EXHIBIT 10.2
OPTION AGREEMENT
by and among
NORTEL NETWORKS LLC,
ARRIS INTERACTIVE L.L.C.
and
ARRIS GROUP, INC.
Dated as of June 7, 2002
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS...............................................................1
1.01 Definitions............................................................1
ARTICLE II GRANT OF OPTION; EXERCISE PRICE..........................................3
2.01 Grant of Option........................................................3
2.02 Full Exercise Price....................................................4
2.03 Time and Manner of Exercise............................................4
2.04 Conditions to the Exercise of the Option...............................4
ARTICLE III CLOSING.................................................................5
3.01 Time, Place and Manner of Closing......................................5
3.02 Actions at Closing.....................................................5
3.03 Effect of Closing......................................................5
ARTICLE IV REPRESENTATIONS AND WARRANTIES...........................................6
4.01 Representations and Warranties of Arris................................6
4.02 Representations and Warranties of Nortel...............................7
ARTICLE V PRE-CLOSING COVENANTS.....................................................8
5.01 Transfer of Class B Interest...........................................8
5.02 Registration and Offering..............................................9
ARTICLE VI CONDITIONS TO CLOSING....................................................9
6.01 Conditions to Each Party's Obligation to Effect the Transactions.......9
6.02 Conditions to Obligation of Arris.....................................10
6.03 Conditions to Obligation of Nortel....................................10
ARTICLE VII TERMINATION............................................................11
7.01 Termination...........................................................11
7.02 Effect of Termination and Abandonment.................................13
ARTICLE VIII MISCELLANEOUS.........................................................13
8.01 Amendment; Extension; Waiver..........................................13
8.02 Counterparts..........................................................13
8.03 Governing Law.........................................................13
8.04 Expenses..............................................................14
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TABLE OF CONTENTS
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8.05 Notices...............................................................14
8.06 Entire Understanding..................................................15
8.07 Assignment; Third Party Beneficiaries.................................15
8.08 Incorporation of Exhibits.............................................15
8.09 Press Releases........................................................16
8.10 Interpretation........................................................16
8.11 Severability..........................................................16
8.12 Investor Rights Agreement.............................................16
8.13 Amendment of LLC Agreement............................................16
Exhibits
Exhibit A Form of Cross-Receipt
Exhibit B Form of Termination Agreement
Exhibit C Form of Exercise Notice
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OPTION AGREEMENT
THIS OPTION AGREEMENT (this "Agreement"), dated as of June 7, 2002, is
made by and among NORTEL NETWORKS LLC, a Delaware limited liability company
("Nortel"), ARRIS INTERACTIVE L.L.C., a Delaware limited liability company (the
"Company") and ARRIS GROUP, INC., a Delaware corporation ("Arris"). Capitalized
terms not otherwise defined herein shall have the respective meanings given them
in the Second Amended and Restated Limited Liability Company Agreement, dated
and effective as of August 3, 2001 (the "LLC Agreement"), of the Company.
WHEREAS, each of Nortel and Arris is a Member of the Company;
WHEREAS, Nortel is the sole Class B Member of the Company holding all
of the Class B Interest;
WHEREAS, Nortel is also the holder of shares (the "Shares") of common
stock, par value $.01 per share, of Arris (the "Arris Common Stock");
WHEREAS, Nortel has requested Arris to undertake the Registration and
Offering, and Arris desires to undertake the same; and
WHEREAS, in connection with such Registration and Offering and the sale
of some or all of the Shares by Nortel pursuant thereto, Arris and the Company
desire the Company to obtain from Nortel, and Nortel desires to grant to the
Company, an option to redeem all or a portion of the Class B Unreturned Capital
and accrued but unpaid Class B Return (to the extent not previously added to
Class B Unreturned Capital) of Nortel's Class B Interest in the Company, in each
case subject to, and on, the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, and intending to be
legally bound hereby, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. The following capitalized terms used in this Agreement
shall have the respective meanings ascribed to them below:
"Agreement" shall have the meaning given it in the introductory
paragraph hereof.
"Ancillary Agreements" shall mean, collectively, the Termination
Agreement and the Cross-Receipt.
"Arris" shall have the meaning given it in the introductory paragraph
hereof.
"Arris Common Stock" shall have the meaning given it in the third
recital hereof.
"Business Day" shall mean each day on which banking institutions in
both of Toronto, Canada and New York, New York are not authorized or
required to close.
"Class B Interest Exchange" shall mean the exchange of Nortel's Class B
Interest for New Securities pursuant to Section 8.03 of the LLC
Agreement.
"Closing" shall have the meaning given it in Section 3.01.
"Closing Date" shall mean any date on which a Closing occurs.
"Company" shall have the meaning given it in the introductory paragraph
hereof.
"Cross-Receipt" shall mean the Cross-Receipt substantially in the form
of Exhibit A.
"Discount Percentage" shall mean, with respect to any particular
exercise of the Option, the percentage determined by reference to the
Nortel Ownership Percentage (determined as of the date of the Exercise
Notice relating to such exercise), as follows:
Nortel Ownership Percentage Discount Percentage
--------------------------- -------------------
Less than 20% 60%
20% or more, but less than 21.5% 70%
21.5% or more, but less than 23% 72.5%
23% or more, but less than 25% 75%
25% or more, but less than 27% 79%
27% or more 80%
"Exercise Notice" shall have the meaning given to it in Section 2.03.
"Exercise Period" shall mean the period commencing at the time of
consummation of the Offering (or, if later, on June 30, 2002) and
ending at 11:59 p.m., Boston time, on June 30, 2003.
"Full Exercise Price" shall have the meaning given to it in Section
2.02.
"Governmental Authority" means any court, administrative agency or
commission or other foreign or domestic federal, state, provincial or
local governmental authority or instrumentality.
"HSR Act" shall have the meaning given to it in Section 4.01(c).
"Investor Rights Agreement" shall have the meaning given it in Section
8.12.
"LLC Agreement" shall have the meaning given it in the introductory
paragraph hereof.
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"Material Adverse Effect" shall mean with respect to the referenced
Person, any change, circumstance or effect that is or is reasonably
likely to be materially adverse to the business, condition (financial
or otherwise) or results of operations of such Person and its
Affiliates taken as a whole.
"Nortel" shall have the meaning given it in the introductory paragraph
hereof.
"Nortel Ownership Percentage" shall mean the percentage of shares of
Arris Common Stock outstanding as of 11:59 p.m., Boston time, on June
30, 2002 (or, if the underwriters' over-allotment option relating to
the Offering is exercised after June 30, 2002, then as of 11:59 p.m.,
Boston time, on the date of the most recent such exercise occurring on
or prior to the date of determination of the Nortel Ownership
Percentage) that is held of record by Nortel as of such time.
"Offering" shall mean the public offering and sale of at least Ten
Million (10,000,000) Shares (or such lesser number of Shares as Nortel
may elect to sell) held by Nortel in a firm commitment underwriting
pursuant to the Registration Statement.
"Option" shall have the meaning given to it in Section 2.01.
"Registration" shall mean the shelf registration for resale under the
Securities Act of at least Twenty-One Million (21,000,000) Shares held
by Nortel, to be made by Arris as contemplated by Section 5.02.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, dated as of August 3, 2001, by and between Nortel and Arris.
"Registration Statement" shall mean the registration statement under
the Securities Act, initially filed by Arris with the SEC prior to the
date hereof to effect the Registration as contemplated by Section 5.02.
"SEC" shall mean the United States Securities and Exchange Commission,
or any successor agency.
"Shares" shall have the meaning given it in the third recital hereof.
"Termination Agreement" shall mean the Termination Agreement
substantially in the form of Exhibit B.
"Transactions" shall mean the transactions contemplated hereby and/or
by any of the Ancillary Agreements to occur at any Closing.
ARTICLE II
GRANT OF OPTION; EXERCISE PRICE
2.01 Grant of Option. Upon the terms and conditions set forth herein, Nortel
hereby grants to the Company an option to redeem all or a portion of
the Class B Unreturned Capital and
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accrued but unpaid Class B Return (to the extent not previously added
to Class B Unreturned Capital) of the Class B Interest held by Nortel
in the Company, subject to, and on, the terms and conditions set forth
below (the "Option"); provided that each exercise of the Option shall
be solely for the Full Exercise Price or any lesser amount in excess of
$20,000,000.
2.02 Full Exercise Price. The price payable by the Company in order to
exercise the Option in full (the "Full Exercise Price") shall be equal
to the amount required to be paid to Nortel hereunder (whether pursuant
to a single exercise of the Option or otherwise) in order to reduce
each of the Class B Unreturned Capital and accrued but unpaid Class B
Return (to the extent not previously added to Class B Unreturned
Capital) to zero (giving effect to the adjustment contemplated by
Section 3.03).
2.03 Time and Manner of Exercise. Upon the terms and subject to the
conditions set forth herein (including Section 2.04), the Option shall
be exercisable by the Company at any time, and from time to time,
during the Exercise Period by delivering to Nortel, in the manner set
forth in Section 8.05, written notice in the form attached hereto as
Exhibit C (an "Exercise Notice"). Upon such delivery of an Exercise
Notice, the Company shall be irrevocably obligated to consummate the
Transactions contemplated by such Exercise Notice, subject to the terms
and conditions of this Agreement, including those set forth in Article
VI.
2.04 Conditions to the Exercise of the Option. The right of the Company to
exercise the Option hereunder shall be conditioned upon and subject to
the following conditions:
(a) the representations and warranties of Arris and the Company
set forth in this Agreement (without giving effect to any
standard, qualification or exception contained therein with
respect to materiality or Material Adverse Effect) shall be
true and correct, as of the date of this Agreement and as of
the date of the relevant Exercise Notice as though made as of
the date of such Exercise Notice (except that representations
and warranties that by their terms speak as of the date of
this Agreement or some other date shall be true and correct as
of such date), except as would not have or reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect on Arris and would not prevent or impair Arris'
or the Company's ability to consummate the Transactions;
(b) the Company, Arris and their Affiliates shall have performed
in all material respects (without giving effect to any
standard, qualification or exception contained therein with
respect to materiality or Material Adverse Effect) all
obligations required to be performed by them as of or prior to
the date of the relevant Exercise Notice under this Agreement
or any other agreement in effect between the Company and/or
Arris (and/or their Affiliates) and Nortel (and/or its
Affiliates);
(c) no temporary restraining order, preliminary or permanent
injunction or other order issued by any court of competent
jurisdiction or other legal restraint or prohibition
preventing the consummation of the Transactions shall be in
effect or
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pending, and no proceeding brought by any Governmental
Authority seeking any of the foregoing shall be pending; and
(d) The Offering shall have been consummated not later than June
30, 2002.
ARTICLE III
CLOSING
3.01 Time, Place and Manner of Closing. In the event that an Exercise Notice
is duly and validly given by the Company hereunder prior to the
expiration of the Exercise Period, consummation of the Transactions
contemplated by such Exercise Notice (a "Closing") shall take place at
10:00 a.m., Boston time, on the tenth (10th) Business Day after the
date of Nortel's receipt of such Exercise Notice, at the offices of
Xxxx and Xxxx LLP at 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx, or by
facsimile, or at such other time and place as the parties hereto may
mutually agree in writing.
3.02 Actions at Closing. At each Closing:
(a) The Company shall deliver to Nortel, by wire transfer or
immediately available U.S. funds to the bank account
designated by Nortel by written notice to the Company not
later than three (3) Business Days prior to the Closing, the
amount of the Full Exercise Price or any lesser amount in
excess of $20 million;
(b) If, as a result of the Transactions consummated at such
Closing, the amount of Class B Unreturned Capital is reduced
to zero by operation of Section 3.03, then Nortel, Arris and
the Company shall execute and deliver to each other the
Termination Agreement, and Arris shall deliver to Nortel the
Termination Agreement executed by each other Affiliate of
Arris that is a party thereto; and
(c) Each of Nortel and the Company shall execute and deliver to
the other the Cross-Receipt.
A Closing shall not be deemed to occur until all of the actions set
forth in clauses (a) through (c) of this Section 3.02 have been
completed with respect to such Closing.
3.03 Effect of Closing. If any Closing occurs, then the amount paid by the
Company pursuant to Section 3.02(a) shall be applied as set forth in
the last sentence of Section 8.02(a) of the LLC Agreement, as if such
payment were a redemption payment referenced therein; provided,
however, that, solely for the purposes of this sentence and the related
calculation of the Class B Unreturned Capital and Class B Return of
Nortel's Class B Interest remaining outstanding after giving effect to
the Option exercise consummated at such Closing, the amount so paid by
the Company shall first be deemed adjusted by dividing the same by the
Discount Percentage applicable to such Closing.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.01 Representations and Warranties of Arris. Arris and the Company each
represents and warrants to Nortel jointly and severally, that:
(a) Organization and Standing. Arris is a corporation and the
Company is a limited liability company, in each case duly
organized, validly existing and in good standing under the
laws of the State of Delaware.
(b) Authority.
(i) The execution and delivery of this Agreement and the
Ancillary Agreements, the exercise of the Option and
the consummation of the Transactions have been duly
authorized by all necessary corporate or limited
liability company (as applicable) action of Arris and
the Company prior to the date hereof (which action
has not been rescinded or modified in any way).
(ii) This Agreement is, and each Ancillary Agreement to be
entered into at the Closing will be, a legal, valid
and binding agreement of the Company and (to the
extent that it is a party thereto) Arris, enforceable
in accordance with its terms (except as such
enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium,
fraudulent transfer and similar laws of general
applicability relating to or affecting creditors'
rights or by general equity principles, whether
considered at law or in equity).
(c) No Defaults. Subject to the receipt of the applicable
regulatory approvals, and expiration of the applicable waiting
periods, referred to in Section 4.01(d) and required filings
under federal and state securities laws, the execution,
delivery and performance of this Agreement and the Ancillary
Agreements, the exercise of the Option and the consummation of
the Transactions by Arris and the Company do not and will not
(i) constitute a breach or violation of, or a default under,
any law, rule or regulation or any judgment, decree, order,
governmental permit or license, or agreement, indenture or
instrument of Arris or the Company or to which Arris or the
Company or any of their respective properties or assets are
subject or bound, (ii) constitute a breach, violation or
default under, the articles or certificate of incorporation or
by-laws of Arris or the certificate of formation or limited
liability company agreement of the Company or (iii) require
any consent or approval under any such law, rule, regulation,
judgment, decree, order, governmental permit or license,
agreement, indenture or instrument, except in the case of (i)
and (iii), where such breach, violation or default or the
failure to obtain such consents or approvals would not in the
aggregate have a Material Adverse Effect on Arris and would
not prevent or impair Arris' or the Company's ability to
consummate the Transactions.
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(d) Regulatory Approvals. No consents or approvals of, or filings
or registrations with, any Governmental Authority are
necessary for the Company to exercise the Option or for the
Company or Arris to consummate the Transactions, except for
(i) as may be required under, and other applicable
requirements of, the HSR Act, the Competition Act (Canada) and
antitrust or other competition laws of other jurisdictions;
(ii) the filing with the SEC and declaration of effectiveness
of the Registration Statement; and (iii) such filings as are
required to be made or approvals as are required to be
obtained under the securities or "Blue Sky" laws of various
states in connection with the Offering.
(e) Solvency. Immediately after giving effect to the Transactions
and the closing of any financing to be obtained by the
Company, Arris or any of their Affiliates in order to effect
the Transactions, the Company, Arris and each of their
relevant Affiliates shall be able to pay its debts as they
become due and shall own property having a fair saleable value
greater than the amounts required to pay its debts (including
a reasonable estimate of the amount of all contingent
liabilities). Immediately after giving effect to the
Transactions and the closing of any financing to be obtained
by the Company, Arris or any of their Affiliates in order to
effect the Transactions, the Company, Arris and each of their
relevant Affiliates shall have adequate capital to carry on
its business. No transfer of property is being made and no
obligation is being incurred in connection with the
Transactions and the closing of any financing to be obtained
by the Company, Arris or any of their Affiliates in order to
effect the Transactions with the intent to hinder, delay or
defraud either present or future creditors of the Company,
Arris or any of their Affiliates.
4.02 Representations and Warranties of Nortel. Nortel represents and
warrants to the Company and Arris that:
(a) Organization and Standing. Nortel is a limited liability
company organized, validly existing and in good standing under
the laws of the State of Delaware.
(b) Authority.
(i) The execution and delivery of this Agreement and the
Ancillary Agreements and the consummation of the
Transactions have been duly authorized by all
necessary limited liability company action of Nortel
prior to the date hereof (which action has not been
rescinded or modified in any way).
(ii) This Agreement is, and each Ancillary Agreement to be
entered into at the Closing will be, a legal, valid
and binding agreement of Nortel (to the extent that
it is a party thereto), enforceable in accordance
with its terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and
similar laws of general applicability relating to or
affecting creditors' rights or by general equity
principles, whether considered at law or in equity).
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(c) No Defaults. Subject to the receipt of the applicable
regulatory approvals, and expiration of the
applicable waiting periods, referred to in Section
4.02(d) and required filings under federal, state and
foreign securities laws, the execution, delivery and
performance of this Agreement and the Ancillary
Agreements and the consummation of the Transactions
by Nortel do not and will not (i) constitute a breach
or violation of, or a default under, any law, rule or
regulation or any judgment, decree, order,
governmental permit or license, or agreement,
indenture or instrument of Nortel or to which Nortel
or any of its respective properties or assets are
subject or bound, (ii) constitute a breach, violation
or default under, the certificate of formation or
limited liability company agreement of Nortel, or
(iii) require any consent or approval under any such
law, rule, regulation, judgment, decree, order,
governmental permit or license, agreement, indenture
or instrument, except in the case of (i) and (iii),
where such breach, violation or default or the
failure to obtain such consents or approvals would
not in the aggregate have a Material Adverse Effect
on Nortel and would not prevent or impair Nortel's
ability to consummate the Transactions.
(d) Regulatory Approvals. No consents or approvals of, or
filings or registrations with, any Governmental
Authority are necessary for Nortel to consummate the
Transactions, except for (i) as may be required
under, and other applicable requirements of, the HSR
Act, the Competition Act (Canada) and antitrust or
other competition laws of other jurisdictions, and
(ii) as may be required under, and other applicable
requirements of, federal, state and foreign
securities laws.
(e) Title to Class B Interest. Nortel has good and valid
title to the Class B Interest, free and clear of all
liens or encumbrances (other than liens or
encumbrances, if any, imposed by the provisions of
the LLC Agreement or the Subordination Agreement).
ARTICLE V
PRE-CLOSING COVENANTS
5.01 Transfer of Class B Interest. Nortel agrees that, from the date hereof
until the expiration of the Exercise Period (or, if earlier, until the
termination of this Agreement in accordance with its terms), without
the prior written consent of the Company, Nortel shall not Transfer its
Class B Interest or any portion thereof (including through granting a
lien or pledge) to any Person other than pursuant to a redemption by
the Company hereunder or under the LLC Agreement unless such Person
agrees to become bound by the provisions of this Agreement to the same
extent as Nortel was so bound as of immediately prior to such Transfer.
In the event that Nortel Transfers all of its Class B Interest in
compliance with the preceding sentence, Nortel shall assign this
Agreement to the Transferee(s) of such Class B Interest (with no
consent or approval of the Company, Arris or any of their Affiliates
being necessary for such assignment) and shall have no further
liabilities or obligations to the Company, Arris or any of their
Affiliates hereunder.
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5.02 Registration and Offering.
(a) Each of Nortel and Arris agrees that, except to the extent
otherwise provided herein or expressly agreed by Nortel and
Arris in writing, the provisions of the Registration Rights
Agreement shall apply to the Registration and Offering
hereunder to the same extent as if (i) Nortel, as the
"Investor" under the Registration Rights Agreement, validly
required registration of the Shares to be included in the
Registration under Section 1 of the Registration Rights
Agreement, and (ii) as a "Selling Stockholder" within the
meaning of Section 1(c) of the Registration Rights Agreement,
Nortel validly requested that the Registration Statement
provide for a delayed or continuous offering of the Shares
covered thereby pursuant to Rule 415 promulgated under the
Securities Act or any similar rule then in effect.
(b) Each of Nortel and Arris agrees that (i) the Offering shall be
pursuant to a firm commitment underwriting, as if a valid
request for the same were made by Nortel as a "Selling
Stockholder" under Section 1(c) of the Registration Rights
Agreement, and (ii) X. X. Xxxxxx Securities Inc. shall act as
a lead managing underwriter for the Offering, together with
one other nationally recognized investment banking firm to be
selected by mutual written agreement of Nortel and Arris.
(c) Arris shall cause each of Messrs. Stanzione, Margolis, Xxxxx
and Xxxxx, each of whom is an officer of Arris, to (i) devote
such time as may be necessary for the expeditious preparation
and filing of the Registration Statement and such responses to
comments and other activities as may be necessary to achieve
expeditious effectiveness of the Registration Statement, (ii)
commencing upon the initial filing of the Registration
Statement with the SEC, devote such time as, in the opinion of
the managing underwriters, be necessary for appropriate
preparation for the road show to be undertaken in connection
with the Offering, (iii) devote such time as Nortel may
request to such road show, not to exceed two (2) weeks, and
(iv) use their respective best efforts to cooperate with and
expedite the Registration and the Offering.
ARTICLE VI
CONDITIONS TO CLOSING
6.01 Conditions to Each Party's Obligation to Effect the Transactions. The
respective obligation of each of Nortel, the Company and Arris to
consummate the Transactions at each Closing (once the applicable
Exercise Notice has been validly given by the Company hereunder) is
subject to the prior fulfillment or written waiver by each of them of
each of the following conditions:
(a) All regulatory approvals required to consummate the
Transactions contemplated by the applicable Exercise Notice
shall have been obtained and shall remain in full force and
effect and all statutory waiting periods in respect thereof
shall have
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expired, except any such approvals failure to obtain which
would not reasonably be expected to have a Material Adverse
Effect on Nortel or Arris following such Closing.
(b) No Governmental Authority of competent jurisdiction shall have
enacted, issued, promulgated, enforced or entered any statute,
rule, regulation, judgment, decree, injunction or other order
(whether temporary, preliminary or permanent) which is in
effect and enjoins or prohibits consummation of the
Transactions contemplated by the applicable Exercise Notice.
(c) There shall have been no Class B Interest Exchange prior to,
or at the time of, such Closing.
6.02 Conditions to Obligation of Arris. The obligation of the Company and
Arris to consummate the Transactions at each Closing (once the
applicable Exercise Notice has been validly given by the Company
hereunder) is also subject to the fulfillment or written waiver by the
Company and Arris at or prior to such Closing of each of the following
conditions:
(a) Representations and Warranties. All representations and
warranties of Nortel set forth in this Agreement (without
giving effect to any standard, qualification or exception
contained therein with respect to materiality or Material
Adverse Effect) shall be true and correct, as of the date of
this Agreement and as of such Closing as though made at and as
of such Closing (except that representations and warranties
that by their terms speak as of the date of this Agreement or
some other date shall be true and correct as of such date),
except as would not have or reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect on
Nortel's ability to consummate the Transactions to be
consummated at such Closing, and the Company shall have
received a certificate, dated the applicable Closing Date,
signed on behalf of Nortel by an appropriate authorized
signatory thereof to such effect.
(b) Performance of Obligations. Nortel and its Affiliates shall
have performed in all material respects (without giving effect
to any standard, qualification or exception contained therein
with respect to materiality or Material Adverse Effect) all
obligations required to be performed by them at or prior to
such Closing under this Agreement or any other agreement in
effect between the Company and/or Arris (and/or their
Affiliates) and Nortel (and/or its Affiliates), and the
Company shall have received a certificate, dated the
applicable Closing Date, signed on behalf of Nortel by an
appropriate authorized signatory thereof to such effect.
6.03 Conditions to Obligation of Nortel. The obligation of Nortel to
consummate the Transactions at each Closing (once the applicable
Exercise Notice has been validly given by the Company hereunder) is
also subject to the fulfillment or written waiver by Nortel prior to
such Closing of each of the following conditions:
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(a) Representations and Warranties. All representations and
warranties of the Company and Arris set forth in this
Agreement (without giving effect to any standard,
qualification or exception contained therein with respect to
materiality or Material Adverse Effect) shall be true and
correct, as of the date of this Agreement and as of such
Closing as though made at and as of such Closing (except that
representations and warranties that by their terms speak as of
the date of this Agreement or some other date shall be true
and correct as of such date), except as would not have or
reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect on the ability of the
Company and Arris to consummate the Transactions to be
consummated at such Closing; and Nortel shall have received a
certificate, dated applicable Closing Date, signed on behalf
of Arris by the Chief Executive Officer or the Chief Financial
Officer of Arris, and on behalf of the Company by an
appropriate authorized signatory thereof, to such effect.
(b) Performance of Obligations. Arris and its Affiliates shall
have performed in all material respects (without giving effect
to any standard, qualification or exception contained therein
with respect to materiality or Material Adverse Effect) all
obligations required to be performed by them at or prior to
such Closing under this Agreement or any other agreement in
effect between the Company and/or Arris (and/or their
Affiliates) and Nortel (and/or its Affiliates), and Nortel
shall have received a certificate, dated the applicable
Closing Date, signed on behalf of Arris by the Chief Executive
Officer or the Chief Financial Officer of Arris, and on behalf
of the Company by an appropriate authorized signatory thereof,
to such effect.
ARTICLE VII
TERMINATION
7.01 Termination. This Agreement may be terminated, and the Transactions to
be consummated at any subsequent Closing may be abandoned:
(a) Mutual Consent. At any time prior to the redemption in full of
Nortel's Class B Interest hereunder or under the LLC
Agreement, by the mutual consent of Nortel and the Company.
(b) Breach. At any time prior to such redemption
(i) by Nortel, in the event of either: (x) a breach by
the Company or Arris of any representation or
warranty contained herein which would result in the
non-satisfaction of the conditions set forth in
Section 6.03(a), which breach is not capable of being
cured or has not been cured within 10 calendar days
after the giving of written notice to the breaching
party of such breach; or (y) a material breach by the
Company, Arris or any of their Affiliates of any of
the covenants or agreements contained herein or in
any other agreement in effect between the Company,
Arris (and/or their
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Affiliates) and Nortel (and/or its Affiliates), which
breach is not capable of being cured or has not been
cured within 10 calendar days after the giving of
written notice to the breaching party of such breach.
(ii) by the Company, in the event of either: (x) a breach
by Nortel of any representation or warranty contained
herein which would result in the non-satisfaction of
the conditions set forth in Section 6.02(a), which
breach is not capable of being cured or has not been
cured within 10 calendar days after the giving of
written notice to the breaching party of such breach;
or (y) a material breach by Nortel or any of its
Affiliates of any of the covenants or agreements
contained herein or in any other agreement in effect
between Arris (and/or its Affiliates) and Nortel
(and/or its Affiliates), which breach is not capable
of being cured or has not been cured within 10
calendar days after the giving of written notice to
the breaching party of such breach.
(c) Delay of Registration or Offering. By Nortel, in the event
that (i) the Registration Statement has not become effective
on or prior to June 15, 2002, or (ii) the Offering (other than
the closing of any exercises of over-allotment options by the
underwriters of the Offering) has not been consummated on or
prior to June 30, 2002; provided that, at the election of
Nortel, the provisions of Section 5.02 shall continue in
effect until June 30, 2003 notwithstanding termination of this
Agreement pursuant to this Section 7.01(c).
(d) Delay of Closing. At any time prior to the redemption in full
of Nortel's Class B Interest hereunder or under the LLC
Agreement, by Nortel or the Company, in the event that such
redemption does not occur by the earlier of (i) the tenth
(10th) Business Day after delivery to Nortel, pursuant to
Section 2.03, of the Exercise Notice contemplating such
redemption, and (ii) July 15, 2003, except to the extent that
the failure of such redemption to occur arises out of or
results from the knowing action or inaction of the party
seeking to terminate pursuant to this Section 7.01(d) which
action or inaction is in violation of its (or one of its
Affiliates') obligations under this Agreement.
(e) No Governmental Approval.
(i) By the Company or Nortel in the event the approval of
any Governmental Authority required for consummation
of the Transactions shall have been denied by final
non-appealable action of such Governmental Authority.
(ii) By Nortel in the event any required approval of a
Governmental Authority contains any final
non-appealable conditions, restrictions or
requirements which would reasonably be expected to
(A) following a Closing, have a Material Adverse
Effect on Nortel or Arris or (B) require Nortel,
Arris or any of their respective Affiliates to sell
or otherwise dispose of, or to hold separately, or to
permit the sale or other disposition of, any of their
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respective assets, whether as a condition to
obtaining any approval from a Governmental Authority
or any other Person or for any other reason.
(iii) By Arris in the event any required approval of a
Governmental Authority contains any final,
non-appealable conditions, restrictions or
requirements which would reasonably be expected to,
following a Closing, have a Material Adverse Effect
on Arris or require Arris or any of its Affiliates to
sell or otherwise dispose of, or to hold separately,
or to permit the sale or other disposition of, any of
their respective assets, whether as a condition to
obtaining any approval of any Governmental Authority
or any other Person or for any other reason.
7.02 Effect of Termination and Abandonment. In the event of termination of
this Agreement and the abandonment of the Transactions pursuant to this
Article VII, no party to this Agreement (nor any of their respective
officers, directors or agents) shall have any liability or further
obligation to the other party hereunder except (i) as otherwise set
forth in Section 7.01(c), and (ii) that termination shall not relieve a
party from liability for any willful breach of this Agreement or any
liability or obligation arising under the Registration Rights
Agreement.
ARTICLE VIII
MISCELLANEOUS
8.01 Amendment; Extension; Waiver.
(a) Except as otherwise provided in Section 5.01 with respect to
Transfers by Nortel of its Class B Interest, this Agreement
may be amended only by an instrument in writing signed on
behalf of each of the parties hereto.
(b) Either party hereto may, to the extent legally allowed, (i)
extend the time for the performance of any of the obligations
or other acts of the other party, (ii) waive any inaccuracies
in the representations and warranties of the other party
contained herein or in any document delivered pursuant hereto
and (iii) waive compliance by the other party with any of the
agreements or conditions contained herein. Any agreement on
the part of a party hereto to any such extension or waiver
shall be valid only if set forth in a written instrument
signed on behalf of such party, but such extension or waiver
or failure to insist on strict compliance with an obligation,
covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other
failure.
8.02 Counterparts. This Agreement may be executed in one or more
counterparts, each of which when executed shall be deemed to constitute
an original but all of which when taken together shall constitute one
and the same instrument.
8.03 Governing Law. This Agreement shall be governed by, and interpreted in
accordance with, the laws of the State of Delaware, without regard to
the conflict of law principles thereof.
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8.04 Expenses. Except as otherwise provided herein, each party hereto will
bear all expenses incurred by it in connection with this Agreement and
the transactions contemplated hereby, except that (i) all costs and
expenses of either party hereto relating to the Registration and the
Offering shall be borne as specified in the Registration Rights
Agreement, as if the Registration were undertaken and made pursuant
thereto and Nortel were the only "Selling Stockholder" under the
Registration Rights Agreement participating therein, and (ii) Arris
shall also reimburse and pay to Nortel, not later than thirty (30) days
after receipt of Nortel's invoice therefor (with interest on any
overdue amounts payable by Arris to Nortel at the rate of 12% per annum
or, if lower, the maximum lawful rate), all of Nortel's and its
Affiliates' costs and expenses relating to Nortel's and its relevant
Affiliates' (and its and their respective officers, directors and
employees) participation in the road show relating to the Offering.
8.05 Notices. All notices, requests and other communications hereunder to a
party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or three Business Days after
being mailed by registered or certified mail (return receipt requested)
or one Business Day after being delivered by overnight courier to such
party at its address set forth below or such other address as such
party may specify by notice to the parties hereto.
If to Nortel, to:
Nortel Networks Inc.
0000 Xxxxxxxx Xxxx.
Xxxxxxxxxx, Xxxxx 00000-0000
Attn: Xxxxx Xxxxxxx, Mergers and Acquisitions
Fax: 000-000-0000
Phone: 000-000-0000
With a copy to:
Nortel Networks Inc.
000 Xxxxxx Xxx
Xxxxxxxxx, Xxxxxxxxx 00000
Attn: Corporate Secretary
Fax: 000-000-0000
Phone: 000-000-0000
Nortel Networks Limited
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attn: Corporate Secretary
Fax: 000-000-0000
Phone: 000-000-0000
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With a copy to:
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
If to Arris, to:
Arris Group, Inc.
00000 Xxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxxx
Fax: (000) 000-0000
Phone: (000) 000-0000
With a copy to:
Xxxxxxxx Xxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
Attention: X. Xxxxxxxx Xxxxxxxxx, Jr.
Fax: 000-000-0000
Phone: 000-000-0000
8.06 Entire Understanding. This Agreement and the documents and instruments
referenced herein represent the entire understanding of the parties
hereto with reference to the transactions contemplated hereby and
thereby supersede any and all other oral or written agreements
heretofore made to the extent (but only to the extent) such agreements
relate to the subject matter hereof.
8.07 Assignment; Third Party Beneficiaries. Except in the event of a
Transfer by Nortel of its Class B Interest prior to the Closing (in
which case Section 5.01 shall apply), neither this Agreement, nor any
of the rights, interests or obligations hereunder, shall be assigned by
either of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other party. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the
benefit of and be enforceable by the parties hereto and their
respective successors and assigns. Except as set forth in Section 8.12,
nothing in this Agreement, express or implied, is intended to confer
upon any Person, other than the parties hereto or their respective
successors or permitted assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement.
8.08 Incorporation of Exhibits. All Exhibits shall be deemed to constitute
an integral part of this Agreement for all purposes.
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8.09 Press Releases. Nortel and Arris shall jointly agree on an initial
press release with respect to the Transactions. Neither the Company nor
Arris will, without the prior approval of Nortel, issue (i) any other
press release or (ii) any written statement for general circulation
(including any written statement circulated to employees, customers or
other third parties) relating to the transactions contemplated hereby;
except, in the case of clause (ii) above, as otherwise required by
applicable law or regulation or rules of the Nasdaq Stock Market, Inc.
8.10 Interpretation. When a reference is made in this Agreement to Articles,
Sections or Exhibits, such reference shall be to an Article or Section
of, or Exhibit to, this Agreement unless otherwise indicated. The table
of contents and headings contained in this Agreement are for reference
purposes only and are not part of this Agreement. Whenever the words
"include", "includes" or "including" are used in this Agreement, they
shall be deemed to be followed by the words "without limitation". Any
reference to "herein" or "hereof" or similar terms shall refer to the
agreement as a whole rather than to the individual paragraph, Section
or Article. Time shall be deemed to be of the essence in the
interpretation and enforcement of this Agreement.
8.11 Severability. Any term or provision of this Agreement which is invalid
or unenforceable in any jurisdiction shall, as to that jurisdiction, be
ineffective to the extent of such invalidity or unenforceability
without rendering invalid or unenforceable the remaining terms and
provisions of this Agreement or affecting the validity or
enforceability of any of the terms or provisions of this Agreement in
any other jurisdiction. If any provision of this Agreement is so broad
as to be unenforceable, the provision shall be interpreted to be only
so broad as it is enforceable.
8.12 Investor Rights Agreement. Arris acknowledges and agrees that (i) the
execution and delivery of this Agreement by the parties hereto and the
consummation of the Transactions do not constitute a breach or
violation of, or otherwise conflict with, the terms and provisions of
the Amended and Restated Investor Rights Agreement, dated as of April
9, 2001, by and among Nortel, Nortel Networks Inc. and Arris, as
amended by the First Amendment to Amended and Restated Investor Rights
Agreement, dated as of August 3, 2001 (as amended, the "Investor Rights
Agreement"), and (ii) to the extent the execution and delivery of this
Agreement by the parties hereto or the consummation of the Transactions
constitutes a breach or violation of, or otherwise conflicts with, the
terms and provisions of the Investor Rights Agreement, Arris hereby
waives any such breach, violation or conflict. Without limiting the
foregoing, Arris acknowledges and agrees that the Registration and the
Offering contemplated by this Agreement shall be deemed to constitute a
"bona fide public offering effected in accordance with the Registration
Rights Agreement" as contemplated by Section 3.3(b)(i) of the Investor
Rights Agreement. Each of Arris and Nortel acknowledges and agrees that
Nortel Networks Inc. shall be an express third party beneficiary of the
provisions of this Section 8.12.
8.13 Amendment of LLC Agreement. This Option Agreement shall be deemed to
be, and shall constitute, an amendment of the LLC Agreement to the full
extent necessary or advisable to give effect to the provisions hereof.
To the extent that any provisions of the
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LLC Agreement are inconsistent with the provisions of this Option
Agreement or impose any additional requirements for the execution and
delivery of this Option Agreement or any of the Ancillary Agreements or
the consummation of the Transactions, the LLC Agreement shall be deemed
amended hereby in all respects necessary to eliminate all such
inconsistencies and additional requirements.
[THE NEXT PAGE IS THE SIGNATURE PAGE]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
ARRIS INTERACTIVE L.L.C.
By: Arris Group, Inc.
Its: Managing Member
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Executive Vice President & CFO
ARRIS GROUP, INC.
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Executive Vice President & CFO
NORTEL NETWORKS LLC
By: Nortel Networks Inc.
Its: Managing Member
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Assistant Secretary
[Signature page to Option Agreement among Nortel Networks LLC, Arris Interactive
L.L.C. and Arris Group, Inc.]
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EXHIBIT A
CROSS RECEIPT
Reference is made to the Option Agreement, dated as of June __, 2002
(the "Option Agreement"), by and between NORTEL NETWORKS LLC, a Delaware limited
liability company ("Nortel"), ARRIS INTERACTIVE L.L.C., a Delaware limited
liability company (the "Company"), and ARRIS GROUP, INC., a Delaware corporation
("Arris"). Capitalized terms used but not defined herein shall have the
respective meanings ascribed to such terms in the Option Agreement.
Nortel hereby acknowledges receipt from the Company of $_____________
(the "Redemption Payment"). Both parties acknowledge that such Redemption
Payment was applied to redeem [the Class B Interest in full] OR [a portion of
the Class B Unreturned Capital and Class B Return (to the extent not previously
added to Class B Unreturned Capital) of the Class B Interest as provided in
Section 3.03 of the Option Agreement].
NORTEL NETWORKS LLC
By: Nortel Networks Inc.
Its: Managing Member
By:
-------------------------------
Name:
Title:
ARRIS INTERACTIVE L.L.C.
By: Arris Group, Inc.
Its: Managing Member
By:
---------------------------------
Name:
Title:
ARRIS GROUP, INC.
By:
-------------------------------
Name:
Title:
Dated: , 200
------------ -
EXHIBIT C
NOTICE OF EXERCISE OF OPTION
To: Nortel Networks LLC
Reference is made to the Option Agreement (the "Option Agreement"),
dated as of ______________________, 2002, by and among Nortel Networks LLC,
Arris Interactive L.L.C. and Arris Group, Inc. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such terms in the
Option Agreement.
The Company hereby irrevocably exercises the Option [in full] [in part
in the amount of _____________________________ (U.S.$ _________)]. The Company
and Arris shall be obligated to consummate the Transactions contemplated by the
Option Agreement to be consummated in connection with such exercise at the
Closing relating thereto, subject to the terms of the Option Agreement.
Dated: , 200
---------------- - ARRIS INTERACTIVE L.L.C.
By: Arris Group, Inc.
Its: Managing Member
By:
-------------------------------
Name:
Title:
