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NORTEL NETWORKS INC.
NORTEL NETWORKS LLC
000 Xxxxxx Xxx
Xxxxxxxxx, XX 00000
ANTEC Corporation
00000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Arris Group, Inc. (f/k/a Broadband Parent Corporation)
Broadband Transition Corporation
00000 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Arris Interactive L.L.C.
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Ladies and Gentlemen:
Reference is made to the Agreement and Plan of Reorganization, dated as
of October 18, 2000, as amended as of April 9, 2001 and August 1, 2001, by and
among ANTEC Corporation (the "Company"), Arris Group, Inc. (f/k/a Broadband
Parent Corporation) ("Newco"), Broadband Transition Corporation, Nortel Networks
Inc., Nortel Networks LLC and Arris Interactive L.L.C. ("Existing Venture") (as
so amended, the "Agreement"). Capitalized terms not otherwise defined herein
have the respective meanings given them in the Agreement.
This letter agreement, dated as of August 3, 2001, sets forth the
agreements and understandings among the Company, Newco, Broadband Transition
Corporation, Nortel Networks, Nortel Networks LLC and Existing Venture relating
to certain obligations of the parties to Existing Venture employees and
Terminated Employees (as defined below) and certain other matters.
1. Nortel Networks shall offer and provide Existing Venture employees who
are terminated prior to the Closing ("Terminated Employees") with those
continued benefits that are required under the Consolidated Omnibus Budget
Reconciliation Act of 1985; provided that Existing Venture shall reimburse
Nortel Networks for all costs of such benefits, by payment of the same in cash
within thirty (30) calendar days of receipt by Existing Venture or the Company
or its Affiliates of an invoice for such costs from Nortel Networks.
2. After the Closing, Nortel Networks shall provide eligible Terminated
Employees with remaining notice payments, severance allowance payments, benefits
and outplacement assistance consistent with past practice and in accordance with
the Nortel Networks Severance Allowance Plan or the Nortel Networks Executive
Management Team Severance Allowance Plan (as
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applicable); provided that Existing Venture shall reimburse Nortel Networks for
all such payments and all costs of such benefits and assistance, by payment of
the same in cash within thirty (30) calendar days of the receipt by Existing
Venture or the Company or its Affiliates of an invoice for such payments and
costs from Nortel Networks.
3. Notwithstanding Schedule 7.19 of the Agreement, the Company, Newco, and
Existing Venture shall, at a minimum: (a) treat the Value Contribution Units
("VCU's") held as of the Closing by Existing Venture employees in accordance
with Exhibit A attached hereto, (b) cause the grant of options to purchase Newco
Common Stock ("Newco Options") to Existing Venture employees consistent with
Exhibit B attached hereto, and (c) with respect to any Existing Venture employee
who holds unvested Nortel Networks stock options as of the Effective Time, cause
the grant of Newco Options to such Existing Venture employee that are
economically equivalent to such employee's unvested Nortel Networks stock
options. For the purpose of clause (c) above, the Newco Options shall be deemed
economically equivalent to the unvested Nortel Networks stock options if (and
only if) the relevant Newco Option is for at least the number of shares of Newco
Common Stock equal to 150% of the number of shares of Nortel Networks Common
Stock subject to the corresponding unvested Nortel Networks stock options.
4. Existing Venture shall reimburse Nortel Networks for all payments made
and other costs incurred by Nortel Networks with respect to the Employees (as
such term is defined in the Loaned Employee Agreement (dated as of March 31,
1999)) after the Closing, including but not limited to cost of notice pay,
severance allowance payments, benefits and outplacement assistance made
consistent with past practice and in accordance with the Nortel Networks
Severance Allowance Plan or the Nortel Networks Executive Management Team
Severance Allowance Plan (as applicable). Existing Venture shall pay such
reimbursements to Nortel Networks in cash within thirty (30) calendar days of
the receipt by Existing Venture or the Company or its Affiliates of an invoice
for the relevant payments and/or other costs subject to such reimbursement from
Nortel Networks.
5. Exhibit G to the Agreement is hereby amended by deleting the same in
its entirety (including schedules and exhibits thereto) and inserting the
attached Exhibit C to this letter agreement (including schedules and exhibits
thereto) in lieu thereof.
6. Listed below are certain claims (or potential claims), matters and/or
proceedings against the Existing Venture:
1. Xxxxx Xxxxxxx x. Xxxxx Interactive L.L.C. Case No.
1:Ol-CV-l027 (U.S. District Court, Northern District of Georgia) - Claim related
to 401(k) plan.
2. Xxxxx Xxxxxxx x. Xxxxx Interactive L.L.C. Case No. 01M4239
(Magistrate Court of Gwinnett County of the State of Georgia) - Claim related to
vacation pay.
3. Shangnia X. Xxxxxx x. Xxxxx Interactive, Inc. (EEOC Charge No.
110A11650) - Alleged failure to hire on the basis of race (Xxxxxx had been an
Arris contractor).
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With respect to the foregoing claims, matters and/or proceedings, the
parties agree that (i) they shall be deemed to have been included in the Nortel
Networks Disclosure Schedule (in Section 6.02(j)(iii) thereof with respect to
items 1 and 2 above, and in Section 6.02(j)(vii) thereof with respect to item 3
above), and (ii) with respect to such claims, matters and/or proceedings, as
well as the claim previously listed in Section 6.02(j)(vii) of the Nortel
Networks Disclosure Schedule relating to Xxxxx XxXxxxxxxxx, Existing Venture
shall reimburse Nortel Networks for any and all costs and expenses which Nortel
Networks and/or any of its Affiliates incurs with respect to such claims,
matters and/or proceedings, including, without limitation, costs and expenses of
investigation, attorneys' fees, settlement payments and awards. Such
reimbursement shall be made in cash within thirty (30) calendar days of the
receipt by Existing Venture or the Company or its Affiliates of an invoice for
such costs from Nortel Networks. The provisions of this Section 6 shall not,
except with respect to matters specifically addressed herein, modify or affect
any other provision of the Agreement or any Ancillary Agreement.
7. As a clarification to Schedule 8.01(f) to the Agreement, any defective
or damaged item (e.g., C stock) shall be removed from the schedule of the
Inventory and shall not constitute Inventory for the purposes of the Agreement.
8. Article I of the Agreement is hereby amended by deleting therefrom the
definition of "Existing Venture Cash Balance". Section 4.02(f) of the Agreement
is hereby amended by deleting the words "and the Existing Venture Cash Balance"
from each of the third and fourth sentences thereof.
9. Each of the parties hereto acknowledges and agrees that, as of the
Closing, the New Membership Interest Balance is not more than $100,000,000.
10. Exhibit E to the Agreement is hereby amended by deleting the same in
its entirety (including schedules and exhibits thereto) and inserting the
attached Exhibit D to this letter agreement in lieu thereof.
11. Section 6.02(j)(i) of the Nortel Networks Disclosure Schedule is hereby
amended by deleting the same in its entirety and inserting the attached Schedule
1 to this letter agreement in lieu thereof
12. The definition of "Outside Closing Date" in Article I of the Agreement
is hereby amended by deleting clause (A) of such definition in its entirety and
inserting in lieu thereof the following: "(A) August 17, 2001, and".
13. It has come to the attention of the parties hereto that certain
information previously received by the Company (in connection with the Company's
due diligence with respect to the transactions contemplated by the Agreement and
the Ancillary Documents) relating to terms of purchase of Existing Venture
products and/or services by certain customers of Nortel Networks and/or its
Affiliates (including, without limitation, Cabovisao, Med Telecom, Menta, Ono,
Retecal, SPTA, and Jupiter Telecommunications Co. Ltd.) may have been
incomplete. Each of the parties hereto acknowledges and agrees that (A) such
information has been supplemented by
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Nortel Networks and/or its Affiliates subsequent to the Company's due diligence
referenced above to the satisfaction of the Company, Newco, Transition and the
Existing Venture; (B) all such supplemental information shall be deemed to have
been provided to the Company, Newco, Transition and the Existing Venture in the
course of the above-referenced due diligence prior to October 18, 2001; and (C)
and no party hereto shall have any claim against or recourse to Nortel Networks
or any of its Affiliates (under the Agreement or otherwise) arising out of, or
in connection with, any actual or alleged failure of Nortel Networks to provide
such supplemental information at an earlier time; provided that the foregoing
acknowledgment shall have no effect on the operation of the provisions of the
Sales Representation Agreement reducing any Nortel Commissions when channel
margins are below 15%.
14. The letter agreement, dated as of August 1, 2001, by and among the
parties hereto, setting forth certain agreements and understandings among the
parties hereto relating to the Outside Closing Date and certain other matters is
hereby deemed superseded hereby in all respects and terminated in its entirety,
and shall be of no further force or effect.
15. Each of the parties hereto acknowledges and agrees that,
notwithstanding Nortel Networks LLC's Interest (as such term is defined in the
Existing Venture Operating Agreement), level of representation on the Members
Committee (as such term is defined in the Existing Venture Operating Agreement)
and other rights with respect to the management and activities of the Existing
Venture during the time periods prior to the Closing (collectively, the "Nortel
Management Rights"):
(A) the Company, Newco and Transition (collectively, the "ANTEC Parties")
have directed and controlled all actions and decisions of the Existing
Venture with respect to the negotiation, execution and delivery by the
Existing Venture of each of the Loan Documents (as such term is defined
in the Credit Agreement, of even date herewith, by and among the
Company, the Existing Venture, Credit Suisse First Boston, The CIT
Group/Business Credit, Inc., and a syndicate of banks, financial
institutions and other investors) to which the Existing Venture is a
party and all other documents, instruments and papers executed by the
Existing Venture in connection therewith;
(B) while Nortel Networks and Nortel Networks LLC had previously provided
comments on selected provisions of certain of the Loan Documents,
neither Nortel Networks nor Nortel Networks LLC nor any of their
respective Affiliates (collectively, the "Nortel Parties") directed or
controlled any of the actions or decisions of the Existing Venture
described in clause (A) of this paragraph 15 or exercised any of the
Nortel Management Rights with respect to such actions and/or decisions;
(C) the ANTEC Parties and the Existing Venture are and shall be solely
responsible for, and no Nortel Party is or will be responsible for, (i)
all actions or decisions of the Existing Venture described in clause
(A) of this paragraph 15 and (ii) the contents of any and all Loan
Documents (including, without limitation, the truth, accuracy and/or
completeness of any disclosures, representations and/or warranties made
or given by any of the ANTEC Parties or the Existing Venture therein or
in connection therewith);
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(D) neither any of the ANTEC Parties nor the Existing Venture shall have or
assert any claim or defense or initiate or maintain any suit, action or
proceeding against any of the Nortel Parties based on or arising from
the negotiation, execution, delivery or contents of any of the Loan
Documents or the existence, at times prior to the Closing, of the
Nortel Management Rights; and
(E) the ANTEC Parties and the Existing Venture shall, jointly and
severally, indemnify and hold harmless each of the Nortel Parties from
and against any and all actions, causes of action, claims, suits,
liabilities, costs and expenses based on or arising from the
negotiation, execution, delivery or contents of any of the Loan
Documents or the existence, at times prior to the Closing, of the
Nortel Management Rights.
16. Each of the parties hereto acknowledges and agrees that, without
limitation, (i) the payment made by Existing Venture to Nortel Networks, on the
Closing Date, but prior to the Effective Time, in the amount of $17,254,600 in
respect of the 2001 Amount Payable, and (ii) any and all instances of late
payment, non-payment, late collection and/or non-collection of payables and
receivables (as applicable) by the Existing Venture since October 18, 2000, are
consented to and approved by each party hereto and shall be deemed to be in
compliance with the provisions of the Agreement (including, without limitation,
Section 5.02(b)) for all purposes thereunder.
17. Each of the parties hereto represents and warrants to each other party
hereto that it has all requisite power and authority to execute and deliver, and
to perform its obligations under, this letter agreement. Each of the parties
hereto hereby acknowledges receipt and sufficiency of consideration in
connection herewith.
18. The provisions of Sections 10.02, 10.03, 10.05, 10.07, 10.09, and 10.10
of the Agreement shall apply to this letter agreement as if set forth herein in
their entirety. This letter agreement constitutes an amendment to the Agreement
and, to the full extent necessary to effectuate the provisions herein, each
relevant Ancillary Agreement. To the extent that any provisions of the Existing
Venture Operating Agreement are inconsistent with the provisions of this letter
agreement or impose any additional requirements for the execution, delivery or
performance of this letter agreement, the Existing Venture Operating Agreement
shall be deemed amended hereby in all respects necessary to eliminate all such
inconsistencies and additional requirements.
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If you agree with the foregoing, please execute a copy of this letter
in the space provided below and return such executed copy to the undersigned.
Very truly yours,
NORTEL NETWORKS INC., for itself and, as the
Managing Member of Nortel Networks LLC, on
behalf of Nortel Networks LLC
By: /s/ Xxxxxxx Xxxxxx
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AGREED TO AND ACCEPTED:
ATEC CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxx
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ARRIS INTERACTIVE L.L.C.
(f/k/a Broadband Parent Corporation)
By: /s/ Xxxxxxxx X. Xxxxxxxx
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BROADBAND TRANSITION CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxxxx
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