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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.          )

Filed by the Registrant ý

Filed by a Party other than the Registrant o

Check the appropriate box:

o

 

Preliminary Proxy Statement

o

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

ý

 

Definitive Proxy Statement

o

 

Definitive Additional Materials

o

 

Soliciting Material under §240.14a-12

 

RIBBON COMMUNICATIONS INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

o

 

No fee required.

o

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
    (1)   Title of each class of securities to which transaction applies:
        Common Stock, par value $0.0001 per share
 
    (2)   Aggregate number of securities to which transaction applies:
        32,500,000
 
    (3)   Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
        $414,675,000(1)
 
    (4)   Proposed maximum aggregate value of transaction:
        N/A
 
    (5)   Total fee paid:
        $53,824.82
 

ý

 

Fee paid previously with preliminary materials.

o

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

 

(1)

 

Amount Previously Paid:
        
 
    (2)   Form, Schedule or Registration Statement No.:
        
 
    (3)   Filing Party:
        
 
    (4)   Date Filed:
        
 

   


(1)
Estimated solely for the purpose of calculating the registration fee pursuant to Exchange Act Rules 14a-6(i)(1) and 0-11. Pursuant to Exchange Act Rules 14a-6(i)(1) and 0-11, the other underlying value of the transaction was calculated based upon (1) the $324,000,000 in cash to be paid in the Merger, and (2) the estimated value of the 32,500,000 shares to be issued in the Merger based on the average of the high and low prices of Ribbon common stock (the securities to be issued in the Merger) on NASDAQ on December 19, 2019.

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LOGO

January 9, 2020


PROPOSED MERGER—YOUR VOTE IS VERY IMPORTANT

To the Stockholders of Ribbon Communications Inc.:

        On November 14, 2019, Ribbon Communications Inc. ("Ribbon") entered into an Agreement and Plan of Merger (the "Merger Agreement") with Eclipse Communications Ltd., an indirect wholly owned subsidiary of Ribbon ("Merger Sub"), Ribbon Communications Israel Ltd. ("Ribbon Israel"), ECI Telecom Group Ltd. ("ECI") and ECI Holding (Hungary) kft ("Swarth"), pursuant to which Merger Sub will merge with and into ECI, with ECI surviving such merger as a wholly owned subsidiary of Ribbon (the "Merger").

        The board of directors of Ribbon (the "Ribbon Board") has unanimously approved the Merger Agreement and the transactions contemplated thereby, and Ribbon intends to hold a special stockholder meeting to approve an issuance of 32.5 million shares of common stock of Ribbon, par value $0.0001 per share ("Ribbon Common Stock"), as partial consideration in the Merger (the "Share Issuance").

        As provided in the Merger Agreement, in connection with and at the time of the closing of the Merger (the "Effective Time" or the "Closing"), all equity securities of ECI issued and outstanding immediately prior to the Effective Time will be converted into the right to receive merger consideration consisting of $324 million in cash, subject to adjustments for indebtedness, pre-Closing distributions, transaction expenses and certain taxes (the "Cash Consideration"), and 32.5 million shares of Ribbon Common Stock (the "Stock Consideration" and, together with the Cash Consideration, the "Merger Consideration"). Additionally, ECI equityholders will be entitled to the amount received as a result of ECI's sale of certain real estate assets of ECI less any taxes payable by ECI resulting from the disposition. Ribbon intends to fund the Cash Consideration with proceeds received from a new credit facility that Ribbon expects to enter into with Citizens Bank, N.A. ("Citizens Bank") in connection with the closing of the Merger. The issuance of the Stock Consideration will be made in reliance on an exemption from the registration provisions of the Securities Act of 1933, as amended, set forth in Section 4(a)(2) thereof, relating to sales by an issuer not involving a public offering.

        Ribbon Common Stock trades on the Nasdaq Global Select Market under the symbol "RBBN."

        Ribbon will hold the special meeting of Ribbon stockholders (the "Ribbon Special Meeting") on January 27, 2020 at 2:00 p.m., Eastern Time, at the offices of Latham & Watkins LLP, 200 Clarendon Street, Boston, Massachusetts 02116. At the Ribbon Special Meeting, Ribbon stockholders will be asked to:

        The Ribbon Board unanimously recommends that Ribbon stockholders vote "FOR" each of the proposals presented at the Ribbon Special Meeting.

        Concurrently with the execution of the Merger Agreement, certain affiliates ("JPM Stockholders") of JPMorgan Chase & Co. ("JPM"), a significant Ribbon stockholder, entered into a voting agreement with ECI pursuant to which JPM Stockholders agreed to vote all shares of Ribbon Common Stock owned by JPM Stockholders FOR the Share Issuance, on the terms and subject to the conditions of the voting agreement. At the close of business on January 8, 2020, the record date for the Ribbon Special Meeting, JPM Stockholders beneficially owned 49,940,222 shares of Ribbon Common Stock or approximately 45.01% of the shares of Ribbon Common Stock outstanding on that date. JPM Stockholders have also agreed to certain restrictions on the sale of its shares of Ribbon Common Stock prior to the Merger, as further described in this proxy statement.


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        YOUR VOTE IS VERY IMPORTANT.    Whether or not you plan to attend the Ribbon Special Meeting, please take the time to vote over the Internet or by telephone as described in this proxy statement or by completing the enclosed proxy card and mailing it in the enclosed envelope. Information about the meeting, the Merger and the other business to be considered at the meeting is contained in this proxy statement. You are urged to read this proxy statement, including the annexes and the documents incorporated by reference, carefully and in its entirety.

Thank you for your cooperation and continued support.

Sincerely,

LOGO   LOGO
Steven Bruny   Kevin Riley
Interim Co-President and Chief Executive Officer   Interim Co-President and Chief Executive Officer
Ribbon Communications Inc.   Ribbon Communications Inc.

        Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved the Merger Agreement and the Merger described in this proxy statement or the Ribbon Common Stock to be issued in the Merger or passed upon the adequacy or accuracy of this proxy statement. Any representation to the contrary is a criminal offense.

        This proxy statement is dated January 9, 2020 and is first being mailed to Ribbon stockholders of record on or about January 10, 2020.


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LOGO


NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD JANUARY 27, 2020

To Our Stockholders:

        A special meeting of stockholders of Ribbon Communications Inc., a Delaware corporation ("Ribbon"), will be held at the offices of Latham & Watkins LLP, 200 Clarendon Street, Boston, Massachusetts 02116 on January 27, 2020 at 2:00 p.m., Eastern Time. The special meeting of stockholders (the "Ribbon Special Meeting") is being held for the following purposes:

        The above matters are more fully described in the accompanying proxy statement of Ribbon, which provides you with information about Ribbon, ECI, the Ribbon Special Meeting, the Share Issuance, the Merger, the Merger Agreement and other documents related to the Merger and other related matters. The accompanying proxy statement also includes, as Annex A, a copy of the Merger Agreement. Ribbon encourages you to carefully read the accompanying proxy statement in its entirety, including the annexes and the documents incorporated by reference.

        Only holders of Ribbon Common Stock as of the close of business on January 8, 2020, which is the record date for the Ribbon Special Meeting, are entitled to receive notice of, attend and vote at the Ribbon Special Meeting.

        We hope that as many stockholders as possible will personally attend the Ribbon Special Meeting. Whether or not you plan to attend the Ribbon Special Meeting, please complete the enclosed proxy card and sign, date and return it promptly so that your shares of Ribbon Common Stock will be represented. You also may vote your shares over the Internet or by telephone by following the instructions included on the proxy card. Submitting your proxy in writing, over the Internet or by telephone will not prevent you from voting in person at the Ribbon Special Meeting. The affirmative vote of a majority of the votes cast on the proposal to approve the Share Issuance, in person or by proxy, will be required to approve the Share Issuance. The affirmative vote of a majority of the shares of Ribbon Common Stock present, in person or by proxy, and entitled to vote at the Ribbon Special Meeting will be required to approve the proposal to adjourn the Ribbon Special Meeting.

        The Ribbon board of directors unanimously recommends that Ribbon stockholders vote "FOR" each of the proposals presented at the Ribbon Special Meeting.

By Order of the Ribbon Board of Directors,    

LOGO

 

 
Richard J. Lynch
Chairman of the Board of Directors
   

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CERTAIN DEFINED TERMS USED IN THIS PROXY STATEMENT

    1  

EXPLANATORY NOTE

    4  

QUESTIONS AND ANSWERS ABOUT THE RIBBON SPECIAL MEETING

    5  

SUMMARY

    11  

Parties to the Merger Agreement

    11  

The Merger and the Merger Agreement

    11  

The Voting Agreement

    14  

The Stockholders Agreement

    14  

The Registration Rights Agreement

    14  

Other Transaction Agreements

    15  

The Ribbon Special Meeting

    15  

No Appraisal Rights

    16  

Termination of the Merger Agreement

    16  

Termination Fees; Expenses and Damages

    17  

Opinion of Ribbon's Financial Advisor

    19  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF RIBBON

    20  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF ECI

    23  

SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED DATA

    24  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

    25  

HISTORICAL MARKET PRICE OF RIBBON COMMON STOCK

    26  

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

    27  

THE RIBBON SPECIAL MEETING

    29  

RIBBON PROPOSAL NO. 1: APPROVAL OF THE SHARE ISSUANCE

    36  

RIBBON PROPOSAL NO. 2: APPROVAL OF ONE OR MORE ADJOURNMENTS OF THE RIBBON SPECIAL MEETING

    37  

THE MERGER

    38  

General

    38  

Background of the Merger

    38  

Ribbon Board's Reasons for the Merger

    44  

Opinion of Ribbon's Financial Advisor

    47  

Certain Forecasts

    53  

Effects of the Merger

    58  

Merger Consideration

    58  

Interests of Certain Ribbon Directors and Executive Officers in the Merger

    58  

Regulatory Filings and Approvals Required to Consummate the Merger

    59  

Closing and Effectiveness of the Merger

    59  

Directors of Ribbon following the Merger

    59  

THE MERGER AGREEMENT

    61  

Explanatory Note Regarding the Merger Agreement

    61  

The Merger

    61  

Effective Time and Closing

    62  

Merger Consideration

    62  

Post-Closing Purchase Price Adjustment

    62  

Indemnification

    62  

Representations and Warranties

    63  

Covenants

    66  

No Solicitation; Change of Recommendation

    72  

Conditions to Completion of the Merger

    75  

Termination of the Merger Agreement

    76  

Effect of Termination

    78  

Termination Fees; Expenses and Damages

    78  

Amendments, Extensions and Waivers

    79  

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No Third Party Beneficiaries

    80  

Specific Performance

    80  

OTHER TRANSACTION AGREEMENTS

    81  

BANK COMMITMENT LETTER AND RELATED FINANCING

    88  

BUSINESS OF RIBBON

    89  

BUSINESS OF ECI

    102  

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ECI

    114  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF RIBBON

    139  

SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF ECI

    142  

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

    143  

COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE

    158  

HISTORICAL MARKET PRICE OF RIBBON COMMON STOCK

    159  

DESCRIPTION OF RIBBON'S CAPITAL STOCK

    160  

BENEFICIAL OWNERSHIP OF RIBBON COMMON STOCK

    165  

NO APPRAISAL RIGHTS OF RIBBON STOCKHOLDERS

    167  

OTHER MATTERS

    168  

WHERE YOU CAN FIND MORE INFORMATION

    169  

FINANCIAL STATEMENTS OF RIBBON

    171  

FINANCIAL STATEMENTS OF ECI

    283  

ANNEXES

    369  

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CERTAIN DEFINED TERMS USED IN THIS PROXY STATEMENT

        Unless otherwise indicated or as the context otherwise indicates, when used in this proxy statement:

        "Barclays" means Barclays Bank PLC, financial advisor to ECI.

        "Closing" means the closing of the Merger.

        "Davis Polk" means Davis Polk & Wardwell LLP, counsel to ECI.

        "Debt Commitment Letter" refers to the debt financing commitment letter, dated November 14, 2019, by and between Ribbon Communications Operating Company, Inc. and Citizens Bank, N.A.

        "DGCL" means Delaware General Corporation Law.

        "ECI" means ECI Telecom Group Ltd.

        "ECI Board" means the board of directors of ECI.

        "ECI Shareholder Approval" means the approval by the holders of a majority of each class of ECI shares voting to approve the Merger Agreement and the transactions contemplated thereby.

        "Effective Time" means the time of the closing of the Merger.

        "Ernst & Young" means Ernst & Young Global Limited.

        "Exchange Act" means the Securities Exchange Act of 1934, as amended.

        "GAAP" means United States generally accepted accounting principles.

        "HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations thereunder.

        "JPM Stockholders" means, together, JPMC Heritage Parent LLC and Heritage PE (OEP) III, L.P.

        "Latham & Watkins" means Latham & Watkins LLP, counsel to Ribbon.

        "Merger" means the merger of Merger Sub with and into ECI, with ECI surviving such merger as a wholly owned subsidiary of Ribbon.

        "Merger Agreement" refers to the Agreement and Plan of Merger, dated November 14, 2019, by and among Ribbon, Merger Sub, Ribbon Israel, ECI and Swarth, a copy of which is attached as Annex A to this proxy statement.

        "Merger Sub" means Eclipse Communications Ltd., an indirect wholly owned subsidiary of Ribbon.

        "NASDAQ" means the Nasdaq Global Select Market.

        "Pathfinder" means Pathfinder Strategic Credit LP, a limited partnership organized and existing under the laws of the Cayman Islands (affiliated with Argentem Creek Partners LP).

        "Registration Rights Agreement" means the Registration Rights Agreement, to be dated as of Closing, by and between Ribbon and certain holders of Ribbon Common Stock following the Effective Time.

        "Ribbon" means Ribbon Communications Inc.

        "Ribbon Acquisition Proposal" means, other than transactions contemplated by the Merger Agreement, any bona fide proposal or offer (other than a proposal or offer by ECI or any of its affiliates) from a third party for (a) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving Ribbon or involving any of its subsidiaries representing, directly or indirectly, greater than 20% of any of the assets, net revenues or earnings

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before interest, taxes, depreciation and amortization of Ribbon and its subsidiaries taken as a whole (other than any merger involving Ribbon and one or more of its wholly owned subsidiaries where Ribbon is the surviving company in the merger, or any liquidation of a wholly owned subsidiary of Ribbon), (b) the acquisition by any person of 20% or more of any of the assets, net revenues or earnings before interest, taxes, depreciation and amortization of Ribbon and its subsidiaries, taken as a whole, or (c) the acquisition by any person of 20% or more of the issued and outstanding shares of Ribbon Common Stock, or 20% or more of the issued and outstanding capital stock of any of its subsidiaries representing, directly or indirectly, greater than 20% of any of the assets, net revenues or earnings before interest, taxes, depreciation and amortization of Ribbon and its subsidiaries taken as a whole.

        "Ribbon Board" means the board of directors of Ribbon.

        "Ribbon Board Recommendation" means Ribbon Board's recommendation to holders of Ribbon Common Stock to vote to approve the Share Issuance and direct that such matters be submitted for consideration by holders of Ribbon Common Stock at the Ribbon Special Meeting.

        "Ribbon Change of Recommendation" means that Ribbon Board (or any committee thereof) does any of the following: (a) withdraws, withholds, modifies or qualifies or publicly proposes to withdraw, withhold, modify or qualify, in any manner adverse to ECI, the Ribbon Board Recommendation, (b) approves, adopts or recommends or publicly proposes to approve, adopt or recommend, any Ribbon Acquisition Proposal, (c) in the event of the commencement of a tender offer or exchange offer for any outstanding shares of Ribbon capital stock, fails to recommend against acceptance of such tender offer or exchange offer by the holders of Ribbon Common Stock (including, subject to Ribbon's disclosure obligations under Rule 14d-9 and 14e-2 of the Exchange Act or issuing a "stop, look and listen" statement pending disclosure of its position or making a disclosure to holders of Ribbon Common Stock if the Ribbon Board determines in good faith, after consultation with its outside counsel, that the failure to make such disclosure would be inconsistent with its fiduciary duties or law, by taking no position or a neutral position with respect to any such offer) within ten business days of the commencement thereof or (d) recommends that the holders of Ribbon Common Stock not approve the Share Issuance.

        "Ribbon Charter" means Ribbon's Amended and Restated Certificate of Incorporation.

        "Ribbon Common Stock" means common stock of Ribbon, par value $0.0001 per share.

        "Ribbon Israel" means Ribbon Communications Israel Ltd.

        "Ribbon Stockholder Approval" means the approval of the Share Issuance.

        "Ribbon Superior Proposal" means a bona fide written Ribbon Acquisition Proposal (except that references in the definition of the "Ribbon Acquisition Proposal" to 20% shall be replaced by 50%) made after the date of the Merger Agreement by any person other than ECI or its subsidiaries that is expressly conditioned upon the termination of the Merger Agreement, on terms that the Ribbon Board determines in good faith, after consultation with its outside legal counsel and financial advisors, and considering such factors as Ribbon considers to be appropriate, are more favorable to the holders of Ribbon Common Stock than the transactions contemplated by the Merger Agreement.

        "Sale Property" means the parcels of real property located south of the Ramat Siv Industrial Zone at (a) Parcels 319, 320 and 323 in Block 6368 in Givat Shmuel, Israel and (b) 12987/20069 parts in Parcel 161 in Block 6368 in Petah Tikva, Israel.

        "SEC" means the U.S. Securities and Exchange Commission.

        "Share Issuance" means an issuance of 32.5 million shares of Ribbon Common Stock as partial consideration in the Merger pursuant to the terms of the Merger Agreement.

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        "Stockholders Agreement" means the Stockholders Agreement, to be dated as of Closing, by and among Ribbon and certain holders of Ribbon Common Stock following the Effective Time.

        "Swarth" means ECI Holding (Hungary) kft.

        "TAP Advisors" means TAP Advisors LLC, financial advisor to Ribbon.

        "Voting Agreement" means that certain Voting Agreement, dated as of November 14, 2019, by and among ECI and the JPM Stockholders.

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EXPLANATORY NOTE

        This proxy statement relates to the Agreement and Plan of Merger, dated as of November 14, 2019, by and among Ribbon, Ribbon Israel, Merger Sub, ECI and Swarth.

        Upon the terms and subject to the conditions of the Merger Agreement (a copy of which is attached to this proxy statement as Annex A), Ribbon and ECI have agreed to effect a merger of their respective businesses. Pursuant to the Merger Agreement, Merger Sub will merge with and into ECI, with ECI surviving such merger as a wholly owned subsidiary of Ribbon.

        As provided in the Merger Agreement, in connection with and at the Effective Time, all equity securities of ECI issued and outstanding immediately prior to the Effective Time will be converted into the right to receive the Merger Consideration, which consists of $324 million in cash, subject to adjustments for indebtedness, pre-Closing distributions, transaction expenses and certain taxes, and 32.5 million shares of Ribbon Common Stock. Additionally, ECI equityholders will be entitled to the amount received as a result of ECI's sale of real estate assets less any taxes payable by ECI resulting from the disposition of such assets. Ribbon intends to fund the Cash Consideration with proceeds received from a new credit facility that Ribbon expects to enter into with Citizens Bank, N.A. ("Citizens Bank") in connection with the Closing. The Share Issuance will be made in reliance on an exemption from the registration provisions of the Securities Act of 1933, as amended, set forth in Section 4(a)(2) thereof, relating to sales by an issuer not involving a public offering.

        With respect to Ribbon stockholders, this document serves as a proxy statement for a special meeting of Ribbon stockholders being held on January 27, 2020, where Ribbon stockholders will vote, among other items, on a proposal to approve the Share Issuance in connection with the Merger.

        Unless the context otherwise requires, all references in this proxy statement to "we," "us" or "our" refer to Ribbon.

        If you have questions about the Merger or the Ribbon Special Meeting, please feel free to contact:

Ribbon Investor Relations:
Monica Gould
+1 (212) 871-3927
IR@rbbn.com

        Stockholders, Banks and Brokers who wish to receive a separate copy of proxy statement, may submit their request to Broadridge Financial Solutions by calling 1-800-579-1639 for delivery of paper copies, through the Internet or by e-mail, or in writing addressed to Ribbon Communications Inc., 4 Technology Park Drive, Westford, MA 01886 Attn: Investor Relations.

        You will not be charged for any of the documents you request.

        Information on the Internet websites of Ribbon and ECI are not part of the enclosed proxy statement. You should not rely on that information in deciding whether to approve the Share Issuance unless that information is in this document or has been incorporated by reference into this document.

        You should only rely on the information contained in this document. We have not authorized anyone to provide you with different information. The document is dated January 9, 2020, and you should not assume that information contained in this document is accurate as of any date other than that date. Neither the mailing of this document to any person nor the issuance by Ribbon of shares of its common stock in connection with the transactions contemplated by the Merger Agreement will create any implications to the contrary.

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QUESTIONS AND ANSWERS ABOUT THE RIBBON SPECIAL MEETING

        The Ribbon Board is soliciting proxies from its stockholders to vote at a special meeting of Ribbon stockholders, to be held at the offices of Latham & Watkins LLP, 200 Clarendon Street, Boston, Massachusetts 02116 on January 27, 2020 at 2:00 p.m., Eastern Time (the "Ribbon Special Meeting"), and any adjournment of the Ribbon Special Meeting, if appropriate.

        The questions and answers below highlight selected information from this proxy statement and are intended to briefly address some commonly asked questions about, among other things, (a) the Merger Agreement, the Merger Consideration and the Share Issuance, (b) the Merger, and (c) the Ribbon Special Meeting, where the stockholders of Ribbon will be asked to consider and vote on the (i) proposal for stockholder approval of the issuance of Ribbon Common Stock to ECI equityholders in connection with the Merger Agreement and (ii) a proposal to permit Ribbon to adjourn the Ribbon Special Meeting, if necessary, for further solicitation of proxies if there are not sufficient votes at the originally scheduled time of the Ribbon Special Meeting to approve the Share Issuance.

        The following questions and answers do not contain all of the information that is important to you. You should carefully read this proxy statement in its entirety, including the annexes and the documents incorporated by reference, to fully understand the matters to be acted upon and the voting procedures for the Ribbon Special Meeting. You may obtain the information incorporated by reference into this proxy statement without charge by following the instructions in the section entitled "Where You Can Find More Information."

Q.
Why have I received this proxy statement?

A.
You are receiving this proxy statement because you were a stockholder of Ribbon as of the close of business on the record date for the Ribbon Special Meeting. On November 13, 2019, the ECI Board and Ribbon Board each approved the Merger Agreement and the transactions contemplated by the Merger Agreement. A copy of the Merger Agreement is attached to this proxy statement as Annex A, which Ribbon encourages you to read in its entirety.

Q.
What are the specific proposals on which I am asked to vote at the Ribbon Special Meeting?

A.
Ribbon stockholders are being asked to approve two proposals at the Ribbon Special Meeting:

The Share Issuance, as contemplated by the Merger Agreement (Ribbon Proposal No. 1 or the "Share Issuance proposal"); and

One or more adjournments of the Ribbon Special Meeting, if appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the Ribbon Special Meeting (Ribbon Proposal No. 2 or the "Ribbon adjournment proposal").
Q.
What is the consideration that Ribbon will pay to ECI equityholders in the Merger?

A.
The aggregate consideration that Ribbon will pay in respect of all equity securities of ECI issued and outstanding in the Merger will be (i) $324 million in cash, subject to adjustments for

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Q.
How does the Ribbon Board recommend that Ribbon stockholders vote?

A.
The Ribbon Board unanimously recommends that the Ribbon stockholders vote:

"FOR" the Share Issuance proposal (Ribbon Proposal No. 1); and

"FOR" the Ribbon adjournment proposal (Ribbon Proposal No. 2).
Q.
How many votes are required to approve each proposal?

A.
Approval of the Share Issuance proposal requires the affirmative vote of holders of a majority of the shares of Ribbon Common Stock, entitled to vote and present in person at the special meeting or represented by proxy that cast a vote on such proposal.
Q.
When is the Merger expected to be consummated?

A.
Ribbon and ECI are working toward consummating the Merger as expeditiously as possible. However, Ribbon and ECI cannot be certain when, or if, the conditions to Closing will be satisfied or waived, or that the Merger will be consummated. See the sections entitled "The Merger—Regulatory Filings and Approvals Required to Consummate the Merger" and "The Merger Agreement—Conditions to Completion of the Merger."

Q.
When and where is the Ribbon Special Meeting?

A.
The Ribbon Special Meeting will be held at the offices of Latham & Watkins LLP, 200 Clarendon Street, Boston, Massachusetts 02116 on January 27, 2020 at 2:00 p.m., Eastern Time. For additional information about the Ribbon Special Meeting, see the section entitled "The Ribbon Special Meeting."

Q.
What is a quorum?

A.
Holders of a majority of the outstanding shares of Ribbon Common Stock entitled to vote, represented either in person or by proxy, constitutes a quorum for the transaction of business at the Ribbon Special Meeting. Your shares are counted as present if you attend the Ribbon Special Meeting in person at the meeting or through a valid proxy properly submitted over the Internet, by telephone or by mail. As of January 8, 2020, the record date for the Ribbon Special Meeting, 110,959,971 shares of Ribbon Common Stock were outstanding and entitled to vote. Further, for purposes of establishing a quorum, shares of Ribbon Common Stock that a stockholder holds and that are represented by their proxy even if the stockholder does not vote on one or more of the

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Q.
Who can vote at the Ribbon Special Meeting?

A.
Holders of record of shares of Ribbon Common Stock at the close of business on the Ribbon record date of January 8, 2020 will be entitled to vote shares held at that date at the Ribbon Special Meeting or any adjournments thereof. Each outstanding share of Ribbon Common Stock entitles its holder to cast one vote.
Q.
How many votes do I have if I am a Ribbon stockholder?

A.
Each share of Ribbon Common Stock that you own at the close of business on the record date will entitle you to one vote on each proposal presented at the Ribbon Special Meeting. As of the close of business on the Ribbon record date, there were 110,959,971 shares of Ribbon Common Stock outstanding (which includes 487,976 unvested shares underlying restricted stock grants that are not considered to be outstanding for accounting purposes) and entitled to vote at the Ribbon Special Meeting.
Q.
If I am a Ribbon stockholder, what happens if I abstain from voting?

A.
The Share Issuance proposal requires the affirmative vote of a majority of the votes cast, in person or by proxy. Abstentions will not be counted as votes cast on, and will have no effect on the outcome of, the proposal to approve the Share Issuance.
Q.
If I am a Ribbon stockholder and my shares of Ribbon Common Stock are held in "street name" by a broker, bank or other nominee, will my broker or bank vote my share for me?

A.
No. If your shares are held in a stock brokerage account or by a bank or other nominee, you are considered the "beneficial holder" of the shares held for you in what is known as "street name." If

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Q.
How do I vote my shares of Ribbon Common Stock that are held in "street name" by a brokerage firm, bank or other nominee?

A.
If your shares are held in an account at a brokerage firm, bank or other nominee, then you are the beneficial owner of shares held in "street name" and this proxy statement is being sent to you by that organization. The organization holding your account is considered to be the stockholder eligible to vote at the Ribbon Special Meeting for purposes of voting at the Ribbon Special Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee how to vote the shares of Ribbon Common Stock in your account by following the instructions that the broker, bank or other nominee provides you along with this proxy statement. All of the proposals at the Ribbon Special Meeting are considered non-routine matters. As a result, your broker may not vote your shares without your specific instructions, which is called a "broker non-vote."

Q.
Do any of the officers or directors of Ribbon have interests in the Merger that may differ from or be in addition to my interests as a Ribbon stockholder?

A.
In considering the recommendation of the Ribbon Board that Ribbon stockholders vote to approve the Share Issuance proposal and the Ribbon adjournment proposal, Ribbon stockholders should be aware that some of Ribbon's directors and executive officers have interests in the Merger that may be different from, or in addition to, the interests of Ribbon stockholders generally. The Ribbon Board was aware of and considered these potential interests, among other matters, in evaluating and negotiating the Merger Agreement and the transactions contemplated therein, in approving the Merger and in recommending the approval of the Share Issuance proposal and the Ribbon adjournment proposal.
Q.
Will any other matters be presented for a vote at the Ribbon Special Meeting?

A.
Ribbon is not aware of any other matters that will be presented for a vote at the Ribbon Special Meeting. However, if any other matters properly come before the Ribbon Special Meeting, the proxies will have the discretion to vote upon such matters, in their discretion.

Q.
Who can attend the Ribbon Special Meeting?

A.
Stockholders eligible to vote at the Ribbon Special Meeting, or their duly authorized proxies, may attend the Ribbon Special Meeting. If you choose to attend the Ribbon Special Meeting, you must

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Q.
How do I vote my shares if I am a Ribbon stockholder of record?

A.
If you are a Ribbon stockholder entitled to vote at the Ribbon Special Meeting, you may vote in person at the Ribbon Special Meeting or through a valid proxy properly submitted by mail, over the Internet or by telephone. All votes, other than votes made in person at the Ribbon Special Meeting, must be received by 11:59 p.m., Eastern Time, on January 26, 2020.

In Person.    If your shares are registered directly in your name, you have the right to vote in person at the Ribbon Special Meeting. If you hold shares in "street name" through a broker, bank or other nominee and you want to vote in person at the Ribbon Special Meeting, you must obtain a proxy from your broker, bank or other nominee and bring that proxy to the Ribbon Special Meeting. If you attend the Ribbon Special Meeting and plan to vote in person, Ribbon will provide you with a ballot at the Ribbon Special Meeting.

Mail.    By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Ribbon Special Meeting in the manner you indicate. Ribbon encourages you to sign and return the proxy card even if you plan to attend the Ribbon Special Meeting so that your shares will be voted if you are ultimately unable to attend the Ribbon Special Meeting.

Internet.    If you have Internet access, you may vote over the Internet at www.proxyvote.com by following the instructions set forth on your proxy card. If you submit your proxy over the Internet, it is not necessary to return your proxy card.

Telephone.    If you are located in the United States or Canada, you may vote by telephone by calling 1-800-690-6903 and following the instructions set forth on your proxy card. If you submit your proxy by telephone, it is not necessary to return your proxy card.

Q.
Can I change my vote after I have delivered my proxy?

A.
Yes. You may revoke your proxy and change your vote at any time before your proxy is voted at the Ribbon Special Meeting. You may do this by signing and submitting a new proxy card (or revocation) with a later date, submitting a proxy by telephone or submitting a proxy over the internet (your latest telephone or internet proxy is counted) or by attending the Ribbon Special Meeting and voting in person. Attending the Ribbon Special Meeting by itself, however, will not revoke your proxy unless you specifically request it.

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Q.
What if I receive more than one proxy card?

A.
If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted.

Q.
What do I need to do now to vote my shares?

A.
After carefully reading and considering the information contained in this proxy statement, please respond by completing, signing and dating the appropriate proxy card or voting instruction card and returning it in the enclosed postage-paid envelope, or, if available, by submitting your voting instruction over the Internet or by telephone, as soon as possible so that your shares of Ribbon Common Stock may be represented and voted at the Ribbon Special Meeting. In addition, you may also vote your shares in person at the Ribbon Special Meeting. If you hold shares registered in the name of a broker, bank or other nominee, that broker, bank or other nominee has enclosed, or will provide, instructions for directing your broker, bank or other nominee how to vote those shares.

Q.
As a Ribbon stockholder, am I entitled to appraisal rights in connection with the Merger?

A.
No. Ribbon's stockholders will not be entitled to exercise appraisal or dissenter's rights under the DGCL in connection with the Merger or the Share Issuance. See section entitled "No Appraisal Rights of Ribbon Stockholders."

Q.
Who can help answer my questions?

A.
If you are a Ribbon stockholder and have any questions about the Merger, the Ribbon Special Meeting or how to submit your proxy, or if you need additional copies of this proxy statement or the enclosed proxy card, you should contact:

Ribbon Investor Relations:
Monica Gould
+1 (212) 871-3927
IR@rbbn.com

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SUMMARY

        This summary highlights selected information from this proxy statement 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 carefully read this entire proxy statement and the other documents to which you are referred.

Parties to the Merger Agreement

Ribbon Communications Inc. (Ribbon)

        Ribbon Communications Inc., a Delaware corporation, delivers market-leading software solutions that secure and power many of the world's leading service provider and enterprise communications environments. Built on world-class technology and intellectual property, Ribbon's cloud-native solutions deliver intelligent and secure real-time communications solutions for the cloud, network and enterprise edge. Ribbon's Kandy Cloud real-time communications software platform delivers advanced and embedded CPaaS and UCaaS capabilities enabling service providers to rapidly create and deploy high-value communications services. For further information, see section entitled "Business of Ribbon."

        The address and telephone number of the principal executive offices of Ribbon Communications Inc. are 4 Technology Park Drive, Westford, Massachusetts 01886 and (978) 614-8100.

ECI Telecom Group Ltd. (ECI)

        ECI Telecom Group Ltd. is a leading global provider of comprehensive networking products and solutions to service providers, utilities and governments, and defense and security customers, headquartered in Petah Tikva, just outside Tel Aviv, Israel. ECI has been providing comprehensive networking products and solutions since 1961 and is one of only a few providers globally offering both optical and packet networking products and solutions, with a diverse and longstanding global customer base. For further information, see section entitled "Business of ECI."

        The address and telephone number of the principal executive offices of ECI Telecom Group Ltd. is 30 Hasivim Street, Petah Tikva, Israel 4959388 and (972) 3 926-6555.

The Merger and the Merger Agreement

General

        Subject to the terms and conditions of the Merger Agreement, at the Effective Time, (1) Merger Sub will merge with and into ECI, with ECI continuing as the surviving company and indirect wholly owned subsidiary of Ribbon and (2) ECI equityholders will receive 32,500,000 shares of Ribbon Common Stock and $324,000,000 in cash, subject to adjustments for indebtedness, pre-Closing distributions, transaction expenses and certain taxes, as described in the section entitled "The Merger Agreement—Merger Consideration." Additionally, ECI equityholders will be entitled to the amount received as a result of ECI's sale of the Sale Property less any taxes payable by ECI resulting from the disposition of such assets. Immediately following the Effective Time, it is expected that existing holders of Ribbon Common Stock will own approximately 77.3% of shares in the share capital of Ribbon and existing ECI equityholders will own approximately 22.7% of shares in the share capital of Ribbon.

Effects of the Merger

        At the Effective Time, Merger Sub will be merged with and into ECI, whereupon the separate corporate existence of Merger Sub will cease, and ECI will continue its existence under the laws of the State of Israel as the surviving corporation in the Merger and a wholly owned subsidiary of Ribbon Israel, as well as an indirect, wholly owned subsidiary of Ribbon.

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        At the Effective Time, each share of ECI issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive the portion of Merger Consideration allocated to it under the Merger Agreement. For further information, see section entitled "The Merger—Effects of the Merger."

Merger Consideration

        As consideration for the Merger, ECI equityholders will receive a total of $324,000,000 in cash, subject to adjustments for indebtedness, pre-Closing distributions, transaction expenses and certain taxes, and 32,500,000 shares of Ribbon Common Stock, as described in the section entitled "The Merger—Merger Consideration." Additionally, ECI equityholders will be entitled to the amount received as a result of ECI's sale of the Sale Property less any taxes payable by ECI resulting from the disposition of such assets.

Purchase Price Adjustment

        The Merger Agreement provides for Closing date adjustments to the Cash Consideration for certain taxes, indebtedness, transaction expenses and pre-Closing distributions, as well as a post-Closing adjustment to the Cash Consideration to the extent that the actual amounts of certain taxes, indebtedness, transaction expenses and pre-Closing distributions are greater or less than the amounts included in the calculation of Cash Consideration on the date of Closing. $5,000,000 of the Cash Consideration will be placed into an escrow account pending the resolution of the post-Closing adjustment to Cash Consideration ($2,000,000 of which will be used for any adjustments required in connection with the taxes on the Sale Property). For further information, see section entitled "The Merger Agreement—Purchase Price Adjustment."

Regulatory Filings and Approvals Required to Consummate the Merger

        Under the antitrust and competition laws and the foreign control laws of certain countries, Ribbon and ECI cannot consummate the Merger until they file certain notification and report forms with the relevant governmental entities that are required or deemed necessary to consummate the Merger.

        Ribbon and ECI filed the required notifications with the Antitrust Division of the DOJ and the Premerger Notification Office of the FTC under the Hart-Scott Rodino Act requirements on December 6, 2019. Regulatory filings have also been made in Russia and Italy. The Russian antitrust filing was made on December 10, 2019, and the Italian foreign investment filing was made on November 28, 2019.

        Under the laws of the United States, Swarth cannot vote more than 9.9% of Ribbon's voting shares and cannot designate members to the Ribbon Board until it files certain notification and report forms with the Committee on Foreign Investment in the United States ("CFIUS") and obtains the required clearance. Ribbon and ECI will use their respective reasonable best efforts to satisfy CFIUS and provide any documentation or information requested or required by CFIUS prior to Closing, but the receipt of CFIUS approval is not a condition to Closing. For further information, see section entitled "The Merger—Regulatory Filings and Approvals Required to Consummate the Merger."

Closing and Effectiveness of the Merger

        The Closing will occur on the third business day after the satisfaction or waiver (to the extent permitted by law) of the conditions to Closing. Subject to the provisions of the Merger Agreement, the Merger will become effective at the time and on the date on which the relevant certificate of merger is filed with the applicable governmental entity, or later if the parties so agree and specify in such certificate. For further information, see section entitled "The Merger—Closing and Effectiveness of the Merger."

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Indemnification and Recourse

        Ribbon has purchased a representation and warranty insurance policy to provide coverage for certain breaches of representations and warranties of ECI contained in the Merger Agreement, which is subject to a $50 million total policy limit as well as certain exclusions, deductibles, and other terms and conditions set forth therein.

        Ribbon and its subsidiaries will be indemnified and held harmless by each ECI equityholder (other than holders of ECI special shares) from and against all losses sustained by Ribbon resulting from: (i) breaches of certain limited representations and warranties of ECI contained in the Merger Agreement, (ii) any failure by ECI to perform or comply with any of its covenants or agreements set forth in the Merger Agreement and (iii) 50% of certain taxes that may be payable by ECI post-Closing, as provided for in the Merger Agreement. In connection with clause (iii) of the foregoing, ECI equityholders and certain other recipients of Merger Consideration have agreed to deposit 2,000,000 shares of Ribbon Common Stock from the Stock Consideration into an escrow account to support their indemnification obligation for any such taxes payable by ECI post-Closing, to the extent not covered by the representation and warranty insurance policy that was obtained by Ribbon in connection with entering into the Merger Agreement.

        ECI equityholders (other than holders of ECI special shares) and certain other recipients of Merger Consideration will be indemnified and held harmless by Ribbon from and against all losses sustained by ECI equityholders resulting from: (i) breaches of certain limited representations and warranties of Ribbon or Merger Sub, (ii) any failure by Ribbon, Ribbon Israel or Merger Sub to perform or comply with any of their respective covenants or agreements set forth in the Merger Agreement and (iii) if an outstanding guarantee of ECI's obligations by an equityholder of ECI has not been canceled and terminated as of the Effective Time, such outstanding guarantee of ECI.

        To the extent that any indemnified party suffers losses relating to a breach of representations and warranties, no indemnification will be payable until the applicable policy limit under the indemnified party's representation and warranty insurance has been met. Each party's recourse for breaches of representations and warranties is limited to the recovery under such representation and warranty insurance policy, except in cases of fraud or breaches of certain fundamental representations and warranties. Additionally, each party's aggregate indemnification obligation is capped at the portion of the Merger Consideration actually received by such indemnifying party. For further information, see section entitled "The Merger Agreement—Indemnification."

No Solicitation; Change of Recommendation

        Ribbon and Merger Sub have agreed, from the date of the Merger Agreement until the effective time of the Merger, or, if earlier, the termination of the Merger Agreement, not to initiate, solicit or knowingly encourage the making of any Ribbon Acquisition Proposal or engage in negotiations or substantive discussions with any third party that may relate to a Ribbon Acquisition Proposal.

        Notwithstanding the foregoing, the Merger Agreement provides that, subject to certain circumstances, prior to obtaining the Ribbon Stockholder Approval, the Ribbon Board may furnish information to, or participate in discussions and negotiations with, third parties in response to an unsolicited, bona fide written acquisition proposal if the Ribbon Board determines in good faith, after consultation with outside counsel, that such acquisition proposal constitutes, or could reasonably be expected to result in, a Ribbon Superior Proposal.

        ECI has agreed, from the date of the Merger Agreement until the effective time of the Merger, or, if earlier, the termination of the Merger Agreement, not to initiate, solicit or knowingly encourage the making of an ECI Acquisition Proposal (as defined in the section entitled "The Merger Agreement—No Solicitation—No Solicitation by ECI"), or engage in negotiations or substantive discussion with any third

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party that may relate to an ECI Acquisition Proposal. For further information, see section entitled "The Merger Agreement—No Solicitation; Change of Recommendation."

Conditions to Completion of the Merger

        The completion of the transactions contemplated by the Merger Agreement is subject to the satisfaction or waiver of certain conditions, including, among others: (i) the Ribbon Stockholder Approval and the ECI Shareholder Approval have been obtained, (ii) the applicable waiting period under the HSR Act and any other applicable antitrust laws has expired or early termination thereof has been granted, (iii) the shares of Ribbon Common Stock to be issued in the Merger have been approved for listing on NASDAQ and (iv) no governmental authority has issued any instruction or directive prohibiting the consummation of the Merger. Swarth and certain other equityholders of ECI have entered into a Voting Agreement pursuant to which they will vote to approve the Merger and the ECI Shareholder Approval will be obtained. For further information, see section entitled "The Merger Agreement—Conditions to Completion of the Merger."

The Voting Agreement

        In connection with the signing of the Merger Agreement, the JPM Stockholders and ECI entered into the Voting Agreement, pursuant to which, among other matters, each JPM Stockholder has agreed (1) to vote all of its shares of Ribbon Common Stock (a) in favor of the Share Issuance at any meeting of the Ribbon Stockholders, (b) against any agreement that relates to a Ribbon Acquisition Proposal, (c) against any action or agreement that would result in a breach of obligations of Ribbon contained in the Merger Agreement and (d) against any action that could reasonably be expected to adversely affect the transactions contemplated by the Merger Agreement and (2) prior to the termination of the Merger Agreement, not to (subject to certain exceptions) transfer its shares of Ribbon Common Stock. As of January 8, 2020, the JPM Stockholders beneficially owned approximately 45.01% of the shares of Ribbon Common Stock outstanding on that date. In the event that the Ribbon Board has changed its recommendation to Ribbon Stockholders to approve the Share Issuance, the JPM Stockholder's voting obligation is reduced to 33% of the aggregate voting power of Ribbon's outstanding common stock and any additional shares held by the JPM Stockholders will be voted, at the JPM Stockholders' election, either in accordance with the Voting Agreement or in proportion to the votes of Ribbon's other stockholders. For further information, see section entitled "Other Transaction Documents."

The Stockholders Agreement

        The Merger Agreement contemplates that at the Closing, Swarth will enter into the Stockholders Agreement with Ribbon and the JPM Stockholders (that are existing principal shareholders of Ribbon). The Stockholders Agreement will become effective upon the closing of the transactions contemplated by the Merger Agreement and sets forth certain arrangements and contains various provisions relating to, among other things, board representation, standstill restrictions and transfer restrictions. For further information, see section entitled "Other Transaction Documents."

The Registration Rights Agreement

        The Merger Agreement contemplates that at the Closing, Ribbon will enter into the Registration Rights Agreement with the JPM Stockholders and Swarth. Under the Registration Rights Agreement, certain Ribbon Stockholders will be granted certain registration rights beginning on the 180th day following the Effective Time, including (i) the right to request that Ribbon file an automatic shelf registration statement and effect unlimited underwritten offerings pursuant to such shelf registration statement, (ii) unlimited demand registrations and (iii) unlimited piggyback registration rights that allow holders of registrable shares to require that shares of Ribbon Common Stock owned by such holders be included in certain registration statements filed by Ribbon, in each case subject to the

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transfer restrictions contained in the Stockholders Agreement. For further information, see section entitled "Other Transaction Documents."

Other Transaction Agreements

        In connection with the Merger Agreement, (i) Pathfinder agreed to sell its preferred shares of ECI Telecom Ltd. to ECI at the Effective Time and (ii) Global Village Advisory Ltd. ("Global Village") agreed that ECI will have a right to cause Global Village or its affiliate to purchase the Sale Property from ECI prior to Closing. For further details on these ancillary agreements, please see section entitled "Other Transaction Agreements."

The Ribbon Special Meeting

Date, Time and Place

        A special meeting of the stockholders of Ribbon will be held at the offices of Latham & Watkins LLP, located at 200 Clarendon Street, Boston, Massachusetts 02116 on January 27, 2020 at 2:00 p.m., Eastern Time, unless the special meeting is adjourned.

Purpose of the Ribbon Special Meeting

        At the Ribbon Special Meeting, Ribbon stockholders will be asked to consider and vote upon the following matters:

    a proposal (which we refer to as the Share Issuance proposal) for stockholder approval of the issuance of Ribbon Common Stock to ECI equityholders in connection with the Merger Agreement; and

    a proposal (which we refer to as the Ribbon adjournment proposal) to permit Ribbon to adjourn the Ribbon Special Meeting, if necessary, for further solicitation of proxies if there are not sufficient votes at the originally scheduled time of the Ribbon Special Meeting to approve the Share Issuance proposal.

Who Can Vote at the Ribbon Special Meeting

        Only holders of record of shares of Ribbon Common Stock at the close of business on the Ribbon record date January 8, 2020 will be entitled to vote shares held at that date at the Ribbon Special Meeting or any adjournments thereof. Each outstanding share of Ribbon Common Stock entitles its holder to cast one vote. As of the close of business on the Ribbon record date, there were 110,959,971 shares of Ribbon Common Stock outstanding (which includes 487,976 unvested shares underlying restricted stock grants that are not considered to be outstanding for accounting purposes) and entitled to vote at the Ribbon Special Meeting.

Vote Required for the Proposals

        Share Issuance Proposal.    Approval of the Share Issuance proposal requires the affirmative vote of holders of a majority of the shares of Ribbon Common Stock entitled to vote and present in person at the Ribbon Special Meeting or represented by proxy that cast a vote on such proposal.

        Ribbon Adjournment Proposal.    Approval of the Ribbon adjournment proposal (if necessary to solicit additional proxies if there are insufficient votes to approve the Share Issuance proposal) requires the affirmative vote of a majority of shares of Ribbon Common Stock present in person or represented by proxy and entitled to vote at the Ribbon Special Meeting on the Ribbon adjournment proposal.

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Shares Owned by Ribbon's Directors and Executive Officers

        At the close of business on the Ribbon record date, the directors and executive officers of Ribbon and certain of their affiliates were entitled to vote approximately 1,490,888 shares of Ribbon Common Stock, or 1.34% of the shares of Ribbon Common Stock outstanding on that date. Approval of the Share Issuance proposal requires the affirmative vote of the holders of a majority of the total shares of Ribbon Common Stock on the record date and present in person at the special meeting or represented by proxy that cast a vote on such proposal. We currently expect that Ribbon's directors and executive officers will vote their shares in favor of each of the proposals to be considered at the Ribbon Special Meeting, although none of them has entered into any agreement obligating them to do so.

Recommendation of the Ribbon Board

        The Ribbon Board unanimously recommends that the Ribbon stockholders vote (i) "FOR" the Share Issuance and (ii) "FOR" the Ribbon adjournment proposal.

Interests of Certain Ribbon Directors and Executive Officers in the Merger

        In considering the recommendation of the Ribbon Board that Ribbon stockholders vote "FOR" the Share Issuance, Ribbon stockholders should be aware that certain executive officers and directors of Ribbon have interests in the Merger that may be different from, or in addition to, the interests of Ribbon stockholders generally. The Ribbon Board was aware of and considered these interests, among other matters, when they approved the Merger Agreement and recommended that Ribbon stockholders approve the Share Issuance.

        For additional information about the Ribbon Special Meeting, see section entitled "The Merger Agreement—Conditions to Completion of the Merger."

No Appraisal Rights

        Ribbon's stockholders will not be entitled to exercise appraisal or dissenter's rights under the DGCL, in connection with the Merger or the Share Issuance.

Termination of the Merger Agreement

        The Merger Agreement may be terminated by mutual written consent of each of Ribbon and ECI.

        The Merger Agreement may be terminated by either Ribbon or ECI if:

    provided the terminating party has not materially breached the Merger Agreement, the Merger has not occurred on or before 5:00 p.m. (New York City time) on July 1, 2020 (the "Termination Date"),

    Ribbon does not obtain the Ribbon Stockholder Approval at the Ribbon Special Meeting, provided that the terminating party has not breached the Merger Agreement in a manner that caused the failure to obtain such Ribbon Stockholder Approval; or

    any restraint preventing the consummation of the Merger is in effect and has become final and non-appealable.

        The Merger Agreement may be terminated by ECI if:

    Ribbon or Merger Sub has breached or failed to perform any of their respective representations, warranties, covenants or other agreements set forth in the Merger Agreement, which breach or failure to perform would result in a failure of the certain conditions to the Merger Agreement and such conditions cannot be cured within 30 days of notice of such failure;

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    ECI has satisfied (and continues to satisfy) all conditions that ECI is responsible for and Ribbon fails to consummate the Merger;

    Prior to obtaining the Ribbon Stockholder Approval, the Ribbon Board effects a Ribbon Change of Recommendation;

    Prior to obtaining the Ribbon Stockholder Approval, at any time after the receipt or public announcement of a Ribbon Acquisition Proposal, the Ribbon Board fails to publicly reaffirm the Ribbon Board Recommendation as promptly as practicable (but in any event within five business days) after receipt of written request to do so from ECI; or

        The Merger Agreement may be terminated by Ribbon if:

    ECI has breached or failed to perform any of their respective representations, warranties, covenants or other agreements set forth in the Merger Agreement, which breach or failure to perform would result in a failure of the certain conditions to the Merger Agreement and such conditions cannot be cured within 30 days of notice of such failure.

        For additional information, see section entitled "The Merger Agreement—Termination of the Merger Agreement."

Termination Fees; Expenses and Damages

Effect of Termination

        In the event of termination of the Merger Agreement as described in the section entitled "The Merger AgreementTermination of the Merger Agreement," there will be no liability or obligation on the part of any party under the Merger Agreement, except:

    for willful and material breaches of the Merger Agreement prior to the termination thereof;

    certain provisions of the Merger Agreement will survive the termination, including such provisions regarding termination fees; and

    the nondisclosure agreement, dated as of April 8, 2019, by and between ECI and Ribbon will survive the termination of the Merger Agreement.

Expenses and Damages

        In the event of a termination as a result of willful and material breach, such breaching party will be liable for any and all damages or other losses of any kind suffered by the other parties or their affiliates as a result of such willful and material breach, unless a termination fee is paid as set forth below.

        Additionally, Ribbon has agreed to pay ECI a fee of $19,500,000 in the event the Merger Agreement is terminated as a result of any of the following:

    the debt financing commitments expire or terminate;

    all or any portion of the debt financing becoming unavailable on the terms and conditions (including any "market flex" provisions) contemplated in the Debt Commitment Letter;

    a repudiation, rescission or withdrawal of the Debt Commitment Letter; or

    a default or breach by any party to the Debt Commitment Letter.

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        Ribbon has agreed to pay ECI a fee of $13,625,000 and to reimburse ECI for its expenses up to a maximum reimbursement of $2,275,000 (the "Acquisition Proposal Termination Fee") if the Merger Agreement is terminated under the following circumstances:

    the Merger Agreement is terminated by ECI prior to Ribbon having obtained the Ribbon Stockholder Approval and either (i) the Ribbon Board makes a Ribbon Change of Recommendation, or (ii) at any time after the receipt or public announcement of a Ribbon Acquisition Proposal, the Ribbon Board fails to publicly reaffirm the Ribbon Board Recommendation as promptly as practicable (but in any event within five business days) after receipt of written request to do so from ECI;

    the Merger Agreement is terminated by either Ribbon or ECI after the holders of Ribbon Common Stock vote not to approve the Share Issuance and either (i) the Ribbon Board makes a Ribbon Change of Recommendation, or (ii) at any time after the receipt or public announcement of a Ribbon Acquisition Proposal, the Ribbon Board fails to publicly reaffirm the Ribbon Board Recommendation as promptly as practicable (but in any event within five business days) after receipt of written request to do so from ECI; and

    a Ribbon Acquisition Proposal is (i) publicly announced and not withdrawn at the Termination Date, or (ii) in the case of a termination due to holders of Ribbon Common Stock voting not to approve the Share Issuance, the Ribbon Acquisition Proposal was publicly announced or disclosed and not withdrawn at the time of the Ribbon Special Meeting and within twelve months after such termination, Ribbon enters in a definitive agreement in respect of a Ribbon Acquisition Proposal or consummates a Ribbon Acquisition Proposal (whether or not the same Ribbon Acquisition Proposal referred to in clause (i) and (ii) above was publicly announced), unless, during any three-month period after the termination of the Merger Agreement and prior to entering into such definitive agreement or consummating such subsequent Ribbon Acquisition Proposal, there was no Ribbon Acquisition Proposal that had been publicly announced and not withdrawn:

    in the event of a termination in which Ribbon executes a definitive agreement with respect to or consummates a Ribbon Acquisition Proposal with a third party that was made and not withdrawn at the time of the Ribbon Special Meeting, payment of the Acquisition Proposal Termination Fee must be paid at the earlier of the date of consummation of the Ribbon Acquisition Proposal or execution of a definitive agreement with respect thereto; and

    in the event of a termination in which Ribbon executes a definitive agreement with respect to or consummates a Ribbon Acquisition Proposal with a third party that made a Ribbon Acquisition Proposal after the Ribbon Special Meeting, the Acquisition Proposal Termination Fee must be paid on the date of consummation of such Ribbon Acquisition Proposal and each reference to 20% in the definition of Ribbon Acquisition Proposal shall be deemed to be a reference to "50%."

        Additionally, Ribbon must pay 100% of ECI's expenses, up to a maximum reimbursement of $5,000,000 (which will be credited against any Acquisition Proposal Termination Fee that is currently, or becomes, payable) if the Merger Agreement is terminated by either Ribbon or ECI after the holders of Ribbon Common Stock vote not to approve the Share Issuance.

        Except in the case of fraud, the payment of the Reverse Termination Fee (as defined in the section entitled "The Merger AgreementTermination Fees; Expenses and Damages") or the Acquisition Proposal Termination Fee is the sole and exclusive remedy available to ECI, unless:

    ECI declines the Reverse Termination Fee or the Acquisition Proposal Termination Fee and sues Ribbon for damages in respect to a Ribbon's willful and material breach; or

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    ECI pursues, and is successful in, the grant of specific performance in lieu of payment of a Reverse Termination Fee as described in the section entitled "The Merger AgreementSpecific Performance."

        For additional information, see section entitled "The Merger Agreement—Termination Fees; Expenses and Damages."

Opinion of Ribbon's Financial Advisor

        We retained TAP Advisors as Ribbon's and the Ribbon Board's financial advisor in connection with the proposed transaction. As part of that engagement, the Ribbon Board requested that TAP Advisors evaluate the fairness, from a financial point of view, of the consideration to be paid by Ribbon pursuant to the Merger Agreement. On November 13, 2019, at a meeting of the Ribbon Board, Ribbon management and Ribbon's legal and financial teams, to evaluate the consideration of the Merger and the transaction contemplated thereby, TAP Advisors delivered to the Ribbon Board an oral opinion, subsequently confirmed by delivery of a written opinion dated November 14, 2019, to the effect that, as of that date and based on the various factors, procedures, assumptions, qualifications and limitations set forth in its opinion, the consideration to be paid by Ribbon was fair to Ribbon, from a financial point of view. The full text of the written opinion of TAP Advisors describes the procedures followed, assumptions made, matters considered and qualifications and limitations on the review undertaken by TAP Advisors. The opinion is attached as Annex B and is incorporated by reference into this proxy statement. The opinion of TAP Advisors does not constitute a recommendation to any Ribbon stockholder as to how to vote with respect to the Merger or any other matter discussed in this proxy statement.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF RIBBON

        The following selected consolidated financial data have been derived from, and should be read in conjunction with, Ribbon's consolidated financial statements. The consolidated statement of operations data for the years ended December 31, 2018, 2017 and 2016 and the consolidated balance sheet data as of December 31, 2018 and 2017 have been derived from Ribbon's audited consolidated financial statements, which are included elsewhere in this proxy statement. The consolidated statement of operations data for the years ended December 31, 2015 and 2014 and the consolidated balance sheet data as of December 31, 2016, 2015 and 2014 have been derived from Ribbon's audited consolidated financial statements, which have not been incorporated into this proxy statement. The consolidated statement of operations data for the nine months ended September 30, 2019 and 2018 and the consolidated balance sheet data as of September 30, 2019 have been derived from Ribbon's unaudited condensed consolidated financial statements, which are included elsewhere in this proxy statement. The consolidated balance sheet data as of September 30, 2018 have been derived from Ribbon's unaudited condensed consolidated financial statements, which have not been incorporated into this proxy statement. These financial statements are unaudited, but in the opinion of Ribbon's management, contain all adjustments necessary to present fairly the financial position and results of operations for the periods indicated.

        The information set forth below is only a summary and is not necessarily indicative of the results of operations of Ribbon or the combined company, and you should read the following information together with Ribbon's audited consolidated financial statements, the notes related thereto and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Ribbon's Annual Report on Form 10-K/A for the year ended December 31, 2018, and Ribbon's unaudited condensed consolidated financial statements, the notes related thereto and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Ribbon's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2019, which are included elsewhere in this proxy statement.

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RIBBON COMMUNICATIONS INC.

 
  Nine months ended
September 30,
  Year ended December 31,  
Consolidated Statement of Operations Data
(In thousands, except per share amounts)
  2019(1)   2018(2)   2018(2)   2017(3)   2016(4)   2015(5)   2014(6)  

Revenue:

                                           

Product

  $ 180,691   $ 191,937   $ 279,014   $ 181,119   $ 146,381   $ 141,913   $ 182,455  

Service

    221,311     219,072     298,891     148,823     106,210     107,121     113,871  

Total revenue

    402,002     411,009     577,905     329,942     252,591     249,034     296,326  

Cost of revenue:

                                           

Product

    101,056     102,183     142,185     70,250     47,367     50,460     60,284  

Service

    84,807     96,208     127,388     58,196     37,613     36,917     42,637  

Total cost of revenue

    185,863     198,391     269,573     128,446     84,980     87,377     102,921  

Gross profit

    216,139     212,618     308,332     201,496     167,611     161,657     193,405  

Operating expenses:

                                           

Research and development

    105,456     109,056     145,462     101,481     72,841     77,908     79,396  

Sales and marketing

    87,179     94,152     128,276     83,403     68,539     72,841     80,141  

General and administrative

    40,833     46,571     66,036     47,642     35,948     39,846     43,937  

Acquisition-related expense

    6,861     14,262     16,951     14,763     1,152     131     1,558  

Restructuring and related expense

    16,448     15,162     17,015     9,436     2,740     2,148     5,625  

Total operating expenses

    256,777     279,203     373,740     256,725     181,220     192,874     210,657  

Loss from operations

    (40,638 )   (66,585 )   (65,408 )   (55,229 )   (13,609 )   (31,217 )   (17,252 )

Interest and other income (expense), net

    66,776     (5,812 )   (8,002 )   1,537     2,193     1,329     2,611  

Income (loss) before income taxes

    26,138     (72,397 )   (73,410 )   (53,692 )   (11,416 )   (29,888 )   (14,641 )

Income tax (provision) benefit

    (5,850 )   (2,587 )   (3,400 )   18,440     (2,516 )   (2,007 )   (2,214 )

Net income (loss)

  $ 20,288   $ (74,984 ) $ (76,810 ) $ (35,252 ) $ (13,932 ) $ (31,895 ) $ (16,855 )

Earnings (loss) per share:

                                           

Basic

  $ 0.19   $ (0.73 ) $ (0.74 ) $ (0.60 ) $ (0.28 ) $ (0.64 ) $ (0.34 )

Diluted

  $ 0.18   $ (0.73 ) $ (0.74 ) $ (0.60 ) $ (0.28 ) $ (0.64 ) $ (0.34 )

Shares used to compute earnings (loss) per share:

                                           

Basic

    109,523     103,009     103,916     58,822     49,385     49,560     50,245  

Diluted

    110,100     103,009     103,916     58,822     49,385     49,560     50,245  

 

 
  September 30,   December 31,  
Consolidated Balance Sheet Data
(In thousands)
  2019   2018   2018   2017   2016   2015   2014  

Cash and cash equivalents

  $ 40,397   $ 35,984   $ 43,694   $ 57,073   $ 31,923   $ 50,111   $ 41,157  

Marketable securities

  $   $ 7,284   $ 7,284   $ 17,224   $ 61,836   $ 58,533   $ 64,443  

Investments

  $   $   $   $ 9,031   $ 32,371   $ 33,605   $ 42,407  

Working capital

  $ 42,090   $ (22,815 ) $ (11,219 ) $ 39,417   $ 100,845   $ 117,692   $ 129,480  

Total assets

  $ 957,081   $ 924,053   $ 957,159   $ 910,883   $ 308,059   $ 312,891   $ 332,635  

Current portion of long-term debt

  $ 2,500   $   $   $   $   $   $  

Revolving credit facility

  $ 34,000   $ 58,000   $ 55,000   $ 20,000   $   $   $  

Long-term debt, net of current

  $ 46,605   $   $   $   $   $   $  

Long-term debt, related party

  $   $ 23,500   $ 24,100   $ 22,500   $   $   $  

Long-term deferred revenue

  $ 18,687   $ 15,985   $ 17,572   $ 14,184   $ 7,188   $ 7,374   $ 8,009  

Other long-term liabilities

  $ 13,055   $ 32,023   $ 30,797   $ 13,189   $ 1,633   $ 2,760   $ 5,246  

Total stockholders' equity

  $ 631,015   $ 590,362   $ 590,298   $ 615,421   $ 219,122   $ 223,026   $ 240,350  

(1)
Anova Data, Inc. was acquired on February 28, 2019. The technology of Anova has been integrated into Ribbon's existing products and accordingly, the results of operations are neither recorded nor disclosed separately.

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(2)
The results above for the nine months ended September 30, 2018 include $10.4 million of revenue and $0.9 million of net loss attributable to Edgewater for the period subsequent to its acquisition by the Company on August 3, 2018. The results above for the year ended December 31, include $21.5 million of revenue and $4.3 million of net loss attributable to Edgewater for the period subsequent to August 3, 2018.

(3)
Includes $69.1 million of revenue and $12.5 million of net loss attributable to GENBAND for the period subsequent to the Merger on October 27, 2017.

(4)
Includes $1.9 million of revenue and $4.7 million of net loss attributable to Taqua, LLC for the period subsequent to its acquisition by the Company on September 26, 2016.

(5)
Includes the results of operations of the SDN Business of Treq Labs, Inc. for the period subsequent to its acquisition by the Company on January 2, 2015. The Company has not disclosed the revenue and earnings of the SDN Business for the period since January 2, 2015, as these amounts are not significant to the Company's consolidated financial statements.

(6)
Includes $14.8 million of revenue attributable to Performance Technologies Incorporated for the period subsequent to its acquisition by the Company on February 19, 2014. The impact on earnings was not significant.

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SELECTED HISTORICAL CONSOLIDATED FINANCIAL INFORMATION OF ECI

        The following selected financial information is intended to aid you in understanding certain financial aspects of ECI. The selected consolidated historical information for ECI for each of the fiscal years ended December 31, 2018, 2017 and 2016 and the selected consolidated balance sheet data as of December 31, 2018 and 2017 have been derived from the audited consolidated financial statements and related notes included in the section entitled "Financial Statements of ECI" of this proxy statement. The selected consolidated statement of operations data for each of the nine months ended September 30, 2019 and 2018 and the selected consolidated balance sheet data as of September 30, 2019 have been derived from the unaudited consolidated financial statements and related notes included in the section entitled "Financial Statements of ECI" of this proxy statement. The selected consolidated statement of operations data for each of the fiscal years ended December 31, 2015 and 2014 and the selected consolidated balance sheet data as of December 31, 2016, 2015 and 2014 have been derived from the unaudited consolidated financial statements of ECI not included in this proxy statement.

 
  Nine Months Ended
September 30,
  Year Ended December 31,  
 
  2019   2018   2018   2017   2016   2015   2014  
 
  (unaudited)
   
   
   
  (unaudited)
 
 
  (in thousands)
 

Statement of Operations Data

                                           

Total revenue

  $ 271,772   $ 301,715   $ 406,333   $ 367,207   $ 326,029   $ 335,106   $ 343,264  

Gross profit

  $ 99,013   $ 104,837   $ 143,260   $ 127,761   $ 132,657   $ 124,516   $ 113,420  

Total operating expenses

  $ 87,603   $ 89,870   $ 122,401   $ 117,089   $ 121,333   $ 116,355   $ 121,566  

Income (loss) before financial expenses, net, other income (expenses), net, and taxes on income

  $ 11,410   $ 14,967   $ 20,859   $ 10,672   $ 11,324   $ 8,161   $ (8,146 )

Net loss

  $ (22,050 ) $ (26,418 ) $ (30,398 ) $ (36,943 ) $ (28,750 ) $ (24,734 ) $ (38,714 )

Loss per ordinary share from continuing operations—basic and diluted

  $ (1.01 ) $ (1.02 ) $ (1.25 ) $ (1.09 ) $ (0.85 ) $ (0.73 ) $ (1.14 )

 

 
   
  December 31,  
 
  September 30,
2019
 
 
  2018   2017   2016   2015   2014  
 
  (unaudited)
   
   
  (unaudited)
 
 
  (in thousands)
 

Balance Sheet Data

                                     

Cash and cash equivalents

  $ 13,027   $ 29,167   $ 26,236   $ 29,793   $ 25,995   $ 32,061  

Total assets

  $ 412,941   $ 413,095   $ 424,474   $ 386,264   $ 391,699   $ 413,954  

Total short-term and long-term loans

  $ 156,944   $ 144,167   $ 242,332   $ 203,509   $ 190,370   $ 198,981  

Total equity (deficit)

  $ 67,473   $ 84,057   $ (51,164 ) $ (14,221 ) $ 14,529   $ 39,263  

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SELECTED UNAUDITED PRO FORMA CONDENSED COMBINED DATA

        The following selected unaudited pro forma condensed combined financial data as of September 30, 2019 and for the year ended December 31, 2018 and the nine months ended September 30, 2019 give effect to the proposed Merger, which will be accounted for as a business combination under the acquisition method of accounting, with Ribbon as the acquirer. The selected unaudited pro forma combined financial data presented below is based on, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements that appear elsewhere in this proxy statement, including the footnotes thereto of both Ribbon and ECI.

        The unaudited pro forma condensed combined balance sheet data as of September 30, 2019 combines the historical condensed consolidated balance sheets of Ribbon and ECI as of September 30, 2019, giving pro forma effect to the Merger as if it had been completed on September 30, 2019. The following selected unaudited pro forma condensed combined statement of operations data for the year ended December 31, 2018 and the nine months ended September 30, 2019 combine the historical condensed statements of operations data of Ribbon and ECI for the same periods, giving pro forma effect to the proposed Merger as if it had been completed on January 1, 2018.

        The selected unaudited pro forma condensed combined financial data is presented for illustrative purposes only and is not necessarily indicative of the actual or future financial position or results of operations that would have been realized if the proposed Merger had been completed as of the data indicated in the unaudited pro forma condensed combined financial statements or that will be realized upon the consummation of the proposed Merger.

 
  Year ended
December 31,
2018
  Nine months
ended
September 30,
2019
 
 
  (in thousands, except per
share data)

 

Pro Forma Statement of Operations Data

             

Loss from operations

  $ (77,774 ) $ (52,903 )

Net income (loss)

  $ (113,573 ) $ (11,629 )

Earnings (loss) per share—basic

  $ (0.83 ) $ (0.08 )

Earnings (loss) per share—diluted

  $ (0.83 ) $ (0.08 )

 

 
  As of
September 30,
2019
 
 
  (in thousands)
 

Pro Forma Balance Sheet Data

       

Cash and cash equivalents

  $ 13,225  

Working capital(1)

  $ 43,046  

Total assets

  $ 1,552,515  

Long-term debt, net of current

  $ 384,880  

Long-term deferred revenue

  $ 18,790  

Other long-term liabilities

  $ 42,281  

Total stockholders' equity

  $ 699,745  

(1)
We define working capital as current assets less current liabilities.

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COMPARATIVE HISTORICAL AND UNAUDITED PRO FORMA PER SHARE DATA

        The following tables set forth certain historical, pro forma and pro forma equivalent per share financial information of Ribbon Common Stock and ECI shares. The unaudited pro forma and pro forma equivalent per share financial information gives effect to the Merger as if it had occurred on September 30, 2019 for book value per share data and as of January 1, 2018 for net income (loss) per share data. The information in the table is based on, and should be read together with the unaudited pro forma condensed combined financial statements including the notes thereto, and the historical financial statements of both Ribbon and ECI that appear elsewhere in this proxy statement.

        The following unaudited pro forma net income (loss) per share data for the year ended December 31, 2018 and the nine months ended September 30, 2019 was calculated using the historical condensed combined statement of operations data of Ribbon and ECI for the same periods, giving pro forma effect to the Merger as if it had been completed on January 1, 2018. The following unaudited pro forma book value per share data as of September 30, 2019 was calculated using the historical condensed combined balance sheets of Ribbon and ECI as of September 30, 2019, giving pro forma effect to the Merger as if it had been completed on September 30, 2019.

        The unaudited pro forma per share data is presented for illustrative purposes only and is not necessarily indicative of actual or future financial position or results of operations that would have been realized if the Merger had been completed as of the dates indicated or will be realized upon the completion of the Merger. Ribbon and ECI have not declared or paid any dividends during the periods presented.

 
  As of and for the
year ended
December 31,
2018
  As of and for the
nine months
ended
September 30,
2019
 

Ribbon

             

Book value per share—historical(1)

  $ 5.53   $ 5.73  

Earnings (loss) per share—basic

  $ (0.74 ) $ 0.19  

Earnings (loss) per share—diluted

  $ (0.74 ) $ 0.18  

ECI

   
 
   
 
 

Book value per share—historical(1)

  $ 1.61   $ 1.29  

Combined

   
 
   
 
 

Book value per share—pro forma(2)

        $ 6.90  

Loss per share—basic

  $ (0.83 ) $ (0.08 )

Loss per share—diluted

  $ (0.83 ) $ (0.08 )

(1)
Historical book value per share is calculated by dividing stockholders' equity by total outstanding shares.

(2)
Combined pro forma book value per share is calculated by dividing pro forma combined total stockholders' equity by pro forma combined outstanding common shares.

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HISTORICAL MARKET PRICE OF RIBBON COMMON STOCK

        Ribbon Common Stock is listed and traded on NASDAQ under the symbol "RBBN." The following table sets forth, for the fiscal quarters indicated, the high and low sale price per share of Ribbon Common Stock, as reported on NASDAQ.

 
  RBBN  
 
  High   Low  

For the fiscal quarter ended:

             

2017

             

November 30, 2017 through December 31, 2017

  $ 8.33   $ 7.30  

2018

             

March 31, 2018

  $ 7.93   $ 5.01  

June 30, 2018

  $ 7.28   $ 4.97  

September 30, 2018

  $ 7.89   $ 6.36  

December 31, 2018

  $ 7.20   $ 4.62  

2019

             

March 31, 2019

  $ 6.56   $ 4.64  

June 30, 2019

  $ 5.55   $ 4.23  

September 30, 2019

  $ 5.93   $ 4.79  

December 31, 2019

  $ 5.92   $ 2.44  

2020

             

January 1, 2020 through January 8, 2020

  $ 3.25   $ 3.02  

        The market price of Ribbon Common Stock has fluctuated since the dates set forth above and will continue to fluctuate between the date of this proxy statement, the date of the Ribbon Special Meeting and the date the Merger is completed. No assurance can be given concerning the market prices of Ribbon Common Stock before completion of the Merger or after completion of the Merger.

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

        This proxy statement contains "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, which are subject to a number of risks and uncertainties. All statements other than statements of historical facts contained in this proxy statement, including statements regarding our future results of operations and financial position, anticipated restructuring and integration-related expenses, business strategy, plans and objectives of management for future operations and plans for future product development and manufacturing are forward-looking statements. Without limiting the foregoing, the words "anticipates", "believes", "could", "estimates", "expects", "intends", "may", "plans", "seeks" and other similar language, whether in the negative or affirmative, are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

        Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. We therefore caution you against relying on any of these forward-looking statements.

        These forward-looking statements are subject to various risks and uncertainties, many of which are outside the parties' control, such as statements about the consummation of the proposed transaction. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include:

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        The foregoing list of factors is not exhaustive. All of our forward-looking statements involve risks and uncertainties (some of which are significant or beyond our control) and assumptions that could cause actual results to differ materially from our historical experience and our present expectations or projections. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. Accordingly, there is no assurance that the expectations of Ribbon or ECI will be realized. Consequences of material differences in results as compared with those anticipated in the forward-looking statements could include, among other things, business disruption, operational problems, financial loss, legal liability to third parties and similar risks, any of which could have a material adverse effect on Ribbon's or ECI's consolidated financial condition, results of operations or liquidity.

        You should carefully consider the foregoing factors and the other risks and uncertainties that affect the parties' businesses, including those described in Ribbon's Annual Report on Form 10-K/A, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other documents filed from time to time with the SEC. We wish to caution you not to place undue reliance on any forward-looking statements, which speak only as of the date hereof. We undertake no obligation to publicly update or revise any of our forward-looking statements after the date they are made, whether as a result of any changes in circumstances or new information, future events or otherwise, except to the extent required by securities and other applicable law. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

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THE RIBBON SPECIAL MEETING

        This proxy statement is being provided to Ribbon stockholders as part of a solicitation of proxies by the Ribbon Board for use at the Ribbon Special Meeting. This proxy statement contains important information regarding the Ribbon Special Meeting, the proposals on which you are being asked to vote, information you may find useful in determining how to vote and voting procedures.

        Stockholders who owned shares of Ribbon Common Stock at the close of business on January 8, 2020, the record date for the Ribbon Special Meeting, are entitled to receive notice of, attend and vote at the Ribbon Special Meeting. As of the close of business on the record date, there were 110,959,971 shares of Ribbon Common Stock outstanding.

Date, Time and Place

  The Ribbon Special Meeting will be held at the offices of Latham & Watkins LLP, located at 200 Clarendon Street, Boston, Massachusetts 02116 on January 27, 2020, at 2:00 p.m., Eastern time, unless the Ribbon Special Meeting is adjourned.

Purpose of the Ribbon Special Meeting

 

The Ribbon Special Meeting will be held for the purpose of considering and acting upon the following matters:

 

Ribbon Proposal No. 1—Approval of the Share Issuance (Item 1 on the Ribbon proxy card). To approve the Share Issuance.

 

Ribbon Proposal No. 2—Adjournment of the Ribbon Special Meeting (Item 2 on the Ribbon proxy card). To approve one or more adjournments of the Ribbon Special Meeting, if appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the Ribbon Special Meeting.

 

The Ribbon Board unanimously recommends that Ribbon stockholders vote "FOR" each of the proposals presented at the Ribbon Special Meeting.

Who Can Vote at the Ribbon Special Meeting

 

Only holders of record of shares of Ribbon Common Stock at the close of business on the Ribbon record date, January 8, 2020 will be entitled to vote shares held at that date at the Ribbon Special Meeting or any adjournments thereof. Each outstanding share of Ribbon Common Stock entitles its holder to cast one vote.

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As of the close of business on the Ribbon record date, there were 110,959,971 shares of Ribbon Common Stock outstanding (which includes 487,976 unvested shares underlying restricted stock grants that are not considered to be outstanding for accounting purposes) and entitled to vote at the Ribbon Special Meeting.

Attending the Ribbon Special Meeting

 

Stockholders eligible to vote at the Ribbon Special Meeting, or their duly authorized proxies, may attend the Ribbon Special Meeting. If you choose to attend the Ribbon Special Meeting, you must bring photo identification and the admission ticket that is part of your proxy card. If you hold shares of Ribbon Common Stock in "street name" through a broker, bank or other nominee and wish to attend the Ribbon Special Meeting, in addition to the above procedures, you must also bring a copy of a brokerage statement reflecting your ownership of Ribbon Common Stock as of the record date for the Ribbon Special Meeting. If you are a representative of a corporate or institutional stockholder, you must also present proof that you are a representative of such stockholder. A valid picture identification is required for all attendees. Cameras, recording devices and other electronic devices will not be permitted at the Ribbon Special Meeting.

Vote Required for the Proposals

 

Ribbon Proposal No. 1—Approval of the Share Issuance (Item 1 on the Ribbon proxy card). Approval of the Share Issuance requires the affirmative vote of a majority of the votes cast, in person or by proxy, on the proposal to approve the Share Issuance.

 

Ribbon Proposal No. 2—Adjournment of the Ribbon Special Meeting (Item 2 on the Ribbon proxy card). Approval of one or more adjournments of the Ribbon Special Meeting, if appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the Ribbon Special Meeting, requires the affirmative vote of a majority of the shares of Ribbon Common Stock present, in person or by proxy, and entitled to vote on the matters at the Ribbon Special Meeting.

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Quorum Requirement

 

Holders of a majority of the shares of Ribbon Common Stock issued and outstanding and entitled to vote at the Ribbon Special Meeting, present in person or represented by proxy, constitute a quorum. In the absence of a quorum, the chairman of the Ribbon Special Meeting may adjourn the meeting to another place, date or time. As of the record date for the Ribbon Special Meeting, 55,479,986 shares of Ribbon Common Stock will be required to achieve a quorum.

 

Holders of shares of Ribbon Common Stock present at the Ribbon Special Meeting but not voting, and shares of Ribbon Common Stock for which Ribbon has received proxies indicating that their holders have abstained, will be counted as present at the Ribbon Special Meeting for purposes of determining whether a quorum is established.

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Brokers, banks and other nominees have the discretion to vote shares held in "street name"—a term that means the shares are held in the name of the broker, bank or other nominee on behalf of its customer, the beneficial owner—on routine matters, but not on non-routine matters. Generally, broker non-votes occur when shares held by a broker, bank or other nominee for a beneficial owner are not voted with respect to a non-routine matter because the broker, bank or other nominee has not received voting instructions from the beneficial owner and the broker, bank or other nominee lacks discretionary authority to vote the shares because of the non-routine nature of the matter. Broker non-votes with respect to a matter are not counted as shares entitled to vote with respect to that matter and do not affect the voting results on that matter (unless the required vote is a percentage of all outstanding shares). Because brokers, banks and other nominees do not have discretionary voting authority with respect to any of the proposals described in this proxy statement, if a beneficial owner of shares of Ribbon Common Stock held in "street name" does not give voting instructions to the broker, bank, nominee or other holder of record, then those shares will not be voted as to any of the proposals described in this proxy statement and will have no effect on the outcome of the vote to approve the Ribbon adjournment proposal. Your vote is very important, whether you hold directly or through a broker, bank or other nominee. We encourage you to read this proxy statement carefully and if you are a beneficial owner, please be sure to give voting instructions to your broker, bank or other nominee.

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Shares Owned by Ribbon Directors and Executive Officers

 

At the close of business on January 8, 2020, the record date for the Ribbon Special Meeting, directors and executive officers of Ribbon beneficially owned and were entitled to vote, in the aggregate, approximately 1,490,888 issued and outstanding shares of Ribbon Common Stock, representing approximately 1.34% of the shares of Ribbon Common Stock outstanding on that date. We currently expect that Ribbon's directors and executive officers will vote all of the shares of Ribbon Common Stock they are entitled to vote (a) "FOR" the proposal to approve the Share Issuance and (b) "FOR" the proposal to approve one or more adjournments of the Ribbon Special Meeting, if appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the Ribbon Special Meeting.

Methods of Voting—Stockholders of Record

 

If you are a Ribbon stockholder entitled to vote at the Ribbon Special Meeting, you may vote over the Internet, by telephone, by mail or in person at the Ribbon Special Meeting. All votes, other than votes made in person at the Ribbon Special Meeting, must be received by 11:59 p.m., Eastern Time, on January 26, 2020.

 

Over the Internet or by Telephone. To vote over the Internet or by telephone, please follow the instructions included on your proxy card. If you vote over the Internet or by telephone, you do not need to complete and mail a proxy card.

 

Mail. By signing the proxy card and returning it in the enclosed prepaid and addressed envelope, you are authorizing the individuals named on the proxy card to vote your shares at the Ribbon Special Meeting in the manner you indicate. Ribbon encourages you to sign and return the proxy card even if you plan to attend the Ribbon Special Meeting so that your shares will be voted if you are ultimately unable to attend the Ribbon Special Meeting. If you receive more than one proxy card, it is an indication that your shares are held in multiple accounts. Please sign and return all proxy cards to ensure that all of your shares are voted.

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In Person. If your shares are registered directly in your name, you have the right to vote in person at the Ribbon Special Meeting. If you hold shares of Ribbon Common Stock in "street name" through a broker, bank or other nominee and you want to vote in person at the Ribbon Special Meeting, you must obtain a proxy from your broker, bank or other nominee and bring that proxy to the Ribbon Special Meeting. If you attend the Ribbon Special Meeting and plan to vote in person, Ribbon will provide you with a ballot at the Ribbon Special Meeting.

 

Ribbon recommends that you vote in advance even if you plan to attend the meeting so that Ribbon will know as soon as possible that enough votes will be present for Ribbon to hold the meeting. If you are a stockholder of record and attend the meeting, you may vote at the meeting or deliver your completed proxy card in person.

Methods of Voting—Beneficial Owners

 

If your shares are held in an account at a brokerage firm, bank or other nominee, then you are the beneficial owner of shares held in "street name," and this proxy statement is being sent to you by that organization. The organization holding your account is considered to be the stockholder entitled to vote at the Ribbon Special Meeting for purposes of voting at the Ribbon Special Meeting. As a beneficial owner, you have the right to direct your broker, bank or other nominee regarding how to vote the shares in your account by following the instructions that the broker, bank or other nominee provides you along with this proxy statement. As a beneficial owner, you must obtain a proxy executed in your favor from the stockholder entitled to vote your shares at the Ribbon Special Meeting to be able to vote your shares in person at the Ribbon Special Meeting. All of the proposals at the Ribbon Special Meeting are considered non-routine matters. As a result, your broker may not vote your shares without your specific instructions, which is called a "broker non-vote."

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Failure to Submit a Proxy or Vote In Person; Broker Non-Votes

 

Failure to submit a proxy or vote in person and broker non-votes will have no effect on the proposal to approve the Share Issuance (Proposal No. 1) and the proposal to approve one or more adjournments of the Ribbon Special Meeting (Proposal No. 2). Ribbon believes that brokers, banks and other nominees do not have discretionary authority to vote on Proposal No. 1 or Proposal No. 2 absent instructions from the beneficial owner.

Failure to Provide Voting Instructions

 

Stockholders should specify their choice for each matter on the enclosed proxy. If no specific instructions are given, proxies that are signed and returned will be voted (a) FOR the proposal to approve the Share Issuance and (b) FOR the proposal to approve one or more adjournments of the Ribbon Special Meeting, if appropriate.

Revoking a Proxy

 

You may revoke your proxy and change your vote at any time before the polls close at the Ribbon Special Meeting. You may do this by signing and submitting a new proxy card with a later date, submitting a proxy by telephone or submitting a proxy over the Internet (your latest telephone or Internet proxy is counted) or by attending the Ribbon Special Meeting and voting in person. Attending the Ribbon Special Meeting by itself, however, will not revoke your proxy unless you specifically request it.

Solicitation of Proxies

 

Ribbon will pay the costs of soliciting proxies from Ribbon stockholders. In addition to soliciting proxies by mail, by telephone and via the Internet, Ribbon's directors, executive officers and other employees may solicit proxies, either personally or by other electronic means, on Ribbon's behalf, without additional compensation, other than the time expended and communications charges in making such solicitations. Ribbon will also request brokerage houses, custodians, nominees and fiduciaries to forward copies of the proxy materials to those persons for whom they hold shares and request instructions for voting the proxies. Ribbon will reimburse such brokerage houses and other persons for their reasonable expenses in connection with forwarding proxy and solicitation materials to the beneficial owners of Ribbon Common Stock and in obtaining voting instructions from such beneficial owners.

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RIBBON PROPOSAL NO. 1:
APPROVAL OF THE SHARE ISSUANCE

        The issuance of shares of Ribbon Common Stock in connection with the transactions contemplated by the Merger Agreement and the Merger is subject to approval by Ribbon stockholders as required by applicable rules of NASDAQ.

        Under NASDAQ listing rules, a company listed on NASDAQ is required to obtain stockholder approval for an acquisition of stock of another company if the present or potential issuance of common stock, other than a public offering for cash, may equal or exceed 20% of the voting power or the total shares outstanding on a pre-transaction basis. The aggregate number of shares of Ribbon Common Stock to be issued in the Merger is expected to be approximately 32.5 million (or approximately 29.4% of the shares of Ribbon Common Stock outstanding before such issuance) based on the number of shares Ribbon Common Stock, and will exceed 20% of the shares of Ribbon Common Stock outstanding before such issuance. For this reason, Ribbon must obtain the approval of Ribbon stockholders for the Share Issuance. Ribbon is asking its stockholders to approve the Share Issuance. The Share Issuance and the approval of the Share Issuance are required for the consummation of the Merger.

        The affirmative vote of a majority of the votes cast, in person or by proxy, on Ribbon Proposal No. 1 is required for the approval of the Share Issuance. Abstentions will not be counted as votes cast on, and will have no effect on the outcome of, the proposal to approve the Share Issuance. Failure to submit a proxy or vote in person and broker non-votes will have no effect on this proposal.

        The Ribbon Board unanimously recommends a vote "FOR" the Share Issuance (Ribbon Proposal No. 1 on the accompanying Ribbon proxy card).

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RIBBON PROPOSAL NO. 2:
APPROVAL OF ONE OR MORE ADJOURNMENTS OF THE RIBBON SPECIAL MEETING

        Ribbon is asking you to approve a proposal to approve one or more adjournments of the Ribbon Special Meeting to a later date or dates, if appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the Ribbon Special Meeting. If Ribbon stockholders approve the adjournment proposal, Ribbon could adjourn the Ribbon Special Meeting and any adjourned session of the Ribbon Special Meeting and use the additional time to solicit additional proxies, including the solicitation of proxies from stockholders that have previously returned properly executed proxies voting against the approval of the Share Issuance. Among other things, approval of the adjournment proposal could mean that, even if Ribbon had received proxies representing a sufficient number of votes against the proposal to approve the Share Issuance, such that proposal would be defeated, Ribbon could adjourn the Ribbon Special Meeting without a vote on the proposal to approve the Share Issuance and seek to convince the holders of those shares to change their votes to votes in favor of that proposal. Additionally, Ribbon may seek to adjourn the Ribbon Special Meeting if a quorum is not present at the meeting.

        Approval of this adjournment proposal requires the affirmative vote of a majority of the shares of Ribbon Common Stock present, in person or by proxy, and entitled to vote. In addition, even if a quorum does not exist, a majority of the shares of Ribbon Common Stock present at the Ribbon Special Meeting, in person or by proxy, may adjourn the meeting to another place, date or time. Abstentions will have the same effect as a vote AGAINST the proposal. Failure to submit a proxy or vote in person and broker non-votes will have no effect on this proposal.

        The Ribbon Board unanimously recommends a vote "FOR" one or more adjournments of the Ribbon Special Meeting, if appropriate, to solicit additional proxies if there are insufficient votes to approve the Share Issuance at the time of the Ribbon Special Meeting (Ribbon Proposal No. 2 on the accompanying Ribbon proxy card).

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THE MERGER

General

        On November 13, 2019, the Ribbon Board approved the Merger Agreement, a copy of which is attached as Annex A to this proxy statement, and the transactions contemplated thereby.

        Subject to the terms and conditions of the Merger Agreement, at the Effective Time, (1) Merger Sub will merge with and into ECI, with ECI continuing as the surviving company and indirect wholly owned subsidiary of Ribbon and (2) ECI equityholders and certain other recipients of Merger Consideration will receive 32,500,000 shares of Ribbon Common Stock and $324,000,000, subject to adjustments for indebtedness, pre-Closing distributions, transaction expenses and certain taxes, as described in the section entitled "The Merger Agreement—Merger Consideration." Additionally, ECI equityholders will be entitled to the amount received as a result of ECI's sale of the Sale Property less any taxes payable by ECI resulting from the disposition of such assets. Immediately following the Effective Time, it is expected that existing holders of Ribbon Common Stock will own approximately 77.3% of shares in the share capital of Ribbon and the existing ECI equityholders will own approximately 22.7% of shares in the share capital of Ribbon.

Background of the Merger

        The following chronology summarizes the key meetings and events that led to the signing of the Merger Agreement. This chronology does not purport to catalogue every conversation of or among members of the Ribbon Board, Ribbon's representatives, the ECI Board, ECI's representatives, and other parties. Other than as described below, there have been no material contacts between Ribbon and ECI in the past two years.

        The network communications marketplace in which Ribbon competes faces competitive pressures as a result of several factors, including rapid technological changes, significant consolidation among the major customers for network communications products and the existence of multiple vendors in the marketplace, including Ribbon. In response to these competitive pressures, and as part of its ongoing oversight of Ribbon's business and affairs, Ribbon periodically reviews Ribbon's condition (financial and otherwise), challenges and prospects with a view toward maximizing stockholder value. In addition, the Ribbon Board has considered numerous potential strategic transactions for Ribbon.

        On February 25, 2019, Daryl Raiford, Ribbon's Chief Financial Officer, and John McCready, Ribbon's Chief Strategy Officer, were introduced to Tim Luke of Barclays, ECI's financial advisor, at the MWC conference in Barcelona, Spain. During their conversation, Mr. Luke suggested that ECI would be worth discussing as a potential acquisition candidate for Ribbon. Later, at the same conference, Mr. Raiford and Mr. McCready spoke to Darryl Edwards, ECI's Chief Executive Officer.

        On March 25, 2019, Mr. Luke and Mr. McCready held a follow-up telephonic meeting to their discussion at the MWC conference. Mr. Luke provided high-level information about ECI and recommended to Mr. McCready that he review ECI's UK registration statement. Four days after the telephonic meeting with Mr. Luke, Mr. McCready and Mr. Edwards spoke on the telephone. Both Mr. McCready and Mr. Edwards discussed the potential of examining a merger and agreed that a potential merger would be worth exploring.

        On April 2, 2019, Davis Terry of TAP Advisors, as Ribbon's financial advisor, spoke on the telephone with Ady Marom of Global Village, a consultant to ECI, about the potential for a business combination between Ribbon and ECI.

        On April 9, 2019, Ribbon and ECI entered into a mutual confidentiality agreement, which allowed the parties to share certain non-public information about their respective businesses with each other.

        On April 15, 2019, Franklin (Fritz) Hobbs, Ribbon's Chief Executive Officer at the time, Mr. Raiford and Mr. McCready met in person with Mr. Luke and several other representatives from

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Barclays, in which Ribbon strategy, strategic options and various acquisition candidates, including ECI, were discussed. It was agreed that an in-person meeting between ECI and Ribbon would be arranged.

        On May 13, 2019, certain members of senior management from Ribbon and ECI as well as representatives of TAP Advisors, Ribbon's financial advisor, and Barclays met in person in New York, New York. Each company presented a management presentation related to their respective company and participated in a full day diligence session during which a number of topics were discussed, including financial and business performance of each company, potential synergies, and valuation of ECI. At the conclusion of the meeting, the parties agreed to continue communicating regarding a potential merger.

        Following this meeting, Ribbon and its advisors conducted additional due diligence and financial analysis to arrive at a proposed deal valuation. On May 22, 2019, Mr. McCready, Mr. Raiford and the TAP Advisors team held a telephonic meeting with Barclays to discuss the valuation of ECI. At or around this time, Ribbon senior management's view was that ECI's enterprise value was $500 million and that the consideration for the acquisition could include a combination of cash and shares of Ribbon Common Stock.

        On May 26, 2019, Mr. McCready and Mr. Edwards held a telephonic meeting during which Mr. Edwards confirmed that ECI was genuine in its consideration of a merger with Ribbon.

        On July 6, 2019, Mr. Terry held a telephonic meeting with Richard W. Smith of JPM and Mr. Marom. Both Mr. Smith and Mr. Marom agreed that a merger was worth exploring further.

        On July 19, 2019, Mr. Hobbs, Mr. Raiford, other senior management from Ribbon, representatives of TAP Advisors and representatives of Barclays met with Mr. Edwards, Shaul Shani, the ultimate beneficial owner of Swarth, other senior management of ECI and representatives of Barclays to provide performance updates on their respective businesses as well as to hold discussions about how Ribbon and ECI could operate as a combined business and what could be achieved in different geographic markets.

        After learning that Ribbon's preliminary valuation of ECI was $500 million, Mr. Shani, directly and through ECI's financial advisor Barclays, indicated that in Swarth's view, ECI should be valued at $650 million. In response to Swarth's valuation of $650 million, Mr. Terry advised that Ribbon's initial valuation of $500 million heavily discounted any revenue impact from the fifth generation of mobile networks ("5G") deployments due to limited available information and limited diligence conducted to date. After further evaluation, Ribbon's management revised its initial valuation of ECI, and ultimately came to a preliminary understanding with Swarth at an enterprise valuation of $600 million for ECI.

        On July 23, 2019, Mr. McCready and Mr. Terry spoke to Fernando Valdivielso, Executive Vice President of Sales for ECI, as well as a representative from Barclays about the synergies that could result from a potential merger.

        On July 26, 2019, Mr. Terry met with Mr. Smith and Mr. Shani in London, UK, and Mr. Smith and Mr. Shani agreed to the principal economic terms of a merger, pending approval by the Ribbon Board, in which ECI would be valued at approximately $600 million on a debt-free basis, with $350 million being paid in cash to ECI equityholders and certain other recipients of Merger Consideration and to retire existing ECI indebtedness and $250 million being paid in the form of shares of Ribbon Common Stock at an assumed price per share of $5.00.

        Between late July and mid-August 2019, the respective senior managements of Ribbon and ECI engaged in discussions regarding the terms of a potential transaction. These discussions also included the governance of Ribbon post-Closing. The parties preliminarily agreed that JPM Stockholders and Swarth would be equally represented on the Ribbon Board post-Closing. During this time, the parties

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also discussed that the transaction would contain representations and warranties, regulatory approvals and other closing conditions customary for a transaction of this nature.

        The Ribbon Board held a telephonic meeting on July 31, 2019 in which representatives of TAP Advisors and Latham & Watkins, outside counsel to Ribbon, participated to discuss an update on Ribbon's discussions with ECI and to authorize continued discussions with ECI. During this meeting, senior management of Ribbon discussed the revenue base of ECI and the opportunities in the emerging 5G equipment space. The Ribbon Board was provided with a summary of key diligence findings to date and outstanding significant diligence items. The discussion also included a detailed summary of the key merits of the proposed transaction and the key risks.

        During the July 31, 2019 meeting, the Ribbon Board and members of Ribbon's senior management team, in consultation with TAP Advisors, reviewed the proposed transaction and discussed the submission of a non-binding term sheet to ECI. Ribbon submitted a non-binding term sheet for the acquisition of ECI valuing ECI at approximately $600 million on a debt-free basis, consisting of (i) $350 million being paid in cash to ECI equityholders and certain other recipients of Merger Consideration and to retire existing ECI indebtedness and (ii) $250 million being paid in the form of shares of Ribbon Common Stock at an assumed price per share of $5.00.

        On August 13, 2019, Mr. McCready, Justin Ferguson, Ribbon's General Counsel, and the TAP Advisors team held a kick-off telephonic diligence meeting with a representative from each of Barclays and ECI. The following day, an introductory telephonic meeting was held between ECI and Ernst & Young, as advisors to Ribbon to discuss the potential merger.

        On August 15, 2019, ECI and Ribbon executed a non-binding term sheet outlining the primary terms of the transaction.

        During the time period of August 19 to August 28, 2019, certain representatives of Ribbon, ECI, TAP Advisors, Latham & Watkins and Davis Polk, as outside counsel to ECI, participated in various introductory telephonic meetings to coordinate on the process for negotiating a potential transaction and conducting mutual due diligence. At this time, Ribbon was provided access through an online virtual data room to more detailed legal and financial information concerning ECI and its assets, on which Ernst & Young conducted extensive financial due diligence. Additionally, Mr. McCready and Kevin Riley, then an Executive Vice President of Advanced R&D for Ribbon, and other senior management of Ribbon and ECI, along with representatives of TAP Advisors and Ernst & Young met in Petah-Tikva, Israel for in-person due diligence sessions, which included presentations and discussions by ECI management on their business strategy, financial projections, revenue projections and pipeline, key customers, business strategy, product portfolio, research and development activities, sales organization, human resource management, accounting and IT operations.

        On August 26, 2019, senior management from Ribbon and representatives of TAP Advisors and Ernst & Young met in Chicago, Illinois with senior management of ECI, alongside a representative from Barclays, to discuss current revenues and potential new projects in the pipeline for ECI. At this meeting, which focused on ECI's projected revenues and forecasts, ECI disclosed various factors that contributed to a reduction in ECI's projected revenues as compared to the forecasts previously discussed.

        On August 27, 2019, the Ribbon Board held a telephonic meeting in which representatives of TAP Advisors and Latham & Watkins participated to discuss (i) ECI's revised projected revenues and forecasts, as well as the factors contributing to the revised forecasts, and (ii) key diligence findings to date. The Ribbon Board authorized continued discussions with ECI and directed Ribbon management to communicate that the proposed economic terms of a transaction would have to be reconsidered to account for the revised projected revenues and forecasts.

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        On August 31, 2019, Mr. Terry communicated to Mr. Marom that, in light of the revised projections and ECI's use of factoring of its accounts receivable, Ribbon would be unable to proceed with the proposed transaction on the economic terms previously outlined in the term sheet. Mr. Terry stated that Ribbon would require an approximate 20% reduction in value.

        On September 3, 2019, representatives from ECI, Davis Polk and IHS Markit, a data and information services provider, conducted a reverse telephonic due diligence meeting with senior management from Ribbon regarding Ribbon's product strategy, markets and roadmap.

        Between September 6, 2019 and September 19, 2019, the respective senior managements of Ribbon and ECI engaged in discussions regarding revised economic terms for a potential transaction. Discussion focused on the loss of a major contract opportunity for ECI, as well as the valuation impact of ECI's use of off-balance sheet factoring of its accounts receivable.

        On September 7, 2019, Mr. Terry held a telephonic meeting with Mr. Shani and Mr. Marom and conveyed, on behalf of Ribbon, that Ribbon was willing to offer consideration worth approximately $505 million on a debt-free basis, which included (i) $305 million being paid in cash to ECI equityholders and certain other recipients of Merger Consideration, (ii) the retirement of existing ECI indebtedness, (iii) $30 million of net proceeds from a sale of the Sale Property being paid to ECI equityholders, (iv) 30 million shares of Ribbon Common Stock being issued to ECI equityholders at an assumed price per share of $5.00; and (v) $20 million of shares of Ribbon Common Stock being issued to ECI equityholders in the form of warrants. In connection with this proposal, Ribbon agreed not to make a deduction in the cash merger consideration with respect to ECI's outstanding factoring balances to the extent such balances are not above $50 million. Mr. Shani and Mr. Marom countered with a total value of $560 million on a debt-free basis.

        On September 10-11, 2019, the Ribbon Board held a meeting in which management team members provided an update on the deal and related diligence. At that meeting, Mr. Smith informed the Board that he was scheduled to meet with Mr. Shani the evening of September 11, 2019.

        On the evening of September 11, 2019, Mr. Smith and Mr. Shani met for dinner and discussed generally the state of the transaction.

        On September 13, 2019, Mr. Terry conveyed, on behalf of Ribbon, an updated offer, worth approximately $530 million on a debt-free basis, consisting of $330 million being paid in cash to ECI equityholders and certain other recipients of Merger Consideration and to retire existing ECI indebtedness, $30 million of net proceeds from a sale of the Sale Property being paid to ECI equityholders, and 34 million shares of Ribbon Common Stock being issued to ECI equityholders at an assumed price per share of $5.00. Ribbon's proposal still included an agreement not to make a deduction in the cash merger consideration with respect to ECI's outstanding factoring balances to the extent such balances are not above $50 million. On September 19, 2019, ECI requested an additional one million of shares of Ribbon Common Stock, worth $5 million at an assumed price per share of $5.00, resulting in a total consideration of $535 million on a debt-free basis.

        The Ribbon Board held a telephonic meeting on September 19, 2019 in which representatives of TAP Advisors and Latham & Watkins participated to discuss, among other items, an update on Ribbon's discussions with ECI and the revised economic terms for the transaction. The Ribbon Board authorized continued discussions with ECI regarding a potential transaction on the revised economic terms, which consisted of an acquisition of ECI for a value of approximately $535 million on a debt-free basis, with $330 million being paid in cash to ECI equityholders and certain other recipients of Merger Consideration and to retire existing ECI indebtedness, $30 million of net proceeds from a sale of the Sale Property being paid to ECI equityholders and 35 million shares of Ribbon Common Stock being issued to ECI equityholders at an assumed price per share of $5.00.

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        From late September until the signing of the Merger Agreement, Ribbon, ECI, and their respective advisors continued further legal, business and financial due diligence reviews of the other party.

        On September 27, 2019, Latham & Watkins circulated to Davis Polk an initial draft of the Merger Agreement relating to the proposed transaction. On September 28, 2019, Davis Polk circulated to Latham & Watkins an initial draft of the Stockholders Agreement and Registration Rights Agreement.

        On October 2, 2019, Mr. McCready, Mr. Hobbs and representatives from TAP Advisors met in-person with Mr. Edwards to discuss the integration of Ribbon and ECI.

        On October 3, 2019, internal counsel for Ribbon circulated the draft Stockholders Agreement and Registration Rights Agreement to internal counsel for the JPM Stockholders. Ribbon also shared a preliminary issues list outlining the primary issues for Ribbon and the JPM Stockholders in the Stockholders Agreement and Registration Rights Agreement.

        On October 3, 2019, Davis Polk circulated to Latham & Watkins an issues list outlining the primary issues for ECI in the Merger Agreement. On October 4, 2019, internal counsel for Ribbon and internal counsel for the JPM Stockholders discussed the Stockholders Agreement and Registration Rights Agreement and provided feedback regarding primary issues to Latham & Watkins. On the same day, Latham & Watkins circulated to Davis Polk an issues list outlining the primary issues for Ribbon and the JPM Stockholders in the Stockholders Agreement and Registration Rights Agreement.

        The Ribbon Board held a telephonic meeting on October 15, 2019 in which representatives of TAP Advisors and Latham & Watkins participated to discuss diligence updates, status of financing with potential financing institutions and key investor relations messaging.

        On October 23, 2019, Mr. Terry met with Mr. Shani in person and conveyed that, based on its due diligence and ECI's results of operations for 2019, Ribbon was reducing its offer to approximately $511 million in total on a debt-free basis, with (i) $310 million being paid in cash to ECI equityholders and certain other recipients of Merger Consideration, (ii) the retirement of existing ECI indebtedness, (iii) $30 million of net proceeds from a sale of the Sale Property being paid to ECI equityholders, (iv) 33 million shares of Ribbon Common Stock being issued to ECI equityholders at an assumed price per share of $5.00 and (v) $6 million of shares of Ribbon Common Stock being issued to ECI equityholders in the form of warrants. The next day, on October 24, 2019, ECI responded with a counter-offer for approximately $525 million on a debt-free basis, with (A) $330 million being paid in cash to ECI equityholders and certain other recipients of Merger Consideration, (B) the retirement of existing ECI indebtedness, (C) $30 million of net proceeds from a sale of the Sale Property being paid to ECI equityholders, (D) 31 million shares of Ribbon Common Stock being issued to ECI equityholders at an assumed price per share of $5.00 and (E) $10 million of shares of Ribbon Common Stock being issued to ECI equityholders in the form of warrants.

        Between early October and November 14, 2019, the parties and their respective legal advisors engaged in ongoing negotiations of various definitive transaction documents, including the Merger Agreement, Stockholders Agreement, Registration Rights Agreement, Voting Agreement and various ancillary agreements. Ribbon also negotiated the terms of various financing arrangements with various financial institutions. The parties and their respective legal advisors exchanged drafts of the Merger Agreement, Stockholders Agreement, Registration Rights Agreement, Voting Agreement and other transaction documents and conducted telephone conferences to negotiate the terms of these agreements, including, among other things (1) the purchase price adjustment, such as the types of indebtedness and debt-like items that would be deducted from Merger Consideration at the Effective Time, (2) deal protection terms, such as the size of the termination fee that could become payable by Ribbon and the circumstances under which the termination fee would be payable and (3) the structure

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for the proposed transaction. These terms were ultimately determined based on commercial considerations among the parties and market precedent for similar transactions.

        On November 1, 2019, an engagement letter formalizing the Company's engagement of TAP Advisors was executed (following discussion with certain Ribbon Board members), which was ratified by the Ribbon Board at its November 13, 2019 meeting.

        On November 6 and 7, 2019, senior management of Ribbon and ECI, as well as representatives of TAP Advisors, Barclays, Latham & Watkins and Davis Polk met in New York to continue negotiations. John McCready of Ribbon informed Mr. Marom and Giora Bitan, the chief financial officer of ECI that, in light of certain business risks identified during business and tax due diligence, Ribbon would require further revision of the valuation of ECI. The parties discussed revised economic terms for the proposed transaction, which consisted of an acquisition of ECI on a debt-free basis, with $324 million being paid in cash to ECI equityholders and certain other recipients of Merger Consideration and to retire existing ECI indebtedness, $31 million of net proceeds from a sale of the Sale Property being paid to ECI equityholders and 32.5 million shares of Ribbon Common Stock being issued to ECI equityholders at an assumed price per share of $5.00, with a portion of such shares of Ribbon Common Stock being held in an escrow account to support an indemnity for certain specified tax risks identified during diligence. Ribbon also agreed not to make a deduction in the cash merger consideration with respect to ECI's outstanding factoring balances to the extent such balances are not above $65 million.

        On November 7, 2019, Mr. McCready and Mr. Terry also held a telephonic meeting with Mr. Valdivielso to discuss updates to ECI's fourth quarter of 2019 revenues.

        The Ribbon Board met later on the evening of November 7, 2019, at which time it reviewed with Ribbon management, collectively with Ribbon's legal and financial advisors, the results of due diligence as well as a status update on negotiations of the definitive transaction.

        At the meeting, members of senior management reported to the Ribbon Board on the resolution of certain key economic terms of the transactions and the remaining open issues in the definitive documentation. Representatives of Latham & Watkins reviewed for the Ribbon Board the terms of the Merger Agreement, Stockholders Agreement, Registration Rights Agreement, the Voting Agreement and other ancillary agreements. Representatives of TAP Advisors reviewed for the Ribbon Board the terms of the transaction, the sources and uses of funds in the transaction and the pro forma capitalization of the combined entity, as well as various financial analyses it had performed as to the valuation of Ribbon and ECI, including discounted cash flow, peer trading multiple, and precedent transaction multiple analyses. The Ribbon Board reviewed with Ribbon management the status of negotiations of the terms of the financing arrangements with various financial institutions.

        Between November 7, 2019 and November 13, 2019, the parties and their respective legal advisors continued to engage in ongoing negotiations of various definitive transaction documents, including the Merger Agreement, Stockholders Agreement, Registration Rights Agreement, Voting Agreement and various ancillary agreements. Ribbon also negotiated the terms of various arrangements with the primary equityholders of ECI, including the Real Estate Option Agreement and the Pathfinder Purchase Agreement.

        The Ribbon Board met again on the evening of November 13, 2019, at which time it reviewed with Ribbon management, together with Ribbon's legal and financial advisors, including representatives of TAP Advisors and Latham & Watkins, the final outcome of negotiations and results of due diligence and reviewed communications and the likely impact of the proposed transaction on Ribbon's stockholders, customers, employees and other constituencies. Representatives of TAP Advisors rendered an oral opinion, subsequently confirmed by delivery of a written opinion that, based upon and subject to the factors, procedures, assumptions, qualifications and limitations set forth in its opinion, as of November 13, 2019, the consideration to be paid pursuant to the Merger Agreement was fair, from a

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financial point of view, to the holders of Ribbon Common Stock. After discussing the final terms of the Merger Agreement as well as the terms of the proposed transaction with ECI, the Ribbon Board unanimously approved the execution by Ribbon of definitive transaction documents and recommended that Ribbon stockholders vote to approve the Share Issuance.

        On November 14, 2019, Ribbon, ECI and the other parties thereto executed the Merger Agreement. On the same day, before the opening of trading on NASDAQ, Ribbon issued a press release announcing the execution of the Merger Agreement.

Ribbon Board's Reasons for the Merger

        At a meeting held on November 13, 2019, the Ribbon Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including without limitation the Merger, are advisable, fair to and in the best interests of Ribbon and the Ribbon stockholders, (ii) adopted and approved the Merger Agreement and the transactions contemplated thereby, and (iii) determined that it is in the best interests of Ribbon to recommend to the Ribbon stockholders that they vote to approve the Share Issuance at the Ribbon Special Meeting.

        In the course of reaching its recommendation, the Ribbon Board consulted with Ribbon's senior management and financial advisors, TAP Advisors and Latham & Watkins and considered a number of factors, both positive and negative, and potential benefits and detriments of the Merger to Ribbon and its stockholders. For the reasons described below, the Ribbon Board determined that the proposed transaction with ECI is the best course of action for Ribbon.

        The decision of the Ribbon Board to enter into the Merger Agreement was the result of careful consideration by the Ribbon Board of numerous factors weighing positively in favor of the Merger, including the following material factors:

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        In the course of its deliberations, the Ribbon Board also identified and considered a variety of risks and countervailing factors weighing negatively against the Merger, including the following material factors:

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        The Ribbon Board also considered the interests that the executive officers and directors of Ribbon have with respect to the Merger in addition to their interests as stockholders of Ribbon generally (see the section entitled "The Merger—Interests of Certain Ribbon Directors and Executive Officers in the Merger").

        The Ribbon Board concluded that the negative factors and potential detriments associated with the proposed transaction with ECI are significantly outweighed by the positive factors and potential benefits that it expects Ribbon and the Ribbon stockholders to achieve as a result of the transaction.

        Accordingly, after careful consideration, the Ribbon Board unanimously (i) determined that the Merger Agreement and the transactions contemplated thereby, including without limitation the Merger, are advisable, fair to and in the best interests of Ribbon and the Ribbon stockholders, (ii) adopted and approved the Merger Agreement and the transactions contemplated thereby, and (iii) determined that it is in the best interests of Ribbon to recommend to the Ribbon stockholders that they vote to approve the Share Issuance at the Ribbon Special Meeting.

        Although the foregoing discussion sets forth the material factors considered by the Ribbon Board in reaching its recommendation, it is not intended to be exhaustive and may not include all of the factors considered by the Ribbon Board, and each director may have considered different factors or given different weight to each factor. The above factors are not presented in any order of priority. In view of the variety of factors, the amount of information and the complexity of the matters considered, the Ribbon Board did not find it practicable to, and did not, make specific assessments of, or assign relative weights to, the specific factors considered in reaching its recommendation. The explanation of the reasoning of the Ribbon Board and certain information presented in this section are forward-looking in nature and should be read in light of the factors discussed in the section entitled "Cautionary Statement Regarding Forward-Looking Statements" of this proxy statement.

        The Ribbon Board unanimously recommends that the Ribbon stockholders vote (i) "FOR" the Share Issuance and (ii) "FOR" the Ribbon adjournment proposal.

Opinion of Ribbon's Financial Advisor

        TAP Advisors rendered its opinion to the Ribbon Board that, as of November 14, 2019 and based upon and subject to the factors and assumptions set forth therein, the consideration to be paid by Ribbon pursuant to the Merger Agreement was fair, from a financial point of view, to Ribbon.

        The full text of the written opinion of TAP Advisors, dated as of November 14, 2019, which sets forth assumptions made, procedures followed, matters considered and limitations on the review undertaken in connection with the opinion, is attached as Annex B. TAP Advisors provided advisory

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services and its opinion for the information and assistance of the Ribbon Board in connection with its consideration of the Merger, and such opinion is not a recommendation as to how any holder of Ribbon Common Stock should vote with respect to the Merger or any other matter.

        In connection with rendering the opinion described above and performing its related financial analyses, TAP Advisors:

        TAP Advisors, with the consent of Ribbon, assumed and relied upon the accuracy and completeness of the information that was publicly available or supplied or otherwise made available to TAP Advisors by Ribbon or ECI, without independent verification. TAP Advisors did not obtain any independent evaluation or appraisal of any of the assets or liabilities of Ribbon or ECI, and TAP Advisors was not furnished with any third-party valuations or appraisals. TAP Advisors also assumed that there were no facts or circumstances that would make any information received by TAP Advisors inaccurate or misleading. TAP Advisors utilized the closing price of $4.10 per share of Ribbon Common Stock on November 12, 2019 for the purpose of calculating the value of the consideration to be paid by Ribbon pursuant to the Merger Agreement. TAP Advisors also calculated the value of the consideration to be paid by Ribbon pursuant to the Merger Agreement assuming a price of $5.00 per share of Ribbon Common Stock.

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        TAP Advisors assumed, with Ribbon's consent, that the financial and operating projections of Ribbon and ECI and the projected operating synergies of Ribbon and ECI were reasonably prepared on bases reflecting the best currently available estimates and judgments of the management of Ribbon. TAP Advisors expressed no view or opinion as to the projections, the synergies or any of the assumptions on which they were based.

        In rendering its opinion, TAP Advisors assumed, with the consent of Ribbon, that the parties to the Merger Agreement would comply with all material terms of the Merger Agreement and that the Merger would be consummated in accordance with the terms set forth in the Merger Agreement and the related documents without any waiver, amendment or delay of any terms or conditions. TAP Advisors also assumed, with the consent of Ribbon, that in connection with the receipt of any necessary governmental, regulatory or other approvals and consents required for the consummation of the Merger, no delays, limitations, conditions or restrictions would be imposed that would have a material adverse effect on any of the parties, the Merger or the contemplated benefits expected to be derived from the Merger.

        TAP Advisors limited its opinion to and addressed only the fairness to Ribbon, from a financial point of view, as of the date of the opinion, of the consideration to be paid by Ribbon pursuant to the Merger Agreement. TAP Advisors' opinion did not address the relative merits of the Merger as compared to any other alternative business transactions or strategies, whether or not such alternative business transactions or strategies could be achieved or are available, or Ribbon's underlying business decision to effect the Merger or any related transaction. TAP Advisors did not express any opinion with respect to the fairness of the Merger to any other party.

        TAP Advisors is a financial advisor only and is not a legal, tax, accounting or regulatory advisor. TAP Advisors relied upon, without independent verification, the assessment of Ribbon and its legal, tax, accounting or regulatory advisors with respect to legal, tax, accounting or regulatory matters.

        TAP Advisors' opinion was necessarily based on financial, economic, market and other conditions as in effect on, and the information made available to it as of, the date of the opinion. TAP Advisors assumed no obligation to update, revise or reaffirm its opinion based on events occurring after the date of its opinion.

        The engagement letter between Ribbon and TAP Advisors provides for a fee of $750,000, payable upon delivery by TAP Advisors of the fairness opinion, and a fee of $9,250,000, payable at the closing of the Merger. In addition, Ribbon agreed to reimburse TAP Advisors' expenses and to indemnify TAP Advisors for certain liabilities arising out of its engagement.

        Neither TAP Advisors nor any of its affiliates received any fees from ECI or any of its affiliates within the two years preceding the date of the fairness opinion. TAP Advisors' fairness opinion was approved by a committee of TAP Advisors authorized to approve opinions of this nature in accordance with TAP Advisors' customary practice, and was provided to the Ribbon Board in connection with its consideration of the Merger.

Financial Analyses

        The following is a summary of the material financial analyses delivered by TAP Advisors to the Ribbon Board in connection with rendering the opinion described above. The following summary, however, does not purport to be a complete description of the financial analyses performed by TAP Advisors, nor does the order of analyses described represent relative importance or weight given to those analyses by TAP Advisors. The preparation of a financial opinion or analysis is a complex process involving various determinations as to the most appropriate and relevant methods of financial analysis and the application of those methods to the particular circumstances and, therefore, a financial opinion and analyses are not readily susceptible to summary description. TAP Advisors arrived at its opinion

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based on the results of all analyses undertaken and assessed as a whole, and did not draw, in isolation, conclusions from or with regard to any one factor or method of analysis. Accordingly, TAP Advisors believes that the analyses and factors summarized below must be considered as a whole and in context. TAP Advisors further believes that selecting portions of the analyses and factors or focusing on information presented in tabular format, without considering all analyses and factors or the narrative description of the analyses and factors, could create a misleading or incomplete view of the processes underlying TAP Advisors' analyses and opinion. Except as otherwise noted, the following quantitative information, to the extent that it is based on market data, is based on market data as it existed on or before November 13, 2019, the last trading day before the signing of the Merger Agreement, and is not necessarily indicative of current market conditions. Future results may differ from those described and such differences may be material.

Discounted Cash Flow Analysis.

        Using Ribbon's prospective financial information regarding ECI, the Ribbon standalone prospective financial information and the Ribbon pro forma prospective financial information, as applicable, TAP Advisors performed a discounted cash flow analysis of ECI (including the Ribbon estimated synergies) to derive a range of resulting enterprise values of ECI as of December 31, 2019. Using discount rates ranging from 12.0% to 14.0%, reflecting estimates of ECI's weighted average cost of capital, TAP Advisors discounted to present value as of December 31, 2019 (i) estimates of unlevered free cash flow for ECI for January 1, 2020 through December 31, 2024, as reflected in the Ribbon prospective financial information regarding ECI (including the Ribbon estimated synergies), and (ii) the implied terminal value as of December 31, 2024. Such terminal value represents an enterprise value to 2024 earnings before interest, tax, depreciation and amortization ("EBITDA") multiple of 5.7x, which was calculated by applying a perpetuity growth rate of 3.0% and a weighted average cost of capital of 13.0%. TAP Advisors derived such range of discount rates by application of the Capital Asset Pricing Model, with certain adjustments to account for size and country specific risks, which requires certain company-specific inputs, including the company's target capital structure weightings, the cost of long-term debt, after-tax yield on permanent excess cash, if any, future applicable marginal cash tax rate and a beta for the company, as well as certain financial metrics for the United States and Israeli financial markets generally. TAP Advisors derived ranges of illustrative enterprise values for ECI by adding the ranges of present values it derived above. The foregoing calculations resulted in a range of enterprise values of $544 million to $700 million.

Selected Comparable Public Companies Analysis.

        TAP Advisors reviewed publicly available financial and stock market information of the following twelve selected publicly traded communications equipment companies that are competitors to ECI or are in similar or adjacent market segments and that, given business and financial characteristics, TAP

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Advisors considered generally relevant for purposes of analysis, which are referred to for purposes of this section of this proxy statement as the selected companies:

 
  Enterprise Value ("EV")/  
Competitors
  2019
Revenue
  2019
EBITDA
  2020
Revenue
  2020
EBITDA
  2021
Revenue
  2021
EBITDA
 

Cisco

    3.8x     11.7x     3.7x     11.3x     3.7x     11.2x  

Ericsson

    1.2x     9.8x     1.1x     8.5x     1.1x     7.4x  

ZTE

    1.4x     13.5x     1.3x     10.6x     1.2x     9.1x  

Nokia

    0.8x     6.9x     0.8x     5.0x     0.7x     4.4x  

Juniper Networks

    1.9x     11.7x     1.8x     11.2x     1.8x     10.6x  

Ciena

    1.7x     11.5x     1.6x     10.2x     1.5x     10.0x  

Lumentum Holdings

    3.3x     13.5x     2.9x     11.1x     2.7x     10.6x  

Infinera

    0.9x     n.m.(i)     0.9x     30.2x     0.8x     16.8x  

Calix

    1.0x     n/a(ii)     0.9x     n/a(ii)     0.8x     n/a(ii)  

Adva

    0.8x     5.7x     0.7x     5.6x     0.7x     5.1x  

Adtran

    0.7x     33.7x     0.6x     13.6x     0.6x     12.6x  

NeoPhotonics Corp

    1.2x     23.2x     1.1x     10.1x     1.0x     n/a(ii)  

(i)
Negative EBITDA.
(ii)
No EBITDA estimate available.

        TAP Advisors reviewed, among other information, closing stock prices of the selected companies, as of November 12, 2019, as a multiple of calendar year 2020 estimated EV/revenue and EV/EBITDA, with EBITDA adjusted to exclude the effect of stock-based compensation, if any, because ECI did not have stock-based compensation expenses. TAP Advisors also reviewed enterprise values, calculated as fully diluted equity values based on closing stock prices as of November 12, 2019. Financial data of the selected companies were based on public filings, publicly available Wall Street research analysts' estimates and other available information. TAP Advisors observed overall low to high estimated EV/revenue multiples for the Ribbon selected companies of 0.7x to 3.8x for calendar year 2019, 0.6x to 3.7x for calendar year 2020, and 0.6x to 3.7x for calendar year 2021, in each case based on closing stock prices on November 12, 2019. TAP Advisors also observed overall low to high estimated EV/EBITDA multiples for the Ribbon selected companies of 5.7x to 33.7x for calendar year 2019, 5.0x to 30.2x for calendar year 2020, and 4.4x to 16.8x for calendar year 2021, in each case based on closing stock prices on November 12, 2019. TAP Advisors then applied, based on its professional judgment, selected ranges of EBITDA multiples and revenue multiples, in each case adding a control premium of 25% but making no adjustments based on any projected synergies. TAP Advisors then reduced the range of implied enterprise values by $55 million to reflect Ribbon's estimate of the amount necessary to replace its existing accounts receivable factoring. The foregoing calculations resulted in implied enterprise values of ECI as follows:

Year
  Applied Estimated EBITDA
Multiple Range
  Implied Enterprise Value
(in millions)

2021

  9.3x - 11.3x   $432 - $540

2020

  9.5x - 11.6x   $396 - $496

2019

  10.6x - 12.9x   $287 - $363

 

Year
  Applied Estimated Revenue
Multiple Range
  Implied Enterprise Value
(in millions)

2019

  0.9x - 1.2x   $496 - $619

2020

  1.0x - 1.2x   $463 - $578

2021

  1.0x - 1.3x   $446 - $558

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Selected Precedent Transactions Analysis.

        Using publicly available information, TAP Advisors reviewed and analyzed the financial information relating to the following eighteen selected transactions from 2008 to 2019 involving target communications equipment organizations in the United States and Canada that, given business and financial characteristics, TAP Advisors considered generally relevant for purposes of analysis, which are referred to for purposes of this section of this proxy statement as the Ribbon selected transactions:

Date Announced
  Target   Acquiror   Implied EV/Next
Twelve Months
("NTM")
EBITDA Multiple
 

10/23/2017

  BroadSoft   Cisco Systems     45.5  

04/04/2016

  Ruckus Wireless   Brocade Communications Systems     34.2  

07/09/2019

  Acacia Communications   Cisco Systems     30.5  

03/27/2019

  Quantenna Communications   ON Semiconductor Corp.     29.4  

02/04/2013

  Acme Packet   Oracle Corporation     26.9  

07/27/2017

  ShoreTel   Mitel U.S. Holdings     20.9  

05/23/2016

  Xura (Mavenir Systems)   Cohesive Capital; Siris Capital     19.0  

11/07/2011

  Tekelec   Sankaty Advisors (Bain Capital Credit)     15.7  

06/27/2017

  Sandvine   Procera Networks     15.0  

01/30/2017

  Ixia   Keysight Technologies     13.7  

12/15/2014

  Riverbed Technology   Ontario Teachers'; Thoma Bravo     12.8  

07/21/2008

  Foundry Networks   Brocade Communications Systems     12.0  

11/09/2018

  Finisar Corporation   II-IV Incorporated     12.0  

11/02/2016

  Brocade   LSI; Broadcom     11.5  

4/24/2018

  Mitel   Searchlight Capital Partners     9.3  

11/08/2018

  ARRIS International   CommScope     8.7  

02/25/2015

  Emulex   Avago Technologies     8.2  

05/13/2016

  Polycom   Siris Capital     5.9  

        Although none of the companies that participated in the selected transactions is directly comparable to ECI, and none of the selected transactions is directly comparable to the Merger, the companies that participated in the selected transactions are companies involved in the communications equipment industry with operations and a business profile that, for purposes of analysis, may be considered similar to certain of ECI's results, market size and product profile.

        TAP Advisors reviewed, among other information, transaction values of the Ribbon selected transactions, calculated as the enterprise values implied for the target companies based on the consideration paid or payable in the Ribbon selected transactions, as a multiple, to the extent publicly available, of the target company's next twelve months EBITDA as of the applicable announcement date of such transaction. Where information was available, EBITDA was also adjusted to exclude the effect of stock based compensation, if any, because ECI did not have a stock-based compensation program. Financial data for the Ribbon selected transactions were based on public filings, publicly available Wall Street research analysts' estimates and other publicly available information on platforms such as CapitalIQ.

        TAP Advisors observed overall low to high next twelve months EBITDA multiples for the Ribbon selected transactions of 5.9x to 45.5x (with a mean of 18.4x and a median of 14.3x). TAP Advisors then applied a selected range of estimated EBITDA multiples of 12.0x to 16.0x for 2020 and 14.0x to 18.0x for 2019 derived from the Ribbon selected transactions to ECI's calendar year 2019 and 2020 estimated EBITDA. TAP Advisors then reduced the range of implied enterprise values by $55 million to reflect

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Ribbon's estimate of the amount necessary to replace its existing accounts receivable factoring. This analysis indicated the following approximate implied equity value reference range for ECI:

Year
  Estimated EBITDA
Multiple Range
  Implied Valuation Range
(in millions)

2020

  12.0x - 16.0x   $410 - $565

2019

  14.0x - 18.0x   $317 - $423

        The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying TAP Advisors' opinion. In arriving at its fairness determination, TAP Advisors considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, TAP Advisors made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to Ribbon or ECI or the Merger.

        TAP Advisors prepared these analyses for purposes of TAP Advisors' providing its opinion to the Ribbon Board that, as of November 14, 2019 and based upon and subject to the factors and assumptions set forth therein, the consideration to be paid by Ribbon pursuant to the Merger Agreement was fair, from a financial point of view, to Ribbon. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon unaudited prospective financial information are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Ribbon, ECI, TAP Advisors or any other person assumes responsibility if future results are materially different from the unaudited prospective financial information.

        The Merger Consideration was determined through arm's-length negotiations between Ribbon and ECI and was approved by the Ribbon Board. TAP Advisors provided advice to Ribbon during these negotiations. TAP Advisors did not, however, recommend any specific amount of consideration to Ribbon or the Ribbon Board or that any specific amount of consideration constituted the only appropriate consideration for the Merger.

        As described above, TAP Advisors' opinion to the Ribbon Board was one of many factors taken into consideration by the Ribbon Board in making its determination to approve the Merger Agreement. The foregoing summary does not purport to be a complete description of the analyses performed by TAP Advisors in connection with the fairness opinion and is qualified in its entirety by reference to the written opinion of TAP Advisors attached as Annex B.

Certain Forecasts

        Apart from current fiscal year non-GAAP Adjusted EBITDA, Ribbon does not as a matter of course make public projections as to future performance, earnings or other results beyond the current fiscal year due to the unpredictability of the underlying assumptions and estimates. The Ribbon Board was provided with non-public forward-looking information and scenarios regarding Ribbon's anticipated future operations for the fiscal years ending December 31, 2019 through 2024 that were prepared by Ribbon management in connection with the Ribbon Board's evaluation of the Merger. Such forward-looking information was provided to TAP Advisors for its use and reliance in connection with its financial analyses and opinion described above under "—Opinion of Ribbon's Financial Advisor." In order to give stockholders access to information that was made available in connection with, and material to, the Ribbon Board's consideration of the Merger, certain forward-looking information,

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including financial projections, has been included in this document. However, this information is not intended to influence any stockholder to make any investment decision with respect to the Merger or for any other purpose.

        The financial projections and other forward-looking financial information set forth below were not prepared with a view toward public disclosure, nor were they prepared with a view toward compliance with published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants with respect to financial projections. Ribbon management believes that the assumptions used as a basis for this projected financial information were reasonably based on the information available to Ribbon management and ECI management at the time prepared and presents, to the best of management's knowledge and belief, the expected course of action and the expected future financial performance of Ribbon and ECI. However, this information is not fact and should not be relied upon in any way as necessarily predictive of actual future results, and readers of this proxy statement are cautioned not to place undue reliance on any such information.

        Neither Ribbon's independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the financial projections described below, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the financial projections described below.

        The reports of Ribbon's independent registered public accounting firm in this proxy statement relate to Ribbon's historical financial information. The reports of ECI's independent registered public accounting firm in this proxy statement relate to ECI's historical financial information. None of those reports extend to any of the financial projections described below and should not be read to do so. The summary of financial projections below is not being included in this proxy statement to influence the decision of any holders of Ribbon Common Stock whether to approve the Share Issuance, but because the information was included among the factors considered by the Ribbon Board in evaluating the Merger.

        Certain of the financial projections described below, including non-GAAP measures, may be considered non-GAAP financial measures. Ribbon management provided this information to the Ribbon Board and TAP Advisors because Ribbon management believed it could be useful in evaluating ECI, in the case of projected ECI financial information, and the combined Ribbon and ECI businesses, in the case of combined financial projections. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information presented in compliance with GAAP and non-GAAP financial measures as used by Ribbon may not be comparable to similarly titled amounts used by other companies.

        The financial projections described below were based on numerous variables and assumptions that are inherently uncertain, many of which are beyond the control of Ribbon's management. Important factors that may affect actual results and cause the financial projections described below not to be achieved include the factors described in the section entitled "Cautionary Statement Regarding Forward-Looking Statements." Even if such variables and assumptions prove to be correct, any delay in timing could cause future results to differ materially from projected amounts. The financial projections described below also reflect assumptions as to certain business decisions that are subject to change. As a result, actual results may differ materially from those contained in the financial projections described below. Accordingly, there can be no assurance that any aspects of the financial projections described below will be realized.

        The inclusion of the financial projections described below in this proxy statement should not be regarded as an indication that any of Ribbon, ECI or their respective affiliates, advisors or other representatives considered that any information contained in those financial projections are necessarily predictive of actual future events, and nothing in them should be relied upon as such. None of Ribbon,

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ECI or their respective affiliates, officers, directors, partners, advisors or other representatives can give any assurance that actual results will not differ from the financial projections described below, and none of them undertakes any obligation to update or otherwise revise or reconcile them to reflect circumstances existing after October 2019 when they were generated or to reflect the occurrence of future events even in the event that any or all of the assumptions underlying the projections are shown to be in error. Ribbon does not intend to make publicly available any update or other revision to any such financial projections. None of Ribbon, ECI or any of their respective affiliates, officers, directors, partners, advisors or other representatives has made, makes or is authorized in the future to make any representation to any stockholder regarding Ribbon's or ECI's ultimate performance compared to the information contained in the financial projections described below or that forecasted results will be achieved.

Ribbon Management Forecasts

        Ribbon management prepared non-public, unaudited prospective internal financial information regarding Ribbon's anticipated future operations for the fiscal years ending December 31, 2019 through 2024. This unaudited prospective financial information (which we refer to as the "Ribbon Management Forecasts") was prepared and provided in October 2019, treating Ribbon on a stand-alone basis, without giving effect to, and as if Ribbon never contemplated, the Merger, including the impact of negotiating or executing the Merger, the expenses that may be incurred in connection with consummating the Merger, the potential synergies that may be achieved by the combined company as a result of the Merger, the effect of any business or strategic decision or action that has been or will be taken as a result of the Merger Agreement having been executed, or the effect of any business or strategic decisions or actions which would likely have been taken if the Merger Agreement had not been executed but which were instead altered, accelerated, postponed or not taken in anticipation of the Merger.

        The following table summarizes the Ribbon Management Forecasts at that point in time:


Summary of the Ribbon Management Forecasts(1)

 
  2019E   2020E   2021E   2022E   2023E   2024E  

Revenue

  $ 565   $ 609   $ 647   $ 678   $ 707   $ 731  

Adjusted EBITDA(2)

  $ 82   $ 102   $ 118   $ 132   $ 148   $ 152  

Unlevered Free Cash Flow(3)

  $ 55   $ 70   $ 66   $ 93   $ 100   $ 103  

(1)
All figures in U.S. dollars in millions.

(2)
Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is calculated by excluding from net income (loss): interest income (expense), net; income tax provision; depreciation; and amortization of intangible assets. In addition, other amounts excluded from net income (loss) include stock-based compensation expense; acquisition-related facilities adjustments; settlement expense; certain litigation costs; acquisition- and integration-related expense; restructuring and related expense; and other income (expense), net. In general, excluded amounts are those that are considered to be non-cash and/or not part of ongoing operations.

(3)
Not provided by Ribbon or ECI management or provided to ECI or its financial advisors. Reflects Unlevered Free Cash Flow as calculated by TAP Advisors as Adjusted EBITDA less cash taxes, change in net working capital and capital expenditures, utilizing the project statements of cash flows and projected cash taxes to be paid for forward-looking periods.

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Adjusted ECI Forecasts

        In November 2019, Ribbon management prepared and provided to TAP Advisors and the Ribbon Board non-public, unaudited prospective internal financial information regarding ECI's anticipated future operations for the fiscal years ending December 31, 2019 through 2024, which was based on forecasts prepared by ECI management but which reflected adjustments that Ribbon management deemed appropriate and consistent with assumptions used by Ribbon management in preparing the Ribbon Management Forecasts. These adjustments consisted of reducing ECI's revenue growth forecasts to more closely reflect historical trends and market growth rates, as well as conforming ECI's capitalization of certain research and development expense and amortization of the resulting capitalized software to Ribbon's accounting policy for the following:

        We refer to this information as the Adjusted ECI Forecasts. The Adjusted ECI Forecasts were not made available to ECI or its financial advisor.

        The following table summarizes the Adjusted ECI Forecasts:


Summary of the Adjusted ECI Forecasts(1)

 
  2019E   2020E   2021E   2022E   2023E   2024E  

Revenue

  $ 395   $ 440   $ 507   $ 628   $ 710   $ 784  

Adjusted EBITDA(2)

  $ 27   $ 37   $ 50   $ 91   $ 124   $ 154  

Unlevered Free Cash Flow(3)

  $ 7   $ (39 ) $ 18   $ 31   $ 82   $ 103  

(1)
All figures in U.S. dollars in millions.

(2)
Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is calculated by excluding from net income (loss): financial expenses, net; income tax provision; and depreciation. In addition, other amounts excluded from net income (loss) include reorganization expense. In general, excluded amounts are those that are considered to be non-cash and/or not part of ongoing operations.

(3)
Not provided by Ribbon or ECI management or provided to ECI or its financial advisors. Reflects Unlevered Free Cash Flow as calculated by TAP Advisors as Adjusted EBITDA including stock-based compensation expense, less cash taxes, change in net working capital and capital expenditures, utilizing the project statements of cash flows and projected cash taxes to be paid for forward-looking periods as provided by ECI management. These ECI projects were adjusted to align with the lower Adjusted EBITDA within the Adjusted ECI Forecasts. The Unlevered Free Cash Flow presented in the table above does not reflect estimated cost synergies. Taking into account estimated cost synergies, Unlevered Free Cash Flow for the years ended December 31, 2020 through 2024 would be $(33) million, $30 million, $43 million, $94 million and $115 million, respectively.

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Estimated Cost Synergies

        In September 2019, Ribbon's management prepared, with the assistance of ECI's management, certain estimates of annual cost synergies expected to be realized following the completion of the Merger, which we refer to in this section as the Ribbon Management Estimated Cost Synergies. The Ribbon Management Estimated Cost Synergies are not reflected in the Ribbon Management Forecasts or the ECI Adjusted Forecasts, each of which relates to stand-alone operations. Ribbon provided the Ribbon Management Estimated Cost Synergies to TAP Advisors to use in connection with its financial analyses and to the Ribbon board.

        The Ribbon Management Estimated Cost Synergies assumed that the Merger would be consummated and that the expected benefits of the Merger would be realized, including that no restrictions, terms or other conditions would be imposed in connection with the receipt of any necessary governmental, regulatory or other approvals or consents in connection with the consummation of the proposed Merger, including any divestitures or other actions contemplated by the Merger Agreement.

        The following table summarizes the Ribbon Management Estimated Cost Synergies:


Summary of the Ribbon Management Estimated Cost Synergies(1)

 
  2020E   2021E   2022E   2023E   2024E  

Cost Synergies

  $ 6   $ 12   $ 12   $ 12   $ 12  

(1)
All figures in U.S. dollars in millions.

Combined Projections

        In addition, the projections of the combined companies summarized below were used by TAP Advisors in its financial analyses that were presented to the Ribbon board:


Summary of the Combined Projections(1)(2)

 
  2019E   2020E   2021E   2022E   2023E   2024E  

Revenue

  $ 960   $ 1,049   $ 1,154   $ 1,306   $ 1,417   $ 1,516  

Adjusted EBITDA(3)

  $ 109   $ 145   $ 181   $ 234   $ 284   $ 317  

Unlevered Free Cash Flow(4)

  $ 62   $ 37   $ 96   $ 136   $ 194   $ 218  

(1)
All figures in U.S. dollar in millions.

(2)
Based on Ribbon Management Forecasts, Adjusted ECI Forecasts and Estimated Cost Synergies.

(3)
Adjusted EBITDA is a non-GAAP measure. Adjusted EBITDA is calculated by excluding from net income (loss): interest income (expense), net; financial expenses, net; income tax provision; depreciation; and amortization of intangible assets. In addition, other amounts excluded from net income (loss) include stock-based compensation expense; acquisition-related facilities adjustments; settlement expense; certain litigation costs; acquisition- and integration-related expense; restructuring and related expense; reorganization expense; and other income (expense), net. In general, excluded amounts are those that are considered to be non-cash and/or not part of ongoing operations.

(4)
Not provided by Ribbon or ECI management or provided to ECI or its financial advisors. Reflects Unlevered Free Cash Flow as calculated by TAP Advisors as Adjusted EBITDA less cash taxes, change in net working capital and capital expenditures, utilizing the projected statements of cash

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    flows and projected cash taxes to be paid for forward-looking periods as provided by Ribbon and ECI management. Also includes the projected cash outflow for integration-related costs and restructuring and related costs. The ECI projections utilized the lower Adjusted EBITDA conformed to Ribbon accounting practices.

Effects of the Merger

        Subject to the terms and conditions of the Merger Agreement, at the Effective Time, Merger Sub will be merged with and into ECI, whereupon the separate corporate existence of Merger Sub will cease, and ECI will continue its existence under the laws of the State of Israel as the surviving company in the Merger and a wholly owned subsidiary of Ribbon Israel, as well as an indirect, wholly owned subsidiary of Ribbon.

        At the Effective Time, by virtue of the Merger and without any action on the part of Ribbon, Merger Sub, Ribbon Israel, or ECI, each share of ECI issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive the portion of Merger Consideration allocated to it under the Merger Agreement, as described in the section entitled "The Merger Agreement—Merger Consideration."

Merger Consideration

        As consideration for the Merger, ECI equityholders and certain other recipients of Merger Consideration will receive 32,500,000 shares of Ribbon Common Stock and $324,000,000, subject to adjustments for indebtedness, pre-Closing distributions, transaction expenses and certain taxes, as described in the section entitled "The Merger Agreement—Merger Consideration." Additionally, ECI equityholders will be entitled to the amount received as a result of ECI's sale of the Sale Property less any taxes payable by ECI resulting from the disposition of such assets.

Interests of Certain Ribbon Directors and Executive Officers in the Merger

        In considering the recommendation of the Ribbon Board that holders of Ribbon Common Stock vote "FOR" the Share Issuance, Ribbon stockholders should be aware that certain executive officers and directors of Ribbon have interests in the Merger that may be different from, or in addition to, the interests of Ribbon stockholders generally. These interests include, among others: (1) the continued employment of Ribbon executive officers with the combined company, (2) the continued service of certain non-employee members of the Ribbon Board, and (3) continuing indemnification rights of nonemployee members of the Ribbon Board and Ribbon executive officers following the Merger. The Ribbon Board was aware of and considered these interests, among other matters, when they approved the Merger Agreement and recommended that Ribbon stockholders approve the Share Issuance.

        As of the date of this proxy statement, it is expected that Ribbon's current executive officers will continue to serve as executive officers of the combined company following the consummation of the Merger; provided that Ribbon is undergoing a search for a new permanent Chief Executive Officer. The transactions contemplated by the Merger Agreement will not result in a "change in control" for purposes of any Ribbon equity-based awards or employment-related agreements, and so no payments, accelerated vesting or benefit enhancements will be triggered under such awards or agreements by the transactions contemplated by the Merger Agreement.

        As of the date of this proxy statement, it is expected that certain members of the Ribbon Board will continue to serve as members of the Ribbon Board following the consummation of the Merger. See the section entitled "The Merger—Directors of Ribbon following the Merger." Pursuant to the terms of the existing award agreements with members of the Ribbon Board, any unvested equity awards held by the directors who cease to serve on the Ribbon Board will be forfeited as a result of such director's cessation of service on the Ribbon Board, provided that in connection with such cessation of service,

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the Ribbon Board may, in its sole and absolute discretion, agree to accelerate the vesting of any unvested equity awards.

Regulatory Filings and Approvals Required to Consummate the Merger

Competition and Antitrust

        Under the antitrust and competition laws and the foreign control laws of certain countries, Ribbon and ECI cannot consummate the Merger until they file certain notification and report forms with the relevant governmental entities that are required or deemed necessary and, where applicable, receive clearance (including the expiration or termination of applicable waiting periods) from such governmental entities to consummate the Merger. Neither ECI nor Ribbon is required, as a condition to receiving necessary competition and antitrust approvals, to agree to any divestiture, licenses or material covenants that affect business operating practices, except to the extent such divestiture, licenses or material covenants that affect business operating practices would not be material to Ribbon and ECI, taken as a whole.

        Ribbon and ECI filed the required notifications with the Antitrust Division of the DOJ and the Premerger Notification Office of the FTC under the Hart-Scott Rodino Act requirements on December 6, 2019. The Russian antitrust filing was made on December 10, 2019, and the Italian foreign investment filing was made on November 28, 2019.

CFIUS

        Under the laws of the United States, Swarth cannot vote more than 9.9% of Ribbon's voting shares and cannot designate members to the Ribbon Board until it files certain notification and report forms with CFIUS and obtains the required clearance. Ribbon and ECI will use their reasonable best efforts to satisfy CFIUS and provide any documentation or information requested or required by CFIUS prior to Closing, but the receipt of CFIUS approval is not a condition to Closing. See the section entitled "Other Transaction Agreements—Stockholders Agreement." Neither ECI nor Ribbon is required, as a condition to receiving CFIUS approval, to agree to any divestiture, licenses or material covenants that affect business operating practices, except to the extent such divestiture, licenses or material covenants that affect business operating practices are not material to Ribbon and ECI, taken as a whole.

Closing and Effectiveness of the Merger

        The Closing will occur on the third business day after the satisfaction or waiver (to the extent permitted by law) of the conditions to Closing described in the section entitled "The Merger Agreement—Conditions to Completion of the Merger."

        Subject to the provisions of the Merger Agreement, the Merger will become effective at the time and on the date on which the relevant certificate of merger is filed with the applicable governmental entity, or later if the parties so agree and specify in such certificate.

Directors of Ribbon following the Merger

        After the Closing of the Merger, pursuant to the terms of the Stockholders Agreement, the Ribbon Board will be comprised of nine directors, consisting of (i) three individuals designated by the JPM Stockholders, two of whom will be independent for purposes of the NASDAQ rules and the SEC rules, (ii) once CFIUS approval has been obtained, three individuals designated by Swarth, two of whom will be independent for purposes of the NASDAQ rules and the SEC rules, (iii) the chief executive officer of Ribbon, and (iv) a number of other individuals designated by Ribbon sufficient to ensure that there are no vacancies on the Ribbon Board, each of whom is independent for purposes of

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the NASDAQ rules and the SEC rules. See the section entitled "Other Transaction Agreements—Stockholders Agreement" for additional information regarding rights related to the composition of the Ribbon Board following the Closing of the Merger.

        As of the date of this proxy statement, the individuals that will serve on the Ribbon Board after the Closing of the Merger have not been determined. It is currently anticipated that the individuals who will serve on the Ribbon Board after the Closing will be determined prior to the Closing of the Merger.

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THE MERGER AGREEMENT

        The following section summarizes material provisions of the Merger Agreement, which is included in this proxy statement as Annex A, and is incorporated herein by reference in its entirety. The rights and obligations of Ribbon and ECI are governed by the express terms and conditions of the Merger Agreement and not by this summary or any other information contained in this proxy statement. Ribbon stockholders are urged to read the Merger Agreement carefully and in its entirety, as well as this proxy statement, before making any decisions regarding the Share Issuance.

Explanatory Note Regarding the Merger Agreement

        The Merger Agreement is included in this proxy statement only to provide public disclosure regarding its terms and conditions as required by U.S. federal securities laws, and is not intended to provide any factual information about Ribbon or ECI. Furthermore, any factual disclosures about Ribbon or ECI contained in this proxy statement or in Ribbon's public reports filed with the SEC may supplement, update or modify the factual disclosures made by such person contained in the Merger Agreement.

        The Merger Agreement contains representations and warranties by each of the parties to the Merger Agreement. These representations and warranties:

        Accordingly, the representations and warranties and other provisions of the Merger Agreement should not be read alone and should not be relied upon as characterizations of the actual state of facts of Ribbon, ECI or any of their respective subsidiaries or affiliates.

        This summary is qualified in its entirety by reference to the Merger Agreement.

The Merger

        Subject to the terms and conditions of the Merger Agreement, at the Effective Time, Merger Sub will be merged with and into ECI, whereupon the separate corporate existence of Merger Sub will cease, and ECI will continue its existence under the laws of the State of Israel as the surviving company in the Merger and a wholly owned subsidiary of Ribbon Israel, as well as an indirect, wholly owned subsidiary of Ribbon.

        At the Effective Time, by virtue of the Merger and without any action on the part of Ribbon, Merger Sub, Ribbon Israel, or ECI, each share of ECI issued and outstanding immediately prior to the Effective Time will be converted automatically into the right to receive the portion of Merger Consideration allocated to it under the Merger Agreement, as described in the section entitled "The Merger—Merger Consideration."

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Effective Time and Closing

        The Closing will occur on the third business day after the satisfaction or waiver (to the extent permitted by law) of the conditions to Closing described in the section entitled "The Merger Agreement—Conditions to Completion of the Merger."

        Subject to the provisions of the Merger Agreement, the Merger will become effective at the time and on the date on which the relevant certificate of merger is filed with the applicable governmental entity, or later if the parties so agree and specify in such certificate.

Merger Consideration

        As consideration for the Merger, ECI equityholders and certain other recipients of Merger Consideration will receive a total of $324,000,000 from Ribbon, subject to the following adjustments:

        In addition to the above, ECI equityholders and certain other recipients of Merger Consideration will receive Stock Consideration.

        Additionally, ECI equityholders will be entitled to the amount received as a result of ECI's sale of the Sale Property less any taxes payable by ECI resulting from the disposition of such assets.

        Prior to the Effective Time, ECI and Swarth will prepare in good faith a payment schedule that will allocate the Merger Consideration among ECI's equityholders and other individuals entitled to a portion of the Merger Consideration. None of Ribbon, Merger Sub or their respective affiliates will be responsible for, and Swarth has released Ribbon, Merger Sub and their respective affiliates from, any and all damages or losses arising out of the allocation of any payments by ECI and Swarth as set forth in such payment schedule.

Post-Closing Purchase Price Adjustment

        The Merger Agreement provides for post-Closing adjustments to the Cash Consideration to the extent that the actual amounts of certain taxes, indebtedness, transaction expenses, pre-Closing distributions are greater or less than the amounts included in the calculation of Cash Consideration on the date of Closing. ECI equityholders have agreed to place $5,000,000 of the Cash Consideration into an escrow account pending the resolution of the post-Closing adjustment to Cash Consideration.

Indemnification and Recourse

        Ribbon has purchased a representation and warranty insurance policy to provide coverage for certain breaches of representations and warranties of ECI contained in the Merger Agreement, which is subject to a $50 million total policy limit as well as certain exclusions, deductibles, and other terms and conditions set forth therein.

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        Ribbon and its subsidiaries will be indemnified and held harmless by ECI equityholders (other than holders of ECI special shares) from and against all losses (as such term is defined in the Merger Agreement) sustained by Ribbon resulting from any of the following:

        ECI has agreed to deposit 2,000,000 shares of Ribbon Common Stock from the Stock Consideration into an escrow account (the "Indemnity Escrow Account") to support its indemnification obligation for Indemnified Taxes. The Indemnity Escrow Account will commence on the date of Closing and will terminate December 31, 2024, but two years after the date of Closing, Citibank, N.A. (the "Escrow Agent") will release all but 1,500,000 shares of Ribbon Common Stock and allocate such shares in accordance with instructions provided by Swarth, as the shareholder representative, and three years after the date of Closing, the Escrow Agent will release all but 1,000,000 shares of Ribbon Common Stock and allocate such shares in accordance with instructions provided by Swarth, as the shareholder representative. In each case, any such shares that is the subject of a pending claim for indemnification will not be released. The ECI equityholders will not be liable for any Indemnified Taxes if and to the extent the amount recoverable exceeds the portion of the Stock Consideration remaining in the Indemnity Escrow Account.

        ECI equityholders (other than holders of ECI special shares) and certain other recipients of Merger Consideration will be indemnified and held harmless by Ribbon from and against all losses (as such term is defined in the Merger Agreement) sustained by ECI equityholders resulting from, arising out of or relating to any of the following:

        Indemnification for certain losses will be limited or capped as set forth in the Merger Agreement. To the extent that any indemnified party suffers losses relating to a breach of representations and warranties, no indemnification will be payable until the applicable policy limit under the indemnified party's representation and warranty insurance has been met. Each party's recourse for breaches of representations and warranties is limited to recovery under such representation and warranty insurance policy, except in cases of fraud or breaches of certain fundamental representations and warranties. Additionally, each party's aggregate indemnification obligation is capped at the portion of the Merger Consideration actually received by the indemnifying party. ECI equityholders may elect to satisfy any indemnification obligation in either cash or shares of Ribbon Common Stock, at a value per share established by the Merger Agreement.

Representations and Warranties

        The Merger Agreement contains a number of representations and warranties made by Ribbon and ECI that are subject in some cases to exceptions and qualifications (including exceptions that do not result in, and would not reasonably be expected to have, a Company Material Adverse Effect or a

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Parent Material Adverse Effect, as discussed below). The representations and warranties of Ribbon and ECI relate to, among other things:

        In addition, Ribbon has made certain representations and warranties relating to:

        In addition, ECI has made certain representations and warranties relating to:

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        Certain of the representations and warranties made by the parties are qualified as to "materiality" or "Parent Material Adverse Effect" or "Company Material Adverse Effect." For purposes of the Merger Agreement, "Parent Material Adverse Effect" or "Company Material Adverse Effect" means any fact, change, occurrence, event, effect or circumstance which, individually or in the aggregate (i) would reasonably be expected to prevent or materially delay the ability of Ribbon and its subsidiaries to consummate the transactions contemplated by the Merger Agreement, or (ii) has had, or would reasonably be expected to have, a material adverse effect on the business, assets and liabilities (taken together), financial condition or results of operations of Ribbon and its subsidiaries, taken as a whole; provided, however, that in the case of clause (ii), in no event will changes, effects or circumstances relating to or resulting from, directly or indirectly, the following (or the effect of any of the following), alone or in combination, be deemed to constitute, or be taken into account in determining, whether there has been or will be, a Parent Material Adverse Effect or Company Material Adverse Effect:

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Covenants

Conduct of Business Pending the Merger

        Each of ECI and Ribbon have agreed that, prior to the Closing, except for matters previously disclosed to the other party, unless otherwise expressly permitted by the Merger Agreement or with the prior written consent of the other party, it will and will cause its subsidiaries to:

        Additionally, Ribbon has agreed that it will use commercially reasonable efforts to maintain its listing status.

        Additionally, ECI has agreed that it and its subsidiaries will comply in all material respects with the requirements of the Israeli Encouragement of Research, Development and Technological Innovation in the Industry Law, 1984, and all rules, regulations and Israeli Innovation Authority-issued guidelines, directives and procedures, and any successor or subsequent law to any of the foregoing (including, without limitation, reporting obligations, limitations on the transfer of know-how and/or manufacturing rights outside of the State of Israel, and obligations relating to royalty payments).

        Ribbon has also agreed that, prior to the Closing, except for matters previously disclosed to ECI, unless otherwise expressly permitted by the Merger Agreement or with the prior written consent of ECI, it will not and will cause its subsidiaries not to:

        Ribbon has also agreed that, prior to the Closing, except for matters previously disclosed to ECI, unless otherwise expressly permitted by the Merger Agreement, senior management members of Ribbon will consult with ECI and will consider in good faith all advice and recommendations of ECI prior to Ribbon or its subsidiaries taking any of the following actions:

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        ECI has also agreed that, prior to the Closing, except for matters previously disclosed to Ribbon, unless otherwise expressly permitted by the Merger Agreement or with the prior written consent of Ribbon, it will not and will cause its subsidiaries not to:

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Preparation of Proxy Statement; Stockholder Meeting

        Ribbon has delivered this proxy statement pursuant to the Merger Agreement, which requires Ribbon to prepare and file this proxy statement following each party's opportunity for review and

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comment. Ribbon will advise ECI, promptly after receiving any comments to the proxy statement from the SEC and will respond to such comments as promptly as reasonably practicable. Additionally, Ribbon has agreed to cause the proxy statement to be mailed to its stockholders as promptly as practicable after the resolution of all SEC comments to the proxy statement, and in any event within five days thereafter.

        As promptly as reasonably practicable following the resolution of all SEC comments to the proxy statement, Ribbon must give notice of and convene the Ribbon Special Meeting, and the meeting must occur within 10 Business Days after the proxy statement is mailed to stockholders.

Required Actions and Governmental Approvals

        Ribbon and ECI have agreed to use its reasonable best efforts to take, or cause to be taken, all actions, and do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective the transactions contemplated by the Merger Agreement as promptly as practicable. Additionally, (i) ECI has agreed to use its reasonable best efforts to cause the conditions set forth in the Pathfinder Purchase Agreement to be satisfied as promptly as practicable, and (ii) Ribbon and ECI agreed to use reasonable best efforts to (A) cause the conditions to the Merger Agreement to be satisfied as promptly as practicable, and (B) obtain all necessary consents and approvals by any governmental authority that are necessary in connection with the consummation of the transactions contemplated by the Merger Agreement, and make all necessary registrations, declarations and filings with, and notices to, any governmental authorities (including pursuant to the HSR Act any other applicable antitrust law necessary to start any applicable waiting period) and take all reasonable steps as may be necessary to obtain an approval from, or to avoid a suit, action, proceeding or investigation by, any governmental authority. However, notwithstanding the foregoing, no party will be required to (x) agree to any divestitures, licenses, hold separate arrangements or similar matters, including material covenants affecting business operating practices, except to the extent (and each party will agree to any divestitures, licenses, hold separate arrangements or similar matters, including material covenants affecting business operating practices, so long as) any such divestitures, licenses, arrangements, matters or covenants would not reasonably be expected to be material to Ribbon and ECI, taken as a whole or (y) defend or contest any proceeding by a governmental authority which questions the validity or legality of the transactions contemplated by the Merger Agreement or seeks damages in connection therewith.

Indemnification, Exculpation and Insurance

        Ribbon has agreed that all rights to exculpation and indemnification for acts or omissions occurring at or prior to the Closing, now existing in favor of all past and present directors, officers, advisors or consultants of ECI and each of its subsidiaries (the "D&O Indemnitees"), as provided in the governing documents of ECI or such subsidiary of ECI or in any contract will survive the Merger and will continue in full force and effect. Additionally, Ribbon will indemnify, defend and hold harmless, and advance expenses to, D&O Indemnitees with respect to any costs or expenses (including attorneys' fees), judgments and fines paid in connection with any claim or action, to the extent such claim or action arises out of (i) any act or omission by the D&O Indemnitees in their capacities as such at any time at or prior to the Closing or (ii) the Merger, to the fullest extent permitted by the governing documents of ECI or such subsidiary, any indemnification agreement of ECI or its subsidiaries or applicable law. Ribbon will cause the governing documents of the Surviving Company and its subsidiaries to contain provisions with respect to indemnification, advancement of expenses and limitation of director, officer and employee liability that are no less favorable to the D&O Indemnitees than those set forth in the governing documents of ECI as of the date of the Merger Agreement.

        Prior to the Closing, ECI will obtain a non-cancelable extension of the directors' and officers' liability coverage of ECI's existing directors' and officers' insurance policies and ECI's existing fiduciary

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liability insurance policies (collectively, the "D&O Insurance"), in each case, for a claims reporting or discovery period of at least seven (7) years from and after the Closing with respect to any claim related to any period of time at or prior to the Closing from an insurance carrier with the same or better credit rating as ECI's current insurance carrier with respect to D&O Insurance with terms, conditions, retentions and limits of liability that are no less favorable than the coverage provided under ECI's existing policies.

Debt Financing

Ribbon Financing

        In connection with the execution of the Merger Agreement, Ribbon entered into the Debt Commitment Letter with Citizens Bank, N.A for the Debt Financing. The Merger Agreement requires Ribbon and Merger Sub to use their reasonable best efforts to arrange the Debt Financing; however, Ribbon's ability to obtain the Debt Financing is not a condition to the consummation of the Merger. Ribbon and Merger Sub may replace or amend the Debt Commitment Letter so long as such replacement or amendment (i) provides an amount of financing not less than the amount of the Debt Financing, (ii) does not contain conditions precedent to such financing that are additions to the conditions precedent set forth in the Debt Commitment Letter, (iii) would not reasonably be expected to delay, impair or prevent the Closing and (iv) would not adversely affect the ability of Ribbon to enforce its rights against other parties to the Debt Commitment Letter.

        Ribbon must notify ECI upon the occurrence of a material adverse change in the status of the Debt Financing as contemplated by the Debt Commitment Letter and upon any default, breach or repudiation by any party to the Debt Commitment Letter, and upon any termination of the Debt Commitment Letter, in each case, of which Ribbon or any of its affiliates becomes aware. Further, Ribbon must arrange and obtain alternative financing if any of the following occurs: (i) the Debt Financing commitments expire or terminate, (ii) all or any portion of the Debt Financing becomes unavailable on the terms and conditions (including any "market flex" provisions) contemplated in the Debt Commitment Letter, (iii) a repudiation, rescission or withdrawal of the Debt Commitment Letter, (iv) a default or breach by any party to the Debt Commitment Letter, (v) it becoming reasonably foreseeable that any of the events set forth in clauses (i) through (iv) above will occur or (vi) any party to the Debt Commitment Letter or any affiliate or agent of such person alleges that any of the events set forth in clauses (i) through (iv) above has occurred. The alternative financing must be in an amount sufficient to satisfy Ribbon's required payments under the Merger Agreement and be upon terms no less favorable, taken as a whole, than the Debt Commitment Letter and that in any event do not impose additional conditions precedent or expand upon the conditions precedent set forth in the Debt Commitment Letter.

        Ribbon has agreed to indemnify, defend and hold harmless ECI, its subsidiaries and their respective representatives from and against any losses suffered or incurred by them in connection with the arrangement of the Debt Financing and/or any information used in connection therewith, other than to the extent such losses arise from the bad faith, gross negligence or willful misconduct of ECI, any of its subsidiaries or its or their respective representatives.

ECI's Cooperation and Payoff Letter

        Subject to the terms of the Merger Agreement and customary carve-outs, ECI has agreed to use reasonable best efforts to provide the cooperation that Ribbon reasonably requests in connection with the Debt Financing as contemplated in the Debt Commitment Letter. Ribbon will reimburse ECI for all reasonable and documented out-of-pocket costs and expenses (including reasonable attorneys' fees) incurred by ECI or any of its subsidiaries in connection with such cooperation.

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        ECI must deliver all notices and take all other actions reasonably requested by Ribbon to facilitate the termination of ECI's existing Senior Finance Agreement, which is dated as of March 14, 2018, and is by and among ECI, Promontoria Holding 206 B.V (affiliated with Cerberus Capital Management, LP) and J.P. Morgan Securities PLC, a subsidiary of JPM ("ECI's Credit Agreement"). Further, ECI must deliver a customary payoff letter with respect to ECI's Credit Agreement (the "Payoff Letter") to Ribbon from all financial institutions and other parties to which indebtedness is owed under ECI's Credit Agreement. The Payoff Letter must indicate the total amount required to be paid under ECI's Credit Agreement to fully satisfy all outstanding and unpaid obligations related to such Indebtedness as of the Closing Date (such amount, a "Payoff Amount") and state that all obligations (including guarantees) in respect thereof and liens in connection therewith on the equity interests in and assets of ECI and its subsidiaries will be released and terminated substantially concurrently with the receipt of the applicable Payoff Amount.

Employee Matters

        Ribbon has agreed that, for the twelve-month period following the Closing (the "Benefits Continuation Period"), it will provide to, or cause to be provided to, continuing employees of ECI ("Continuing Employees") (i) base salary or wage rates and target bonus opportunities that are, in each case, no less favorable to such Continuing Employee than those provided immediately prior to the date of Closing, (ii) (A) during the portion of the Benefits Continuation Period that is prior to January 1, 2021, eligibility for employee benefits pursuant to employee plans, programs, policies and arrangements that are substantially comparable in the aggregate to those provided to such Continuing Employees immediately prior to the date of Closing, and (B) during the portion of the Benefits Continuation Period that is on or after January 1, 2021, eligibility for employee benefits pursuant to employee plans, programs, policies and arrangements that are substantially comparable in the aggregate to those provided to either (1) such Continuing Employees immediately prior to the date of Closing or (2) similarly situated employees of Ribbon (provided, that, in each of (A) and (B), the foregoing comparisons will not apply to equity or equity-based incentive, non-qualified deferred, supplemental retirement, transaction, change in control, or retention-related or (other one-time) compensation or defined benefit pension or retiree medical benefits) and (iii) severance benefits that are no less favorable in the aggregate than those provided to Continuing Employees immediately prior to the date of Closing.

        Ribbon has agreed that, with respect to any benefit plan or arrangement (other than equity or equity-based plans or programs) maintained by Ribbon in which any Continuing Employee is eligible to participate on or after the date of Closing, Ribbon will use commercially reasonable efforts to cause such Continuing Employees to receive full credit for purposes of determining eligibility to participate, level of benefits, vesting and, solely for the purposes of any severance and vacation plan, practice or policy and any ECI benefit plan qualified under Section 401(a) of the Code (but not any defined benefit pension plan), benefit accrual, and each Continuing Employee's service with ECI (as well as service with any predecessor employer) prior to the date of Closing will be treated as service with Ribbon as of the date of Closing, provided that the above will not apply to the extent that it would result in any duplication of benefits for the same period of service.

        Ribbon has agreed that, with respect to any health and welfare plan maintained by Ribbon in which any Continuing Employee is eligible to participate on or after the date of Closing, Ribbon will use commercially reasonable efforts, and use commercially reasonable efforts to cause its affiliates (i) to waive, or cause to be waived, preexisting condition limitations or exclusions, actively-at-work requirements, waiting periods and any other restrictions that would prevent immediate or full participation by and coverage of each Continuing Employee (and his or her eligible dependents) and (ii) to the extent any such Continuing Employee has satisfied any deductible or co-payments, to recognize, or cause to be recognized, the dollar amount of all co-payments, deductibles and similar

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expenses incurred by each Continuing Employee (and his or her eligible dependents) during the calendar year in which the date of Closing occurs for purposes of satisfying such year's deductible and co-payment limitations under the medical, dental, vision or prescription drug plans in which each such employee (and his or her eligible dependents) will be eligible to participate from and after the date of Closing.

Other Covenants and Agreements

        The Merger Agreement contains certain other covenants and agreements, including covenants relating to:

No Solicitation; Change of Recommendation

No Solicitation by ECI

        ECI has agreed that, prior to the Closing or, if earlier, the termination of the Merger Agreement in accordance with its terms, neither it nor any of its subsidiaries or representatives will:

        For purposes of the Merger Agreement, "ECI Acquisition Proposal" means, other than the transactions contemplated by the Merger Agreement, any bona fide proposal or offer (other than a proposal or offer by Ribbon or any of its affiliates) from a third party for (i) a merger, consolidation, liquidation, recapitalization, share exchange or other business combination transaction involving ECI (other than any merger involving ECI and one or more of its wholly owned subsidiaries where ECI is the surviving company in the merger, or any liquidation of a wholly owned subsidiary of ECI), (ii) the acquisition by any person of all or a material portion of the assets of ECI and its subsidiaries, taken as a whole (based on fair market value, as determined in good faith by ECI Board), (iii) the acquisition by any person of all or a material portion of the issued and outstanding shares of any class of ECI shares, (iv) any other transaction the consummation of which would reasonably be expected to impede, interfere with, prevent or materially delay the Merger or (v) any combination of the foregoing.

        ECI agrees that it and its subsidiaries and their respective representatives will (i) immediately cease and cause to be terminated any existing activities, discussions or negotiations with any person (other than the parties) conducted prior to the date of the Merger Agreement with respect to any ECI Acquisition Proposal and (ii) request each third party that has heretofore executed a confidentiality

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agreement that relates to an ECI Acquisition Proposal (other than Ribbon) to return or destroy all confidential information regarding ECI or its subsidiaries heretofore furnished to such third party by Ribbon or on its behalf.

No Solicitation by Ribbon

        Each of Ribbon, its subsidiaries and representatives has agreed to not (i) initiate, solicit or knowingly encourage, directly or indirectly, the making of any Ribbon Acquisition Proposal or (ii) other than informing third parties of the provisions contained in the Merger Agreement, engage in negotiations or substantive discussions with, or furnish any material nonpublic information to, any third party that may relate to a Ribbon Acquisition Proposal, subject to the exceptions described below.

        Prior to the Effective Time, subject to the exceptions described below, neither the Ribbon Board nor any committee thereof will, directly or indirectly, (i) withdraw, withhold, modify or qualify, or publicly propose to withdraw, withhold, modify or qualify, in a manner adverse to ECI, its recommendation that the Ribbon stockholders approve the Share Issuance, (ii) approve, adopt or recommend, or publicly propose to approve, adopt or recommend, any Ribbon Acquisition Proposal, (iii) in the event of the commencement of a tender offer or exchange offer for any outstanding shares of Ribbon's capital stock, fail to recommend against acceptance of such tender offer or exchange offer by the holders of Ribbon Common Stock (including, by taking no position or a neutral position with respect to any such offer) within ten business days of the commencement thereof, (iv) recommend that the Ribbon stockholders not approve the Share Issuance, (v) either fail to enforce, or grant any waiver or release under, any standstill or similar agreement with respect to any class of equity securities of Ribbon or any of its subsidiaries unless the Ribbon Board determines in good faith, after consultation with outside legal counsel, that the failure to take such action would be inconsistent with its fiduciary duties under applicable laws, (vi) approve any transaction under, or any person becoming an "interested stockholder" under Article IX of the Ribbon Charter or (vii) enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other similar instrument relating to a Ribbon Acquisition Proposal.

        However, the Ribbon Board may at any time (i) comply with its disclosure obligations under Rule 14d-9 and 14e-2 promulgated under applicable law, or issuing a "stop, look and listen" statement pending disclosure of its position (none of which, in and of itself, will be deemed to constitute a change in its recommendation) or (ii) make any disclosure to Ribbon's stockholders if the Ribbon Board determines in good faith, after consultation with its outside legal counsel, that the failure to make such disclosure would be inconsistent with its fiduciary duties or law; provided that any such disclosure may constitute a change in its recommendation.

        Additionally, if Ribbon receives a written bona fide Ribbon Acquisition Proposal, that was not, directly or indirectly, solicited, initiated or knowingly encouraged, and that the Ribbon Board has determined in good faith, after consultation with its outside legal counsel and financial advisors (i) constitutes a Ribbon Superior Proposal or (ii) could reasonably be expected to result in a Ribbon Superior Proposal, then Ribbon, its subsidiaries and representatives may, to the extent that the Ribbon Board has determined in good faith, after consultation with its outside legal counsel, that a failure to take such actions would be inconsistent with its fiduciary duties to Ribbon's stockholders under law: (a) furnish nonpublic information to the third party making such Ribbon Acquisition Proposal, if, and only if, prior to furnishing such information, Ribbon receives from the third party an executed confidentiality agreement with provisions no less restrictive to such third party with respect to the use or disclosure of nonpublic information than the confidentiality agreement between Ribbon and ECI and expressly allow Ribbon to comply with its obligations under the Merger Agreement and (b) engage in discussions or negotiations with the third party with respect to such Ribbon Acquisition Proposal.

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        Nothing contained in the Merger Agreement prevents Ribbon or the Ribbon Board from, at any time prior to, but not after, the receipt of the Ribbon Stockholder Approval, in response to the receipt of a written Ribbon Acquisition Proposal prior to the Closing and not otherwise in violation of the Merger Agreement, effecting a change in the Ribbon Boards Recommendation, if and only if, prior to taking such action, (i) the Ribbon Board determines in good faith, after consultation with its outside legal counsel and financial advisors, that such Ribbon Acquisition Proposal constitutes a Ribbon Superior Proposal and (ii) (a) ECI has received written notice of Ribbon's intention to take such action at least four business days prior to the taking of such action by Ribbon, (b) during the four business days following the receipt by ECI of the notice of a Ribbon Superior Proposal, Ribbon, if requested by ECI, will make its representatives available to negotiate with ECI regarding any revisions to the terms of the transactions proposed by ECI in response to such Ribbon Acquisition Proposal, and (c) at the end of the four business day period described in the foregoing clause (b), the Ribbon Board continues to believe, in good faith after consultation with its outside legal counsel and financial advisors and after taking into account any modifications to the terms of the transactions that are proposed in a written offer by ECI, that such Ribbon Acquisition Proposal continues to constitute a Ribbon Superior Proposal and that failure to take such action would be inconsistent with the Ribbon directors' fiduciary duties under applicable law.

        Additionally, nothing will prevent the Ribbon Board from, at any time prior to the receipt of the Ribbon Stockholder Approval, effecting a Ribbon Change of Recommendation if the Ribbon Board determines that an "intervening event" has occurred and is continuing and if, (i) prior to taking such action, the Ribbon Board determines in good faith, after consultation with its outside legal counsel, that failure to take such action would be inconsistent with the Ribbon directors' fiduciary duties under applicable law; provided, however that Ribbon will send to ECI written notice at least four business days prior to the taking of such action by the Ribbon Board, specifying in reasonable detail the circumstances related to such determination, (ii) during such notice period, Ribbon, if requested by ECI, makes available its representatives to negotiate with ECI to revise the terms of the Merger Agreement and (iii) the Ribbon Board continues to believe that failing to take such action would be inconsistent with the Ribbon directors' fiduciary duties under applicable law.

        For purposes of the Merger Agreement, "intervening event" means any material event, development or change in circumstances (i) that first becomes known to the Ribbon Board after the date of the Merger Agreement to the extent any such event, development or change in circumstances was not reasonably foreseeable by the Ribbon Board as of the date of the Merger Agreement or (ii) the consequences of which were not reasonably foreseeable by the Ribbon Board as of the date of the Merger Agreement; provided, however, that in no event will the following events, developments or changes in circumstances constitute an Intervening Event: (a) the receipt, existence or terms of a Ribbon Acquisition Proposal or any matter relating thereto or consequence thereof; (b) any change in the price, or change in trading volume, of the Ribbon Common Stock; and (c) meeting or exceeding internal or analysts' expectations, projections or results of operations; however no event, development or change in circumstances that has had, or would reasonably be expected to have, an adverse effect on the business, assets, liabilities, financial condition or results of operation of ECI or its subsidiaries will constitute an "intervening event" unless such event, development or change in circumstances has had, or would reasonably be expected to have, a material adverse effect.

        Ribbon agrees that it and its subsidiaries will, and that they will cause their respective representatives to, (i) immediately cease and cause to be terminated any existing activities, discussions or negotiations with any person (other than the parties) conducted prior to the date of the Merger Agreement with respect to any Ribbon Acquisition Proposal and (ii) request each third party that has heretofore executed a confidentiality agreement that relates to a Ribbon Acquisition Proposal (other than ECI) to return or destroy all confidential information regarding Ribbon or its subsidiaries heretofore furnished to such third party by Ribbon or on its behalf. Ribbon agrees that it and its

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subsidiaries will take the necessary steps to promptly inform its and its subsidiaries' representatives of the obligations undertaken in this provision.

        Ribbon is required to promptly notify ECI orally and in writing of any request for information or any inquiries, proposals or offers relating to a Ribbon Acquisition Proposal indicating, in connection with such notice, the name of such person making such request, inquiry, proposal or offer and the material terms and conditions of any proposals or offers and Ribbon will provide to ECI written notice of any such inquiry, proposal or offer within 24 hours of such event and copies of any written or electronic correspondence to or from any person making a Ribbon Acquisition Proposal (or its representatives). Ribbon will keep ECI informed orally and in writing, as soon as is reasonably practicable, of the status of any Ribbon Acquisition Proposal, including with respect to the status and material terms of any such proposal or offer and whether any such proposal or offer has been withdrawn or rejected and Ribbon will provide to ECI written notice of any such withdrawal or rejection and copies of any written proposals or requests for information within 24 hours. Ribbon also agrees to provide any information to ECI (not previously provided or made available to ECI) that it is providing to another person at substantially the same time it provides such information to such other person. All such information provided to ECI must be kept confidential by ECI in accordance with the terms of the confidentiality agreement that relates to the Ribbon Acquisition Proposal.

        Any breach of the no solicitation provisions by a representative of Ribbon will be deemed to be a breach of such provisions by Ribbon.

Conditions to Completion of the Merger

Conditions to Ribbon's and ECI's Obligation to Consummate the Merger

        The respective obligations of each party to consummate the Merger are subject to the satisfaction or waiver of various conditions that include the following:

        Swarth and certain other equityholders of ECI have entered into a Voting Agreement pursuant to which they will vote to approve the Merger and the ECI Shareholder Approval will be obtained.

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Conditions to Ribbon's and Merger Sub's Obligation to Consummate the Merger

        The obligations of Ribbon and Merger Sub to consummate the Merger are subject to the satisfaction or waiver of various conditions that include the following:

Conditions to ECI's Obligation to Consummate the Merger

        The obligations of ECI to consummate the Merger are subject to the satisfaction or waiver of various conditions that include the following:

Termination of the Merger Agreement

        The Merger Agreement may be terminated at any time prior to the Effective Time as follows:

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Effect of Termination

        In the event of termination of the Merger Agreement as described in the section entitled "The Merger AgreementTermination of the Merger Agreement," there will be no liability or obligation on the part of any party under the Merger Agreement, except:

Termination Fees; Expenses and Damages

        A party may be liable to the other if the Merger Agreement is terminated as described in the section entitled "The Merger AgreementTermination of the Merger Agreement," if such termination resulted, directly or indirectly, from a willful and material breach of any representation, warranty, covenant or other agreement contained in the Merger Agreement. In the event of a termination as a result of a party's willful and material breach, such breaching party will be liable for any and all damages or other losses of any kind suffered by the other parties or their affiliates as a result of such willful and material breach, unless a termination fee is paid as set forth below.

        Additionally, Ribbon has agreed to pay ECI a fee of $19,500,000 (the "Reverse Termination Fee") in the event the Merger Agreement is terminated as a result of any of the following:

        Ribbon has agreed to pay ECI a fee of $13,625,000 and to reimburse ECI for its expenses up to a maximum reimbursement of $2,275,000 if the Merger Agreement is terminated under the following circumstances:

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        Additionally, Ribbon must pay 100% of ECI's expenses (as such term is defined in the Merger Agreement), up to a maximum reimbursement of $5,000,000 (which will be credited against any Acquisition Proposal Termination Fee that is currently, or becomes, payable) if the Merger Agreement is terminated by either Ribbon or ECI after the Ribbon Common Stockholders voted not to approve the Share Issuance.

        Except in the case of fraud, the payment of the Reverse Termination Fee or the Acquisition Proposal Termination Fee is the sole and exclusive remedy available to ECI, unless:

Amendments, Extensions and Waivers

Amendments

        The Merger Agreement may be amended only in writing, and only by mutual agreement of the parties at any time before or after receipt of the Ribbon Stockholder Approval; however, after the Ribbon Stockholder Approval has been obtained, there will not be any amendment that by law requires further approval by the stockholders of Ribbon without such further approval of such stockholders.

Extensions and Waivers

        At any time prior to the Effective Time, subject to applicable law, any party to the Merger Agreement may (i) extend the time for the performance of any obligation or other act of any other party, (ii) waive any inaccuracy in the representations and warranties of the other party contained

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herein or in any document delivered pursuant thereto, and (iii) subject to the first sentence of the preceding paragraph, waive compliance with any agreement or condition contained herein. Notwithstanding the foregoing, no failure or delay by ECI, Ribbon or Merger Sub in exercising any right thereunder will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other right or further exercise of any other right thereunder. Any agreement on the part of a party to any extension or waiver must be in writing and signed on behalf of such party.

No Third-Party Beneficiaries

        The Merger Agreement is not intended to and does not confer any rights or remedies upon any person other than the parties and their respective successors and permitted assigns, except for the rights of certain third parties to receive a portion of the Merger Consideration and matters related to the directors' and officers' indemnification and insurance (which will be enforceable by certain directors and officers of ECI that may be entitled to indemnification).

Specific Performance

        Except as set forth in the following paragraph, the parties have agreed that irreparable damage for which monetary damages, even if available, would not be an adequate remedy, would occur in the event that the parties do not perform the provisions of the Merger Agreement. Accordingly, the parties have agreed that they will be entitled to an injunction, specific performance and other equitable relief to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions thereof, in addition to any other remedy to which they are entitled at law or in equity. Any party seeking an injunction or injunctions to prevent breaches of the Merger Agreement and to enforce specifically the terms and provisions of the Merger Agreement will not be required to provide any bond or other security in connection with any such order or injunction. The election of Ribbon or ECI to pursue an injunction or specific performance will not restrict, impair or otherwise limit such party from subsequently seeking to terminate the Merger Agreement, and will not restrict, impair or otherwise limit Ribbon or ECI seeking to collect damages pursuant to the Merger Agreement.

        Additionally, the parties have agreed that, prior to the valid termination of the Merger Agreement, ECI will be entitled to specific performance to cause Ribbon to consummate the Closing if, and only if: (i) all the conditions set forth in the section entitled "The Merger Agreement—Conditions to Completion of the Merger" have been satisfied (and continue to be satisfied) or irrevocably waived, (ii) ECI has irrevocably confirmed by written notice to Ribbon that ECI is ready, willing and able to consummate the Closing, (iii) the debt financing has been funded or will be funded at the Effective Time and (iv) Ribbon does not consummate the Closing within three business days after the later of (a) delivery of the notification by ECI referred to in the foregoing clause (ii) and (b) the date the Effective Time is required to occur pursuant to the Merger Agreement.

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OTHER TRANSACTION AGREEMENTS

Voting Agreement

        The following is a summary of the Voting Agreement. This summary does not purport to describe all of the terms of the Voting Agreement and is qualified in its entirety by the complete text of the Voting Agreement, which is included as Annex C of this proxy statement and incorporated by reference herein. All stockholders of Ribbon are urged to read the Voting Agreement carefully and in its entirety, as well as this proxy statement, before making any decisions regarding the Merger Agreement and the transactions contemplated thereby, including the Merger.

        In connection with the signing of the Merger Agreement, the JPM Stockholders and ECI entered into the Voting Agreement, pursuant to which, among other matters, each JPM Stockholder has agreed (1) to vote all of its shares of Ribbon Common Stock (a) in favor of the issuance by the Share Issuance at any meeting of the Ribbon stockholders, (b) against any agreement that relates to a Ribbon Acquisition Proposal, (c) against any action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation of Ribbon contained in the Merger Agreement and (d) against any action or agreement that could reasonably be expected to interfere with or adversely affect the Share Issuance or the other transactions contemplated by the Merger Agreement and (2) prior to the termination of the Merger Agreement, not to (subject to certain exceptions) (x) sell, transfer or effect a distribution of any of its Ribbon Common Stock, (y) deposit any such stock into a voting trust or enter into a voting agreement or arrangement with respect to such stock or (z) grant any proxy or power of attorney with respect to such stock. As of January 8, 2020, the JPM Stockholders beneficially owned approximately 45.01% of the shares of Ribbon Common Stock outstanding on that date.

        If the Ribbon Board effects a Ribbon Change of Recommendation (the "Trigger Event"), the obligations of each JPM Stockholder in the preceding paragraph shall be modified such that the number of Ribbon Common Stock that the JPM Stockholders, collectively, must vote in favor of approving the Share Issuance shall be equal to the sum of (rounded up to the nearest whole share) the number of shares that would represent as of the time of the Trigger Event 33% of the aggregate voting power of the issued and outstanding Ribbon Common Stock, voting together as a single class (and each JPM Stockholder shall vote any shares not required to be voted to approve the Share Issuance to instead be voted on the Share Issuance, at such JPM Stockholder's election, either (A) in accordance with the preceding paragraph or (B) pro rata in accordance with how the other holders of Ribbon Common Stock, other than the JPM Stockholders, vote their shares of Ribbon Common Stock on the Share Issuance at the Ribbon Special Meeting).

        Each JPM Stockholder also agreed (1) to use its reasonable best efforts to supply Ribbon, ECI or any affiliates of ECI with information and reasonable assistance in connection with any registrations and filings with, and notices to, governmental authorities, that are necessary to consummate the Merger and the other transactions contemplated by the Merger Agreement, (2) to take no action that would reasonably be likely to adversely affect or delay obtaining the Ribbon Stockholder Approval, or any governmental authority approvals required for the transactions contemplated by the Merger Agreement and (3) until the earlier of the Effective Time or the termination of the Merger Agreement, not to solicit or engage in discussions relating to any Ribbon Acquisition Proposal and to promptly notify ECI of any officers relating to a Ribbon Acquisition Proposal. In connection with its agreements and obligations under the Voting Agreement, each JPM Stockholder has also irrevocably appointed ECI and any person designated in writing by ECI as its proxy and attorney-in-fact to consent to or vote the shares of Ribbon Common Stock owned by such JPM Stockholder as indicated in the Voting Agreement.

        The Voting Agreement will terminate upon the valid termination of the Merger Agreement.

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Stockholders Agreement

        The following is a summary of certain material terms and provisions of the Stockholders Agreement (as defined below). This summary does not purport to describe all of the terms and provisions of the Stockholders Agreement and is qualified in its entirety by the complete text of the Stockholders Agreement, a form of which is included as Annex D of this proxy statement and incorporated by reference herein. All stockholders of Ribbon are urged to read the Stockholders Agreement carefully and in its entirety, as well as this proxy statement, before making any decisions regarding the Merger Agreement and the transactions contemplated thereby, including the Merger.

        The Merger Agreement contemplates, as a condition to the closing of the transactions contemplated thereby, that at the Closing, Swarth will enter into a stockholders agreement (the "Stockholders Agreement") with Ribbon and the JPM Stockholders, existing principal stockholders of Ribbon. The Stockholders Agreement will become effective upon the closing of the transactions contemplated by the Merger Agreement; it sets forth certain arrangements and contains various provisions relating to, among other things, board representation, standstill restrictions and transfer restrictions as further described below.

        For purposes of the Stockholders Agreement, "Independent Director" means, regardless of whether designated by the JPM Stockholders or Swarth, a person nominated for or appointed to the Board who, as of the time of determination, is independent for purposes of the NASDAQ rules and the SEC rules.

Board Representation

        The Stockholders Agreement provides that the Ribbon Board following the Closing will be comprised as follows:

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        In the event any Ribbon Board member nominated by the JPM Stockholders or Swarth, as applicable, resigns or is unable to serve, such party will be entitled to designate a successor, subject to the conditions set forth in the Stockholders Agreement.

        Following the Effective Time, the Ribbon Board will maintain (i) an audit committee, (ii) a compensation committee and (iii) a nominating and corporate governance committee.

        For as long as the JPM Stockholders have the right to designate at least two directors to the Ribbon Board, (i) the nominating and corporate governance committee shall be comprised of three Independent Directors, at least one of whom shall be a designee of the JPM Stockholders, (ii) a designee of the JPM Stockholders shall be the Chairman of each of the nominating and corporate governance committee and the compensation committee and (iii) only in the case that Swarth does not have the right to designate at least two directors to the Ribbon Board, a designee of the JPM Stockholders shall be the Chairman of the audit committee.

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        For as long as Swarth has the right to designate at least two directors to the Ribbon Board, (i) the nominating and corporate governance committee shall be comprised of three Independent Directors, at least one of whom shall be a designee of Swarth, (ii) a designee of Swarth shall be the Chairman of the audit committee and (iii) only in the case that the JPM Stockholders do not have the right to designate at least two directors to the Ribbon Board, a designee of Swarth shall be the Chairman of each of the nominating and corporate governance committee and the compensation committee.

        The nominating and corporate governance committee shall determine the size and membership of each of the audit committee, the compensation committee and all other committees established by the Ribbon Board, provided that (a) such determination shall comply with mandatory legal and listing requirements; (b) for as long as the JPM Stockholders have the right to designate at least one director to the Ribbon Board who is eligible to serve on such committee, at least one member of each such committee shall be a designee of the JPM Stockholders; and (c) for as long as Swarth has the right to designate at least one director to the Ribbon Board who is eligible to serve on such committee, at least one member of each such committee shall be a designee of Swarth.

Swarth Irrevocable Proxy

        All of Swarth's governance rights, including its right to designate members of the Ribbon Board, are subject to receipt of CFIUS approval. If the CFIUS approval is not obtained prior to the Effective Time, Swarth grants an irrevocable proxy to Ribbon to vote the shares of Ribbon Common Stock held by Swarth that represent more than 9.99% of the consolidated voting power of all issued and outstanding Ribbon Common Stock pro rata in accordance with how the other holders of Ribbon Common Stock vote their shares.

Voting

        So long as a stockholder has director nomination rights under the Stockholders Agreement, with respect to any proposal or resolution relating to the election of directors to the Board, both JPM and Swarth will take all necessary actions within its control to vote its shares affirmatively in favor of such director nominees.

Standstill Restrictions

        The Stockholders Agreement contains certain standstill provisions restricting the JPM Stockholders and Swarth from acquiring (or seeking or making any proposal or offer with respect to acquiring) additional shares of Ribbon Common Stock or any security convertible into Ribbon Common Stock or any assets, indebtedness or businesses of Ribbon Common Stock or any of its subsidiaries. Certain customary exclusions apply, and acquisition of shares of Ribbon Common Stock by a Ribbon stockholder will be permitted so long as such acquisition would not result in such stockholder and its affiliates beneficially owning a number of Ribbon Common Stock that is greater than 120% of the number of voting shares of Ribbon Common Stock held by the JPM Stockholders or Swarth, as applicable, on the Closing Date (or such lower number as specified in the Stockholders Agreement).

        The standstill restrictions apply from the date of the Stockholders Agreement until the earlier of (i) the entry by Ribbon into a definitive agreement constituting a change of control transaction as discussed in further detail below and (ii) such date as the JPM Stockholders or Swarth, as applicable, no longer has a right to designate any members of the Ribbon Board.

Change of Control

        Without the approval of a majority of the disinterested directors serving on the Ribbon Board, no JPM Stockholder nor Swarth may enter into or affirmatively support any transaction resulting in a

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change of control of Ribbon in which any such stockholder receives per share consideration as a holder of Ribbon Common Stock in excess of that to be received by other holders of Ribbon Common Stock.

Transfer Restrictions

        Without the approval of a majority of the disinterested directors serving on the Ribbon Board:

        Certain other recipients of Stock Consideration in the Merger have also agreed to transfer restrictions that are substantially similar to the transfer restrictions in the Stockholders Agreement.

Termination

        The Stockholders Agreement will terminate by mutual consent of Ribbon, a majority in interest of the JPM Stockholders and Swarth (including the approval by a majority of Independent Directors) or with respect to either the JPM Stockholders or Swarth, on the date that such stockholder ceases to beneficially own 2% or more of the issued and outstanding Ribbon Common Stock.

Registration Rights Agreement

        The following is a summary of certain material terms and provisions of the Registration Rights Agreement. This summary does not purport to describe all of the terms and provisions of the Registration Rights Agreement and is qualified in its entirety by the complete text of the Registration Rights Agreement, a form of which is included as Annex E of this proxy statement and incorporated by reference herein. All stockholders of Ribbon are urged to read the Registration Rights Agreement carefully and in its entirety, as well as this proxy statement, before making any decisions regarding the Merger Agreement and the transactions contemplated thereby, including the Merger.

        The Merger Agreement contemplates, as a condition to the closing of the transactions contemplated thereby, that at the Closing, Ribbon will enter into a registration rights agreement (the "Registration Rights Agreement") with the JPM Stockholders and Swarth. Under the Registration Rights Agreement, certain holders of Ribbon Common Stock will be granted certain registration rights beginning on the 180th day following the Effective Time, including (i) the right to request that Ribbon file an automatic shelf registration statement and effect unlimited underwritten offerings pursuant to such shelf registration statement; (ii) unlimited demand registrations; and (iii) unlimited piggyback registration rights that allow holders of registrable shares to require that shares of Ribbon Common Stock owned by such holders be included in certain registration statements filed by Ribbon, in each

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case subject to the transfer restrictions contained in the Stockholders Agreement. In connection with these registration rights, Ribbon has agreed to effect certain procedural actions, including taking certain actions to properly effect any registration statement or offering and to keep the participating Ribbon stockholders reasonably informed with adequate opportunity to comment and review, as well as customary indemnification and contribution agreements.

Pathfinder Purchase Agreement

        The following is a summary of certain material terms and provisions of the Pathfinder Purchase Agreement. This summary does not purport to describe all of the terms and provisions of the Pathfinder Purchase Agreement and is qualified in its entirety by the complete text of the Pathfinder Purchase Agreement, which is included as Annex F of this proxy statement and incorporated by reference herein. All stockholders of Ribbon are urged to read the Pathfinder Purchase Agreement carefully and in its entirety, as well as this proxy statement, before making any decisions regarding the Merger Agreement and the transactions contemplated thereby, including the Merger.

        In connection with the Merger Agreement, Pathfinder, ECI and Ribbon entered into a Share Purchase Agreement (the "Pathfinder Purchase Agreement"), pursuant to which, among other matters, Pathfinder agreed to sell its preferred shares of ECI Telecom Ltd. at the Effective Time (the "Pathfinder Shares") for an aggregate purchase price of ranging between $90,850,000 and $101,069,000, depending on the date of the Effective Time, plus gross-up on account of tax, as provided in the Pathfinder Purchase Agreement, if any.

        The Pathfinder Purchase Agreement will terminate (i) by mutual consent of Ribbon, ECI and Pathfinder; (ii) by Pathfinder, if any of the conditions precedent to the Pathfinder Purchase Agreement have not been satisfied or the Closing shall not have occurred on or before July 1, 2020; (iii) by ECI (with Ribbon's consent), if Pathfinder fails to deliver any of the documents pursuant to the Pathfinder Purchase Agreement or the Closing has not occurred on or before July 1, 2020; (iv) by ECI (with Ribbon's consent) or Pathfinder if the sale of the Pathfinder Shares becomes illegal.

Real Estate Put Agreement and Matters Related to the Sale Property

        The following is a summary of certain material terms and provisions of the Real Estate Put Agreement and matters relating to the Sale Property. This summary does not purport to describe all of the terms and provisions of the Real Estate Put Agreement and is qualified in its entirety by the complete text of the Real Estate Put Agreement, which is included as Annex G of this proxy statement and incorporated by reference herein. All stockholders of Ribbon are urged to read the Real Estate Put Agreement carefully and in its entirety, as well as this proxy statement, before making any decisions regarding the Merger Agreement and the transactions contemplated thereby, including the Merger.

        In connection with the signing of the Merger Agreement, ECI and Global Village entered into a put option agreement (the "Real Estate Put Agreement"), pursuant to which, among other matters, ECI will have the right to cause Global Village or one of its affiliates to purchase the Sale Property from ECI prior to the Closing on the terms set forth in a Sale Agreement, the form of which is attached to the Real Estate Put Agreement (the "Sale Agreement"). Pursuant to the Sale Agreement, among other matters, the Sale Property would be sold to Global Village for $40,000,000 plus VAT, contingent upon completion of the transactions contemplated by the Merger Agreement, no later than July 1, 2020.

        The Merger Agreement contemplates that ECI may sell the Sale Property to a third party on terms agreed to by Ribbon (such consent not to be unreasonably withheld), provided that (i) such terms shall include a lease-back arrangement on terms agreed to by ECI and Ribbon and set forth in the Company Disclosure Letter attached to the Merger Agreement (the "Lease-Back Terms") and (ii) that any net sale proceeds from such sale shall be deposited in a segregated account until the

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Closing. Pursuant to the Merger Agreement, in the event that ECI does not sell the Sale Property prior to Closing, then ECI shall exercise its put option pursuant to the Real Estate Put Agreement, and shall cause Global Village or one of its affiliates to purchase the Sale Property and enter into a lease-back arrangement on the Lease-Back Terms immediately prior to the Closing.

        The Real Estate Put Agreement may be terminated by either ECI or Global Village due to a material breach of the agreement upon 14-days advance notice and an opportunity given to the breaching party to cure the breach during such time period.

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BANK COMMITMENT LETTER AND RELATED FINANCING

        In connection with the execution of the Merger Agreement, on November 14, 2019, Ribbon Communications Operating Company, Inc., a Delaware corporation ("RCOC"), entered into the Debt Commitment Letter and related fee letter with Citizens Bank. Pursuant to the Debt Commitment Letter, Citizens Bank committed to provide RCOC with: (a) a $100.0 million senior secured revolving credit facility and (b) a $400.0 million senior secured term loan A facility (collectively, the "Debt Financing"). The Debt Commitment Letter permits Citizens Bank to syndicate its commitments thereunder. The proceeds of the Debt Financing shall be used (a) to pay the Merger Consideration, (b) to refinance outstanding debt of ECI Telecom Holdings B.V. and certain of its affiliates, (c) to pay transaction costs and related expenses and (d) for working capital and general corporate purposes. The availability of the borrowings under the Debt Financing is subject to the satisfaction of certain customary conditions, including the substantially concurrent consummation of the Merger. Syndication of Citizens Bank's commitments under the Debt Commitment Letter is not a condition precedent to the funding of the Debt Financing.

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BUSINESS OF RIBBON

Overview

        We are a leading provider of next generation ("NextGen") software solutions to telecommunications, wireless and cable service providers and enterprises across industry verticals. With over 1,000 customers around the globe, including some of the largest telecommunications service providers and enterprises in the world, we enable service providers and enterprises to modernize their communications networks through software and provide secure RTC solutions to their customers and employees. By securing and enabling reliable and scalable IP networks, we help service providers and enterprises adopt the next generation of software-based virtualized and cloud communications technologies for service providers to drive new, incremental revenue, while protecting their existing revenue streams. Our software solutions provide a secure way for our customers to connect and leverage multivendor, multiprotocol communications systems and applications across their networks and the cloud, around the world and in a rapidly changing ecosystem of IP-enabled devices, such as smartphones and tablets. In addition, our software solutions secure cloud-based delivery of UC solutions—both for service providers transforming to a cloud-based network and for enterprises using cloud-based UC. We sell our software solutions through both direct sales and indirect channels globally, leveraging the assistance of resellers, and we provide ongoing support to our customers through a global services team with experience in design, deployment and maintenance of some of the world's largest software IP networks.

        We completed our acquisition of Edgewater Networks, Inc. ("Edgewater"), a market leader in Network Edge Orchestration for the distributed enterprise and UC market, in August 2018 (the "Edgewater Acquisition"), making us a software market leader in enterprise Session Border Controllers and allowing us to extend Edgewater software solutions internationally while expanding our cloud offerings and entering the SD-WAN market.

        We completed our Merger with GENBAND, a global leader in NextGen software-enabled real-time communications solutions, in October 2017. Because of the Merger, we believe that we improved our position to enable network transformations to IP and to cloud-based networks for service providers and enterprise customers worldwide, with a broader and deeper sales footprint, increased ability to invest in growth, more efficient and effective research and development, and a comprehensive RTC product offering.

Industry Background

        Traditional TDM-based voice and data solutions are being supplanted by alternative NextGen IP-based networks, and RTC software applications are being offered from the cloud in conjunction with the network and enterprise edge. Given this shift, today's telecommunications service providers and enterprises are faced with two separate but related challenges: how to upgrade their aging and costly communications infrastructure, and how to implement new and innovative NextGen software, IP and cloud-based communications capabilities. Service providers in particular must address these challenges while at the same time responding to competition in the form of new web-scale communication providers, such as Microsoft Corp., Google LLC and Amazon.com, Inc.

        To address these challenges, service providers and enterprises are modernizing their communications networks, network functions and communications applications from legacy environments to new environments using NextGen IP software, NFV, the cloud and the edge to take advantage of the many benefits that these technologies offer with an end goal of providing better and more productive communications experiences for their customers and employees.

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Telecommunications Service Providers: Network Modernization

        One of the most significant capital costs for telecommunications service providers has been and continues to be their infrastructure. In order to leverage past capital investments and deliver existing and new services, service providers must consolidate their infrastructure from costly, legacy infrastructures, such as the PSTN and the PLMN, into more efficient and flexible IP- and software-based network models, which are capable of driving revenue growth. Migrating from the PSTN to IP reduces real estate, power and operating costs. IP software networks allow the consolidation of voice, video and data within a single IP-based networking infrastructure over broadband and wireless access and enables new communications services, such as SIP Trunking and Hosted UCs. Similarly, modernizing mobile networks to the IMS-based 4G LTE and VoLTE networks enables mobile service providers to offer better and more efficient mobile communications experiences to end users. As consumers and businesses continue to demand more engaging and productive communications, we believe network modernization is and will continue to be essential to service providers' ability to compete effectively in the market for telecommunications services. As such, key market drivers include:

Modernization of Networks to IP

        Communication trends have been shifting for the past several years. What was once an industry built on voice communications from central office switches and PBXs on the enterprise premise is now being replaced by the use of social networks, OTT service providers, mobile applications, and hosted service providers. Consumers are increasingly turning to OTT applications (i.e., WhatsApp, Apple's Facetime and iMessaging, or Amazon's Alexa). This shift has created an enhanced experience for consumers, heightened expectations for future products and services, and expanded related addressable markets.

        Network modernization to IP NextGen software-based systems enables service providers to add modern communications service offers that blend traditional voice messaging capabilities with contemporary features, such as video messaging, visual voicemail, mobile messaging and e-mail integration, and an accelerated time-to-market for differentiated messaging services. Network infrastructures are also undergoing a transformation to IP and the cloud, migrating from hardware-centric appliances to software solutions for voice interconnect and wide area networking.

        Enterprises, large and small, are re-architecting business processes and undergoing a digital transformation, building their own virtualized software solutions in the cloud or moving their IT applications entirely to public cloud applications, and adding RTC and collaboration to their customer service solutions. These new offerings improve customer service and create an e-commerce experience that blends online applications with the in-store environment, creating a seamless experience for customers.

        As a result of these evolving communications environments, the complexity of network operations is also increasing significantly, requiring sophisticated NextGen software solutions based on machine learning and analytics to provide reliable network operations.

Secure Real-time Communications

        The evolution by telecommunications service providers to IP NextGen software-based RTC exposes them to new security threats, as the "walled" protection offered by their voice network infrastructures no longer exists with SIP and data-based networks. With SIP-based systems, RTC applications such as voice, video and messaging become data applications, and without appropriate security measures in place, these networks are left open to security breaches and hacks. Additionally, the move to SIP has seen an increase in fraud in service provider networks in the form of robo-dialing and toll fraud schemes.

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        Given these threats, there is a need for sophisticated software security solutions to protect IP-based communications networks. Service providers have relied upon the software capabilities of SBCs, which are deployed within their networks and are designed to provide robust security as well as simplify interoperability, routing and other functions as a protection measure. By its nature, the SBC-controlling software is application aware and therefore can provide sophisticated data to software-based analytics platforms to detect and thwart security breaches. In conjunction with SBCs, big data analytics and machine learning solutions can enforce a network-wide security perimeter. We believe securing networks against threats is most effective when secure software solutions are deployed within networks into existing RTC investments and combined with network-wide approaches for secure RTC.

Edge Orchestration

        As service providers deliver Hosted and Cloud UC services to enterprises, they need to be able to provide those services to the enterprise via the internet and IP infrastructure and must do so with service assurance, security and reliability in a cost-effective manner. Hybrid cloud and edge orchestration software offerings enable service providers to manage enterprise edge devices remotely from their cloud or network and provide the service in a cost-effective and reliable manner. Such solutions minimize service downtime and expensive visits to enterprise customer sites via truck rolls to work on the edge devices on the enterprise customer premise.

Network Function Virtualization

        In addition to shifting from traditional TDM-based voice and data networks to secure IP NextGen software networks, telecommunications service providers are increasingly moving toward NFV in order to offer new services quickly to their customers, reduce costs and compete with Web-Scale companies. NFV provides a new way to design, deploy and manage networking services by decoupling network software functions from proprietary appliances so they may run in software. This transformation enables better use of network infrastructure, creates agility, delivers rapid and elastic scaling, and enables faster time to market. Software-enabled VNFs can be deployed on generic computing platforms, hosted in private and public clouds, located in data centers, within other network elements or on computer platforms on end-user premises.

Cloud and "as a Service" Models

        As software communications applications are deployed in the cloud, telecommunications service providers gain the ability to offer a new class of business models commonly referred to "as a Service" solutions. These offerings include:

        CPaaS:    CPaaS is a cloud-based software platform that enables developers to add RTC features, such as voice, data, video and messaging, in their own applications without requiring backend infrastructure and interfaces. CPaaS provides software developers the flexibility to "drag and drop" these features into their native applications or within web sites through simple APIs and SDKs. With CPaaS, enterprises can quickly build applications that tie RTC and their social channels to their business workflows and customer engagements. This software technology has not only moved real time communications off service provider networks, but also has greatly simplified the development and deployment of RTC capabilities.

        UCaaS:    Deploying NextGen UC software within the cloud helps enterprises provide flexibility and scalability for core business tasks. UCaaS features include enterprise messaging, presence technology, online meetings, team collaboration, telephony and video conferencing in lieu of traditional voice solutions, such as PBXs or carrier-based Centrex. UCaaS is also another offering for improving customer engagements and experiences.

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        STaaS:    SIP software trunking enables service providers to bundle voice and data over a single converged IP connection and brings converged connectivity to the enterprise, creating a more economical offering than can be achieved with separate voice and data connections. STaaS delivers NextGen IP software connectivity to customers equipped with IP-PBX and UC facilities. With STaaS, customers have the flexibility to manage their own SIP trunks through simple and reliable software interfaces.

Enterprises: Network Modernization and Digital Transformation

        Today's enterprises, including multi-national corporations, SMBs and government institutions, are undergoing not only a network modernization but also a digital business transformation. The focus is shifting from person-to-person communications to contextual collaboration and omni-channel customer experiences. Within this context, enterprises need a secure, scalable and innovative NextGen software alternative to proprietary PBX and UC products. As part of their digital transformation, enterprises have adopted the cloud, open interfaces, mobile, Big Data, and analytics. Seeing the advantages and cost savings from the cloud, enterprises are migrating their communications solutions to this same environment, thereby enabling connections between business processes, communications, and collaboration.

Network Modernization

        Enterprises undergoing network modernization are focused on moving from TDM-based PBXs to SIP trunking and NextGen UC software and collaboration systems while ensuring interoperability during the transformation process. In addition, enterprises in certain industries will often be subject to specific requirements or standards before a network transformation is completed. For example, governments may require Joint Interoperability Test Command ("JITC") certification for secure deployments, and healthcare providers may need to achieve HIPAA certification.

        When modernizing a network with software, the ability to interwork modern applications, such as Microsoft's Skype for Business, with legacy analog endpoints on premises becomes essential. Additionally, software capabilities of SBCs are vital in providing interworking and survivability options. SBCs play a crucial role in securing the modern network and for NextGen UC software, which is a top priority for any enterprise. Edge SBC software devices can also play an important role in providing SD-WAN capabilities for small and distributed enterprises. Due to the growing open nature of communications environments in the enterprise, the complexity of network operations is also increasing significantly, requiring sophisticated software solutions based on machine learning and analytics to provide reliable network operations.

Digital Transformation

        Successful enterprises today are focused on innovating their core product offerings and building a strategic advantage to reach and empower their customers. As technologies evolve and new mobile applications and connected devices proliferate, enterprises must adapt and innovate their communications solutions to create a "connected" experience anywhere, anytime, on any device. As part of this process, businesses are increasingly deploying "as a Service" offerings from the cloud (from either a service provider or a web-scale provider). UCaaS and CPaaS create a single software communications platform that changes the way enterprises deliver services and interact with customers. CPaaS software enables enterprises to quickly build applications that tie real time communications and their social channels to their business processes, while UCaaS software delivers the underlying UC capabilities to ensure end users have the features and functionality required to enable reliable and scalable end-to-end communications.

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Our Solutions, Products and Services

Ribbon Solutions

        Ribbon provides secure NextGen RTC software-enabled appliances and cloud solutions for service providers and enterprises. Ribbon's software communications solutions are widely deployed at over 1,000 customers globally; provide high scale, reliability and performance; and are deployable from the public, private and hybrid cloud, in-network or on the enterprise premise and edge. As of December 31, 2018, our software solutions, which are a combination of our software products and services, for service providers and enterprises included the following:

GRAPHIC

        Ribbon service provider software solutions enable fixed and wireless service providers, cable providers (or MSOs), ISPs and interconnect service providers to modernize their networks, quickly capitalize on growing market segments and introduce differentiating products, applications and services for their business and consumer customers. Ribbon's service provider network modernization software solutions include fixed network transformation, wireless network evolution (mobility), secure network interconnects, network functions virtualization, cloud communications as a Service, and communications security and edge orchestration solutions, enabling secure and innovative business and consumer communications services offerings. Ribbon software solutions help service providers connect people to each other wherever they happen to be, addressing the growing demands of today's consumers and businesses for secure RTC.

        Ribbon's enterprise software solutions allow enterprises to securely connect to SIP trunks and modernize their unified and cloud communications networks. Modernization solutions range from Intelligent Edge, legacy Nortel PBX evolution, securing UC and contact centers, migrating to Microsoft Skype for Business and Teams with Direct Routing, and providing session management, security and cloud communications software solutions to enable highly productive communications experiences for employees and customers using the web, mobile and fixed endpoints. Ribbon provides secure communications software solutions for the federal government vertical and has JITC-certified solutions. Ribbon also provides RTC software solutions to other industry verticals, including higher education, finance and healthcare. Ribbon has significant experience and expertise in securing SIP communications with a portfolio of SBC software solutions, and has deployed thousands of SBC software installations across different industry verticals. Our Intelligent Edge software solutions simplify UC deployments and enable SD-WAN for small and distributed enterprises. Our Microsoft Skype for Business and Teams

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software solutions secure those communications environments and assist in the migration of enterprise customers to those environments.

Ribbon Products

        Ribbon software products enable service providers to take new services to market quickly and with scale and carrier class reliability, allowing such providers to compete effectively in the marketplace, and enable enterprises to make their employee and customer engagement experiences richer and more productive.

        Ribbon's software product lines enabling network transformation, mobile network evolution and interconnect solutions include Ribbon's call session controllers, media gateways, signaling, policy and routing software and a market leading portfolio of SBC's intelligent edge software products, all of which are mechanisms through which operators and enterprises deploy our secure RTC software solutions. Ribbon's NextGen UC software solutions are enabled by the Ribbon Application Server, Client and Intelligent Messaging products, and are a software platform for business and residential multimedia communications across fixed, mobile, cable, and enterprise markets. Our software product portfolio facilitates the securing of SIP-based UC sessions in the enterprise core and edge networks, and the migration of legacy PBX-based enterprise communications networks (such as the Nortel PBX installed base) across different market verticals. Our software product portfolio includes element management and network management software to enable customers to configure, monitor and manage the solutions they purchase from us.

        The software product portfolio also includes native mobile client products that allow service providers to enable Wi-Fi and LTE Calling services for their subscribers without the considerable cost of investing in, implementing and maintaining, a full VoLTE IMS network.

        The Company's Cloud Communications "as a Service" portfolio, which includes CPaaS, UCaaS and STaaS offerings, is based on Kandy Cloud, which is a cloud-based RTC software platform that enables service providers, independent software vendors, systems integrators and enterprises to rapidly create and deploy high-value embedded communications services for their customers. Utilizing Ribbon's communications technology, which is offered as a part of a white-label solution service, service providers may connect their networks to Kandy Cloud CPaaS via SIP trunks and APIs. The Kandy Cloud software platform provides APIs and SDKs for developers to build embedded communications applications. Kandy Cloud helps service providers grow revenue with quick to deploy, pre-packaged applications called Kandy Wrappers. Kandy Wrappers are fully functional software applications that can be delivered standalone or inserted into an enterprise website or into an enterprise application to endow it with embedded RTC capabilities. Kandy Cloud also delivers a suite of UCaaS solutions, such as Cloud PBX, Cloud Contact Center and Cloud Collaboration.

Ribbon Global Services

        Our global services organization is responsible for all aspects of implementation and support of our solutions and products. Key portfolio components include solution and business consulting, system integration, deployment, and managed care services. Our technical support group provides constant support to keep customers' software operating at peak performance. Support services include managing software updates, appliance maintenance, appliance spare services and managed spares programs, and emergency assistance during disaster recovery.

        With a local presence in over twenty countries on five continents, Ribbon Global Services provides both a U.S. presence and a global presence with complete coverage to help drive our customers' success.

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        The Ribbon Global Services team provides our customers with the following:

        A full-service portfolio including deployment and integration, testing and verification, migration, operational support, monitoring and managed services;

        End-to-end project management and accountability via highly experienced program managers who follow a consistent, disciplined methodology;

        Knowledgeable and experienced technical resources with in-depth skills and expertise on IP communications software solutions and network modernization;

        Consistent execution in the design, deployment and support of the world's largest and most advanced software networks; and

        Award winning, around-the-clock technical support services with dedicated technical support centers around the globe, including the United States, Canada, Mexico, United Kingdom, Spain, Germany, Czech Republic, Australia, Japan, Malaysia, Taiwan, China (Hong Kong) and India.

Our Strategy

        Ribbon is a leader in enabling network modernization through NextGen software and we plan to continue to invest in our software solutions platform approach to increase our global reach and scale. We aim to enable service providers and enterprises to significantly expand their software-enabled RTC environments to provide better, more agile end-customer experiences that contain their operational and capital expenditure costs. By doing so, we believe that we will sustain our industry-leading position and succeed in our market. Our customers are key to the success of our business, and our business model is focused on aligning with our customers through direct engagement, service and support, as well as through our channel partners. This model allows us to target our sales and research and software development efforts based on the needs of our customers and we believe it is critical to our success.

        Key elements of Ribbon's strategy include:

        Selectively Invest in our Core Software Products and Solutions.    In order to service our customers and support their key priorities and growth, we must strategically invest in research and development. We are committed to balancing our research and software development investments between existing software products and solutions and new growth-oriented product initiatives. In 2018, greater than 95% of our research and development investment was directed at software. In addition, we are focused on investing in products and solutions that will be profitable. We intend to continue to sunset certain less significant product offerings that are not aligned with our strategic direction and are not meaningful contributors to our profitability. We believe this will allow us to more effectively and efficiently deploy capital to our growth areas. Through targeted research and software development investments in core software products and solutions that will align with our strategy for growth, we are committed to helping our customers migrate their networks to software and virtualized and cloud environments.

        Build on Growing our Customer Footprint and Global Reach.    Ribbon has over 1,000 customers globally, in all of the major regions with many of the largest telecommunications service providers and enterprises in the world. This footprint allows us to sell additional software products and services from the Ribbon portfolio to that deployed base of existing customers and provides us with the opportunity to sell new software products and services to that customer base. We also continue to look for opportunities to expand our portfolio footprint and global reach to further diversify our customer base.

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GRAPHIC

        Disciplined Expansion into New Markets and New Solutions for Growth.    We believe that a disciplined approach to targeting new markets is critical to growing our business. As such, we have taken actions to expand our software portfolio and offerings to our customers. We have expanded our investments in the enterprise market and have increased our revenue from enterprise customers. We are investing in growth initiatives focused on cloud communications and RTC security both for service providers and enterprises. Similarly, given our significant experience with securing IP network borders in the core and the edge with our SBC software, and the increasing importance of security in today's networks and communications, we are working on expanding our role in securing RTC with new software portfolio offerings.

        Selectively Pursue Strategic Relationships, Alliances and Acquisitions.    The ecosystem in which we operate is continually evolving and expanding. Accordingly, we continue to pursue strategic relationships, alliances and acquisitions that align our business with our customers' strategic goals and objectives as well as our own strategic goals for further extending our footprint, reach, scale and growth in the business.

        In addition to our scale and global presence, we believe there are several factors that set us apart and allow us to compete effectively with comparable peers in terms of scope, size and scale.

        Installed Base.    Ribbon has a large, global deployed base of Nortel-, Sonus- and GENBAND-branded software products, including softswitches and media gateways in global service provider and enterprise networks supporting over 30 million switched access lines. These products are highly integrated into our customers' network environments and require specialized tools and intellectual property from Ribbon to consolidate and modernize those environments to newer IP software-based services with optimal capital expenditure investments. Similarly, our large, global deployed base of SBCs at service providers' networks and in enterprises offers Ribbon a unique platform for upgrading and cross-selling software products into that installed base.

        Strong Technology in Virtualization.    Ribbon has extensive network virtualization software products and technology as part of our overall portfolio, and has deployed these software products to help our customers in the modernization of their networks to software-based virtualization and the cloud. A significant portion of our overall portfolio has software and virtualized offerings that can coexist with appliance-based software products.

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        Security Experience and Technology.    Our SBC and edge software, deployments and expertise are market leading. Ribbon has been in the SBC software market for over fifteen years, yielding us a strong advantage from which to launch additional security offerings into the market. We believe our SBC software products are unmatched in the market on reliability, performance and functionality at scale.

        Media Processing, Transcoding and Signaling Technology Expertise.    We have extensive experience in deploying mobile VoLTE and fixed network software solutions. Our voice media transcoding software technology that is supported by CPU, GPU or DSP options is industry leading. Our mobile network evolution software solutions are deployed in large-scale 4G VoLTE networks supporting over 250 million subscribers in total.

Intellectual Property

        Intellectual property is fundamental to our business and our success, and we depend upon our ability to develop, maintain and protect our technology. We have defended, and intend to vigorously defend when necessary, our intellectual property from infringement. Therefore, we seek to safeguard our investments in technology and rely on a combination of United States and foreign patent, trademark, trade secret and copyright law and contractual restrictions to protect the proprietary aspects of our technology and to defend us against claims from others. Our general policy has been to seek to patent those patentable inventions that we plan to incorporate in our products or that we expect will be valuable otherwise. We have a program to file applications for and obtain patents, copyrights and trademarks in the United States and in specific foreign countries where we believe filing for such protection is appropriate.

        As of December 31, 2018, we held patents and had pending patent applications both in the United States and abroad as follows: in the name of Sonus Networks, Inc., 239 United States patents with expiration dates ranging from May 2019 through May 2037, 33 patent applications pending in the United States, 50 foreign patents with expiration dates ranging from May 2020 through April 2030, and one patent application pending abroad; in the name of GENBAND US LLC, 326 United States patents with expiration dates ranging from June 2019 through April 2037, 59 patent applications pending in the United States, 219 foreign patents with expiration dates ranging from October 2019 through April 2035, and 51 patent applications pending abroad; and in the name of Edgewater Networks, Inc., six United States patents with expiration dates ranging from October 2022 through March 2035 and six patent applications pending in the United States.

        Furthermore, as of December 31, 2018, we had 37 registered trademarks in the United States, as follows: 19 in the name of GENBAND US LLC, including GENBAND, GENBAND with design, G9, G9 with design, KANDY and BUSINESSCALL; 12 in the name of Sonus Networks, Inc., including SONUS, the SONUS logo and NETSCORE; two in the name of Network Equipment Technologies, Inc., including NET (and design); four in the name of Quintum Technologies, LLC, including TENOR; and five in the name of Edgewater Networks, including Edgewater and Edgeview. We also had 28 pending trademark applications in the United States in the name of Sonus Networks, Inc., including Ribbon and the Ribbon Logo as of December 31, 2018.

        In addition to the protections described above, we seek to safeguard our intellectual property by:

        Employing measures to safeguard against the unauthorized use or disclosure of the source and object code for our software, documentation and other written materials, and seeking protection of such materials under copyright and trade secret laws;

        Licensing our software pursuant to signed license agreements, which impose restrictions on others' ability to use our software; and

        Seeking to limit disclosure of our intellectual property by requiring employees and consultants with access to our proprietary information to execute confidentiality agreements.

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        We have incorporated third-party licensed technology into certain of our current products. From time to time, we may be required to license additional technology from third parties to develop new products or to enhance existing products. Based on experience and standard industry practice, we believe that licenses to use third-party technology generally can be obtained on commercially reasonable terms. Nonetheless, there can be no assurance that necessary third-party licenses will be available or continue to be available to us on commercially reasonable terms. As a result, the inability to maintain, license or re-license any third-party licenses required in our current products, or to obtain any new third-party licenses to develop new products and enhance existing products could require us to obtain substitute technology of lower quality or performance standards or at greater cost. This could delay or prevent us from making these products or enhancements, any of which could seriously harm our business, financial condition and operating results.

Our Customers

        We have over 1,000 customers globally. Our customers are located around the world in over 50 countries and include many of the leading global telecommunications service providers and enterprises. Service providers use our products to provide secure software-enabled RTC for the service providers (in the case of interconnects), enterprises and consumers they serve. Enterprises use our products to provide software-enabled RTC for their employees (including remote workers) as well as provide secure communications networks for their customer-facing components, such as contact centers.

        Our global service provider customers include fixed-line, wireless, cable, internet and interconnect service providers. Our enterprise customers include businesses of all sizes, ranging from SOHO, SMB, and large and distributed enterprises across various industry verticals with a concentration in the federal government, healthcare and education sectors. We sell to customers via a direct sales team as well as through indirect channels that include VARs, system integrators and service providers. Independent software vendors also partner with Ribbon to source our software solutions and market them through their sales channels.

        In both the years ended December 31, 2018 and 2017, approximately 17% of our revenue was derived from sales to one customer, Verizon Communications Inc., a service provider that provides interconnect, fixed line and mobile communications services. Verizon is transforming its TDM network from an appliance-centric network to a SIP and NFV based network, and Ribbon is playing a key role in this transformation. Our top five customers represented approximately 38% of our revenue in the year ended December 31, 2018 and approximately 41% of our revenue in the year ended December 31, 2017.

Competitive Conditions

        Competition in the telecommunications market remains fierce. The market is shifting from a market dominated by a few large telecommunications legacy hardware equipment companies, such as Ericsson LM Telephone Company, Huawei Technologies Co. Ltd., and Nokia Corporation, to a market that is characterized by software, including network virtualization, migration to the cloud, and open interfaces. We believe this shift creates opportunities for us as well as our direct competitors in telecommunications and networking, including:

        Network transformation:    Mid-size vendors of networking and telecommunications equipment and specialty vendors, including AudioCodes Ltd., Dialogic Inc., Mavenir Systems, Inc., Metaswitch Networks Corporation, Oracle Corporation (Session Border Controller) and ADTRAN, Inc.;

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        Enterprise and cloud solutions:    Microsoft, 8x8, Inc., Avaya Inc., Bandwidth Inc., Cisco Inc. (with Broadsoft, Inc.), Mitel Networks Corporation (with ShoreTel, Inc.), Plivo Inc., RingCentral, Inc., Twilio Inc., Telestax Inc., Fuze, Inc., Genesys and Vonage Holdings Corp. (with Nexmo, Inc. and Tokbox Inc.); and

        Security and analytics:    SecureLogix Corporation, RedShift Networks Corporation, Empirix Inc. and Oracle Corporation.

        Other smaller private and public companies are also focusing on similar market opportunities. Mergers among any of the above companies or other competitors, as well as additional competitors with significant financial resources entering our markets, could further intensify competition. Mergers between service providers may also increase competition, as these reduce the number of customers and channels for products and solutions.

        To compete effectively, we must deliver innovative software solutions that provide extremely high reliability and quality; deploy and scale easily and efficiently; interoperate with existing network infrastructures and multivendor solutions; provide effective network management; are accompanied by comprehensive customer support and professional services; provide a cost-effective and space-efficient solution for enterprises and service providers; meet price competition from low-cost equipment providers; and offer solutions that are timely for the market and support where the industry is heading.

        Although we believe we compete favorably because our software solutions are widely deployed, highly scalable and cost-effective for our customers, some of our competitors include products in their portfolios that we do not provide and may be able to devote greater resources to the development, promotion, sale and support of their products. In addition, some of our competitors have more extensive customer bases and broader customer relationships than we have, including relationships with our potential customers and established relationships with distribution partners.

Sales and Marketing

        We sell our software products, solutions and services to our customers with a direct internal sales force and also indirectly via channels and partnerships globally, leveraging the assistance of service provider channels and VARs such as Verizon Communications Inc. and Hawaiian Telecom, and distributors such as Westcon Group Inc., Ingram Micro, BlackBox and Arrow S3. Our channel partner programs are designed to serve particular markets and provide our customers with opportunities to purchase our products in combination with related services and products. For example, Ribbon is a Microsoft Gold Communications Partner and helps enterprises optimize Skype for Business (and Teams) deployments by securing those communications.

        As a primary supplier of software solutions to Tier 1 service providers (a service provider that can reach every other network on the Internet without purchasing IP transit), we require a strong worldwide presence. We have an established sales presence throughout North America, Europe, Asia/Pacific, the Middle East, Africa and Central/South America. We also have a dedicated direct sales team focused on the enterprise, industry verticals and federal government sector in the United States.

        Our marketing team is focused on promoting company brand awareness, increasing our software solutions, product, technology and services differentiation and awareness via webinars, company web sites, advertising and digital outreach, as well as generating qualified sales leads. We promote thought leadership on technology and our solutions within the industry by participating in and speaking at industry events and conferences and via social network campaigns and blogs. Our marketing team also provides briefings to industry analysts on a regular basis and at major industry events, communicates with the media in connection with noteworthy public announcements and supports our investor relations department on quarterly conference calls and regular investor updates.

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Manufacturing

        A number of our software products are deployed on appliances. Where our products contain an appliance element, we utilize contract manufacturers to source and assemble these components. Our contract manufacturers provide comprehensive manufacturing services, including assembly and testing of our products and procurement of component materials on our behalf. We believe that outsourcing the manufacturing of any necessary appliance enables us to preserve working capital, allows for greater flexibility in meeting changes in demand and enables us to be more responsive in delivering diverse product offerings to our customers. As of December 31, 2018, we outsourced the manufacturing of our appliance products to four manufacturers, two upon which we primarily rely. However, we are currently in the process of transitioning our manufacturing to a single contract manufacturer. We and our contract manufacturers purchase several key components of our appliance products, including commercial digital signal processors, from single or limited sources. We purchase these components on a purchase order basis.

        Our purchases of direct materials and components for manufacture of approximately $75 million in 2018 (approximately $64 million excluding the effects of the Edgewater Acquisition) increased compared with approximately $38 million in 2017 due to the inclusion of the GENBAND business since October 27, 2017 and Edgewater business since August 3, 2018 in our consolidated results. Going forward, we expect our overall trend of a reduction in direct material purchases to continue as the software richness within our products increases while the remaining appliance content declines.

Research and Development

        We believe that strong software product development capabilities are essential to our strategy of enhancing our core technology, developing additional security and network modernization features and maintaining comprehensive software and service offerings. Our research and development process leverages innovative technology in response to market data and customer feedback. As part of this process, we regularly review research and software development investments in our products and balance them against market demand.

        We have assembled a team of highly skilled engineers with significant transcoding, UC application and networking industry experience. Our engineers have deep experience in software design and development. Our engineering effort is focused on NextGen UC, NFV, security and cloud-based architecture software product development.

        As of December 31, 2018, we maintained research and development offices in Massachusetts, California, Illinois, Texas, New Jersey and North Carolina in the United States, as well as Canada, India and the United Kingdom.

Seasonality

        We have experienced quarterly fluctuations in customer activity due to seasonal considerations. We typically experience increases in order volume in the fourth quarter due to greater spending on operating and capital expenditures by our service provider customers. We typically experience reductions in order volume toward the beginning of the calendar year, when our service provider customers are finalizing their annual budgets, which may result in lower revenue in the first quarter. These seasonal effects may vary and do not always correlate to our operating results. Accordingly, they should not be considered a reliable indicator of our future operating results.

Backlog

        We sell products and services pursuant to purchase orders issued under master agreements that provide standard terms and conditions that govern the general commercial terms and conditions of the

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sale. These agreements typically do not obligate customers to purchase any minimum or guaranteed quantities, nor do they generally require upfront cash deposits. At any given time, we have orders for products that have not yet been shipped and for services (including our customer support obligations) that have not yet been performed. We also have orders relating to products that have been delivered and services that have been performed but have not yet been accepted by the customer under the applicable purchase terms. We include both of these situations in our calculation of backlog.

        A backlogged order may not result in revenue in the quarter in which it was booked, and the actual revenue recognized in a quarter may not equal the total amount of related backlog. In addition, although we believe that the backlog orders are firm, purchase orders may be canceled by the customer prior to shipment without significant penalty. Therefore, we do not believe that our backlog, as of any particular date, is necessarily indicative of actual revenue for any future period.

        We have begun to derive, and expect to continue to derive, a greater percentage of our revenue from the enterprise market and through sales channels where speed of fulfillment is essential to winning business. Consequently, we expect to earn a lower relative percentage of our total business from large service provider orders that are delivered over multiple quarters and years and that our backlog going forward will diminish both as a comparable metric to prior periods and as a relative percentage of total revenue (both service provider and enterprise). Our backlog was approximately $340 million at December 31, 2018 and approximately $370 million at December 31, 2017. Our prior period amount has been conformed to our current period presentation following the adoption of Accounting Standards Codification 606, Revenue from Contracts with Customers and no longer includes purchase orders where product delivery is not expected within twelve months.

Our Employees

        At December 31, 2018, we had a total of 2,245 employees, comprised of 1,386 employees located in the Americas, 257 employees located in the Middle East, Africa and Europe and 602 employees located in the Asia Pacific region. Certain of our employees are represented by collective bargaining agreements, primarily in Europe. We believe our relationships with our employees are good.

Segment Information

        We operate in a single segment. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. To date, our chief operating decision maker has made such decisions and assessed performance at the company level, as one segment. Our chief operating decision maker is our President and Chief Executive Officer.

Our Company History

        We were organized as a Delaware corporation on May 19, 2017, initially under the name Solstice Sapphire Investments, Inc., for the purpose of effecting the merger of Sonus and GENBAND. The Merger occurred on October 27, 2017. Upon completion of the Merger, Sonus and GENBAND became wholly owned subsidiaries of Solstice Sapphire Investments, Inc., which concurrently changed its name to Sonus Networks, Inc. On November 28, 2017, Sonus Networks, Inc. changed its name to Ribbon Communications Inc. Ribbon succeeded to and continues to operate, directly or indirectly, the then-existing businesses of Sonus and GENBAND.

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BUSINESS OF ECI

        ECI is a leading global provider of comprehensive networking products and solutions to service providers, Utilities and Governments, and Defense and Security customers, headquartered in Petah Tikva, just outside Tel Aviv, Israel. ECI has been providing comprehensive networking products and solutions since 1961 and is one of only a few providers globally offering both optical and packet networking products and solutions, with a diverse and longstanding global customer base.

        Since 2012, ECI has focused its strategy on optical and packet transport products and solutions and has introduced a full set of products and solutions. These offerings also include software-based solutions and cyber-security network protection. With this comprehensive portfolio, ECI is well positioned for the expected wave of global 5G deployments. ECI is evolving its solutions guided by both market and customer demands to be the innovative driving force of the 5G Transport market. 5G is the next generation of mobile networks, offering substantially greater capacity and number of supported devices compared to previous generations.

        To expand its global reach, ECI has been working with a combination of direct sales and channel partnerships. ECI has built its brand around its "Elastic" network of products and solutions, whereby customers have the ability to construct a tailor-made network to meet their current needs, while remaining flexible to evolve to meet their changing needs. Since 2007, the company has invested over $1 billion in research and development to develop leading-edge transport products and software communication solutions.

Industry Overview

        The global telecommunication market is undergoing a fundamental transformation spurred by recent advances in network-connected technologies and an increase in overall demand for network data. Data traffic has been growing rapidly and investments in the networks that support this have been required in order to keep pace with growth. The key trend that has driven the industry's growth is the increasing prevalence of network-connected devices. This trend is driven by Internet of Things ("IoT") applications, innovative changes in the mobility sector (including, for example, autonomous vehicles), the increased use of cloud applications and data centers, artificial intelligence ("AI"), and the rise of virtual reality ("VR") and augmented reality ("AR") technologies—all of which are expected to drive an increasing demand for data and faster networks.

        These technological advances and new applications are testing the limits of current data transport networks and IT systems, requiring service providers, utilities and governments, and defense and security customers to invest in new network infrastructure and technologies. These providers are seeking to create more efficient infrastructure in order to mitigate the significant investments needed to support these changes, including moving to products and solutions that support 5G, which is expected to be rolled out to meet the increasing demand for data and faster networks. 5G is also expected to accelerate the adoption of Network Function Virtualization ("NFV") and Software Defined Networking ("SDN") applications and to allow new levels of connectivity (such as IoT and autonomous vehicles). Furthermore, in this new era of data usage, data and network security is becoming a key concern that might require additional investments in infrastructure.

        A primary driver of network traffic growth is increasing smartphone usage. There is market consensus that service providers will need to maintain a certain level of infrastructure capacity to keep up with this growth and meet market demand. In addition, other personal devices are changing the data usage landscape. Tablets, wearable devices and other portable, personal electronics are becoming increasingly popular and users expect a level of service that covers these devices everywhere and at any time. Hence, for both businesses and consumers, on-demand service and increased data capacity is becoming a necessity.

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        Due to the worldwide presence of smartphones and tablets, video traffic in both mobile and fixed networks is expected to continue growing rapidly. Data demand driven by content provided directly from the provider to the viewer via the internet, also known as over-the-top ("OTT") services, has substantially increased as both the quantity and the quality of the content has increased.

        Similarly, ultra-high definition television has put pressure on service providers. As OTT platforms such as Netflix, Hulu, Amazon and others, produce more content, they have also improved the quality of their respective platforms (from 1080p to 4K or more). These developments, along with rapidly accelerating online streaming habits, are responsible for an increasingly significant proportion of overall data consumption.

        The emergence of the IoT, which uses a large amount of network bandwidth due to the necessity of machine-to-machine ("M2M") related data traffic, is also expected to increase data traffic. IoT's main drivers—the connected car (which relies largely on smart technologies for future autonomous capabilities), smart homes and cities, connected health, Industry 4.0 (Industrial IoT) and wearable devices—all require a wireless connection, a large amount of data transportation and large amounts of bandwidth.

        The gradual evolution of cloud technology and data centers has been an additional driver of increased data traffic. Cloud technology has allowed individuals and businesses to store their data on the web and access it from anywhere. This has enabled the rapid expansion of data-consuming companies in the Platform as a Service ("PaaS"), Software as a Service ("SaaS") and Infrastructure as a Service ("IaaS") spaces. Cloud networks substantially increase network traffic and the need to store this data has forced data storage companies and telecommunications providers to increase the number of data centers and to adjust their capabilities. Given the proliferation of cloud technology, there is an increasing need for data center and cloud resources for both business and consumer services, leading to the development of large-scale data centers.

5G as a Future Growth Driver

        5G is expected to be gradually deployed worldwide starting in 2020 and over the following 5-10 years. 5G is different from its predecessors (such as the fourth generation of mobile networks ("4G")) because of its increase in data speed and quality, as well as its ability to assign resources to customers in the context of network virtualization, edge computing, and changing traffic priorities (known as "network slicing"). With 5G, devices that demand fast connections, such as autonomous cars, will require customized data connections that maximize what is required while preventing wasted data transmission.

        5G networks are expected to require a significant amount of investment. Carriers typically increase the number of cell towers, base stations and bandwidth capacity during each network transition to meet increases in data demand and to lower latency. However, the move to 5G is more complex than previous network upgrades as new services are demanding larger changes in network infrastructure.

        The expected increases in mobile subscriptions and the amount of data traffic are expected to drive the new development of 5G technologies. In order to reduce the significant amount of capital expenditure and operating expenditure invested, it is expected that telecommunications companies will be looking for new efficient technologies that will support ultra-low latency and cost-effective products. While global telecommunications companies continue to expand the 4G networks, companies in the United States, China and other developed nations are beginning their development of 5G technologies. Initial equipment testing and pilot networks have already begun to be rolled out recently in North America, Europe, Japan and Korea, featuring large-scale cross-regional cooperation.

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ECI's Solutions

        ECI has built its brand around its "Elastic" network of products and solutions, whereby customers have the ability to construct a tailor-made network to meet their current needs, while remaining flexible to evolve to meet their changing needs. Since 2007, ECI has invested over $1 billion in research and development to develop leading-edge transport products and software communication solutions. At the heart of the Elastic network are five core products and solutions:

        Along with these core products and solutions, ECI also offers a variety of end-to-end network management, professional support and third-party solution services, which together comprise ECI's "Elastic Services Platform."

        ECI has created its "Elastic" network of products and solutions to provide existing and future customers with an integrated transport solution for their existing product portfolio as well as for the expected shift to 5G. The Elastic network of products and solutions are designed to enable operators to scale and build underlying infrastructure to address key 5G requirements, such as ultra-low latency and hyper-flexible bandwidth, and expand customers' SDN and NFV implementation, while simplifying and automating the operational lifecycles of network equipment in order to reduce operating expenses. To support its growing focus on software solutions and leveraging on Israel being one of the world's leading technology hubs, as of December 2019, approximately 85% of ECI's research and development personnel were software engineers.

        ECI offers its portfolio of complementary networking products and services to the following customers:

Products

        At the heart of the Elastic network lie ECI's five core product offerings:

(a) Apollo (Optical transport and OTN switching system)

        Apollo is a family of high-performing, advanced, transparent and flexible wavelength data transport solutions with configurable optical routing. Apollo enables customers to deploy optical networks that continue lowering the cost per bit, while simultaneously providing packet services, high efficiency end-to-end operations and SDN applications. Apollo accomplishes this through its family of optical transport and switching platforms, which includes both hardware and advanced operations software that

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interwork seamlessly to provide scalable, high-density and energy-efficient solutions from the access to the core.

        Apollo provides transparent low-latency transport for a broad array of customer interfaces to support their service transport needs. These include Ethernet, Fiber Channel, SDH/SONET and multiple video interfaces, as well as OTN optical pipes.

        Apollo supports a full range of platforms, with switching capacity ranging in size from 1 Terabit per second ("Tbit/s") to 16 Tbit/s and has the potential to increase to 32 Tbit/s in the future. In addition, Apollo has WDM line speeds of 2.5 gigabytes per second ("GB/s") to 400 GB/s and has the potential to increase to 1.2 Tbit/s in the future.

        ECI also provides its Apollo customers with a fully integrated, intuitive network management system ("NMS") that allows network operators to manage their networks in real time. This system is marketed under the "LightSOFTTM" brand. LightSOFTTM provides comprehensive provisioning, maintenance, assurance and performance monitoring across all network technologies, including the management of both optical and packet-optical transport solutions on one platform. With open, standards-based interfaces, LightSOFTTM easily integrates into the operator's OSS and BSS ecosystem. Moreover, LightSOFTTM acts as an interim NMS for customers who already wish to incorporate SDN functionality into their current networks.

(b) Neptune (Metro packet-optical transport)

        Neptune is a family of Carrier Ethernet, Multiprotocol Label Switching ("MPLS") based, multi-service packet-optical transport platforms, providing advanced solutions for the metro. Metro networks must support an extremely diverse set of services and customer needs, ranging from simple point-to-point private connections to the complex multipoint networks (which will be required for 5G backhaul). The Neptune product family, powered by ECI's Elastic MPLS, is able to economically support all of these diverse service needs on a right-size platform that can be grown with in-service expansion options. It supports both Multiprotocol Label Switching—Transport Profile (MPLS-TP) and IP/MPLS (IP multi-protocol label switching) and is expected to support segment routing for 5G networks in the future. Neptune supports this with resilient hardware and advanced operations software. Customers also expect more flexible and dynamic services. To host virtualized network functions ("VNFs"), Neptune leverages ECI's NFV platform using ECI's VNF library.

        The Neptune product portfolio provides an elastic, multiservice platform capable of meeting all packet transport needs of a network operator across the metro network from access to core. It supports a full range of platforms, with switching capacity ranging in size from 5 GB/s to 2 Tbit/s. ECI expects it to support 6 Tbit/s and 16 Tbit/s in the future.

        Similar to Apollo, Neptune can also be managed by the LightSOFTTM NMS, allowing network operators to control both optical and packet layers by a single management system.

(c) NFV-based solution

        ECI's NFV-based solution is a system that runs a rich library of the company's and third-party VNFs to create differentiable service value and is integrated within the Neptune packet-optical transport system or on a standalone appliance/box. ECI's NFV solution provides customers with a low-latency service experience, which will allow for multi-access edge computing ("MEC") that is expected to be used in 5G, and can be deployed at the network edge, in the access or at the customer premises. It can also deploy VNFs more centrally in metro POPs (Points of Presence). ECI markets its NFV-based solutions under its "Mercury" brand. Mercury is fully compliant with European Telecommunications Standards Institute ("ETSI") Management and Orchestration ("MANO"), which

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enables easy operational integration and incorporation of third-party software and provides end-to-end orchestration.

(d) SDN applications

        ECI's SDN system is a modular suite of controller and applications that is designed to assist customers to get the most out of their network, create and turn on new services rapidly and ensure the network is available and running at peak efficiency. Powered by a carrier-grade PaaS, our SDN solution delivers real-time control over a programmable network infrastructure and automates the service and network operations' life cycles. ECI markets its SDN controller under "Muse Orchestration" and the applications under its "Muse applications" brand. Muse applications provide customers with access to the following applications:

        Muse's applications include open APIs, interfaces and SDN controllability to facilitate full functionality in multi-vendor environments, allowing customers the flexibility to choose the right providers for their needs and creating a smooth and seamless platform on which to operate their network.

(e) Cybersecurity solution

        ECI also offers a cybersecurity solution. ECI markets its cybersecurity solution under its "Muse Cyber Security Suite" brand. The Muse Cyber Security Suite is an aggregated, web-based system for managing all cybersecurity threats. It relies on two systems:

Legacy Products

        ECI also has two legacy transport solutions:

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ECI's strategy

        ECI has the following key business strategies to position ECI to drive diversified growth and increase profitability with the existing operational leverage:

ECI's customers

        ECI sells its product and service solutions directly and through indirect sales channels to the following end markets: Service Providers, Utilities and Governments, and Defense and Security.

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Service Providers

        ECI provides secured optical transport solutions with a comprehensive end-to-end management system to wireline, wireless, MSO / quad-play and wholesale service providers. Increasing scalability requirements, greater network virtualization, cloud computing and the rollout of 4/5G networks are trends expected to drive sales in this market. ECI addresses these needs by offering high bandwidth and integrated optical transport solutions through its Apollo and Neptune products, with a focus on embedded cybersecurity solutions and cost optimization through its SDN and NFV applications.

        ECI's solutions focus on the following areas for these customers:

        Some of ECI's customers in this market include: Bharti Airtel Limited, Vodafone Idea Ltd., Telecom Italia S.p.A., Euronext Technologies SAS, Digicel Limited, RCS & RDS SA, Infracom Italia S.p.A.

Utilities and Governments

        ECI's customers also include a variety of utility providers (power, water, gas and oil), transportation, government and municipalities, and NRENs. The compatibility of ECI's solutions with legacy systems and "Elastic" flexibility has led to an increasing number of new wins in this market over the past two years.

        Network modernization, smart grid, increasing need for network efficiency and enhanced security regulations are trends expected to drive sales in this market in the short term. ECI can embed cybersecurity solutions fully within its products remotely. ECI's Muse Cyber Security Suite manages cybersecurity threats at the communication transport nodes points-of-access in the communication network (as opposed to traditional firewalls that prevent cyberattacks only at point of access by the ultimate user).

        ECI's solutions focus on the following areas for these customers:

Defense and Security

        Since ECI was established in 1961, it has continued to maintain a strong relationship with a variety of Defense and Security customers. As Defense and Security customers have begun to modernize their networks, their data usage has increased substantially. With an emphasis on speed, reliability and security, Defense and Security customers have unique telecommunications needs that are expected to increase as Defense and security activities use increasingly advanced technologies.

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        ECI's solutions focus on the following areas for these customers:

        ECI's customers in this sector are located in approximately ten countries.

Sales and Marketing

Sales

        ECI sells directly and through indirect channels.

(a)   Direct sales

        ECI sales teams operate in 20 locations around the world. For the year ended December 31, 2018, 86% of ECI's revenue was generated through direct sales. ECI's direct sales team is made up of sales personnel responsible for maintaining long-term relationships with ECI's customers. In addition, within each geographic area, ECI maintains specific teams, personnel or agents that focus on a particular region, country, customer or market vertical. These teams include sales management, account salespeople, and sales engineers, as well as project managers and commercial management personnel, responsible for maintaining a close and consultative relationship with customers.

(b) Indirect sales

        ECI also maintains a global channel program that involves partnerships with a continuously growing number of resellers, systems integrators and other third-party distributors, who market and sell ECI's products and services. For the year ended December 31, 2018, 14% of ECI's revenue was generated through indirect sales.

        ECI's channel partners include for example, RUAG Schweiz AG, Corning Services GmbH (previously 3M Services GmbH), NTEGRATOR PTE LTD., Siemens A.G, Ericsson A.B, Kellner Telecom GmbH, Quality Business Solutions S.R.L, Why Not Universal Co, Ltd, Henan Yuanlin Telecommunications Equipment Co. Ltd., Commtel Networks Pvt. Ltd., and Vitrociset S.p.A. ECI seeks opportunities to leverage its partners' relationships to address new customer segments and new geographies, while reducing the financial and operational risk of entering these additional markets.

Marketing

        To support ECI's sales efforts, ECI engages in marketing activities to generate demand for its products and services, with a focus on direct customer offerings. ECI's marketing strategy is highly focused on building its brand awareness to create customer preference for ECI, engaging in thought leadership programs to illustrate how ECI's innovations solve customer business problems and enabling its sales teams to drive customer adoption of ECI's solutions. ECI's marketing team supports its sales efforts through a variety of activities, including direct customer interaction, account-based marketing campaigns, portfolio marketing, industry events, media relations, industry analyst relations, social media, trade shows, ECI's website and other marketing vehicles for ECI's customers and channel partners.

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Global Services

        ECI's global services organization is responsible for the full cycle of a project, from planning, implementation, training and support of its solutions and products.

        ECI's key services portfolio includes network and business analysis, network setup and design (including low-level design), integration, installation and commissioning, maintenance and support both for Hardware and Software.

        ECI's technical support engineers provide Hardware and Software support to ensure the network availability and capacity at all time. The support services include Hardware repair, fast exchange, spare management, Software repair and updates, proactive maintenance services and tools, and emergency assistance during network downtime or partial outage.

        ECI maintains high-level support and service facilities at its home office in Israel and in India, as well as at strategically located facilities close to customers based around the world. This enables its engineers to respond to service calls quickly and efficiently, regardless of the location, and to provide customers with first and second line support that is close at hand and in the customer's native language and time zone.

        ECI Global Services team provides its customers with the following options:

Manufacturing

        ECI delivers products that run the ECI software on ECI's proprietary appliances. It utilizes contract manufacturers to source and assemble these products. Its contract manufacturers provide comprehensive manufacturing services, including assembly and testing of its products, logistics services and procurement of component materials on its behalf. ECI believes that outsourcing the manufacturing of its products enables the company to preserve working capital, allows for greater flexibility in meeting changes in demand and enables the company to be more responsive in delivering diverse product offerings to its customers. The manufacturing of its products is outsourced to two manufacturers. ECI and its contract manufacturers purchase several key components of its products, including ASICs and Optical Components, from single or limited sources. ECI purchases these components on a purchase order basis.

        ECI has streamlined and enhanced its global supply network for flexible delivery of products to meet customer needs. The supply network is backed by master sale agreements with two leading EMS

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suppliers, Flextronics Telecom Systems Limited ("Flex") and Eastern Communication Co. Ltd. ("Eastcom"):

        In addition, ECI uses a variety of suppliers for components used in ECI's products and solutions. Furthermore, ECI regularly evaluates suppliers and sites for production and manufacturing based on customer needs.

Research and Development

        To remain competitive, ECI must continually invest in and enhance its product platforms, adding new features and functionality and aligning with market demand. ECI's research and development strategy emphasizes software-enabled programmability, automation and open interfaces, and seeks to promote broad application of ECI's solutions, including in long-haul, metropolitan and access networks and packet-based infrastructures for service delivery. As the capacity and service demands upon its networks increase, ECI's approach is also focused on designing products that enable network operators to achieve improved economics and efficiency, including with respect to power, space and operating cost. ECI's current development efforts are focused upon:

        ECI believes these strong software and hardware product development capabilities are essential to its strategy of enhancing its core technology, developing additional security and network modernization features and maintaining comprehensive product and service offerings. The company's research and development process leverages innovative technology in response to market data and customer feedback. As part of this process, the company regularly reviews research and product development investments in its products and balances them against market demand.

        The company has assembled a team of highly skilled engineers with significant transport networks optics/packet and NMS expertise. ECI's engineers have deep experience in software design and development. Its engineering effort is focused on Optic/Packet transport networks, NextGen 5G, SDN/NFV, security and advanced software product development.

        As of December 23, 2019, ECI maintained research and development offices in Israel, India and China.

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Seasonality

        Historically, ECI has experienced fluctuations in customer activity due to seasonal considerations on a quarterly basis. The company typically experiences lower order volumes at the beginning of the calendar year, due to its customers still finalizing their budgets, which may result in lower revenue in the first quarter. The company typically experiences increases in order volume in the fourth quarter due to greater spending on capital expenditures by its customers. These seasonal effects may vary and do not always correlate to its operating results. Accordingly, they should not be considered a reliable indicator of the company's future operating results.

ECI's Employees

        At September 30, 2019, the company had a total of 1,750 full-time equivalent employees ("FTEs"), comprised of 821 FTEs located in Israel, 490 FTEs located in India, 248 FTEs located in the Asia Pacific region (mainly in China), 119 FTEs located in Europe and 72 FTEs located in the Americas.

        Certain of its employees in Israel and Germany are represented by collective bargaining agreements. The company believes it has good relationships with its employees.

Segment Information

        ECI operates in a single segment. Operating segments are identified as components of an enterprise about which separate discrete financial information is available for evaluation by the chief operating decision maker in making decisions regarding resource allocation and assessing performance. To date, the company's chief operating decision maker has made such decisions and assessed performance at the company level, as one segment. The company's chief operating decision maker is its Chief Financial Officer.

ECI's Company History

        The company was founded as Electronics Corporation of Israel Ltd. in 1961 and undertook an initial public offering on Nasdaq in 1982. The Electronics Corporation of Israel was rebranded as ECI in 1985.

        ECI began to diversify its product offering with the digitization of telephone switching that began in the 1970s. ECI developed a specialization in telephone transmission products, which manipulated the signals carried on telephone lines.

        Subsequently, in the 1990s, ECI developed broadband access products, which operate closer to customer premises ("Access"). Starting in 2000, ECI began introducing transmission management products for fiber optic networks and its next-generation asynchronous transfer mode ("ATM") switches. The company's legacy XDM product was one of the first of these products introduced into the industry.

        In 2007, ECI was taken private by Ashmore Investment Management Limited ("Ashmore") and the Swarth Group. In 2013, the Swarth Group acquired Ashmore's stake in ECI and Plenus (subsequently renamed Viola Credit) converted its second lien debt position into common shares of ECI.

        Beginning in mid-2012, a new management team started to turn ECI around by stabilizing the business, exiting non-profitable business areas, significantly reducing costs and converting the majority of its customer base to the new technologies and products. In particular, since 2012, ECI's management team has overseen the following key achievements:

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF ECI

        The following discussion of the financial condition and results of operations of ECI Telecom Group Ltd. ("ECI") should be read in conjunction with the condensed consolidated financial statements and the related notes thereto included elsewhere in this proxy statement. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties, and assumptions. The company's actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A").

Overview

        ECI is a leading global provider of comprehensive networking products and solutions to service providers, utilities and governments, and defense and security customers. ECI has been providing comprehensive networking products and solutions since 1961, and is one of only a few providers globally offering both optical and packet networking products and solutions, with a diverse and long-standing global customer base. For the year ended December 31, 2018, eight of its top 10 end customers by revenue purchased its products or services every year since 2008. ECI is headquartered outside Tel Aviv, Israel and has over 250 customers and operations in more than 70 countries worldwide as of September 30, 2019.

        Since 2012, the company has changed its strategy to focus solely on optical and transport products and solutions and has introduced a new full set of products and solutions. These new offerings include software-based solutions and cybersecurity network protection.

        ECI has become a challenger in its markets and has generated over 120 "new wins" since 2016, defined as either new customers purchasing its products for the first time or new product offerings being ordered by existing customers. Over 70% of these new wins have been with new customers located in more than 30 different countries, with approximately half of the new wins from Europe, the Middle East and Africa ("EMEA"). These new wins have generated approximately $300 million in revenue from the beginning of 2016 to September 30, 2019.

        The company sells its products and solutions through both direct sales and indirect channels, leveraging the assistance of resellers, and the company provides ongoing support to its customers through its global services team. To further expand its global footprint and its growth, the company has been increasing its number of channels and resellers with approximately 170 current channel and reseller agreements, of which 100 new agreements were established since 2018. Approximately 14% of its revenue for 2018 was generated through these relationships.

Financial Overview

Financial Results

        ECI reported operating income of approximately $9 million and $10 million for the three months ended September 30, 2019 and 2018, respectively. ECI reported operating income of approximately $11 million and $15 million for the nine months ended September 30, 2019 and 2018, respectively.

        ECI's revenue was approximately $95 million and $104 million in the three months ended September 30, 2019 and 2018, respectively. Revenue was approximately $272 million and $302 million in the nine months ended September 30, 2019 and 2018, respectively.

        The company's gross profit was approximately $38 million and $40 million in the three months ended September 30, 2019 and 2018, respectively. Gross profit as a percentage of revenue ("total gross

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margin") was approximately 40% and 38% in the three months ended September 30, 2019 and 2018, respectively. Gross profit was approximately $99 million and $105 million in the nine months ended September 30, 2019 and 2018, respectively. Gross margin was approximately 36% and 35% in the nine months ended September 30, 2019 and 2018, respectively.

        The company's operating expenses were approximately $29 million and $30 million in the three months ended September 30, 2019 and 2018, respectively. Operating expenses were approximately $88 million and $90 million in the nine months ended September 30, 2019 and 2018, respectively. Operating expenses for the nine months ended September 30, 2018 included approximately $1 million of restructuring expense.

        See "Results of Operations" in this MD&A for a discussion of the changes in ECI's revenue and expenses for the three and nine months ended September 30, 2019 compared with the three and nine months ended September 30, 2018.

Critical Accounting Policies and Estimates

        The MD&A is based upon ECI's condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires the company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. ECI bases its estimates and judgments on historical experience, knowledge of current conditions and beliefs of what could occur in the future given available information. The company considers the following accounting policies to be both those most important to the portrayal of its financial condition and those that require the most subjective judgment: revenue recognition, valuation of inventory, loss contingencies and reserves, stock-based compensation, goodwill and intangible assets, accounting for leases and accounting for income taxes. If actual results differ significantly from its estimates and projections, there could be a material effect on its condensed consolidated financial statements. With the exception of the lease accounting policy below, there were no significant changes to its critical accounting policies from December 31, 2018 through September 30, 2019.

        Leases.    Effective January 1, 2019, ECI adopted Accounting Standards Codification 842, Leases ("ASC 842") issued by the Financial Accounting Standards Board ("FASB"). ASC 842 replaced existing lease accounting rules with a comprehensive lease measurement and recognition standard. ASC 842 introduces a lessee model that brings most leases onto the balance sheet and eliminates the current GAAP requirement for an entity to use bright-line tests in determining lease classification. Under ASC 842, ECI must determine if an arrangement is a lease at inception. A contract is determined to contain a lease component if the arrangement provides ECI with a right to control the use of an identified asset. Lease agreements may include lease and non-lease components. In such instances for all classes of underlying assets, ECI does not separate lease and non-lease components but instead accounts for the entire arrangement under leasing guidance. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for these leases is recognized on a straight-line basis over the lease term.

        Right-of-use assets and lease liabilities are initially measured based on the present value of the future minimum fixed lease payments (i.e., fixed payments in the lease contract) over the lease term at the commencement date. As many of the company's leases do not have a readily determinable implicit rate, the company typically uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of future minimum fixed lease payments. ECI calculates incremental borrowing rate to reflect the interest rate that it would have to pay to borrow on a collateralized basis an amount equal to the lease payments in a similar economic environment over a similar term and considers its historical borrowing activities and market data from entities with comparable credit ratings in this determination. The measurement of the right-of-use asset

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also includes any lease payments made prior to the commencement date (excluding any lease incentives) and initial direct costs incurred. ECI assessed its right-of-use assets for impairment as of September 30, 2019 and determined no impairment has occurred.

        Lease terms may include options to extend or terminate the lease and the company incorporates such options in the lease term when it has the unilateral right to make such an election and it is reasonably certain that ECI will exercise that option. In making this determination, ECI considers its prior renewal and termination history and planned usage of the assets under lease, incorporating expected market conditions.

        For a further discussion of ECI's other critical accounting policies and estimates, please refer to ECI's audited financial statements and notes thereto included elsewhere in this definitive proxy.

Results of Operations

        Revenue.    Revenue for the three and nine months ended September 30, 2019 and 2018 was as follows (in millions, except percentages):

 
  Three months ended   Increase
(decrease)
from prior year
 
 
  September 30,
2019
  September 30,
2018
 
 
  $   %  

Product

  $ 73.9   $ 82.9   $ (9.0 )   (10.8 )%

Service

    21.3     21.1     0.2     0.1 %

Total revenue

  $ 95.3   $ 104.0   $ (8.7 )   (8.4 )%

 

 
  Nine months ended   Increase
(decrease)
from prior year
 
 
  September 30,
2019
  September 30,
2018
 
 
  $   %  

Product

  $ 209.6   $ 238.6   $ (29.0 )   (12.2 )%

Service

    62.2     63.1     (0.9 )   (1.4 )%

Total revenue

  $ 271.8   $ 301.7   $ (29.9 )   (9.9 )%

        ECI provides comprehensive end-to-end optical and packet-optical transport solutions that are scalable across access (i.e. closer to the end user) to core (i.e. the critical infrastructure of a communication provider). ECI's product portfolio addresses the growing demand of service providers, utilities and governments, and defense and security customers for optical and packet transport solutions, as well as Network Function Virtualization ("NFV"), Software Defined Networking ("SDN") and cybersecurity solutions for wireless backhaul, enterprise cloud connectivity and Over The Top ("OTT") traffic. The company has five core product offerings: the Apollo transport solution, the Neptune transport solution, NFV-based solutions, SDN orchestration and applications and cybersecurity solutions. All of ECI's products are sold through both direct sales and indirect sales through channels and resellers.

        The decrease in product revenue in the three months ended September 30, 2019 compared with the three months ended September 30, 2018 was primarily due to lower revenues from service providers in Former Soviet Union countries ("FSU") and from various customers in Europe, partially offset by some growth in revenues from service providers in India.

        The company's product revenue from sales to service providers was approximately 68% and 66% of ECI's product revenue in the three months ended September 30, 2019 and 2018, respectively.

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        The decrease in product revenue in the nine months ended September 30, 2019 compared with the nine months ended September 30, 2018 was primarily the result of the decrease in revenues in India in the first half of 2019, as the major service providers there reduced capital spending due to their high leverage and declining profitability. Revenues also decreased in the defense and security customers in Israel due to partial completion of large defense projects and delayed capital spending relating to uncertainties with government budgets, offset by increased revenues in Europe (mainly to utilities and governments and defense customers).

        The company's product revenue from sales to service providers was approximately 64% and 65% of its product revenue in the nine months ended September 30, 2019 and 2018, respectively.

        In addition to its product offerings, ECI offers a broad set of service offerings, comprised of installation, post-sale implementation and training and support-related services as well as design services and consultancy that allow it to gain valuable insight into network and business challenges faced by its customers and to work closely with them in the assessment, planning, deployment and transformation of their networks. For the nine months ended September 30, 2019, 23% of its revenues related to services. Following the initial warranty period, almost all of its customers enter into service agreements, which are generally renewed either annually or every few years. ECI believes its customers will typically contract with their transport solution provider to also provide support services to minimize network risks. In addition, because transport products typically have a general life of over 15 years, coupled with ECI's long-term customer relationships, ECI believes that revenues from services and maintenance are relatively predictable.

        Service revenue for the three and nine months ended September 30, 2019 and 2018 was comprised of the following (in millions, except percentages):

 
   
   
  Increase
(decrease)
from prior
year
 
 
  Three months ended  
 
  September 30,
2019
  September 30,
2018
 
 
  $   %  

Service contracts

  $ 14.91   $ 14.3   $ 0.6     4.3 %

Implementation and other

    6.4     6.8     (0.4 )   (5.9 )%

  $ 21.3   $ 21.1   $ 0.2     1.0 %

 

 
   
   
  Increase
(decrease)
from prior
year
 
 
  Nine months ended  
 
  September 30,
2019
  September 30,
2018
 
 
  $   %  

Service contracts

  $ 41.6   $ 43.3   $ (1.7 )   (4.0 )%

Implementation and other

    20.6     19.8     0.8     4.1 %