-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, IrNeMeoUfAasDJwgYryhwGl6gIbfXx9vhBkd8RL3tjL4+YYr3TeNdh1YUw6ipx2l YVb7sWD3sLn59YtNCTSp3g== 0000950144-01-505632.txt : 20010814 0000950144-01-505632.hdr.sgml : 20010814 ACCESSION NUMBER: 0000950144-01-505632 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20010813 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ARRIS GROUP INC CENTRAL INDEX KEY: 0001141107 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 582588724 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-61849 FILM NUMBER: 1706500 BUSINESS ADDRESS: STREET 1: 11450 TECHNOLOGY CIRCLE CITY: DULUTH STATE: GA ZIP: 30097 BUSINESS PHONE: 6784732000 MAIL ADDRESS: STREET 1: 11450 TECHNOLOGY CIRCLE CITY: DULUTH STATE: GA ZIP: 30097 FORMER COMPANY: FORMER CONFORMED NAME: BROADBAND PARENT CORP DATE OF NAME CHANGE: 20010521 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: NORTEL NETWORKS CORP CENTRAL INDEX KEY: 0000072911 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 621262580 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 8200 DIXIE ROAD STREET 2: SUITE 100 CITY: BRAMPTON ONT CANA STATE: A6 ZIP: 00000 BUSINESS PHONE: 9058631103 MAIL ADDRESS: STREET 1: 8200 DIXIE ROAD STREET 2: SUITE 100 BRAMPTON L6T 5P6 CITY: ONTARIO CANADA FORMER COMPANY: FORMER CONFORMED NAME: NORTHERN ELECTRIC CO LTD DATE OF NAME CHANGE: 19760324 FORMER COMPANY: FORMER CONFORMED NAME: NORTHERN TELECOM LTD DATE OF NAME CHANGE: 19940831 SC 13D 1 t27986sc13d.txt ARRIS GROUP/NORTEL NETWORKS 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D (RULE 13d-101) Arris Group, Inc. ----------------- (Name of Issuer) Common Stock, $.01 par value per share ------------------------------------- (Title of Class of Securities) 04269Q100 ------------- (CUSIP Number) Deborah J. Noble Corporate Secretary Nortel Networks Corporation 8200 Dixie Road, Suite 100 Brampton, Ontario L6T 5P6 (905) 863-1103 ------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 3, 2001 ------------------------------------------ (Date of Event Which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box: Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter the disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). (Page 1 of 14 Pages) 2 CUSIP No. 04269Q100 13D Page 2 of 14 Pages - -------------------------------------------------------------------------------- 1 NAMES OF REPORTING PERSONS I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Nortel Networks Corporation - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) (b) Not Applicable - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Canada - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 37,000,000 shares ------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER SHARES BENEFICIALLY 0 shares OWNED BY ------------------------------------------------------------- EACH REPORTING 9 SOLE DISPOSITIVE POWER PERSON WITH 37,000,000 shares ------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 shares - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 37,000,000 shares - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 49.2% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! 3 CUSIP No. 04269Q100 13D Page 3 of 14 Pages Item 1. Security and Issuer. - ------ ------------------- This Statement on Schedule 13D (this "Statement") relates to the common stock, par value $.01 per share ("Arris Group Common Stock"), of Arris Group, Inc. (f/k/a Broadband Parent Corporation), a Delaware corporation ("Arris Group"). The principal executive offices of Arris Group are located at 11450 Technology Circle, Duluth, Georgia 30097. The 37,000,000 shares of Arris Group Common Stock beneficially owned by Nortel Networks Corporation are held of record by Nortel Networks LLC, a Delaware limited liability company whose membership interests are directly and indirectly held by Nortel Networks Inc., a Delaware corporation. Nortel Networks Inc. in turn is a wholly owned subsidiary of Nortel Networks Limited, a Canadian corporation and a wholly owned subsidiary of Nortel Networks Corporation, a Canadian corporation. Nortel Networks Corporation and the above referenced affiliates are sometimes collectively referred to herein as "Nortel Networks." Item 2. Identity and Background. - ------ ----------------------- This Statement is being filed by Nortel Networks Corporation. The principal business and principal office of Nortel Networks Corporation are located at 8200 Dixie Road, Suite 100, Brampton, Ontario L6T 5P6, Canada. Nortel Networks Corporation is a global leader in networking and communications solutions for service providers and corporations. Its business consists of the design, development, manufacture, assembly, marketing, sale, licensing, financing, installation, servicing and support of networking solutions and services. Nortel Networks Corporation is focused on building the infrastructure, service enabling solutions and applications for the new, high-performance Internet. (a) - (c); (f) The name, business address, present principal occupation or employment, and the name and principal business of any corporation or other organization in which such employment is conducted, of each of the directors and executive officers of Nortel Networks Corporation is set forth in Schedule I hereto, which is incorporated herein by reference. The citizenship of each person listed in Schedule I is indicated thereon. (d) - (e) During the last five years, neither Nortel Networks Corporation nor, to the knowledge of Nortel Networks Corporation, any of the persons listed on Schedule I hereto (i) has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) has been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, Federal or State securities laws or finding any violation with respect to such laws. Item 3. Source and Amount of Funds or Other Consideration. - ------ ------------------------------------------------- The 37,000,000 shares of Arris Group Common Stock were acquired by Nortel Networks LLC in exchange for its then existing membership interest in Arris Interactive L.L.C. ("Arris LLC"), a Delaware limited liability company and a joint venture of Nortel Networks LLC and Arris International, Inc. (f/k/a ANTEC Corporation), a Delaware corporation ("ANTEC"). 4 CUSIP No. 04269Q100 13D Page 4 of 14 Pages Item 4. Purpose of Transaction. - ------ ---------------------- On June 15, 2001, Nortel Networks Corporation announced its decision to discontinue its access solutions business operations, which now includes its ownership interest in Arris Group. As a result, during the twelve-month period ending in June 2002, Nortel Networks Corporation may, among other things, sell a substantial percentage of the Arris Group Common Stock and, to facilitate this, may exercise the demand registration rights described in Item 6 of this Statement, which is incorporated herein by reference. On August 3, 2001, Nortel Networks LLC, ANTEC and Arris Group entered into a second amended and restated limited liability company operating agreement for Arris LLC (the "Arris LLC Operating Agreement") pursuant to which Nortel Networks LLC received a new membership interest in Arris LLC (the "New Membership Interest"). Subject to the satisfaction of certain conditions, the New Membership Interest, which has an initial capital account balance of $100,000,000, is to be redeemed by Arris LLC commencing February 2002 at a rate of up to $33,000,000 per fiscal quarter. In the event that (a) any of ANTEC, Arris Group or their affiliates enters into and consummates an agreement to sell all or any portion of its respective membership interest in Arris LLC, the New Membership Interest is automatically converted into equity or debt obligations of Arris Group; (b) there is any foreclosure on any of the membership interests in Arris LLC held by ANTEC or Arris Group or a sale in lieu of foreclosure or an exercise of any rights or remedies of a secured creditor with respect to such membership interests, in each case pursuant to Arris Group's senior credit agreement, dated as of August 3, 2001 (the "Senior Credit Agreement"), with Credit Suisse First Boston, The CIT Group/Business Credit, Inc., and a syndicate of banks, financial institutions and other accredited investors (the "Senior Lenders"), either the Senior Lenders or Nortel Networks may require that the New Membership Interest be converted into equity or debt obligations of Arris Group; or (c) during the continuance of an "Event of Default" (as defined under the Senior Credit Agreement), the Senior Lenders may require that the New Membership Interest be converted into equity or debt obligations of Arris Group. Upon such event, Nortel Networks may elect to receive Arris Group Common Stock, preferred stock (which may be convertible) or notes (which may be convertible), with an exchange of the New Membership Interest for Arris Group Common Stock determined at the then prevailing market value of the Arris Group Common Stock. A copy of the Arris LLC Operating Agreement is filed as Exhibit 1 to this Statement and incorporated herein by reference. Except as set forth in this Statement and the Arris LLC Operating Agreement, neither Nortel Networks Corporation nor, to the best of Nortel Networks Corporation's knowledge, any of the individuals named in Schedule I hereto has any plans or proposals which relate to or which would result in or relate to any of the actions specified in subparagraphs (a) through (j) of Item 4 of Schedule 13D. Item 5. Interest in Securities of the Issuer. - ------ ------------------------------------ (a) Nortel Networks Corporation is the beneficial owner of 37,000,000 shares of Arris Group Common Stock, representing approximately 49.2% of the Arris Group Common Stock issued and outstanding. Except as set forth in this Item 5, neither Nortel Networks Corporation nor, to the best of Nortel Networks Corporation's knowledge, any of the individuals named in Schedule I hereto beneficially owns any shares of Arris Group Common Stock. 5 CUSIP No. 04269Q100 13D Page 5 of 14 Pages (b) Nortel Networks Corporation has the sole power to vote or to direct the vote and sole power to dispose or direct the disposition of the 37,000,000 shares of Arris Group Common Stock. (c) Except as described above, neither Nortel Networks Corporation nor, to the best of Nortel Networks Corporation's knowledge, any of the individuals named in Schedule I hereto has effected any transaction in Arris Group Common Stock during the past 60 days. (d) Nortel Networks Corporation holds all rights associated with the 37,000,000 shares of Arris Group Common Stock, including the right to receive dividends on such stock. (e) Not applicable. Item 6. Contracts, Arrangements, Understanding or Relationships with Respect to - ------- Securities of Arris Group. -------------------------- The Reorganization Agreement. ANTEC, Arris Group, Broadband Transition Corporation, a Delaware corporation and wholly owned subsidiary of Arris Group, Nortel Networks Inc., Nortel Networks LLC and Arris LLC entered into an Agreement and Plan of Reorganization, dated as of October 18, 2000 (the "Original Agreement"), as amended as of April 9, 2001 (the "Amended Agreement" and, together with the Original Agreement, the "Reorganization Agreement"). A copy of the Original Agreement is filed as Exhibit 2 to this Statement and incorporated herein by reference, and a copy of the Amended Agreement is filed as Exhibit 3 to this Statement and incorporated herein by reference. Pursuant to the Reorganization Agreement, Nortel Networks LLC exchanged its existing membership interest in Arris LLC for 37,000,000 shares of Arris Group Common Stock. The Investor Rights Agreement. On April 9, 2001, Nortel Networks LLC, Nortel Networks Inc. and Arris Group entered into an Amended and Restated Investor Rights Agreement (the "Amended and Restated IR Agreement"), as amended by First Amendment to Amended and Restated Investor Rights Agreement dated as of August 3, 2001 (the "First Amendment to the IR Agreement" and, together with the Amended and Restated IR Agreement, the "Investor Rights Agreement"). A copy of the Amended and Restated IR Agreement is filed as Exhibit 4 to this Statement and incorporated herein by reference, and a copy of the First Amendment to the IR Agreement is filed as Exhibit 5 to this Statement and incorporated herein by reference. Directors; Voting of Shares. --------------------------- The Investor Rights Agreement sets forth the following terms for the selection of the board of directors of Arris Group and the voting of the shares of Arris Group Common Stock held by Nortel Networks: o on August 3, 2001, two nominees of Nortel Networks ("Investor Nominees") were appointed to the board of directors of Arris Group; o up to two Investor Nominees by Nortel Networks are to be included in any slate of director nominees recommended to the Arris Group stockholders by the Arris Group board of directors, provided that in the event that the shares of Arris Group Common Stock held by Nortel Networks decreases to (a) less than 20% of the outstanding shares of Arris Group Common Stock, Nortel Networks will be entitled to only one 6 CUSIP No. 04269Q100 13D Page 6 of 14 Pages Investor Nominee, and (b) less than 10% of the outstanding shares of Arris Group Common Stock, Nortel Networks will no longer be entitled to an Investor Nominee; o Nortel Networks will vote its shares of Arris Group Common Stock for the election of the slate of nominees proposed by the board of directors of Arris Group, provided that the Investor Nominees are included in such slate; o at least 60% of the members of the board of directors of Arris Group are to be unaffiliated with either Arris Group or Nortel Networks; and o the size of Arris Group's board of directors is currently 13 and without Nortel Networks' consent will not exceed 15 members. The initial Investor Nominees of Nortel Networks are Vickie L. Yohe, President of the Established Carriers Business at Nortel Networks, and Craig A. Johnson, Vice President and Department Head, Global Mergers and Acquisitions for Nortel Networks. Acquisition of Arris Group Securities. ------------------------------------- The Investor Rights Agreement sets forth the following limitations on transactions related to the acquisition of securities of Arris Group: Nortel Networks will not (a) with limited exceptions, acquire or propose to acquire greater than 49.9% of the outstanding shares of Arris Group Common Stock; (b) propose or seek to effect any merger, business combination, restructuring, recapitalization or similar transaction involving Arris Group or any of its subsidiaries or the sale of all or substantially all of the assets of Arris Group or any of its subsidiaries; (c) deposit Arris Group voting securities into a voting trust, unless such voting trust provides that such shares will be voted consistent with the provisions of the Investor Rights Agreement; (d) except for the exercise by the Investor Nominees of their fiduciary duties, seek election to, seek to place a representative on, or seek the removal of any member of, the Arris Group board of directors; (e) engage in a proxy contest or solicitation; or (f) call a meeting of stockholders or seek stockholder approval of any action or participate in a group with other holders of Arris Group voting securities. Notwithstanding the forgoing, Nortel Networks is authorized to participate in discussions or negotiations regarding the acquisition of Arris Group by an unaffiliated third party provided that such third-party's offer is for at least 90% of the outstanding shares of Arris Group Common Stock held by stockholders other than Nortel Networks, its affiliates or the third party (the "Unaffiliated Stockholders"). In addition, at least a majority of the shares of Arris Group Common Stock held by the Unaffiliated Stockholders must be tendered in the third-party offer. In the event that Nortel Networks acquires more than 49.9% of the outstanding Arris Group Common Stock as a result of an acquisition of an unaffiliated business entity, Arris Group may require Nortel Networks to dispose of shares held by it or its affiliates in excess of 49.9%. Such disposition must be completed within 12 months after Arris Group issues a request. The Investor Rights Agreement allows Nortel Networks to acquire greater than 49.9% of the Arris Group Common Stock provided that it makes an offer to acquire at least 90% of the outstanding Arris Group Common Stock. In the event that Arris Group does not accept Nortel Networks' offer, Arris Group is required to initiate an auction process for the sale of Arris Group. If Nortel Networks is not the successful bidder in the auction or does not elect to participate in the auction and Arris Group has received a fairness opinion from a nationally recognized investment banking firm that the successful bidder's transaction provides the highest value to Arris Group or its stockholders of all of the bids in the auction, then Nortel Networks is obligated to vote in favor of the winning transaction in the auction and to tender its shares of Arris Group Common Stock. Except in conjunction with a permitted offer, Nortel Networks may not become a 7 CUSIP No. 04269Q100 13D Page 7 of 14 Pages participant in the solicitation of proxies concerning any transaction relating to the voting securities of Arris Group. Nortel Networks has no current intention to acquire additional shares of Arris Group Common Stock. During the twelve month period ending in June 2002, Nortel Networks may, among other things sell a substantial percentage of the Arris Group Common Stock and to facilitate such sale, may exercise the demand registration rights described in this Item 6. Disposition of Arris Group Common Stock. --------------------------------------- The Investor Rights Agreement sets forth limitations on Nortel Networks' ability to sell or transfer any shares of Arris Group Common Stock, except a transfer to an affiliate of Nortel Networks. Nortel Networks may sell or transfer shares of Arris Group Common Stock only in the following transactions: (a) in a bona fide public offering effected in accordance with the Registration Rights Agreement (as defined below); (b) in a bona fide open market transaction as permitted by the provisions of Rule 144 under the Securities Act of 1933, as amended; or (c) in a privately-negotiated transaction to either an institutional investor or any other person, provided that (i) Nortel Networks may not sell or transfer shares to any institutional investor if, after giving effect to the sale or transfer, such investor would own shares representing more than 10% of the outstanding voting power of Arris Group, and (ii) Nortel Networks may not sell or transfer shares to any other person, other than an institutional investor, unless such person agrees to be bound by the provisions of the Investor Rights Agreement which limit transactions and dispositions of Arris Group capital stock. Right of Participation in the Sale of Arris Group. ------------------------------------------------- The Investor Rights Agreement provides that as long as Nortel Networks beneficially owns Arris Group Common Stock representing at least 20% of the total voting power of Arris Group, Arris Group may not enter into, and the Arris Group board of directors shall not publicly recommend to its stockholders or approve, a definitive agreement providing for a change in control of Arris Group, unless prior thereto Nortel Networks is provided with notice of the proposed transaction and the opportunity to participate in the bidding process. Termination. ----------- The Investor Rights Agreement may be terminated by either Arris Group or Nortel Networks if: o a transaction as a result of a third-party offer is consummated; o the parties mutually agree in writing; or o at any time after Nortel Networks and its affiliates cease to own shares representing at least 10% of the total voting power of Arris Group. Arris LLC Operating Agreement. Pursuant to the Arris LLC Operating Agreement, Nortel Networks Corporation may be required to, or under some circumstances may elect to, exchange its New Membership Interest for common stock, preferred stock (which may be convertible) or notes (which may be convertible) of Arris Group under limited circumstances. Shares of Arris Group Common Stock received by Nortel Networks Corporation upon the exchange of the New Membership Interest will be excluded from the provisions of the Investor Rights Agreement triggered upon Nortel Networks' ownership of more than 49.9% of the outstanding of Arris Group Common Stock. All other provisions of the Investor Rights Agreement will apply to any shares of Arris Group Common Stock received by Nortel Networks upon the exchange of the New Membership Interest. 8 CUSIP No. 04269Q100 13D Page 8 of 14 Pages Registration Rights Agreement. On August 3, 2001, Arris Group and Nortel Networks LLC entered into a Registration Rights Agreement (the "Registration Rights Agreement"), which sets forth the following registration rights and limitations regarding the Arris Group Common Stock: (a) Nortel Networks may require Arris Group to initiate a public offering for any shares requested to be sold by Nortel Networks, provided that the number of shares requested to be sold by Nortel Networks is equal to at least 5% of the then outstanding shares of Arris Group Common Stock and provided further that Arris Group is not required to effect more than three registrations on Form S-1; (b) Nortel Networks may not exercise its rights to request a registration more than once during any 90-day period; (c) Nortel Networks has the right to participate in and sell shares of stock held by it during any public offering of Arris Group stock, whether offered by Arris Group or any other stockholder; and (d) Arris Group will pay for Nortel Networks' expenses relating to its participation in a public offering, whether or not the offering is initiated by Nortel Networks. A copy of the Registration Rights Agreement is filed as Exhibit 6 to this Statement and incorporated herein by reference. The foregoing summaries of the Reorganization Agreement, the Investor Rights Agreement, the Arris LLC Operating Agreement and the Registration Rights Agreement do not purport to be complete and are qualified in their entirety by reference to the text of such agreements incorporated by reference herein. Except as provided in the Reorganization Agreement, the Investor Rights Agreement, the Arris LLC Operating Agreement or the Registration Rights Agreement or as set forth in this Statement, neither Nortel Networks Corporation nor, to the best of Nortel Networks Corporation's knowledge, any of the individuals named in Schedule I hereto has any contracts, arrangements, understandings or relationships (legal or otherwise) with any person with respect to any securities of Arris Group, including, but not limited to, transfer or voting of any of the securities, finder's fees, joint ventures, loan or option arrangements, puts or calls, guarantees of profits, division of profits or loss, or the giving or withholding of proxies. Item 7. Material To Be Filed as Exhibits. - ------ -------------------------------- Exhibit 1 -- Second Amended and Restated Limited Liability Company Agreement of Arris Interactive L.L.C., dated as of August 3, 2001, among Arris International, Inc. (f/k/a ANTEC Corporation), Arris Group, Inc. and Nortel Networks LLC Exhibit 2 -- Agreement and Plan of Reorganization, dated as of October 18, 2000, among ANTEC Corporation, Broadband Parent Corporation, Broadband Transition Corporation, Nortel Networks Inc., Nortel Networks LLC and Arris Interactive L.L.C. (Incorporated herein by reference to Exhibit 2.1 to Form 8-K (File No. 000-22336), filed by ANTEC Corporation on October 25, 2000) Exhibit 3 -- First Amendment to Agreement and Plan of Reorganization, dated as of April 9, 2001, among ANTEC Corporation, Broadband Parent Corporation, Broadband Transition Corporation, Nortel Networks Inc., Nortel Networks LLC and Arris Interactive L.L.C. (Incorporated herein by reference to Exhibit 2.1 to Form 8-K (File No. 000-22336), filed by ANTEC Corporation on April 13, 2001) Exhibit 4 -- Amended and Restated Investor Rights Agreement, dated as of April 9, 2000, among Broadband Parent Corporation, Nortel Networks Inc. and Nortel Networks LLC 9 CUSIP No. 04269Q100 13D Page 9 of 14 Pages (Incorporated herein by reference to Exhibit 10.1 to Form 8-K (File No. 000-22336), filed by ANTEC Corporation on April 13, 2001) Exhibit 5 -- First Amendment to Amended and Restated Investor Rights Agreement, dated as of August 3, 2001, among Arris Group, Inc., Nortel Networks Inc. and Nortel Networks LLC (Incorporated herein by reference to Exhibit 10.2 to Form 8-A (File No. 001-16631), filed by Arris Group, Inc. on August 3, 2001) Exhibit 6 -- Registration Rights Agreement, dated as of August 3, 2001, between Arris Group, Inc. and Nortel Networks LLC 10 CUSIP No. 04269Q100 13D Page 10 of 14 Pages SIGNATURES After reasonable inquiry and to the best of the knowledge and belief of the undersigned, the undersigned certify that the information set forth in this statement is true, complete and correct. Date: August 9, 2001 NORTEL NETWORKS CORPORATION By: /s/ Douglas Beatty ------------------------------------ Douglas Beatty Controller By: /s/ Blair F. Morrison ------------------------------------ Blair F. Morrison Assistant Secretary 11 CUSIP No. 04269Q100 13D Page 11 of 14 Pages SCHEDULE 1 DIRECTORS AND OFFICERS OF NORTEL NETWORKS CORPORATION The name, citizenship, present principal occupation or employment, and the name of any corporation or other organization in which such employment is conducted, of each of the directors and executive officers of Nortel Networks Corporation is set forth below. Unless otherwise indicated below, the business address of each director and executive officer is Nortel Networks Corporation, 8200 Dixie Road, Suite 100, Brampton, Ontario L6T 5P6, Canada. NAME AND CITIZENSHIP PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT Directors - --------- Blanchard, James J. Verner, Liipfert, Bernhard, McPherson and Hand American 901-15th Street, N.W., Suite 700 Washington, D.C. 20005-2301 U.S.A. Brown, Robert E. President and Chief Executive Officer Canadian/British Bombardier Inc. 800 Rene-Levesque Boulevard West Montreal, Quebec H3B 1Y8 Canada Cleghorn, John E. Chairman and Chief Executive Officer Canadian Royal Bank of Canada 200 Bay Street, South Tower, 8th Floor Royal Bank Plaza Toronto, Ontario L5J 2J5 Canada Dunn, Frank A. Chief Financial Officer Canadian Fortier, L. Yves Chairman & Senior Partner Canadian Ogilvy Renault 1981 McGill College Avenue, 12th Floor Montreal, Quebec H3A 3C1 Canada Ingram, Robert A. Chief Operating Officer and President, American Pharmaceutical Operations GlaxoSmithKline 5 Moore Drive, Research Triangle Park, N.C. 27709 U.S.A. Roth, John A. President and Chief Executive Officer Canadian Saucier, Guylaine Chairman of the Joint Committee on Corporate Canadian Governance 1321 Sherbrooke Street West, Apartment C-61 Montreal, Quebec H3G 1J4 Canada 12 CUSIP No. 04269Q100 13D Page 12 of 14 Pages Smith, Jr., Sherwood H. Chairman Emeritus American Carolina Power & Light Company One Hanover Square Building 421 Fayetteville Street Mall Raleigh, N.C. 27601-1748 U.S.A. Wilson, Lynton R. Chairman Canadian CAE Inc. 181 Bay Street, Suite 4700 P.O. Box. 794 Toronto, Ontario M5J 2T3 Canada Officers - -------- DeRoma, Nicholas, J. Chief Legal Officer American Mao, Robert Y.L. Chief Executive Officer, Nortel China American Ricks, Richard C. Chief Information Officer American Alan Kember Chief Marketing Officer Canadian Donahee, Gary R. President, Americas Canadian Debon, Pascal President, Europe, Middle East & Africa Canadian Tariq, Masood A. President, Asia American Bolouri, Chahram President, Global Operations Canadian Mumford, D. Gregory President, Optical Internet Canadian Plastina, Frank President, Wireless and Core Networks Canadian Meunier, Jules M.J. President, Wireless Canadian Ross, Eric J. President, Enterprise Solutions and Canadian Customer Care Childers, Charles A. President, Major Accounts American 13 CUSIP No. 04269Q100 13D Page 13 of 14 Pages Schilling, Steven L. President, Optical Ethernet American Srikanth, Kannankote S. President, Professional Services American Yohe, Vickie L. President, Established Carrier Businesses American Carney, Lloyd A. President, Core IP Networks Canadian McFadden, Brian W. President, Metropolitan Optical Canadian Kerr, William R. Senior Vice-President, Corporate Business Canadian Development Burn, David L. Vice-President, Taxation Canadian Donovan, William J. Senior Vice-President, Human Resources American Noble, Deborah J. Corporate Secretary Canadian Beatty, Douglas C. Controller Canadian Stevenson, Katharine B. Treasurer Canadian Morrison, Blair F. Assistant Secretary Canadian Mezon, Linda F. Assistant Controller Canadian/American Doolittle, John M. Assistant Treasurer Canadian Kaye, Robert B. General Auditor Canadian Bush, Kriss W. Vice-President, Tax American 14 CUSIP No. 04269Q100 13D Page 14 of 14 Pages Exhibits/Index -------------- Exhibit 1 Second Amended and Restated Limited Liability Company Agreement of Arris Interactive L.L.C., dated as of August 3, 2001, among Arris International, Inc. (f/k/a ANTEC Corporation), Arris Group, Inc. and Nortel Networks LLC Exhibit 2 Agreement and Plan of Reorganization, dated as of October 18, 2000, among ANTEC Corporation, Broadband Parent Corporation, Broadband Transition Corporation, Nortel Networks Inc., Nortel Networks LLC and Arris Interactive L.L.C. (Incorporated herein by reference to Exhibit 2.1 to Form 8-K (File No. 000-22336), filed by ANTEC Corporation on October 25, 2000) Exhibit 3 First Amendment to Agreement and Plan of Reorganization, dated as of April 9, 2001, among ANTEC Corporation, Broadband Parent Corporation, Broadband Transition Corporation, Nortel Networks Inc., Nortel Networks LLC and Arris Interactive L.L.C. (Incorporated herein by reference to Exhibit 2.1 to Form 8-K (File No. 000-22336), filed by ANTEC Corporation on April 13, 2001) Exhibit 4 Amended and Restated Investor Rights Agreement, dated as of April 9, 2000, among Broadband Parent Corporation, Nortel Networks Inc. and Nortel Networks LLC (Incorporated herein by reference to Exhibit 10.1 to Form 8-K (File No. 000-22336), filed by ANTEC Corporation on April 13, 2001) Exhibit 5 First Amendment to Amended and Restated Investor Rights Agreement, dated as of August 3, 2001, among Arris Group, Inc., Nortel Networks Inc. and Nortel Networks LLC (Incorporated herein by reference to Exhibit 10.2 to Form 8-A (File No. 001-16631), filed by Arris Group, Inc. on August 3, 2001) Exhibit 6 Registration Rights Agreement, dated as of August 3, 2001, between Arris Group, Inc. and Nortel Networks LLC EX-1 3 t27986ex1.txt LIMITED LIABILITY COMPANY AGREEMENT 1 EXHIBIT 1 TO FORM 13D SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT OF ARRIS INTERACTIVE L.L.C., A DELAWARE LIMITED LIABILITY COMPANY AUGUST 3, 2001 THE INTERESTS IN ARRIS INTERACTIVE L.L.C. (THE "INTERESTS") ARE SUBJECT TO THE RESTRICTIONS ON TRANSFER AND OTHER TERMS AND CONDITIONS SET FORTH IN ARTICLE VIII OF THIS AGREEMENT. THE INTERESTS HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND HAVE NOT BEEN REGISTERED UNDER (I) ANY STATE SECURITIES LAWS, OR (II) THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). NEITHER THE INTERESTS, NOR ANY PART THEREOF, MAY BE OFFERED FOR SALE, PLEDGED, HYPOTHECATED, SOLD, ASSIGNED OR TRANSFERRED AT ANY TIME EXCEPT (A) IN COMPLIANCE WITH THE TERMS AND CONDITIONS OF ARTICLE VIII OF THIS AGREEMENT AND (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR IN A TRANSACTION WHICH IS EXEMPT FROM REGISTRATION UNDER SUCH LAWS OR WHICH IS OTHERWISE IN COMPLIANCE WITH SUCH LAWS. 2 TABLE OF CONTENTS ARTICLE I DEFINITIONS.........................................................1 1.01. Definitions...........................................................1 1.02. Exhibits and Schedules................................................9 1.03. Other Capitalized Terms...............................................9 ARTICLE II GENERAL.............................................................9 2.01. Formation and Management..............................................9 2.02. Name of the Limited Liability Company.................................9 2.03. Office of the Limited Liability Company and Agent for Service of Process...............................................10 2.04. Qualification........................................................10 2.05. Purposes.............................................................10 2.06. Members..............................................................10 2.07. Term.................................................................10 2.08. Liability of Members.................................................10 2.09. No Partnership.......................................................11 2.10. Title to Company Property............................................11 2.11. No Individual Authority..............................................11 2.12. Investment Representations...........................................11 ARTICLE III CAPITAL CONTRIBUTIONS; ADDITIONAL FINANCING......................11 3.01. Capital Accounts.....................................................11 3.02. Capital Contributions................................................12 3.03. Other Contributions: No Withdrawal of or Interest on Capital.........12 3.04. Third Party Loans....................................................12 3.05. Member Loans.........................................................12 3.06. Reduction of Capital Accounts........................................12 3.07. Capital Accounts.....................................................12 3.08. Negative Capital Accounts............................................14 3.09. No Resignation or Withdrawal of Capital..............................14 ARTICLE IV DISTRIBUTIONS......................................................14 4.01. Distribution of Cash Flow............................................14 4.02. Distribution of Capital Proceeds.....................................14 3 4.03. Limitations on Distributions.........................................14 4.04. Class B Member Distribution Preference in Bankruptcy.................14 4.05. Tax Withholding......................................................15 4.06. No Limitations on Redemption.........................................15 ARTICLE V ALLOCATION OF NET PROFITS AND NET LOSSES...........................16 5.01. Net Profit...........................................................16 5.02. Net Loss.............................................................16 5.03. Limitation on Net Loss Allocations...................................16 5.04. Other Items..........................................................16 5.05. Special Allocations..................................................16 5.06. Curative Allocations.................................................18 5.07. Other Allocation Rules...............................................18 5.08. Section 704(c) Allocation............................................19 ARTICLE VI MANAGEMENT........................................................19 6.01. Management of the Company............................................19 6.02. Officers.............................................................20 6.03. Binding the Company..................................................21 6.04. Contracts with Members...............................................21 6.05. Required Approval by Members.........................................21 6.06. Member Action........................................................22 6.07. Indemnification......................................................23 ARTICLE VII FISCAL MATTERS...................................................25 7.01. Books and Records....................................................25 7.02. Financial and Other Reports..........................................26 7.03. Bank Accounts........................................................26 7.04. Tax Matters Partner..................................................26 7.05. Tax Elections and Decisions..........................................27 ARTICLE VIII TRANSFERS OF INTERESTS..........................................27 8.01. General Restrictions on Transfer.....................................27 8.02. Redemption of Interest of Class B Interest...........................28 8.03. Mandatory Exchange for New Securities................................30 ARTICLE IX DISSOLUTION AND LIQUIDATION.......................................33 9.01. Events Causing Dissolution...........................................33 ii 4 9.02. Procedures on Dissolution............................................33 9.03. Distributions Upon Liquidation.......................................34 ARTICLE X MISCELLANEOUS PROVISIONS...........................................35 10.01. Applicable Law.......................................................35 10.02. Counterparts.........................................................35 10.03. Separability of Provisions...........................................35 10.04. Article and Section Titles...........................................35 10.05. Amendments...........................................................35 10.06. No Third Party Beneficiaries.........................................35 10.07. Successors and Assigns...............................................36 10.08. Notice...............................................................36 10.09. Subordination........................................................37 iii 5 ARRIS INTERACTIVE L.L.C. SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT THIS SECOND AMENDED AND RESTATED LIMITED LIABILITY COMPANY AGREEMENT of ARRIS INTERACTIVE L.L.C., a Delaware limited liability company (the "Company"), dated and effective as of August 3, 2001 (the "Closing Date"), by and among ANTEC Corporation, a Delaware corporation that is in the process of changing its name to Arris International, Inc. ("ANTEC"), Arris Group, Inc., a Delaware corporation ("Newco"), and Nortel Networks LLC, a Delaware limited liability company ("Nortel"). WHEREAS, ANTEC and Nortel, as the only members, are parties to the Amended and Restated Limited Liability Company Agreement of Arris Interactive L.L.C., dated as of March 31, 1999 (the "Amended and Restated Limited Liability Company Agreement"); WHEREAS, in connection with the transactions contemplated by the Agreement and Plan of Reorganization, dated as of October 18, 2000, as amended (the "Agreement and Plan of Reorganization"), among ANTEC, Newco, Broadband Transition Corporation, a Delaware corporation, Nortel Networks Inc., a Delaware corporation ("Nortel Networks"), Nortel, and the Company, the parties hereto desire to amend and restate the Amended and Restated Limited Liability Company Agreement in its entirety. NOW, THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, ANTEC and Nortel hereby agree to amend and restate the Amended and Restated Limited Liability Company Agreement in its entirety 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: "Act" shall mean the Delaware Limited Liability Company Act, as amended from time to time. "Administrative Agent" shall have the meaning specified in the Senior Credit Agreement. "Adjusted Capital Account Balance" shall mean with respect to any Member, the balance, in such Member's Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: 6 (i) credit to such Capital Account any amounts which such Member is obligated to restore, because of a promissory note to the Company or otherwise pursuant to Regulation Section 1.704-1(b)(2)(ii)(c), or is deemed to be obligated to restore pursuant to the penultimate sentence in each of Regulation Sections 1.704-2(g)(1)(ii) and 1.704-2(i)(5); and (ii) debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of the Regulations. This definition of Adjusted Capital Account Balance is intended to comply with Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently with such Regulations. "Affiliate" shall mean, with respect to any specified Person, any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person; provided, however, that none of the Company, Newco and ANTEC shall, for the purposes of this Agreement, be, or be deemed or construed to be, an Affiliate of Nortel, Nortel Networks or any of their respective Affiliates. "Agreement" shall mean this Second Amended and Restated Limited Liability Company Agreement as it may be amended, restated, amended and restated, supplemented, or otherwise modified from time to time. "ANTEC" shall have the meaning set forth in the introductory paragraph hereof. "Assignee" shall have the meaning set forth in Section 8.01(a) hereof. "Bankruptcy" means the occurrence of any of the events specified in Section 8.6 or Section 8.7 of the Senior Credit Agreement. "Borrowers" shall have the meaning specified in the Senior Credit Agreement. "Capital Account" shall have the meaning specified in Section 3.07 hereof. "Capital Contribution" shall mean any contribution by a Member to the capital of the Company. "Capital Proceeds" shall mean the net proceeds from: (i) loans to the Company in excess of current or reasonably anticipated Company needs (including reasonable reserves for Company debt obligations and working capital as determined by the Managing Member) or excess funds received from refinancing of any Company indebtedness (x) after the payment of, or provision for the payment of, all costs and expenses incurred by the Company in connection with such refinancing, and (y) after deduction or retention of such sums as are deemed necessary to be retained as a reserve for the conduct of the business of the Company; and 2 7 (ii) any sale, exchange, condemnation or other disposition of any capital asset of the Company or from claims on policies of insurance maintained by the Company for damage to or destruction of capital assets of the Company or the loss of title thereto (to the extent that such proceeds exceed the actual or estimated costs of repairing or replacing the assets damaged or destroyed if, pursuant to this Agreement, such assets are repaired or replaced) (x) after the payment of, or provision for the payment of, all costs and expenses incurred by the Company in connection with such sale or other disposition or the receipt of such insurance proceeds, as the case may be, and (y) after deduction or retention of such sums as are deemed necessary by the Managing Member to be retained as a reserve for the conduct of the business of the Company. "Cash Flow" shall mean for any period the Gross Receipts of the Company for such period less Operating Expenses for such period. "Certificate" shall mean the Certificate of Formation of the Company filed under and pursuant to the Act with the Office of the Secretary of State of the State of Delaware, as it may, from time to time, be amended in accordance with the Act. "Certificate of Designations" shall mean the Certificate of Designations of Series A Convertible Subordinated Preferred Stock of Newco in the form of Exhibit 1 hereto. "Change of Control," with respect to Newco, shall have the meaning set forth in the Indenture dated as of May 18, 1998, between ANTEC and The Bank of New York, as it may be amended, restated, amended and restated, supplemented or otherwise modified from time to time. "Class A Interest" shall mean all of a Class A Member's limited liability company interest in the Company, including the rights to receive allocations and distributions, to vote, and to consent or approve. "Class A Members" shall mean ANTEC and Newco and any transferees of ANTEC or Newco permitted hereunder. "Class A Sharing Ratio" shall mean, with respect to each Class A Member, the percentage set forth opposite such Class A Member's name on Schedule A. "Class B Interest" shall mean the Class B Member's limited liability company interest in the Company, which includes the specified right to receive allocations pursuant to Article V and distributions pursuant to Article IV and the redemption rights provided in Section 8.02 but does not include the right to vote in matters of the Company unless expressly stated otherwise in this Agreement or required by the Act. "Class B Member" shall mean Nortel and any transferee of Nortel permitted hereunder so long as the Class B Interest has not been redeemed in full. 3 8 "Class B Return" shall mean an amount equal to ten percent (10%) per annum, compounded annually determined on the basis of a 360 day year, accruing to the extent not paid pursuant to Sections 4.01, 4.02, 8.02 or 9.03 herein, of the average daily balance of Class B Unreturned Capital during the period commencing on the Closing Date and ending on the date of any calculation. "Class B Unreturned Capital" shall mean an amount equal to the excess, if any, of (i) the sum of (A) the Initial Class B Balance and (B) the Class B Return compounded as set forth in the definition of "Class B Return" herein, over (ii) the aggregate amount actually distributed to Class B Member after the Closing Date pursuant to Sections 4.01, 4.02, 8.02 or 9.03 herein. "Closing Date" shall have the meaning set forth in the introductory paragraph hereof. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time. "Company" shall have the meaning set forth in the introductory paragraph hereof. "Default" and "Event of Default" shall have the meaning specified in the Senior Credit Agreement. "Depreciation" shall mean for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Managing Member. "DGCL" shall mean the General Corporation Law of the State of Delaware, as amended from time to time. "Excess Availability" shall have the meaning specified in the Senior Credit Agreement. "Fair Market Value" shall mean, with respect to Newco Common Stock, the average closing price per share of Newco Common Stock on The Nasdaq Stock Market (or, if Newco Common Stock is not then trading thereon, such other nationally recognized stock market or exchange, if any, on which Newco Common Stock may then be actively traded) for the twenty (20) consecutive trading days ending two (2) trading days prior to the date of determination. In the absence of trading of Newco Common Stock in such trading markets, the Fair Market Value shall be as reasonably determined by the board of directors of Newco based upon a written valuation report prepared by an independent valuation firm. 4 9 "Fiscal Year" shall mean the twelve month period ending December 31 of each year; provided that the last Fiscal Year shall be the period beginning on January 1 of the calendar year in which the final liquidation and termination of the Company is completed and ending on the date such final liquidation and termination is completed (to the extent any computation or other provision hereof provides for an action to be taken on a Fiscal Year basis, an appropriate proration or other adjustment shall be made in respect of the first or final Fiscal Year to reflect that such period is less than a full calendar year period as determined by the Managing Member in its reasonable discretion). "Gross Asset Value" shall mean with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of such asset, as determined by the contributing Member and the Managing Member. (ii) The Gross Asset Values of all Company assets shall be adjusted to equal their respective gross fair market values, as determined by the Managing Member in its reasonable discretion, at each of the following times: (a) the acquisition of an additional Interest in the Company by any new or existing Member for more than a de minimis contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Company property as consideration for an Interest in the Company; and (c) the liquidation of the Company within the meaning of Section 1.704-1(b)(2)(ii)(g) of the Regulations; provided, however, that the adjustments pursuant to clauses (a) and (b) above shall be made only if the Managing Member reasonably determines that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company. (iii) The Gross Asset Value of any Company asset distributed to any Member shall be the gross fair market value of such asset on the date of distribution as determined by the Managing Member in its reasonable discretion. (iv) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to the extent that such adjustments are taken into account in determining the Capital Accounts pursuant to Regulation Section 1.704-1(b)(2)(iv)(m), clause (iv) of the definition of "Net Profit" or "Net Loss," and Section 5.05(g) hereof, provided, however, that Gross Asset Values shall not be adjusted pursuant to this subsection to the extent the Managing Member determines that an adjustment pursuant to subsection (ii) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subsection. (v) If the Gross Asset Value of an asset has been determined or adjusted 5 10 pursuant to paragraphs (i), (ii) or (iv) above, such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Net Profit and Net Loss. "Gross Receipts" shall mean receipts (other than Capital Proceeds and Capital Contributions), calculated on an accrual basis, from the conduct of the business of the Company from all sources. "Indemnitee" shall have the meaning set forth in Section 6.07 hereof. "Initial Class B Balance" shall mean the amount of $100,000,000. "Interest" shall mean Class A Interest or Class B Interest (if any) or any other class of interest in the Company subsequently created pursuant to this Agreement. "Law" or "Laws" shall mean federal, state and local statutes, case law, rules, regulations, ordinances, codes and the like which are in full force and effect from time to time and which affect the Company or the operation of the Company's business. "Liquidator" shall mean any Person or Persons (including the Managing Member and one or more officers of the Company) charged with winding up and/or liquidating the business, affairs and/or assets of the Company in accordance with the provisions hereof, each of which Persons shall be deemed to be a "liquidating trustee" within the meaning of the Act. "Managing Member" shall mean initially Newco, or any successor Managing Member elected by the Class A Members owning, in the aggregate, a majority of the Class A Interests. "Maximum Quarterly Class B Redemption" shall have the meaning set forth in Section 8.02(a) hereof. "Member" shall mean each of Newco, ANTEC and Nortel and any other Person hereafter admitted to the Company as a member as provided in this Agreement, but such term does not include any Person which has ceased to be a member of the Company, unless the Agreement states otherwise. "Member Loan" shall mean a loan made by a Member pursuant to Section 3.05. "Net Profit" or "Net Loss" shall mean for each Fiscal Year the Company's taxable income or taxable loss for such Fiscal Year, as determined under Section 703(a) of the Code, and Regulation Section 1.703-1, but with the following adjustments: (i) Any tax exempt income, as described in Section 705(a)(1)(B) of the Code, realized by the Company during such Fiscal Year shall be added to such taxable income or taxable loss; 6 11 (ii) Any expenditures of the Company described in Section 705(a)(2)(B) of the Code for such Fiscal Year or treated as being so described in Regulation Section 1.704-1(b)(2)(iv)(i) and not otherwise taken into account in this subsection shall be subtracted from such taxable income or taxable loss; (iii) The amount of any gain or loss required to be recognized by the Company during such Fiscal Year by reason of a sale or other disposition of Company property, and any depreciation, amortization or cost recovery deductions with respect to Company property to which the Company is entitled for any Fiscal Year, shall be computed as if the Company's adjusted basis in such property for income tax purposes were equal to the Gross Asset Value (and taking into account Depreciation in lieu of such depreciation, amortization or cost recovery deductions), and any adjustment to the Gross Asset Value shall be treated as a Net Profit or Net Loss; and (iv) to the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required pursuant to Regulation Section 1.704-1(b)(2)(iv)(m)(4) to be taken into account in determining Capital Accounts as a result of a distribution other than in complete liquidation of a Member's Interest, the amount of such adjustment shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases the basis of the asset) from the disposition of the asset and shall be taken into account for purposes of computing Net Profit or Net Loss. This definition is intended to comply with the Regulations and any and all other items which must be included in Net Profit or Net Loss in order for this Agreement to comply with said Regulations shall be included in such concept. Notwithstanding any other provision of this definition, any items of income, gain, deduction, loss or credit which are specially allocated shall not be taken into account in computing Net Profit or Net Loss. The intent of this definition is that no reference to Net Profit or Net Loss include such specially allocated items. "New Securities" shall have the meaning set forth in Section 8.03 hereof. "Newco" shall have the meaning set forth in the introductory paragraph hereof. "Newco Preferred Stock" shall mean the Series A Convertible Subordinated Preferred Stock of Newco, par value $1.00 per share, having the powers, designations, preferences and rights specified in the Certificate of Designations. "Nortel" shall have the meaning set forth in the introductory paragraph hereof. "Officers" shall have the meaning set forth in Section 6.02 hereof. "Operating Expenses" shall mean all expenditures of any kind incurred by the Company after the Closing Date hereof in the normal course of its business, including, without limitation, debt service (principal and interest) payable on indebtedness of the Company (whether to a third party or to a Member), plus such sums as are deemed reasonably necessary by the Managing Member as a reserve to be retained for the conduct of the business of the Company, and capital 7 12 expenditures and investments in other assets, but excluding, without duplication: (A) payments with respect to federal, state or local income, franchise or similar taxes of any Member and all kinds of taxes payable in lieu thereof, and (B) any non-cash charges for depreciation or amortization of any Company asset. "Optional Indemnitee" shall have the meaning set forth in Section 6.07 hereof. "Person" shall mean any corporation, limited or general partnership, limited liability company, trust, unincorporated association, any other entity or organization, governmental agency, bureau, department or other body, or an individual. "Regulations" shall mean the United States Department of Treasury Regulations (including Temporary Regulations) promulgated under the Code. "Revolving Loan Commitment Termination Date" shall have the meaning specified in the Senior Credit Agreement. "Regulatory Allocations" shall have the meaning set forth in Section 5.06 hereof. "Securities Act" shall mean the Securities Act of 1933, as amended. "Senior Credit Agreement" shall mean the Credit Agreement, of even date herewith, by and among the Company, ANTEC, Credit Suisse First Boston, The CIT Group/Business Credit, Inc., and a syndicate of banks, financial institutions and other investors party thereto, as such Credit Agreement may be amended, restated, amended and restated, supplemented, or otherwise modified. References to provisions of, and terms defined in, the Senior Credit Agreement shall be interpreted as applying equally to the comparable provisions and terms of any such amendment, restatement, amendment and restatement, supplement or other modification. "Senior Credit Facilities" shall mean (i) the senior secured revolving credit facility providing for revolving loans and other extensions of credit in an aggregate principal amount of $175,000,000 pursuant to the Senior Credit Agreement as such $175,000,000 in aggregate principal amount of revolving loans and other extensions of credit may be increased by additional revolving loans and additional extensions of credit pursuant to an uncommitted facility of up to $25,000,000 in aggregate principal amount made available to the Borrowers pursuant to the Senior Credit Agreement; (ii) any refinancing, refunding, replacement, restatement, amendment, amendment and restatement, renewal, restructuring (including without limitation to increase the amount of available borrowing thereunder (but not above $200,000,000 in aggregate principal amount outstanding at any time), supplement or other modification of such facilities and (iii) the definitive documentation including credit, guarantee, security, intercreditor and other related instruments and documentation evidencing such facilities, in each case as amended, restated, amended and restated, refinanced, refunded, renewed, replaced, restructured (including without limitation to increase the amount of available borrowing thereunder (but not above $200,000,000 in aggregate principal amount outstanding at any time), supplemented or otherwise modified. "Senior Debt" shall have the meaning specified in the Subordination Agreement. 8 13 "Special Allocations" shall mean allocations made pursuant to Section 5.05 hereof. "Subordination Agreement" shall mean the Subordination Agreement dated as of August 3, 2001, among Nortel, The CIT Group/Business Credit, Inc., as Administrative Agent, Newco, and the Company, as such Subordination Agreement may be amended, restated, amended and restated, supplemented or otherwise modified from time to time. "Transfer" shall refer to any sale, exchange, redemption, assignment, conveyance, license, sublicense, encumbrance, hypothecation, gift, pledge, grant of a security interest, or other transfer, disposition or alienation in any way (whether voluntarily, involuntarily, by reason of merger involving the Company, by operation of law, or otherwise). Transfer shall specifically include assignments and distributions resulting from death, incompetency, bankruptcy, insolvency, liquidation and dissolution. 1.02 EXHIBITS AND SCHEDULES. The Exhibits and Schedules attached hereto are hereby incorporated by this reference. 1.03 OTHER CAPITALIZED TERMS. Capitalized terms not otherwise defined herein shall have the respective meanings given them in the Agreement and Plan of Reorganization. ARTICLE II GENERAL 2.01 FORMATION AND MANAGEMENT. On November 9, 1995, the Company was formed as a Delaware limited liability company by delivering the Certificate to the Delaware Secretary of State in accordance with the provisions of the Act. The Company shall be managed by the Managing Member in accordance with Section 6.01 of this Agreement and the rights and obligations of the Members shall be governed by this Agreement and by the Act. If there is a conflict between the provisions of this Agreement and the Act, the provisions of the Act shall control (it being understood that if the Act provides for a particular rule but allows the members of a limited liability company to provide to the contrary in the limited liability company agreement, and if the parties hereto have so provided hereunder, then such provisions shall not be deemed to constitute a conflict for purposes of the foregoing). 2.02 NAME OF THE LIMITED LIABILITY COMPANY. The name of the Company is "Arris Interactive L.L.C." The name of the Company may be changed at any time or from time to time by the Managing Member. 2.03 OFFICE OF THE LIMITED LIABILITY COMPANY AND AGENT FOR SERVICE OF PROCESS. The address of the registered office of the Company in the State of Delaware is Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801. The name of the resident agent at such address for service of process on the Company in the State of Delaware is The 9 14 Corporation Trust Company. The Managing Member may cause the Company to change from time to time its resident agent for service of process, or the location of its registered office in the State of Delaware. The Company's principal place of business shall be located at Atlanta, Georgia. The Managing Member may establish places of business of the Company within and without the State of Georgia, as and when required by the Company's business and in furtherance of its purposes set forth in Section 2.05 hereof, and may appoint agents for service of process in all jurisdictions in which the Company shall conduct business. 2.04 QUALIFICATION. The Managing Member shall cause to be filed such certificates and documents as may be necessary or appropriate to comply with the Act and any other applicable requirements for the operation of a limited liability company in accordance with the laws of the jurisdictions in which the Company shall conduct business, and shall continue to do so for so long as the Company conducts business therein. 2.05 PURPOSES. The Company is formed for the object and purpose of, and the nature of the business to be conducted and promoted by the Company is, engaging in any lawful act or activity for which limited liability companies may be formed under the Act and engaging in any and all activities necessary, convenient, desirable or incidental to the foregoing. 2.06 MEMBERS. The current Members of the Company are Newco, ANTEC and Nortel. Subject to Section 6.05 and compliance with the other provisions of this Agreement, additional members may be admitted to the Company, solely upon the prior written consent of the Managing Member, which may be withheld for any or no reasons, unless stated otherwise in this Agreement (including, without limitation, Section 8.01(b)). 2.07 TERM. The existence of the Company commenced upon the effectiveness of the Certificate and the Company shall have a perpetual existence, unless and until it is dissolved and terminated in accordance with Article IX. 2.08 LIABILITY OF MEMBERS. Except as otherwise expressly provided by the Act, the debts, obligations and liabilities of the Company, whether arising in contract, tort or otherwise, shall be solely the debts, obligations and liabilities of the Company, and no Member shall be obligated personally for any such debt, obligation or liability of the Company solely by reason of being a Member. Without limiting the foregoing, (a) no Member, in its capacity as a Member, shall have any liability or obligation to restore any negative balance in its Capital Account, and (b) the failure of the Company to observe any formalities or requirements relating to exercise of its powers or management of its business or affairs under this Agreement or the Act shall not be grounds for imposing personal liability on the Members for liabilities of the Company. 2.09 NO PARTNERSHIP. The Company is not intended to be a general partnership, limited partnership or joint venture, and no Member shall be considered to be a partner or joint venture of any other Member, for any purposes other than foreign and domestic federal, state, provincial and local income tax purposes, and this Agreement shall not be construed to suggest otherwise. 10 15 2.10 TITLE TO COMPANY PROPERTY. All property owned by the Company, whether real or personal, tangible or intangible, shall be deemed to be owned by the Company as an entity, and no Member, individually, shall have any ownership of such property. The Company may hold any of its assets in its own name or in the name of its nominee, which nominee may be one or more trusts. Any property held by a nominee trust for the benefit of the Company shall, for purposes of this Agreement, be treated as if such property were directly owned by the Company. 2.11 NO INDIVIDUAL AUTHORITY. No Member shall, without the express, prior written consent of the Managing Member, take any action for or on behalf of or in the name of the Company, or assume, undertake or enter into any commitment, debt, duty or obligation binding upon the Company, except for actions expressly provided for in this Agreement, and any action taken in violation of the foregoing limitation shall, to the fullest extent permitted by law, be void. 2.12. INVESTMENT REPRESENTATIONS. (a) Investment Intent. Each Member hereby represents and warrants to each other Member and to the Company that it has acquired its interest in the Company solely for its own account with the intention of holding such interest for investment purposes only. (b) Unregistered Interests. Each Member hereby acknowledges that it is aware that its Interests have not been registered under the Securities Act or under any state securities laws. Each Member further understands and acknowledges that its representations and warranties contained in this Section 2.13 are being relied upon by the Company and by the other Members as the basis for the exemption of the Members' Interests in the Company from the registration requirements of the Securities Act and under all state securities laws. Subject to Section 6.05(c), each Member further acknowledges that the Company will not and has no obligation to recognize any sale, transfer, or assignment of a Member's Interest in the Company to any Person unless and until the provisions of Article VIII hereof applicable to such sale, transfer or assignment have been fully satisfied. ARTICLE III CAPITAL CONTRIBUTIONS; ADDITIONAL FINANCING 3.01 CAPITAL ACCOUNTS. For each Member (and each permitted assignee), the Company shall establish and maintain a separate Capital Account. The initial Capital Account balances of the Members as of the Closing Date shall be set forth in Schedule A. 3.02 CAPITAL CONTRIBUTIONS. Pursuant to the Agreement and Plan of Reorganization, on the Closing Date, Nortel shall contribute the amounts specified in Section 4.02 of the Agreement and Plan of Reorganization. In exchange for such contribution, the Company shall issue to Nortel the Class B Interest. 11 16 3.03 OTHER CONTRIBUTIONS: NO WITHDRAWAL OF OR INTEREST ON CAPITAL. Each Class A Member may contribute to the capital of the Company any amounts requested by the Managing Member to be so contributed. The Class B Member may not further contribute to the capital of the Company and shall have no obligation to make any further or additional Capital Contribution. No interest shall accrue on any Capital Contributions, and no Member shall have the right to withdraw or to have returned or be repaid any Capital Contribution made by it or to receive any other payment in respect of its Interest, except as specifically provided in this Agreement (including, without limitation, Sections 8.02 and 9.03). 3.04 THIRD PARTY LOANS. In the event that the Company requires additional funds to carry out its purposes, to conduct its business and affairs, or to meet its obligations, or to make any expenditure authorized by this Agreement, the Company may borrow funds from such Persons, and on such terms and conditions, as may be approved by the Managing Member. 3.05 MEMBER LOANS. Any Member, including the Managing Member, may lend funds to the Company to carry out its purposes, to conduct its business and affairs, or to meet its obligations, or to make any expenditure authorized by this Agreement, in each case upon the approval of the Managing Member (provided that the Class B Member shall have no obligation to lend any such funds to the Company, and this Agreement shall not be construed to suggest otherwise). Unless otherwise agreed by the lender and the Managing Member, a Member Loan shall bear interest at the "prime rate" published by The Wall Street Journal plus two percent (2%) and shall be payable out of Cash Flow, Capital Proceeds or on liquidation as provided in Sections 4.01, 4.02 and 9.03, respectively; provided that in all events all other terms of any Member Loan shall be commercially reasonable and established on an arms-length basis. 3.06 REDUCTION OF CAPITAL ACCOUNTS. Any distribution to a Member, whether pursuant to Section 4.01 or 4.02 or any other Section of this Agreement, shall reduce the amount of such Member's Capital Account in accordance with Section 3.07, but no adjustment in the Interests of any Member shall be made on account of any such distribution, except as otherwise specifically provided in this Agreement. 3.07. CAPITAL ACCOUNTS. (a) "Capital Account" means an account that shall be maintained for each Member and which, as of any given date, shall be an amount equal to the following: (i) The aggregate amount of cash that has been contributed to the capital of the Company as of such date by or on behalf of such Member; plus (ii) The agreed upon Gross Asset Value (as of the date of contribution) of any property other than cash that has been contributed to the capital of the Company as of such date by such Member and the amount of liabilities assumed by any such Member under Section 752 of the Code or which is secured by any Company property distributed to such Member; plus 12 17 (iii) The aggregate amount of the Company's Net Profit that has been allocated to such Member as of such date pursuant to the provisions of Section 5.01 or any items of income or gain which are specially allocated to such Member or other positive adjustment required by the Regulations and which have not been previously taken into account in determining Capital Accounts; minus (iv) The aggregate amount of the Company's Net Loss that has been allocated to such Member as of such date pursuant to Section 5.02 and the amount of any item of expense deduction or loss which is specially allocated to such Member; and minus (v) The aggregate amount of cash and the agreed upon Gross Asset Value of all other property (as of the date of distribution) that has been distributed to or on behalf of such Member and the amount of any liabilities of such Member assumed by the Company under Section 752 of the Code or which are secured by any property contributed by such Member to the Company or other negative adjustment required by the Regulations and which have not been previously taken into account in determining Capital Accounts. (b) Upon the sale, transfer, assignment or other disposition of an Interest in the Company after the date of this Agreement, the Capital Account of the transferor Member that is attributable to the transferred Interest will be carried over to the transferee Member. In the case of a sale or exchange of any Interest in the Company at a time when an election under Code Section 754 is in effect, the Capital Account of the transferee Member shall not be adjusted to reflect the adjustments to the adjusted tax bases of Company property required under Code Sections 754 and 743, except as otherwise permitted by Regulation Section 1.704-1(b)(2)(iv)(m). (c) The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulation Section 1.704-1(b), and shall be interpreted and applied in a manner consistent with such Regulation. In the event the Members shall determine that it is prudent to modify the manner in which the Capital Accounts, or any debits or credits thereto (including, without limitation, debits or credits relating to liabilities that are secured by contributed or distributed property or that are assumed by the Company or the Members), are computed in order to comply with such Regulation, the Managing Member may make such modification, provided that such modification is not likely to have a material effect on the amounts distributable to any Member pursuant to Section 9.03 hereof upon the dissolution of the Company. 3.08 NEGATIVE CAPITAL ACCOUNTS. Any Member having a deficit or negative balance in its Capital Account shall not be required to restore such deficit capital amount or otherwise to contribute capital to the Company to restore its Capital Account. 3.09 NO RESIGNATION OR WITHDRAWAL OF CAPITAL. Except as provided in Article VIII, no Member shall have the right to resign or withdraw from the Company or to withdraw any portion of the capital of the Company at any time. Upon dissolution of the Company, the Members' capital shall be distributed pursuant to Section 9.03 hereof. 13 18 ARTICLE IV DISTRIBUTIONS 4.01 DISTRIBUTION OF CASH FLOW. Subject to Section 9.03, the Company shall distribute Cash Flow as follows: (a) to the Class B Member to make the redemption payments specified in Section 8.02 in respect of the Class B Interest; (b) to repay amounts borrowed pursuant to Section 3.05 as and when determined by the Managing Member; and (c) to the Class A Members as and when determined by the Managing Member; provided that it is acknowledged and agreed that (x) this Section 4.01 is not intended to, and shall not, override or otherwise qualify the limitations on the Company's obligations contained in Section 8.02 hereof, and (y) the Company shall not have any obligation to make, and shall not make, any redemption payments with respect to the Class B Interest pursuant to Section 4.01(a) unless and until such redemption payment is permitted by Section 8.02. 4.02 DISTRIBUTION OF CAPITAL PROCEEDS. The Company shall distribute to the Members Capital Proceeds as provided herein (including, without limitation, Section 8.02 and Section 9.03), and otherwise as and when determined by the Managing Member; provided that it is acknowledged and agreed that (x) this Section 4.02 is not intended to, and shall not, override or otherwise qualify the limitations on the Company's obligations contained in Section 8.02 hereof, and (y) the Company shall not have any obligation to make, and shall not make, any redemption payments with respect to the Class B Interest pursuant to Section 4.02 unless and until such redemption payment is permitted by Section 8.02. 4.03 LIMITATIONS ON DISTRIBUTIONS. Except as provided in Sections 4.01, 4.02, 4.04, 8.02 and 9.03, distributions of cash or other property shall be made to the Members at such time or times, in such amounts, and in such manner, as the Managing Member shall determine. Notwithstanding any provision to the contrary contained in this Agreement, the Company shall not make a distribution to any Member on account of its Interest if such distribution would violate the Act or other applicable law or, in the case of a distribution with respect to the Class B Interest, violate Section 8.02(b) or exceed the Class B Unreturned Capital plus any unpaid Class B Return. 4.04 CLASS B MEMBER DISTRIBUTION PREFERENCE IN BANKRUPTCY. If (a) a Bankruptcy occurs as to the Company and (b) an exchange described in Section 8.03 has not occurred, no other Member of the Company shall be entitled to receive any distributions under this Agreement until the Class B Member has received a distribution of (i) the Class B Unreturned Capital and (ii) any unpaid Class B Return. Nothing herein shall be construed to permit a distribution to the Class B Member that otherwise is prohibited by the Subordination Agreement. 4.05 TAX WITHHOLDING. If the Company incurs any obligation to pay any amount in respect of taxes (including withholding taxes and any interest, penalties or additions to tax) imposed on income of or distributions made to any Member or former Member, any amount so required to be paid by the Company with respect to such Person shall be treated for all purposes of this Agreement as if it had been loaned to such Person, and the Managing Member shall cause 14 19 the Company to give prompt written notice to such Person of the date and amount of such loan. Any withholding taxes withheld pursuant to this Section 4.05 shall be withheld at the maximum applicable statutory rate under the applicable tax law unless the Managing Member shall have received an opinion of counsel or other evidence, satisfactory to the Managing Member in its reasonable discretion, to the effect that a lower rate is applicable or that no withholding is applicable. Each Member covenants, for itself, its successors, assigns, heirs and personal representatives, that such Person shall pay to the Company at any time after notice of the loan has been given, but not later than twenty (20) days after the Company delivers a written demand to such Person for such repayment (which demand may be made at any time prior to or after the dissolution of the Company or the withdrawal of such Person or its predecessors from the Company); provided, however, that if any such repayment is not made within such 20-day period, such Person shall pay interest to the Company at a rate equal to the "prime rate" published by The Wall Street Journal, adjusted daily, for the entire period commencing on the date on which the Company paid such amount and ending on the date on which such Person repays such amount to the Company together with all accrued but previously unpaid interest. The Company shall (1) collect such unpaid amounts (including interest) from any Company distributions that otherwise would be made to such Person and/or (2) subtract from the Capital Account of such Person, no later than the day prior to the Company's initial liquidating distribution, any such unpaid amounts (plus unpaid interest) not so collected, in each case treating the amount so collected or subtracted as having been distributed to such Person at the time of such collection or subtraction. 4.06. NO LIMITATIONS ON REDEMPTION. For the avoidance of doubt, notwithstanding anything to the contrary in this Agreement (including, without limitation, the provisions of Section 4.01 and Section 4.02 to the extent they may be construed to imply that the Company shall not, unless otherwise determined by the Managing Member, be obligated to distribute assets other than Cash Flow and Capital Proceeds in connection with the redemption of the Class B Interest required by the provisions of Section 8.02 hereof), the provisions of this Article IV shall be in all respects subject to, and shall not in any way limit or restrict, the Company's obligations under Section 8.02(a) and Section 9.03 (in each case subject to the limitations set forth in Section 8.02(b) and the Subordination Agreement), except for amounts owed to the Company pursuant to Section 4.05. ARTICLE V ALLOCATION OF NET PROFITS AND NET LOSSES 5.01. NET PROFIT. Except as otherwise provided in this Article V, all Net Profit of the Company for each Fiscal Year shall be allocated to the Members as follows: (a) First, to the Members, pro rata in proportion to the cumulative allocations of Net Loss to each Member pursuant to Section 5.03 until the cumulative Net Profit allocated to each Member pursuant to this clause (a) is equal to the cumulative Net Loss allocated to such Member pursuant to Section 5.03 (such Net Profit to be allocated in reverse chronological order of the allocation of the Net Loss pursuant to Section 5.03 which has not been previously offset by an allocation under this Section 5.01(a)); 15 20 (b) Second, to the Class A Members, pro rata in proportion to the cumulative Net Loss allocated to each Class A Member pursuant to Section 5.02 until the cumulative Net Profit allocated to each Class A Member pursuant to this clause (b) is equal to the cumulative Net Loss allocated to such Class A Member pursuant to Section 5.02 (such Net Profit to be allocated in reverse chronological order of the allocation of the Net Loss pursuant to Section 5.02 which has not been previously offset by an allocation under this Section 5.01(b)); and (c) Thereafter, to the Class A Members pro rata in proportion to their then respective Class A Sharing Ratios. 5.02. NET LOSS. Except as otherwise provided in this Agreement, all Net Loss of the Company for each Fiscal Year shall be allocated to the Class A Members pro rata in proportion to their then respective Class A Sharing Ratios. 5.03. LIMITATION ON NET LOSS ALLOCATIONS. Notwithstanding any provision of this Agreement to the contrary, except as otherwise specifically provided in this Section 5.03 in no event shall Net Loss be allocated to a Member if such allocation would result in such Member's having a negative Adjusted Capital Account Balance at the end of any Fiscal Year. All Net Loss in excess of the limitation set forth in this Section 5.03 shall be allocated to any remaining Member with a positive Adjusted Capital Account Balance, and if all such Adjusted Capital Account Balances are zero or negative, to the Class A Members pursuant to Section 5.02 above. 5.04. OTHER ITEMS. Except as provided herein, for tax purposes, all items of income, gain, loss, deduction or credit shall be allocated in the same manner as are Net Profit and Net Loss. 5.05. SPECIAL ALLOCATIONS. Notwithstanding Sections 5.01, 5.02 and 5.03 above, the following allocations of Net Profit or Net Loss or items thereof shall be made in the following order of priority: (a) MINIMUM GAIN CHARGEBACK. To the extent required by Regulation Section 1.704-2(f), if there is a net decrease in "partnership minimum gain" (within the meaning of Regulation Section 1.704-2(b)(2)), then each Member will be allocated items of income and gain (calculated in accordance with clauses (i), (ii) and (iii) of the definition of "Net Profit" or "Net Loss"), before any other allocation of Net Profit or Net Loss, equal to that Member's share of the net decrease in partnership minimum gain determined in accordance with Regulation Section 1.704-2(g)(2). (b) MEMBER MINIMUM GAIN CHARGEBACK. If a Member suffers a net decrease in "partner nonrecourse debt minimum gain" (within the meaning of Regulation Section 1.704-2(i)(4)) in any Fiscal Year, then that Member will be allocated items of income and gain (calculated in accordance with clauses (i), (ii) and (iii) of the definition of "Net Profit" or "Net Loss") to the extent required by Regulation Section 1.704-2(i)(4). 16 21 (c) QUALIFIED INCOME OFFSET. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Regulation Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6), items of Company income and gain (calculated in accordance with clauses (i), (ii) and (iv) of the definition of "Net Profit" or "Net Loss") shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the negative Adjusted Capital Account Balance of such Member as quickly as possible, provided that an allocation pursuant to this clause (c) shall be made if and only to the extent that such Member would have a negative Adjusted Capital Account Balance after all other allocations provided for in this Article V. This provision is intended to constitute a "qualified income offset" within the meaning of Regulation Section 1.704-2(b)(ii)(d). (d) GROSS INCOME ALLOCATION. In the event any Member has a deficit Capital Account at the end of any Fiscal Year that is in excess of the sum of (i) the amount such Member is obligated to restore (pursuant to the terms of a promissory note to the Company or otherwise), and (ii) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentence of each of Regulation Sections 1.704-2(g)(1)(ii) and 1.704-2(i)(5) each such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this clause (d) shall be made if and only to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article V have been tentatively made as if Section 5.05(c) and this clause (d) were in not in this Article V. (e) NONRECOURSE DEDUCTIONS. If there are any "nonrecourse deductions" (within the meaning of Regulation Sections 1.704-2(b)(1) and 1.704-2(c)) in a Fiscal Year, then such deductions shall be allocated to the Class A Members pro rata in accordance with their then respective Class A Sharing Ratios. (f) MEMBER NONRECOURSE DEDUCTIONS. If there are any "partner nonrecourse deductions" (within the meaning of Regulation Section 1.704-2(i)(1)) in a Fiscal Year, then such deductions will be allocated to the Member who bears the economic risk of loss for the "partner nonrecourse liability" (within the meaning of Regulation Section 1.704-2(b)(4)) to which the deductions are attributable. (g) SECTION 754 ADJUSTMENTS. To the extent an adjustment to the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulation Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such Section of the Regulations. (h) CLASS B PRIORITY ALLOCATION. At the end of each Fiscal Year, all or part of the Company items of gross income or gross gain for the Fiscal Year remaining after the application of Sections 5.05(a)-(g), if any, shall be specially allocated to the Class B Member(s), 17 22 pro rata in accordance with their Class B Interests, in proportion to and to the extent of the excess of (x) the cumulative distributions of the Class B Return pursuant to this Agreement from the Closing Date to the end of such Fiscal Year, or with respect to such Fiscal Year, over (y) the cumulative items of gross income or gross gain previously allocated to such Class B Member pursuant to this Section 5.05(h). 5.06. CURATIVE ALLOCATIONS. The allocations set forth in Sections 5.05(a) through 5.05(e) (the "Regulatory Allocations") are intended to comply with certain requirements of Regulation Sections 1.704-1(b) and 1.704-2(b). Notwithstanding any other provisions of this Agreement, other than the Regulatory Allocations, the Regulatory Allocations shall be taken into account in allocating other items of income, gain, loss and deduction among the Members so that, to the extent possible, the net amount of such allocations of other items and the Regulatory Allocations to each Member shall be equal to the net amount that would have been allocated to such Member if the Regulatory Allocations had not occurred. The Members shall, with respect to each Fiscal Year, apply the provisions of this Section 5.06 in whatever manner is likely to minimize the economic distortions that might otherwise result from the Regulatory Allocations. 5.07. OTHER ALLOCATION RULES. The following rules shall apply for purposes of making tax allocations: (a) "Excess nonrecourse liabilities" of the Company within the meaning of Regulations Section 1.752-3(a)(3), shall be allocated to the Class A Members in proportion to their respective Class A Sharing Ratios. (b) For purposes of determining the Net Profit, Net Loss or any other items allocable to any period, Net Profit, Net Loss and any such other items shall be determined on a daily, monthly or other basis, pursuant to any permissible method under Code Section 706 and the Regulations promulgated thereunder as selected by the Managing Member in its reasonable discretion without regard to the tax consequences to any Member. (c) The Members are aware of the income tax consequences of the allocations made by this Article V and hereby agree to be bound by the provisions of this Article V in reporting their shares of the Company income and loss for income tax purposes. (d) To the extent permitted by Regulations Section 1.704-2(h)(3), the Members shall treat distributions of Capital Proceeds as not allocable to an increase in "partnership minimum gain" (within the meaning of Regulation Section 1.704-2(b)(2)) to the extent the distribution does not cause or increase a deficit balance in the Adjusted Capital Account Balance of any Member. 5.08. SECTION 704(C) ALLOCATION. Notwithstanding any other provision of this Agreement to the contrary, any gain or loss and any depreciation and cost recovery deductions recognized by the Company for income tax purposes in any Fiscal Year with respect to all or any part of the Company's property that is required or permitted to be allocated among the Members in accordance with Section 704(c) of the Code and any Regulations promulgated thereunder so as to take into account the variation, if any, between the adjusted tax basis of such property at the 18 23 time of its contribution and the Gross Asset Value of such property at the time of its contribution, shall be allocated to the Members for income tax purposes using any method described in Section 1.704-3 of the Regulations as selected by the Members. If and when the Capital Accounts of the Members are adjusted pursuant to the definition of "Gross Asset Value" or otherwise pursuant to Regulation Sections 1.704-1(b)(2)(iv)(f) or (g) with respect to a revaluation of any asset of the Company, then subsequent allocations of income, gain, loss, and deduction, including without limitation depreciation or deductions for cost recovery with respect to such asset, shall take into account any variation between the then existing adjusted basis of such asset for federal income tax purposes and the agreed value of such asset, as such computations may be required under Sections 704(b) and 704(c) of the Code and Regulation Section 1.704-1(b)(4)(i). Any elections or other decisions relating to such allocations shall be made by the Managing Member in its reasonable discretion without regard to the tax consequences to any Member. ARTICLE VI MANAGEMENT 6.01. MANAGEMENT OF THE COMPANY. (a) The management of the Company is fully reserved to the Class A Members, and the Company shall not have non-member "managers," as such term is used in the Act. Subject to the other provisions of this Agreement, the powers of the Company shall be exercised by or under the authority of, and the business and affairs of the Company shall be managed under the direction and authority of the Managing Member who, in its sole and absolute discretion, shall make all decisions and take all actions for the Company. Except as set forth in the foregoing provisions of this Section 6.01 or expressly provided otherwise elsewhere in this Agreement, no Member (in its capacity as a Member) has the right, power or authority to act for or on behalf of the Company, to do any act that would be binding on the Company, or to incur any expenditures on behalf of the Company. Decisions or actions with respect to the Company taken by the Managing Member in accordance with this Agreement shall constitute decisions or actions by the Company and shall be binding on the Company and each Member, officer and employee of the Company. (b) The Managing Member in its sole and absolute discretion may delegate all or any of its duties hereunder to such other Persons as the Managing Member deems necessary or desirable for the transaction of the business of the Company, and in furtherance of any such delegation, shall have the right to appoint, employ or contract with and pay reasonable compensation to any other Persons, but in such event the Managing Member will not be released from its responsibilities hereunder. Such Persons may, under the supervision of the Managing Member, administer, or assist in the administration of the routine day-to-day management of the Company and its business and affairs; may serve as advisors and consultants to the Managing Member in connection with decisions made by the Managing Member; may act as consultants, accountants, correspondents, attorneys, brokers, escrow agents, or in any other capacity; and may perform such other acts or services for the Company as the Managing Member in its sole and absolute discretion may approve. 19 24 6.02. OFFICERS. (a) The officers of the Company shall consist of such officers as may be determined by the Managing Member ("Officers"); provided, however, that, if the Managing Member determines to establish any officer position with a title expressly referenced in the DGCL or customarily used in corporations organized under the DGCL, such Officer shall, to the maximum extent possible, have the duties and responsibilities, and be deemed to have been delegated to him by the Managing Member the rights, powers and authority, associated with such officer position under the DGCL or customarily associated with such officer position in such corporations, as the case may be. (b) No Officer need be a Member. Any two or more offices may be held by the same person. Each Officer of the Company shall be required to devote only such time to the business and affairs of the Company as may be reasonably necessary for the discharge of his duties and responsibilities to the Company in such capacity, and no Officer of the Company shall be required to devote full time to the business and affairs of the Company unless the Managing Member determines otherwise. (c) Except as otherwise provided by Law or by this Agreement, each Officer shall hold office until his death, resignation or removal, unless a different term is specified in the action of the Managing Member designating him. Any Officer may resign by delivering his written resignation to the Managing Member. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event. Any Officer may be removed at any time, with or without cause, by action of the Managing Member. (d) Except as the Managing Member may otherwise determine, no Officer who resigns or is removed shall have any right to any compensation as an Officer for any period following his resignation or removal, or any right to damages on account of such removal, whether his compensation be by the month or by the year or otherwise, unless such compensation is expressly provided in a duly authorized written agreement with the Company. (e) The Managing Member may, in its discretion, fill any vacancy occurring in any office of the Company for any reason or leave such vacancy unfilled for such period as it may determine. 6.03. BINDING THE COMPANY. Except as the Managing Member may generally or in any particular case or cases otherwise authorize, and subject to the other provisions of this Agreement, all deeds, leases, contracts, bonds, notes, checks, drafts or other obligations made, accepted or endorsed by the Company shall be signed by the Managing Member or any one or more Officers of the Company. 6.04. CONTRACTS WITH MEMBERS. The Company may engage in business with, or enter into one or more agreements, leases, contracts or other arrangements for the furnishing to or by the Company of funds, goods, services or space with, any Member or Affiliate of a Member, and 20 25 may pay reasonable compensation in connection with such business, funds, goods, services or space. Contracts with Members or Affiliates of Members, at the discretion of the Managing Member, need not be in writing. 6.05. REQUIRED APPROVAL BY MEMBERS. (a) The following actions and decisions shall require the affirmative approval, either by vote or by written consent, of Members representing a majority of the Class A Interests: (i) to admit any new Member to the Company, other than (A) as specifically permitted in this Agreement (including, without limitation, Section 8.01(b)) or (B) as provided for in Section 6.05(c) below; (ii) to institute proceedings to adjudicate the Company a bankrupt, or consent to the filing of a bankruptcy proceeding against the Company, or file a petition or answer or consent seeking reorganization of the Company under the Federal Bankruptcy Code or any other similar applicable federal, state or foreign law, or consent to the filing of any such petition against the Company, or consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or make an assignment for the benefit of creditors of the Company, or admit in writing the Company's inability to pay its debts generally as they become due; (iii) to dissolve or wind-up the Company; and (iv) to merge or consolidate the Company with or into another Person. (b) Subject only to Section 6.05(c) and the transactions described in Section 8.03(a)(x), but notwithstanding anything else in this Agreement to the contrary, for so long as any Class B Member remains a Member, any (i) merger, consolidation or other business combination involving the Company, (ii) conversion of the Company into any other form of entity, and (iii) amendment of this Agreement (whether in connection with admission of a new Member or otherwise), in each case causing or resulting in any direct or indirect reduction of the benefits or increase of the detriments to be received by the Class B Member hereunder, or otherwise adversely affecting the Class B Interest, also shall require the prior affirmative written approval of a majority of Class B Members. (c) The Members acknowledge that a full and complete security interest in the Class A Interest has been granted by each of the Class A Members to the Administrative Agent, for the benefit of the lenders pursuant to the Senior Credit Facilities. Notwithstanding anything in this Agreement to the contrary, the Administrative Agent and the lenders under, and the other beneficiaries of, the Senior Credit Facilities, and their successors and assigns, shall have the absolute and unconditional right to become Class A Members, with no need for any approval, consent or other action of the Managing Member, the Class A Members, the Class B Members, the Company or any other Person, upon notice to the Managing Member in connection with the Administration Agent's enforcement of such security interest after an Event of Default under the 21 26 Senior Credit Facilities, whether through foreclosure, Transfer in lieu of foreclosure, other exercise of rights under the Senior Credit Facilities or otherwise (including without limitation the exercise of rights of a secured lender). 6.06. MEMBER ACTION. In the event that any matter is required to be submitted to the Members for their approval under the terms of this Agreement or the Act, the following provisions shall apply: (a) Meetings of the Members may be called by the Managing Member. The Members entitled to vote may vote on any such matter at a meeting to be held at such time and place as shall be designated by the Managing Member. Any meeting of the Members may be held by conference telephone or similar communication equipment so long as all Members entitled to vote participating in the meeting can hear one another. Members entitled to vote on the matter shall be given at least three (3) business days' prior written notice of any meeting; provided that any Member may waive such notice prior to, at or after the meeting. The notice shall specify the place, date and hour of the meeting and the general nature of the business to be transacted. (b) Each Class A Member shall be entitled to vote in accordance with its Class A Sharing Ratio of the Company. At any meeting of Members, the presence of Class A Members holding at least a majority of the Class A Sharing Ratios and the Class B Member when entitled to vote at such meeting, shall constitute a quorum for the transaction of business. Except as otherwise required by this Agreement or applicable Law, the affirmative vote of Class A Members representing more than fifty percent (50%) of the Class A Sharing Ratios is required to constitute approval of the Class A Members. (c) Any action that may be taken at any meeting of Members may be taken without a meeting and without prior notice if a consent in writing setting forth the action so taken is signed by all Members entitled to vote on the matter. Any such written consent may be executed and given by telecopy or similar electronic means and such consents shall be filed with the minutes of the proceedings of the Members. (d) From time to time each Class A Member shall, by notice to each other Member, designate one or more individuals who shall be authorized to act under this Agreement for and on behalf of any such Class A Member. Any written act, approval, consent or vote of any such representative shall be deemed the act, approval, consent or vote of the Class A Member that designated such representative. Each Class A Member may change any one or more of its representatives at any time and from time to time by written notice to each other Member. (e) Each Class A Member agrees to indemnify, hold harmless and defend the other Members from any liability whatsoever arising out of such other Member's relying on the written act, approval, consent or vote of the indemnifying Class A Member's designated representatives. If any Member relies on any act, approval, consent or vote of any other Person associated with a Class A Member other than the designated representative, such relying Member assumes the risk that such act, approval, consent or vote has not been duly authorized 22 27 by the Class A Member allegedly taking or giving such act, approval, consent or vote, and shall not be entitled to rely on any such Person's apparent or implied authority to perform or give any such act, approval, consent or vote on behalf of the Class A Member allegedly performing or giving same. Upon the transfer by a Class A Member of its entire Interest, any representative appointed by such Class A Member shall automatically cease to be a representative of such Class A Member hereunder effective upon notice of such transfer to each other Member. 6.07. INDEMNIFICATION. (a) The Company shall, to the fullest extent permitted by Law, indemnify any Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such Person is an Officer of the Company, or is or was serving at the request of the Company as a director or officer of any other Person (each, an "Indemnitee"), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding with respect to any Indemnitee, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe was unlawful. (b) In addition, the Company may indemnify any Person who is not an Indemnitee who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such Person is an employee or agent of the Company, or was serving at the request of the Company as an employee or agent of any other Person (each, an "Optional Indemnitee"), against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe was unlawful. (c) To the extent that an Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 6.07(a), or in defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (d) To the extent that an Optional Indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Section 6.07(b), or in defense of any claim, issue or matter therein, he may be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith. (e) The Company may pay the expenses (including attorneys' fees) incurred by an Indemnitee or Optional Indemnitee in defending a civil, criminal, administrative or investigative action, suit or proceeding brought by a party against the Indemnitee or Optional Indemnitee in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Indemnitee or Optional Indemnitee to repay such amount 23 28 if it shall ultimately be determined that he is not entitled to be indemnified by the Company as authorized in this Section 6.07. (f) Any indemnification under this Section 6.07 (unless ordered by a court) shall be made by the Company only as authorized in the specific case upon a determination that indemnification of the Indemnitee or Optional Indemnitee is proper in the circumstances because he has met the applicable standard of conduct set forth in Section 6.07(a) and Section 6.07(b). Such determination shall be made by the Managing Member. (g) The right of indemnification and reimbursement provided in this Section 6.07 shall be in addition to any rights to which an Indemnitee or Optional Indemnitee may otherwise be entitled and shall inure to the benefit of the executors, administrators, personal representatives, successors or assigns of each Indemnitee and Optional Indemnitee. (h) The rights to indemnification and reimbursement provided for in this Section 6.07 may be satisfied only out of the assets of the Company and to the extent of the Capital Contributions of the Members and none of the Members shall be personally liable for any claim for indemnification or reimbursement against the Company under this Section 6.07. (i) Except as set forth in Section 6.06(e) hereof, no Managing Member and no Member (nor any director, shareholder, member, manager, officer or employee of such Member, direct or indirect) shall be personally liable or personally accountable to the Company or to any of the Members, in damages or otherwise, for any error of judgment, for any mistake of fact or of law, or for any other act or thing which it may do or refrain from doing in connection with the business and affairs of the Company, except for claims and damages resulting from fraud, willful misconduct, bad faith, gross negligence or a material breach of this Agreement. (j) To the fullest extent permitted by Law, the Company (to the extent of its assets) hereby agrees to indemnify, defend and hold harmless each Member and its Affiliates from and against any loss, expense, or damage (including reasonable attorneys' fees and court costs) suffered by such Member or its Affiliate by reason of anything the Company may do or refrain from doing or such Member may do or refrain from doing hereafter for and on behalf of the Company and in furtherance of its interests or by reason of such Member's status as a Member of the Company. (k) Each Class A Member shall defend and indemnify the Company and the other Members against, and shall hold them harmless from, any damage, loss, liability or expense, including reasonable attorneys' fee, as and when incurred by the Company or such other Members in connection with or resulting from such indemnifying Class A Member's unauthorized actions, bad faith, gross negligence, fraud, or willful misconduct. (l) The Company and each Member that is not a Class B Member (each, an "Indemnifying Member"), jointly and severally, shall indemnify, defend and hold harmless each Class B Member and its Affiliates from and against any loss, cost, expense or damage (including, without limitation, attorneys' fees and costs, costs of investigation and court and arbitration costs) suffered by such Class B Member or any such Affiliate by reason of, or in connection 24 29 with, (i) anything the Company may do or refrain from doing or any Indemnifying Member may do or refrain from doing hereafter in connection with, or in any way relating to, the business and affairs of the Company, (ii) such Class B Member's status as a Member of the Company and/or (iii) any action or omission by such Class B Member (or any such Affiliate) taken or omitted to be taken in connection with any exercise of, or any waiver of or failure to exercise, any of such Class B Member's rights and powers under this Agreement. The Company and each Indemnifying Member hereby agree that neither any Class B Member nor any Affiliate of a Class B Member shall have any liability or accountability, in damages or otherwise, to the Company, any Indemnifying Member or any of their respective Affiliates with respect to any claim, cause of action, suit or proceeding to the extent the same is based, in whole or in part, on any actual or alleged action or omission of a type or kind described in clause (i), (ii) or (iii) of the preceding sentence. ARTICLE VII FISCAL MATTERS 7.01. BOOKS AND RECORDS. The Managing Member shall keep or cause an officer, employee or agent of the Company or a designated third party to keep, at the principal office of the Company or in such other location as the Managing Member or such officer, employee, agent or third party may designate, complete and accurate books and records of the Company, maintained in such form and manner as the Managing Member or such other Person may determine, as well as any other documents and information required to be furnished to the Members under the Act. 7.02. FINANCIAL AND OTHER REPORTS. (a) Within fifteen (15) days after the end of each month and within forty-five (45) days after the end of each fiscal quarter, the Managing Member shall cause the Company to provide each Member with: (i) an unaudited balance sheet as of the end of, and unaudited statements of income, cash flow and Members' equity for, each such period prepared in accordance with generally accepted accounting principles, consistently applied, for the Company; and (ii) to the extent not included in (i), unaudited statement of distributions, changes in capital accounts, and tax allocations, for the Company. (b) Not later than the earlier of (x) five (5) business days after the same become available to the Company, or (y) 120 days after the end of each Fiscal Year, the Company shall provide each Member with: (i) an audited balance sheet as of the end of, and audited statements of income, cash flow and Members' equity for, each such period prepared in accordance 25 30 with generally accepted accounting principles, consistently applied, for the Company; and (ii) to the extent not included in (i), audited statements of distributions, changes in capital accounts, and tax allocations of the Company. (c) Not later than 120 days after the end of each fiscal year, the Company shall provide each Member with such information as is necessary to complete federal and state income tax or information returns, and a copy of the Company's federal, state and local income tax or information returns for that year. 7.03. BANK ACCOUNTS. The Managing Member shall (or shall authorize and direct one or more Officers of the Company to) cause the Company to open and maintain one or more accounts with such one or more financial institutions as the Managing Member or any such Officer may determine to be necessary or advisable. 7.04. TAX MATTERS PARTNER. The Managing Member shall serve as the "tax matters partner" of the Company. The "tax matters partner" is hereby authorized to and shall perform all duties and have all powers of a "tax matters partner" under the Code and shall serve as "tax matters partner" until its resignation or until the designation of its successor, whichever occurs sooner. The "tax matters partner" shall be reimbursed by the Company, for all reasonable expenses actually incurred by the "tax matters partner" in connection with its performance of its duties as such, and the Company shall indemnify and hold harmless the "tax matters partner," to the maximum extent permissible under the Act, from and against any and all losses, claims, liabilities, costs and expenses incurred by the "tax matters partner" in connection with its performance of its duties as such, except insofar as the same may have been incurred by reason of gross negligence or willful misconduct of such "tax matters partner." 7.05. TAX ELECTIONS AND DECISIONS. Any and all federal, state and local tax elections and decisions for the Company shall be made by the Managing Member in its reasonable discretion without regard to the tax consequences to any Member; provided, however, the Managing Member may not cause the Company to be classified for federal income tax purposes as other than a partnership unless approved in writing by all the Members. ARTICLE VIII TRANSFERS OF INTERESTS 8.01. GENERAL RESTRICTIONS ON TRANSFER. (a) Except in connection with a foreclosure, a Transfer in lieu of foreclosure, or other exercise of rights in connection with the Senior Credit Facilities or otherwise (including without limitation exercise of rights of a secured lender) and except as otherwise provided in Section 6.05(c), no Class A Member may Transfer all or any part of its Interest (including the interest of an assignee within the meaning of Section 18-702 of the Act) or its share of capital, profits, 26 31 losses, allocations or distributions hereunder to any Person without first meeting the following requirements: (i) the prior written approval of the Managing Member; (ii) the execution by the transferring Member of an instrument of transfer of such Interest in form and substance reasonably satisfactory to the Managing Member; (iii) the execution by the transferee of the Interest (the "Assignee") of a written agreement, in form and substance satisfactory to the Managing Member, to assume all of the duties and obligations of the transferring Member under this Agreement and the agreement by such Assignee to be bound by and subject to all the terms and conditions contained herein; (iv) the execution by the transferring Member and the Assignee of a written agreement, in form and substance reasonably satisfactory to the Managing Member, to indemnify and hold harmless the Company and the non-transferring Members from and against any expense, loss or liability arising out of such Transfer; (v) the execution by the transferring Member of a written agreement, in form and substance reasonably satisfactory to the Managing Member, acknowledging the termination of all the transferring Member's rights and interests as a Member of the Company, effective immediately upon such Transfer; (vi) if requested by the Managing Member, a written opinion, delivered by and at the expense of the transferring Member, of counsel for the Company, or other counsel reasonably satisfactory to the Managing Member, that the Transfer will not result in (i) a violation of applicable law or this Agreement; (ii) the Company being classified as an association or taxable as a corporation for federal income tax purposes; (iii) the Company being deemed terminated pursuant to Section 708(b)(1)(B) of the Code; or (iv) a requirement for a registration of the transaction or the Interest under applicable federal and state securities laws; and (vii) unless otherwise waived by the Managing Member, the payment of the Assignee or the transferring Member of all expenses incurred by the Company in connection with the Transfer and the admission of the Assignee to the Company as a Member. (b) Subject to compliance with non-waivable provisions of applicable Law, any Class B Member may Transfer all or any portion of its Class B Interest to any Person (whether one or more) at any time or from time to time, with no need for any approval, consent or other action of the Managing Member, the Class A Members, the Company or any other Person, provided that the Transferee executes and delivers to the Transferor, the Managing Member and the Administrative Agent (and receives a written acknowledgment from the Administrative Agent of such delivery to the Administrative Agent) a written instrument in substantially the form attached hereto as Exhibit 3 with the blanks therein appropriately completed (the "Admission Agreement"). Upon acquisition of all or any portion of the Class B Interest and execution and delivery of the Admission Agreement and the Administrative Agent's acknowledgment thereof, such Transferee shall, to the extent it was granted such right by the terms of the Transfer by 27 32 virtue of which such Transferee acquired its Class B Interest, but with no need for any other approval, consent or other action of the Managing Member, the Class A Members, the Company or any other Person, be admitted to the Company as a Class B Member (unless it is already a Class B Member at the time of such acquisition, execution and delivery). Any attempt to transfer all or any portion of the Class B Interest without compliance with the foregoing provisions shall be void ab initio. 8.02. REDEMPTION OF INTEREST OF CLASS B INTEREST. (a) PERIODIC REDEMPTION PAYMENTS. Subject to the limitations of Section 8.02(b), the Company shall redeem the Class B Interest held by the Class B Member for an aggregate amount equal to Initial Class B Balance plus the Class B Return, for cash, as follows: (i) in quarterly installments, commencing on the first business day after the six-month anniversary of the Closing Date and thereafter on each successive three-month anniversary thereof, in the maximum aggregate amount permitted under Section 8.02(b) up to (and including) $33,000,000 per such installment (the "Maximum Quarterly Class B Redemption"), until redeemed in full (as defined below); and (ii) in any event, in full (as defined below), at the earlier of (1) the date occurring six (6) months after the Revolving Loan Commitment Termination Date, (2) a Change of Control of Newco, (3) Bankruptcy of Arris and (4) acceleration of the Senior Credit Facilities in accordance with the terms thereof. For the purposes hereof, the Class B Interest shall be redeemed in full at such time as the Class B Member has received cash redemption payments equal, in the aggregate, to the sum of (i) Class B Unreturned Capital and (ii) the aggregate Class B Return that has not been added to Class B Unreturned Capital, calculated through and including the date of such redemption in full. Redemption payments shall be applied first to the payment of accrued Class B Return that has not been paid or added to Class B Unreturned Capital, and then to payment of Class B Unreturned Capital. (b) CERTAIN LIMITATIONS. Until payment in full in cash of all Senior Debt, the termination of any commitments to lend under the Senior Credit Facilities and the cancellation or termination of any letters of credit issued under the Senior Credit Facilities, no obligation to make redemption payments shall arise, and no redemption payment shall be made, pursuant to Section 8.02(a)(i), and no redemption payment shall be made pursuant to Section 8.02(a)(ii), unless and until: (1) prior to the date on which such redemption is made, the Borrowers have delivered to the Administrative Agent all financial statements, compliance certificates and other documents required to be delivered in connection with the most recent fiscal quarter ending prior to such date pursuant to the Senior Credit Agreement, (2) both immediately before and after giving pro forma effect to such redemption, no Event of Default shall have occurred and be continuing, 28 33 (3) after giving pro forma effect to such redemption, the Borrowers shall have Excess Availability of at least $75 million, and (4) the Borrowers shall have delivered an officer's certificate of ANTEC signed by the chief financial officer of ANTEC certifying as to the foregoing clauses (1)-(3) and attaching a Borrowing Base Certificate demonstrating such Excess Availability, in each case in form and substance satisfactory to Administrative Agent; provided that, with respect to the fourth fiscal quarter of any fiscal year, Borrowers shall be deemed to have satisfied the part of the condition contained in clause (1) above requiring delivery of audited financial statements for the fiscal year ended at the end of the preceding fiscal quarter upon delivery of unaudited financial statements for such fiscal year in lieu of audited financial statements for such fiscal year and a certificate signed by the chief financial officer of ANTEC certifying that, when delivered, the audited financial statements shall not contain any material differences from the unaudited financial statements. (c) [Intentionally Omitted.] (d) COMPANY COVENANT. So as to enable the exercise of the Class B Member's redemption rights in this Section 8.02, the Company shall, and shall cause ANTEC to, comply with all reporting requirements and document delivery requirements contained in the Senior Credit Facilities, make all requisite certifications under the Senior Credit Facilities, and take all such further actions as may be reasonably requested by the Class B Member to enable the Company, to the fullest extent possible, to make all redemption payments contemplated by this Section 8.02 timely and in full (provided, however, that in no event shall the Company be required by any of the foregoing provisions of this Section 8.02(d) to take any action prohibited by the terms of the Senior Credit Facilities). The Company shall notify the Class B Member in writing of any Default or Event of Default, any material breach by the Company of this Section 8.02, or any amendment, restatement, amendment and restatement, supplement to, or other modification thereof, in each case not later than five (5) business days after occurrence thereof. (e) CESSATION OF CLASS B RIGHTS UPON COMPLETE REDEMPTION. Upon the redemption in full of the Class B Interest as set forth in this Section 8.02, the Class B Interest shall be completely extinguished (including, without limitation, any preference or other claim with respect to the Class B Interest) and neither Nortel, nor any transferee permitted pursuant to Section 8.01, shall have any rights, claims, duties, liabilities or obligations whatsoever with respect to the Company under the Class B Interest or otherwise as a Member of the Company, and shall cease to be a Member for all purposes (provided that, notwithstanding anything in this Agreement to the contrary, the complete redemption of the Class B Interest as set forth in this Section 8.02 shall not constitute or operate as a waiver or release of, or have any other effect on, (i) any breach or violation of the provisions of this Agreement occurring prior to such complete redemption, or (ii) any of the Class B Member's rights and remedies (whether at law or in equity) with respect thereto). 29 34 (f) NO LIMITATION ON OTHER PAYMENTS. For the avoidance of doubt, the foregoing limitations on the Company's redemption obligations with respect to the Class B Interest shall not apply to any other payments to be made by the Company or Newco (or any of their Affiliates) to Nortel Networks or any of its Affiliates (including Nortel), whether pursuant to the Agreement and Plan of Reorganization, any of the Ancillary Agreements, in connection with purchases of goods and/or services or licenses of intellectual property rights as of and after the date hereof, or otherwise (including payments with respect to the Inventory and the German Inventory specified on Schedule 8.01(f) to the Agreement and Plan of Reorganization). 8.03. MANDATORY EXCHANGE FOR NEW SECURITIES. (a) Until payment in full in cash of all Senior Debt, the termination of all commitments to lend under the Senior Credit Facilities, and the cancellation or termination of all letters of credit issued under the Senior Credit Facilities, in the event that (x) ANTEC, Newco or any of their Affiliates, or any of their successors and assigns, enter into and consummate an agreement to Transfer all or any portion of their Interests, or the Company Transfers all or substantially all of its assets, in each case to one or more persons other than Newco or any of its subsidiaries, (y) there is any foreclosure on any of the Interests held by ANTEC or Newco (or any of their successors or assigns) or a Transfer in lieu of foreclosure or an exercise of any rights or remedies of a secured creditor with respect to such Interests, in each case pursuant to the Senior Credit Facilities or otherwise, or (z) during the continuance of an Event of Default, then upon either (I) written notice by the Class B Member to the Company and Newco in the event of the circumstances described in clause (y), (II) written notice by the Administrative Agent to the Class B Member, the Company and Newco in the event of the circumstances described in clause (y) or clause (z), or (III) simultaneously in the event of the circumstances described in clause (x), the Class B Interest automatically shall be exchanged (at such time as may be specified in the notice or immediately if no time is specified in the notice or no notice is required) for such of the following as may be selected by the Class B Member by notice to the Company: (i) Duly authorized, validly issued, fully paid and non-assessable shares of Newco common stock with a Fair Market Value as of the date of exchange equal to the unredeemed portion of Initial Class B Balance plus the unpaid Class B Return accrued to the date of exchange, (ii) One hundred thousand (100,000) shares of Newco Preferred Stock, constituting all of the authorized shares of Newco Preferred Stock, all of which shares shall be duly authorized, validly issued, fully paid and non-assessable (provided, however, that the provisions of Section 6 of Annex A to the Certificate of Designations, and any other provisions thereof (including, without limitation, the designation of Newco Preferred Stock) referencing convertibility of Newco Preferred Stock shall be deleted from such Annex A and shall not be part of the powers, designations, preferences and rights of Newco Preferred Stock if the Class B Member so elects, in writing), (iii) a subordinated note of Newco with a maturity date six months after the final maturity of the Senior Credit Facilities in the principal amount equal to 30 35 the unredeemed portion of the Initial Class B Balance plus the Class B Return accrued to the date of exchange, in the form of, and containing the terms set forth in, Exhibit 2 hereto (provided, however, that the provisions of Section 3 of such Exhibit 2, and any other provisions thereof (including, without limitation, the title of such subordinated note) referencing convertibility of such subordinated note, shall be deleted from such Exhibit 2 and shall not be part of such subordinated note if the Class B Member so elects in writing), or (iv) any combination of the foregoing yielding an aggregate value consistent with the foregoing equal to the unredeemed portion of the Initial Class B Balance plus the Class B Return accrued to the date of exchange (the securities or other instruments receivable by Class B Member in such exchange, the "New Securities"); provided that: (V) if the Class B Member elects to receive a combination of New Securities as described in clause (iv) above, the amount of "Maximum Quarterly Redemption" referenced in Section 4(a)(ii)(A) of Annex A to the Certificate of Designations and the amount of "Maximum Quarterly Payment" referenced in Section 1(a)(i) of the form of subordinated note of Newco attached hereto as Exhibit 2 shall be reduced on a pro rata basis to reflect the proportion allocated to each such New Security of the unredeemed portion of the Class B Unreturned Capital plus the Class B Return accrued to the date of exchange that has not been paid or added to Class B Unreturned Capital; (W) if the Class B Member shall not have given notice of its selection prior to the effective time of an exchange, then (1) it shall be presumed to have selected to receive a subordinated note as provided in clause (iii) above that does not contain the references to convertibility of such subordinated note, and (2) such subordinated note may be exchanged by the Class B Member (notwithstanding its having ceased to be a Member of the Company), by written notice to Newco given not later than twenty (20) days after the effective time of the exchange pursuant to clause (W)(1) of this proviso, for any of the other New Securities described in clauses (i) through (iii) above or, subject to clause (iv) above, any combination of the same; (X) the Class B Member, by notice to the Company, may change its selection at any time prior to the effective time of the exchange, and, in the event that the New Securities can not be issued or are not promptly issued as a result of inaction by Newco or otherwise, the Class B Member shall be entitled to change its selection until the earlier of when it receives the New Securities it selected and twenty (20) days after such effective time (and for sixty (60) days thereafter it may elect to add any convertibility provisions contained in such New Securities); (Y) if the Class B Member selects to receive either the Newco common stock pursuant to clause (i) above or the Newco Preferred Stock pursuant to clause (ii) above, and the exchange occurs, or by its terms should occur, prior to 31 36 completion of any filings or corporate formalities necessary for the issuance of such common stock or Newco Preferred Stock (such as, by way of example but not limitation, any necessary increase in the number of shares of Newco common stock or preferred stock authorized for issuance; approval by the Board of Directors of Newco of the Certificate of Designations and filing of the same with the office of the Secretary of State of the State of Delaware; and approval of the issuance of such common stock or Newco Preferred Stock (as applicable) by the Board of Directors of Newco) and the actual issuance thereof, then (1) as part of the exchange, Newco shall, and the Company shall cause Newco to, deliver to the Class B Member a subordinated note as provided in clause (iii) above that does not contain references to convertibility of such subordinated note, and (2) within ten (10) days after the exchange, the Company shall cause Newco to complete such filings and formalities and issue and deliver such common stock or Newco Preferred Stock (as applicable) against return of the subordinated note (provided that, prior to such issuance and delivery, the Class B Member (notwithstanding its having ceased to be a Member of the Company) shall be entitled to exercise the rights set forth in clause (W)(2) above); and (Z) the Class B Member shall not be entitled to select the mix of New Securities which would result in a Change of Control of Newco or a "Change in Control" as defined in the Senior Credit Agreement. Promptly upon receipt of any notice from the Class B Members pursuant to clause (I) above, the Company and Newco shall cause a copy thereof to be delivered to the Administrative Agent. The Company and Newco shall give each Class B Member written notice of the occurrence of any event described in clause (x) or (y) above not later than five (5) business days after the occurrence of such event. (b) CESSATION OF CLASS B RIGHTS UPON MANDATORY EXCHANGE. Upon the exchange of the Class B Interest for the New Securities as set forth above in this Section 8.03, the Class B Interest shall be completely extinguished (including, without limitation, any preference or other claim relating thereto) and neither Nortel nor any transferee permitted pursuant to Section 8.01 shall have any rights, claims, duties, liabilities or obligations whatsoever with respect to the Company under the Class B Interest or otherwise as a Member of the Company, and shall cease to be a Member for all purposes; provided that, notwithstanding the foregoing, Nortel and each transferee permitted pursuant to Section 8.01 shall remain entitled, after effectiveness of such exchange, solely to exercise the rights of a Class B Member set forth in clauses (W)(2), (X) and (Y) of the first sentence of Section 8.03(a). ARTICLE IX DISSOLUTION AND LIQUIDATION 9.01. EVENTS CAUSING DISSOLUTION. The Company shall be dissolved and its affairs wound up upon the earlier of: 32 37 (a) Any transaction authorized by or subject to Section 18-209 of the Act as a result of which the Company is not the surviving entity; (b) The election to dissolve the Company made by the holders of a majority of the Class A Interests and the Class B Member; (c) At any time there are no Members of the Company, unless the business of the Company is continued pursuant to the Act; or (d) The entry of a decree of judicial dissolution under Section 18-802 of the Act. 9.02. PROCEDURES ON DISSOLUTION. Dissolution of the Company shall be effective on the day on which occurs the event giving rise to the dissolution, but the Company shall not terminate until the assets of the Company shall have been distributed as provided herein and the Certificate shall have been canceled. Notwithstanding the dissolution of the Company, prior to the termination of the Company, as aforesaid, the business of the Company and the affairs of the Members, as such, shall continue to be governed by this Agreement. The Managing Member or one or more other Persons appointed as Liquidator by the Managing Member shall liquidate the assets of the Company, apply and distribute the proceeds thereof as contemplated by this Agreement and cause the cancellation of the Certificate. 9.03. DISTRIBUTIONS UPON LIQUIDATION. (a) Upon dissolution, the Company, by and through the Liquidator, shall satisfy liabilities owing to creditors (including creating such reserves as may be required by non-waivable provisions of Section 18-804(b) of the Act or as the Liquidator otherwise deems reasonably necessary for any contingent liabilities or obligations of the Company). Said reserves may be paid over by the Liquidator to a bank, to be held in escrow for the purpose of complying with any such provisions of Section 18-804(b) of the Act or paying any such contingent liabilities or obligations and, at the expiration of such period as may be required by non-waivable provisions of Section 18-804(b) of the Act or as the Liquidator may deem advisable, such reserves shall be distributed to the Members or their assigns in the manner set forth in Section 9.03(b). (b) After satisfying such liabilities (including the creation of reserves) as set forth in Section 9.03(a), the Liquidator shall cause the remaining net assets of the Company to be distributed: first, to the Members to the extent of any unpaid principal of and interest on any Member Loans; second, subject to Section 8.02(b), to the Class B Member to the extent of the Class B Unreturned Capital and Class B Return; and then to the Members pro rata in proportion to the positive balances in their respective Capital Accounts (after such Capital Accounts have been adjusted to reflect any Net Profit or Net Loss or any items of income, gain, loss or deduction to be allocated to the Members through the time of the dissolution and liquidation of the Company pursuant to Article V hereof and the distributions made pursuant to the previous clauses of this sentence). Distributions pursuant to this Section 9.03(b) shall be made by the end of the Fiscal Year during which the dissolution of the Company occurs (or, if later, within ninety 33 38 (90) days of such dissolution). In the event that any part of such net assets consists of notes or accounts receivable or other noncash assets, the Liquidator may take whatever steps it deems appropriate to convert such assets into cash or into any other form which would facilitate the distribution thereof. If any assets of the Company are to be distributed in kind, such assets shall be distributed on the basis of their fair market value net of any liabilities; provided, however, that, unless Class B Members holding a majority of the Class B Interests otherwise consent in writing prior to such distribution, all distributions to the Class B Members pursuant to this Section 9.03(b) shall be made solely in cash. ARTICLE X MISCELLANEOUS PROVISIONS 10.01. APPLICABLE LAW. This Agreement shall be construed and enforced in accordance with the laws of the State of Delaware, including the Act, as interpreted by the courts of the State of Delaware, notwithstanding any rules regarding choice of law to the contrary. 10.02. COUNTERPARTS. This Agreement may be executed in several counterparts and as so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all of the parties have not signed the same counterpart. 10.03. SEPARABILITY OF PROVISIONS. Each provision of this Agreement shall be considered separable. To the extent that any provision of this Agreement is prohibited or ineffective under the Act, this Agreement shall be considered amended to the smallest degree possible in order to make the Agreement effective under the Act (and, if the Act is subsequently amended or interpreted in such manner as to make effective any provision of this Agreement that was formerly rendered invalid, such provision shall automatically be considered to be valid from the effective date of such amendment or interpretation). 10.04. ARTICLE AND SECTION TITLES. Article and section titles are included herein for descriptive purposes only and shall not control or alter the meaning of this Agreement as set forth in the text. 10.05. AMENDMENTS. Except as otherwise expressly provided herein, this Agreement and the Certificate shall be amended only if such amendment is (i) adopted by the Managing Member, (ii) approved by Class A Members representing more than fifty percent (50%) of the Class A Sharing Ratios, and (iii) approved by the Class B Member, if any. 10.06. NO THIRD PARTY BENEFICIARIES. The beneficiaries under the Subordination Agreement and the parties to the Secured Credit Facilities shall be third party beneficiaries of this Agreement. Otherwise, the provisions of this Agreement are not intended to be for the benefit of any other creditor (other than a Member who is a creditor) or other Person (other than a Member or an Officer of the Company in his capacity as such) to whom any debts, liabilities or obligations are owed by (or who otherwise has any claim against) the Company or any of the Members. Moreover, except as provided in the first sentence of this Section 10.06 but notwithstanding anything contained in this Agreement, no such creditor or other Person shall 34 39 obtain any rights under this Agreement or shall, by reason of this Agreement, make any claim in respect of any debt, liability or obligation (or otherwise) against the Company or any Member. Notwithstanding the foregoing, any Person entitled to indemnification hereunder shall be deemed a third party beneficiary hereof with respect to all matters relating to such indemnification, and shall be entitled to enforce any and all such Person's rights relating to such indemnification as if such Person were a party hereto. 10.07. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon the parties hereto and their respective successors, executors, administrators, legal representatives, heirs and legal assigns and shall inure to the benefit of the parties hereto and, except as otherwise provided herein, their respective successors, executors, administrators, legal representatives, heirs and legal assigns. Except for the beneficiaries under the Subordination Agreement and the parties to the Secured Credit Facilities, no Person other than the parties hereto and their respective successors, executors, administrators, legal representatives, heirs and permitted assigns shall have any rights or claims under this Agreement. 10.08. NOTICE. 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 LLC 200 Athens Way Nashville, Tennessee 37228 Attention: Legal Department With a copy to: Nortel Networks Inc. 2221 Lakeside Boulevard Richardson, Texas 75082 Attention: Robert Fishman Fax: (972) 684-3888 With a copy to: Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Attention: Dimitri P. Racklin Fax: (617) 526-5000 Phone: (617) 526-6000 35 40 If to ANTEC or Newco, to: ANTEC Corporation 11450 Technology Circle Duluth, Georgia 30097 Attention: Lawrence Margolis Fax: (678) 473-8470 With a copy to: Troutman Sanders LLP 600 Peachtree Street Suite 5200 Atlanta, GA 30308 Attention: W. Brinkley Dickerson, Jr. Fax: 404-885-3900 Phone: 404-885-3000 If to the Company, to: Arris Interactive L.L.C. 3871 Lakefield Drive, Suite 300 Suwanee, GA 30024 Attention: President Fax: 770-622-8554 Phone: 770-622-8400 With a copy to: Troutman Sanders LLP 600 Peachtree Street Suite 5200 Atlanta, GA 30308 Attention: W. Brinkley Dickerson, Jr. Fax: 404-885-3900 Phone: 404-885-3000 If to the Administrative Agent, as specified in the Senior Credit Agreement. 10.09. SUBORDINATION. All obligations to the Class B Member under this Agreement and all amounts payable to the Class B Member under this Agreement (including without limitation under or in respect to the Class B Interest, the New Securities, if any, the redemption obligations under Section 8.02, the distribution obligations under Sections 4.01 and 4.02, the dissolution obligations under Section 9.02, the liquidation obligations under Section 9.03, any indemnification payments under this Agreement, or otherwise) are subordinated to the extent and in the manner set forth in the Subordination Agreement. Each of this Section 10.09 and the Subordination Agreement shall constitute a continuing offer to all persons who, in reliance upon 36 41 such provisions, become holders of, or continue to hold, Senior Debt, and such provisions are made for the benefit of the holders of the Senior Debt, and such holders are made obligees hereunder and any one or more of them may enforce such provisions. 37 42 IN WITNESS WHEREOF, the Members have executed this Agreement effective as of the Closing Date. ARRIS GROUP, INC. a Delaware corporation By: /s/ Lawrence A. Margolis ------------------------------------ Name: Lawrence A. Margolis --------------------------------- Title: --------------------------------- ANTEC CORPORATION, a Delaware corporation By: /s/ Lawrence A. Margolis ------------------------------------ Name: Lawrence A. Margolis --------------------------------- Title: --------------------------------- NORTEL NETWORKS LLC, a Delaware limited liability company By: /s/ Craig A. Johnson ------------------------------------ Name: Craig A. Johnson --------------------------------- Title: --------------------------------- 38 43 Schedule A Effective as of the Closing Date CLASS A MEMBERS Capital Name of Member Sharing Ratio Account Balance - -------------- ------------- ------------------ Arris Group, Inc. 84.26% [To be determined] ANTEC Corporation 15.74% [To be determined] CLASS B MEMBER Capital Name of Member Account Balance - -------------- ------------------ Nortel Networks LLC $100,000,000 44 EXHIBIT 3 ADMISSION AGREEMENT Reference is made to the Second Amended and Restated Limited Liability Company Agreement (the "LLC Agreement") of Arris Interactive L.L.C. (the "LLC"), dated and effective as of ___________, 2001, as amended, by and among ANTEC Corporation, a Delaware corporation that was, as of such date, in the process of changing its name to Arris International, Inc., Arris Group, Inc., a Delaware corporation, and Nortel Networks LLC, a Delaware limited liability company. Capitalized terms used but not defined herein shall have their respective meanings set forth in the LLC Agreement. 1. The undersigned, being a Transferee of all or a portion of the Class B Interest, hereby agrees that, upon acquisition by such Transferee of the Transferred Class B Interest, the undersigned shall be bound by all of the terms and provisions of the LLC Agreement and the Subordination Agreement (a copy of which is attached hereto), to the same extent that such terms and provisions were applicable to the Class B Member that is the Transferor of such Transferred Class B Interest (provided that, if the Transferee was not granted the right to become a Member by the terms of the Transfer by virtue of which the undersigned acquired the Class B Interest, or a portion thereof, then the undersigned shall be bound by the terms and provisions of the LLC Agreement and the Subordination Agreement to the extent they are applicable to an assignee of the Class B Interest that is not a Member) as of immediately prior to effectiveness of such acquisition. 2. The undersigned hereby acknowledges receipt and sufficiency of consideration in connection with this Admission Agreement. IN WITNESS WHEREOF, the undersigned has caused this Admission Agreement to be duly executed and delivered effective as of __________________, 200_. [Name of Transferee] By: ------------------------------------ Name: Title: Received: - ------------------------------------ Administrative Agent EX-6 4 t27986ex6.txt REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 6 TO FORM 13D REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT, dated as of August 3, 2001 (this "Agreement"), by and between NORTEL NETWORKS LLC, a limited liability company organized under the laws of Delaware ("Investor") and ARRIS GROUP, INC. f/k/a Broadband Parent Corporation, a Delaware corporation ("Newco"). WHEREAS, pursuant to (i) an Agreement and Plan of Reorganization dated as of October 18, 2000, as amended (the "Plan of Reorganization") among Newco, ANTEC Corporation, Broadband Transition Corporation, Nortel Networks Inc., Investor and Arris Interactive L.L.C., and (ii) an Amended and Restated Investor Rights Agreement dated as of April 9, 2001, as amended, among Newco, Nortel Networks Inc. and Investor, Investor will receive at the Closing (as such term is defined in the Plan of Reorganization) shares of Newco Common Stock (such shares and any shares of Newco Common Stock acquired or to be acquired from time to time by Investor and any Permitted Transferee (as defined below), the "Newco Shares"); WHEREAS, in connection with the Plan of Reorganization, Newco has agreed to provide Investor certain registration rights as provided herein. NOW, THEREFORE, in consideration of the premises and of the mutual covenants herein contained, the parties hereto agree as follows: 1. Demand Registration. (a) Investor or any person acquiring by transfer any Newco Shares (a "Permitted Transferee") (Investor and any such Permitted Transferees being hereinafter referred to individually as a "Stockholder" and collectively as the "Stockholders") shall at any time have the right to require registration under the Securities Act (as defined below), of the Newco Shares and any securities issued in exchange for or in respect of such Newco Shares, whether pursuant to a stock dividend, stock split, stock reclassification, recapitalization or otherwise (such Newco Shares and such securities issued in exchange for or in respect of such Newco Shares being collectively referred to herein as the "Registrable Shares") upon the terms and subject to the conditions set forth in this Agreement. For purposes of this Agreement, "Securities Act" shall mean the United States Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations of the United States Securities and Exchange Commission (or any other federal agency at the time administering such Act) (the "Commission") issued under such Act, as they may, from time to time, be in effect. (b) Upon receipt by Newco of a written demand for registration hereunder, Newco shall (i) promptly notify each other Stockholder in writing of its receipt of such initial written demand for registration and (ii) as soon as practicable, but in no event more than 30 days (except that with respect to any registration on a Form S-1 Registration Statement (or successor form thereto), such period shall be 45 days) after receipt of such 2 written demand, file with the Commission, and use its reasonable best efforts to cause to become effective, a registration statement under the Securities Act (a "Registration Statement") which shall cover the Registrable Shares specified in the initial written demand and in any written demand from any other Stockholder received by Newco within 20 days of its giving the notice specified in clause (i) hereof. (c) If so requested by any Stockholder demanding participation in a public offering or distribution of Registrable Shares (a "Selling Stockholder") pursuant to this Section 1, the Registration Statement shall provide for a delayed or continuous offering of Registrable Shares pursuant to Rule 415 promulgated under the Securities Act or any similar rule then in effect (a "Shelf Offering"). If so requested by Selling Stockholders who own a majority of the Registrable Shares then outstanding, the public offering or distribution of Registrable Shares under this Agreement shall be pursuant to a firm commitment underwriting, the managing underwriter of which shall be a nationally recognized investment banking firm selected by the Selling Stockholders and approved by Newco, which approval shall not be unreasonably withheld. Newco shall enter into the same underwriting agreement as shall the Selling Stockholders, containing representations, warranties and agreements customarily made by an issuer in underwriting agreements with respect to secondary distributions. Newco, as a condition to fulfilling its obligations under this Agreement, may require the underwriters to enter into an agreement in customary form indemnifying Newco and the Selling Stockholders against any Losses (as defined in Section 6 hereof) that arise out of or are based upon an untrue statement or an alleged untrue statement or omission in the Disclosure Documents (as defined in Section 6 hereof) made in reliance upon and in conformity with written information furnished to Newco by the underwriters specifically for use in the preparation thereof. (d) If the Board of Directors of Newco, in its good faith judgment, determines that the filing of a Registration Statement pursuant to this Section 1 should not be made because it would materially and adversely affect any material business transaction involving Newco (a "Valid Business Reason"), Newco may postpone filing such a Registration Statement until such Valid Business Reason no longer exists, but in no event for more than 75 days (such period of postponement, the "Postponement Period"); and Newco shall give written notice of its determination to postpone the filing of a Registration Statement and of the fact that the Valid Business Reason for such postponement no longer exists, in each case, promptly after the occurrence thereof; provided, however, Newco shall not be permitted to postpone the filing of a Registration Statement after the expiration of any Postponement Period until 12 months after the expiration of such Postponement Period. If Newco shall give any notice of postponement of any Registration Statement, Newco shall not, during the Postponement Period, register any shares of Newco Common Stock, other than pursuant to a registration statement on Form S-4 or S-8 (or an equivalent registration form then in effect). If Newco shall give any notice of postponement of the filing of a Registration Statement, Newco shall, at such time as the Valid Business Reason that caused such postponement no longer exists (but in no event later than 75 days after the date of the postponement), use its reasonable best efforts to effect the registration under the Securities Act of the Registrable Shares covered by the postponed Registration Statement in accordance with this Section 1. If Newco shall postpone the filing of any Registration Statement, any of the Selling Stockholders 2 3 shall have the right to withdraw his or its demand for such registration by giving notice to Newco within 20 days of the notice of postponement. In the event that all of the Selling Stockholders withdraw their demand, such demand shall not be counted for purposes of determining the number of registrations to which Stockholders are entitled hereunder. (e) Each Selling Stockholder may, before such a Registration Statement becomes effective, withdraw his or its Registrable Shares from sale, should the terms of the sale not be satisfactory to such Selling Stockholder; should all Selling Stockholders who are participating in such registration so withdraw, however, such registration shall be deemed to have been effected for the purposes of Sections 4(a) and 4(c) hereof unless such Selling Stockholders pay (pro rata, in proportion to the number of shares requested to be included) within 20 days after any such withdrawal, all of the out-of-pocket expenses of Newco incurred in connection with such registration. (f) In the event that a Registration Statement demanded by a Selling Stockholder pursuant to Section 1 hereof involves a firm commitment underwritten public offering and the managing underwriter thereof determines reasonably and in good faith that the inclusion in such Registration Statement of any additional shares of Newco Common Stock or other securities of Newco to be offered and sold for the account of any person (including Newco) other than such Selling Stockholder (each, a "Piggy-Back Seller") would adversely affect the offering of any Registrable Shares by the Selling Stockholder, then, subject to the provisions of that certain Registration Rights Agreement, dated October 29, 1996, as amended, between ANTEC Corporation and Tele-Communications, Inc., as in effect on the date hereof (the "TCI Registration Rights Agreement"), the number of shares to be offered for the accounts of each Piggy-Back Seller shall be reduced or limited in proportion to the number of shares owned by each such Piggy-Back Seller (as compared to all such Piggy-Back Sellers) to the extent necessary to reduce the total number of shares to be included in such Registration Statement by all Piggy-Back Sellers to the amount that such managing underwriter determines would not adversely affect the offering of the number of Registrable Shares demanded to be registered by the Selling Stockholder. Subject to the provisions of the TCI Registration Rights Agreement, in no event shall a Selling Stockholder be required to reduce the number of Registrable Shares demanded to be registered by such Selling Stockholder pursuant to Section 1 hereof as a result of the inclusion in any Registration Statement of Newco Common Stock or other securities of Newco to be offered and sold for the account of any Piggy-Back Seller. All references in this Agreement to the TCI Registration Rights Agreement shall be understood to include the rights, remedies, obligations or liabilities of Newco (as successor to ANTEC Corporation) under the TCI Registration Rights Agreement upon and by reason of the closing of the transactions contemplated by the Plan of Reorganization. 2. Incidental Registrations. Each time that Newco proposes to register any of its equity securities under the Securities Act (other than a registration effected solely to implement an employee benefit or stock option plan or to sell shares obtained under any employee benefit or stock option plan or a registration in connection with a transaction to which Rule 145 or any successor rule of the Commission under the Securities Act is applicable), whether for its account or the account of other stockholders of Newco, Newco will give written notice to the Stockholders of its intention to do so. Each of the Stockholders may give Newco a written 3 4 request to register all or some of its Registrable Shares in the registration described in the written notice from Newco as set forth in the foregoing sentence, provided that such written request is given within 20 days after receipt of any such notice from Newco (with such request stating (i) the amount of Registrable Shares to be disposed of and the intended method of disposition of such Registrable Shares and (ii) any other information customarily requested by issuers in secondary distributions to properly effect the registration of such Registrable Shares). Upon receipt of such request, Newco will use its reasonable best efforts to cause promptly all such Registrable Shares intended to be disposed of to be registered under the Securities Act so as to permit their sale or other disposition (in accordance with the intended methods set forth in the request for registration), unless the sale is a firm commitment underwritten public offering and the managing underwriter thereof determines reasonably and in good faith in writing that the inclusion of such securities would materially adversely affect the offering, in which case the number of shares to be offered for the accounts of the Selling Stockholders shall be reduced or limited in proportion to the number of shares owned by such Selling Stockholders to the extent necessary to reduce the total number of shares to be included in such offering to the amount recommended by such managing underwriting; provided, that, subject to the provisions of the TCI Registration Rights Agreement, if securities are being offered for the account of other persons or entities as well as Newco, such reduction shall be made pro rata from the securities intended to be offered by such persons and from the Selling Stockholders. Newco's obligations under this Section 2 shall apply to a registration to be effected for securities to be sold for the account of Newco as well as a registration statement which includes securities to be offered for the account of other holders of Newco equity securities. No registration effected under this Section 2 shall relieve Newco of its obligations to effect demand registrations under Section 1. 3. Expenses of Registration. Newco shall pay all costs and expenses directly attributable to the registration of the Registrable Shares pursuant hereto, including, without limitation: (a) Commission, Nasdaq National Market (or exchange) and NASD registration and filing fees; (b) fees and expenses of compliance with state and provincial securities or "blue sky" laws and in connection with the preparation of a "blue sky" survey, including without limitation, reasonable fees and expenses of blue sky counsel; (c) printing and copying expenses; (d)messenger and delivery expenses; (e) expenses incurred in connection with any road show; (f) fees and disbursements of counsel for Newco; (g) with respect to each registration, the fees and disbursements of one counsel for the Selling Stockholders (selected by the Selling Stockholders); (h) fees and disbursements of all independent public accountants (including the expenses of any audit and/or "cold comfort" letter) and fees and expenses of other persons, including special experts, retained by Newco; (i) fees and expenses of underwriters, if any, customarily paid by issuers or sellers of securities. Notwithstanding the foregoing, all transfer taxes, brokerage commissions and underwriters' discounts attributable to the Registrable Shares being offered and sold by such Selling Stockholders and any out-of-pocket expenses of the Selling Stockholders (except as expressly contemplated by the preceding sentence) shall be for the account of the Selling Stockholders. 4. Limitations on Registration Rights. Notwithstanding anything to the contrary contained lsewhere herein, the registration rights granted to the Stockholders under the provisions of Section 1 hereof are expressly subject to the following terms, conditions and limitations: 4 5 (a) In no event shall Newco be obligated to effect more than three (3) registrations on a Form S-1 Registration Statement. (b) Newco shall not be required to effect any registration pursuant to Section 1 unless the demand or demands for registration cover an aggregate number of Registrable Shares constituting at least five percent (5%) of the then outstanding shares of Common Stock. (c) The Stockholders shall not be entitled to demand Newco to register Registrable Shares pursuant to Section 1 more than once in any 90-day period. (d) Newco shall be entitled to extend the time period specified in Section 1(b)(ii) with respect to the filing of a Registration Statement for an additional period of time not to exceed thirty (30) days if Newco, in order to comply with such demand, would be required to (A) undergo a special interim audit or (B) prepare and file with the Commission, sooner than would otherwise be required, pro forma or other financial statements relating to any proposed or probable transaction. 5. Obligations with Respect to Registration. (a) If and whenever Newco is obligated by the provisions of this Agreement to effect the registration of any Registrable Shares under the Securities Act, Newco shall, as expeditiously as possible: (i) prepare and file with the Commission a Registration Statement on an appropriate registration form of the Commission for the disposition of such Registrable Shares in accordance with the intended method of disposition thereof, and such Registration Statement shall comply as to form in all material respects with the requirements of the applicable form and include all financial statements required by the Commission to be filed therewith, and Newco shall use its reasonable best efforts to cause such Registration Statement to become and remain effective (provided, however, that before filing a Registration Statement or prospectus or any amendments or supplements thereto, or comparable statements under securities or blue sky laws of any jurisdiction, Newco will furnish to one counsel for the Selling Stockholders participating in the planned offering and the underwriters, if any, copies of all such documents proposed to be filed (including all exhibits thereto), which documents will be subject to the reasonable review and reasonable comment of such counsel, and Newco shall not file any Registration Statement or amendment thereto or any prospectus or supplement thereto to which the holders of a majority of the Registrable Shares covered by such Registration Statement or the underwriters, if any, shall reasonably object in writing); (ii) prepare and file with the Commission any amendments and supplements to the Registration Statement and to the prospectus used in connection therewith as may be necessary to keep the Registration Statement 5 6 effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Shares covered by the Registration Statement for the period required to effect the distribution of such Registrable Shares, but in no event shall Newco be required to do so for a period of more than 180 days following the effective date of the Registration Statement other than a Shelf Offering and for a Shelf Offering, the earlier of (A) the date the offering is completed and (B) two years following the effective date of the Shelf Offering; (iii) furnish at Newco's expense to the Selling Stockholders such number of copies of the Registration Statement and any preliminary, final, supplemental or amended prospectus, in conformity with the requirements of the Securities Act, as may reasonably be requested by the Selling Stockholders in order to facilitate the disposition of the Registrable Shares covered by such Registration Statement, but only while Newco is required under the provisions hereof to cause a Registration Statement to remain effective; (iv) register or qualify the Registrable Shares covered by a Registration Statement under such other securities or blue sky laws of such jurisdictions in the United States and Canada as the Selling Stockholders shall reasonably request, and do any and all other acts and things which may be necessary to enable each Selling Stockholder whose Registrable Shares are covered by such Registration Statement to consummate the disposition in such jurisdictions of such Registrable Shares; provided, however, that Newco shall in no event be required to qualify to do business as a foreign corporation or a dealer in any jurisdiction where it is not so qualified, to conform the composition of its assets at the time to the securities and blue sky laws of such jurisdiction, to exercise or file any general consent to service of process in suits other than those arising out of the offer and sale of the Registrable Shares covered by the Registration Statement, or to subject itself to taxation, in each case in any jurisdiction where it has not theretofore done so; (v) promptly notify each Selling Stockholder covered by such Registration Statement and each managing underwriter, if any: (A) when the Registration Statement, any pre-effective amendment, the prospectus or any prospectus supplement related thereto or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective; (B) of any request by the Commission or state or provincial securities authority for amendments or supplements to the Registration Statement or the prospectus related thereto or for additional information; (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (D) of the receipt by Newco of any notification with respect to the suspension of the qualification of any Registrable Shares for sale under the securities or blue sky laws of any jurisdiction or the initiation of any proceeding for such purpose; (E) of the existence of any fact of which Newco becomes aware which results in the Registration Statement, the prospectus related thereto or any document incorporated therein by reference containing an untrue statement of a material fact or omitting to state a material fact required to be stated therein or necessary to 6 7 make any statement therein not misleading; and (F) if at any time the representations and warranties contemplated by any underwriting agreement, securities sale agreement, or other similar agreement, relating to the offering shall cease to be true and correct in all material respects; and, if the notification relates to an event described in clause (E), Newco shall promptly prepare and furnish to each such Selling Stockholder and each underwriter, if any, a reasonable number of copies of a prospectus supplemented or amended so that, as thereafter delivered to the purchasers of such Registrable Shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; (vi) comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as reasonably practicable after the effective date of the Registration Statement (and in any event within 16 months thereafter), an earnings statement (which need not be audited) covering the period of at least twelve consecutive months beginning with the first day of Newco's first calendar quarter after the effective date of the Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 (or any successor rule) thereunder; (vii) enter into such customary agreements (including, if applicable, an underwriting agreement) and take such other actions as the holders of a majority of the Registrable Shares participating in such offering shall reasonably request in order to expedite or facilitate the disposition of such Registrable Shares. The holders of the Registrable Shares which are to be distributed by such underwriters shall be parties to such underwriting agreement and may, at their option, require that Newco make to and for the benefit of such Selling Stockholders the representations, warranties and covenants of Newco which are being made to and for the benefit of such underwriters; (viii) obtain an opinion from Newco's counsel and a "cold comfort" letter from Newco's independent public accountants in customary form and covering such matters as are customarily covered by such opinions and "cold comfort" letters delivered to underwriters in underwritten public offerings, which opinion and letter shall be reasonably satisfactory to the underwriter, if any, and to the Selling Stockholders, and furnish to each Selling Stockholder and to each underwriter, if any, a copy of such opinion and letter addressed to such Selling Stockholder or underwriter; (ix) deliver promptly to each Selling Stockholder and each underwriter, if any, copies of all correspondence between the Commission and Newco, its counsel or auditors, make reasonably available for inspection by any Selling Stockholder of such Registrable Shares covered by such Registration Statement, by any underwriter participating in any disposition to be effected pursuant to such Registration Statement and by any attorney, accountant or other agent retained by any such Selling Stockholder or any such underwriter, all pertinent financial and other records, pertinent corporate documents and properties of Newco, and cause 7 8 all of Newco's officers, directors and employees to supply all information reasonably requested by any such Selling Stockholder, underwriter, attorney, accountant or agent in connection with such Registration Statement; (x) use its reasonable best efforts to obtain the withdrawal of any order suspending the effectiveness of the Registration Statement; (xi) promptly prior to the filing of any document which is to be incorporated by reference into the Registration Statement or the prospectus (after the initial filing of such Registration Statement) provide copies of such document to counsel for the Selling Stockholders and to each managing underwriter, if any, and make Newco's representatives reasonably available for discussion of such document and make such changes in such document concerning the Selling Stockholders prior to the filing thereof as counsel for such Selling Stockholders or underwriters may reasonably request; (xii) furnish to each Selling Stockholder and managing underwriter, if any, without charge, at least one signed copy of the Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those incorporated by reference); (xiii) cooperate with the Selling Stockholders and managing underwriters, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Shares to be sold, and cause such Registrable Shares to be issued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Shares to the underwriters or, if not an underwritten offering, in accordance with the instructions of the Selling Stockholders at least three business days prior to any sale of Registrable Shares and instruct any transfer agent and registrar of Registrable Shares to release any stop transfer orders in respect thereof; (xiv) comply in all respects with Regulation M of the Exchange Act (as defined below), and any successor rules and regulations to Regulation M ("Regulation M"), during any distribution of Registrable Shares pursuant to this Agreement; and (xv) cause such Registrable Shares covered by a Registration Statement to be listed on the principal exchange or exchanges (including the Nasdaq Stock Market) on which the Newco Common Stock is then listed upon the sale of such Registrable Shares pursuant to such Registration Statement. For purposes of this Agreement, "Exchange Act" shall mean the United States Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations of the Commission issued under such Act, as they may, from time to time, be in effect. 8 9 (b) Subject to any rights under registration rights agreements which ANTEC Corporation is a party as of the date hereof, Newco agrees that if it shall previously have received a request for registration pursuant to Section 1 hereof and if such previous registration shall not have been withdrawn or abandoned, Newco shall not effect any registration of any of its securities under the Securities Act (other than a registration on Form S-4 or Form S-8 or any successor form which is then in effect), whether or not for sale for its own account, until a period of 60 days, shall have elapsed from the effective date of such previous registration. (c) Newco's obligations under this Agreement with respect to a Selling Stockholder shall be conditioned upon such Selling Stockholder's compliance with the following: (i) Such Selling Stockholder shall cooperate with Newco in connection with the preparation of the Registration Statement, and for so long as Newco is obligated to file and keep effective the Registration Statement, shall provide to Newco, in writing, for use in the Registration Statement, all such information regarding the Selling Stockholder and its plan of distribution of the Registrable shares as may be reasonably requested to enable Newco to prepare the Registration Statement and prospectus covering the Registrable Shares, to maintain the currency and effectiveness thereof and otherwise to comply with all applicable requirements of law in connection therewith. (ii) During such time as such Selling Stockholder may be engaged in a distribution of the Registrable Shares, such Selling Stockholder shall comply with Regulation M and pursuant thereto it shall, among other things: (A) not engage in any stabilization activity in connection with the securities of Newco in contravention of such regulation; (B) distribute the Registrable Shares solely in the manner described in the Registration Statement; (C) cause to be furnished to each broker through whom the Registrable Shares may be offered, or to the offeree if an offer is not made through a broker, such copies of the prospectus covering the Registrable Shares and any amendment or supplement thereto and documents incorporated by reference therein as may be required by law; and (D) not bid for or purchase any securities of Newco or attempt to induce any person to purchase any securities of Newco other than as permitted under the Exchange Act. (iii) If the Registration Statement provides for a Shelf Offering, then at least five (5) business days prior to any distribution of the Registrable Shares, any Selling Stockholder who is an "affiliated purchaser" (as defined in Rule 100 of Regulation M) of Newco shall advise Newco in writing of the date on which the distribution by such Selling Stockholder will commence, the number of the Registrable Shares to be sold and the manner of sale. Such Selling Stockholder also shall inform Newco when each distribution of such Registrable Shares is complete. (iv) Stockholder agrees and covenants that, upon receipt of any notice from Newco of the happening of any event of the kind described in Section 5(a)(v)(E) hereof, Stockholder will forthwith discontinue disposition of 9 10 Registrable Shares pursuant to the registration statement covering such Registrable Shares until Stockholder's receipt of the copies of the supplemented or amended prospectus contemplated by such section, and, if so directed by Newco, Stockholder will deliver to Newco all copies, other than permanent file copies, then in Stockholder's possession of the most recent prospectus covering such Registrable Shares at the time of receipt of such notice; provided, however, that the Company shall use its reasonable best efforts to promptly prepare and furnish to each such Selling Stockholder and each underwriter, if any, a reasonable number of copies of the supplemented or amended prospectus. 6. Indemnification. (a) By Newco. Newco agrees to indemnify and hold harmless, to the full extent permitted by law, each Selling Stockholder, its officers, directors and agents, and each person, if any, who controls any of the foregoing persons within the meaning of the Securities Act against all losses, claims, damages, liabilities and expenses, joint or several (including reasonable fees of one counsel for all Selling Stockholders) ("Losses"), to which each indemnified party may become subject under the Securities Act, state and provincial securities laws or otherwise in respect thereof insofar as such Losses arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any registration statement, prospectus or preliminary prospectus or any amendment thereof or supplement thereto (the "Disclosure Documents") or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading, except insofar as the same are caused by or contained in any information with respect to such Selling Stockholder furnished in writing to Newco by such Selling Stockholder expressly for use therein. In connection with an underwritten offering, Newco will indemnify the underwriters thereof, their officers and directors and each person who controls such underwriters (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the holders of Registrable Shares. Newco will reimburse each such indemnified party for all legal or other expenses reasonably incurred by such party (as incurred by such party) in connection with investigating or defending any such claims, including, subject to such indemnified party's compliance with the provisions of the last sentence of subsection (c) of this Section 6, any amounts paid in settlement of any litigation, commenced or threatened. The foregoing indemnity and reimbursement of expenses shall remain in full force and effect regardless of any investigation made by or on behalf of such indemnified party and shall survive the transfer of such Registrable Shares by such Selling Stockholder. (b) By the Selling Stockholders. In connection with any registration statement in which a Selling Stockholder is participating, each such Selling Stockholder shall furnish to Newco in writing such information with respect to such Selling Stockholder as Newco reasonably requests for use in connection with any such registration statement or prospectus and agrees to indemnify, severally and not jointly, to the extent permitted by law, Newco, the directors and officers of Newco and each person who controls Newco (within the meaning of the Securities Act) against any Losses resulting from any untrue 10 11 or alleged untrue statement of a material fact or any omission or alleged omission of a material fact required to be stated in the Disclosure Documents or necessary to make the statements therein (in the case of a prospectus, in the light of the circumstances under which they were made) not misleading, to the extent, but only to the extent, that such untrue statement or omission is contained in any information with respect to such Selling Stockholder so furnished in writing by such Selling Stockholder expressly for use in the registration statement, provided that the liability of such Selling Stockholder pursuant to this Section 6(b) shall not exceed an amount equal to the net proceeds of the sale of Registrable Shares sold pursuant to such registration statement that are received by or for the benefit of such Selling Stockholder. Newco shall be entitled to receive indemnities from underwriters, selling brokers, dealer managers and similar securities industry professionals participating in the distribution to the same extent as provided above with respect to information so furnished in writing by such persons specifically for inclusion in any prospectus or registration statement. The Selling Stockholders shall reimburse each such indemnified party for all legal or other expenses reasonably incurred by such party in connection with investigating or defending any such claim, including, subject to such indemnified party's compliance with the provisions of the last sentence of subsection (c) of this Section 6, any amounts paid in settlement of any litigation, commenced or threatened. Newco and each Selling Stockholder hereby acknowledge and agree that, unless otherwise expressly agreed to in writing by such Selling Stockholder to the contrary, for all purposes of this Agreement the only information furnished or to be furnished to Newco for use in any such registration statement, preliminary, final or summary prospectus or amendment or supplement thereto are statements specifically relating to (i) transactions between such Selling Stockholder and its affiliates, as that term is defined in Rule 12b-2 of the Exchange Act ("Affiliates"), on the one hand, and Newco, on the other hand; (ii) the beneficial ownership of shares of Newco Common Stock by such Selling Stockholder and its Affiliates, (iii) the name and address of such Selling Stockholder, and (iv) any additional information about such Selling Stockholder or the plan of distribution (other than for an underwritten offering) that is required by law to be disclosed in any such document. (c) Third Party Claims. Promptly after the receipt by any party hereto of notice of any claim, action, suit or proceeding (whether commenced or threatened) by any person who is not a party to this Agreement (collectively, an "Action") which is subject to indemnification hereunder, such party (the "Indemnified Party") shall give reasonable written notice to the party from whom indemnification is claimed (the "Indemnifying Party"). The Indemnified Party shall be entitled, at the sole expenses and liability of the Indemnifying Party, to exercise full control of the defense, compromise or settlement of any such Action unless the Indemnifying Party, within a reasonable time after the giving of such notice by the Indemnified Party, shall: (i) admit in writing to the Indemnified Party, the Indemnifying Party's liability to the Indemnified Party for such Action under the terms of this Section 6; (ii) notify the Indemnified Party in writing of the Indemnifying Party's intention to assume the defense thereof and (iii) retain legal counsel reasonably satisfactory to the Indemnified Party to conduct the defense of such Action. The Indemnified Party and the Indemnifying Party shall cooperate with the party assuming the defense, compromise or settlement of any such Action in accordance herewith in any manner that such party reasonably may request. If the Indemnifying Party so assumes the defense of any such Action, the Indemnified Party shall have the right to 11 12 employ separate counsel and to participate in (but not control) the defense, compromise, or settlement thereof, but the fees and expenses of such counsel shall be the expenses of the Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees and expenses, (ii) any relief other than the payment of money damages is sought against the Indemnified Party, (iii) the Indemnified Party shall have been advised by its counsel that there may be one or more legal defenses available to it which are different from or additional to those available to the Indemnifying Party or (iv) the Indemnified Party shall have been advised by counsel that representation of both parties by the same counsel is otherwise inappropriate under applicable standards of professional conduct, and, in any such case, the fees and expenses of such separate counsel shall be borne by the Indemnifying Party. No Indemnifying Party shall settle or compromise any such Action in which any relief other than the payment of money damages is sought against any Indemnified Party unless the Indemnified Party consents in writing to such compromise or settlement. No Indemnified Party shall settle or compromise any such Action for which it is entitled to indemnification hereunder without the prior written consent of the Indemnifying Party, unless the Indemnifying Party shall have failed, after reasonable notice thereof, to undertake control of such Action in the manner provided above in this Section 6. (d) Contribution. If the indemnification provided for in subsections(a) or (b) of this Section 6 is unavailable to or insufficient to hold the indemnified party harmless under subsections (a) or (b) above in respect of any Losses referred to therein for any reason other than as specified therein, then the Indemnifying Party shall contribute to the amount paid or payable by such indemnified party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and such Indemnified Party on the other in connection with the statements or omissions which resulted in such Losses, as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by (or omitted to be supplied by) Newco or the Selling Stockholder (or underwriter) and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by an Indemnified Party as a result of the Losses referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Notwithstanding anything in this Section 6(d) to the contrary, no Indemnifying Party (other than Newco) shall be required pursuant to this Section 6(d) to contribute any amount in excess of the net proceeds received by such Indemnifying Party from the sale of Registrable Shares in the offering to which the Losses of the Indemnified Parties relate, less the amount of any indemnification payment made by such Indemnifying Party pursuant to subsection (a) or (b) of this Section 6. (e) The indemnity agreements contained herein shall be in addition to any other rights to indemnification or contribution which any Indemnified Party may have pursuant to law or contract and shall remain operative and in full force and effect regardless of any 12 13 investigation made or omitted by or on behalf of any Indemnified Party and shall survive the transfer of the Registrable Shares by any such party. (f) The indemnification and contribution required by this Section 6 shall be made by periodic payments of the amount thereof during the course of the investigation or defense, as and when bills are received or expense, loss, damage or liability is incurred. 7. Limitations on Subsequent Registration Rights; Priority. Subject to the provisions of the TCI Registration Rights Agreement, Newco shall not, without the prior written consent of Stockholders holding at least a majority of the Registrable Shares then held by all Stockholders, enter into any agreement with any holder or prospective holder of any securities of Newco which grants such holder or prospective holder rights to include securities of Newco in any Registration Statement any of which material rights are more favorable than those provided to Stockholders hereunder, without also offering to Stockholders such more favorable material rights. 8. Rule 144 Requirements. Newco agrees to: (a) make and keep current public information about Newco available, as those terms are understood and defined in Rule 144; (b) use its reasonable best efforts to file with the Commission in a timely manner all reports and other documents required of Newco under the Securities Act and the Exchange Act; and (c) furnish to any holder of Registrable Shares upon request (i) a written statement by Newco as to its compliance with the reporting requirements of Rule 144 and of the Securities Act and the Exchange Act, (ii) a copy of the most recent annual or quarterly report of Newco and (iii) such other reports and documents of Newco as such holder may reasonably request to avail itself of any similar rule or regulation of the Commission allowing it to sell any such securities without registration. 9. Miscellaneous. (a) Notices. All notices, requests, demands, waivers and other communications required or permitted to be given under this Agreement shall be in writing and shall be deemed to have been duly given if delivered personally or mailed, certified or registered mail with postage prepaid, or sent by telex, telegram or telecopier, as follows: (i) if to Investor: Nortel Networks LLC 200 Athens Way Nashville, TN 37228 Attn: Legal Department Facsimile: (615) 432-4067 and with a copy to: 13 14 Nortel Networks Inc. 2221 Lakeside Blvd. Richardson, TX 75082 Attn: Robert Fishman Facsimile: (972) 684-3888 (ii) if to Newco: Arris Group, Inc. 11450 Technology Circle Duluth, GA 30097 Attn: Larry Margolis Facsimile: (678) 473-8470 and with a copy to: ANTEC Corporation 11450 Technology Circle Duluth, GA 30097 Attn: Bob Stanzione Facsimile: (678) 473-8470 or to such other person or address as any party shall specify by notice in writing to the other party. Notice of a change of address shall be effective only upon actual receipt thereof. (b) Entire Agreement. This Agreement, together with the TCI Registration Rights Agreement, constitutes the entire agreement among the parties hereto and supersedes all prior agreements and understandings, oral and written, between the parties hereto with respect to the subject matter hereof. (c) Binding Effect; Benefit. This Agreement shall insure to the benefit of and be binding upon the parties hereto and their respective successors and assigns. Nothing in this Agreement, expressed or implied, is intended to confer on any person other than the parties hereto or their respective successors and assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement, other than rights conferred upon indemnified persons under Section 6 and rights conferred upon Permitted Transferees. Nothing in this Agreement shall be deemed to create an independent obligation on the part of any Stockholder to sell any Registrable Shares pursuant to any effective registration statement. (d) Termination. This Agreement shall terminate upon the first such instance as the Stockholders, collectively, cease to own at least two percent (2%) of the outstanding Newco Common Stock. Notwithstanding the foregoing, the rights, duties and obligations of Newco and the Stockholders under Section 6 shall survive the termination of this Agreement. (e) Amendment and Modification. This Agreement may be amended or modified only by an instrument in writing signed by or on behalf of such party and any other person then a Stockholder. Any term or provision of this Agreement may be waived in writing at any time by the party which is entitled to the benefits thereof. 14 15 (f) Enforceability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to such 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. (g) Equitable Remedies. The parties hereto acknowledge that there would be no adequate remedy at law if any party fails to perform any of its obligation hereunder, and, accordingly, agree that each party, in addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to injunctive relief, including specific performance, to enforce such obligations without the posting of any bond, and, if any action should be brought in equity to enforce any of the provisions of this Agreement, none of the parties hereto shall raise the defense that there is an adequate remedy at law. (h) Section Headings. The section headings contained in this Agreement are inserted for reference purposes only and shall not affect the meaning or interpretation of this Agreement. (i) Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and all of which together shall be deemed to be one and the same instrument. (j) Applicable Law. This Agreement and the legal relations between the parties hereto shall be governed by and construed in accordance with the laws of the State of Delaware, without regard to the conflict of laws thereof. [Remainder of page intentionally left blank.] 15 16 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. "INVESTOR" NORTEL NETWORKS LLC By: /s/ Craig A. Johnson ------------------------------------ Its: ------------------------------------ ARRIS GROUP, INC. f/k/a Broadband Parent Corporation By: /s/ Lawrence A. Margolis ------------------------------------ Its: ------------------------------------ -----END PRIVACY-ENHANCED MESSAGE-----