event a person becomes an acquiring person, each holder
of a right will thereafter have the right to receive, upon
exercise, common stock (or, in certain circumstances, cash,
property or other securities of the company) having a value
equal to two times the exercise price of the right.
Notwithstanding any of the foregoing, following the occurrence
of any of the events set forth in this paragraph, all rights
that are, or (under certain circumstances specified in the
Rights Agreement) were, beneficially owned by any acquiring
person will be null and void.
In the event that, at any time following the stock acquisition
date, (i) ARRIS is acquired in a merger or other business
combination transaction in which ARRIS is not the surviving
corporation (other than a merger which follows an offer
described in the second preceding paragraph), or (ii) 50%
or more of ARRIS assets, cash flow or earning power is
sold or transferred, each holder of a right (except rights which
previously have been voided) shall have the right to receive,
upon exercise, common stock of the acquiring company having a
value equal to two times the exercise price of the right.
At any time after a person becomes an acquiring person and prior
to the acquisition by such person or group of 50% or more of the
outstanding ARRIS common stock, the ARRIS board may exchange the
rights (other than rights owned by the person or group which
have become void), in whole or in part, at an exchange ratio of
one share of ARRIS common stock per right (subject to
adjustment). At any time prior to ten business days following
the stock acquisition date, the ARRIS board may redeem the
rights in whole, but not in part, at a price of $0.001 per right
(payable in cash, common stock or other consideration deemed
appropriate by the ARRIS board). Immediately upon the action of
the board ordering redemption of the rights, the rights will
terminate and the only right of the holders of rights will be to
receive the $0.001 redemption price.
The rights are intended to protect ARRIS shareholders in
the event of an unfair or coercive offer to acquire ARRIS and to
provide the ARRIS board of directors with adequate time to
evaluate unsolicited offers. The rights may have anti-takeover
effects. The rights will cause substantial dilution to a person
or group that attempts to acquire ARRIS without conditioning the
offer on a substantial number of rights being acquired. The
rights, however, should not affect any prospective offer or
person willing to make an offer at a fair price
92
as determined by the ARRIS board of directors. The rights should
not interfere with any merger or other business combination
approved by the ARRIS board of directors.
Certain
Charter and Bylaw Provisions
Pursuant to the provisions of the Delaware law, ARRIS has
adopted provisions in its certificate of incorporation and
bylaws which required ARRIS to indemnify its officers and
directors to the fullest extent permitted by law, and eliminate
the personal liability of its directors to ARRIS or ARRIS
shareholders for monetary damages for breach of their duty of
due care except (i) for any breach of the duty of loyalty;
(ii) for acts or omissions not in good faith or which
involve intentional misconduct or knowing violations of laws;
(iii) for liability under Section 174 of Delaware law
(relating to certain unlawful dividends, stock repurchases or
stock redemptions); or (iv) for any transaction from which
the director derived any improper personal benefit. These
provisions do not eliminate a directors duty of care.
Moreover, the provisions do not apply to claims against a
director for violation of certain laws, including federal
securities laws. ARRIS believes that these provisions will
assist it in attracting or retaining qualified individuals to
serve as directors and officers.
ARRIS certificate of incorporation includes a provision
which allows the ARRIS board of directors, without shareholder
approval to issue up to 5,000,000 shares of preferred stock
with voting, liquidation and conversion rights that could be
superior to and adversely affect the voting power of holders of
ARRIS common stock. The issuance of preferred stock could have
the effect of delaying, deferring or preventing a change in
control of ARRIS.
Delaware
Anti-Takeover Law
ARRIS is a Delaware corporation that is subject to
Section 203 of the Delaware law. Under Section 203
certain business combinations between a Delaware
corporation whose stock generally is publicly traded or held of
record by more than 2,000 shareholders and an
interested shareholder are prohibited for a
three-year period following the date that such shareholder
became an interested shareholder, unless (i) the
corporation has elected in its certificate of incorporation not
to be governed by Section 203 (ARRIS has not made such
election), (ii) the business combination was approved by
the board of directors of the corporation before the other party
to the business combination became an interested shareholder,
(iii) upon consummation of the transaction that made it an
interested shareholder, the interested shareholder owned at
least 85% of the voting stock of the corporation outstanding at
the commencement of the transaction (excluding voting stock
owned by directors who are also officers or held in employee
benefit plans in which the employees do not have a confidential
right to tender or vote stock held by the plan) or (iv) the
business combination is approved by the board of directors of
the corporation and ratified by two-thirds of the voting stock
which the interested shareholder did not own. The three-year
prohibition also does not apply to certain business combinations
proposed by an interested shareholder following the announcement
or notification of certain extraordinary transactions involving
the corporation and a person who had not been an interested
shareholder during the previous three years or who became an
interested shareholder with the approval of a majority of the
corporations directors. The term business
combination is defined generally to include mergers or
consolidations between a Delaware corporation and an interested
shareholder, transactions with an interested shareholder
involving the assets or stock of the corporation or its
majority-owned subsidiaries, and transactions which increase an
interested shareholders percentage ownership of stock. The
term interested shareholder is defined generally as
those shareholders who become beneficial owners of 15% or more
of a Delaware corporations voting stock, together with the
affiliates or associates of that shareholder.
93
The consolidated financial statements of ARRIS appearing in
ARRIS Annual Report
(Form 10-K)
for the year ended December 31, 2006 (including the
schedule appearing therein), and ARRIS managements
assessment of the effectiveness of internal control over
financial reporting as of December 31, 2006 included
therein, have been audited by Ernst & Young LLP,
independent registered public accounting firm, as set forth in
their reports thereon, included therein, and incorporated herein
by reference. Such consolidated financial statements and
managements assessment are incorporated herein by
reference in reliance upon such reports given on the authority
of such firm as experts in accounting and auditing.
The consolidated financial statements and financial statement
schedule of C-COR Incorporated and subsidiaries as of June 29,
2007 and June 30, 2006, and for each of the three fiscal years
in the period ended June 29, 2007 and C-CORs
managements assessment of the effectiveness of internal
control over financial reporting as of June 29, 2007 have been
incorporated herein by reference from C-CORs Annual Report
on Form 10-K, as amended, for the fiscal year ended June 29,
2007 in reliance upon the reports of KPMG LLP, independent
registered public accounting firm, given on the authority of
such firm as experts in accounting and auditing.
The audit report on C-CORs consolidated financial
statements contains an explanatory paragraph that describes
C-CORs change in its method of accounting for stock-based
compensation on June 25, 2005.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
ARRIS files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy any document ARRIS files at the SECs public reference
room located at 100 F Street, N.E.,
Washington, D.C., 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room.
ARRIS SEC filings are also available to the public at the
SECs website at
http://www.sec.gov
or at ARRIS website at www.arrisi.com.
The SEC allows ARRIS to incorporate by reference into this joint
proxy statement/prospectus, documents it files with the SEC.
This means that ARRIS can disclose important information to you
by referring you to those documents. The information filed by
ARRIS and incorporated by reference is considered to be a part
of this joint proxy statement/prospectus, and later information
that ARRIS files with the SEC will update and supersede that
information. Statements contained in this joint proxy
statement/prospectus, or in any document incorporated in this
joint proxy statement/prospectus by reference, regarding the
contents of any contract or other document are not necessarily
complete and each such statement is qualified in its entirety by
reference to such contract or other document filed as an exhibit
with the SEC. ARRIS incorporates by reference the documents
listed below and any documents filed by ARRIS pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
(File
No. 0-31254),
after the date of this joint proxy statement/prospectus and
before the date of the ARRIS meeting:
|
|
|
ARRIS Filings
|
|
Period/Filing Date:
|
|
Annual Report on
Form 10-K
|
|
For the year ended December 31, 2006
|
Quarterly Report on
Form 10-Q
|
|
For the quarter ended September 30, 2007
|
Quarterly Report on
Form 10-Q
|
|
For the quarter ended June 30, 2007
|
Quarterly Report on
Form 10-Q
|
|
For the quarter ended March 31, 2007
|
Current Report on
Form 8-K
|
|
October 24, 2007
|
Current Report on
Form 8-K
|
|
September 24, 2007
|
Current Report on
Form 8-K
|
|
March 13, 2007
|
Current Report on
Form 8-K
|
|
February 21, 2007
|
Current Report on
Form 8-K
|
|
January 19, 2007
|
94
C-COR files annual, quarterly and current reports, proxy
statements and other information with the SEC. You may read and
copy any document C-COR files at the SECs public reference
room located at 100 F Street, N.E.,
Washington, D.C., 20549. Please call the SEC at
1-800-SEC-0330
for further information on the public reference room.
C-CORs SEC filings are also available to the public at the
SECs website at
http://www.sec.gov
or at C-CORs website at www.c-cor.com.
The SEC allows C-COR to incorporate by reference into this joint
proxy statement/prospectus, documents it files with the SEC.
This means that C-COR can disclose important information to you
by referring you to those documents. The information filed by
C-COR and incorporated by reference is considered to be a part
of this joint proxy statement/prospectus, and later information
that C-COR files with the SEC will update and supersede that
information. Statements contained in this joint proxy
statement/prospectus, or in any document incorporated in this
joint proxy statement/prospectus by reference, regarding the
contents of any contract or other document are not necessarily
complete and each such statement is qualified in its entirety by
reference to such contract or other document filed as an exhibit
with the SEC. C-COR incorporates by reference the documents
listed below and any documents filed by C-COR pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
(File
No. 0-10726),
after the date of this joint proxy statement/prospectus and
before the date of the C-COR meeting:
|
|
|
C-COR Filings
|
|
Period/Filing Date:
|
|
Annual Report on
Form 10-K,
as amended
|
|
For the year ended June 29, 2007
|
Quarterly Report on
Form 10-Q
|
|
For the 13-week period ended September 28, 2007
|
Current Report on
Form 8-K
|
|
October 29, 2007
|
Current Report on
Form 8-K
|
|
October 25, 2007
|
Current Report on
Form 8-K
|
|
October 12, 2007
|
Current Report on
Form 8-K
|
|
October 1, 2007
|
Current Report on
Form 8-K
|
|
September 27, 2007
|
Current Report on
Form 8-K
|
|
September 25, 2007
|
Current Report on
Form 8-K
|
|
September 24, 2007
|
The validity of ARRIS common stock offered by this joint proxy
statement/prospectus will be passed upon for ARRIS by Troutman
Sanders LLP. Troutman Sanders LLP and Ballard Spahr
Andrews & Ingersoll, LLP also will opine as to certain
United States federal income tax consequences of the merger.
As of the date of this joint proxy statement/prospectus, none of
the ARRIS board of directors or the
C-COR board
of directors knows of any matter that will be presented for
consideration at the ARRIS meeting or the C-COR meeting,
respectively, other than as described in this joint proxy
statement/prospectus.
95
UNAUDITED
PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined balance sheet and
statements of operations are presented to give effect to the
proposed transaction. The pro forma information was prepared
based on the historical financial statements and related notes
of ARRIS and C-COR (which are incorporated by reference in this
document), after giving effect to ARRIS acquisition of
C-COR using the purchase method of accounting. The unaudited pro
forma combined balance sheet is presented as if the transaction
occurred on September 30, 2007. The unaudited pro forma
combined statements of operations combine the results of
operations of ARRIS and
C-COR for
the calendar year ended December 31, 2006 and the nine
months ended September 30, 2007 are presented as if the
transaction had taken place on January 1, 2006. In
addition, the pro forma financial information assumes that no
adjustments are made to the stock consideration as a result of
the average closing price of ARRIS common stock being less
than $12.83 or more than $15.69 or otherwise. For additional
information, please see the assumptions and adjustments
described in the accompanying notes to the unaudited pro forma
combined financial statements.
ARRIS and C-COR have different fiscal year ends. The unaudited
pro forma combined balance sheet combines ARRIS and
C-CORs historical consolidated balance sheets as of
September 30, 2007 and September 28, 2007,
respectively. The unaudited pro forma combined statement of
operations for the year ended December 31, 2006 combines
ARRIS and C-CORs historical consolidated statement
of operations for the trailing four quarters. The unaudited pro
forma combined statement of operations for the nine months ended
September 30, 2007 combines ARRIS and C-CORs
historical consolidated statement of operations for the trailing
three quarters. Certain reclassification adjustments have been
made in the presentation of C-CORs historical amounts to
conform to ARRIS presentation.
The proposed transaction will be accounted for under the
purchase method of accounting, and following the closing of the
transaction, the results of operations of C-COR will be included
in the results of ARRIS. For purposes of this pro forma
information, the preliminary purchase price has been allocated
to the estimated fair values of the assets acquired and
liabilities assumed based on the information available at the
time of the printing of this document. The excess of the
preliminary purchase price over the fair value of the net
tangible and identifiable intangible assets acquired and
liabilities assumed has been allocated to goodwill. Although the
preliminary purchase price and its allocation are not final, it
is anticipated that a portion of the purchase price will be
allocated to existing technology, in-process research and
development, order backlog, customer relationships, and
non-compete agreements. Since C-COR is an operating business,
the assets and liabilities actually acquired and the fair market
values of the assets will change prior to completion of the
transaction. As a result, the final purchase price and the
allocation of the purchase price will be determined after the
transaction is completed and after completion of thorough
analyses to identify and determine the fair values of
C-CORs tangible and identifiable intangible assets and
liabilities as of the date the transaction is completed. Any
change in the fair value of the net assets of C-COR will change
the amount of the purchase price allocable to goodwill. The
final allocation may be materially different from the unaudited
pro forma adjustments presented herein.
The unaudited pro forma combined financial statements have been
prepared for illustrative purposes only and are not necessarily
indicative of the consolidated financial position or results of
operations in future periods or the results that actually would
have been achieved had ARRIS and C-COR been a combined company
during the respective periods presented. These unaudited pro
forma combined financial statements should be read in
conjunction with ARRIS historical consolidated financial
statements and related notes included in its
Form 10-K
for the fiscal year ended December 31, 2006, filed on
March 1, 2007 and in its
Form 10-Q
for the nine months ended September 30, 2007, filed on
November 2, 2007, as well as C-CORs historical
consolidated financial statements and related notes included in
its
Form 10-K
for the fiscal year ended June 29, 2007, filed on
September 12, 2007, as amended on October 11, 2007,
and in its
Form 10-Q
for the 13-week period ended September 28, 2007, filed on
November 6, 2007.
P-1
ARRIS
GROUP, INC.
Unaudited Pro Forma Combined Balance Sheet
At September 30, 2007
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
Pro Forma
|
|
|
|
ARRIS
|
|
|
C-COR
|
|
|
Adjustments
|
|
|
Combined
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash, cash equivalents and short-term investments
|
|
$
|
588.6
|
|
|
$
|
61.0
|
|
|
$
|
(401.7
|
)(a1)
|
|
$
|
247.9
|
|
Restricted cash
|
|
|
3.2
|
|
|
|
4.4
|
|
|
|
|
|
|
|
7.6
|
|
Marketable securities
|
|
|
|
|
|
|
71.5
|
|
|
|
|
|
|
|
71.5
|
|
Accounts receivable (net)
|
|
|
130.2
|
|
|
|
42.0
|
|
|
|
|
|
|
|
172.2
|
|
Other receivables
|
|
|
5.0
|
|
|
|
4.4
|
|
|
|
|
|
|
|
9.4
|
|
Inventories (net)
|
|
|
118.2
|
|
|
|
23.8
|
|
|
|
3.0
|
(b)
|
|
|
145.0
|
|
Deferred costs
|
|
|
|
|
|
|
9.1
|
|
|
|
(9.1
|
)(c)
|
|
|
|
|
Current deferred income tax assets
|
|
|
19.6
|
|
|
|
0.2
|
|
|
|
18.4
|
(g)
|
|
|
38.2
|
|
Prepaids and other current assets
|
|
|
17.3
|
|
|
|
1.7
|
|
|
|
|
|
|
|
19.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
882.1
|
|
|
|
218.1
|
|
|
|
(389.4
|
)
|
|
|
710.8
|
|
Property, plant and equipment (net)
|
|
|
31.3
|
|
|
|
19.6
|
|
|
|
6.0
|
(d)
|
|
|
56.9
|
|
Goodwill
|
|
|
150.6
|
|
|
|
128.6
|
|
|
|
193.1
|
(a5),(e)
|
|
|
472.3
|
|
Intangibles (net of accumulated amortization)
|
|
|
0.1
|
|
|
|
1.2
|
|
|
|
307.8
|
(a4),(f)
|
|
|
309.1
|
|
Investments
|
|
|
8.9
|
|
|
|
|
|
|
|
|
|
|
|
8.9
|
|
Noncurrent deferred income tax assets
|
|
|
16.2
|
|
|
|
0.5
|
|
|
|
33.4
|
(g)
|
|
|
50.1
|
|
Other assets
|
|
|
9.0
|
|
|
|
6.5
|
|
|
|
(0.3
|
)(c)
|
|
|
15.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,098.2
|
|
|
$
|
374.5
|
|
|
$
|
150.6
|
|
|
$
|
1,623.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
35.5
|
|
|
$
|
18.5
|
|
|
$
|
|
|
|
$
|
54.0
|
|
Accrued compensation, benefits and related taxes
|
|
|
18.9
|
|
|
|
9.3
|
|
|
|
|
|
|
|
28.2
|
|
Deferred revenue
|
|
|
6.3
|
|
|
|
28.1
|
|
|
|
(22.8
|
)(h)
|
|
|
11.6
|
|
Accrued warranty
|
|
|
7.3
|
|
|
|
5.6
|
|
|
|
|
|
|
|
12.9
|
|
Current deferred income tax liabilities
|
|
|
|
|
|
|
0.2
|
|
|
|
(0.2
|
)(g)
|
|
|
|
|
Other accrued liabilities
|
|
|
20.9
|
|
|
|
8.7
|
|
|
|
|
|
|
|
29.6
|
|
Current portion of long-term debt
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
0.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
88.9
|
|
|
|
70.8
|
|
|
|
(23.0
|
)
|
|
|
136.7
|
|
Long-term debt, net of current portion
|
|
|
276.0
|
|
|
|
35.9
|
|
|
|
(35.0
|
)(i)
|
|
|
276.9
|
|
Accrued pension
|
|
|
11.8
|
|
|
|
|
|
|
|
|
|
|
|
11.8
|
|
Noncurrent income tax payable
|
|
|
5.3
|
|
|
|
|
|
|
|
|
|
|
|
5.3
|
|
Deferred revenue, net of current portion
|
|
|
|
|
|
|
3.4
|
|
|
|
(1.5
|
)(h)
|
|
|
1.9
|
|
Noncurrent deferred income tax liabilities
|
|
|
|
|
|
|
5.8
|
|
|
|
97.2
|
(g)
|
|
|
103.0
|
|
Other long-term liabilities
|
|
|
5.1
|
|
|
|
6.3
|
|
|
|
|
|
|
|
11.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
387.1
|
|
|
|
122.2
|
|
|
|
37.7
|
|
|
|
547.0
|
|
Total stockholders equity
|
|
|
711.1
|
|
|
|
252.3
|
|
|
|
112.9
|
(a2),(a3),(j),(k),(l)
|
|
|
1,076.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,098.2
|
|
|
$
|
374.5
|
|
|
$
|
150.6
|
|
|
$
|
1,623.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P-2
ARRIS
GROUP, INC.
Unaudited
Pro Forma Combined Statement of Operations
For the nine months ended September 30, 2007
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
Pro Forma
|
|
|
|
ARRIS
|
|
|
C-COR
|
|
|
Adjustments
|
|
|
Combined
|
|
|
Net sales
|
|
$
|
742.6
|
|
|
$
|
219.4
|
|
|
$
|
|
|
|
$
|
962.0
|
|
Cost of sales
|
|
|
532.7
|
|
|
|
119.8
|
|
|
|
|
|
|
|
652.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
209.9
|
|
|
|
99.6
|
|
|
|
|
|
|
|
309.5
|
|
Gross margin%
|
|
|
28.3
|
%
|
|
|
45.4
|
%
|
|
|
|
|
|
|
32.2
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
74.4
|
|
|
|
50.3
|
|
|
|
0.8
|
(o)
|
|
|
125.5
|
|
Research and development expenses
|
|
|
53.7
|
|
|
|
25.7
|
|
|
|
0.8
|
(o)
|
|
|
80.2
|
|
Restructuring and impairment charges
|
|
|
0.4
|
|
|
|
0.6
|
|
|
|
|
|
|
|
1.0
|
|
Amortization of intangibles
|
|
|
0.2
|
|
|
|
2.2
|
|
|
|
42.1
|
(m),(n)
|
|
|
44.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
128.7
|
|
|
|
78.8
|
|
|
|
43.7
|
|
|
|
251.2
|
|
Operating income
|
|
|
81.2
|
|
|
|
20.8
|
|
|
|
(43.7
|
)
|
|
|
58.3
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
5.0
|
|
|
|
1.0
|
|
|
|
(0.9
|
)(p)
|
|
|
5.1
|
|
Gain on investments
|
|
|
(4.9
|
)
|
|
|
|
|
|
|
|
|
|
|
(4.9
|
)
|
Loss (gain) on foreign currency
|
|
|
0.1
|
|
|
|
(0.2
|
)
|
|
|
|
|
|
|
(0.1
|
)
|
Interest and investment income
|
|
|
(19.3
|
)
|
|
|
(3.8
|
)
|
|
|
13.6
|
(r)
|
|
|
(9.5
|
)
|
Gain related to terminated acquisition, net of expenses
|
|
|
(22.8
|
)
|
|
|
|
|
|
|
|
|
|
|
(22.8
|
)
|
Other expense (income), net
|
|
|
0.3
|
|
|
|
(0.4
|
)
|
|
|
|
|
|
|
(0.1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
122.8
|
|
|
|
24.2
|
|
|
|
(56.4
|
)
|
|
|
90.6
|
|
Income tax expense
|
|
|
34.4
|
|
|
|
1.9
|
|
|
|
(14.3
|
)(s),(t)
|
|
|
22.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
$
|
88.4
|
|
|
$
|
22.3
|
|
|
$
|
(42.1
|
)
|
|
$
|
68.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.81
|
|
|
|
|
|
|
|
|
|
|
$
|
0.51
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
|
|
$
|
0.50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
109.4
|
|
|
|
|
|
|
|
|
|
|
|
134.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
111.6
|
|
|
|
|
|
|
|
|
|
|
|
138.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P-3
ARRIS
GROUP, INC.
Unaudited
Pro Forma Combined Statement of Operations
For the year ended December 31, 2006
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Historical
|
|
|
Pro Forma
|
|
|
|
ARRIS
|
|
|
C-COR
|
|
|
Adjustments
|
|
|
Combined
|
|
|
Net sales
|
|
$
|
891.6
|
|
|
$
|
236.8
|
|
|
$
|
|
|
|
$
|
1,128.4
|
|
Cost of sales
|
|
|
639.5
|
|
|
|
134.7
|
|
|
|
|
|
|
|
774.2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin
|
|
|
252.1
|
|
|
|
102.1
|
|
|
|
|
|
|
|
354.2
|
|
Gross margin%
|
|
|
28.3
|
%
|
|
|
43.1
|
%
|
|
|
|
|
|
|
31.4
|
%
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
|
87.2
|
|
|
|
61.4
|
|
|
|
1.0
|
(o)
|
|
|
149.6
|
|
Research and development expenses
|
|
|
66.0
|
|
|
|
33.1
|
|
|
|
1.0
|
(o)
|
|
|
100.1
|
|
Restructuring and impairment charges
|
|
|
2.2
|
|
|
|
7.1
|
|
|
|
|
|
|
|
9.3
|
|
Gain on sale of product lines
|
|
|
|
|
|
|
(1.7
|
)
|
|
|
|
|
|
|
(1.7
|
)
|
Amortization of intangibles
|
|
|
0.6
|
|
|
|
3.4
|
|
|
|
55.6
|
(m),(n)
|
|
|
59.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
156.0
|
|
|
|
103.3
|
|
|
|
57.6
|
|
|
|
316.9
|
|
Operating income (loss)
|
|
|
96.1
|
|
|
|
(1.2
|
)
|
|
|
(57.6
|
)
|
|
|
37.3
|
|
Other expense (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
1.0
|
|
|
|
1.4
|
|
|
|
3.9
|
(p),(q)
|
|
|
6.3
|
|
Interest and investment income
|
|
|
(11.2
|
)
|
|
|
(2.9
|
)
|
|
|
11.2
|
(r)
|
|
|
(2.9
|
)
|
Loss (gain) on foreign currency
|
|
|
(1.4
|
)
|
|
|
(0.6
|
)
|
|
|
|
|
|
|
(2.0
|
)
|
Gain on sale of bankruptcy trade claims
|
|
|
|
|
|
|
(9.7
|
)
|
|
|
|
|
|
|
(9.7
|
)
|
Other expense (income), net
|
|
|
0.3
|
|
|
|
(2.9
|
)
|
|
|
|
|
|
|
(2.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations before income taxes
|
|
|
107.4
|
|
|
|
13.5
|
|
|
|
(72.7
|
)
|
|
|
48.2
|
|
Income tax expense (benefit)
|
|
|
(34.8
|
)
|
|
|
3.3
|
|
|
|
(26.1
|
)(s),(t)
|
|
|
(57.6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from continuing operations
|
|
$
|
142.2
|
|
|
$
|
10.2
|
|
|
$
|
(46.6
|
)
|
|
$
|
105.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from continuing operations per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.33
|
|
|
|
|
|
|
|
|
|
|
$
|
0.80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
1.30
|
|
|
|
|
|
|
|
|
|
|
$
|
0.78
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
107.3
|
|
|
|
|
|
|
|
|
|
|
|
132.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
|
109.5
|
|
|
|
|
|
|
|
|
|
|
|
135.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
P-4
The following pro forma adjustments have been made in the
Unaudited Pro Forma Combined Balance Sheet presented above (in
millions):
|
|
|
|
|
|
|
(a)
|
|
Adjustment to record ARRIS purchase of approximately 53.1
million shares of
C-COR common
stock at a purchase price of $13.75 per share:
|
|
|
|
|
|
|
Cash paid for shares - $7.00 per share
|
|
$
|
371.7
|
|
|
|
Acquisition-related transaction costs and change of
control expenses to be paid
upon closing of transaction
|
|
|
30.0
|
|
|
|
|
|
|
|
|
1
|
|
Total cash outflow
|
|
|
401.7
|
|
2
|
|
Fair value of assumed stock options
|
|
|
16.8
|
|
3
|
|
Equity issued for shares - $6.75 per share
|
|
|
358.4
|
|
|
|
|
|
|
|
|
|
|
Preliminary purchase price
|
|
$
|
776.9
|
|
|
|
|
|
|
|
|
|
|
Allocation of preliminary purchase price:
|
|
|
|
|
|
|
Net tangible assets acquired and liabilities assumed
|
|
$
|
181.4
|
|
4
|
|
Identifiable intangible assets
|
|
|
309.0
|
|
|
|
In-process research and development
|
|
|
10.0
|
|
|
|
Current deferred tax assets
|
|
|
18.4
|
|
|
|
Noncurrent deferred tax assets
|
|
|
33.4
|
|
|
|
Current deferred tax liabilities
|
|
|
0.2
|
|
|
|
Noncurrent deferred tax liabilities
|
|
|
(97.2
|
)
|
5
|
|
Goodwill
|
|
|
321.7
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
776.9
|
|
|
|
|
|
|
|
|
(b)
|
|
To adjust work-in-process and finished goods inventories to
their fair values
|
|
$
|
3.0
|
|
(c)
|
|
To eliminate C-CORs deferred costs associated with
deferred revenue:
|
|
|
|
|
|
|
Short-term
|
|
$
|
(9.1
|
)
|
|
|
Long-term
|
|
$
|
(0.3
|
)
|
(d)
|
|
To record the difference between the fair value and historical
carrying value of
C-CORs
property and equipment
|
|
$
|
6.0
|
|
(e)
|
|
To eliminate C-CORs historical goodwill
|
|
$
|
(128.6
|
)
|
(f)
|
|
To eliminate C-CORs historical intangible assets
|
|
$
|
(1.2
|
)
|
(g)
|
|
To recognize deferred tax assets and liabilities for the tax
consequences of deductible and taxable temporary differences
between the assigned values and the tax basis of identifiable
assets and liabilities, which includes recognizing certain
C-COR
deferred tax assets previously subject to a valuation allowance:
|
|
|
|
|
|
|
Current deferred tax assets
|
|
$
|
18.4
|
|
|
|
Noncurrent deferred income tax assets
|
|
$
|
33.4
|
|
|
|
Current deferred income tax liabilities
|
|
$
|
(0.2
|
)
|
|
|
Noncurrent deferred income tax liabilities
|
|
$
|
97.2
|
|
(h)
|
|
To record the difference between the fair value, representing
the legal performance obligations under C-CORs existing
contracts, and historical carrying value of
C-CORs
deferred revenue:
|
|
|
|
|
|
|
Short-term
|
|
$
|
(22.8
|
)
|
|
|
Long-term
|
|
$
|
(1.5
|
)
|
(i)
|
|
To eliminate convertible debt upon conversion, assuming the
holder converts prior to the closing of the merger
|
|
$
|
(35.0
|
)
|
(j)
|
|
To expense in-process research and development
|
|
$
|
(10.0
|
)
|
(k)
|
|
To eliminate C-CORs historical stockholders equity
|
|
$
|
(252.3
|
)
|
(l)
|
|
For purposes of these pro forma financial statements, the vested
ARRIS stock options issued as a result of the merger have a fair
value in excess of the exchanged C-COR stock options of
approximately $1.8 million, which is immediately recognized
as compensation expense, for purposes of these pro forma
financial statements, in the total stockholders equity
line of the Unaudited Pro Forma Combined Balance Sheet. (This
charge is not reflected in the Unaudited Pro Forma Combined
Statement of Operations.) The following is a summary of the
effect on stockholders equity:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional
paid-in-capital-purchase price allocation
|
|
$
|
1.8
|
|
|
|
Retained earnings
compensation expense
|
|
|
(1.8
|
)
|
|
|
|
|
|
|
|
|
|
Net
effect on total stockholders equity
|
|
$
|
|
|
|
|
|
|
|
|
|
P-5
The following pro forma adjustments have been made in the
Unaudited Pro Forma Combined Statements of Operations presented
above (in millions):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve months
|
|
|
Nine months
|
|
|
|
|
|
ended
|
|
|
ended
|
|
|
|
|
|
12/31/2006
|
|
|
9/30/2007
|
|
|
(m)
|
|
Adjustment to eliminate the historical amortization related to
C-CORs
intangibles
|
|
$
|
(3.4
|
)
|
|
$
|
(2.2
|
)
|
(n)
|
|
Amortization expense of purchased intangible assets
|
|
$
|
59.0
|
|
|
$
|
44.3
|
|
(o)
|
|
To record additional depreciation expense on property and
equipment as a result of the adjustment to fair value:
|
|
|
|
|
|
|
|
|
|
|
SG&A
|
|
$
|
1.0
|
|
|
$
|
0.8
|
|
|
|
R&D
|
|
$
|
1.0
|
|
|
$
|
0.8
|
|
(p)
|
|
To adjust interest expense associated with C-CORs
convertible debt on the assumption that the convertible debt was
converted on January 1, 2006
|
|
$
|
(1.2
|
)
|
|
$
|
(0.9
|
)
|
(q)
|
|
ARRIS issued convertible debt in November 2006 for working
capital and acquisition purposes. For purposes of the pro forma
combined financial statement for the year ended December 31,
2006, it is assumed that ARRIS had issued its convertible debt
on January 1, 2006. Accordingly, pro forma interest
expense was calculated based on a 2% coupon rate assuming that
the ARRIS convertible debt was outstanding for each of the
periods presented.
|
|
$
|
5.1
|
|
|
$
|
|
|
(r)
|
|
To reduce interest income to reflect cash used for funding the
merger (interest earned at an average rate of 4.5%)
|
|
$
|
11.2
|
|
|
$
|
13.6
|
|
(s)
|
|
To adjust the tax provision to reflect the effect of the pro
forma adjustments at the statutory tax rate of 38.5%
|
|
$
|
(28.0
|
)
|
|
$
|
(21.7
|
)
|
(t)
|
|
To reflect an income tax provision for C-COR at the statutory
tax rate for historical pretax earnings
|
|
$
|
1.9
|
|
|
$
|
7.4
|
|
P-6
Reclassifications
The following reclassifications have been made in the
presentation of the historical financial statements to conform
to the current presentation:
|
|
|
|
|
ARRIS deferred revenue of $6.3 million was
reclassified from other accrued liabilities to deferred revenue.
|
|
|
|
|
|
ARRIS prepaid assets of $3.6 million was reclassified
from prepaid assets to other current assets.
|
|
|
|
|
|
Both ARRIS and C-CORs stockholders equity
individual accounts are included in total stockholders
equity.
|
|
|
|
Certain subtotals may differ from subtotals in the financial
statements previously filed as a result of rounding.
|
Preliminary
Purchase Price Allocation
The total preliminary purchase price of the transaction and
allocation of the preliminary purchase price as of
September 30, 2007 is as follows (in millions):
|
|
|
|
|
Total purchase consideration cash and equity
|
|
$
|
730.1
|
|
Fair value of assumed stock options
|
|
|
16.8
|
|
Acquisition-related transaction costs and change of control
expenses
|
|
|
30.0
|
|
|
|
|
|
|
Total preliminary purchase price
|
|
$
|
776.9
|
|
|
|
|
|
|
Net tangible assets
|
|
$
|
181.4
|
|
Identifiable intangible assets:
|
|
|
|
|
Existing technology
|
|
|
60.0
|
|
Order backlog
|
|
|
6.0
|
|
Customer relationships
|
|
|
240.0
|
|
Non-compete agreements
|
|
|
3.0
|
|
In-process research & development
|
|
|
10.0
|
|
Current deferred tax assets
|
|
|
18.4
|
|
Noncurrent deferred tax assets
|
|
|
33.4
|
|
Current deferred tax liabilities
|
|
|
0.2
|
|
Noncurrent deferred tax liabilities
|
|
|
(97.2
|
)
|
Goodwill
|
|
|
321.7
|
|
|
|
|
|
|
Total preliminary purchase price
|
|
$
|
776.9
|
|
|
|
|
|
|
Fair
Value of Assumed Stock Options
The fair value of the assumed options was determined using a
Black-Scholes Merton model. The use of this model and the method
of determining the variables were consistent with ARRIS
valuation of stock options in accordance with Statement of
Financial Accounting Standards No. 123R, Share-Based
Payment. For purposes of the preliminary purchase price
calculation, the assumed ARRIS stock price was based on the
average closing price of the stock over a
five-day
period beginning two business days prior to the announcement of
the merger and ending two business days after the announcement.
The fair value of the ARRIS stock options issued has a fair
value in excess of the exchanged C-COR stock options of
approximately $1.8 million. This excess is recognized as
compensation expense at the acquisition date for purposes of
these pro forma financial statements, as the options will become
fully vested. Additionally, the number of stock options included
in the preliminary purchase price calculation is based upon the
stock options outstanding as of September 30, 2007. ARRIS
does not expect this number to change materially before the
closing of the merger. The number of stock options ultimately
issued will be dependent upon the final calculation of the
P-7
exchange ratio formula per the merger agreement, and
determination of the measurement date in accordance with
Emerging Issues Task Force Issue
No. 99-12,
Determination of the Measurement Date for the Market Price of
Acquirer Securities Issued in a Purchase Business
Combination.
Fair
Value of Assets and Liabilities
Under the purchase method of accounting, the purchase price as
shown in the table above is allocated to the tangible and
identifiable intangible assets acquired and liabilities assumed
based on their estimated fair values. The purchase price was
allocated using the information currently available, and ARRIS
may adjust the preliminary purchase price allocation after
obtaining more information regarding, among other things, asset
valuations, liabilities assumed, and revisions of preliminary
estimates. The purchase price allocation will be finalized in
fiscal 2008. The excess of the total purchase price over the net
of the amounts assigned to tangible and identifiable intangible
assets acquired and liabilities assumed is recognized as
goodwill.
The unaudited pro forma combined financial statements are based
on the estimates and assumptions set forth in the notes to such
statements, which are preliminary and have been made solely for
the purpose of developing such pro forma information. ARRIS
expects that the existing technology will have an amortization
period ranging from one to eight years. At this time, the work
needed to provide the basis for estimating these fair values and
amortization periods has not been completed. Below is a table
which details the preliminary fair market value and useful life
of each intangible asset:
Intangible
Assets
|
|
|
|
|
|
|
|
|
|
|
Preliminary Fair
|
|
|
Preliminary
|
|
|
|
Market Value
|
|
|
Estimated
|
|
|
|
(in millions)
|
|
|
Useful Life
|
|
|
Existing technology
|
|
$
|
60.0
|
|
|
|
3 years
|
|
Customer relationships
|
|
|
240.0
|
|
|
|
8 years
|
|
Non-compete agreements
|
|
|
3.0
|
|
|
|
1 year
|
|
Order backlog
|
|
|
6.0
|
|
|
|
1 year
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
309.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Existing
Technology
Approximately $60.0 million, or 19% of the identified
intangible assets, has been preliminarily allocated to existing
technology with an estimated useful life of 3 years.
Approximately 78% of C-CORs sales in its fiscal 2007
related to Access & Transport products and services,
with the other 22% relating to the OSS and On-Demand
businesses. Conversely, approximately 45% and 55% of
research and development expense related to the
Access & Transport, OSS and On-Demand business,
respectively. ARRIS believes that it will be able to leverage
the technologies in product solutions that encompass all of
C-CORs products and ARRIS products. As a result,
relatively less value has been placed on the existing
technologies of C-CORs standalone products and more on the
combined solutions which is included in goodwill.
Customer
Relationships
Approximately $240.0 million, or 78% of the identified
intangible assets, has been preliminarily allocated to customer
relationships with an estimated useful life of 8 years. Key
factors leading to the allocation include:
|
|
|
|
|
The cable industry in general is dominated by several large
MSOs, resulting in customer concentration. In particular,
C-COR had a
significant portion of its sales to Time Warner (approximately
31% in
C-CORs
fiscal year 2007).
C-CORs
position with Time Warner is complementary to ARRIS, creating
synergistic value.
|
P-8
|
|
|
|
|
The Access & Transport products are fairly sensitive
to existing footprints, or installed base. As MSOs upgrade their
networks, for example to 1 GHZ, the incumbent vendors have a
significant advantage. As a result, the existing relationships
have a proportionately higher value and larger useful life.
|
In-Process
Research & Development
ARRIS estimates that $10.0 million of the purchase price
represents in-process research and development (in-process
R&D) primarily related to research and development
projects of C-COR which had not yet reached technological
feasibility, and if unsuccessful, have no alternative future use.
The project activities that fell within the in-process R&D
valuation include: Headend Optics, Outside Plant, Operational
Support Systems, On Demand, and eQAM.
Headend Optics: Activities in this area are
primarily focused around two areas. The first is the continued
extension of optical technology (e.g. Course Wave
Division Multiplexing (CWDM)), and the second area is
support of natural extensions of existing platform system
requirements.
Outside Plant: Activities in this area are
primarily focused around two areas. The first is the outside
plant component of optical technology (e.g. CWDM). This outside
plant component (optical node) converts voice, video and data
applications from an optical format (fiber optic) to an
electrical format (coaxial cable) for delivery to the
application subscriber and in turn takes returning subscriber
data from an electrical format to an optical format. The second
area is the development of radio frequency (RF) amplifiers that
maintain the amplitude and integrity of the voice, video and
data signals in domestic and international communication
networks.
Operational Support Systems (OSS): Activities
in this area are primarily focused around two areas; Service
Assurance and Work Assurance. The Service Assurance platforms
assist the Multiple System Operators (MSO) in the monitoring of
voice, video and data services and the prioritization of
activities to maintain and restore those services. The Work
Assurance platform assists the MSO in providing optimal workflow
for their technical field personnel, i.e. installers, service
technicians, maintenance technicians, etc.
On Demand: Activities in this area are
primarily focused around two areas. The first is a system for
the management and provision of real-time, on-demand, video
systems. The second area is focused on systems that manage and
insert advertisements into video programming on a real-time
basis.
eQAM (quadrature amplitude modulated): Activities in this
area are primarily focused around development of system
components necessary for the translation of digitally formatted
(gigabit ethernet) information into RF formatted
(QAM quadrature amplitude modulated) information
closer to the edge of the cable distribution networks which is
then a compatible format for consumer premise devices.
ARRIS methodology for allocating the purchase price for
acquisitions to in-process R&D is determined through
established valuation techniques in the high-technology
communications equipment industry. Due to its non-recurring
nature, the in-process R&D expense has been excluded from
the Unaudited Pro Forma Combined Statements of Operations, but
it is included as a reduction to shareholders equity in
the Unaudited Pro Forma Combined Balance Sheet.
Goodwill
Goodwill of $321.7 million represents the excess of the
total purchase price over the net of the amounts assigned to
tangible and identifiable intangible assets acquired and
liabilities assumed from C-COR. As described above, ARRIS
believes it will be able to create significant value from
combining the organizations, technologies, and products that
create the ability to provide bundled solution sales. As a
result, approximately 41% of the purchase price has
preliminarily been assigned to goodwill. ARRIS performs a
goodwill impairment test on an annual basis and between annual
tests in certain circumstances.
P-9
Pro Forma
Combined Net Income per Share
Diluted shares outstanding include the dilutive effect of
in-the-money options which is calculated based on the average
share price for each fiscal period using the treasury stock
method. Under the treasury stock method, the amount the employee
must pay for exercising stock options, the amount of
compensation cost for future service that ARRIS has not yet
recognized, and the amount of tax benefits that would be
recorded in additional paid-in capital when the award becomes
deductible are assumed to be used to repurchase shares. Based
upon the assumption that C-COR stock options would have been
converted into ARRIS stock options as of January 1, 2006,
the pro forma diluted shares outstanding increased by
approximately 0.9 million and 1.2 million for the year
ended December 31, 2006 and the nine months ended
September 30, 2007, respectively.
Certain
Impact on Future Financial Results
The pro forma combined balance sheet is as of September 30,
2007. The impact of adjusting certain assets and liabilities to
fair market value will have an impact on the results of
operations in future periods. A similar impact does not exist in
the pro forma combined statement of operations since the assumed
opening balance sheet is recorded at historical cost, not fair
market value. Specifically, the change in fair market value of
the following items is expected to impact the results of
operations following the close of the transaction:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At September 30, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
C-COR
|
|
|
C-COR
|
|
|
|
|
|
Impact on Future Results
|
|
|
|
Historic
|
|
|
Fair Market
|
|
|
|
|
|
|
|
|
Gross
|
|
|
Operating
|
|
|
|
Value
|
|
|
Value
|
|
|
Change
|
|
|
Sales
|
|
|
Margin
|
|
|
Income
|
|
|
Deferred revenue
|
|
$
|
31.5
|
|
|
$
|
7.2
|
|
|
$
|
(24.3
|
)
|
|
$
|
(24.3
|
)
|
|
$
|
(24.3
|
)
|
|
$
|
(24.3
|
)
|
Deferred cost
|
|
|
9.4
|
|
|
|
|
|
|
|
(9.4
|
)
|
|
|
|
|
|
|
9.4
|
|
|
|
9.4
|
|
Inventory and cost of goods sold
|
|
|
23.8
|
|
|
|
26.8
|
|
|
|
3.0
|
|
|
|
|
|
|
|
(3.0
|
)
|
|
|
(3.0
|
)
|
Property, plant and equipment and depreciation
|
|
|
19.6
|
|
|
|
25.6
|
|
|
|
6.0
|
|
|
|
|
|
|
|
|
|
|
|
(6.0
|
)
|
P-10
Agreement
and Plan of Merger
by and among
ARRIS Group, Inc.,
C-COR Incorporated
and
Air Merger Subsidiary, Inc.
TABLE OF
CONTENTS
|
|
|
|
|
ARTICLE I THE MERGER
|
|
|
A-1
|
|
Section 1.1
The Merger
|
|
|
A-1
|
|
Section 1.2
Effective Time
|
|
|
A-1
|
|
Section 1.3
Effect of the Merger
|
|
|
A-1
|
|
Section 1.4
Subsequent Actions
|
|
|
A-2
|
|
Section 1.5
Certificate of Incorporation; Bylaws; Directors and Officers
of Surviving Corporation
|
|
|
A-2
|
|
|
|
|
|
|
ARTICLE II EFFECT ON STOCK OF THE SURVIVING CORPORATION
AND THE MERGED CORPORATION
|
|
|
A-2
|
|
Section 2.1
Conversion of Securities
|
|
|
A-2
|
|
Section 2.2
Conversion of Shares
|
|
|
A-2
|
|
Section 2.3
Allocation of Merger Consideration
|
|
|
A-3
|
|
Section 2.4
Cancellation of Treasury Shares
|
|
|
A-4
|
|
Section 2.5
Election of Merger Consideration and Exchange of Shares
|
|
|
A-4
|
|
Section 2.6
Transfer Books
|
|
|
A-6
|
|
Section 2.7
No Fractional Share Certificates
|
|
|
A-6
|
|
Section 2.8
Options to Purchase C-COR Common Stock
|
|
|
A-6
|
|
Section 2.9
Restricted Stock
|
|
|
A-7
|
|
Section 2.10
Certain Adjustments
|
|
|
A-7
|
|
Section 2.11
Employee Stock Purchase Plans
|
|
|
A-8
|
|
|
|
|
|
|
ARTICLE III CERTAIN CORPORATE MATTERS
|
|
|
A-8
|
|
Section 3.1
Directors of ARRIS
|
|
|
A-8
|
|
|
|
|
|
|
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF C-COR
|
|
|
A-8
|
|
Section 4.1
Organization and Qualification; Subsidiaries
|
|
|
A-8
|
|
Section 4.2
Articles of Incorporation and Bylaws
|
|
|
A-8
|
|
Section 4.3
Capitalization
|
|
|
A-9
|
|
Section 4.4
Authority Relative to this Agreement
|
|
|
A-9
|
|
Section 4.5
No Conflict; Required Filings and Consents
|
|
|
A-9
|
|
Section 4.6
Compliance, Permits
|
|
|
A-10
|
|
Section 4.7
SEC Filings; Financial Statements
|
|
|
A-10
|
|
Section 4.8
Absence of Certain Changes or Events
|
|
|
A-11
|
|
Section 4.9
No Undisclosed Liabilities
|
|
|
A-12
|
|
Section 4.10
Absence of Litigation
|
|
|
A-12
|
|
Section 4.11
Joint Proxy Statement
|
|
|
A-12
|
|
Section 4.12
Employee Benefit Plans, Employment Agreements
|
|
|
A-12
|
|
Section 4.13
Labor Matters
|
|
|
A-14
|
|
Section 4.14
Restrictions on Business Activities
|
|
|
A-14
|
|
Section 4.15
Title to Property
|
|
|
A-14
|
|
Section 4.16
Customers
|
|
|
A-14
|
|
Section 4.17
Supplier Relations
|
|
|
A-14
|
|
Section 4.18
Inventory
|
|
|
A-14
|
|
Section 4.19
Taxes
|
|
|
A-14
|
|
Section 4.20
Environmental Matters
|
|
|
A-16
|
|
A-i
|
|
|
|
|
Section 4.21
Intellectual Property
|
|
|
A-16
|
|
Section 4.22
Product Warranty and Product Liability
|
|
|
A-21
|
|
Section 4.23
Insurance
|
|
|
A-21
|
|
Section 4.24
Import and Export Control Laws
|
|
|
A-21
|
|
Section 4.25
Foreign Corrupt Practices Act
|
|
|
A-22
|
|
Section 4.26
Board Recommendation; Required Vote
|
|
|
A-22
|
|
Section 4.27
Opinion of Financial Advisor
|
|
|
A-22
|
|
Section 4.28
Brokers
|
|
|
A-22
|
|
Section 4.29
Certain of Pennsylvania Law Not Applicable
|
|
|
A-22
|
|
Section 4.30
C-COR Rights Plan
|
|
|
A-23
|
|
|
|
|
|
|
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ARRIS AND
THE MERGER SUBSIDIARY
|
|
|
A-23
|
|
Section 5.1
Organization and Qualification; Subsidiaries
|
|
|
A-23
|
|
Section 5.2
Certificate of Incorporation and By-laws
|
|
|
A-23
|
|
Section 5.3
Capitalization
|
|
|
A-24
|
|
Section 5.4
Authority Relative to this Agreement
|
|
|
A-24
|
|
Section 5.5
No Conflict, Required Filings and Consents
|
|
|
A-24
|
|
Section 5.6
Compliance, Permits
|
|
|
A-25
|
|
Section 5.7
SEC Filings; Financial Statements
|
|
|
A-25
|
|
Section 5.8
Absence of Certain Changes or Events
|
|
|
A-26
|
|
Section 5.9
No Undisclosed Liabilities
|
|
|
A-26
|
|
Section 5.10
Absence of Litigation
|
|
|
A-27
|
|
Section 5.11
Joint Proxy Statement
|
|
|
A-27
|
|
Section 5.12
Employee Benefit Plans, Employment Agreements
|
|
|
A-27
|
|
Section 5.13
Taxes
|
|
|
A-27
|
|
Section 5.14
Environmental Matters
|
|
|
A-28
|
|
Section 5.15
ARRIS Customers
|
|
|
A-28
|
|
Section 5.16
ARRIS Intellectual Property
|
|
|
A-28
|
|
Section 5.17
Foreign Corrupt Practices Act
|
|
|
A-30
|
|
Section 5.18
Opinion of Financial Advisor
|
|
|
A-30
|
|
Section 5.19
Brokers
|
|
|
A-30
|
|
Section 5.20
Financial Capability
|
|
|
A-30
|
|
Section 5.21
Board Recommendation; Required Vote
|
|
|
A-30
|
|
Section 5.22
ARRIS Rights Plan
|
|
|
A-31
|
|
|
|
|
|
|
ARTICLE VI CONDUCT OF BUSINESS PENDING THE MERGER
|
|
|
A-31
|
|
Section 6.1
Conduct of Business by C-COR Pending the Merger
|
|
|
A-31
|
|
Section 6.2
No Solicitation by C-COR
|
|
|
A-33
|
|
Section 6.3
Conduct of Business by ARRIS Pending the Merger
|
|
|
A-36
|
|
Section 6.4
Recommendation of the Board of Directors of ARRIS
|
|
|
A-36
|
|
A-ii
|
|
|
|
|
ARTICLE VII ADDITIONAL AGREEMENTS
|
|
|
A-37
|
|
Section 7.1
Joint Proxy Statement and the Registration Statement
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A-37
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Section 7.2
C-COR and ARRIS Stockholders Meetings and Consummation
of the Merger
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A-37
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Section 7.3
Additional Agreements
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A-37
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Section 7.4
Notification of Certain Matters
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A-38
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Section 7.5
Access to Information
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A-38
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Section 7.6
Public Announcements
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A-38
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Section 7.7
Cooperation
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A-38
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Section 7.8
Indemnification, Directors, and Officers Insurance
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A-39
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Section 7.9
Employee Benefit Plans
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A-40
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Section 7.10
Stock Exchange Listing
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A-41
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Section 7.11
No Shelf Registration
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A-41
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Section 7.12
Affiliates
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A-41
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Section 7.13
Change in Control, Severance and Employment Agreements
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A-41
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Section 7.14
Tax-Free Reorganization
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A-41
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Section 7.15
Section 16 Matters
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A-42
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Section 7.16
C-COR Notes
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A-42
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Section 7.17
C-COR Incentive Plan
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A-42
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Section 7.18
C-COR Intellectual Property
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A-42
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Section 7.19
Change of Control Notifications
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A-42
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ARTICLE VIII CONDITIONS TO THE MERGER
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A-42
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Section 8.1
Conditions to Obligations of Each Party to Effect the
Merger
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A-42
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Section 8.2
Additional Conditions to Obligations of C-COR
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A-43
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Section 8.3
Additional Conditions to Obligations of ARRIS
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A-44
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ARTICLE IX TERMINATION, AMENDMENT AND WAIVER
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A-45
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Section 9.1
Termination by Mutual Consent
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A-45
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Section 9.2
Termination by Either ARRIS or C-COR
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A-45
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Section 9.3
Termination by C-COR
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A-45
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Section 9.4
Termination by ARRIS
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A-46
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Section 9.5
Effect of Termination and Abandonment
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A-46
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ARTICLE X GENERAL PROVISIONS
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A-49
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Section 10.1
Non-Survival of Representations, Warranties and Agreements
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A-49
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Section 10.2
Notices
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A-49
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Section 10.3
Expenses
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A-49
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Section 10.4
Certain Definitions
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A-50
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Section 10.5
Specific Performance
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A-51
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Section 10.6
Headings
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A-51
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Section 10.7
Severability
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A-51
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Section 10.8
Entire Agreement; No Third-Party Beneficiaries
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A-51
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Section 10.9
Assignment
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A-51
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Section 10.10
Governing Law; Jurisdiction and Venue
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A-51
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Section 10.11
Counterparts
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A-51
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A-iii
AGREEMENT
AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of September 23,
2007 (this Agreement), among C-COR
INCORPORATED, a Pennsylvania corporation
(C-COR or the Company),
ARRIS GROUP, INC., a Delaware corporation
(ARRIS), and AIR MERGER SUBSIDIARY, INC., a
Delaware corporation and wholly owned subsidiary of ARRIS (the
Merger Subsidiary). C-COR, ARRIS, and the
Merger Subsidiary are herein referred to collectively as the
Parties and each individually as a
Party.
W I T N E
S S E T H
WHEREAS, the Boards of Directors of C-COR, ARRIS and the Merger
Subsidiary have determined that it is in the best interests of
their respective stockholders that C-COR, ARRIS and the Merger
Subsidiary enter into a business combination under which C-COR
will merge with and into the Merger Subsidiary (the
Merger) and, in connection therewith, to make
certain representations, warranties and agreements in connection
with the Merger;
WHEREAS, the Boards of Directors of C-COR, ARRIS and the Merger
Subsidiary have determined that the Merger and the other
transactions contemplated hereby are consistent with, and in
furtherance of, their respective business strategies and goals
and have each adopted and approved this Agreement and the Merger
upon the terms and conditions set forth herein; and
WHEREAS, for federal income tax purposes, it is intended that
the Merger shall constitute a tax-free reorganization under
Section 368 of the Internal Revenue Code of 1986, as
amended and the Treasury regulations promulgated thereunder (the
Code);
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, the receipt and
sufficiency of which are hereby acknowledged, and intending to
be legally bound hereby, the parties hereto hereby agree as
follows:
ARTICLE I
THE MERGER
Section 1.1
The Merger. At the Effective Time and
subject to and upon the terms and conditions of this Agreement,
the Pennsylvania Business Corporation Law (Pennsylvania
Law) and the Delaware General Corporation Law
(Delaware Law), the Merger shall be
consummated, whereby C-COR shall be merged with and into the
Merger Subsidiary, the separate corporate existence of C-COR
shall cease, and the Merger Subsidiary shall continue as the
surviving corporation, which shall be a wholly owned subsidiary
of ARRIS. The Merger Subsidiary as the surviving corporation
after the Merger is herein sometimes referred to as the
Surviving Corporation, and C-COR as the
non-surviving corporation after the Merger is herein sometimes
referred to as the Merged Corporation.
Section 1.2
Effective Time. As promptly as practicable
after the satisfaction or waiver of the conditions set forth in
Article VIII hereof and the consummation of the Closing
referred to in Section 7.2(b) hereof, the Parties shall
cause the Merger to be consummated by filing (i) Articles
of Merger (the Articles of Merger) with the
Department of State of the Commonwealth of Pennsylvania with
respect to the Merger and (ii) a Certificate of Merger (the
Certificate of Merger) with the Secretary of
State of the State of Delaware with respect to the Merger, in
such form as required by, and executed in accordance with, the
relevant provisions of Pennsylvania Law and Delaware Law, as
applicable (the time of such filing being the Effective
Time).
Section 1.3
Effect of the Merger. At the Effective Time,
the effect of the Merger shall be as provided in the applicable
provisions of Pennsylvania Law and Delaware Law. Without
limiting the generality of the foregoing, and subject thereto,
at the Effective Time, all the property, rights, privileges,
powers and franchises of C-COR and the Merger Subsidiary shall
continue with, or vest in, as the case may be, the Merger
Subsidiary as the Surviving Corporation, and all debts,
liabilities and duties of C-COR and the Merger
A-1
Subsidiary shall continue to be, or become, as the case may be,
the debts, liabilities and duties of the Merger Subsidiary as
the Surviving Corporation. As of the Effective Time, the
Surviving Corporation shall be a direct wholly owned subsidiary
of ARRIS.
Section 1.4
Subsequent Actions. If, at any time after the
Effective Time, the Surviving Corporation shall consider or be
advised that any deeds, bills of sale, assignments, assurances
or any other actions or things are necessary or desirable to
continue in, vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or
under any of the rights, properties, privileges, franchises or
assets of either of its constituent corporations acquired or to
be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this
Agreement, the directors and officers of the Surviving
Corporation shall be directed and authorized to execute and
deliver, in the name and on behalf of either of such constituent
corporations, all such deeds, bills of sale, assignments and
assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and
things as may be necessary or desirable to vest, perfect or
confirm any and all right, title and interest in, to and under
such rights, properties, privileges, franchises or assets in the
Surviving Corporation or otherwise to carry out this Agreement.
Section 1.5
Certificate of Incorporation; Bylaws; Directors and Officers
of Surviving Corporation. Unless otherwise agreed
by C-COR and ARRIS before the Effective Time, at the Effective
Time:
(a) the Certificate of Incorporation of the Merger
Subsidiary immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Merger Subsidiary as the
Surviving Corporation from and after the Effective Time, until
thereafter amended as provided by Delaware Law and such
Certificate of Incorporation, except that the name of the Merger
Subsidiary as the Surviving Corporation shall be changed to
C-COR Incorporated;
(b) the Bylaws of the Merger Subsidiary immediately prior
to the Effective Time shall be the Bylaws of the Merger
Subsidiary as the Surviving Corporation from and after the
Effective Time, until thereafter amended as provided by Delaware
Law, the Certificate of Incorporation and such Bylaws; and
(c) the directors of the Merger Subsidiary immediately
prior to the Effective Time shall continue to serve as directors
of the Surviving Corporation, and the officers of C-COR
immediately prior to the Effective Time shall continue to serve
in their respective offices as officers of the Surviving
Corporation from and after the Effective Time, in each case
until their successors are elected or appointed or until their
resignation or removal. If, at the Effective Time, a vacancy
shall exist in any office of the Surviving Corporation, such
vacancy may thereafter be filled in the manner provided by
Delaware Law and the Bylaws of the Merger Subsidiary as the
Surviving Corporation.
ARTICLE II
EFFECT ON
STOCK OF THE SURVIVING
CORPORATION
AND THE MERGED CORPORATION
Section 2.1
Conversion of Securities. The manner and basis
of converting the shares of common stock of the Merged
Corporation at the Effective Time, by virtue of the Merger and
without any action on the part of any of the Parties or the
holder of any of such securities, shall be as hereinafter set
forth in this Article II.
Section 2.2
Conversion of Shares.
(a) Subject to Section 2.3, each share of C-COR Common
Stock (as defined herein) issued and outstanding immediately
before the Effective Time (excluding those held in the treasury
of C-COR and those owned by ARRIS, referred to herein as the
Excluded C-COR Shares) and all rights in
respect thereof, shall at the Effective Time, without any action
on the part of any holder thereof, forthwith cease to exist and
be converted into and become exchangeable, at the election of
the holder thereof: (i) for each share of C-COR Common
Stock with respect to which an election to receive cash has been
effectively made and not revoked or lost pursuant to
Section 2.5 (a Cash Election), the right
to receive in cash from ARRIS, without interest, an
A-2
amount equal to $13.75 (the Cash
Consideration), (collectively, Cash
Election Shares); (ii) for each share of C-COR
Common Stock with respect to which an election to receive ARRIS
Common Stock (as defined herein) has been effectively made and
not revoked or lost pursuant to Section 2.5 (a
Stock Election), the right to receive
from ARRIS a portion of a share of ARRIS Common Stock equal to
0.9642 of a share, subject to adjustment as set forth in
Section 2.2(b) below, (the Exchange
Ratio) of ARRIS Common Stock (the Stock
Consideration), subject to adjustment as provided in
Section 2.2(b) (collectively, the Stock Election
Shares); and (iii) for each share of C-COR Common
Stock other than shares as to which a Cash Election or a Stock
Election has been effectively made and not revoked or lost
pursuant to Section 2.5 (Non-Election
Shares), the right to receive from ARRIS such Stock
Consideration
and/or Cash
Consideration as is determined in accordance with
Section 2.3(b). For purposes of this Agreement, the term
Merger Consideration with respect to a
given share of C-COR Common Stock shall mean either the Cash
Consideration (with respect to a share of C-COR Common Stock
representing the right to receive the Cash Consideration) or the
Stock Consideration (with respect to a share of C-COR Common
Stock representing the right to receive the Stock Consideration).
(b) In the event that the average closing price of the
ARRIS Common Stock on the Nasdaq Global Select Market (as
reported in The Wall Street Journal) for the ten
trading-day
period ending the third trading day prior to the anticipated
Closing Date (the Average Trading Price) is
less than $12.83 (a Decrease Event) then
ARRIS shall increase the amount of the Stock Consideration,
which increase in the Stock Consideration, at ARRIS
election by notice to the Exchange Agent and C-COR, may be paid
as cash or additional shares of ARRIS Common Stock, such that
the value of the aggregate Merger Consideration paid per share
of C-COR Common Stock for all outstanding shares of C-COR Common
Stock (other than Excluded C-COR Shares), calculated using the
Average Trading Price (solely for purposes of determining the
value of the shares of ARRIS Common Stock to be issued as Stock
Consideration), equals $13.08. If the Average Trading Price is
more than $15.69 (an Increase Event), then
ARRIS shall decrease the amount of the Stock Consideration such
that the value of the aggregate Merger Consideration paid per
share of C-COR Common Stock for all outstanding shares of C-COR
Common Stock (other than Excluded C-COR Shares), calculated
using the Average Trading Price (solely for purposes of
determining the value of the shares of ARRIS Common Stock to be
issued as Stock Consideration), equals $14.43. Notwithstanding
the foregoing, in making the adjustments to the Merger
Consideration set forth in this Section 2.2(b),
(i) ARRIS shall not be required to use an Average Trading
Price of less than $11.41 or more than $17.11, and (ii) in
the event of a Decrease Event, ARRIS shall not elect to pay such
increase in cash to the extent that such increase in cash would
result in counsel to
C-COR or
counsel to ARRIS being unable to deliver its opinion
contemplated by Sections 8.2(d) or 8.3(d), respectively.
(c) Commencing immediately after the Effective Time, each
certificate that, immediately prior to the Effective Time,
represented issued and outstanding shares of C-COR Common Stock
(C-COR Shares) shall evidence the right to
receive the Merger Consideration on the basis hereinbefore set
forth, but subject to the limitations set forth in this
Article II.
(d) For all purposes of this Agreement, unless otherwise
specified, all C-COR Shares held by retirement plans of C-COR
subject to the requirements under Section 401(a) of the
Code and all C-COR Shares held in non-qualified plans of C-COR
(the C-COR Retirement Plan Shares)
(i) shall be deemed to be issued and outstanding,
(ii) shall not be deemed to be held in the treasury of
C-COR and (iii) shall be converted into the right to
receive the Merger Consideration in accordance with
Section 2.2(a); provided, however, that all
such C-COR Retirement Plan Shares shall be deemed Non-Election
Shares for purposes of this Article II.
Section 2.3
Allocation of Merger Consideration.
(a) Notwithstanding any other provision contained in this
Agreement and subject to ARRISs rights under
Section 2.3(b) to increase the Stock Consideration by
adding cash instead of ARRIS Common Stock, (i) the number
of shares of C-COR Common Stock to be converted into Stock
Consideration pursuant to Section 2.2(a) (the
Stock Conversion Number) shall be equal to
the product obtained by multiplying (A) the number of
shares of C-COR Common Stock outstanding immediately prior to
the Effective Time by (B) 0.4909 and (ii) all of the
A-3
other shares of C-COR Common Stock outstanding immediately prior
to the Effective Time shall be converted into Cash Consideration
(in case of each of clauses (i) and (ii), excluding the
Excluded C-COR Shares).
(b) As soon as practicable after the Election Deadline (as
defined herein) and in any event no more than five business days
after the Closing Date (or such other date as C-COR and ARRIS
shall agree), ARRIS shall cause the Exchange Agent to effect the
allocation among holders of C-COR Common Stock (other than
Excluded C-COR Shares) of rights to receive the Cash
Consideration and the Stock Consideration as follows:
(i) If the aggregate number of C-COR Shares with respect to
which Stock Elections shall have been made (the Stock
Election Number) exceeds the Stock Conversion Number,
then all Cash Election Shares and all Non-Election Shares of
each holder thereof shall be converted into the right to receive
the Cash Consideration and Stock Election Shares of each holder
thereof will be converted into the right to receive the Stock
Consideration in respect of that number of Stock Election Shares
of such holder equal to the product obtained by multiplying
(A) the number of Stock Election Shares held by such holder
by (B) a fraction, the numerator of which is the Stock
Conversion Number and the denominator of which is the Stock
Election Number, with the remaining number of such holders
Stock Election Shares being converted into the right to receive
the Cash Consideration; and
(ii) If the Stock Election Number is less than the Stock
Conversion Number (the amount by which the Stock Conversion
Number exceeds the Stock Election Number being referred to
herein as the Shortfall Number), then all
Stock Election Shares shall be converted into the right to
receive the Stock Consideration and the Non-Election Shares and
Cash Election Shares shall be treated in the following manner:
(A) if the Shortfall Number is less than or equal to the
number of Non-Election Shares, then all Cash Election Shares
shall be converted into the right to receive the Cash
Consideration and the Non-Election Shares of each holder thereof
shall be converted into the right to receive the Stock
Consideration in respect of that number of Non-Election Shares
equal to the product obtained by multiplying (x) the number
of Non-Election Shares held by such holder by (y) a
fraction, the numerator of which is the Shortfall Number and the
denominator of which is the total number of Non-Election Shares,
with the remaining number of such holders Non-Election
Shares being converted into the right to receive the Cash
Consideration; or (B) if the Shortfall Number exceeds the
number of Non-Election Shares, then all Non-Election Shares
shall be converted into the right to receive the Stock
Consideration and Cash Election Shares of each holder thereof
shall be converted into the right to receive the Stock
Consideration in respect of that number of Cash Election Shares
equal to the product obtained by multiplying (x) the number
of Cash Election Shares held by such holder by (y) a
fraction, the numerator of which is the amount by which the
Shortfall Number exceeds the total number of Non-Election Shares
and the denominator of which is the total number of Cash
Election Shares, with the remaining number of such holders
Cash Election Shares being converted into the right to receive
the Cash Consideration.
Section 2.4
Cancellation of Treasury Shares. Except as
provided in Section 2.2(d), at the Effective Time, each
share of C-COR Common Stock held in the treasury of C-COR or
owned by ARRIS immediately prior to the Effective Time shall be
canceled and retired and no shares of stock or other securities
of ARRIS or the Surviving Corporation shall be issuable, and no
payment or other consideration shall be made, with respect
thereto.
Section 2.5
Election of Merger Consideration and Exchange of
Shares. Each holder of record of
C-COR Common
Stock (other than (i) Excluded C-COR Shares and
(ii) C-COR Retirement Plan Shares) shall have the right,
subject to the limitations set forth in this Article II to
submit an election in accordance with the following procedures:
(a) Each holder may specify in a request made in accordance
with the provisions of this Section 2.5 (herein called an
Election) (i) the number of C-COR Shares
owned by such holder with respect to which such holder desires
to make a Stock Election and (ii) the number of C-COR
Shares owned by such holder with respect to which such holder
desires to make a Cash Election.
(b) Subject to the terms and conditions hereof, at or prior
to the Effective Time, ARRIS and C-COR shall jointly appoint an
exchange agent to effect the exchange of C-COR Shares for the
Merger
A-4
Consideration in accordance with the provisions of this
Article II (the Exchange Agent). Prior
to the Effective Time, ARRIS shall deposit, or cause to be
deposited, with the Exchange Agent cash and certificates
representing ARRIS Common Stock sufficient to pay all amounts
for conversion of C-COR Shares in accordance with the provisions
of Section 2.2 hereof, it being understood that any and all
interest earned on funds deposited with the Exchange Agent shall
be turned over to ARRIS. Commencing immediately after the
Effective Time and until the appointment of the Exchange Agent
shall be terminated, each holder of a certificate or
certificates theretofore representing C-COR Shares may surrender
the same to the Exchange Agent, and, after the appointment of
the Exchange Agent shall be terminated, any such holder may
surrender any such certificate to ARRIS. Each holder shall be
entitled upon such surrender to receive in exchange therefor the
Cash Consideration and a certificate or certificates
representing the number of full shares of the Stock
Consideration into which the C-COR Shares theretofore
represented by the certificate or certificates so surrendered
shall have been converted in accordance with the provisions of
Section 2.2 hereof, together with a cash payment in lieu of
fractional shares, if any, in accordance with Section 2.7
hereof. All such shares of ARRIS Common Stock issued as Stock
Consideration shall be issued at the Effective Time. Until so
surrendered and exchanged, each outstanding certificate that,
prior to the Effective Time, represented issued and outstanding
C-COR Shares shall be for all corporate purposes of ARRIS, other
than the payment of dividends and other distributions, if any,
to evidence the right to receive the Merger Consideration.
Unless and until any such certificate theretofore representing
C-COR Shares is so surrendered, no dividend or other
distribution, if any, payable to the holders of record of ARRIS
Common Stock as of any date subsequent to the Effective Time
shall be paid to the holder of such certificate in respect
thereof. Except as otherwise provided in Section 2.6
hereof, upon the surrender of any such certificate theretofore
representing C-COR Shares, however, the record holder of the
certificate or certificates representing shares of ARRIS Common
Stock issued in exchange therefor shall receive from the
Exchange Agent or from ARRIS, as the case may be, payment of the
amount of dividends and other distributions, if any, that as of
any date subsequent to the Effective Time and until such
surrender shall have become payable with respect to such number
of shares of ARRIS Common Stock (Pre-Surrender
Dividends). No interest shall be payable with respect
to the payment of Pre-Surrender Dividends upon the surrender of
certificates theretofore representing C-COR Shares. After the
appointment of the Exchange Agent shall have been terminated,
any holders of certificates representing C-COR Shares which have
not received payment of Pre-Surrender Dividends shall look only
to ARRIS for payment thereof. Notwithstanding the foregoing
provisions of this Section 2.5(b), neither the Exchange
Agent nor any Party shall be liable to a holder of C-COR Shares
for any Cash Consideration, Stock Consideration, any dividends
or distributions thereon or any cash payment for fractional
shares as contemplated by Section 2.7, delivered to a
public official pursuant to any applicable abandoned property,
escheat or similar law or to a transferee.
(c) ARRIS shall cause the Exchange Agent to mail to the
shareholders of C-COR entitled to vote at the C-COR
Stockholders Meeting (as defined herein), at the time that
the Joint Proxy Statement (as defined herein) is provided to the
stockholders of C-COR, a form reasonably acceptable to C-COR
(the Form of Election) pursuant to which
C-CORs stockholders shall be entitled to exercise their
right to make an Election prior to the Election Deadline (as
defined herein), and shall cause the Exchange Agent to use all
reasonable efforts to make available as promptly as possible a
Form of Election to any stockholder of C-COR who requests such
Form of Election following the initial mailing of the Form of
Election and prior to the Election Deadline. In no event shall
the initial mailing of the Form of Election to C-CORs
stockholders be made less than 20 days prior to the
Election Deadline.
(d) Any Election shall have been made properly only if the
person authorized to receive Elections and to act as Exchange
Agent under this Agreement, shall have received, by
5:00 p.m. New York City time on the date of the
Election Deadline, a Form of Election properly completed and
signed. As used herein, Election Deadline
means 5:00 p.m. New York City time on the date that is
the business day prior to the date of the C-COR Stockholders
Meeting (or at such other date and time as C-COR and ARRIS shall
agree). ARRIS and C-COR shall cooperate to issue a press release
announcing the date of the Election Deadline not more than
fifteen business days before, and at least five business days
prior to, the Election Deadline (and, if C-COR and ARRIS shall
agree to any extension thereof, C-COR and
A-5
ARRIS shall make a public announcement of any such extension as
far as reasonably practicable prior to such new Election
Deadline).
(e) If ARRIS shall determine in its reasonable discretion
that any Election is not properly made with respect to any C-COR
Shares, such Election shall be deemed to be not in effect,
thereafter timely filed. Any stockholder of C-COR may, at any
time prior to the Election Deadline, change his, her or its
Election by written notice received by the Exchange Agent prior
to the Election Deadline accompanied by a properly completed and
signed, revised Form of Election. Any stockholder of C-COR may,
at any time prior to the Election Deadline, revoke his, her or
its Election by written notice received by the Exchange Agent
prior to the Election Deadline.
(f) Each of the Exchange Agent, ARRIS and the Surviving
Corporation will be entitled to deduct and withhold from the
Merger Consideration otherwise payable pursuant to this
Agreement to any holder of shares of C-COR Common Stock such
amounts as it is required to deduct and withhold with respect to
the making of such payment under the Code, or any other
applicable state, local or foreign law related to Taxes. To the
extent that amounts are so withheld by the Surviving Corporation
or ARRIS, as the case may be, such withheld amounts
(i) will be remitted by ARRIS or the Surviving Corporation,
as the case may be, to the applicable governmental entity, and
(ii) will be treated for all purposes of this Agreement as
having been paid to the holder of the share of C-COR Common
Stock in respect of which such deduction and withholding was
made by the Surviving Corporation or ARRIS, as the case may be.
(g) If any certificate formerly representing C-COR Shares
shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the person claiming such certificate
to be lost, stolen or destroyed and, if required by ARRIS, the
posting by such person of a bond, in such reasonable amount as
ARRIS may direct, as indemnity against any claim that may be
made against it with respect to such certificate, the Exchange
Agent shall pay, in exchange for such lost, stolen or destroyed
certificate, the Merger Consideration to be paid in respect of
C-COR Shares represented by such certificate, as contemplated by
this Section 2.5.
Section 2.6
Transfer Books. The stock transfer books of
C-COR shall be closed at the Effective Time and no transfer of
any C-COR Shares will thereafter be recorded on any of such
stock transfer books. In the event of a transfer of ownership of
C-COR Shares that is not registered in the stock transfer
records of C-COR at the Effective Time, cash and a certificate
or certificates representing the number of full shares of ARRIS
Common Stock into which such C-COR Shares shall have been
converted shall be issued to the transferee together with a cash
payment in lieu of fractional shares, if any, in accordance with
Section 2.7 hereof, and a cash payment in the amount of
Pre-Surrender Dividends, if any, in accordance with
Section 2.5(b) hereof, if the certificate or certificates
representing such C-COR Shares is or are surrendered as provided
in Section 2.5 hereof, accompanied by all documents
required to evidence and effect such transfer and by evidence of
payment of any applicable stock transfer tax.
Section 2.7
No Fractional Share
Certificates. Notwithstanding any other provision
of this Agreement, each holder of shares of C-COR Common Stock
exchanged pursuant to the Merger who otherwise would have been
entitled to receive a fraction of a share of ARRIS Common Stock
(after taking into account all certificates delivered by such
holder) shall receive, in lieu thereof, cash (without interest)
in an amount equal to such fractional part of a share of ARRIS
Common Stock multiplied by the Average Trading Price. No such
holder will be entitled to dividends, voting rights, or any
other rights as a stockholder in respect of any fractional
shares.
Section 2.8
Options to Purchase C-COR Common Stock.
(a) At the Effective Time, each option granted by C-COR to
purchase shares of C-COR Common Stock that is outstanding and
unexercised immediately prior to the Effective Time (the
Assumed Equity Awards), whether vested or
unvested, shall be assumed by ARRIS and converted into an option
or warrant to purchase shares of ARRIS Common Stock in such
amount and at such exercise price as provided below and
otherwise having the same terms, conditions and restrictions as
are in effect immediately prior to the Effective Time
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(except to the extent that such terms, conditions and
restrictions may be altered in accordance with their terms as a
result of the transactions contemplated hereby):
(i) the number of shares of ARRIS Common Stock to be
subject to the new option or warrant shall be equal to the
product of (x) the number of shares of C-COR Common Stock
subject to the original option or warrant multiplied by
(y) 0.9642 (the Option Exchange Ratio),
rounded down to the nearest whole share; provided,
however, that (A) in the event of a Decrease Event
under Section 2.2(b), the Option Exchange Ratio shall be
the quotient obtained by dividing $13.08 by the Average Trading
Price, and (B) in the event of an Increase Event under
Section 2.2(b), the Option Exchange Ratio shall be the
quotient obtained by dividing $14.43 by the Average Trading
Price, in the case of either (A) or (B), rounded down to
the nearest whole share; provided, further, that
ARRIS shall not be required to use an Average Trading Price of
less than $11.41 or more than $17.11; and
(ii) the exercise price per share of ARRIS Common Stock
under the new option or warrant shall be equal to the result of
(x) the exercise price per share of the C-COR Common Stock
under the original option or warrant divided by (y) the
applicable Option Exchange Ratio, rounded up to the nearest cent.
(b) For purposes of Section 4(b) of the C-COR Amended
and Restated Incentive Plan (the Incentive
Plan), the provisions of Section 2.8(a)
constitute an adjustment in the number and option price of
shares subject to, and the consideration to be issued upon the
exercise of, outstanding Options (as defined in the Incentive
Plan), as determined appropriate by the Board of Directors of
C-COR, as of the Effective Time, and no further action or
amendment of the Incentive Plan shall be necessary to implement
such adjustment.
(c) The adjustments provided herein shall, to the extent
applicable, be effected in a manner consistent with
Section 409A of the Code so as not to be treated as new
grants or awards or as a change in the form of payment, and with
respect to any options that are incentive stock
options (as defined in Section 422 of the Code) shall
be effected in a manner consistent with Section 424(a) of
the Code.
(d) ARRIS shall take all corporate actions necessary to
reserve for issuance a sufficient number of shares of ARRIS
Common Stock for delivery upon exercise of the Assumed Equity
Awards assumed in accordance with this Section 2.8. Within
ten (10) business days following the Effective Time, ARRIS
shall file a registration statement on
Form S-8
(or any successor form) with respect to ARRIS Common Stock
subject to such Assumed Equity Awards and shall use its
reasonable best efforts to maintain the effectiveness of such
registration statement or registration statements (and maintain
the current status of the prospectus or prospectuses contained
therein) for so long as such Assumed Equity Awards remain
outstanding.
(e) As of the Effective Time, ARRIS shall assume the
obligations and succeed to the rights of C-COR under the
Incentive Plan with respect to the Assumed Equity Awards.
(f) At the Effective Time, each warrant granted by C-COR to
purchase shares of C-COR Common Stock that is outstanding and
unexercised immediately prior to the Effective Time, whether
vested or unvested, shall be canceled and no shares of stock or
other securities of ARRIS or the Surviving Corporation shall be
issuable, and no payment or other consideration shall be made
with respect thereto. C-COR will take all steps reasonably
necessary to notify the holders of such warrants of the
anticipated Effective Time as required by the applicable warrant
agreements.
Section 2.9
Restricted Stock. At the Effective Time, each
share of C-COR Common Stock awarded pursuant to any plan,
arrangement or transaction, and outstanding immediately prior to
the Effective Time shall be treated as fully vested and shall be
exchanged in accordance with Section 2.2 hereof with
respect to such percentage of such award equal to the percentage
of the applicable restriction period for such award that has
elapsed as of the Effective Time.
Section 2.10
Certain Adjustments. If between the date
hereof and the Effective Time, the outstanding shares of C-COR
Common Stock or of ARRIS Common Stock shall be changed into a
different number of shares by reason of any reclassification,
recapitalization,
split-up,
combination or exchange of shares, or any dividend payable in
stock or other securities shall be declared thereon with a
record date within such period, the Exchange Ratio and Option
Exchange Ratio shall be adjusted accordingly to provide to the
holders of
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C-COR Common
Stock and ARRIS Common Stock the same economic effect as
contemplated by this Agreement prior to such reclassification,
recapitalization,
split-up,
combination, exchange or dividend.
Section 2.11
Employee Stock Purchase Plans. C-COR shall
take all actions with respect to the 1992 Stock Purchase Plan
(the 1992 SPP) as are necessary to assure
that (i) the 1992 SPP shall be suspended as soon as
permitted by the terms of the 1992 SPP and (ii) there shall
not be any additional Offering Period (as defined in the 1992
SPP) following the date of this Agreement.
ARTICLE III
CERTAIN
CORPORATE MATTERS
Section 3.1
Directors of ARRIS. As soon as practicable
after the Effective Time, ARRIS shall take such steps as are
reasonably necessary to ensure that a nominee to the Board of
Directors of ARRIS as selected by C-COR (and reasonably
acceptable to ARRIS) is appointed to the Board of Directors of
ARRIS.
ARTICLE IV
REPRESENTATIONS
AND WARRANTIES OF C-COR
C-COR hereby represents and warrants to ARRIS and the Merger
Subsidiary that, except as set forth in the written disclosure
schedule delivered on or prior to the date hereof by C-COR to
ARRIS and the Merger Subsidiary that is arranged in paragraphs
corresponding to the numbered and lettered paragraphs contained
in this Article IV (the C-COR Disclosure
Schedule) that the statements contained in this
Article IV are true and correct. The C-COR Disclosure
Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this
Article IV. Unless otherwise stated therein, if the
disclosure of any paragraph lists an item or information in such
a way as to make its relevance to the disclosure required in
another paragraph reasonably apparent on its face, such
disclosure shall qualify and apply to the other paragraph.
Section 4.1
Organization and Qualification;
Subsidiaries. Each of C-COR and each of its
Subsidiaries (as defined herein) is an entity duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization, and has the requisite
corporate power and authority and is in possession of all
franchises, grants, authorizations, licenses, permits,
easements, consents, certificates, approvals and orders
(Approvals) necessary to own, lease and
operate the properties it purports to own, operate or lease and
to carry on its business as it is now being conducted, except
where the failure to be in good standing or to have such
Approvals would not have a Material Adverse Effect. Each of
C-COR and each of its Subsidiaries is duly qualified or licensed
as a foreign entity to do business, and is in good standing, in
each jurisdiction where the character of its properties owned,
leased or operated by it or the nature of its activities makes
such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good
standing that would not have a Material Adverse Effect. A true
and complete list of all of C-CORs Subsidiaries, together
with the jurisdiction of organization of each Subsidiary and the
percentage of each Subsidiarys outstanding capital stock
or ownership interests owned by C-COR or another Subsidiary, is
set forth in Section 4.1 of the C-COR Disclosure Schedule.
Except as set forth in Section 4.1 of the C-COR Disclosure
Schedule, C-COR does not directly or indirectly own any equity
or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest
in, any corporation, partnership, joint venture or other
business association or entity, with respect to which interest
C-COR or any of its Subsidiaries has invested or is required to
invest $50,000 or more, excluding securities in any publicly
traded company held for investment and comprising less than five
percent of the outstanding stock of such company.
Section 4.2
Articles of Incorporation and Bylaws. C-COR
has heretofore furnished to ARRIS a complete and correct copy of
its Articles of Incorporation and Bylaws as most recently
restated and subsequently amended to date, and has furnished or
made available to ARRIS and the Merger Subsidiary the Articles
of Incorporation and Bylaws (or equivalent organizational
documents) of each of its Subsidiaries (the
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Subsidiary Documents). Such Articles of
Incorporation, Bylaws and Subsidiary Documents are in full force
and effect. Neither C-COR nor any of its Subsidiaries is in
violation of any of the provisions of its Articles of
Incorporation or Bylaws or Subsidiary Documents, except for
immaterial violations of the Subsidiary Documents that may exist.
Section 4.3
Capitalization. The authorized capital stock
of C-COR consists of (i) 100,000,000 shares of C-COR
Common Stock and (ii) 2,000,000 shares of preferred
stock, no par value per share, none of which is issued and
outstanding and none of which is reserved for issuance. As of
September 20, 2007, (i) 50,288,695 shares of
C-COR Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and
3,644,980 shares were held in treasury, (ii) no shares
of C-COR Common Stock were held by Subsidiaries of C-COR,
(iii) 4,216,184 shares of C-COR Common Stock were
reserved for future issuance pursuant to warrants or pursuant to
outstanding stock options or other similar rights granted under
C-COR incentive plans and agreements listed in Section 4.3
of the C-COR Disclosure Schedule
(C-CORs
Stock Option Plans), (iv) 2,838,168 shares
reserved for future issuance upon the conversion of the
3.5% Convertible Senior Unsecured Notes due 2009 (the
C-COR Notes) and (v) 563,853 shares
of C-COR Common Stock were reserved for future issuance under
C-CORs 1992 Stock Purchase Plan. Except as set forth in
Section 4.3 or Section 4.12 of the C-COR Disclosure
Schedule, and other than the C-COR Notes, there are no options,
warrants, convertible securities or other similar rights,
agreements, arrangements or commitments of any character
relating to the issued or unissued capital stock of C-COR or any
of its Subsidiaries or obligating C-COR or any of its
Subsidiaries to issue or sell any shares of capital stock of, or
other equity interests in, C-COR or any of its Subsidiaries. All
shares of C-COR Common Stock subject to issuance as aforesaid,
upon issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly
authorized, validly issued, fully paid and nonassessable. Except
as disclosed in Section 4.3 of the C-COR Disclosure
Schedule, there are no obligations, contingent or otherwise, of
C-COR or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of C-COR Common Stock or the
capital stock of any Subsidiary or to provide funds to or make
any investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity. There are
no preemptive rights with respect to the C-COR Common Stock.
Except as set forth in Sections 4.1 and 4.3 of the C-COR
Disclosure Schedule, all of the outstanding shares of capital
stock of each of C-CORs Subsidiaries are duly authorized,
validly issued, fully paid and nonassessable, and all such
shares are owned by C-COR or another Subsidiary of C-COR free
and clear of all security interests, liens, claims, pledges,
agreements, limitations in C-CORs voting rights, charges
or other encumbrances of any nature whatsoever.
Section 4.4
Authority Relative to this Agreement. C-COR
has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by C-COR and the
consummation by C-COR of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of C-COR
are necessary to authorize this Agreement or to consummate the
transactions so contemplated (other than the adoption of this
Agreement by the holders of at least a majority of the votes
cast at the C-COR Stockholders Meeting by the holders of
all outstanding shares of C-COR Common Stock entitled to vote in
accordance with Pennsylvania Law and C-CORs Articles of
Incorporation and Bylaws). The Board of Directors of C-COR has
determined that the Merger upon the terms and subject to the
conditions of this Agreement is advisable and in the best
interests of C-CORs stockholders. This Agreement has been
duly and validly executed and delivered by
C-COR and,
assuming the due authorization, execution and delivery by ARRIS
and the Merger Subsidiary, as applicable, constitutes a legal,
valid and binding obligation of C-COR enforceable against C-COR
in accordance with its terms.
Section 4.5
No Conflict; Required Filings and Consents.
(a) Section 4.5(a) of the C-COR Disclosure Schedule
includes a list of all agreements to which C-COR or any of its
Subsidiaries is a party or by which any of them is bound that,
as of the date hereof: (i) are required to be filed as
material contracts with the SEC pursuant to the
requirements of the Exchange Act (as defined herein);
(ii) under which the consequences of a default, nonrenewal,
termination or reduction of purchases or sales thereunder could
have a Material Adverse Effect on C-COR; or (iii) pursuant
to which
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payments might be required or acceleration of benefits may be
required upon a change of control of C-COR
(collectively, the Material Contracts).
(b) Except as set forth in Section 4.5(b) of the C-COR
Disclosure Schedule, the execution and delivery of this
Agreement by C-COR does not, and the performance of this
Agreement by C-COR will not, (i) conflict with or violate
the Articles of Incorporation, Bylaws or Subsidiary Documents of
C-COR or any of its Subsidiaries, (ii) conflict with or
violate any law, rule, regulation, order, judgment or decree
applicable to
C-COR or any
of its Subsidiaries or by which its or any of their respective
properties is bound or affected, or (iii) result in any
breach of or constitute a default (or an event that with notice
or lapse of time or both would become a default) under, or
impair C-CORs or any of its Subsidiaries rights or
alter the rights or obligations of any third party under, or
give to others any rights of termination, amendment,
acceleration or cancellation of any Material Contract, or result
in the creation of a lien or encumbrance on any of the
properties or assets of C-COR or any of its Subsidiaries
pursuant to any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument
or obligation to which C-COR or any of its Subsidiaries is a
party or by which C-COR or any of its Subsidiaries or its or any
of their respective properties is bound or affected, except in
such cases for any such conflicts, violations, breaches,
defaults, liens or other occurrences with respect to
(ii) and (iii) above that would not have a Material
Adverse Effect.
(c) Except as set forth in Section 4.5(c) of the C-COR
Disclosure Schedule, the execution and delivery of this
Agreement by C-COR does not, and the performance of this
Agreement by C-COR will not, require any consent, approval,
authorization or permit of, or filing with or notification to,
any governmental or regulatory authority, domestic or foreign,
except (i) for applicable requirements, if any, of the
1933 Act, the Exchange Act, the pre-merger notification
requirements of the
Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (HSR
Act), and the filing of the Articles of Merger and the
Certificate of Merger, and (ii) where the failure to obtain
such consents, approvals, authorizations or permits, or to make
such filings or notifications, would not prevent or delay
consummation of the Merger, or otherwise prevent or delay C-COR
from performing its obligations under this Agreement, or would
not otherwise have a Material Adverse Effect.
Section 4.6
Compliance, Permits.
(a) Except as disclosed in Section 4.6(a) of the C-COR
Disclosure Schedule, neither C-COR nor any of its Subsidiaries
is in conflict with, or in default or violation of, (i) any
law, rule, regulation, order, judgment or decree applicable to
C-COR or any of its Subsidiaries or by which its or any of their
respective properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which C-COR or any of its Subsidiaries is a party or by which
C-COR or any of its Subsidiaries or its or any of their
respective properties is bound or affected, except for any such
conflicts, defaults or violations that would not have a Material
Adverse Effect.
(b) Except as disclosed in Section 4.6(b) of the C-COR
Disclosure Schedule, C-COR and its Subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities
that are material to the operation of the business of C-COR and
its Subsidiaries taken as a whole as it is now being conducted
(collectively, the C-COR Permits), except
where the failure to have such C-COR Permits would not have a
Material Adverse Effect. C-COR and its Subsidiaries are in
compliance with the terms of the C-COR Permits, except where the
failure to so comply would not have a Material Adverse Effect.
Section 4.7
SEC Filings; Financial Statements.
(a) C-COR has filed all forms, reports and documents
required to be filed with the SEC and has made available to
ARRIS (i) its Annual Reports on
Form 10-K
for the fiscal years ended June 24, 2005, June 30,
2006 and June 29, 2007, (ii) all proxy statements
relating to C-CORs meetings of stockholders (whether
annual or special) held since June 25, 2004, (iii) all
other reports or registration statements filed by C-COR with the
Securities and Exchange Commission (the SEC)
since June 25, 2004, and (iv) all amendments and
supplements to all such reports and registration statements
filed by C-COR with the SEC since June 25, 2004
(collectively, the C-COR SEC Reports). Except
as disclosed in Section 4.7(a) of the C-COR Disclosure
Schedule, the C-COR SEC Reports (i) were prepared in all
material respects in accordance with the
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requirements of the 1933 Act (as defined herein) or the
Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a filing
prior to the date of this Agreement, then on the date of such
filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
None of C-CORs Subsidiaries is required to file any forms,
reports or other documents with the SEC.
(b) Except as disclosed in Section 4.7(b) of the C-COR
Disclosure Schedule, each of the consolidated financial
statements (including, in each case, any related notes thereto)
contained in the C-COR SEC Reports was prepared in accordance
with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto), and
each fairly presents in all material respects the consolidated
financial position of C-COR and its Subsidiaries as at the
respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were subject to
normal and recurring year-end adjustments which were not, or are
not expected to be, material in amount.
(c) C-COR has established and maintains disclosure
controls and procedures (as defined in
Rule 13a-15(e)
promulgated under the Exchange Act) that are reasonably designed
to ensure that material information (both financial and
non-financial) relating to C-COR and its Subsidiaries required
to be disclosed by C-COR in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and
forms of the SEC, and that such information is accumulated and
communicated to C-CORs principal executive officer and
principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding
disclosure and to make the certifications of the principal
executive officer and the principal financial officer of C-COR
required by Section 302 of the Sarbanes-Oxley Act of 2002
(Sarbanes-Oxley) with respect to such
reports. For purposes of this Agreement, principal
executive officer and principal financial
officer shall have the meanings given to such terms in
Sarbanes-Oxley.
(d) C-COR has established and maintains a system of
internal control over financial reporting (as defined in
Rule 13a-15(f)
promulgated under the Exchange Act) (internal
controls). Such internal controls are sufficient to
provide reasonable assurance regarding the reliability of
C-CORs financial reporting and the preparation of
C-CORs financial statements for external purposes in
accordance with GAAP (as defined herein). C-COR has disclosed,
based on its most recent evaluation of internal controls prior
to the date hereof, to C-CORs auditors and audit committee
(i) any significant deficiencies and material weaknesses
known to
C-COR in the
design or operation of internal controls which are reasonably
likely to adversely affect in a material respect C-CORs
ability to record, process, summarize and report financial
information and (ii) any material fraud known to C-COR that
involves management or other employees who have a significant
role in internal controls. C-COR has made available to ARRIS a
summary of any such disclosure regarding material weaknesses and
fraud made by management to C-CORs auditors and audit
committee since July 1, 2005. For purposes of this
Agreement, a significant deficiency in controls
means an internal control deficiency that adversely affects an
entitys ability to initiate, authorize, record, process,
or report external financial data reliably in accordance with
GAAP. A significant deficiency may be a single
deficiency or a combination of deficiencies that results in more
than a remote likelihood that a misstatement of the annual or
interim financial statements that is more than inconsequential
will not be prevented or detected. For purposes of this
Agreement, a material weakness in internal controls
means a significant deficiency, or a combination of significant
deficiencies, that results in more than a remote likelihood that
a material misstatement of the annual or interim financial
statements will not be prevented or detected.
Section 4.8
Absence of Certain Changes or Events. Except
as set forth in Section 4.8 of the C-COR Disclosure
Schedule or the C-COR SEC Reports, since June 29, 2007,
C-COR has conducted its business in the ordinary course and
there has not occurred: (i) any Material Adverse Effect;
(ii) any amendments or changes in the Articles of
Incorporation or Bylaws of C-COR; (iii) any damage to,
destruction or loss of any asset of C-COR (whether or not
covered by insurance) that would have a Material Adverse Effect;
(iv) any material change by C-COR in its accounting
methods, principles or practices, except as disclosed in
Section 4.8 of the C-COR Disclosure Schedule; (v) any
material revaluation by C-COR of any of its assets, including,
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without limitation, writing down the value of inventory or
writing off notes or accounts receivable other than in the
ordinary course of business; (vi) any other action or event
that would have required the consent of ARRIS pursuant to
Section 6.1 had such action or event occurred after the
date of this Agreement; or (vii) any sale of a material
amount of property of C-COR or any of its Subsidiaries, except
in the ordinary course of business.
Section 4.9
No Undisclosed Liabilities. Except as is
disclosed in Section 4.9 of the C-COR Disclosure Schedule,
neither C-COR nor any of its Subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise), except liabilities
(a) in the aggregate adequately provided for in
C-CORs audited balance sheet (including any related notes
thereto) as of June 29, 2007 (the 2007 C-COR
Balance Sheet), (b) incurred in the ordinary
course of business and not required under GAAP to be reflected
on the 2007
C-COR
Balance Sheet, (c) incurred since June 29, 2007, in
the ordinary course of business consistent with past practice,
or (d) incurred in connection with this Agreement.
Section 4.10
Absence of Litigation. Except as set forth in
Section 4.10 of the C-COR Disclosure Schedule, there are no
claims, actions, suits or proceedings pending or, to the
knowledge of C-COR, overtly threatened and to the knowledge of
C-COR, there are no investigations pending or threatened against
C-COR or any of its Subsidiaries, or any properties or rights of
C-COR or any of its Subsidiaries, before any court, arbitrator
or administrative, governmental or regulatory authority or body,
domestic or foreign, could reasonably be expected to result in a
liability in excess of $500,000.
Section 4.11
Joint Proxy Statement. None of the information
supplied or to be supplied by or on behalf of C-COR for
inclusion or incorporation by reference in the registration
statement to be filed with the SEC by ARRIS in connection with
the issuance of shares of ARRIS Common Stock in the Merger (the
Registration Statement) will, at the time the
Registration Statement becomes effective under the
1933 Act, contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. None
of the information supplied or to be supplied by or on behalf of
C-COR for inclusion or incorporation by reference in the joint
proxy statement, in definitive form, relating to the meetings of
C-COR and ARRIS stockholders to be held in connection with the
Merger, or in the related proxy and notice of meeting, or
soliciting material used in connection therewith (referred to
herein collectively as the Joint Proxy
Statement) will, at the dates mailed to stockholders
and at the times of the C-COR Stockholders Meeting and the
ARRIS Stockholders Meeting (as defined herein), contain
any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in
order to make the statements therein, in light of the
circumstances under which they are made, not misleading. The
information provided by C-COR for inclusion in the Joint Proxy
Statement (except for information relating solely to ARRIS) will
comply as to form in all material respects with the provisions
of the Exchange Act and the rules and regulations promulgated
thereunder.
Section 4.12
Employee Benefit Plans, Employment Agreements.
(a) Section 4.12(a) of the C-COR Disclosure Schedule
lists all employee pension plans (as defined in
Section 3(2) of the Employee Retirement Income Security Act
of 1974 (ERISA)), all material employee
welfare plans (as defined in Section 3(1) of ERISA) and all
other material bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and
other similar fringe or employee benefit plans, programs or
arrangements, and any material current or former employment,
executive compensation, consulting or severance agreements,
written or otherwise, for the benefit of, or relating to, any
employee of or consultant to C-COR, any trade or business
(whether or not incorporated) which is a member of a controlled
group including C-COR or which is under common control with
C-COR (an ERISA Affiliate) within the meaning
of Section 414 of the Code, or any Subsidiary of C-COR, as
well as each plan with respect to which C-COR or an ERISA
Affiliate could incur liability under Section 4069 (if such
plan has been or were terminated) or Section 4212(c) of
ERISA (collectively the C-COR Employee
Plans). C-COR has made available to ARRIS copies of
(i) each such written C-COR Employee Plan (other than those
referred to in Section 4(b)(4) of ERISA), (ii) the
most recent annual report on Form 5500 series, with
accompanying schedules and attachments, filed with respect to
each C-COR Employee Plan required to make such a filing,
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(iii) the most recent actuarial valuation for each C-COR
Employee Plan subject to Title IV of ERISA, and
(iv) such other documents or information that ARRIS
reasonably requests. For purposes of this Section 4.12(a),
the term material, used with respect to any C-COR
Employee Plan, shall mean that C-COR or an ERISA Affiliate has
incurred or may incur obligations in an annual amount exceeding
$500,000 with respect to such C-COR Employee Plan.
(b) (i) Except as set forth in Section 4.12(b) of
the C-COR Disclosure Schedule, none of the C-COR Employee Plans
promises or provides retiree medical or other retiree welfare
benefits to any person, (ii) none of the C-COR Employee
Plans is a multiemployer plan as such term is
defined in Section 3(37) of ERISA; (iii) there has
been no prohibited transaction, as such term is
defined in Section 406 of ERISA and Section 4975 of
the Code, with respect to any C-COR Employee Plan that could
result in any material liability of C-COR or any of its
subsidiaries; (iv) all C-COR Employee Plans are in
compliance in all material respects with the requirements
prescribed by any and all statutes (including ERISA and the
Code), orders, or governmental rules and regulations currently
in effect with respect thereto (including all applicable
requirements for notification to participants or the Department
of Labor, the Pension Benefit Guaranty Corporation (the
PBGC), Internal Revenue Service (the
IRS) or Secretary of the Treasury), and C-COR
and each of its Subsidiaries have performed all material
obligations required to be performed by them under, are not in
any material respect in default under or violation of, and have
no knowledge of any default or violation by any other party to,
any of the C-COR Employee Plans; (v) each C-COR Employee
Plan that is subject to Section 409A of the Code has been
operated prior to 2008 in material good faith compliance with
temporary and transition guidance issued by the IRS with respect
to Section 409A of the Code, and will be amended within the
time prescribed by law so that payments thereunder will not
result in the imposition of any additional tax as a result of
Section 409A of the Code; (vi) each C-COR Employee
Plan intended to qualify under Section 401(a) of the Code
and each trust intended to qualify under Section 501(a) of
the Code is the subject of a favorable determination letter from
the IRS, and nothing has occurred which may reasonably be
expected to impairs such determination; (vii) all
contributions required to be made to any C-COR Employee Plan
pursuant to Section 412 of the Code, or the terms of C-COR
Employee Plan or any collective bargaining agreement, have been
made on or before their due dates; (viii) with respect to
each C-COR Employee Plan, no reportable event within
the meaning of Section 4043 of ERISA (excluding any such
event for which the 30 day notice requirement has been
waived under the regulations to Section 4043 of ERISA) nor
any event described in Section 4062, 4063 or 4041 of ERISA
has occurred; and (ix) neither C-COR nor any ERISA
Affiliate has incurred, nor reasonably expects to incur, any
liability under Title IV of ERISA (other than liability for
premium payments to the PBGC arising in the ordinary course).
(c) Section 4.12(c) of the C-COR Disclosure Schedule
sets forth a true and complete list of each current or former
employee, officer or director of C-COR or any of its
subsidiaries who holds (i) any option to purchase C-COR
Common Stock as of the date hereof, together with the number of
shares of C-COR Common Stock subject to such option, the option
price of such option (to the extent determined as of the date
hereof), whether such option is intended to qualify as an
incentive stock option within the meaning of Section 422(b)
of the Code (an ISO), and the expiration date
of such option; (ii) any other right, directly or
indirectly, to acquire C-COR Common Stock, together with the
number of shares of C-COR Common Stock subject to such right.
Section 4.12(c) of the C-COR Disclosure Schedule also sets
forth the total number of such ISOs, such nonqualified options
and such other rights. The per share exercise price for each
option to purchase C-COR Common Stock issued by C-COR equaled
the fair market value of one share of C-COR Common Stock.
(d) Section 4.12(d) of the C-COR Disclosure Schedule
sets forth a true and complete list of (i) all employment
agreements with officers of C-COR or any of its Subsidiaries;
(ii) all agreements with consultants who are individuals
obligating C-COR or any of its Subsidiaries to make annual cash
payments in an amount exceeding $200,000; (iii) all
employees of, or consultants to, C-COR or any of its
Subsidiaries who have executed a non-competition agreement with
C-COR or any of its Subsidiaries; (iv) all severance
agreements, programs and policies of C-COR or any of its
Subsidiaries with or relating to its employees, in each case
with outstanding commitments exceeding $100,000, excluding
programs and policies required to be maintained by
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law; and (v) all plans, programs, agreements and other
arrangements of C-COR or any of its Subsidiaries with or
relating to its employees that contain change in control
provisions.
Section 4.13
Labor Matters. Except as set forth in
Section 4.13 of the C-COR Disclosure Schedule,
(i) there are no material controversies pending or, to the
knowledge of C-COR, threatened between C-COR or any of its
Subsidiaries and any of their respective employees;
(ii) neither C-COR nor any of its Subsidiaries is a party
to any collective bargaining agreement or other labor union
contract applicable to persons employed by C-COR or its
Subsidiaries, nor to the knowledge of C-COR, are there any
activities or proceedings by any labor union to organize any
employees; and (iii) to the knowledge of C-COR, there are
not any material strikes, slowdowns, work stoppages, lockouts,
or threats thereof, by or with respect to any employees of
C-COR or any
of its Subsidiaries.
Section 4.14
Restrictions on Business Activities. Except
for this Agreement or as set forth in Section 4.14 of the
C-COR Disclosure Schedule, to the knowledge of C-COR, there is
no material agreement, judgment, injunction, order or decree
binding upon C-COR or any of its Subsidiaries that has or could
reasonably be expected to have the effect of prohibiting or
impairing any material business practice of C-COR or any of its
Subsidiaries, any acquisition of property by C-COR or any of its
Subsidiaries or the conduct of business by C-COR or any of its
Subsidiaries as currently conducted or as proposed to be
conducted by
C-COR.
Section 4.15
Title to Property. Except as set forth in
Section 4.15 of the C-COR Disclosure Schedule, C-COR and
each of its Subsidiaries have good and defensible title to all
of their properties and assets, free and clear of all liens,
charges and encumbrances, except (i) liens for Taxes (as
defined herein) not yet due and payable,
(ii) mechanics, materialmens or similar
statutory liens for amounts not yet due or being contested and
(iii) such liens or other imperfections of title, if any,
as do not materially detract from the value of or interfere with
the present use of the property affected thereby; and, to the
knowledge of C-COR, all leases pursuant to which C-COR or any of
its Subsidiaries lease from others material amounts of real or
personal property are valid and effective in accordance with
their respective terms, and there is not, to the knowledge of
C-COR, under any of such leases, any existing material default
or event of default (or event which with notice or lapse of
time, or both, would constitute a material default).
Section 4.16
Customers. Except as set forth in
Section 4.16 of the C-COR Disclosure Schedule,
C-COR has
not received any notice and has no knowledge to the effect that
any of C-CORs ten largest customers for fiscal year
2007 may terminate or materially alter its business
relations with C-COR, either as a result of the transactions
contemplated by this Agreement or otherwise, except for such
alterations that have not had or are not reasonably expected to
have a Material Adverse Effect.
Section 4.17
Supplier Relations. Except as set forth on
Section 4.17 of the C-COR Disclosure Schedule, C-COR has
not received any notice and has no knowledge to the effect that
any of C-CORs ten largest suppliers for fiscal year
2007 may terminate or materially alter its business
relations with C-COR, either as a result of the transactions
contemplated by this Agreement or otherwise.
Section 4.18
Inventory. The inventory (a) is
sufficient for the operations of C-COR (as conducted on the date
hereof) in the ordinary course consistent with past practice,
(b) consists of items which are good and merchantable
within normal trade tolerances and (c) is of a quality and
quantity presently usable or saleable in the ordinary course of
the business of C-COR (subject to applicable reserves).
Section 4.19
Taxes. For purposes of this Agreement,
Tax or Taxes shall mean
taxes, fees, levies, duties, tariffs, imposts, and governmental
impositions or charges of any kind in the nature of (or similar
to) taxes, payable to any federal, state, local or foreign
taxing authority, including (without limitation) income,
franchise, profits, gross receipts, ad valorem, net worth, value
added, sales, use, service, real or personal property, special
assessments, capital stock, license, payroll, withholding,
employment, social security, workers compensation,
unemployment compensation, utility, severance, production,
excise, stamp, occupation, premiums, windfall profits, transfer
and gains taxes, together with any interest, penalties,
additional taxes and additions to tax imposed with respect
thereto, whether disputed or not and including any obligation to
indemnify or otherwise assume or succeed to the tax liability of
any other person; and Tax Returns shall
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mean returns, reports, and information statements with respect
to Taxes required to be filed with the IRS or any other taxing
authority, domestic or foreign, including, without limitation,
consolidated, combined and unitary tax returns.
(a) Except as set forth in Section 4.19(a) of the
C-COR Disclosure Schedule, each of C-COR and its Subsidiaries
(together the C-COR Entities), including for
this purpose, their branches, has timely filed (taking into
account any extension of time within which to file) with the
appropriate Taxing authorities all material income and other Tax
Returns in all jurisdictions in which Tax Returns are required
to be filed, and such Tax Returns are correct and complete in
all material respects. All Taxes of the C-COR Entities (whether
or not shown on any Tax Return) that have become due or payable
have been fully and timely paid, or proper accruals pursuant to
GAAP have been established in the 2007 C-COR Balance Sheet with
respect thereto (except for Taxes relating to events subsequent
to the date thereof), except to the extent any failure to accrue
or reserve would not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect. There
are no material liens for any Taxes (other than a lien for
current real property or ad valorem Taxes not yet due and
payable) on any of the assets of any of the C-COR Entities.
(b) Except as set forth in Section 4.19(b) of the
C-COR Disclosure Schedule, none of the C-COR Entities has
received in writing from any foreign, federal, state, or local
taxing authority (including jurisdictions where the C-COR
Entities have not filed Tax Returns) any notice of deficiency or
proposed adjustment for any amount of Tax proposed, asserted, or
assessed by any taxing authority against C-COR or any of its
Subsidiaries exceeding the amount reserved on the face of,
rather than in any notes thereto, the 2007 C-COR Balance Sheet.
Section 4.19(b) of the C-COR Disclosure Schedule lists all
federal, state, local, and foreign income Tax Returns that
currently are the subject of audit. C-COR has delivered to ARRIS
correct and complete copies of all federal income Tax Returns
filed since October 15, 2002, and all examination reports,
and statements of deficiencies assessed against or agreed to by
the C-COR Entities. Except as set forth in Section 4.19(b)
of the C-COR Disclosure Schedule, none of the C-COR Entities has
waived any statute of limitations in respect of any Taxes or
agreed to a Tax assessment or deficiency.
(c) Each C-COR Entity has complied in all material respects
with all applicable laws, rules and regulations relating to the
withholding of Taxes and the payment thereof to appropriate
authorities, including Taxes required to have been withheld and
paid in connection with amounts paid or owing to any employee or
independent contractor, and Taxes required to be withheld and
paid pursuant to Sections 1441 and 1442 of the Code or
similar provisions under foreign law.
(d) Except as set forth in Section 4.19(d) of the
C-COR Disclosure Schedule, none of the C-COR Entities is a party
to any Tax allocation or sharing agreement, and none of the
C-COR Entities has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the
common parent of which was C-COR) or has any Tax liability of
any person (other than another C-COR Entity that is a member of
the consolidated federal income Tax group of which C-COR is the
common parent) under Treasury
Regulation Section 1.1502-6
or any similar provision of state, local or foreign law, or as a
transferee or successor, by contract or otherwise.
(e) During the five-year period ending on the date hereof,
none of the C-COR Entities was a distributing corporation or a
controlled corporation in a transaction intended to be governed
by Section 355 of the Code.
(f) Except as set forth in Section 4.19(f) of the
C-COR Disclosure Schedule, none of the C-COR Entities has made
any payments, is obligated to make any payments, or is a party
to any contract that could obligate it to make any payments that
could be disallowed as a deduction under Section 280G or
162(m) of the Code.
(g) None of the C-COR Entities has been a United States
real property holding corporation within the meaning of
Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code.
(h) None of the C-COR Entities has been or will be required
to include any adjustment in taxable income for any Tax period
(or portion thereof) ending after the Closing Date pursuant to
Section 481 of the Code or
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any comparable provision under state or foreign Tax laws as a
result of transactions or events occurring prior to the Closing.
(i) None of the C-COR Entities is or has been a Passive
Foreign Investment Company within the meaning of the Code or the
Treasury Regulations promulgated thereunder.
Schedule 4.19(i) of the C-COR Disclosure Schedule lists
each C-COR Entity that is a Controlled Foreign Corporation
within the meaning of the Code and the Treasury Regulations
promulgated thereunder.
(j) To the knowledge of C-COR, except as set forth in
Section 4.19(j) of the C-COR Disclosure Schedule, the net
operating losses of the C-COR Entities are not subject to any
limitation on their use under the provisions of
Sections 382, 384, or 269 of the Code or any of the
provisions of the Treasury Regulations dealing with the
utilization of net operating losses other than any such
limitations as may arise as a result of the consummation of the
transactions contemplated hereby.
Section 4.20
Environmental Matters. Except as set forth in
Section 4.20 of the C-COR Disclosure Schedule, and except
in those cases, either individually or in the aggregate, that
are not reasonably expected to have a Material Adverse Effect,
C-COR and each of its Subsidiaries (i) are in compliance
with all Environmental Laws (as defined below); (ii) have
obtained all applicable permits, licenses and other
authorizations that are required to be obtained under all
applicable federal, foreign, state or local laws or any
regulation, code, plan, order, decree, judgment, notice or
demand letter issued, entered, promulgated or approved
thereunder relating to pollution or protection of the
environment, including laws relating to emissions, discharges,
releases or threatened releases of pollutants, contaminants, or
Hazardous Materials into ambient air, surface water, ground
water, or land or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or hazardous
or toxic materials or wastes (Environmental
Laws) by C-COR or its Subsidiaries; (iii) are in
compliance with all terms and conditions of such required
permits, licenses and authorizations, and have made all
appropriate filings for issuance or renewal of such permits,
licenses and authorizations; (iv) as of the date hereof,
are not aware of nor have received any notice, claim, demand,
report or other information alleging any past or present
violations of Environmental Laws, or any liabilities arising
under Environmental Laws, against C-COR or any of its
Subsidiaries; (v) have not used any waste disposal site or
otherwise disposed of, transported, or arranged for the
transportation of, any Hazardous Materials to any place or
location, or in violation of any Environmental Laws; and
(vi) have taken all actions necessary under applicable
Environmental Laws to register any products or materials
required to be registered by C-COR or its Subsidiaries (or any
of their respective agents) thereunder.
Section 4.21
Intellectual Property.
(a) Section 4.21(a)-1
of the C-COR Disclosure Schedule sets forth, for the Owned
Intellectual Property (as defined below), a correct and complete
list of all (i) issued Patents (as defined below) and filed
and pending applications for Patents, (ii) registered
Trademarks (as defined below) and Trademarks for which
registrations have been applied for, (iii) domain name
registrations, (iv) mask work registrations and
(v) registered Copyrights (as defined below) and Copyrights
for which registrations have been applied for, indicating for
each of the foregoing (i)-(v), the applicable jurisdiction,
registration number (or application number) and date issued (or
date filed). C-COR and its Subsidiaries exclusively own, free
and clear of all liens, all right, title and interest in the
Owned Intellectual Property except as set forth in
Section 4.21(a)-2
of the C-COR Disclosure Schedule.
(b) All Trademarks, Patents and Copyrights listed in
Section 4.21(a) of the C-COR Disclosure Schedule
(i) are currently in compliance in all material respects
with all applicable legal requirements (including, as
applicable, application, registration and maintenance
requirements, such as the timely post-registration filing of
affidavits of use and incontestability and renewal applications
with respect to Trademarks, and the payment of filing,
examination and annuity and maintenance fees in the United
States, (ii) are, to the knowledge of
C-COR, valid
and enforceable, and (iii) except as set forth in
Section 4.21(b)-1
of the C-COR Disclosure Schedule, are not subject to any
maintenance fees or actions falling due on or before
March 31, 2008. No Trademark listed in Section 4.21(a)
of the C-COR Disclosure Schedule currently is involved in any
opposition or cancellation proceeding and, to the knowledge of
C-COR, no such action has been threatened with respect
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to any of those Trademarks. As of the date hereof, except as set
forth in
Section 4.21(b)-2
of the C-COR Disclosure Schedule, no Patent owned by C-COR or
any of its Subsidiaries currently is involved in any
interference, reissue, re- examination or opposition proceeding
and, to the knowledge of C-COR, no such action has been
threatened with respect to any such Patent.
(c) Section 4.21(c)-1
of the C-COR Disclosure Schedule sets forth a complete and
accurate list of any and all contracts or other written
agreements (excluding license agreements for off-the-shelf
software applications programs having a price of less than
$10,000 per copy, seat, CPU or named user) pursuant to which
C-COR or any of its Subsidiaries has been granted or otherwise
receives from a third party any right to use or distribute any
software (as defined below) (other than the Third Party Embedded
Software (as defined below) and any Software licensed pursuant
to a Limited License (as defined below)).
Section 4.21(c)-2
of the C-COR Disclosure Schedule sets forth a complete and
accurate list of all third party Software that is contained or
embedded in, and necessary for the operation and use of, any
commercially available products of C-COR (Third Party
Embedded Software and, together with the contracts and
agreements listed in
Section 4.21(c)-1
of the C-COR Disclosure Schedule, the Third Party
Software Licenses). C-COR has all of the Third Party
Embedded Software rights materially necessary to manufacture,
distribute, and sell all Software embedded in C-COR products,
provided, that the foregoing shall not be deemed to be a
representation that such Third Party Embedded Software rights do
not infringe the patent rights of any other person, other than
the Third Party Embedded Software developer or provider.
(d) Except for the Third Party Software Licenses,
Section 4.21(d) of the C-COR Disclosure Schedule sets forth
a complete and accurate list of any and all contracts or other
written arrangements pursuant to which
C-COR or any
of its Subsidiaries has been granted or otherwise receives any
right to use, exercise or practice any right under any
Intellectual Property (as defined below) of a third party (the
Third Party IP Licenses and, together with
the Third Party Software Licenses, the Third Party
Licenses). To the knowledge of
C-COR, C-COR
and its Subsidiaries have valid and enforceable rights to use
all of the Intellectual Property covered by the Third Party
Licenses. No royalties, honoraria or other fees are past due and
owing by C-COR or any of its Subsidiaries under the Third Party
Licenses. C-COR has all of the Third Party IP Licenses necessary
to manufacture, distribute, and sell all C-COR products,
provided, that the foregoing shall not be deemed to be a
representation that such rights do not infringe the patent
rights of any other person, other than the Third Party IP
Licenses developer or provider.
(e) Except as set forth on
Section 4.21(e)-1
of the C-COR Disclosure Schedule, the Owned Intellectual
Property and the Intellectual Property covered by the Third
Party Licenses constitute all of the Intellectual Property used
in and, to the knowledge of C-COR, necessary for the operation
of C-CORs business as currently conducted. C-COR and its
Subsidiaries have taken all reasonable steps to protect the
Owned Intellectual Property, including reasonable steps to
prevent and abate any infringement or misappropriation of the
Owned Intellectual Property. To the knowledge of C-COR, except
as set forth on
Section 4.21(e)-2
of the C-COR Disclosure Schedule, no third party has challenged
in writing, to C-COR, C-CORs ownership, use, validity or
enforceability of any of the Owned Intellectual Property since
C-CORs acquisition of such Intellectual Property. Neither
C-COR nor any of its Subsidiaries has licensed or otherwise
authorized any third party to make, have made, sell, copy,
distribute, modify, reverse engineer, or prepare derivatives of
any Owned Intellectual Property (other than Copyrights in C-COR
Software, which is addressed in the last sentence of
Section 4.21(h) below), except pursuant to a written
agreement (including via electronic means).
(f) Except as set forth on
Section 4.21(f)-1
of the C-COR Disclosure Schedule, the conduct of C-CORs
business as currently conducted with respect to the development
of the products, services and platforms set forth on
Section 4.21(f)-2
of the C-COR Disclosure Schedule, to the knowledge of C-COR,
does not infringe upon any Intellectual Property rights of any
third party. Except as set forth on
Section 4.21(f)-3
of the C-COR Disclosure Schedule, to the knowledge of C-COR, no
third party has notified C-COR or any of C-CORs
Subsidiaries in writing that (i) any of such third
partys Intellectual Property rights are infringed by C-COR
or any of its Subsidiaries, or (ii) C-COR or any of its
Subsidiaries requires a license to any of such third
partys Intellectual Property rights in order for C-COR or
its Subsidiaries, as applicable, to be non-infringing, and
neither C-COR nor any of its Subsidiaries has received any
written offer to license (or any other form of written notice
of) any of such third partys Intellectual Property rights.
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(g) To the knowledge of C-COR, except as set forth in
Section 4.21(g)-1
of the C-COR Disclosure Schedule, no third party is
misappropriating, infringing, diluting or violating any Owned
Intellectual Property. Except as set forth on
Section 4.21(g)-2
of the C-COR Disclosure Schedule, no such claims have been
brought or threatened against any third party by or on behalf of
C-COR or any of its Subsidiaries.
(h) Section 4.21(h)-1
of the C-COR Disclosure Schedule contains a complete and
accurate list of all Software that is owned by C-COR or any of
its Subsidiaries and sold, licensed, leased or otherwise
distributed by C-COR or any of its Subsidiaries or authorized
resellers to end user customers of C-CORs or its
Subsidiaries products or services (the C-COR
Software). C-COR Software was developed either by
(i) employees of C-COR or its Subsidiaries within the scope
of their employment who have executed enforceable
confidentiality and assignment of inventions agreements, which
are with or have been assigned to C-COR or any of its
Subsidiaries, or (ii) independent contractors who have
assigned their rights to C-COR or one of its Subsidiaries
pursuant to enforceable written agreements or
(iii) acquired pursuant to an enforceable written agreement
or assignment. Neither C-COR nor any of its Subsidiaries have
licensed or otherwise authorized any third party to copy,
distribute, modify, decompile, or prepare derivatives of any
C-COR Software except pursuant to a written license agreement or
other written arrangement.
(i) Except as set forth on
Section 4.21(i)-1
of the C-COR Disclosure Schedule, all material Trademarks of
C-COR and its Subsidiaries within the Owned Intellectual
Property and currently used in the operation of the business of
C-COR or any of its Subsidiaries have been in continuous use by
C-COR or a Subsidiary of
C-COR, as
applicable, since the date of their initial use in commerce.
Except as set forth on
Section 4.21(i)-2
of the C-COR Disclosure Schedule, to the knowledge of C-COR,
there has been no prior use of any registered Trademarks owned
by C-COR or any of its Subsidiaries or other action taken by any
third party that would confer upon such third party superior
rights in such Trademarks. C-COR has taken reasonable steps to
prevent infringement of the Trademarks referenced in the first
sentence of this subsection (i).
(j) The Copyrights within the Owned Intellectual Property
have been solely (i) created by (A) employees of C-COR
and its Subsidiaries within the scope of their employment who
have executed the confidentiality and assignment of inventions
agreement set forth in
Section 4.21(h)-2
of the C-COR Disclosure Schedule, or (B) independent
contractors who have assigned their rights in such works to
C-COR, either as a work made for hire as defined
under Section 101 of the United States Copyright Act, or
pursuant to enforceable written agreements, or
(ii) acquired pursuant to an enforceable written assignment
from the original author(s) or subsequent assignees. To the
knowledge of C-COR, the works covered by such Copyrights were
not copies of, nor derived from, any work for which C-COR or any
of its Subsidiaries does not own the Copyrights. To the
knowledge of C-COR, no other person has any claim to authorship
or ownership of any part of any of the Copyrights within the
Owned Intellectual Property.
(k) The Patents within the Owned Intellectual Property
relate solely to inventions (i) created by
(A) employees of C-COR and its Subsidiaries within the
scope of their employment who have executed the confidentiality
and assignment of inventions agreement set forth in
Section 4.21(h)-2
of the C-COR Disclosure Schedule, or (B) independent
contractors who have assigned their rights to C-COR pursuant to
enforceable written agreements, or (ii) acquired pursuant
to an enforceable written assignment from the original
inventor(s) or subsequent assignees or pursuant to written
agreements setting forth an obligation of the original investor
to assign their inventions to C-COR. The inventions covered by
such Patents were not copies of any invention for which C-COR or
any of its Subsidiaries does not own the Patent, and no other
person has any claim to inventorship or ownership of any part
thereof.
(l) C-COR and its Subsidiaries have taken reasonable steps
to protect their respective rights in material confidential
information and trade secrets owned by them or disclosed to them
by a third party and used in connection with the conduct of
C-CORs business. Without limiting the foregoing, C-COR and
its Subsidiaries have enforced a policy of requiring each
employee, consultant and contractor to execute proprietary
information, invention assignment and confidentiality
agreements, as appropriate, substantially consistent with
C-CORs standard forms (complete and current copies of
which have been delivered or made available to ARRIS). Except
under valid and binding confidentiality obligations, there has
been no material disclosure by
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C-COR or any of its Subsidiaries to a third party of any
confidential information or trade secrets used in connection
with the conduct of C-CORs business.
(m) C-COR and its Subsidiaries have valid registrations for
each of the domain names set forth in Section 4.21(a) of
the C-COR Disclosure Schedule. The registration of each such
domain name is free and clear of all liens and is in full force
and effect. C-COR has paid all fees required to maintain each
such registration. Neither C-COR nor any of its Subsidiaries has
received written notice of any claim asserted against C-COR or
any of its Subsidiaries adverse to its rights to such domain
names, and, to the knowledge of C-COR, none of C-CORs
registrations or uses of the domain names has been disturbed or
placed on hold.
(n) To the knowledge of C-COR, all C-COR Software is free
from any defect or programming or documentation error, including
bugs, logic errors or failures of such software to operate in
all material respects as described in the related documentation,
and substantially conforms to the specifications of such
software, other than those defects, errors, bugs or failures
that would not have a Material Adverse Effect on C-COR. To the
knowledge of C-COR, all Software licensed from any third party
is free from any material defect or programming or documentation
error, including major bugs, logic errors or failures of such
Software to operate in all material respects as described in the
related documentation, and substantially conforms to the
specifications of such Software. With respect to C-COR Software,
the applications can be compiled from the associated source code
in accordance with the means currently employed by C-COR. Except
for any components of the source code licensed in from third
parties, C-COR has actual and sole possession of the complete
source code of C-COR Software. Except as set forth on
Section 4.21(n) of the C-COR Disclosure Schedule, other
than C-CORs or any of its Subsidiaries delivery of
C-COR source code to third party escrow agents or their
disclosure of such source code to third parties as part of a
software development kit made available by C-COR or any of its
Subsidiaries in the ordinary course of business, no event has
occurred, and to the knowledge of C-COR no circumstance or
condition exists, that (with or without notice or lapse of time)
will, or could reasonably be expected to, result in the
disclosure or delivery to any third party of the source code for
C-COR Software. C-COR Software (as used or distributed by C-COR
or its Subsidiaries) does not contain any back door,
time bomb, Trojan horse,
worm, drop dead device,
virus (as these terms are commonly used in the
computer software industry), or other Software routines or
hardware components intentionally designed to permit
unauthorized access, to disrupt, disable or erase software,
hardware or data, or to perform any other similar type of
unauthorized activities.
(o) Except as set forth in Section 4.21(o) of the
C-COR Disclosure Schedule, none of C-COR Software or any Owned
Intellectual Property are, in whole or in part, subject to the
provision of any open source or other similar type of license
agreement or distribution model that (i) requires the
distribution or making available of the source code for C-COR
Software to the general public, (ii) prohibits or limits
C-COR or any of its Subsidiaries from charging a fee or
receiving consideration in connection with sublicensing or
distributing any C-COR Software, (iii) except as
specifically permitted by law, grants any right to any third
party (other than C-COR and its Subsidiaries) or otherwise
allows any such third party to decompile, disassemble or
otherwise reverse-engineer any C-COR Software, or
(iv) requires the licensing of any C-COR Software to the
general public for the purpose of permitting others to make
derivative works of C-COR Software (any such open source or
other type of license agreement or distribution model described
in clause (i), (ii), (iii) or (iv) above, a
Limited License). By way of clarification,
but not limitation, the term Limited License
includes (A) GNUs General Public License (GPL) or
Lesser/Library GPL (LGPL), (B) the Artistic License (e.g.,
PERL), (C) the Mozilla Public License, (D) the
Netscape Public License, (E) the Sun Community Source
License (SCSL), and (F) the Sun Industry Standards License
(SISL). To the knowledge of C-COR, none of C-COR Software
incorporates, or is distributed with, any Software that is
subject to a Limited License, nor does any C-COR Software
constitute a derivative work of or dynamically link with any
such Software.
(p) Except as set forth on Section 4.21(p) of the
C-COR Disclosure Schedule, no government funding, facilities of
a university, college, or other educational institution or
research center was used in the creation or development of the
Owned Intellectual Property or C-COR Software. To the knowledge
of C-COR, no current or former employee, consultant or
independent contractor who was directly involved in, or who
contributed directly to, the creation or development of any
Owned Intellectual Property or C-COR Software has performed
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services for any governmental entity, a university, college, or
other educational institution, or a research center, during a
period of time during which such employee, consultant or
independent contractor was also performing services used in the
creation or development of the Owned Intellectual Property or
C-COR Software. Neither C-COR nor any of its Subsidiaries are
party to any contract, license or agreement with any
governmental entity that grants to such governmental entity any
right or license with respect to the Owned Intellectual Property
or C-COR Software, other than as granted in the ordinary course
of business pursuant to a non-exclusive license to any C-COR
Software.
(q) For the purposes of this Agreement:
(i) The term Copyrights means
(A) any rights in original works of authorship fixed in any
tangible medium of expression as set forth in the United States
Copyright Act, 17 U.S.C. §101 et. seq., and any rights
in mask works, registered and unregistered, as defined in
17 U.S.C. §901, (B) all registrations and
applications to register the foregoing anywhere in the world,
(C) all foreign counterparts and analogous rights anywhere
in the world, and (D) all rights in and to any of the
foregoing;
(ii) The term Intellectual Property
means any and all (A) Copyrights, Trademarks, and Patents
and all rights to obtain and rights to apply for Patents, and to
register Trademarks and Copyrights, (B) and to the extent
enforceable rights of protection are available, such right in
Software, ideas, innovations, inventions (whether or not
patentable, reduced to practice, or the subject of an
application for Patent), know-how and show-how, trade secrets,
works of authorship, and confidential technical and
non-technical information to the extent protectable under
intellectual property rights anywhere in the world,
(C) moral rights and authors rights, (D) all
rights in mask works and registrations and applications for
registrations thereof (E) all other industrial, proprietary
and intellectual property related rights anywhere in the world,
and all renewals and extensions of any of the foregoing,
regardless of whether or not such rights have been registered
with the appropriate authorities in such jurisdictions in
accordance with the relevant legislation, (F) copies and
tangible embodiments of all the foregoing, in whatever form or
medium, (G) all rights in and to any of the foregoing,
including the right to sue, recover, and retain damages, costs,
and attorneys fees for past and present infringement or
misappropriation of any of the foregoing;
(iii) The term Owned Intellectual
Property means Intellectual Property currently owned
by or subject to an obligation to be assigned to C-COR and its
Subsidiaries;
(iv) The term Patents means (A) all
classes and types of patents (including national and
multinational statutory invention registrations, utility models,
petty patents, design patents and industrial designs) and the
inventions covered thereby and any enhancements or improvements
thereto (including the exclusive right to use, make, have made,
sell, offer to sell and import the inventions),
(B) invention disclosures, provisional patent applications,
patent applications, continuations,
continuations-in-part,
divisionals or substitutes of the original applications upon
which the any of foregoing patent rights are based, (C) any
reexaminations, reissues, renewals or extensions of any of the
foregoing, (D) foreign counterparts (including national and
multinational) of any of the foregoing, and (E) all rights
in and to any of the foregoing;
(v) The term Software means all computer
programs and systems, whether embodied in software, firmware or
otherwise, including, software compilations, software
implementations of algorithms, software tool sets, compilers,
and software models and methodologies (regardless of the stage
of development or completion), all databases and compilations,
and all related documentation, including system documentation,
user manuals, and training materials, all descriptions,
flow-charts and other work product used to design, plan organize
and develop any of the foregoing, and including any and all
forms in which any of the foregoing is embodied (whether in
source code, object code, executable code or human readable
form); and
(vi) The term Trademarks means
(A) all classes and types of trademarks, service marks,
logos, trade dress and trade names, Web addresses and domain
names, and other indicia of commercial source or origin (whether
registered, common law, statutory or otherwise),
(B) registrations and pending applications to register any
of the foregoing including any intent to use applications,
supplemental
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registrations and any renewals or extensions, (C) goodwill
associated with any of the foregoing, (D) foreign
counterparts of any of the foregoing anywhere in the world,
(E) all goodwill associated with any of the foregoing, and
(F) all rights in and to any of the foregoing.
Section 4.22
Product Warranty and Product Liability. C-COR
has delivered to ARRIS true, correct and complete copy of
C-CORs standard warranty or warranties for sales of
products
and/or
services, and except as expressly set forth therein, there are
no warranties, deviations from standard warranties or
commitments or obligations with respect to the return, repair,
replacement or re-performance of products
and/or
services under which C-COR could reasonably be expected to have
any material liability which has not been adequately reserved
for on the financial statements of C-COR. Except as set forth in
Section 4.22 of the C-COR Disclosure Schedule, C-CORs
products and services have not been the subject of any
broad-based (i.e., excluding customary warranty claims with
respect to individual defective products) replacement, field
fix, retrofit, modification or recall campaign costing in excess
of $10,000,000 in the aggregate after July 1, 2004, and no
facts or conditions exist that are reasonably expected to result
in such a recall campaign. All of C-CORs products have
been designed, manufactured and labeled and all of C-CORs
services have been performed so as to meet and comply with all
industry and governmental standards and specifications and all
applicable laws and orders currently in effect in all material
respects, and have received all governmental approvals necessary
to allow their sale and use. All products and services that
C-COR produces or performs under contracts in which C-COR
commits to deliver products or perform services that are
designed, manufactured, labeled
and/or
performed so as to meet and comply with any industry
and/or
governmental standards and specifications or laws or orders
currently in effect have been designed, manufactured, labeled
and/or
performed in a manner that complies with such contractual
requirements in all material respects.
Section 4.23
Insurance. All material fire and casualty,
general liability, business interruption, product liability,
professional liability and sprinkler and water damage insurance
policies maintained by C-COR or any of its Subsidiaries are with
reputable insurance carriers, provide full and adequate coverage
for all normal risks incident to the business of C-COR and its
Subsidiaries and their respective properties and assets and are
in character and amount at least equivalent to that carried by
entities engaged in similar businesses and subject to the same
or similar perils or hazards, except as would not have a
Material Adverse Effect.
Section 4.24
Import and Export Control Laws. C-COR and each
of its Subsidiaries has at all times as to which the applicable
statute of limitations has not yet expired, conducted its import
and export transactions in accordance in all material respects
with all applicable U.S. import, export and re-export
controls, including the United States Export Administration Act
and Regulations and Foreign Assets Control Regulations, and all
other applicable import/export controls in other countries in
which C-COR and its Subsidiaries conduct material business.
Without limiting the foregoing:
(a) C-COR and each of its Subsidiaries has obtained, and is
in compliance in all material respects with, all material export
licenses, license exceptions and other consents, notices,
waivers, approvals, orders, authorizations, registrations,
declarations, classifications and filings with any governmental
entity required for (i) the export and re-export of
products, services, Software and technologies and
(ii) releases of technologies and Software to foreign
nationals located in the United States and abroad
(Export Approvals);
(b) There are no pending or, to the knowledge of C-COR,
threatened claims against C-COR or any of its Subsidiaries with
respect to such Export Approvals;
(c) To the knowledge of C-COR, there are no actions,
conditions or circumstances pertaining to
C-CORs
or any of its Subsidiaries import or export transactions
that may give rise to any future claims;
(d) Except as set forth on Section 4.24(d) of the
C-COR Disclosure Schedule, no Export Approvals for the transfer
of export licenses to ARRIS or the Surviving Corporation are
required, or if any such Export Approvals are required, they can
be obtained expeditiously without material cost;
(e) None of C-COR, its Subsidiaries or any of their
respective affiliates is a party to any contract or bid with, or
has conducted business with (directly or, to the knowledge of
C-COR, indirectly), a person
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located in, or otherwise has any operations in, or sales to,
Cuba, Myanmar (Burma), Iran, Iraq, North Korea, Libya, Rwanda,
Syria or Sudan;
(f) Since January 1, 2007, neither C-COR nor any of
its Subsidiaries has received written notice to the effect that
a governmental entity claimed or alleged that C-COR or any of
its Subsidiaries was not in compliance in any material respect
with any applicable laws relating to the export of goods and
services to any foreign jurisdiction against which the United
States or the United Nations maintains sanctions or export
controls, including applicable regulations of the United States
Department of Commerce and the United States Department of
State; and
(g) None of C-COR, its Subsidiaries or any of their
respective affiliates has made any voluntary disclosures to, or
has been subject to any fines, penalties or sanctions from, any
governmental entity regarding any past import or export control
violations.
Section 4.25
Foreign Corrupt Practices Act. To the
knowledge of C-COR, neither C-COR nor any of its Subsidiaries
(including any of their officers, directors, agents,
distributors, employees or other person associated with or
acting on their behalf) has, directly or indirectly, taken any
action which would cause it to be in material violation of the
Foreign Corrupt Practices Act of 1977, as amended, or any rules
or regulations thereunder or any similar anti-corruption or
anti-bribery Laws applicable to C-COR or any of its Subsidiaries
in any jurisdiction other than the United States (collectively,
the FCPA), or used any corporate funds for
unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, made, offered or
authorized any unlawful payment to foreign or domestic
government officials or employees, whether directly or
indirectly, or made, offered or authorized any unlawful bribe,
rebate, payoff, influence payment, kickback or other similar
unlawful payment, whether directly or indirectly, except for any
of the foregoing which is no longer subject to potential claims
of violation as a result of the expiration of the applicable
statute of limitations. C-COR has established reasonable
internal controls and procedures intended to ensure compliance
with the FCPA and has made available to ARRIS copies of any such
written controls and procedures.
Section 4.26
Board Recommendation; Required Vote. The Board
of Directors of C-COR at a meeting duly called and held, by vote
of the members present at such meeting has (a) determined
that this Agreement and the transactions contemplated hereby,
including the Merger, are advisable, fair to and in the best
interests of the stockholders of C-COR; (b) adopted this
Agreement in accordance with Section 1922(c) of
Pennsylvania Law; (c) directed that this Agreement be
submitted to a vote of shareholders entitled to vote thereon at
a regular or special meeting of stockholders; and
(d) resolved to recommend that the stockholders of C-COR
approve and adopt this Agreement and the Merger (collectively,
the C-COR Board Recommendation). The
affirmative vote of a majority of the votes cast at the C-COR
Stockholders Meeting by the holders of all outstanding
shares of C-COR Common Stock entitled to vote is necessary to
adopt this Agreement and the Merger is the only vote of the
holders of any class or series of capital stock of C-COR
necessary to adopt this Agreement and approve the transactions
contemplated by this Agreement, including the Merger (the
C-COR Stockholders Approval).
Section 4.27
Opinion of Financial Advisor. The Board of
Directors of C-COR has received the opinion of C-CORs
financial advisor, Merrill Lynch & Co. Inc.
(Merrill Lynch), to the effect that, as of
the date of this Agreement, the Merger Consideration is fair,
from a financial point of view, to the stockholders of C-COR.
Section 4.28
Brokers. No broker, finder or investment
banker (other than Merrill Lynch) is entitled to any brokerage,
finders or other fee or commission in connection with the
transactions contemplated by this Agreement based upon
arrangements made by or on behalf of C-COR. C-COR has heretofore
furnished to ARRIS a complete and correct copy of all agreements
between C-COR and Merrill Lynch pursuant to which such firm
would be entitled to any payment relating to the transactions
contemplated hereunder.
Section 4.29
Certain of Pennsylvania Law Not
Applicable. Assuming that ARRIS does not own or
acquire 20% or more of the C-COR Common Stock prior to the
Effective Time, Subchapters C through J
of Chapter 25 of Pennsylvania Law will not apply to the
execution, delivery or performance of this Agreement,
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including the Merger or the C-COR stockholder vote with respect
thereto, or the other transactions contemplated by this
Agreement.
Section 4.30
C-COR Rights Plan. C-COR has amended or
otherwise taken all necessary action, and C-COR and the Board of
Directors of C-COR have taken all necessary action to render the
rights issuable pursuant to the Rights Agreement dated as of
August 17, 1999, between C-COR.net Corp. and American
Stock & Transfer Co. (the C-COR Rights
Agreement) inapplicable to the execution and delivery
of this Agreement and consummation of the Merger and ensure that
none of the execution or delivery of this Agreement or the
consummation of the Merger will result in (a) the
occurrence of the flip-in event described under
Section 11(a)(ii) of the C-COR Rights Agreement or
(b) the rights becoming evidenced by, and transferable
pursuant to, certificates separate from the certificates
representing the shares of C-COR Common Stock. C-COR and the
Board of Directors of C-COR have taken all actions necessary to
ensure that the Rights shall expire immediately prior to the
Effective Time, without the payment of any money or other
consideration.
ARTICLE V
REPRESENTATIONS
AND WARRANTIES OF ARRIS AND THE MERGER SUBSIDIARY
ARRIS and the Merger Subsidiary hereby, represents and warrants
to C-COR that, except as set forth in the written disclosure
schedule delivered on or prior to the date hereof, by ARRIS to
C-COR that is arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this
Article III (the ARRIS Disclosure
Schedule) the statements contained in this
Article V are true and correct. The ARRIS Disclosure
Schedule shall be arranged in paragraphs corresponding to the
numbered and lettered paragraphs contained in this
Article V. Unless otherwise stated therein, if the
disclosure of any paragraph lists an item or information in such
a way as to make its relevance to the disclosure required in
another paragraph reasonably apparent on its face, such
disclosure shall qualify and apply to the other paragraph.
Section 5.1
Organization and Qualification;
Subsidiaries. Each of ARRIS and its Subsidiaries
(as defined herein) is an entity duly organized, validly
existing and in good standing under the laws of the jurisdiction
of its organization, has the requisite corporate power and
authority and is in possession of all Approvals necessary to
own, lease and operate the properties it purports to own,
operate or lease and to carry on its business as it is now being
conducted, except where the failure to be in good standing or to
have such Approvals would not have a Material Adverse Effect.
Each of ARRIS and each of its Subsidiaries, including the Merger
Subsidiary, is duly qualified or licensed as a foreign entity to
do business, and is in good standing, in each jurisdiction where
the character of its properties owned, leased or operated by it
or the nature of its activities makes such qualification or
licensing necessary, except for such failures to be so duly
qualified or licensed and in good standing that would not have a
Material Adverse Effect. A true and complete list of all of
ARRIS Subsidiaries, together with the jurisdiction of
organization of each Subsidiary and the percentage of each
Subsidiarys outstanding capital stock or ownership
interests owned by ARRIS or another Subsidiary, is set forth in
Section 5.1 of the ARRIS Disclosure Schedule. Except as set
forth in Section 5.1 of the ARRIS Disclosure Schedule,
ARRIS does not directly or indirectly own any equity or similar
interest in, or any interest convertible into or exchangeable or
exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business
association or entity, with respect to which interest ARRIS or
any of its Subsidiaries has invested or is required to invest
$50,000 or more, excluding securities in any publicly traded
company and comprising less than five percent of the outstanding
stock of such company.
Section 5.2
Certificate of Incorporation and
By-laws. ARRIS has heretofore furnished to C-COR
a complete and correct copy of its Certificate of Incorporation
and By-laws as most recently restated and subsequently amended
to date, and has furnished or made available to C-COR the
Subsidiary Documents of each of its Subsidiaries, including the
Merger Subsidiary. Such Certificate of Incorporation, By-laws
and Subsidiary Documents are in full force and effect. Neither
ARRIS nor any of its Subsidiaries is in violation of any of the
provisions of its Certificate of Incorporation or By-laws or
Subsidiary Documents, except for immaterial violations of the
Subsidiary Documents which may exist.
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Section 5.3
Capitalization. The authorized capital stock
of ARRIS consists of (i) 320,000,000 shares of ARRIS
Common Stock and (ii) 5,000,000 shares of preferred
stock, $1.00 par value per share, none of which is issued
and outstanding and none of which is reserved for issuance. As
of September 20, 2007, (i) 110,122,378 shares of
ARRIS Common Stock were issued and outstanding, all of which are
validly issued, fully paid and nonassessable, and no shares were
held in treasury, (ii) no shares of ARRIS Common Stock were
held by Subsidiaries of ARRIS, (iii) 8,093,994 shares
of ARRIS Common Stock were reserved for future issuance pursuant
to outstanding warrants or pursuant to stock options, or other
similar rights granted under the ARRIS incentive plans and
agreements listed in Section 5.3 of the ARRIS Disclosure
Schedule (the ARRIS Stock Option Plans), and
(iv) 59,005 shares of ARRIS Common Stock were reserved
for future issuance under the ARRIS Employee Stock Purchase
Plan. No material change in such capitalization has occurred
between September 20, 2007 and the date hereof. Except as
set forth in Section 5.3 or Section 5.9 of the ARRIS
Disclosure Schedule, and other than the 2.00% Convertible
Senior Notes due 2026 (the ARRIS Notes) and
employee and director stock options issued pursuant to
shareholder approved plans, there are no options, warrants,
convertible securities or other similar rights, agreements,
arrangements or commitments of any character relating to the
issued or unissued capital stock of ARRIS or any of its
Subsidiaries or obligating the ARRIS or any of its Subsidiaries
to issue or sell any shares of capital stock of, or other equity
interests in, ARRIS or any of its Subsidiaries. All shares of
ARRIS Common Stock subject to issuance as aforesaid, upon
issuance on the terms and conditions specified in the
instruments pursuant to which they are issuable, shall be duly
authorized, validly issued, fully paid and nonassessable. Except
as disclosed in Section 5.3 of the ARRIS Disclosure
Schedule, there are no obligations, contingent or otherwise, of
ARRIS or any of its Subsidiaries to repurchase, redeem or
otherwise acquire any shares of ARRIS Common Stock or the
capital stock of any Subsidiary or to provide funds to or make
any investment (in the form of a loan, capital contribution or
otherwise) in any such Subsidiary or any other entity. There are
not, and never have been, preemptive rights with respect to the
ARRIS Common Stock. Except as set forth in Sections 5.1 and
5.3 of the ARRIS Disclosure Schedule, all of the outstanding
shares of capital stock of each of the ARRIS Subsidiaries
is duly authorized, validly issued, fully paid and
nonassessable, and all such shares are owned by ARRIS or another
Subsidiary of ARRIS free and clear of all security interests,
liens, claims, pledges, agreements, limitations in ARRIS
voting rights, charges or other encumbrances of any nature
whatsoever.
Section 5.4
Authority Relative to this Agreement. ARRIS
has all necessary corporate power and authority to execute and
deliver this Agreement and to perform its obligations hereunder
and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by ARRIS and the
consummation by ARRIS of the transactions contemplated hereby
have been duly and validly authorized by all necessary corporate
action on the part of ARRIS, and no other corporate proceedings
on the part of ARRIS (other than the approval of the issuance of
ARRIS Common Stock pursuant to this Agreement by the holders of
at least a majority of the votes cast at the ARRIS
Stockholders Meeting by the holders of all outstanding
shares of ARRIS Common Stock entitled to vote in accordance with
Delaware Law and ARRIS Certificate of Incorporation and
Bylaws) are necessary to authorize this Agreement or to
consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by ARRIS and,
assuming the due authorization, execution and delivery by the
other Parties, constitutes a legal, valid and binding obligation
of ARRIS enforceable against each of ARRIS and the Merger
Subsidiary in accordance with its terms.
Section 5.5
No Conflict, Required Filings and Consents.
(a) Section 5.5(a) of the ARRIS Disclosure Schedule
includes a list of all agreements to which ARRIS or any of its
Subsidiaries is a party or by which any of them is bound that,
as of the date hereof are required to be filed as material
contracts with the SEC pursuant to the requirements of the
Exchange Act (collectively, the ARRIS Material
Contracts).
(b) Except as set forth in Section 5.5(b) of the ARRIS
Disclosure Schedule, the execution and delivery of this
Agreement by ARRIS does not, and the performance of this
Agreement by ARRIS will not, (i) conflict with or violate
the Certificate of Incorporation, By-laws or Subsidiary
Documents of ARRIS or any of its Subsidiaries,
(ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to ARRIS or any of its
Subsidiaries or by which its or their respective properties are
bound or affected, or
A-24
(iii) result in any breach of or constitute a default (or
an event which with notice or lapse of time or both would become
a default) under, or impair ARRIS or any of its
Subsidiaries rights or alter the rights or obligations of
any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of any
ARRIS Material Contract, or result in the creation of a lien or
encumbrance on any of the properties or assets of ARRIS or any
of its Subsidiaries pursuant to, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation to which ARRIS or
any of its Subsidiaries is a party or by which ARRIS or any of
its Subsidiaries or its or any of their respective properties
are bound or affected, except in any such case for any such
conflicts, violations, breaches, defaults, liens or other
occurrences with respect to (ii) and (iii) above that
would not have a Material Adverse Effect.
(c) The execution and delivery of this Agreement by ARRIS
does not, and the performance of this Agreement by ARRIS will
not, require any consent, approval, authorization or permit of,
or filing with or notification to, any governmental or
regulatory authority, domestic or foreign, except (i) for
applicable requirements, if any, of the 1933 Act, the
Exchange Act, the pre-merger notification requirements of the
HSR Act and the filing of the Certificate of Merger as required
by Delaware Law, and (ii) where the failure to obtain such
consents, approvals, authorizations or permits, or to make such
filings or notifications, would not prevent or delay
consummation of the offer of ARRIS Common Stock or the Merger,
or otherwise prevent ARRIS or Acquisition from performing their
respective obligations under this Agreement, and would not have
a Material Adverse Effect.
Section 5.6
Compliance, Permits.
(a) Except as disclosed in Section 5.6(a) of the ARRIS
Disclosure Schedule, neither ARRIS nor any of its Subsidiaries
is in conflict with, or in default or violation of, (i) any
law, rule, regulation, order, judgment or decree applicable to
ARRIS or any of its Subsidiaries or by which its or any of their
respective properties is bound or affected or (ii) any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or any other instrument or obligation
to which ARRIS or any of its Subsidiaries is a party or by which
ARRIS or any of its Subsidiaries or its or any of their
respective properties is bound or affected, except for any such
conflicts, defaults or violations that would not have a Material
Adverse Effect.
(b) Except as disclosed in Section 5.6(b) of the ARRIS
Disclosure Schedule, ARRIS and its Subsidiaries hold all
permits, licenses, easements, variances, exemptions, consents,
certificates, orders and approvals from governmental authorities
that are material to the operation of the business of ARRIS and
its Subsidiaries taken as a whole as it is now being conducted
(collectively, the ARRIS Permits), except
where the failure to have such ARRIS Permits would not have a
Material Adverse Effect. ARRIS and its Subsidiaries are in
compliance with the terms of the ARRIS Permits, except where the
failure to so comply would not have a Material Adverse Effect.
Section 5.7
SEC Filings; Financial Statements.
(a) ARRIS has filed all forms, reports and documents
required to be filed with the SEC and has made available to
C-COR (i) its Annual Reports on
Form 10-K
for the fiscal years ended December 31, 2004, 2005 and
2006, respectively, (ii) its Quarterly Reports on
Form 10-Q
for the periods ended September 30, 2006, March 31,
2007 and June 30, 2007 (iii) all proxy statements
relating to ARRIS meetings of stockholders (whether annual
or special) held since January 1, 2004, (iv) all other
reports or registration statements (other than Reports on
Form 10-Q
not referred to in clause (ii) above) filed by ARRIS with
the SEC since January 1, 2004, and (v) all amendments
and supplements to all such reports and registration statements
filed by ARRIS with the SEC since January 1, 2004
(collectively, the ARRIS SEC Reports). Except
as disclosed in Section 5.7 of the ARRIS Disclosure
Schedule, the ARRIS SEC Reports (i) were prepared in all
material respects in accordance with the requirements of the
1933 Act or the Exchange Act, as the case may be, and
(ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then
on the date of such filing) contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. None of the ARRIS Subsidiaries is
required to file any forms, reports or other documents with the
SEC.
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(b) Each of the consolidated financial statements
(including, in each case, any related notes thereto) contained
in the ARRIS SEC Reports was prepared in accordance with GAAP
applied on a consistent basis throughout the periods involved
(except as may be indicated in the notes thereto), and each
fairly presents in all material respects the consolidated
financial position of ARRIS and its Subsidiaries as at the
respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated, except that
the unaudited interim financial statements were or are subject
to normal and recurring year-end adjustments which were not. or
are not expected to be, material in amount.
(c) ARRIS has established and maintains disclosure
controls and procedures (as defined in
Rule 13a-15(e)
promulgated under the Exchange Act) that are reasonably designed
to ensure that material information (both financial and
non-financial) relating to ARRIS and its Subsidiaries required
to be disclosed by ARRIS in the reports that it files or submits
under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the rules and
forms of the SEC, and that such information is accumulated and
communicated to ARRIS principal executive officer and
principal financial officer, or persons performing similar
functions, as appropriate to allow timely decisions regarding
disclosure and to make the certifications of the principal
executive officer and the principal financial officer of ARRIS
required by Sarbanes-Oxley with respect to such reports. For
purposes of this Agreement, principal executive
officer and principal financial officer shall
have the meanings given to such terms in Sarbanes-Oxley.
(d) ARRIS has established and maintains a system of
internal control over financial reporting (as defined in
Rule 13a-15(f)
promulgated under the Exchange Act) (internal
controls). Such internal controls are sufficient to
provide reasonable assurance regarding the reliability of
ARRIS financial reporting and the preparation of
ARRIS financial statements for external purposes in
accordance with GAAP. ARRIS has disclosed, based on its most
recent evaluation of internal controls prior to the date hereof,
to ARRIS auditors and audit committee (i) any
significant deficiencies and material weaknesses known to ARRIS
in the design or operation of internal controls which are
reasonably likely to adversely affect in a material respect
ARRIS ability to record, process, summarize and report
financial information and (ii) any material fraud known to
ARRIS that involves management or other employees who have a
significant role in internal controls. ARRIS has made available
to C-COR a summary of any such disclosure regarding material
weaknesses and fraud made by management to ARRIS auditors
and audit committee since December 31, 2004. For purposes
of this Agreement, a significant deficiency in
controls means an internal control deficiency that adversely
affects an entitys ability to initiate, authorize, record,
process, or report external financial data reliably in
accordance with GAAP. A significant deficiency may
be a single deficiency or a combination of deficiencies that
results in more than a remote likelihood that a misstatement of
the annual or interim financial statements that is more than
inconsequential will not be prevented or detected. For purposes
of this Agreement, a material weakness in internal
controls means a significant deficiency, or a combination of
significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected.
Section 5.8
Absence of Certain Changes or Events. Except
as set forth in Section 5.8 of the ARRIS Disclosure
Schedule or the ARRIS SEC Reports, since June 30, 2007,
ARRIS has conducted its business in the ordinary course and
there has not occurred: (i) any Material Adverse Effect;
(ii) any amendments or changes in the Certificate of
Incorporation or Bylaws of ARRIS; (iii) any damage to,
destruction or loss of any asset of ARRIS (whether or not
covered by insurance) that would have a Material Adverse Effect;
(iv) any material change by ARRIS in its accounting
methods, principles or practices; (v) any material
revaluation by ARRIS of any of its assets, including, without
limitation, writing down the value of inventory or writing off
notes or accounts receivable other than in the ordinary course
of business; (vi) any other action or event that would have
required the consent of C-COR pursuant to Section 6.1 had
such action or event occurred after the date of this Agreement;
or (vii) any sale of a material amount of property of ARRIS
or any of its Subsidiaries, except in the ordinary course of
business.
Section 5.9
No Undisclosed Liabilities. Except as is
disclosed in Section 5.9 of the ARRIS Disclosure Schedule,
neither ARRIS nor any of its Subsidiaries has any liabilities
(absolute, accrued, contingent or otherwise), except liabilities
(a) in the aggregate adequately provided for in ARRIS
audited balance sheet (including any related notes thereto) as
of December 31, 2006, (the 2006 ARRIS Balance
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Sheet), (b) incurred in the ordinary course of
business and not required under GAAP to be reflected on the 2006
ARRIS Balance Sheet, (c) incurred since December 31,
2006, in the ordinary course of business consistent with past
practice, or (d) incurred in connection with this Agreement.
Section 5.10
Absence of Litigation. Except as set forth in
Section 5.10 of the ARRIS Disclosure Schedule, there are no
claims, actions, suits or proceedings pending or, to the
knowledge of ARRIS, overtly threatened and to the knowledge of
ARRIS, there are no investigations pending or threatened against
ARRIS or any of its Subsidiaries, or any properties or rights of
ARRIS or any of its Subsidiaries, before any court, arbitrator
or administrative, governmental or regulatory authority or body,
domestic or foreign, that could reasonably be expected to result
in a liability in excess of $500,000.
Section 5.11
Joint Proxy Statement. None of the information
supplied or to be supplied by or on behalf of ARRIS for
inclusion or incorporation by reference in the Registration
Statement will, at the time the Registration Statement becomes
effective under the 1933 Act, contain any untrue statement
of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were
made, not misleading. None of the information supplied or to be
supplied by or on behalf of ARRIS for inclusion or incorporation
by reference in the Joint Proxy Statement, will, at the dates
mailed to stockholders and at the times of the C-COR
Stockholders Meeting and the ARRIS Stockholders
Meeting, contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of
the circumstances under which they are made, not misleading. The
information provided by ARRIS for the Registration Statement and
the Joint Proxy Statement (except for information relating
solely to C-COR) will comply as to form in all material respects
with the provisions of the 1933 Act and the Exchange Act
and the rules and regulations promulgated thereunder.
Section 5.12
Employee Benefit Plans, Employment
Agreements. Section 5.12 of ARRIS Disclosure
Schedule lists all employee pension plans (as defined in
Section 3(2) of ERISA), all material employee welfare plans
(as defined in Section 3(1) of ERISA) and all other
material bonus, stock option, stock purchase, incentive,
deferred compensation, supplemental retirement, severance and
other similar fringe or employee benefit plans, programs or
arrangements, and any material current or former employment,
executive compensation, consulting or severance agreements,
written or otherwise, for the benefit of, or relating to, any
employee of or consultant to ARRIS, any trade or business
(whether or not incorporated) which is a member of a controlled
group including ARRIS or which is under common control with
ARRIS (an ERISA Affiliate) within the meaning
of Section 414 of the Code, or any Subsidiary of ARRIS, as
well as each plan with respect to which ARRIS or an ERISA
Affiliate could incur liability under Section 4069 (if such
plan has been or were terminated) or Section 4212(c) of
ERISA (collectively the ARRIS Employee
Plans). There have been made available to C-COR copies
of (i) each such written ARRIS Employee Plan (other than
those referred to in Section 4(b)(4) of ERISA),
(ii) the most recent annual report on Form 5500
series, with accompanying schedules and attachments, filed with
respect to each ARRIS Employee Plan required to make such a
filing, (iii) the most recent actuarial valuation for each
ARRIS Employee Plan subject to Title IV of ERISA, and
(iv) such other documents or information that C-COR
reasonably requests. For purposes of this Section 5.12, the
term material, used with respect to any ARRIS
Employee Plan, shall mean that ARRIS or an ERISA Affiliate has
incurred or may incur obligations in an annual amount exceeding
$500,000 with respect to such ARRIS Employee Plan.
Section 5.13
Taxes.
(a) Each of ARRIS and its Subsidiaries (together the
Acquirer Entities) has timely filed (taking into
account any extension of time within which to file) with the
appropriate Taxing authorities all material income and other Tax
Returns in all jurisdictions in which Tax Returns are required
to be filed, and such Tax Returns are correct and complete in
all material respects. All Taxes of the Acquirer Entities
(whether or not shown on any Tax Return) that have become due or
payable have been fully and timely paid, or proper accruals
pursuant to GAAP have been established in ARRIS
consolidated unaudited balance sheet as of June 30, 2007
with respect thereto (except for Taxes relating to events
subsequent to the date thereof), except to the extent any
failure to accrue or reserve would not, individually, or in the
aggregate, reasonably be expected to have a
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Material Adverse Effect. There are no liens for any Taxes (other
than a lien for current real property or ad valorem Taxes not
yet due and payable) on any of the assets of any of the Acquirer
Entities.
(b) None of the Acquirer Entities has received from any
foreign, federal, state, or local taxing authority (including
jurisdictions where the Acquired Companies or their Subsidiaries
have not filed Tax Returns) notice of deficiency or proposed
adjustment for any amount of Tax proposed, asserted, or assessed
by any taxing authority against ARRIS or any of its Subsidiaries
exceeding the amount reserved for on its financial statements.
(c) Each Acquirer Entity has complied in all material
respects with all applicable laws, rules and regulations
relating to the withholding of Taxes and the payment thereof to
appropriate authorities, including Taxes required to have been
withheld and paid in connection with amounts paid or owing to
any employee or independent contractor, and Taxes required to be
withheld and paid pursuant to Sections 1441 and 1442 of the
Code or similar provisions under foreign law.
(d) None of the Acquirer Entities is a party to any Tax
allocation or sharing agreement, and none of the Acquirer
Entities has been a member of an affiliated group filing a
consolidated federal income Tax Return (other than a group the
common parent of which was ARRIS) or has any Tax liability of
any person (other than another Acquirer Entity that is a member
of the consolidated federal income Tax group of which ARRIS is
the common parent) under Treasury
Regulation Section 1.1502-6
or any similar provision of state, local or foreign law, or as a
transferee or successor, by contract or otherwise.
(e) During the five-year period ending on the date hereof,
none of the Acquirer Entities was a distributing corporation or
a controlled corporation in a transaction intended to be
governed by Section 355 of the Internal Revenue Code.
Section 5.14
Environmental Matters. Except as set forth in
Section 5.14 of the ARRIS Disclosure Schedule, and except
in those cases, either individually or in the aggregate, that
are not reasonably expected to have a Material Adverse Effect,
ARRIS and each of its Subsidiaries (i) are in compliance
with all Environmental Laws; (ii) have obtained all
applicable permits, licenses and other authorizations that are
required to be obtained under all applicable Environmental Laws
by ARRIS or its Subsidiaries; (iii) are in compliance with
all terms and conditions of such required permits, licenses and
authorizations, and have made all appropriate filings for
issuance or renewal of such permits, licenses and
authorizations; (iv) as of the date hereof, are not aware
of nor have received any notice, claim, demand, report or other
information alleging any past or present violations of
Environmental Laws, or any liabilities arising under
Environmental Laws, against ARRIS or any of its Subsidiaries;
(v) have not used any waste disposal site or otherwise
disposed of, transported, or arranged for the transportation of,
any Hazardous Materials to any place or location, or in
violation of any Environmental Laws; and (vi) have taken
all actions necessary under applicable Environmental Laws to
register any products or materials required to be registered by
ARRIS or its Subsidiaries (or any of their respective agents)
thereunder.
Section 5.15
ARRIS Customers. Except as set forth in
Section 5.15 of the ARRIS Disclosure Schedule, ARRIS has
not received any notice and has no knowledge to the effect that
any of ARRIS ten largest customers for fiscal year
2007 may terminate or materially alter its business
relations with ARRIS, either as a result of the transactions
contemplated by this Agreement or otherwise, except for such
alterations that have not had or are not reasonably expected to
have a Material Adverse Effect.
Section 5.16
ARRIS Intellectual Property.
(a) All Trademarks, Patents and Copyrights owned by ARRIS
(ARRIS Trademarks, ARRIS
Patents, and ARRIS Copyrights
respectively; collectively ARRIS Owned Intellectual
Property) are currently in compliance in all material
respects with all applicable legal requirements. No ARRIS
Trademark is currently involved in any opposition or
cancellation proceeding and, to the knowledge of ARRIS, no such
action has been threatened with respect to any of those ARRIS
Trademarks. No ARRIS Patent is currently involved in any
interference, reissue, re-examination or opposition proceeding
and, to the knowledge of ARRIS, no such action has been
threatened with respect to any such ARRIS Patent.
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(b) To the knowledge of ARRIS, ARRIS and its Subsidiaries
have valid and enforceable rights to use all Intellectual
Property licensed from third parties.
(c) To the knowledge of ARRIS, the ARRIS Owned Intellectual
Property and the Intellectual Property licensed from third
parties constitute all of the Intellectual Property used in and,
to the knowledge of ARRIS, necessary for the operation of
ARRIS business as currently conducted. ARRIS and its
Subsidiaries have taken all reasonable steps to protect the
ARRIS Owned Intellectual Property, including reasonable steps to
prevent and abate any infringement or misappropriation of the
ARRIS Owned Intellectual Property.
(d) Except as set forth on Section 5.16(d) of the
ARRIS Disclosure Schedule, to the knowledge of ARRIS, the
conduct of ARRIS business as currently conducted does not
infringe upon any Intellectual Property rights of any third
party. Except as set forth on Section 5.16(d) of the ARRIS
Disclosure Schedule, no third party has notified ARRIS of any
allegation of infringement upon any third party Intellectual
Property rights.
(e) To the knowledge of ARRIS, no third party is
misappropriating, infringing, diluting or violating any ARRIS
Owned Intellectual Property.
(f) Software developed by ARRIS (ARRIS
Software) was developed either by (i) employees
of ARRIS or its Subsidiaries within the scope of their
employment who have executed a confidentiality and assignment of
inventions agreement, (ii) independent contractors who have
assigned their rights to ARRIS or one of its Subsidiaries
pursuant to enforceable written agreements, or
(iii) acquired pursuant to an enforceable written agreement
or assignment.
(g) To the knowledge of ARRIS, the ARRIS Copyrights have
been solely (i) created by (A) employees of ARRIS and
its Subsidiaries within the scope of their employment who have
executed confidentiality and assignment of inventions
agreements, or (B) independent contractors who have
assigned their rights to ARRIS pursuant to enforceable written
agreements, or (ii) acquired pursuant to an enforceable
written assignment or agreement.
(h) To the knowledge of ARRIS, the ARRIS Patents relate
solely to inventions (i) created by (A) employees of
ARRIS and its Subsidiaries within the scope of their employment
who have executed a confidentiality and assignment of inventions
agreement, or (B) independent contractors who have assigned
their rights to ARRIS pursuant to enforceable written
agreements, or (ii) acquired pursuant to an enforceable
written agreement or assignment. To the knowledge of ARRIS, the
inventions covered by such Patents were not copies of any
invention for which ARRIS or any of its Subsidiaries does not
own the Patent, and no other person has any claim to
inventorship or ownership of any part thereof.
(i) ARRIS and its Subsidiaries have taken reasonable steps
to protect their respective rights in material confidential
information and trade secrets owned by them or disclosed to them
by a third party and used in connection with the conduct of
ARRIS business. Without limiting the foregoing, ARRIS and
its Subsidiaries have enforced a policy of requiring each
employee, consultant and contractor to execute proprietary
information, invention assignment and confidentiality
agreements, as appropriate, substantially consistent with
ARRIS standard forms. Except under valid and binding
confidentiality obligations, there has been no material
disclosure by ARRIS or any of its Subsidiaries to a third party
of any confidential information or trade secrets used in
connection with the conduct of ARRIS business.
(j) ARRIS and its Subsidiaries have valid registrations for
each of the domain names owned by ARRIS. The registration of
each such domain name is free and clear of all liens and is in
full force and effect. ARRIS has paid all fees required to
maintain each such registration. Neither ARRIS nor any of its
Subsidiaries has received written notice of any claim asserted
against ARRIS or any of its Subsidiaries adverse to its rights
to such domain names, and, to the knowledge of ARRIS, none of
ARRIS registrations or uses of the domain names has been
disturbed or placed on hold.
(k) To the knowledge of ARRIS, all ARRIS Software is free
from any material defect or programming or documentation error,
including major bugs, logic errors or failures of such software
to operate in all material respects as described in the related
documentation, and substantially conforms to the specifications
of such
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software, other than those defects, errors, bugs or failures
that would not have a Material Adverse Effect on ARRIS.
(l) Except as set forth in Section 5.16(l) of the
ARRIS Disclosure Schedule, none of the ARRIS Software or any
ARRIS Owned Intellectual Property are, in whole or in part,
subject to the provision of any open source or other similar
type of license agreement or distribution model that
(i) requires the distribution or making available of the
source code for ARRIS Software to the general public,
(ii) prohibits or limits ARRIS or any of its Subsidiaries
from charging a fee or receiving consideration in connection
with sublicensing or distributing any ARRIS Software,
(iii) except as specifically permitted by law, grants any
right to any third party (other than ARRIS and its Subsidiaries)
or otherwise allows any such third party to decompile,
disassemble or otherwise reverse-engineer any ARRIS Software, or
(iv) requires the licensing of any ARRIS Software to the
general public for the purpose of permitting others to make
derivative works of ARRIS Software.
Section 5.17
Foreign Corrupt Practices Act. To the
knowledge of ARRIS, neither ARRIS nor any of its Subsidiaries
(including any of their officers, directors, agents,
distributors, employees or other person associated with or
acting on their behalf) has, directly or indirectly, taken any
action which would cause it to be in material violation of the
FCPA, or used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to
political activity, made, offered or authorized any unlawful
payment to foreign or domestic government officials or
employees, whether directly or indirectly, or made, offered or
authorized any unlawful bribe, rebate, payoff, influence
payment, kickback or other similar unlawful payment, whether
directly or indirectly, except for any of the foregoing which is
no longer subject to potential claims of violation as a result
of the expiration of the applicable statute of limitations.
ARRIS has established reasonable internal controls and
procedures intended to ensure compliance with the FCPA and has
made available to ARRIS copies of any such written controls and
procedures.
Section 5.18
Opinion of Financial Advisor. The Board of
Directors of ARRIS has received the opinion of ARRIS
financial advisor, UBS Securities LLC, to the effect that, as of
the date of such opinion, the Merger Consideration to be paid by
ARRIS is fair, from a financial point of view, to ARRIS.
Section 5.19
Brokers. No broker, finder or investment
banker (other than UBS Securities LLC) is entitled to any
brokerage, finders or other fee or commission in
connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of ARRIS. ARRIS has
heretofore furnished to C-COR a complete and correct copy of all
agreements between ARRIS and UBS Securities LLC pursuant to
which such firm would be entitled to any payment relating to the
transactions contemplated hereunder.
Section 5.20
Financial Capability. ARRIS has sufficient
funds or capital commitments in place to consummate the
transactions contemplated herein on the terms and conditions
contained in this Agreement and will have such funds or capital
commitments on the Closing Date.
Section 5.21
Board Recommendation; Required Vote.
(a) The Board of Directors of ARRIS, at a meeting duly
called and held, by vote of the members present at such meeting
has (a) determined that this Agreement and the transactions
contemplated hereby are advisable, fair to and in the best
interests of the stockholders of ARRIS; (b) declared
advisable and in all respects approved the issuance of ARRIS
Common Stock pursuant to this Agreement; (c) resolved to
recommend that the stockholders of ARRIS approve the issuance of
ARRIS Common Stock pursuant to this Agreement; (d) approved
the Merger as the sole stockholder of the Merger Subsidiary; and
(e) directed that the proposed issuance of ARRIS Common
Stock pursuant to this Agreement be submitted to stockholders of
ARRIS for consideration in accordance with this Agreement, which
resolutions as of the date of this Agreement, have not been
subsequently rescinded, modified or withdrawn in any way
(collectively, the ARRIS Board
Recommendation). The vote of the stockholders of ARRIS
to approve the issuance of ARRIS Common Stock pursuant to this
Agreement is the only vote of the holders of capital stock of
ARRIS necessary to approve the transactions contemplated by this
Agreement.
(b) The Board of Directors of the Merger Subsidiary, at a
meeting duly called and held, by unanimous vote of the members
present at such meeting has (a) determined that this
Agreement and the transactions
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contemplated hereby, including the Merger, are advisable, fair
to and in the best interests of the stockholders of the Merger
Subsidiary; (b) declared advisable and in all respects
approved this Agreement, and the transactions contemplated by
this Agreement, including the Merger; (c) directed that
this Agreement be submitted to a vote of ARRIS, as sole
stockholder of the Merger Subsidiary; and (d) resolved to
recommend that ARRIS, as sole stockholder of the Merger
Subsidiary, approve and adopt this Agreement and the Merger,
which resolutions as of the date of this Agreement, have not
been subsequently rescinded, modified or withdrawn in any way
(collectively, the Merger Subsidiary Board
Recommendation). The vote of ARRIS, as the sole
stockholder of the Merger Subsidiary, to approve this Agreement
and the Merger is the only vote of the holders of capital stock
of the Merger Subsidiary necessary to approve the transactions
contemplated by this Agreement, and ARRIS in that capacity has
approved this Agreement and the Merger.
Section 5.22
ARRIS Rights Plan. ARRIS has amended or
otherwise taken all necessary action, and ARRIS and the Board of
Directors of ARRIS have taken all necessary action to render the
rights issuable pursuant to the Rights Agreement dated as of
October 3, 2002, between ARRIS and The Bank of New York
(the ARRIS Rights Agreement) inapplicable to
the execution and delivery of this Agreement and consummation of
the Merger and ensure that none of the execution or delivery of
this Agreement or the consummation of the Merger will result in
(a) the rights becoming evidenced by, and transferable
pursuant to, certificates separate from the certificates
representing the shares of ARRIS Common Stock and (b) the
rights becoming exercisable under the ARRIS Rights Agreement.
ARTICLE VI
CONDUCT OF
BUSINESS PENDING THE MERGER
Section 6.1
Conduct of Business by C-COR Pending the
Merger. C-COR covenants and agrees that, except
as contemplated by this Agreement, during the period from the
date of this Agreement and continuing until the earlier of the
termination of this Agreement, unless ARRIS shall otherwise
consent in writing (which consent shall not be unreasonably
withheld), C-COR shall conduct its business and shall cause the
businesses of its Subsidiaries to be conducted only in, and
C-COR and its Subsidiaries shall not take any action except in,
the ordinary course of business and in the manner consistent
with past practice; and C-COR shall use reasonable commercial
efforts to preserve substantially intact the business
organization of C-COR and its Subsidiaries, to keep available
the services of the present officers, employees and consultants
of C-COR and its Subsidiaries and to preserve the present
relationships of C-COR and its Subsidiaries with customers,
suppliers and other persons with which C-COR or any of its
Subsidiaries has significant business relations. By way of
amplification and not limitation, except as contemplated by this
Agreement, neither C-COR nor any of its Subsidiaries shall,
during the period from the date of this Agreement and continuing
until the earlier of the termination of this Agreement or the
Merger, directly or indirectly do, or propose to do, any of the
following without the prior written consent of ARRIS (which
consent shall not be unreasonably withheld):
(a) amend or otherwise change the Articles of
Incorporation, Bylaws or Subsidiary Documents of
C-COR or any
of its Subsidiaries;
(b) except as set forth in Section 6.1(b) of the C-COR
Disclosure Schedule, issue, sell, pledge, dispose of or
encumber, or authorize the issuance, sale, pledge, disposition
or encumbrance of, any shares of capital stock of any class, or
any options, warrants, convertible securities or other rights of
any kind to acquire any shares of capital stock, or any other
ownership interest (including, without limitation, any phantom
interest) in C-COR or any of its Subsidiaries (except for
(i) the issuance of shares of C-COR Common Stock issuable
pursuant to Stock Options listed in Section 4.12(c) of the
C-COR Disclosure Schedule, (ii) the grant of options under
C-CORs Stock Option Plans to new hires consistent with
past practice to purchase up to 50,000 (in the aggregate) shares
of C-COR Common Stock at the market value on the date of grant,
and the issuance of shares upon exercise thereof (provided that
the vesting of such options granted from and after the date
hereof pursuant to this clause (ii) shall not be
accelerated by the transactions contemplated by this Agreement
and, if necessary, C-COR will amend the Incentive Plan to so
provide), (iii) the grant of options under C-CORs
Stock Option Plans to non-employee directors of
C-COR
consistent with past practice to purchase up to
7,500 shares of C-COR Common Stock per non-
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employee director, at the market value on the date of grant, and
the issuance of shares upon the exercise thereof or
(iv) issuance of shares of C-COR Common Stock upon
conversion of the C-COR Notes;
(c) except as set forth on Section 6.1(c) of the C-COR
Disclosure Schedule, sell, pledge, dispose of or encumber any
assets of C-COR or any of its Subsidiaries (except for (i) sales
of assets in the ordinary course of business and in a manner
consistent with past practice, (ii) disposition of obsolete
or worthless assets, and (iii) sales of immaterial assets
not in excess of $500,000;
(d) (i) declare, set aside, make or pay any dividend
or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock,
except that a wholly owned Subsidiary of C-COR may declare and
pay a dividend or make advances to C-COR, (ii) split,
combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock, or (iii) amend the terms or change the
period of exercisability of, purchase, repurchase, redeem or
otherwise acquire, or permit any Subsidiary to purchase,
repurchase, redeem or otherwise acquire, any of its securities
or any securities of its Subsidiaries, including, without
limitation, shares of C-COR Common Stock or any option, warrant
or right, directly or indirectly, to acquire shares of C-COR
Common Stock, or propose to do any of the foregoing;
(e) (i) acquire (by merger, consolidation, or
acquisition of stock or assets) any corporation, partnership or
other business organization or division thereof; (ii) incur
any indebtedness for borrowed money, other than renewal or
extension of C-CORs revolving credit facility with
Citizens Bank of Pennsylvania (the C-COR LOC
Facility) which renewal or extension shall not materially
modify the terms of the C-COR LOC Facility other than to renew
or extend the Commitment Period (as defined in the C-COR LOC
Facility) thereof and to make substantially similar changes to
any notes issued thereunder, or issue any debt securities or
assume, guarantee or endorse or otherwise as an accommodation
become responsible for, the obligations of any person or, except
in the ordinary course of business consistent with past practice
or in connection with purchases of equipment or capital
improvements, make any loans or advances (other than loans or
advances to or from direct or indirect wholly owned
Subsidiaries), (iii) enter into or amend any material
contract or agreement other than in the ordinary course of
business; or (iv) authorize any capital expenditures or
purchase of fixed assets which are, in the aggregate, in excess
of the amounts set forth in Section 6.1(e) of the C-COR
Disclosure Schedule;
(f) except as set forth in Section 6.1(f) of the C-COR
Disclosure Schedule, increase the compensation payable or to
become payable to its officers or employees, except for
increases in salary or wages of employees of C-COR or its
Subsidiaries in accordance with past practice and in amounts
that are in the aggregate reflected in the budgets previously
provided to ARRIS or, except in the ordinary course of business,
grant any severance or termination pay to, or enter into any
employment or severance agreement with any director, officer or
other employee of C-COR or any of its Subsidiaries, or
establish, adopt, enter into or amend any collective bargaining,
bonus, profit sharing, thrift, compensation, stock option,
restricted stock, pension, retirement, deferred compensation,
employment, termination, severance or other plan, agreement,
trust, fund, policy or arrangement for the benefit of any
current or former directors, officers or employees, except, in
each case, as may be required by law; provided however,
C-COR may take action prior to the Effective Time (i) to
determine the Matching Contribution to be made under
C-CORs
401(k) savings plan (the C-COR Retirement Savings and
Profit Sharing Plan) for 2008 (which shall not exceed
the rate of matching contribution made for 2007) and to
determine the status of such plan for 2008 as a safe
harbor plan described in Sections 401(k)(12) and
401(m)(10) of the Code, (ii) to provide for the deferral,
matching and discretionary contributions for 2008 under the
terms of C-CORs Supplemental Executive Retirement Plan
(which matching and discretionary contributions shall not exceed
the rate of such contributions made for 2007) and
(iii) to amend the terms of the C-COR Employee Plans to the
extent necessary or desirable to conform to the requirements of
Section 409A of the Code or to satisfy an exception to
Section 409A of the Code, including without limitation to
provide elections before the end of 2007 to affected
participants in such plans regarding new benefit timing
and/or form
elections consistent with transition guidance promulgated by the
IRS (provided that to the extent permissible without violating
Section 409A of the Code, such amendments do not further
accelerate the
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time of payment or vesting pursuant to the transactions
contemplated by this Agreement, except that payments pursuant to
a qualifying change in control may be made at any time following
Closing);
(g) take any action to change accounting policies or
procedures (including, without limitation, procedures with
respect to revenue recognition, payments of accounts payable and
collection of accounts receivable) or any action that would
prevent or impede the Merger from qualifying as a tax-free
reorganization under Section 368 of the Code;
(h) make any material Tax election inconsistent with past
practice or settle or compromise any material federal, state,
local or foreign Tax liability or agree to an extension of a
statute of limitations, except to the extent the amount of any
such settlement has been reserved for in the financial
statements contained in the C-COR SEC Reports filed prior to the
date of this Agreement;
(i) pay, discharge or satisfy any material claims,
liabilities or obligations (absolute, accrued, asserted or
unasserted, contingent or otherwise), other than the payment,
discharge or satisfaction in the ordinary course of business and
consistent with past practice of liabilities reflected or
reserved against in the financial statements contained in the
C-COR SEC Reports filed prior to the date of this Agreement or
incurred in the ordinary course of business and consistent with
past practice;
(j) make any significant change in any Tax or accounting
methods or systems of internal accounting controls, except as
may be appropriate to conform to changes in Tax Laws or
regulatory accounting requirements or GAAP; or
(k) take, or agree in writing or otherwise to take, any of
the actions described in Sections 6.1(a) through
(i) above, or any action which would make any of the
representations or warranties of C-COR contained in this
Agreement untrue or incorrect or prevent C-COR from performing
or cause C-COR not to perform its covenants hereunder.
Section 6.2
No Solicitation by C-COR.
(a) C-COR shall not, nor shall it permit or authorize any
of its Subsidiaries or any officer, director, employee,
accountant, counsel, financial advisor, agent or other
representative of C-COR or any of its Subsidiaries
(collectively, the C-COR Representatives) to,
on its or any of its Subsidiaries behalf, directly or
indirectly,
(i) solicit, initiate, facilitate, respond to or encourage,
including by way of furnishing non-public information, any
inquiries regarding or relating to, or the submission of, any
Takeover Proposal (as defined below),
(ii) participate in any discussions or negotiations,
furnish to any person any information or data relating to C-COR
or its Subsidiaries, provide access to any of the properties,
books, records or employees of C-COR or its Subsidiaries or take
any other action, in each such case regarding or to facilitate
the making of any proposal that constitutes, or may reasonably
be expected to lead to, any Takeover Proposal,
(iii) enter into any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement,
merger agreement or other similar agreement or commitment with
respect to any Takeover Proposal (an Alternative
Acquisition Agreement) or agree to, approve, endorse
or resolve to recommend or approve any Takeover Proposal, except
in each case as otherwise specifically provided in
Section 6.2(b),
(iv) grant any waiver or release under any standstill or
similar agreement by any third party who has made a Takeover
Proposal,
(v) take any action to exempt any third party from the
restrictions on business combinations contained in
Subchapters C through J of
Chapter 25 of Pennsylvania Law or otherwise cause such
restrictions not to apply, or
(vi) authorize or direct any C-COR Representative to take
any such action;
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provided, however, that nothing contained in this
Section 6.2(a) or any other provision of this Agreement
shall prohibit C-COR or the Board of Directors of C-COR from
(A) taking and disclosing to C-CORs stockholders a
position required by
Rules 14d-9
and 14e-2 or
Item 1012(a) of
Regulation M-A
promulgated under the Exchange Act, (B) making such
disclosure to C-CORs stockholders as, in the good faith
judgment of the Board of Directors of C-COR, after receiving
advice from its outside counsel and its financial advisors,
C-COR is
required under Pennsylvania Law in order to comply with its
fiduciary duties, or (C) notifying any third party solely
of the existence of, and restrictions under, the provisions of
this Section 6.2, provided that C-COR may not, except as
permitted by Section 6.2(b), withdraw or modify, or propose
to withdraw or modify, its approval or recommendation of this
Agreement or the transactions contemplated hereby, including the
Merger, or approve or recommend, or propose to approve or
recommend, any Takeover Proposal, or enter into any Alternative
Acquisition Agreement. Upon execution of this Agreement, C-COR
shall, and it shall cause C-COR Representatives and its
Subsidiaries to, immediately terminate any existing activities,
discussions, solicitations or negotiations with any third party
conducted previously with respect to any Takeover Proposal and,
if requested by ARRIS, to request the return
and/or
destruction of any materials previously provided in connection
with any such activities, discussions, solicitations or
negotiations.
Notwithstanding any of the foregoing restrictions set forth in
Section 6.1 or this Section 6.2(a), nothing in this
Agreement prevents C-COR or the Board of Directors of C-COR from
furnishing (or causing to be furnished), prior to, but not
after, the time the vote is taken with respect to adoption of
this Agreement and approval of the Merger at the Meeting of the
stockholders of C-COR, information concerning its business,
properties or assets to any third party pursuant to a
confidentiality agreement with terms and conditions
substantially similar to those of the Confidentiality Agreement
(as defined herein), so long as such information is
contemporaneously provided to ARRIS, and may negotiate and
participate in discussions and negotiations with such third
party who has made a bona fide, written Takeover Proposal,
but only if: (w) such Takeover Proposal was made
after the date of this Agreement (it being understood that such
a Takeover Proposal made after the date of this Agreement by a
third party who has made a Takeover Proposal prior to the date
of this Agreement is considered a new Takeover Proposal made
after the date of this Agreement); (x) none of
C-COR, its
Subsidiaries nor the C-COR Representatives has solicited,
initiated, or knowingly facilitated or encouraged any Takeover
Proposal, or otherwise directly or indirectly violated this
Section 6.2 (other than unintentional breaches that
(1) have not directly or indirectly resulted in the making
of such Takeover Proposal and (2) otherwise have had only
an immaterial impact on ARRIS rights under this
Section 6.2); (y) such third party has submitted a
Takeover Proposal that the Board of Directors of C-COR has
determined, after receiving advice from its outside legal
counsel and its financial advisors, either (i) constitutes
a Superior Proposal (as defined below) or (ii) is
reasonably likely to lead to a Superior Proposal; and
(z) the Board of Directors of
C-COR
determines in good faith, after receiving advice from its
outside counsel and its financial advisors, that such action is
required to discharge the Board of Directors of C-CORs
fiduciary duties to C-CORs stockholders under Pennsylvania
Law. C-COR shall not release or permit the release of any third
party from, or waive or permit the waiver of any provision of,
any confidentiality, standstill (other than to permit the making
of a Takeover Proposal) or similar agreement to which C-COR is a
party or under which C-COR has any rights. C-COR shall promptly
(and in any event within one business day) notify ARRIS
telephonically and in writing of the existence of any proposal,
discussion, negotiation or inquiry received by C-COR that is or
could reasonably be expected to constitute or lead to a Takeover
Proposal, and C-COR shall promptly communicate in writing to
ARRIS the terms and conditions of any such proposal, discussion,
negotiation or inquiry which it may receive, and provide a copy
of any written proposal (to the extent permissible by the terms
thereof) and the identity of the third party making the same.
C-COR shall inform ARRIS within one business day after any
change to the material terms of any such Takeover Proposal.
Within one business day after any determination by the C-COR
Board that a Takeover Proposal constitutes a Superior Proposal,
C-COR shall deliver to ARRIS and Merger Subsidiary a written
notice advising them of such determination, specifying the terms
and conditions of such Superior Proposal and the identity of the
third party making such Superior Proposal, and providing ARRIS
and Merger Subsidiary with a copy of the Superior Proposal to
the extent permissible by the terms thereof.
(b) Neither the Board of Directors of C-COR nor any
committee thereof shall (i) withdraw or modify, or propose
to withdraw or modify, in a manner adverse to ARRIS or Merger
Subsidiary, the recommendation of the
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Board of Directors of C-COR, (ii) approve or recommend, or
propose to approve or recommend, any Takeover Proposal or
(iii) enter into any Alternative Acquisition Agreement
(other than a confidentiality agreement expressly permitted by
and in accordance with Section 6.2(a)). Notwithstanding the
foregoing, prior to, but not after, the time the vote is taken
with respect to the adoption of this Agreement and approval of
the Merger at the Meeting of the stockholders of C-COR, the
Board of Directors of C-COR may make a Change in C-COR
Recommendation in a manner adverse to ARRIS or Merger Subsidiary
(including, for such purpose, a withdrawal of such
recommendation by the Board of Directors of C-COR) (a
Change in C-COR Recommendation)
and/or
approve or recommend a Superior Proposal (and, in connection
therewith, take such action as shall be necessary to exempt such
Superior Proposal from any Takeover Statute (as defined herein)
and the C-COR Rights Agreement), and C-COR may enter into an
Alternative Acquisition Agreement with respect to a Superior
Proposal in connection with the termination of this Agreement,
in each case if (A) C-COR has received a Superior Proposal
that is pending at the time C-COR determines to take such
action, (B) the C-COR Board has determined in good faith,
after receiving advice from its outside counsel and its
financial advisors, that such action is required to discharge
the fiduciary duties of the Board of Directors of C-COR to
C-CORs stockholders under Pennsylvania Law and (C) at
least three business days have passed following ARRIS
receipt of an Adverse Recommendation Notice (as defined below),
and ARRIS does not make an offer within such three business day
period that is at least as favorable to C-CORs
stockholders as the Superior Proposal, as concluded by the Board
of Directors of C-COR in its good faith judgment, after
receiving advice from its outside counsel and its financial
advisors (it being agreed that the Board of Directors of C-COR
shall convene a meeting to consider any such offer by ARRIS as
promptly as possible following receipt of such offer and that
the Board of Directors of C-COR shall not withhold, withdraw or
modify the recommendation of the Board of Directors of C-COR
until the earlier of the receipt of ARRIS revised offer or
three business days after receipt by ARRIS of the Adverse
Recommendation Notice).
(c) For purposes of this Agreement:
(i) The term Adverse Recommendation
Notice means a written notice from C-COR advising
ARRIS that the Board of Directors of C-COR has received a
Superior Proposal that it intends to accept or recommend or
advising ARRIS that it intends to make a Change in C-COR
Recommendation, specifying the material terms and conditions of
such Superior Proposal and the other information required by
Section 6.2(a); provided, however, any
material amendment to the financial terms or other material
terms of such Superior Proposal shall require a new Adverse
Recommendation Notice and a new three business day period
pursuant to Section 6.2(b) hereof.
(ii) The term Competing Transaction
means any transaction, other than the transactions contemplated
by this Agreement, to acquire beneficial ownership (as defined
under Rule 13(d) promulgated under the Exchange Act) of
(A) assets that constitute 20% or more of the consolidated
revenues, net income or assets of C-COR and its Subsidiaries or
(B) 20% or more (in number or voting power) of any class of
equity securities or other capital stock of C-COR or any of its
Subsidiaries, in any such case pursuant to any transaction or
series of transactions, including (I) a merger,
consolidation, share exchange, or other business combination
(including any so-called merger-of-equals and whether or not
C-COR is the entity surviving any such transaction) involving
C-COR or any of its Subsidiaries, (II) a sale, issuance,
exchange, transfer or other disposition of shares of capital
stock of C-COR or any of its Subsidiaries, (III) a sale,
lease, license, exchange, transfer or other disposition of
assets of C-COR or any of its Subsidiaries or (IV) a tender
offer, exchange offer or similar transaction with respect to
either C-COR or any of its Subsidiaries, including any single or
multi-step transaction or series of related transactions, which
is structured to permit such third party or another third party
to acquire beneficial ownership of assets that constitute 20% or
more of the consolidated revenues, net income or assets of C-COR
and its Subsidiaries, or 20% or more of the equity interest in
either C-COR or any of its Subsidiaries.
(iii) The term Superior Proposal means
an unsolicited written proposal or offer (whether a Takeover
Proposal or otherwise) by a third party to acquire (whether by
way of merger, acquisition or otherwise), directly or
indirectly, greater than 50% of the shares of C-COR Common Stock
then outstanding (or the effect of which would be that the
stockholders of C-COR beneficially own less than 50% of the
voting power of the combined or ongoing entity), or to acquire
all or substantially all of the assets of C-COR and
(A) otherwise on terms which the Board of Directors of
C-COR determines in good
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faith, after consultation with its financial advisors, and
taking into account all terms and conditions of the proposal or
offer that it deems relevant (including all legal, financial,
regulatory and other aspects, including any financing condition
and time to consummation), to be more favorable to C-CORs
stockholders from a financial point of view than the Merger, and
(B) that, in the good faith reasonable judgment of the
Board of Directors of C-COR, is reasonably likely to be
consummated.
(iv) The term Takeover Proposal means
any inquiry, proposal, offer or indication of interest
(including any inquiry, proposal, offer or indication of
interest to its stockholders), whether in writing or otherwise,
from a third party that constitutes, or could reasonably be
expected to lead to, a Competing Transaction.
Section 6.3
Conduct of Business by ARRIS Pending the
Merger. ARRIS covenants and agrees that, except
as contemplated by this Agreement, during the period from the
date of this Agreement and continuing until the earlier of the
termination of this Agreement, unless C-COR shall otherwise
consent in writing (which consent shall not be unreasonably
withheld), ARRIS shall conduct its business and shall cause the
businesses of its Subsidiaries to be conducted only in, and
ARRIS and its Subsidiaries shall not take any action except in,
the ordinary course of business and in the manner consistent
with past practice; and ARRIS shall use reasonable commercial
efforts to preserve substantially intact the business
organization of ARRIS and its Subsidiaries, to keep available
the services of the present officers, employees and consultants
of ARRIS and its Subsidiaries and to preserve the present
relationships of ARRIS and its Subsidiaries with customers,
suppliers and other persons with which ARRIS or any of its
Subsidiaries has significant business relations or take any
actions which would reasonably be expected to interfere with or
delay the consummation of the Merger or otherwise breach this
Agreement. By way of amplification and not limitation, except as
contemplated by this Agreement, neither ARRIS nor any of its
Subsidiaries shall, during the period from the date of this
Agreement and continuing until the earlier of the termination of
this Agreement or the Merger, directly or indirectly do, or
propose to do, any of the following without the prior written
consent of C-COR (which consent shall not be unreasonably
withheld):
(a) amend or otherwise change the Articles of
Incorporation, Bylaws or Subsidiary Documents of ARRIS or any of
its Subsidiaries;
(b) (i) declare, set aside, make or pay any dividend
or other distribution (whether in cash, stock or property or any
combination thereof) in respect of any of its capital stock,
except that a wholly owned Subsidiary of ARRIS may declare and
pay a dividend or make advances to ARRIS or (ii) split,
combine or reclassify any of its capital stock or issue or
authorize or propose the issuance of any other securities in
respect of, in lieu of or in substitution for shares of its
capital stock; and
(c) take, or agree in writing or otherwise to take, any of
the actions described in Sections 6.3(a) and
(b) above, or any action which would make any of the
representations or warranties of ARRIS contained in this
Agreement untrue or incorrect or prevent ARRIS from performing
or cause ARRIS not to perform its covenants hereunder.
Section 6.4
Recommendation of the Board of Directors of
ARRIS. The Board of Directors of ARRIS shall
recommend the approval of the issuance of ARRIS Common Stock
pursuant to this Agreement in the Joint Proxy Statement. Neither
the Board of Directors of ARRIS nor any committee thereof shall
withdraw or modify, or propose to or resolve to withdraw or
modify, in a manner adverse to C-COR, the ARRIS Board
Recommendation.
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ARTICLE VII
ADDITIONAL
AGREEMENTS
Section 7.1
Joint Proxy Statement and the Registration Statement.
(a) As promptly as practicable after the execution and
delivery of this Agreement, the Parties shall prepare and file
with the SEC, and shall use all reasonable efforts to have
cleared by the SEC, and promptly thereafter shall mail to the
holders of record of shares of ARRIS Common Stock and C-COR
Common Stock, the Joint Proxy Statement, provided, however, that
C-COR and ARRIS shall not mail or otherwise furnish the Joint
Proxy Statement to their respective stockholders unless and
until they have received notice from the SEC that the
Registration Statement is effective under the 1933 Act.
(b) The Parties will cooperate in the preparation of the
Joint Proxy Statement and the Registration Statement and in
having the Registration Statement declared effective as soon as
practicable.
Section 7.2
C-COR and ARRIS Stockholders Meetings and Consummation
of the Merger.
(a) Following the execution and delivery of this Agreement,
C-COR shall promptly take all action necessary in accordance
with Pennsylvania Law and its Articles of Incorporation and
Bylaws to convene a stockholders meeting (the
C-COR Stockholders Meeting) and ARRIS
shall promptly take all action necessary in accordance with
Delaware Law and its Certificate of Incorporation and By-laws to
convene a stockholders meeting (the ARRIS
Stockholders Meeting). Each of C-COR and ARRIS
shall use all commercially reasonable efforts to solicit from
its respective stockholders proxies to be voted at its
stockholders meeting in favor of this Agreement pursuant
to the Joint Proxy Statement and, subject to the fiduciary
duties of its Board of Directors, each of C-COR and ARRIS shall
include in the Joint Proxy Statement the recommendation of its
Board of Directors in favor of this Agreement and the Merger.
Each of the Parties shall take all other action necessary or, in
the opinion of the other Parties, advisable to promptly and
expeditiously secure any vote or consent of stockholders
required by Pennsylvania Law or Delaware Law, as applicable, the
applicable requirements of any securities exchange, and such
Partys Certificate or Articles of Incorporation and Bylaws
to effect the Merger.
(b) Upon the terms and subject to the conditions hereof and
as soon as practicable after the conditions set forth in
Article VIII hereof have been fulfilled or waived, each of
the Parties shall execute such instruments and agreements as may
be required by Pennsylvania Law and Delaware Law in the manner
required by such applicable state law and deliver to and file
such instruments and documents with the Department of State of
the Commonwealth of Pennsylvania and the Secretary of State of
the State of Delaware, as applicable, and the Parties shall take
all such other and further actions as may be required by law to
make the Merger effective. Prior to the filings referred to in
this Section 7.2(b), a closing (the
Closing) will be held at the offices of
Troutman Sanders LLP in Atlanta, Georgia (or such other place as
the Parties may agree) for the purpose of confirming all the
foregoing. The Closing will take place upon the fulfillment or
waiver of all of the conditions to closing set forth in
Article VIII of this Agreement, or as soon thereafter as
practicable (the date of the Closing being herein referred to as
the Closing Date).
Section 7.3
Additional Agreements.
(a) Each of the Parties will comply in all material
respects with all applicable laws and with all applicable rules
and regulations of any governmental authority in connection with
its execution, delivery and performance of this Agreement and
the transactions contemplated hereby. Each of the Parties agrees
to use all commercially reasonable efforts to obtain in a timely
manner all necessary waivers, consents and approvals and to
effect all necessary registrations and filings, and to use all
commercially reasonable efforts to take, or cause to be taken,
all other actions and to do, or cause to be done, all other
things necessary, proper or advisable to consummate and make
effective as promptly as practicable the transactions
contemplated by this Agreement. Without limiting the generality
of the foregoing, each of C-COR and ARRIS shall promptly prepare
and file a Premerger Notification (as defined in the HSR Act) in
accordance with the HSR Act, shall promptly comply with any
requests for additional information, and shall use its
commercially reasonable efforts to obtain termination of the
waiting period thereunder as promptly as practicable.
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(b) C-COR and ARRIS shall cooperate in the preparation,
execution and filing of all returns, questionnaires,
applications or other documents regarding any real property
transfer or gains, sales, use, transfer, value added, stock
transfer and stamp taxes, and transfer, recording, registration
and other fees and similar taxes which become payable in
connection with the Merger that are required or permitted to be
filed on or before the Effective Time. Except to the extent set
forth in Section 2.5(f) hereof, each of ARRIS and the
Merger Subsidiary shall pay, without deduction from any amount
payable to holders of C-COR Common Stock, any such taxes or fees
imposed on any Party that become payable in connection with the
Merger.
Section 7.4
Notification of Certain Matters. Each of C-COR
and ARRIS shall give prompt notice to the other of the following:
(a) the occurrence or nonoccurrence of any event whose
occurrence or nonoccurrence would be likely to cause either
(i) any representation or warranty contained in this
Agreement to be untrue or inaccurate in any material respect at
any time from the date hereof to the Effective Time, or
(ii) directly or indirectly, any Material Adverse Effect on
such Party;
(b) any material failure of such Party, or any officer,
director, employee or agent of any thereof, to comply with or
satisfy any covenant, condition or agreement to be complied with
or satisfied by it hereunder; and
(c) any facts relating to such Party which would make it
necessary or advisable to amend the Joint Proxy Statement or the
Registration Statement in order to make the statements therein
not misleading or to comply with applicable law;
provided, however, that the delivery of any notice
pursuant to this Section 7.4 shall not limit or otherwise
affect the remedies available hereunder to the Party receiving
such notice.
Section 7.5
Access to Information.
(a) From the date hereof to the Effective Time, each of
C-COR and ARRIS shall, and shall cause its respective
Subsidiaries, and its and their officers, directors, employees,
auditors, counsel and agents to afford the officers, employees,
auditors, counsel and agents of the other Party complete
reasonable access at all reasonable times to such Partys
and its Subsidiaries officers, employees, auditors,
counsel agents, properties, offices and other facilities and to
all of their respective books and records, and shall furnish the
other with all financial, operating and other data and
information as such other Party may reasonably request.
(b) Each of C-COR and ARRIS agrees that all information so
received from the other Party shall be deemed received pursuant
to the confidentiality agreement, dated as of September 6,
2007 between C-COR and ARRIS (the Confidentiality
Agreement) and such Party shall, and shall cause its
Subsidiaries and each of its and their respective officers,
directors, employees, financial advisors and agents
(Party Representatives), to comply with the
provisions of the Confidentiality Agreement with respect to such
information and the provisions of the Confidentiality Agreement
are hereby incorporated herein by reference with the same effect
as if fully set forth herein.
Section 7.6
Public Announcements. C-COR and ARRIS shall
use all reasonable efforts to develop a joint communications
plan and each Party shall use all reasonable efforts to ensure
that all press releases and other public statements with respect
to the transactions contemplated hereby shall be consistent with
such joint communications plan or, to the extent inconsistent
therewith, shall have received the prior written approval of the
other.
Section 7.7
Cooperation.
(a) Upon the terms and subject to the conditions hereof,
each of the Parties agrees to use its commercially reasonable
efforts to take or cause to be taken all actions and to do or
cause to be done all things necessary, proper or advisable to
consummate the transactions contemplated by this Agreement and
shall use its commercially reasonable efforts to obtain all
necessary waivers, consents and approvals, and to effect all
necessary filings under the 1933 Act, the Exchange Act and
the HSR Act. The Parties shall cooperate in responding to
inquiries from, and making presentations to, regulatory
authorities. Notwithstanding the foregoing, no Party shall have
any obligation to divest, or agree to divest, any asset or
business.
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(b) Each of C-COR and ARRIS agree to use its commercially
reasonable efforts to comply promptly with all requirements of
any property transfer statutes, to the extent applicable to the
transactions contemplated hereby, and to take all actions
necessary to cause the transactions contemplated hereby to be
effected in compliance therewith. C-COR and ARRIS agree that
they will consult with each other to determine what, if any,
actions must be taken prior to or after the Effective Time to
ensure compliance with such statutes.
(c) The Parties shall use their reasonable efforts to
satisfy or cause to be satisfied all of the conditions precedent
that are set forth in Article VII, as applicable to each of
them.
Section 7.8
Indemnification, Directors, and Officers Insurance.
(a) As of the Effective Time, the indemnification and
exculpation provisions contained in the Certificate of
Incorporation and Bylaws of the Surviving Corporation shall be
at least as favorable to individuals who immediately prior to
the Closing Date were directors, officers, agents or employees
of C-COR or its Subsidiaries or otherwise entitled to
indemnification under C-CORs or such Subsidiarys
Bylaws or Articles of Incorporation (an Indemnified
Party) as those contained as of the date hereof in the
Bylaws and Articles of Incorporation of C-COR or such
Subsidiary, respectively, and shall not be amended, repealed or
otherwise modified for a period of six years after the Closing
Date in any manner that would adversely affect the rights
thereunder of any Indemnified Party; provided,
however, that nothing contained herein shall limit
ARRIS ability to merge the Surviving Corporation into
ARRIS or any of its Subsidiaries or any other person or
otherwise eliminate the Companys or the Surviving
Corporations corporate existence so long as such rights
are preserved. C-COR covenants that it shall, to the fullest
extent permitted under Pennsylvania law and regardless of
whether the Merger becomes effective, indemnify, defend and hold
harmless, and after the Effective Time, the Surviving
Corporation shall, to the fullest extent permitted by Delaware
law, indemnify, defend and hold harmless, each Indemnified Party
against any costs or expenses (including reasonable
attorneys fees), judgments, fines, losses, claims,
damages, liabilities and amounts paid in settlement in
connection with any claim, action, suit, proceeding or
investigation, including, without limitation, liabilities
arising out of this Agreement or under the 1933 Act or the
Exchange Act, and in the event of any such claim, action, suit,
proceeding or investigation (whether arising before or after the
Effective Time), (i) C-COR or the Surviving Corporation
shall pay the reasonable fees and expenses of counsel selected
by the Indemnified Parties, which counsel shall be reasonably
satisfactory to C-COR or the Surviving Corporation, promptly as
statements therefor are received, and (ii) C-COR and the
Surviving Corporation will cooperate in the defense of any such
matter; provided, however, that neither C-COR nor
the Surviving Corporation shall be liable for any settlement
effected without its written consent (which consent shall not be
unreasonably withheld); and provided, further, that neither
C-COR nor the Surviving Corporation shall be obliged pursuant to
this Section 7.8(a) to pay the fees and disbursements of
more than one counsel for all Indemnified Parties in any single
action, except to the extent that, in the reasonable opinion of
counsel for the Indemnified Parties, two or more of such
Indemnified Parties have conflicting interests in the outcome of
such action.
(b) The Surviving Corporation shall cause to be obtained
prior to the Effective Time, although in lieu thereof C-COR may
obtain prior to the Effective Time, tail insurance
policies with a claims period of at least six years from the
Effective Time with respect to directors and
officers liability insurance in amount and scope at least
as favorable as C-CORs existing policies for claims
arising from facts or events that occurred on or prior to the
Effective Time; provided, however, that in no
event shall the Surviving Corporation be required to expend
pursuant to this Section 7.8 more than an amount per year
equal to 200% of current annual premiums paid by C-COR for such
insurance; provided, further however, that in the
event of an expiration, termination or cancellation of such
policies, ARRIS or the Surviving Corporation shall be required
to obtain as much coverage as is possible under substantially
similar policies for such maximum annual amount in aggregate
annual premiums.
(c) It is expressly agreed that the Indemnified Parties
(and, if deceased, his or her heirs or beneficiaries) to whom
this Section 7.8 applies shall be third party beneficiaries
of the obligations to such persons set forth in this
Section 7.8. The obligations of the Surviving Corporation
and its Subsidiaries under this Section 7.8 shall not be
terminated or modified in such a manner as to adversely affect
the rights of any Indemnified Party
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(or, if deceased, his or her heirs or beneficiaries) to whom
this Section 7.8 applies without the consent of such
affected person.
Section 7.9
Employee Benefit Plans.
(a) ARRIS hereby agrees that, immediately following the
Effective Time, it shall, or it shall cause the Surviving
Corporation to, (i) initially provide each employee of
C-COR and each of its Subsidiaries as of the Effective Time
(each, an Employee) with at least the same
level of base salary and, taken as a whole, cash incentive
compensation and other variable cash compensation as was
provided to each such Employee immediately prior to the
Effective Time, and (ii) initially provide the Employees
with employee benefits that are no less favorable in the
aggregate than those provided to similarly situated employees of
ARRIS. From and after the Effective Time, ARRIS shall cause the
Surviving Corporation and its Subsidiaries to honor in
accordance with their terms, all employment agreements and
change in control agreements (including, without limitation,
distribution elections under C-CORs Supplemental Executive
Retirement Plan) listed on Section 4.12 of the
C-COR
Disclosure Schedule, except in the event the individuals covered
under such agreements enter into new agreements with ARRIS, and,
for a period of 18 months following the Effective Time,
severance plans or agreements listed on Section 4.12 of the
C-COR Disclosure Schedule.
(b) Employees shall receive credit for all purposes
(including, for purposes of eligibility to participate, vesting,
benefit accrual and eligibility to receive benefits, but
excluding benefit accruals under any defined benefit pension
plan) under any employee benefit plan, program or arrangement
established or maintained by ARRIS or the Surviving Corporation
under which the Employee may be eligible to participate on or
after the Effective Time to the same extent recognized by C-COR
or any of its Subsidiaries with respect to its own Employees
under comparable plans immediately prior to the Effective Time,
but which shall not result in the duplication of benefits
thereunder.
(c) In the event that ARRIS or the Surviving Corporation
does not elect to continue C-CORs 401(k) savings plan (the
C-COR Retirement Savings and Profit Sharing
Plan) and elects to transfer account balances to
ARRIS (or the Surviving Corporations) 401(k) savings
plan, outstanding plan loans shall be transferred in kind so as
to permit such loans to continue in accordance with their terms
without triggering a taxable distribution event. In the event
ARRIS or the Surviving Corporation does not choose to continue
C-CORs
flexible spending account (FSA) program, it shall
nevertheless allow the current coverage periods under such FSAs
to continue through March 31, 2008 to permit participants
who remain employees to continue to obtain reimbursements for
eligible expenses incurred through March 31, 2008 on the
same terms and conditions as existed immediately prior to the
Effective Time.
(d) With respect to the welfare benefits plans, programs
and arrangements maintained, sponsored or contributed to by
ARRIS or the Surviving Corporation in which an Employee may be
eligible to participate on the Effective Time, ARRIS shall
(i) waive, or shall use commercially reasonable efforts to
cause its insurance carrier to waive, all limitations as to
preexisting and at-work conditions, if any, with respect to
participation and coverage requirements applicable to each
Employee, (ii) to the extent that ARRIS insurance
carrier will not provide coverage to an Employee as a result of
a preexisting or at-work condition and in the event that such
Employee elects continuation coverage pursuant to
Section 4980B of the Code or Sections 601 to 608 of
ERISA or other similar state laws (COBRA), ARRIS
shall pay for such continuation coverage to the extent that the
cost of the coverage exceeds the amount that the Employee was
paying for the benefit coverage immediately prior to the
Employees loss of coverage and such payments shall
continue until the COBRA period has ended or, if earlier, until
the Employee is entitled to coverage under any
employer-sponsored group health plan or any government-sponsored
health program, (iii) provide credit to each Employee for
any co-payments, deductibles and out-of-pocket expenses paid by
such Employee under C-CORs comparable plans during the
relevant plan year, up to and including the Effective Time, and
(iv) use commercially reasonable efforts to provide
in-network
coverage for State College-based Employees.
(e) As of the Closing, ARRIS and its affiliates shall
assume and be liable for all obligations of C-COR and all of its
Subsidiaries in respect of any accrued but unpaid vacation,
holiday or similar liability as of the Closing and to provide
COBRA continuation coverage to C-COR employees and qualified
beneficiaries.
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Section 7.10
Stock Exchange Listing. ARRIS shall use all
reasonable efforts to obtain, prior to the Effective Time, the
approval for listing on the NASDAQ, effective upon official
notice of issuance, of the shares of ARRIS Common Stock into
which the C-COR Shares will be converted pursuant to
Article II hereof and which will be issuable upon exercise
of options pursuant to Section 2.8 hereof.
Section 7.11
No Shelf Registration. ARRIS shall not be
required to amend or maintain the effectiveness of the
Registration Statement for the purpose of permitting resale of
the shares of ARRIS Common Stock received pursuant hereto by the
persons who may be deemed to be affiliates of C-COR
or ARRIS within the meaning of Rule 145 promulgated under
the 1933 Act.
Section 7.12
Affiliates. C-COR (i) has disclosed to
ARRIS on Section 7.12 of the C-COR Disclosure Schedule
hereof all persons who are, or may be, as of the date hereof its
affiliates for purposes of Rule 145 under the
1933 Act or SEC Accounting Series Release 135, and
(ii) shall use commercially reasonable efforts to cause
each person who is identified as an affiliate of it
on Section 7.12 of the C-COR Disclosure Schedule to deliver
to ARRIS as promptly as practicable but in no event later than
the Closing Date, a signed agreement substantially in the form
previously agreed to by C-COR and ARRIS. C-COR and ARRIS shall
notify each other from time to time of any other persons who
then are, or may be, such an affiliate and use all
reasonable efforts to cause each additional person who is
identified as an affiliate to execute a signed
agreement as set forth in this Section 7.12.
Section 7.13
Change in Control, Severance and Employment
Agreements. C-COR shall cooperate reasonably with
ARRIS and the Merger Subsidiary in accelerating to the earlier
of the Effective Time or December 31, 2007, with respect to
those individuals and specific awards or payments identified by
ARRIS, any one or more of the following subject to the
limitations of Section 409A of the Code: (i) benefits
under any existing change in control agreements;
(ii) benefits to be paid in the event of a change in
control under any existing employment agreements;
(iii) bonuses or other incentive compensation reasonably
likely to be earned; and (iv) benefits under any
nonqualified deferred compensation arrangements. Notwithstanding
the foregoing, ARRIS shall honor existing participant elections
as to timing and forms of benefits under C-CORs
Supplemental Executive Retirement Plan (including elections made
before the end of 2007 with respect to payment in connection
with a qualified change in control, if applicable). The parties
understand that payments subject to Section 409A of the
Code that are triggered by termination of employment must be
delayed for six months for specified employees under
Section 409A(2)(B)(i).
Section 7.14
Tax-Free Reorganization.
(a) This Agreement is a plan of reorganization
within the meaning of
Section 1.368-2(g)
of the Treasury regulations promulgated under the Code. From and
after the date of this Agreement and until the Effective Time,
each Party hereto shall use all commercially reasonable efforts
to cause the Merger to qualify as a reorganization under the
provisions of Section 368(a) of the Code. Following the
Effective Time, neither the Merger Subsidiary, ARRIS, C-COR or
any of their affiliates shall knowingly take any action that
could cause the Merger to fail to qualify as a reorganization
under Section 368(a) of the Code.
(b) Officers of C-COR shall execute and deliver to each of
C-CORs and ARRIS counsel, at the time the
Registration Statement or any amendment thereto is filed with
the SEC and on or about the Closing Date, certificates
substantially in compliance with IRS published advance ruling
guidelines, with customary exceptions and modifications thereto,
to enable such firms to deliver any opinions required in
connection with the filing of the Registration Statement and the
opinions contemplated by Sections 8.2(d) and 8.3(d). C-COR
does not know of any reason why C-COR will not be able to
deliver such certificates.
(c) Officers of ARRIS shall execute and deliver to each of
C-CORs and ARRIS counsel at the time the
Registration Statement or any amendment thereto is filed with
the SEC and on or about the Closing Date, certificates
substantially in compliance with IRS published advance ruling
guidelines, with customary exceptions and modifications thereto,
to enable such firms to delivery any opinions required in
connection with the filing of the Registration Statement and the
opinions contemplated by Sections 8.2(d) and 8.3(d). ARRIS
does not know of any reason why ARRIS will not be able to
deliver such certificates.
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Section 7.15
Section 16 Matters. Prior to the
Effective Time, C-COR shall take all such steps as may be
required (to the extent permitted under applicable law) to cause
any dispositions of C-COR Common Stock (including derivative
securities with respect to C-COR Common Stock) resulting from
the transactions contemplated by Article II by each
individual who is subject to the reporting requirements of
Section 16(a) of the Exchange Act with respect to C-COR to
be exempt under
Rule 16b-(3)
promulgated under the Exchange Act.
Section 7.16
C-COR Notes. If requested by ARRIS, to the
extent permitted by the C-COR Notes,
C-COR shall
redeem the C-COR Notes in accordance with ARRIS request.
Section 7.17
C-COR Incentive Plan. If requested by ARRIS,
C-COR shall take all reasonable actions necessary to amend the
Incentive Plan to permit consultants of C-COR to be eligible to
receive awards thereunder.
Section 7.18
C-COR Intellectual Property. C-COR will
deliver to ARRIS as soon as reasonably practicable a list of
maintenance fees outside the United States for all Patents
listed on Section 4.21(a) of the C-COR Disclosure Schedule.
Within thirty (30) days of the date of the Agreement C-COR
will provide the names of the parties and the date executed for
each contract or agreement set forth on
Schedule 4.21(c)-1.
Within thirty (30) days of the date of this Agreement,
C-COR will identify to ARRIS, for each contract listed in
Section 4.21(c)-1
and
Section 4.21(c)-2
of the C-COR Disclosure Schedule, all royalties, honoraria or
other fees (if any) that will become due or payable thereunder
on or prior to March 31, 2008. Within thirty (30) days
of the signing of this Agreement, C-COR will identify to ARRIS,
for each Contract listed in Section 4.21(d) of the C-COR
Disclosure Schedule, all royalties, honoraria or other fees (if
any) that will become due or payable thereunder within five
months after the date of this Agreement. C-COR will deliver to
ARRIS as soon as reasonably practicable a complete and accurate
list of all Agreements referenced in Section 4.21(k)(i)(B)
or 4.21(k)(ii).
Section 7.19
Change of Control Notifications. Prior to the
Closing, ARRIS will deliver to each
C-COR
employee subject to a change of control agreement a non-binding
indication of ARRIS then-current expectation with respect
to the term of such employees employment after the
Effective Time.
ARTICLE VIII
CONDITIONS
TO THE MERGER
Section 8.1
Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each Party
to effect the Merger shall be subject to the following
conditions:
(a) Stockholder Approval. The Merger and
this Agreement shall have been approved and adopted by the
requisite vote of the stockholders of each of C-COR and the
Merger Subsidiary and the issuance of ARRIS Common Stock
pursuant to the Merger shall have been approved by the requisite
vote of the stockholders of ARRIS, in each case in accordance
with Pennsylvania Law, Delaware Law and the rules of NASDAQ, as
applicable;
(b) Legality. No federal, state or
foreign statute, rule, regulation, executive order, decree or
injunction shall have been enacted, entered, promulgated or
enforced by any court or governmental authority which is in
effect and has the effect of (i) making the Merger illegal
or otherwise prohibiting the consummation of the Merger or
(ii) creating a Material Adverse Effect on ARRIS, with or
without including its ownership of C-COR and its Subsidiaries
after the Merger, or C-COR;
(c) Regulatory Matters. All
authorizations, consents, orders or approvals of, or
declarations or filings with, and all expirations of waiting
periods imposed by, any governmental body, agency or official,
including, without limitation, any waiting period applicable to
the consummation of the Merger under the HSR Act, shall have
expired or been terminated (all of the foregoing,
Consents) that are necessary for the
consummation of the transactions contemplated hereby, other than
immaterial Consents the failure to obtain which would have no
material adverse effect on the consummation of the transactions
contemplated hereby and no Material Adverse Effect on ARRIS,
with or without including its ownership of
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C-COR and
its Subsidiaries after the Merger, or C-COR, shall have been
filed, have occurred or have been obtained (all such permits,
approvals, filings and consents and the lapse of all such
waiting periods being referred to as the Requisite
Regulatory Approvals) and all such Requisite
Regulatory Approvals shall be in full force and effect,
provided, however, that a Requisite Regulatory
Approval shall not be deemed to have been obtained if in
connection with the grant thereof any state or federal
governmental body, agency or official shall have imposed any
condition, requirement, restriction or change of regulation, or
any other action directly or indirectly related to such grant
taken by such governmental body, which would reasonably be
expected to either (i) have a Material Adverse Effect on
either ARRIS, with or without including its ownership of C-COR
and its Subsidiaries, or C-COR, or (ii) prevent the Parties
from realizing in all material respects the economic benefits of
the transactions contemplated by this Agreement that the Parties
currently anticipate receiving therefrom;
(d) Registration Statement Effective. The
Registration Statement shall have become effective prior to the
mailing by each of C-COR and ARRIS of the Joint Proxy Statement
to its respective stockholders, no stop order suspending the
effectiveness of the Registration Statement shall then be in
effect, and no proceedings for that purpose shall then be
threatened by the SEC or shall have been initiated by the SEC
and not concluded or withdrawn;
(e) Stock Exchange Listing. The shares of ARRIS
Common Stock into which the C-COR Shares will be converted
pursuant to Article II hereof and the shares of ARRIS
Common Stock issuable upon the exercise of options pursuant to
Section 2.8 hereof shall have been duly approved for
listing on the NASDAQ, subject to official notice of issuance;
(f) Consents Under C-COR
Agreements. C-COR shall have obtained the consent
or approval of any person whose consent or approval shall be
required under any agreement or instrument in order to permit
the consummation of the transactions contemplated hereby except
those which the failure to obtain would not, individually or in
the aggregate, have a Material Adverse Effect on ARRIS, with or
without including its ownership of C-COR and its Subsidiaries
after the Merger, or C-COR; and
(g) Consents Under ARRIS
Agreements. ARRIS shall have obtained the consent
or approval of any person whose consent or approval shall be
required under any agreement or instrument in order to permit
the consummation of the transactions contemplated hereby except
those which the failure to obtain would not, individually or in
the aggregate, have a Material Adverse Effect on ARRIS, with or
without including its ownership of C-COR and its Subsidiaries
after the Merger, or C-COR.
Section 8.2
Additional Conditions to Obligations of
C-COR. The obligations of C-COR to effect the
Merger are also subject to the fulfillment of the following
conditions:
(a) Representations and Warranties. The
representations and warranties of ARRIS contained in this
Agreement shall be true and correct on the date hereof and
(except to the extent such representations and warranties speak
as of a date earlier than the date hereof) shall also be true
and correct on and as of the Closing Date, except for changes
permitted under Section 6.1 hereof or otherwise
contemplated by this Agreement, with the same force and effect
as if made on and as of the Closing Date, provided,
however, that for purposes of this Section 8.2(a)
only, such representations and warranties shall be deemed to be
true and correct unless the failure or failures of such
representations and warranties to be so true and correct
(without regard to materiality qualifiers contained therein),
individually or in the aggregate, results or would reasonably be
expected to result in a Material Adverse Effect on ARRIS;
(b) Agreements, Conditions and
Covenants. ARRIS shall have performed or complied
in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied
with by them on or before the Effective Time;
(c) Certificate. C-COR shall have
received a certificate of an executive officer of ARRIS to the
effect set forth in paragraphs (a) and (b) above;
(d) Tax Opinion.
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(i) C-COR shall have received an opinion of Ballard Spahr
Andrews & Ingersoll, LLP, special counsel to C-COR,
dated as of the Closing Date, in form and substance reasonably
satisfactory to
C-COR,
substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion, all
of which are consistent with the state of facts existing as of
the Effective Time, to the effect that (A) the Merger will
qualify as a reorganization within the meaning of
Section 368(a) of the Code and (B) C-COR, the Merger
Subsidiary and ARRIS each will be a party to the
reorganization within the meaning of Section 368 of
the Code. In rendering such opinion, Ballard Spahr
Andrews & Ingersoll, LLP may require and rely upon
representations and covenants including those contained in
certificates of officers of C-COR and ARRIS and others. The
issuance of such tax opinion shall be conditioned upon receipt
by C-CORs counsel of representation letters from each of
ARRIS and C-COR reasonably satisfactory in form and substance to
each of C-CORs and ARRIS counsel; and
(ii) ARRIS shall have received the opinion described in
Section 8.3(d) (i) hereof; and
Section 8.3
Additional Conditions to Obligations of
ARRIS. The obligations of ARRIS to effect the
Merger are also subject to the fulfillment of the following
conditions:
(a) Representations and Warranties. The
representations and warranties of C-COR contained in this
Agreement shall be true and correct on the date hereof and
(except to the extent such representations and warranties speak
as of a date earlier than the date hereof) shall also be true
and correct on and as of the Closing Date, except for changes
permitted under Section 6.1 hereof or otherwise
contemplated by this Agreement, with the same force and effect
as if made on and as of the Closing Date, provided,
however, that for purposes of this Section 8.3(a)
only, such representations and warranties shall be deemed to be
true and correct unless the failure or failures of such
representations and warranties to be so true and correct
(without regard to materiality qualifiers contained therein),
individually or in the aggregate, results or would reasonably be
expected to result in a Material Adverse Effect on C-COR or
ARRIS;
(b) Agreements, Conditions and
Covenants. C-COR shall have performed or complied
in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied
with by them on or before the Effective Time;
(c) Certificate. ARRIS shall have
received a certificate of an executive officer of C-COR to the
effect set forth in paragraphs (a) and (b) above;
(d) Tax Opinion.
(i) ARRIS shall have received a written opinion of Troutman
Sanders LLP, special counsel to ARRIS, dated as of the Effective
Time, in form and substance reasonably satisfactory to ARRIS,
substantially to the effect that, on the basis of the facts,
representations and assumptions set forth in such opinion, all
of which are consistent with the state of facts existing as of
the Effective Time, to the effect that (A) the Merger will
qualify as a reorganization within the meaning of
Section 368 of the Code and (B) C-COR, the Merger
Subsidiary and ARRIS will each be a party to the
reorganization within the meaning of Section 368 of
the Code. In rendering such opinion, Troutman Sanders LLP may
require and rely upon representations and covenants including
those contained in certificates of officers of ARRIS and C-COR
and others. The issuance of such tax opinion shall be
conditioned upon receipt by ARRIS counsel of
representation letters from each of ARRIS and
C-COR
reasonably satisfactory inform and substance to each of
C-CORs and ARRIS counsel; and
(ii) C-COR shall have received the opinion described in
Section 8.2(d)(i) hereof.
(e) Affiliate Agreements. ARRIS shall
have received the agreements required by Section 7.12
hereof to be delivered by the C-COR affiliates, duly
executed by each affiliate of C-COR.
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ARTICLE IX
TERMINATION,
AMENDMENT AND WAIVER
Section 9.1
Termination by Mutual Consent. This Agreement
may be terminated and the Merger may be abandoned at any time
prior to the Effective Time, whether before or after the
approval by stockholders of C-COR and ARRIS referred to in
Section 7.2(a), by mutual written consent of C-COR or ARRIS
as authorized by the respective Board of Directors.
Section 9.2
Termination by Either ARRIS or C-COR. This
Agreement may be terminated and the Merger may be abandoned at
any time prior to the Effective Time, whether before or after
the approval by stockholders of C-COR and ARRIS referred to in
Section 7.2(a), by ARRIS or C-COR as authorized by the
respective Board of Directors and by written notice if:
(a) the Merger is not consummated by March 31, 2008
(as such date may be extended by mutual written consent of ARRIS
and C-COR) (the Termination Date);
(b) the approval of the stockholders of ARRIS or of C-COR
required by Section 7.2(a) is not obtained at a duly held
stockholders meeting of each such company, including any
adjournments thereof;
(c) any order permanently restraining, enjoining or
otherwise prohibiting consummation of the Merger becomes final
and non-appealable, whether before or after the stockholders
meeting of either Party (provided such Party used commercially
reasonable efforts to have such order lifted); or
(d) if the Average Trading Price, as determined in
accordance with Section 2.2(b), is less than $11.41;
provided, however, that the right to terminate
this Agreement pursuant to clause (a) or (b) above
will not be available to any Party that has breached or failed
to perform in any material respect its obligations under this
Agreement in any manner that has been the principal cause of or
primarily resulted in the failure of the Merger to be
consummated; and provided, further, that, prior to
or upon any termination (i) by C-COR pursuant to
clause (b) above, C-COR must have paid to ARRIS any C-COR
Termination Fee (as defined herein) then due and payable under
Section 9.5(b) under the terms specified in
Section 9.5(b) or (ii) by ARRIS pursuant to
clause (b) above, ARRIS must have paid to C-COR any ARRIS
Termination Fee (as defined herein) then due and payable under
Section 9.5(c) under the terms specified in
Section 9.5(c).
Section 9.3
Termination by C-COR. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time by C-COR as authorized its the Board of
Directors:
(a) if prior to, but not after, the time the vote is taken
with respect to the adoption of this Agreement at the
stockholders meeting of either Party, (i) C-CORs
Board of Directors, pursuant to and in compliance with
Section 6.2, has approved or recommended to the
stockholders of C-COR any Superior Proposal and (ii) prior
to or upon termination pursuant to this Section 9.3(a),
C-COR has paid to ARRIS the C-COR Termination Fee then due and
payable under Section 9.5; provided, however,
that (A) prior to such termination pursuant to this
Section 9.3(a), C-COR notified ARRIS in writing promptly of
its intention to terminate this Agreement and to enter into a
binding Alternative Acquisition Agreement concerning a Superior
Proposal promptly following the Waiting Period (as defined
below), attaching the most current version of such agreement
(or, to the extent no such agreement is contemplated to be
entered into by C-COR in connection with such Superior Proposal,
a description of all material terms and conditions of such
Superior Proposal), and (B) ARRIS did not make, within
three business days after its receipt of such written
notification (the Waiting Period), an offer
that the Board of Directors of C-COR determined, in good faith
after consultation with its financial advisor, is at least as
favorable to the stockholders of C-COR from a financial point of
view as such Superior Proposal (it being understood that
(1) C-COR shall not enter into any such binding agreement
prior to or during the Waiting Period,
(2) C-COR
shall keep ARRIS reasonably informed at all times during the
Waiting Period of the status and material terms and conditions
(including any amendment thereto) of such Superior Proposal and
provide copies of all draft Alternative Acquisition Agreements
relating to such Superior Proposal (and any executed
confidentiality agreement entered into in the circumstances
referred to in Section 6.2(a)),
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and (3) C-COR shall notify ARRIS promptly if C-CORs
intention to enter into such binding written agreement changes
at any time after giving notification of such Superior
Proposal); or
(b) if there has been a breach of any representation,
warranty, covenant or agreement made by ARRIS or Merger
Subsidiary in this Agreement, or any such representation or
warranty becomes untrue after the date of this Agreement, such
that the condition set forth in Sections 8.2(a) or 8.2(b),
as the case may be, would not be satisfied and such breach is
not cured within twenty days after written notice thereof is
given by C-COR to ARRIS; provided, however, that
the right to terminate this Agreement by C-COR will not be
available to ARRIS if C-COR is at that time in material breach
of this Agreement.
Section 9.4
Termination by ARRIS. This Agreement may be
terminated and the Merger may be abandoned at any time prior to
the Effective Time by ARRIS as authorized by its Board of
Directors:
(a) if a C-COR Triggering Event (as defined below) has
occurred; or
(b) if there has been a breach of any representation,
warranty, covenant or agreement made by
C-COR in
this Agreement, or any such representation or warranty becomes
untrue after the date of this Agreement, such that the condition
set forth in Sections 8.3(a) or 8.3(b), as the case may be,
would not be satisfied and such breach is not cured within
20 days after written notice thereof is given by ARRIS to
C-COR; provided, however, that the right to
terminate this Agreement by ARRIS will not be available to ARRIS
if ARRIS or Merger Subsidiary is at that time in material breach
of this Agreement.
For the purposes of this Agreement, a C-COR Triggering
Event will be deemed to have occurred if:
(A) the Board of Directors of C-COR fails to recommend
approval of this Agreement and the Merger in the Proxy
Statement, a Change in C-COR Recommendation occurs or the Board
of Directors of C-COR resolves to make a change in its
recommendation;
(B) the Board of Directors of C-COR recommends to the
stockholders of C-COR a Competing Transaction or publicly
announces that it intends to do so or enters into any
Alternative Acquisition Agreement accepting any Acquisition
Proposal;
(C) a tender offer or exchange offer for the outstanding
shares of capital stock of C-COR is commenced (other than
pursuant to the transactions contemplated by this Agreement),
and the Board of Directors of C-COR fails to recommend against
(or maintain such recommendation against) acceptance of such
tender offer or exchange offer by its stockholders;
(D) the Board of Directors of C-COR, upon request of ARRIS
following receipt of a proposal or offer for a Competing
Transaction, fails to reaffirm to ARRIS the approval or
recommendation of the Merger and this Agreement within five
business days after such request; or
(E) C-COR or any of its officers, directors,
representatives, or agents knowingly and materially breaches its
obligations under Section 6.2.
Section 9.5
Effect of Termination and Abandonment.
(a) In the event of termination of this Agreement and the
abandonment of the Merger pursuant to this Article IX, this
Agreement (other than as set forth in Section 10.1) becomes
void and of no effect with no liability or obligation on the
part of any party (or of any of its directors, officers,
employees, agents, legal and financial advisors or other
representatives); provided, however, except as
otherwise provided in this Agreement, no termination relieves
any Party hereto of any liability or damages resulting from any
fraud or willful or intentional breach of this Agreement. No
termination of this Agreement affects the obligations of the
Parties contained in the Confidentiality Agreement, all of which
obligations survive in accordance with their terms.
A-46
(b) C-COR shall pay to ARRIS a fee equal to
$22.5 million (the C-COR Termination
Fee), by wire transfer of immediately available funds
on the date that the C-COR Termination Fee is due as provided
below, in the event this Agreement is terminated:
(i) by ARRIS or C-COR pursuant to Section 9.2(a) or
Section 9.2(b) as a result of the failure to obtain the
approval of the C-COR stockholders, if the following occurs:
(A) after the date of this Agreement and prior to the
stockholders meeting of either Party, any third party makes a
Takeover Proposal (substituting 35% for the 20% threshold in the
definition of Competing Transaction for purposes of this
Section 9.5(b)(i)) to C-COR or publicly discloses or
announces an intention (whether or not conditional and whether
or not withdrawn) to make a Takeover Proposal, prior to either
(1) with respect to any termination pursuant to
Section 9.2(a), the date of such termination or
(2) with respect to any termination pursuant to
Section 9.2(b), the date of the C-COR Stockholders
Meeting; and
(B) within twelve months of such termination C-COR or any
of its Subsidiaries enters into an Alternative Acquisition
Agreement to consummate, or consummates, or approves or
recommends to the stockholders of C-COR or otherwise does not
oppose, a Competing Transaction with such third party;
(ii) by C-COR (A) pursuant to Section 9.2(b) and,
prior to the date of the stockholders meeting of either Party, a
C-COR Triggering Event shall have occurred or (B) pursuant
to Section 9.3(a); or
(iii) by ARRIS pursuant to Section 9.4(a).
C-COR shall pay ARRIS the C-COR Termination Fee no later than:
(x) on the date of the first to occur of the execution of
an Alternative Acquisition Agreement (other than a
confidentiality agreement), approval or recommendation to the
stockholders of C-COR of a Competing Transaction, failure to
oppose a Competing Transaction or the consummation of a
Competing Transaction, in the case of clause (i) above;
(y) on the date of termination of this Agreement in the
case of clause (ii) above; and (z) two business days
after termination of this Agreement in the case of
clause (iii) above. ARRIS and Merger Subsidiary agree that
payment of the C-COR Termination Fee, if such fee is actually
paid as provided herein, will be the sole and exclusive remedy
of ARRIS and Merger Subsidiary upon termination of this
Agreement.
C-COR acknowledges that the agreements contained in this
Section 9.5(b) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements, ARRIS and the Merger Subsidiary would not enter into
this Agreement. If C-COR fails to pay the C-COR Termination Fee
in accordance with this Section 9.5(b) and, in order to
obtain such payment, ARRIS commences a suit that results in a
judgment against C-COR for the C-COR Termination Fee, C-COR
shall pay to ARRIS its reasonable costs and expenses (including
reasonable attorneys fees and expenses) incurred in
connection with such suit, together with interest on the amount
of the C-COR Termination Fee, from the date such payment was
required to be made until the date of payment at the prime rate
as announced in The Wall Street Journal in effect on the
date such payment was required to be made, after delivery to
C-COR of reasonable documentation evidencing such costs and
expenses.
(c) ARRIS shall pay to C-COR a fee equal to
$22.5 million (the ARRIS Termination
Fee), by wire transfer of immediately available funds
on the date that the ARRIS Termination Fee is due as provided
below, in the event this Agreement is terminated by ARRIS or
C-COR pursuant to Section 9.2(a) or Section 9.2(b) as
a result of the failure to obtain the approval of the ARRIS
stockholders, if the following occurs:
(i) after the date of this Agreement and prior to the
stockholders meeting of either Party, any third party makes an
ARRIS Takeover Proposal (as defined herein) to ARRIS or publicly
discloses or announces an intention (whether or not conditional
and whether or not withdrawn) to make a Takeover Proposal, prior
to either (1) with respect to any termination pursuant to
Section 9.2(a), the date of such termination or
(2) with respect to any termination pursuant to
Section 9.2(b), the date of the ARRIS Stockholders
Meeting; and
A-47
(ii) within twelve months of such termination ARRIS or any
of its Subsidiaries enters into an ARRIS Alternative Acquisition
Agreement (as defined herein) to consummate, or consummates, or
approves or recommends to the stockholders of ARRIS or otherwise
does not oppose, an ARRIS Competing Transaction (as defined
herein) with such third party;
ARRIS shall pay C-COR the ARRIS Termination Fee no later than on
the date of the first to occur of the execution of an
Alternative Acquisition Agreement (other than a confidentiality
agreement), approval or recommendation to the stockholders of
ARRIS of an ARRIS Competing Transaction, failure to oppose an
ARRIS Competing Transaction or the consummation of an ARRIS
Competing Transaction. C-COR agrees that payment of the ARRIS
Termination Fee, if such fee is actually paid as provided
herein, will be the sole and exclusive remedy of C-COR upon
termination of this Agreement.
ARRIS acknowledges that the agreements contained in this
Section 9.5(c) are an integral part of the transactions
contemplated by this Agreement, and that, without these
agreements, C-COR would not enter into this Agreement. If ARRIS
fails to pay the ARRIS Termination Fee in accordance with this
Section 9.5(c) and, in order to obtain such payment, C-COR
commences a suit that results in a judgment against ARRIS for
the ARRIS Termination Fee, ARRIS shall pay to C-COR its
reasonable costs and expenses (including reasonable
attorneys fees and expenses) incurred in connection with
such suit, together with interest on the amount of the ARRIS
Termination Fee, from the date such payment was required to be
made until the date of payment at the prime rate as announced in
The Wall Street Journal in effect on the date such
payment was required to be made, after delivery to C-COR of
reasonable documentation evidencing such costs and expenses.
For purpose of this Agreement:
(A) The term ARRIS Alternative Acquisition
Agreement means any letter of intent, memorandum of
understanding, agreement in principle, acquisition agreement,
merger agreement or other similar agreement or commitment with
respect to any ARRIS Takeover Proposal.
(B) The term ARRIS Competing Transaction
means any transaction, other than the transactions contemplated
by this Agreement, to acquire beneficial ownership (as defined
under Rule 13(d) promulgated under the Exchange Act) of
(1) assets that constitute 35% or more of the consolidated
revenues, net income or assets of ARRIS and its Subsidiaries or
(2) 35% or more (in number or voting power) of any class of
equity securities or other capital stock of ARRIS or any of its
Subsidiaries, in any such case pursuant to any transaction or
series of transactions, including (w) a merger,
consolidation, share exchange, or other business combination
(including any so-called merger-of-equals and whether or not
ARRIS is the entity surviving any such transaction) involving
ARRIS or any of its Subsidiaries, (x) a sale, issuance,
exchange, transfer or other disposition of shares of capital
stock of ARRIS or any of its Subsidiaries, (y) a sale,
lease, license, exchange, transfer or other disposition of
assets of ARRIS or any of its Subsidiaries or (z) a tender
offer, exchange offer or similar transaction with respect to
either ARRIS or any of its Subsidiaries, including any single or
multi-step transaction or series of related transactions, which
is structured to permit such third party or another third party
to acquire beneficial ownership of assets that constitute 35% or
more of the consolidated revenues, net income or assets of ARRIS
and its Subsidiaries, or 35% or more of the equity interest in
either ARRIS or any of its Subsidiaries.
(C) The term ARRIS Takeover Proposal
means any inquiry, proposal, offer or indication of interest
(including any inquiry, proposal, offer or indication of
interest to its stockholders), whether in writing or otherwise,
from a third party that constitutes, or could reasonably be
expected to lead to, an ARRIS Competing Transaction.
A-48
ARTICLE X
GENERAL
PROVISIONS
Section 10.1
Non-Survival of Representations, Warranties and
Agreements. The representations. warranties and
agreements in this Agreement shall terminate at the Effective
Time or upon the termination of this Agreement pursuant to
Section 9.1 hereof, as the case may be, except that
(a) the agreements set forth in Article I and
Sections 2.5, 2.6, 2.7, 7.8, and 7.9 hereof shall survive
the Effective Time indefinitely, (b) the agreements and
representations set forth in Sections 4.11, 4.28, 5.11,
5.19, 7.5(b) and 10.3 and Article IX hereof shall survive
termination indefinitely and (c) nothing contained herein
shall limit any covenant or agreement of the Parties that by its
terms contemplates performance after the Effective Time.
Section 10.2
Notices. All notices and other communications
given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the date of receipt
and shall be delivered personally, sent by nationally recognized
overnight courier or sent by telecopy, to the Parties at the
following addresses or telecopy numbers (or at such other
address or telecopy number for a Party as shall be specified by
like notice):
C-COR Incorporated
60 Decibel Road
State College, Pennsylvania 16801
Attention: President
Telecopy No.:
(814) 237-5574
with a copy to:
Ballard Spahr Andrews & Ingersoll, LLP
51st
Floor, 1735 Market Street
Philadelphia, Pennsylvania
19103-7599
Attention: Robert C. Gerlach
Telecopy No.:
(215) 864-8999
ARRIS Group, Inc.
3871 Lakefield Drive
Suwanee, Georgia 30024
Attention: President
Telecopy No.:
(678) 473-8470
with a copy to:
Troutman Sanders LLP
600 Peachtree Street, NE
Atlanta, Georgia 30308
Attention: W. Brinkley Dickerson, Jr.
Telecopy No.:
(404) 962-6743
Section 10.3
Expenses. Except as otherwise provided herein,
all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid
by the Party incurring such costs and expenses, except that
those expenses incurred in connection with the printing of the
Joint Proxy Statement and the Registration Statement, as well as
the filing fees related thereto and any filing fee required in
connection with the filing of Premerger Notifications under the
HSR Act, shall be shared equally by
C-COR and
ARRIS.
A-49
Section 10.4
Certain Definitions. For purposes of this
Agreement, the following terms shall have the following meanings:
(a) 1933 Act means the Securities
Act of 1933, as the same may be amended from time to time, and
Exchange Act means the Securities Exchange Act of
1934, as the same may be amended from time to time.
(b) ARRIS Common Stock means the shares
of common stock, par value $.01 per share of ARRIS.
(c) affiliate of a person means a person
that directly or indirectly, through one or more intermediaries,
controls, is controlled by, or is under common control with, the
first mentioned person.
(d) C-COR Common Stock or C-COR
Common Stock means the shares of common stock, par value
$.05 per share of C-COR.
(e) control (including the terms
controlled by and under common control
with) means the possession, direct or indirect, of the
power to direct or cause the direction of the management and
policies of a person, whether through the ownership of stock, as
trustee or executor, by contract or credit arrangement or
otherwise.
(f) GAAP means generally accepted
accounting principles in the United States, as in effect from
time to time.
(g) HSR Act means the Hart-Scott- Rodino
Antitrust Improvements Act of 1976, as the same may be amended
from time to time.
(h) Hazardous Materials means
(a) any substance, material, element, compound, waste or
chemical, whether solid, liquid or gaseous which is defined,
listed or otherwise classified or regulated in any way as a
contaminant, pollutant toxic
pollutant, toxic substance, hazardous
substance, hazardous waste, or special
waste under any Environmental Laws; (b) petroleum and
its refined products; (c) polychlorinated biphenyls;
(d) radon; and (e) any raw materials, building
components (including without limitation, asbestos-containing
materials) and manufactured products containing hazardous
substances listed or classified as such under Environmental Laws.
(i) knowledge of any Party shall mean
the actual knowledge of the executive officers of such Party
following due inquiry.
(j) Material Adverse Effect means any
change in or effect on the business of the referenced
corporation or any of its Subsidiaries that is or will be
materially adverse to the business, operations (including the
income statement), prospects, properties (including intangible
properties), condition (financial or otherwise), assets,
liabilities or regulatory status of such referenced corporation
and its Subsidiaries taken as a whole, but shall not include the
effects of changes that are generally applicable in (A) the
United States economy, (B) the United States securities
markets, (C) the announcement of this Agreement and the
transactions contemplated hereby, (D) the taking of any
action required under this Agreement or the transactions
contemplated hereby, (E) changes in GAAP, (E) changes
in laws of general applicability or interpretations thereof by
courts or governmental entities, (F) changes in C-COR and
ARRIS industry and (G) any acts of terrorism or any
outbreak of war, if, in any of (A) through (G), the effect
on C-COR or ARRIS, determined without including its ownership of
C-COR after the Merger, (as the case may be) and its respective
Subsidiaries, taken as a whole, is not disproportionate relative
to the effect on the other and its Subsidiaries, taken as a
whole. All references to Material Adverse Effect on ARRIS or its
Subsidiaries contained in Article IV, V or VI of this
Agreement shall be deemed to refer solely to ARRIS and its
Subsidiaries without including its ownership of C-COR and its
Subsidiaries after the Merger.
(k) person means an individual,
corporation, partnership, association, trust, unincorporated
organization, entity or group (as defined in the Exchange Act).
(l) Subsidiary, C-COR
Subsidiary, or ARRIS Subsidiary
means any corporation or other legal entity of which C-COR
or ARRIS, as the case may be (either alone or through or
together with any other
A-50
Subsidiary or Subsidiaries), owns, directly or indirectly, more
than 50% of the stock or other equity interests the holders of
which are generally entitled to vote for the election of the
board of directors or other governing body of such corporation
or other legal entity.
(m) Takeover Statute means a fair
price, moratorium, control share
acquisition or other similar anti-takeover statute or
regulation enacted under state or federal Laws in the United
States, including Section 203 of the Delaware Law and
Subchapters C through J of
Chapter 25 of the Pennsylvania Law.
(n) third party means any person or
group other than ARRIS, Merger Subsidiary, C-COR, any affiliate
of ARRIS or any affiliate of C-COR.
Section 10.5
Specific Performance. The parties hereto agree
that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance
with their specific terms or were otherwise breached.
Accordingly, the parties further agree that each party shall be
entitled to an injunction or restraining order to prevent
breaches of this Agreement and to enforce specifically the terms
and provisions hereof in any court of the United States or any
state having jurisdiction, this being in addition to any other
right or remedy to which such party may be entitled under this
Agreement, at law or in equity.
Section 10.6
Headings. The headings contained in this
Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement.
Section 10.7
Severability. If any term or other provision
of this Agreement is invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not
affected in any manner adverse to any Party. Upon such
determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in an
acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the maximum extent possible.
Section 10.8
Entire Agreement; No Third-Party
Beneficiaries. This Agreement constitutes the
entire agreement and, except as expressly set forth herein,
supersedes any and all other prior agreements and undertakings,
both written and oral, among the Parties, or any of them, with
respect to the subject matter hereof and, except for
Section 7.8 (Indemnification, Directors and
Officers Insurance) is not intended to confer upon any
person other than C-COR, ARRIS, and the Merger Subsidiary and,
after the Effective Time, their respective stockholders, any
rights or remedies hereunder. Without by implication limiting
the foregoing, in no event shall Section 7.9 or 8.2(e)
confer any rights on any current, former or future employee of
C-COR or ARRIS or any of their Subsidiaries.
Section 10.9
Assignment. This Agreement shall not be
assigned by operation of law or otherwise.
Section 10.10
Governing Law; Jurisdiction and Venue. Other
than the validity of the Merger, which shall be governed by the
laws of the Commonwealth of Pennsylvania, this Agreement shall
be governed by and construed in accordance with the laws of the
State of Delaware, regardless of the laws that might otherwise
govern under applicable principles of conflicts of law thereof.
For all actions, suits and proceedings arising out of or
relating to this Agreement, the parties hereby irrevocably and
unconditionally (i) consent to the personal jurisdiction of
any state or federal court of competent jurisdiction located in
the City of Wilmington in the State of Delaware and
(ii) waive any defense or objection to proceeding in such
court, including those objections and defenses based on an
alleged lack of personal jurisdiction, improper venue and forum
non-conveniens.
Section 10.11
Counterparts. This Agreement may be executed
in one or more counterparts, and by the different Parties in
separate counterparts, each of which when executed shall be
deemed to be an original, but all of which shall constitute one
and the same agreement.
[This
space intentionally left blank.]
A-51
IN WITNESS WHEREOF, C-COR and ARRIS have caused this Agreement
to be executed as of the date first written above by their
respective officers thereunto duly authorized.
C-COR INCORPORATED
David A. Woodle
Chairman and Chief Executive Officer
ARRIS GROUP, INC.
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|
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By:
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/s/ Robert
J. Stanzione
|
Robert J. Stanzione
Chairman and Chief Executive Officer
AIR MERGER SUBSIDIARY, INC.
|
|
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By:
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/s/ Robert
J. Stanzione
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Robert J. Stanzione
President
List of
Disclosure Schedules
|
|
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Schedule No.
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Schedule Title
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|
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4
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.1
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C-COR Organization and Qualification; Subsidiaries
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4
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.3
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C-COR Capitalization
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4
|
.5(a)
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C-COR Material Contracts
|
|
4
|
.5(b)
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C-COR No Conflict
|
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4
|
.5(c)
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|
C-COR Required Filings and Consents
|
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4
|
.6(a)
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|
C-COR Compliance
|
|
4
|
.6(b)
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|
C-COR Permits
|
|
4
|
.7(a) and (b)
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C-COR SEC Filings; Financial Statements
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4
|
.8
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C-COR Absence of Changes
|
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4
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.9
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|
C-COR Undisclosed Liabilities
|
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4
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.10
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C-COR Litigation
|
|
4
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.12(a)
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C-COR Employee Benefit Plans
|
|
4
|
.12(b)
|
|
C-COR Retiree Benefits
|
|
4
|
.12(c)
|
|
C-COR Options
|
|
4
|
.12(d)
|
|
C-COR Agreements related to Employment
|
|
4
|
.13
|
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C-COR Labor Matters
|
|
4
|
.14
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|
C-COR Restrictions on Business Activities
|
|
4
|
.15
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C-COR Title to Property
|
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4
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.16
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|
C-COR Customers
|
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4
|
.17
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|
C-COR Supplier Relations
|
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4
|
.19(a)
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|
C-COR Tax Returns
|
|
4
|
.19(b)
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C-COR Tax Returns Subject to Audit
|
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4
|
.19(d)
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C-COR Tax Groups
|
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4
|
.19(f)
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C-COR Certain Payments
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4
|
.19(i)
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|
C-COR Controlled Foreign Companies
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4
|
.19(j)
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C-COR Net Operating Loss Limitations
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4
|
.20
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C-COR Environmental Matters
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4
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.21(a)
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C-COR Intellectual Property
|
|
4
|
.21(b)
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C-COR Trademarks, Patents & Copyrights
|
|
4
|
.21(c)
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|
C-COR Third Party Software
|
|
4
|
.21(d)
|
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C-COR Third Party IP Licenses
|
|
4
|
.21(e)
|
|
C-COR Owned Intellectual Property
|
|
4
|
.21(f)
|
|
C-COR Third Party Infringement
|
|
4
|
.21(g)
|
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C-COR Infringement on Owned Intellectual Property
|
|
4
|
.21(h)
|
|
C-COR Software
|
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4
|
.21(h)-2
|
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C-COR
Form Non-Competition
Agreement
|
|
4
|
.21(i)-2
|
|
C-COR Trademarks
|
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4
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.21(n)
|
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C-COR Software
|
|
4
|
.21(o)
|
|
C-COR Licenses
|
|
4
|
.21(p)
|
|
C-COR Funding
|
|
4
|
.22
|
|
C-COR Warranties
|
|
4
|
.24(d)
|
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C-COR Import and Export Control Laws
|
|
4
|
.25
|
|
C-COR Foreign Corrupt Practices Act
|
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5
|
.1
|
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ARRIS Organization and Qualification; Subsidiaries
|
|
5
|
.3
|
|
ARRIS Capitalization
|
|
|
|
|
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Schedule No.
|
|
Schedule Title
|
|
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5
|
.5(a)
|
|
ARRIS No Conflict; Required Filings
|
|
5
|
.5(b)
|
|
ARRIS Consents
|
|
5
|
.6(a)
|
|
ARRIS Compliance
|
|
5
|
.6(b)
|
|
ARRIS Permits
|
|
5
|
.7
|
|
ARRIS SEC Filings; Financial Statements
|
|
5
|
.8
|
|
ARRIS Absence of Certain Changes or Events
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5
|
.9
|
|
ARRIS No Undisclosed Liabilities
|
|
5
|
.10
|
|
ARRIS Litigation
|
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5
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.12
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ARRIS Employee Benefit Plans; Employment Agreements
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5
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.14
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ARRIS Environmental Matters
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5
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.15
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|
ARRIS Customers
|
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5
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.16(d)
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ARRIS Infringement on Third Party IP Rights
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5
|
.16(l)
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|
ARRIS Open Source Licensing
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6
|
.1
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Business Pending the Merger
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7
|
.12
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Affiliates
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[LETTERHEAD
OF UBS SECURITIES LLC]
September 23,
2007
The Board of Directors
ARRIS Group, Inc.
3871 Lakefield Drive
Suwanee, Georgia 30024
Dear Members of the Board:
We understand that ARRIS Group, Inc., a Delaware corporation
(ARRIS), is considering a transaction whereby C-COR
Incorporated, a Pennsylvania corporation (C-COR),
will merge with and into Air Merger Subsidiary, Inc., a Delaware
corporation and wholly owned subsidiary of ARRIS (Merger
Sub), as a result of which C-COR will become a wholly
owned subsidiary of ARRIS (the Transaction).
Pursuant to the terms of the Agreement and Plan of Merger, dated
as of September 23, 2007 (the Merger
Agreement), among
C-COR,
Merger Sub and ARRIS, each outstanding share of the common
stock, par value $0.05 per share, of C-COR (C-COR Common
Stock) will be converted, at the option of the holder
thereof (subject to certain proration and other procedures and
limitations set forth in the Merger Agreement, as to which
procedures and limitations we express no opinion), into the
right to receive either (i) $13.75 (the Cash
Consideration) or (ii) 0.9642 of a share of the
common stock, par value $0.01 per share, of ARRIS (ARRIS
Common Stock and, such number of shares, the Stock
Consideration) (the Stock Consideration and the Cash
Consideration being collectively referred to as the Merger
Consideration), subject to a collar mechanism as specified
in the Merger Agreement. The terms and conditions of the
Transaction are more fully set forth in the Merger Agreement.
You have requested our opinion as to the fairness, from a
financial point of view, to ARRIS of the Merger Consideration to
be paid by ARRIS in the Transaction.
UBS Securities LLC (UBS) has acted as financial
advisor to ARRIS in connection with the Transaction and will
receive a fee for its services, a portion of which is payable in
connection with this opinion and a significant portion of which
is contingent upon consummation of the Transaction. In the past,
UBS has provided investment banking services to ARRIS unrelated
to the proposed Transaction, for which UBS received
compensation. In the ordinary course of business, UBS, its
successors and affiliates may hold or trade, for their own
accounts and the accounts of their customers, securities of
ARRIS and C-COR and, accordingly, may at any time hold a long or
short position in such securities.
Our opinion does not address the relative merits of the
Transaction as compared to other business strategies or
transactions that might be available to ARRIS or ARRIS
underlying business decision to effect the Transaction. Our
opinion does not constitute a recommendation to any stockholder
as to how such stockholder should vote or act with respect to
the Transaction. At your direction, we have not been asked to,
nor do we, offer any opinion as to the terms, other than the
Merger Consideration to the extent expressly specified herein,
of the Merger Agreement, the form of the Transaction or the form
of the Merger Consideration. We express no opinion as to what
the value of ARRIS Common Stock will be when issued pursuant to
the Transaction or the prices at which ARRIS Common Stock or
C-COR Common Stock will trade at any time. In rendering this
opinion, we have assumed, with your consent, that (i) ARRIS
and C-COR will comply with all material terms of the Merger
Agreement, and (ii) the Transaction will be consummated in
accordance with the terms of the Merger Agreement without any
adverse waiver or amendment of any material term or condition
thereof. We have also assumed that all governmental, regulatory
or other consents and approvals necessary for the consummation
of the Transaction will be obtained without any material adverse
effect on ARRIS, C-COR or the Transaction.
B-1
The Board of Directors
ARRIS Group, Inc.
September 23, 2007
Page 2
In arriving at our opinion, we have, among other things:
(i) reviewed certain publicly available business and
financial information relating to C-COR and ARRIS;
(ii) reviewed certain internal financial information and
other data relating to the business and financial prospects of
C-COR that were provided to us by the management of C-COR and
not publicly available, including financial forecasts and
estimates prepared by the management of C-COR as adjusted by the
management of ARRIS; (iii) reviewed certain internal
financial information and other data relating to the business
and financial prospects of ARRIS that were provided to us by the
management of ARRIS and not publicly available, including
financial forecasts and estimates prepared by the management of
ARRIS; (iv) conducted discussions with members of the
senior managements of ARRIS and C-COR concerning the businesses
and financial prospects of ARRIS and C-COR; (v) reviewed
publicly available financial and stock market data with respect
to certain other companies we believe to be generally relevant;
(vi) compared the financial terms of the Transaction with
the publicly available financial terms of certain other
transactions we believe to be generally relevant;
(vii) reviewed current and historical market prices of
C-COR Common Stock and ARRIS Common Stock;
(viii) considered certain pro forma effects of the
Transaction on ARRIS financial statements, both before and
after giving effect to the accounting treatment under purchase
accounting of certain deferred revenue of C-COR as estimated by
the management of ARRIS; (ix) reviewed the Merger
Agreement; and (x) conducted such other financial studies,
analyses and investigations, and considered such other
information, as we deemed necessary or appropriate.
In connection with our review, with your consent, we have not
assumed any responsibility for independent verification of any
of the information provided to or reviewed by us for the purpose
of this opinion and have, with your consent, relied on such
information being complete and accurate in all material
respects. In addition, with your consent, we have not made any
independent evaluation or appraisal of any of the assets or
liabilities (contingent or otherwise) of ARRIS or C-COR, nor
have we been furnished with any such evaluation or appraisal.
With respect to the financial forecasts, estimates and pro forma
effects referred to above, we have assumed, at your direction,
that they have been reasonably prepared on a basis reflecting
the best currently available estimates and judgments of the
managements of C-COR and ARRIS, as the case may be, as to the
future performance of C-COR and ARRIS and such pro forma
effects. In addition, we have assumed, with your approval, that
the financial forecasts and estimates referred to above will be
achieved at the times and in the amounts projected. We have
assumed, with your consent, that the Transaction will qualify
for U.S. federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended. Our opinion is necessarily
based on economic, monetary, market and other conditions as in
effect on, and the information available to us as of, the date
hereof.
Based upon and subject to the foregoing, it is our opinion that,
as of the date hereof, the Merger Consideration to be paid by
ARRIS in the Transaction is fair, from a financial point of
view, to ARRIS.
This opinion is provided for the benefit of the Board of
Directors in connection with, and for the purpose of, its
evaluation of the Transaction.
Very truly yours,
UBS SECURITIES LLC
B-2
September 23,
2007
Board of Directors
C-COR Incorporated
60 Decibel Road
State College, Pennsylvania 16801
Members of the Board of Directors:
C-COR Incorporated (the Company), ARRIS Group, Inc.
(the Acquiror) and Air Merger Subsidiary, Inc., a
wholly owned subsidiary of the Acquiror (the Acquisition
Sub), propose to enter into an Agreement and Plan of
Merger dated as of September 23, 2007 (the
Agreement) pursuant to which the Company will be
merged with and into the Acquisition Sub in a transaction (the
Merger) in which each outstanding share of the
Companys common stock, par value $0.05 per share (the
Company Shares), will be converted into the right to
receive (i) 0.9642 shares of common stock, subject to
the adjustment described below (the Stock
Consideration), of the Acquiror, par value $0.01 per share
(the Acquiror Shares), or (ii) $13.75 in cash
(the Cash Consideration, and together with the Stock
Consideration, the Consideration), in each case as
the holder thereof shall have elected, or (iii) in certain
circumstances a combination of cash and Acquiror Shares, subject
to the terms, limitations and procedures set forth in the
Agreement, which include a limitation on the aggregate amount of
cash and the number of Acquiror Shares available to be paid in
the Merger. Subject to the limitations described therein, the
Agreement also provides that if the Market Value (as defined in
the Agreement) of the Acquiror Shares is less than $12.83 per
share, then the Acquiror shall increase the amount of the Stock
Consideration, which increase may be paid in cash or additional
Acquiror Shares, such that the value of the aggregate
Consideration paid per Company Share for all outstanding Company
Shares equals $13.08, and if the Market Value of the Acquiror
Shares is greater than $15.69 per share, then the Acquiror shall
decrease the amount of the Stock Consideration such that the
value of the aggregate Consideration paid per Company Share for
all outstanding Company Shares equals $14.43.
You have asked us whether, in our opinion, the Consideration is
fair from a financial point of view to the holders of the
Company Shares.
In arriving at the opinion set forth below, we have, among other
things:
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(1)
|
Reviewed certain publicly available business and financial
information relating to the Company and the Acquiror that we
deemed to be relevant;
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(2)
|
Reviewed certain information, including financial forecasts,
relating to the business, earnings, cash flow, assets,
liabilities and prospects of the Company, as well as the amount
and timing of the cost savings and related expenses and
synergies expected to result from the Merger furnished to us by
the Company (the Expected Synergies), and certain
information relating to the business, earnings,
|
C-1
Board of Directors
C-COR Incorporated
60 Decibel Road
State College, Pennsylvania 16801
Page 2
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cash flow, assets, liabilities and prospects of the Acquiror
furnished to us by the Acquiror, including financial forecasts
for fiscal years 2007 and 2008 only, having been informed by the
Acquiror that it has not prepared financial forecasts beyond
that period;
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(3)
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Conducted discussions with members of senior management and
representatives of the Company and the Acquiror concerning the
matters described in clauses 1 and 2 above, as well as
their respective businesses and prospects before and after
giving effect to the Merger and the Expected Synergies;
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(4)
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Reviewed the market prices and valuation multiples for the
Company Shares and the Acquiror Shares and compared them with
those of certain publicly traded companies that we deemed to be
relevant;
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(5)
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Reviewed the results of operations of the Company and the
Acquiror and compared them with those of certain publicly traded
companies that we deemed to be relevant;
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(6)
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Compared the proposed financial terms of the Merger with the
financial terms of certain other transactions that we deemed to
be relevant;
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(7)
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Participated in certain discussions and negotiations among
representatives of the Company and the Acquiror and their
financial and legal advisors;
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(8)
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Reviewed the potential pro forma impact of the Merger;
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(9)
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Reviewed the Agreement; and
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(10)
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Reviewed such other financial studies and analyses and took into
account such other matters as we deemed necessary, including our
assessment of general economic, market and monetary conditions.
|
In preparing our opinion, we have assumed and relied on the
accuracy and completeness of all information supplied or
otherwise made available to us, discussed with or reviewed by or
for us, or publicly available, and we have not assumed any
responsibility for independently verifying such information or
undertaken an independent evaluation or appraisal of any of the
assets or liabilities of the Company or the Acquiror or been
furnished with any such evaluation or appraisal, nor have we
evaluated the solvency or fair value of the Company or the
Acquiror under any state or federal laws relating to bankruptcy,
insolvency or similar matters. In addition, we have not assumed
any obligation to conduct any physical inspection of the
properties or facilities of the Company or the Acquiror. With
respect to the financial forecast information and the Expected
Synergies furnished to or discussed with us by the Company or
the Acquiror, we have assumed that they have been reasonably
prepared and reflect the best currently available estimates and
judgment of the Companys or the Acquirors management
as to the expected future financial performance of the Company
or the Acquiror, as the case may be, and the Expected Synergies.
We have further assumed that the Merger will qualify as a
tax-free reorganization for U.S. federal income tax
purposes.
Our opinion is necessarily based upon market, economic and other
conditions as they exist and can be evaluated on, and on the
information made available to us as of, the date hereof. We have
assumed that in the course of obtaining the necessary regulatory
or other consents or approvals (contractual or otherwise) for
the Merger, no restrictions, including any divestiture
requirements or amendments or modifications, will be imposed
that will have a material adverse effect on the contemplated
benefits of the Merger.
We are acting as financial advisor to the Company in connection
with the Merger and will receive a fee from the Company, a
portion of which is payable upon the delivery of this letter,
and a significant portion of which is payable contingent upon
the consummation of the Merger. In addition, the Company has
agreed to
C-2
Board of Directors
C-COR Incorporated
60 Decibel Road
State College, Pennsylvania 16801
Page 3
indemnify us for certain liabilities arising out of our
engagement. In the ordinary course of our business, we may
actively trade the Company Shares and other securities of the
Company, as well as the Acquiror Shares and other securities of
the Acquiror, for our own account and for the accounts of
customers and, accordingly, may at any time hold a long or short
position in such securities.
This opinion is for the use and benefit of the Board of
Directors of the Company. Our opinion does not address the
merits of the underlying decision by the Company to engage in
the Merger and does not constitute a recommendation to any
shareholder as to how such shareholder should vote on the
proposed Merger or any matter related thereto or as to what form
of Consideration such shareholder should elect. In addition, you
have not asked us to address, and this opinion does not address,
the fairness to, or any other consideration of, the holders of
any class of securities, creditors or other constituencies of
the Company, other than the holders of the Company Shares.
We are not expressing any opinion herein as to the prices at
which the Company Shares or the Acquiror Shares will trade
following the announcement or consummation of the Merger.
On the basis of and subject to the foregoing, we are of the
opinion that, as of the date hereof, the Consideration is fair
from a financial point of view to the holders of the Company
Shares.
Very truly yours,
/s/ MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
C-3
PART II
INFORMATION
NOT REQUIRED IN THE PROSPECTUS
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Item 20.
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Indemnification
of Directors and Officers
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ARRIS is a Delaware corporation. Under Section 145 of the
Delaware General Corporation Law, as amended (the
DGCL), a corporation may indemnify any person who
was or is a party or is threatened to be made a party to any
threatened, pending or completed action or proceeding, whether
civil, criminal, administrative or investigative (other than an
action by or in the right of such corporation), by reason of the
fact that such person is or was a director, officer, employee or
agent of the corporation, or is or was serving at its request in
such capacity of another corporation or business organization
against expenses (including attorneys fees), judgments,
fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or
proceeding if such person acted in good faith and in a manner
such person reasonably believed to be in or not opposed to the
best interest of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to
believe that such persons conduct was unlawful. A Delaware
corporation may indemnify officers and directors in any action
by or in the right of a corporation under the same conditions,
except that no indemnification is permitted without judicial
approval if the officer or director is adjudged to be liable to
the corporation. Where an officer or director is successful on
the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the expenses
(including attorneys fees) that such officer or director
actually and reasonably incurred.
Under Section 102(b)(7) of the DGCL, a corporation may
provide in its certificate of incorporation that a director of
the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, except for liability
(i) for any breach of the directors duty of loyalty
to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) under
Section 174 of the DGCL (having to do with unlawful payment
of dividends or unlawful stock purchase redemptions) or
(iv) for any transaction from which the director derived an
improper personal benefit.
The amended and restated certificate of incorporation of ARRIS
provides for the elimination of personal liability of a director
for breach of fiduciary duty as permitted by
Section 102(b)(7) of the DGCL and the bylaws of ARRIS
provide that ARRIS shall indemnify its directors and officers to
the full extent permitted by Section 145 of the DGCL.
ARRIS has directors and officers liability insurance that
insures the directors and officers of ARRIS against certain
liabilities.
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Item 21.
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Exhibits
and Financial Statement Schedules
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(a) Exhibits.
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The Filings Referenced for Incorporation by Reference are
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Exhibit
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ARRIS (Formerly Known as Broadband Parent,
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Number
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Description of Exhibit
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Inc.) Fillings Unless Otherwise Noted
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2
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.1
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Agreement and Plan of Merger, by and among
C-COR
Incorporated, ARRIS Group, Inc. and Air Merger Subsidiary, Inc.,
dated September 23, 2007.
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Attached as Annex A to the joint proxy statement-prospectus,
which is part of this registration statement on Form S-4.
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3
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.1
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Amended and Restated Certificate of Incorporation
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Registration Statement #333-61524, Exhibit 3.1, filed by
Broadband Parent Corporation.
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3
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.2
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Certificate of Amendment to Amended and Restated Certificate of
Incorporation
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August 3, 2001, Form 8-A, Exhibit 3.2.
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3
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.3
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Bylaws
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Registration Statement #333-61524, Exhibit 3.2, filed by
Broadband Parent Corporation.
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4
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.1
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Form of Certificate for Common Stock
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Registration Statement #333-61524, Exhibit 4.1, filed by
Broadband Parent Corporation.
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II-1
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The Filings Referenced for Incorporation by Reference are
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Exhibit
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ARRIS (Formerly Known as Broadband Parent,
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Number
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Description of Exhibit
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Inc.) Fillings Unless Otherwise Noted
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4
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.2
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Rights Agreement dated October 2, 2002
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October 3, 2002 Form 8-K, Exhibit 4.1.
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5
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.1
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Opinion of Troutman Sanders LLP as to the validity of the
securities being registered (including its consent).
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Previously filed.
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8
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.1
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Opinion of Troutman Sanders LLP as to certain tax matters
(including its consent)
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Previously filed.
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8
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.2
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Opinion of Ballard Spahr Andrews & Ingersoll, LLP as
to certain tax matters (including its consent)
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Previously filed.
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21
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Subsidiaries of Registrant
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December 31, 2006 Form 10-K, Exhibit 21.
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23
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.1
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Consent of Ernst & Young LLP, independent registered
public accounting firm for ARRIS Group, Inc.
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Filed herewith.
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23
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.2
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Consent of KPMG LLP, independent registered public accounting
firm for C-COR Incorporated
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Filed herewith.
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23
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.3
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Consent of Troutman Sanders LLP
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Included in Exhibits 5.1 and 8.1.
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23
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.4
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Consent of Ballard Spahr Andrews & Ingersoll, LLP
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Included in Exhibit 8.2.
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24
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Power of Attorney of Officers and Directors of ARRIS Group,
Inc.
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Previously filed.
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99
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.1
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Consent of UBS Securities LLC
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Previously filed.
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99
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.2
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Consent of Merrill Lynch, Pierce, Fenner & Smith
Incorporated
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Previously filed.
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99
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.3
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Form of Proxy Card for Special Meeting of Shareholders of ARRIS
Group, Inc.
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Filed herewith.
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99
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.4
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Form of Proxy Card for Special Meeting of Shareholders of C-COR
Incorporated
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Filed herewith.
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99
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.5
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Merger Consideration Election Form and Letter of Transmittal
|
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Filed herewith.
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(b) Financial Statement Schedules.
No financial statements schedules are required to be filed as
part of this Registration Statement.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act of 1933.
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum
aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration
statement.
II-2
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
registration statement or any material change to the information
in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a
post-effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act
of 1933, each filing of the registrants annual report
pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each
filing of an employee benefit plans annual report pursuant
to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(c) (1) The undersigned registrant hereby undertakes
as follows: that prior to any public reoffering of the
securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of
Rule 145(c), the issuer undertakes that such reoffering
prospectus will contain the information called for by the
applicable registration form with respect to reofferings by
persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form.
(2) The registrant undertakes that every prospectus
(i) that is filed pursuant to paragraph (c)(1) immediately
preceding, or (ii) that purports to meet the requirements
of Section 10(a)(3) of the Securities Act of 1933 and is
used in connection with an offering of securities subject to
Rule 415, will be filed a part of an amendment to the
registration statement and will not be used until such amendment
is effective, and that, for purposes of determining any
liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(d) Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant
will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Securities Act of 1933 and will be governed by the final
adjudication of such issue.
(e) The undersigned registrant hereby undertakes to respond
to requests for information that is incorporated by reference
into the prospectus pursuant to Items 4, 10(b), 11 or 13 of
this Form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the
registration statement through the date of responding to the
request.
(f) The undersigned registrant hereby undertakes to supply
by means of a post-effective amendment all information
concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in
the registration statement when it became effective.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
ARRIS has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of Suwanee, State of Georgia, on November 7, 2007.
ARRIS GROUP, INC.
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By:
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/s/ Robert
J. Stanzione
|
Robert J. Stanzione
Chairman and Chief Executive Officer
POWER OF
ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
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/s/ Robert
J. Stanzione
Robert
J. Stanzione
|
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Chief Executive Officer and
Chairman of the board of directors (Principal Executive Officer)
|
|
November 7, 2007
|
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/s/ David
B. Potts
David
B. Potts
|
|
Executive Vice President, Chief
Financial Officer,
Chief Accounting Officer
(Principal Financial Officer &
Principal Accounting Officer)
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|
November 7, 2007
|
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*
Alex
B. Best
|
|
Director
|
|
November 7, 2007
|
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*
Harry
L. Bosco
|
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Director
|
|
November 7, 2007
|
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*
John
(Ian) Anderson Craig
|
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Director
|
|
November 7, 2007
|
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*
Matthew
B. Kearney
|
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Director
|
|
November 7, 2007
|
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*
William
H. Lambert
|
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Director
|
|
November 7, 2007
|
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*
John
R. Petty
|
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Director
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November 7, 2007
|
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*By:
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/s/ Lawrence
A. Margolis
Lawrence
A. Margolis
Attorney-in-Fact
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II-4
EXHIBIT INDEX
|
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Exhibit
|
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Exhibit Description
|
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23
|
.1
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|
Consent of Ernst & Young LLP, independent registered
public accounting firm for ARRIS Group, Inc.
|
|
23
|
.2
|
|
|
|
Consent of KPMG LLP, independent registered public accounting
firm for C-COR Incorporated
|
|
99
|
.3
|
|
|
|
Form of Proxy Card for Special Meeting of Shareholders of ARRIS
Group, Inc.
|
|
99
|
.4
|
|
|
|
Form of Proxy Card for Special Meeting of Shareholders of C-COR
Incorporated
|
|
99
|
.5
|
|
|
|
Merger Consideration Election Form and Letter of Transmittal
|