-----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, AC6rXZ+2QWnQDQuImsJPSoX7XIDCYDzYWRdq1BUzVOMXwJNlwFLLj9P3jt8zamss VHPHNeH4fypgYjLw7qqJ1A== 0000912057-02-008882.txt : 20020415 0000912057-02-008882.hdr.sgml : 20020415 ACCESSION NUMBER: 0000912057-02-008882 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 12 FILED AS OF DATE: 20020306 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NEXT LEVEL COMMUNICATIONS INC CENTRAL INDEX KEY: 0001093802 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 943342408 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-57193 FILM NUMBER: 02568214 BUSINESS ADDRESS: STREET 1: 6085 STATE FARM DRIVE CITY: ROHNERT PARK STATE: CA ZIP: 94928 BUSINESS PHONE: 7875846820 MAIL ADDRESS: STREET 1: 6085 STATE FARM DRIVE CITY: ROHNERT PARK STATE: CA ZIP: 94928 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: MOTOROLA INC CENTRAL INDEX KEY: 0000068505 STANDARD INDUSTRIAL CLASSIFICATION: RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663] IRS NUMBER: 361115800 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 1303 E ALGONQUIN RD CITY: SCHAUMBURG STATE: IL ZIP: 60196 BUSINESS PHONE: 8475765000 MAIL ADDRESS: STREET 1: 1303 EAST ALGONQUIN ROAD CITY: SCHAUMBURG STATE: IL ZIP: 60196 FORMER COMPANY: FORMER CONFORMED NAME: MOTOROLA DELAWARE INC DATE OF NAME CHANGE: 19760414 SC 13D/A 1 a2072365zsc13da.htm AMEND NO. 2
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


SCHEDULE 13D/A
Under the Securities Exchange Act of 1934*
(Amendment No. 2)


NEXT LEVEL COMMUNICATIONS, INC.
(Name of Issuer)

Common Stock, par value $0.01 per share
(Title of Class of Securities)

65333U 10 4
(CUSIP Number)

Carol H. Forsyte
Motorola, Inc.
1303 East Algonquin Road, Schaumburg, IL 60196
(847) 576-5000
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)


February 21, 2002
(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(b)(3) or (4), check the following box. o

    Note:   Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent.

(Continued on the following pages)
(Page 1 of 13 pages)


*        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 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 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).


CUSIP No.    65333U 10 4   13D   Page 2 of 13 Pages
             

(1)   Names of Reporting Persons
Motorola, Inc.
S.S. or I.R.S. Identification Nos. of Above Persons

 

 

 

 

 

 

 

(2)   Check the Appropriate Box if a Member   (a)   o
    of a Group   (b)   o

 

 

 

 

 

 

 

(3)   SEC Use Only        

 

 

 

 

 

 

 

(4)   Source of Funds
00
       

 

 

 

 

 

 

 

(5)   Check Box if Disclosure of Legal Proceedings is Required Pursuant
    to Items 2(d) or 2(e)       o

 

 

 

 

 

 

 

(6)   Citizenship or Place of Organization
Delaware

 

 

 

 

 

 

 

Number of Shares Beneficially Owned by Each Reporting Person With   (7)   Sole Voting Power
92,241,050 (Includes 14,312,442 shares of common stock which are subject to warrants currently exercisable within 60 days and 13,824,884 shares of common stock subject to Series A Convertible Preferred Stock. See Item 4.)

 

 

 

 

 

 

 
       
        (8)   Shared Voting Power
0

 

 

 

 

 

 

 
       
        (9)   Sole Dispositive Power
92,241,050 (Includes 14,312,442 shares of common stock which are subject to warrants currently exercisable within 60 days and 13,824,884 shares of common stock subject to Series A Convertible Preferred Stock. See Item 4.)

 

 

 

 

 

 

 
       
        (10)   Shared Dispositive Power
0

 

 

 

 

 

 

 

(11)   Aggregate Amount Beneficially Owned by Each Reporting Person
92,241,050 (Includes 14,312,442 shares of common stock which are subject to warrants currently exercisable within 60 days and 13,824,884 shares of common stock subject to Series A Convertible Preferred Stock. See Item 4.)

(12)   Check if the Aggregate Amount in Row (11) Excludes Certain Shares                                    o

 

 

 

 

 

 

 

(13)   Percent of Class Represented by Amount in Row (11)

81.11% (See Item 5.)

(14)   Type of Reporting Person
CO


STATEMENT PURSUANT TO RULE 13d-1
OF THE
GENERAL RULES AND REGULATIONS
UNDER THE
SECURITIES EXCHANGE ACT OF 1934, AS AMENDED

Item 1.    Security and Issuer.

        Item 1 is amended and restated to read as follows:

        This Amendment No. 2 to Schedule 13D (this "Statement") relates to the Common Stock, par value $0.01 per share (the "Shares"), of Next Level Communications, Inc., a Delaware corporation (the "Company") and amends and supplements all information contained in the initial statement on Schedule 13D (the "Initial Statement") filed on January 14, 2000, as amended by Amendment No. 1 filed on June 15, 2001 by Motorola, Inc., a Delaware corporation ("Motorola").

        The Initial Statement amended and supplemented all information contained in an initial statement on Schedule 13D ("GI Schedule 13D") filed on November 22, 1999 by General Instrument Corporation, a Delaware corporation ("General Instrument"), the Voting Trust and the Trustee (each as defined and identified in the GI Schedule 13D) in which Shares were previously reported as beneficially owned by General Instrument. On January 5, 2000, pursuant to an agreement and plan of merger (the "Agreement and Plan of Merger"), dated September 14, 1999, General Instrument merged with and into Lucerne Acquisition Corp. ("Lucerne"), a Delaware corporation and a wholly-owned subsidiary of Motorola (the "Merger"). As a result of the Merger the separate corporate existence of Lucerne ceased, General Instrument continued as the surviving corporation as a wholly-owned subsidiary of Motorola, the Voting Trust was terminated and Motorola became the sole beneficial owner of the Shares of the Company held by General Instrument, with the sole voting and investment power with respect to such Shares. Consequently, since the date of the Merger Motorola has assumed the reporting obligations with respect to such Shares. Unless otherwise indicated, capitalized terms used but not defined herein shall have the same meanings assigned to such terms in the GI Schedule 13D and are incorporated herein by reference.

        The Company's principal executive offices are at 6085 State Farm Drive, Rohnert Park, California 94928.


Item 2.    Identity and Background.

        Item 2 is amended and restated to read as follows:

        (a)—(c), (f)    This Statement is being filed by Motorola. Motorola's principal executive offices are located at 1303 East Algonquin Road, Schaumburg, Illinois 60196. Motorola is a global leader in providing integrated communications solutions and embedded electronic solutions. These include: (i) software-enhanced wireless telephone, two-way radio, messaging products and systems, as well as networking and Internet-access products, for consumers, network operators, and commercial, government and industrial customers; (ii) end-to-end systems for the delivery of interactive digital video, voice and high-speed data solutions for broadband operations; (iii) embedded semiconductor solutions for customers in the networking and computing, transportation wireless communications and digital consumer/home networking markets; and (iv) embedded electronic systems for automotive, industrial, transportation, navigation, communications and energy systems markets.

        The names, business addresses and present principal occupations or employment of the directors and executive officers of Motorola are set forth in the attached Appendix 1, which is incorporated herein by reference. To the best of Motorola's knowledge, except as noted on Appendix 1, all directors and executive officers of Motorola are citizens of the United States.

3



        (d)—(e)    Neither Motorola, nor to the best of Motorola's knowledge, any of the directors or executive officers listed on Appendix 1 has been, during the last five years, (a) convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (b) 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.

        Item 3 is amended and restated to read as follows:

        In connection with the Merger described above, each outstanding share of General Instrument common stock was exchanged for 0.575 shares of Motorola common stock, with cash in lieu of any fractional Motorola shares that former General Instrument stockholders would have otherwise received. As a result of the Merger, Motorola became the sole beneficial owner of the 64,103,724 Shares of the Company held by General Instrument, with the sole voting and investment power with respect to such Shares.

        On May 16, 2001, Motorola and the Company entered into a $60 million credit agreement (the "Credit Agreement"). Under the terms of the Credit Agreement, the Company granted Motorola warrants for up to 7,500,000 Shares (the "May Warrants"), all with an exercise price of $7.39 per share. The May Warrants expire on May 15, 2006 and are exercisable in varying increments described below in Item 4.

        On October 24, 2001, Motorola and the Company entered into: i) a Guarantee pursuant to which Motorola will guarantee the Company's $20 million mortgage loan obligation to a third party; and ii) an Environmental Indemnity Agreement in favor of the third party relating to real estate security. In exchange for Motorola entering into such agreements, the Company granted Motorola warrants for an additional 400,000 Shares ("Warrant No. 10"), all with an exercise price of $3.82 per share. Warrant No. 10 is currently exercisable and expires on October 23, 2006.

        On December 11, 2001, pursuant to an Amendment to the Credit Agreement ("December 11, 2001 Amendment") by Motorola and the Company, Motorola agreed to provide an additional $20 million of loans ("$20 million tranche") to the Company. Under the terms of the December 11, 2001 Amendment, the Company granted to Motorola a convertible promissory note ("Convertible Promissory Note") that is convertible, at the option of Motorola, into Shares or other securities of the Company upon the same terms as will be offered to other investors in the Company's next future equity financing in excess of $15 million. If no such Company financing occurs and either (i) the Company delivers a notice of prepayment of this $20 million tranche or (ii) this $20 million tranche will mature within thirty days, then Motorola, at its option, can convert the outstanding principal and interest under the Convertible Promissory Note into Shares at a rate of $4.29 per share, subject to customary anti-dilution protection provisions. This $20 million tranche may not be prepaid while there are outstanding any other loans under the Credit Agreement, as amended. The conversion option under the Convertible Promissory Note is currently not exercisable. As additional consideration for entering into the December 11, 2001 Amendment, the Company granted Motorola an additional warrant to acquire 2,500,000 Shares ("Warrant No. 11"), all with an exercise price of $4.29 per share. Warrant No. 11 is currently exercisable and expires on December 10, 2006.

        On February 21, 2002, Motorola and the Company entered into a Securities Purchase Agreement whereby Motorola purchased 6,912,442 shares of the Series A Convertible Preferred Stock of the Company ("Series A Preferred") at a per share purchase price of $4.34, for a total purchase price of approximately $30 million. Each share of Series A Preferred is convertible into two shares of the Company's common stock; is entitled to cumulative dividends at an annual rate of 7.5%, payable in cash or additional shares of Series A Preferred; and is entitled to a liquidation preference of $10.85 in

4



the event of insolvency or dissolution of the company, in the event of certain change in control, merger or consolidation events and in the event of sales or transfers of a material portion of Company's assets outside the ordinary course of business. In addition, a majority of the holders of the Series A Preferred may call for redemption on or after February 19, 2007 at a per share redemption price of $5.21. Further, each holder of Series A Preferred may vote its shares on an as-converted basis. Finally, certain material actions require the consent of a majority of the holders of the Series A Preferred. In addition, the Company granted Motorola a warrant for 3,456,221 Shares with an exercise price of $2.17 per share ("Warrant No. Series A 001") and a warrant for 3,456,221 Shares with an exercise price of $2.60 per share ("Warrant No. Series A 002"). The warrants are currently exercisable and expire on February 19, 2007.


Item 4.    Purpose of Transaction.

        Item 4 is amended and restated to read as follows:

        Beneficial ownership of the 64,103,724 Shares was acquired by Motorola as part of the Merger. Reference is made to Motorola's Registration Statement on Form S-4 (File No. 333-88735) for more information regarding the Merger, including the background and reasons therefor. Prior to the Merger, beneficial ownership of the 64,103,724 Shares was with General Instrument. Reference is made to the GI Schedule 13D for more information regarding beneficial ownership of such Shares by General Instrument, the Voting Trust and the Trustee.

        Prior to the Merger, the 64,103,724 Shares were held in the Voting Trust, which was terminated upon the Merger. Following such termination, such Shares were registered to General Instrument. Pursuant to the Corporate and Intercompany Agreement described in Item 6 below, upon termination of the Voting Trust, the Company's board of directors took action to appoint four Motorola employees as Company directors. Currently, Eugene Delaney and Richard D. Severns, employees of Motorola, serve as Company directors. Jerry Roseland and Ferdinand C. Kuznik, retired employees of Motorola, also serve as Company directors.

        On May 16, 2001, Motorola and the Company entered into the Credit Agreement. Under the terms of the Credit Agreement, the Company granted Motorola the May Warrants. All the May Warrants have an exercise price of $7.39 per share and expire on May 15, 2006. The May Warrants are exercisable in varying increments as follows: a) on May 16, 2001, (the "Effective Date") of the Credit Agreement, warrants for 1,500,000 Shares became exercisable; b) on May 18, 2001, warrants for an additional 1,500,000 Shares became exercisable when the Company's cumulative borrowing under the Credit Agreement exceeded $30 million; c) on June 20, 2001, warrants for an additional 750,000 Shares become exercisable when the Company's cumulative borrowing under the Agreement exceeded $40 million; d) on June 27, 2001, warrants for an additional 750,000 Shares become exercisable when the Company's cumulative borrowing under the Agreement exceeded $50 million; and e) warrants for an additional 3,000,000 Shares become exercisable in 1,000,000 increments on May 17, 2002, November 17, 2002 and February 17, 2003 respectively, unless prior to those dates the Company's borrowings under the Credit Agreement have been repaid in full and the Credit Agreement has been terminated.

        On October 24, 2001, Motorola and the Company entered into: i) a Guarantee pursuant to which Motorola will guarantee the Company's $20 million mortgage loan obligation to a third party; and ii) an Environmental Indemnity Agreement in favor of the third party relating to real estate security. In exchange for Motorola entering into such agreements, the Company granted Motorola Warrant No. 10 for an additional 400,000 Shares, with an exercise price of $3.82 per share. Warrant No. 10 is currently exercisable and expires on October 23, 2006.

        Pursuant to the December 11, 2001 Amendment to the Credit Agreement, Motorola agreed to provide an additional $20 million tranche to the Company. Under the terms of the December 11, 2001

5



Amendment, the Company granted to Motorola the Convertible Promissory Note that is convertible, at the option of Motorola, into Shares or other securities of the Company upon the same terms as will be offered to other investors in the Company's next future equity financing in excess of $15 million. If no such Company financing occurs and either (i) the Company delivers a notice of prepayment of this $20 million tranche or (ii) this $20 million tranche will mature within thirty days, then Motorola, at its option, can convert the outstanding principal and interest under the Convertible Promissory Note into Shares at a rate of $4.29 per share, subject to customary anti-dilution protection provisions. This $20 million tranche may not be prepaid while there are outstanding any other loans under the Credit Agreement, as amended. The conversion option under the Convertible Promissory Note is currently not exercisable. As additional consideration for entering into the December 11, 2001 Amendment, the Company granted Motorola Warrant No. 11 to acquire 2,500,000 Shares, with an exercise price of $4.29 per share. Warrant No. 11 is currently exercisable and expires on December 10, 2006.

        On February 21, 2002, Motorola and the Company entered into a Securities Purchase Agreement whereby Motorola purchased 6,912,442 shares of the Series A Preferred at a per share purchase price of $4.34, for a total purchase price of approximately $30 million. Each share of Series A Preferred is convertible into two shares of the Company's common stock; is entitled to cumulative dividends at an annual rate of 7.5%, payable in cash or additional shares of Series A Preferred; and is entitled to a liquidation preference of $10.85 in the event of insolvency or dissolution of the company, in the event of certain change in control, merger or consolidation events and in the event of sales or transfers of a material portion of Company's assets outside the ordinary course of business. In addition, a majority of the holders of the Series A Preferred may call for redemption on or after February 19, 2007 at a per share redemption price of $5.21. Further, each holder of Series A Preferred may vote its shares on an as-converted basis. Finally, certain material actions require the consent of a majority of the holders of the Series A Preferred. In addition, the Company granted Motorola Warrant No. Series A 001 for 3,456,221 Shares with an exercise price of $2.17 per share and Warrant No. Series A 002 for 3,456,221 Shares with an exercise price of $2.60 per share. These warrants are currently exercisable and expire on February 19, 2007.

        Of the 17,312,442 warrants for Shares currently held by Motorola, 14,312,442 are currently exercisable and 3,000,000 are not currently exercisable within 60 days. Each of the 6,912,442 shares of Series A Preferred are currently convertible into two shares of the Company's common stock for a total of 13,824,884 Shares.

        As a result of the Merger, and the transactions described herein, Motorola is able to exercise a majority of the total voting power of the Company. Motorola has appointed four of the eight current directors. In addition, two of the current directors are employees of the Company. Except in connection with the agreements and arrangements described herein, Motorola has no current plans or proposals which relate to or would result in any of the events described in Items (a) through (j) of Item 4 to Schedule 13D. Motorola does, however, expect to evaluate on an ongoing basis its intentions with respect to the Company and may determine to pursue one or more of the actions specified in Items (a) through (j).

        Motorola currently intends to maintain beneficial ownership of all of its Shares. However, Motorola may acquire beneficial ownership of additional Shares or sell or otherwise dispose of beneficial ownership of any or all of the Shares it beneficially owns. Motorola reserves the right to change its plans and intentions at any time and to take any action, with respect to the Company or any of its debt or equity securities, in any manner permitted by law.

6




Item 5.    Interest in Securities of the Issuer.

        Item 5 is amended and restated to read as follows:

        (a)—(b)    Motorola is the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) of 94,241,050 Shares1 (constituting 81.11% of the total outstanding Shares as determined pursuant to Rule 13d-3 under the Exchange Act). As to such Shares, Motorola has the sole power to vote or to direct the vote and sole power to dispose or direct the disposition of all of the Shares.


        1      Motorola's beneficial ownership of the Company's common stock consists of (i) 64,103,724 shares of the Company's common stock and (ii) 14,312,442 shares of the Company's common stock deemed to be outstanding under Rule 13d-3(d) under the Exchange Act as a result of Motorola's ownership of 14,312,442 shares of common stock which are subject to warrants currently exercisable within 60 days and (iii) Motorola's ownership of 13,824,884 shares of common stock which are subject to Series A Preferred currently convertible within 60 days.

        (c)    David Robinson, Executive Vice President and President, Broadband Communications Sector of Motorola has sole voting and investment control of 5,000 Shares, a negligible percent of the total outstanding Shares. Glenn A. Gienko, Executive Vice President and Motorola Director of Human Relations of Motorola has shared voting and investment control of 1,000 Shares, a negligible percent of the total outstanding Shares. Except as described herein, neither Motorola nor, to the knowledge of Motorola, any of the individuals identified in Appendix 1 has executed any transactions in the Company's stock during the past 60 days.

        (d)    There is no person that has the right to receive or the power to direct the receipt of dividends from, or the proceeds from the sale of, the Shares beneficially owned by Motorola.

        (e)    Not applicable.


Item 6.    Contracts, Arrangements, Understandings or Relationships With Respect to Securities of Issuer.

        Item 6 is amended and restated to read as follows:

        General Instrument entered into the following agreements with respect to its ownership of the 64,103,724 Shares that are now beneficially owned by Motorola. The following summary of certain provisions of these agreements is qualified in its entirety by reference to these agreements themselves, which are filed as exhibits hereto and hereby incorporated by reference.

        Corporate and Intercompany Agreement. General Instrument and the Company have entered into the Corporate and Intercompany Agreement, dated as of November 15, 1999, (the "Corporate and Intercompany Agreement") under which, among other things, the Company has granted General Instrument and its affiliates a continuing option to purchase additional Shares or shares of non-voting capital stock of the Company. If the Company issues any additional equity securities after its initial public offering, General Instrument and its affiliates may exercise this option to purchase: (i) Shares to the extent necessary for them to maintain their then-existing percentage of the total voting power; and (ii) shares of non-voting capital to the extent necessary to own 80% of any class of non-voting capital stock which may be outstanding. The purchase price of the Shares will be the market price of the common stock. The purchase price of non-voting capital stock will be the price at which third parties may purchase this stock. The stock option expires if General Instrument and its affiliates beneficially own less than 30% of the outstanding Shares.

        The Corporate and Intercompany Agreement also provides that, immediately upon the termination of the Voting Trust, the Company and its board of directors will take all actions necessary to appoint on the date of termination any number of additional directors nominated by General Instrument. As

7



indicated in Item 4 above, upon the Merger, the Company's board appointed four individuals as Company directors at Motorola's request.

        Registration Rights Agreement dated November 15, 1999. General Instrument, Spencer Trask Investors LLC ("Spencer Trask") and the Company entered into a registration rights agreement, dated as of November 15, 1999 (the "1999 Registration Rights Agreement"). Under the 1999 Registration Rights Agreement, the Company granted to these stockholders and their affiliates the right to request that the Company use its best efforts to register their Shares under federal and state securities laws so that they may sell or dispose of their Shares in accordance with these laws. So long as General Instrument and its affiliates own 30% of the Company's outstanding common stock, they will not be limited in the number of times they may make that request. After their ownership declines below that level, they will be able to cause the Company to effect up to four demand registration of their Shares. Under customary "piggy-back" registration rights, General Instrument and its affiliates will also be entitled to include their 64,103,724 Shares in all registrations of common stock that the Company makes, either for a sale by the Company or any of its stockholders, subject to customary exceptions. The Company will pay for all out-of-pocket expenses relating to these registrations and indemnify General Instrument and its affiliates against liabilities under securities laws. General Instrument and its affiliates may generally assign these registration rights to transferees of their 64,103,724 Shares.

        Motorola has entered into the following agreements with respect to its ownership of the Shares. The following summary of certain provisions of these agreements is qualified in its entirety by reference to these agreements themselves, which are filed as exhibits hereto and hereby incorporated by reference

        Credit Agreement, as amended. On May 16, 2001, Motorola and the Company entered into a $60 million Credit Agreement. Under the terms of the Credit Agreement, the Company granted Motorola the May Warrants. The May Warrants expire on May 15, 2006 and are exercisable in varying increments as described above in Item 4.

        On December 11, 2001, pursuant to the December 11, 2001 Amendment to the Credit Agreement by Motorola and the Company, Motorola agreed to provide an additional $20 million of loans to the Company. Under the terms of the December 11, 2001 Amendment, the Company granted to Motorola a Convertible Promissory Note that is convertible, at the option of Motorola, into Shares or other securities of the Company upon the same terms as will be offered to other investors in the Company's next future equity financing in excess of $15 million. If no such Company financing occurs and either (i) the Company delivers a notice of prepayment of this $20 million tranche or (ii) this $20 million tranche will mature within thirty days, then Motorola, at its option, can convert the outstanding principal and interest under the Convertible Promissory Note into Shares at a rate of $4.29 per share, subject to customary anti-dilution protection provisions. This $20 million tranche may not be prepaid while there are outstanding any other loans under the Credit Agreement, as amended. The conversion option under the Convertible Promissory Note is currently not exercisable. As additional consideration for entering into the December 11, 2001 Amendment, the Company granted Motorola Warrant No. 11 to acquire 2,500,000 Shares, all with an exercise price of $4.29 per share. Warrant No. 11 is currently exercisable and expires on December 10, 2006.

        Security Agreement. As security for the obligations under the Credit Agreement the Company entered into a Security Agreement dated as of May 16, 2001 with Motorola, pursuant to which the Company granted to Motorola a security interest in substantially all of the personal property assets of the Company, including certain patents and patent applications. If the Company defaults under its obligations under the Credit Agreement, Motorola is entitled to exercise remedies with respect to the pledged assets, including those available to a secured party under the Uniform Commercial Code.

        Guarantee and Environmental Indemnity Agreements. On October 24, 2001, Motorola and the Company entered into: i) a Guarantee pursuant to which Motorola will guarantee the Company's

8



$20 million mortgage loan obligation to a third party; and ii) an Environmental Indemnity Agreement in favor of the third party relating to real estate security. In exchange for Motorola entering into the Guarantee and Environmental Indemnity Agreements, the Company granted Motorola warrants for an additional 400,000 shares of the Company's common stock with an exercise price of $3.82 per share. Warrant No. 10 is currently exercisable and expires on October 23, 2006.

        Securities Purchase Agreement. On February 21, 2002, Motorola purchased 6,912,442 shares of the Series A Preferred at a per share purchase price of $4.34, for a total purchase price of approximately $30 million. Pursuant to the Securities Purchase Agreement, each share of Series A Preferred is convertible into two shares of the Company's common stock; is entitled to cumulative dividends at an annual rate of 7.5%, payable in cash or additional shares of Series A Preferred; and is entitled to a liquidation preference of $10.85 in the event of insolvency or dissolution of the company, in the event of certain change in control, merger or consolidation events and in the event of sales or transfers of a material portion of Company's assets outside the ordinary course of business. In addition, a majority of the holders of the Series A Preferred may call for redemption on or after February 19, 2007 at a per share redemption price of $5.21. Further, each holder of Series A Preferred may vote its shares on an as-converted basis. Finally, certain material actions require the consent of a majority of the holders of the Series A Preferred. As consideration for Motorola entering into the Securities Purchase Agreement discussed above, the Company granted Motorola Warrant No. Series A 001 for 3,456,221 Shares with an exercise price of $2.17 per share. Warrant No. Series A 001 is currently exercisable and expires on February 19, 2007.As additional consideration for Motorola entering into the Securities Purchase Agreement discussed above the Company granted Motorola Warrant No. Series A 002 for 3,456,221 Shares with an exercise price of $2.60 per share. Warrant No. Series A 002 is currently exercisable and expires on February 19, 2007.

        Registration Rights Agreement dated May 16, 2001 as amended. Motorola and the Company entered into a Registration Rights Agreement dated as of May 16, 2001 ("2001 Registration Rights Agreement") pursuant to which the Company granted Motorola both demand registration rights (for up to four registrations) and piggyback registration rights related to Shares obtained in connection with the May Warrants. The Company further agreed to use its best efforts to ensure that the conditions to the availability of Rule 144 set forth in paragraph (c) thereof shall be satisfied, and to use its reasonable efforts to cause all conditions to the availability of Form S-3 to be met as soon as practicable after the date of the 2001 Registration Rights Agreement. In connection with the Guarantee, Environmental Indemnity Agreements and Warrant No. 10 discussed above, the 2001 Registration Rights Agreement was amended to provide that such agreement would cover any Shares issued pursuant to the Warrant No. 10. In connection with the December 11, 2001 Credit Agreement Amendment, Convertible Promissory Note and Warrant No. 11 discussed above, the 2001 Registration Rights Agreement was again amended to provide that any Shares issued pursuant to Warrant No. 11 or pursuant to the Convertible Promissory Note would be covered by such agreement. At the same time, the 2001 Registration Rights Agreement was also amended to increase the number of demand registration rights from four to five.

        Registration Rights Agreement dated February 20, 2002. In connection with the Securities Purchase Agreement, Warrant No. Series A 001 and Warrant No. Series A 002 discussed above, the Company also entered into a Registration Rights Agreement ("2002 Registration Rights Agreement") pursuant to which the Company granted Motorola both demand registration rights (for up to four registrations) and piggyback registration rights related to Shares obtained in connection with the Series A Preferred stock or Warrants No. Series A 001 and A 002. The Company further agreed to use its best efforts to ensure that the conditions to the availability of Rule 144 set forth in paragraph (c) thereof shall be satisfied, and to use its reasonable efforts to cause all conditions to the availability of Form S-3 to be met as soon as practicable after the date of the 2002 Registration Rights Agreement.

9



Item 7.    Material to be Filed as Exhibits.

        Item 7 is amended and restated to read as follows:

    1.
    Form of Agreement and Plan of Merger, by and among Motorola, Lucerne and General Instrument (incorporated by reference to Appendix A to Motorola's registration statement ("Motorola's Registration Statement") on Form S-4, File No. 333-88735, filed with the Commission on November 30, 1999).

    2.
    Form of Registration Rights Agreement, by and among General Instrument, the Company and Spencer Trask (incorporated by reference to Exhibit 4.2 to amendment number 6 ("Amendment No. 6") to the Company's registration statement on Form S-1, File No. 333-85999 (the "Registration Statement"), filed with the Commission on November 9, 1999).

    3.
    Form of Voting Trust Agreement, by and among General Instrument, the Company and ChaseMellon Shareholder Services, LLC, as trustee (incorporated by reference to Exhibit 9.1 to Amendment No. 6).

    4.
    Form of Corporate and Intercompany Agreement, between General Instrument and the Company (incorporated by reference to Exhibit 10.2 to Amendment No. 6).

    5.
    Credit Agreement, dated as of May 16, 2001, between the Company and Motorola (incorporated by reference to Exhibit 99.1 of the Company's Current Report on Form 8-K filed on May 29, 2001).

    6.
    Security Agreement, dated as of May 16, 2001, between the Company and Motorola (incorporated by reference to Exhibit 99.2 of the Company's Current Report on Form 8-K filed on May 29, 2001).

    7.
    Form of May Warrants, between the Company and Motorola (incorporated by reference to Exhibit 99.3 of the Company's Current Report on Form 8-K filed on May 29, 2001).

    8.
    Registration Rights Agreement, dated as of May 16, 2001, between the Company and Motorola. (Previously filed with Motorola's Amendment No. 1 to the Initial Statement filed on June 15, 2001)

    9.
    Guarantee, dated as of October 24, 2001, between Motorola and Northwestern Mutual Life Insurance Company.

    10.
    Environmental Indemnity Agreement, dated as of October 24, 2001, between Motorola and Northwestern Mutual Life Insurance Company.

    11.
    Form of Warrant No. 10 between the Company and Motorola.

    12.
    December 11, 2001 Amendment to Credit Agreement, dated May 16, 2001, between the Company and Motorola.

    13.
    Convertible Promissory Note, dated as of December 11, 2001, between the Company and Motorola.

    14.
    Form of Warrant No. 11 between the Company and Motorola.

    15.
    Securities Purchase Agreement, dated as of February 20, 2002, between the Company and Motorola.

    16.
    Form of Warrant No. Series A 001 between the Company and Motorola.

    17.
    Form of Warrant No. Series A 002 between the Company and Motorola.

    18.
    Registration Rights Agreement Amendment No. 1 dated October 24, 2001, to Registration Rights Agreement dated May 16, 2001, between the Company and Motorola (incorporated by reference to Exhibit 10.3 of the Company's Form 10-Q filed on November 14, 2001).

    19.
    Registration Rights Agreement Amendment No. 2 dated December 11, 2001, to Registration Rights Agreement dated May 16, 2001, between the Company and Motorola.

    20.
    Registration Rights Agreement dated February 20, 2002, between the Company and Motorola.

10



SIGNATURE

        After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

    Motorola, Inc.

Date: March 5, 2002

 

By:

 

/s/  
CAROL H. FORSYTE      
    Name:   Carol H. Forsyte
    Title:   Corporate and Securities

11



APPENDIX I

INFORMATION CONCERNING THE DIRECTORS AND EXECUTIVE OFFICERS OF MOTOROLA

        The following table sets forth the name, business address, and principal occupation or employment at the present time for each director and executive officer of Motorola. Unless otherwise noted, each such person is a citizen of the United States. In addition, unless otherwise noted, each such person's business address is 1303 East Algonquin Road, Schaumburg, Illinois 60196.

DIRECTORS OF MOTOROLA

Christopher B. Galvin   Chairman of the Board and Chief Executive Officer, Motorola, Inc.

Edward D. Breen

 

President and Chief Operating Officer, Motorola, Inc.

Robert L. Growney

 

Vice Chairman of the Board of Directors.

Francesco Caio

 

Chief Executive Officer, Netscalibur. His Business address is:
Via Caldera 21, 20153, Milano, Italy. Mr. Caio is a citizen of Italy.

Ronnie C. Chan

 

Chairman, Hang Lung Development Group. His business address is: Hang Lung Development Company Limited, 28/F Standard Chartered Bank Building, 4 Des Voeux Road Central, Hong Kong. Mr. Chan is a U.S. citizen residing in Hong Kong.

H. Laurance Fuller

 

Retired; formerly Co-Chairman of the Board of Directors, BP Amoco, p.l.c. His business address is: Primary Business Center, 1111 E. Warrenville Road, Suite 257, Naperville IL 60563.

Anne P. Jones

 

Consultant. Her business address is: 5716 Bent Branch Road, Bethesda, MD 20816.

Judy C. Lewent

 

Executive Vice President and Chief Financial Officer, Merck & Co., Inc. Her business address is: Merck & Co., Inc., One Merck Drive, Whitehouse Station, NJ 08889.

Dr. Walter E. Massey

 

President of Morehouse College. His business address is: Morehouse College, 830 Westview Drive, SW, Atlanta, GA 30314.

Nicholas Negroponte

 

Chairman of the Massachusetts Institute of Technology Media Laboratory. His business address is: Massachusetts Institute of Technology Media Lab, 20 Ames St. E15-210, Cambridge, MA 02139.

John E. Pepper, Jr.

 

Chairman of the Board of Directors, Procter & Gamble Co. His business address is: Procter & Gamble Co., One Procter & Gamble Plaza, Cincinnati, OH 45202.

Samuel C. Scott III

 

Chairman and Chief Executive Officer, Corn Products International. His business address is: CPC International, Inc., 6500 Archer Road, Summit-Argo, IL 60501.

B. Kenneth West

 

Senior Consultant for Corporate Governance to Teachers Insurance and Annuity Association-College Retirement Equities Fund. His business address is: Retired Chairman of the Board, Harris Bankcorp, Inc., 111 W. Monroe (LLW), Chicago, IL 60603.

Dr. John A. White

 

Chancellor, University of Arkansas. His business address is:
University of Arkansas, 425 Administration Building, Fayetteville, AR 72701.

12


EXECUTIVE OFFICERS OF MOTOROLA, INC.
(WHO ARE NOT ALSO DIRECTORS OF MOTOROLA)

Keith J. Bane   Executive Vice President and President, Global Strategy and Corporate Development.

Robert L. Barnett

 

Executive Vice President and President, Commercial, Government and Industrial Solutions Sector.

Glenn A. Gienko

 

Executive Vice President and Motorola Director of Human Resources.

Joseph M. Guglielmi

 

Executive Vice President and President, Global Customer Solutions Operations.

Carl F. Koenemann

 

Executive Vice President and Chief Financial Officer.

A. Peter Lawson

 

Executive Vice President, General Counsel and Secretary.

Thomas J. Lynch

 

Executive Vice President and President, Integrated Electronic Systems Sector.

Adrian R. Nemcek

 

Senior Vice President and President, Global Telecom Solutions Sector.

Dennis A. Roberson

 

Executive Vice President and Chief Technology Officer.

David E. Robinson

 

Executive Vice President and President, Broadband Communications
Sector.

Fred (Theodore) A. Shlapak

 

Executive Vice President and President, Semiconductor Products Sector.

Mike S. Zafirovski

 

Executive Vice President and President, Personal Communications Sector.

13




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SIGNATURE
APPENDIX I
EX-99.9 3 a2072365zex-99_9.txt GUARANTEE W/NORTHWESTERN MUTUAL DATED 10/24/01 LOAN NO. C-332628 GUARANTEE In consideration of the benefits which the undersigned (herein called "Guarantor") will receive as a result of The Northwestern Mutual Life Insurance Company ("Lender") making the above-numbered loan to Next Level Communications, Inc. ("Borrower") evidenced by a promissory note (the "Note") dated of even date herewith in the original principal amount of $20,000,000 and secured by a deed of trust and security agreement (the "Lien Instrument") covering property in Rohnert Park, California, and as an inducement required by Lender to fund said loan, Guarantor has agreed to guarantee payment of the Note and all amounts at any time owed to Lender under the Lien Instrument and under the other Loan Documents (as hereinafter defined). 1. Therefore, for value received, Guarantor hereby, unconditionally and irrevocably, guarantees to Lender, its successors and assigns the full, prompt and faithful payment of all amounts owed Lender under the Loan Documents, it being the intention hereof that Guarantor shall remain liable until the full amount of the principal, interest and any other sums due or to become due under the Loan Documents (the "Indebtedness") shall be fully paid, (i) notwithstanding any invalidity of, or defect or deficiency in any Loan Document, and (ii) notwithstanding any act, omission or thing which might otherwise operate as a legal or equitable discharge of any Guarantor. If Borrower shall become the debtor under the Federal Bankruptcy Code or the subject of any other state or federal bankruptcy, insolvency or similar proceeding, neither the operation of a stay nor the discharge of the Indebtedness thereunder shall affect the liability of Guarantor hereunder. As used herein, the term "Loan Documents" means the Note, the Lien Instrument and all other instruments and documents (as the same may be amended from time to time) executed by Borrower and delivered to Lender in connection with, or as security for, the indebtedness evidenced by the Note, except any separate environmental indemnity agreement. 2. Upon the occurrence of an Event of Default (as defined in the Lien Instrument), Guarantor shall, within five business days from the date notice of such Event of Default is given to Guarantor, cure such Event of Default. If any Event of Default shall not be cured by Guarantor within said five business day period, Lender may, at its option, accelerate the Indebtedness (if operation of a stay under the Federal Bankruptcy Code or under any other state or federal bankruptcy, insolvency or similar proceeding prohibits or delays acceleration of the Indebtedness as to Borrower, Guarantor agrees that its obligations hereunder shall not be postponed or reduced) and, within five business days from the date a written demand from Lender to Guarantor is given, Guarantor shall pay all Indebtedness outstanding, whether or not acceleration of the Indebtedness shall have occurred as to the Borrower. 3. Except to the extent that any obligation hereunder has been fully and completely satisfied by Guarantor, Guarantor hereby waives absolutely and irrevocably any right of subrogation to Lender's claims against Borrower and any right of indemnity, reimbursement or contribution from Borrower with respect to any payment made or performance undertaken by Guarantor pursuant hereto. Concurrently with the payment in full of the Indebtedness by the Guarantor hereunder, the Lender shall assign all its rights and obligations in the Loan Documents to the Guarantor (including, without limitation, the Lien Instrument) and shall reasonably cooperate with the Guarantor in making any public filings in connection therewith. 4. Without limiting or lessening the liability of Guarantor under this Guarantee, Lender may, without notice to Guarantor, (a) grant extensions of time or any other indulgences on the Indebtedness; (b) take, give up, modify, vary, exchange, renew or abstain from perfecting or taking advantage of any security for the Indebtedness; and (c) accept or make compositions or other arrangements with Borrower, realize on any security and otherwise deal with Borrower, other parties and any security as Lender may deem expedient. Notwithstanding anything to the contrary in this Guarantee, so long as Guarantor has not defaulted under this Guarantee, Lender shall not, without the prior written consent of Guarantor, (i) amend the Loan Documents to increase the principal amount of the Indebtedness, increase the interest rate charged on such principal amount, increase the amount of any prepayment fee, change the principal amortization of the Indebtedness, eliminate any notice required to be given to Guarantor or make any other change that could reasonably be expected to increase the liability of Guarantor hereunder, or (ii) release any material portion of the collateral securing the Indebtedness. 5. This Guarantee shall be a continuing guarantee, shall not be revoked by death, shall inure to the benefit of, and be enforceable by, any subsequent holder of the Note and the Lien Instrument and shall be binding upon, and enforceable against, Guarantor and Guarantor's successors and assigns. 6. All additional demands, presentments, notices of protest and dishonor, and notices of every kind and nature, including those of any action or no action on the part of Borrower, Lender or any Guarantor, are expressly waived by Guarantor. This is a guarantee of payment and not of collection. Guarantor hereby waives the right to require Lender to proceed against Borrower or any other party or to proceed against or apply any security it may hold, waive the right to require Lender to pursue any other remedy for the benefit of Guarantor and agrees that Lender may proceed against Guarantor without taking any action against any other party and without proceeding against or applying any security it may hold. Lender may, at its election, following a default by Guarantor hereunder, foreclose upon any security held by it in one or more judicial or nonjudicial sales, whether or not every aspect of such sale is commercially reasonable, without affecting or impairing the liability of Guarantor, except to the extent the Indebtedness shall have been paid. Guarantor waives all rights and defenses arising out of an election of remedies by Lender following a default by Guarantor hereunder, even though that election of remedies, such as a nonjudicial foreclosure of the Lien Instrument, has destroyed the Guarantor's rights of subrogation and reimbursement against Borrower by the operation of Section 580d of the California Code of Civil Procedure or otherwise. Guarantor waives all rights and defenses that Guarantor may have because Borrower's debt is secured by real property. This means, among other things, that (i) Lender may collect from the Guarantor without first foreclosing on any real or personal collateral pledged by Borrower, and (ii) if Lender forecloses on any real property collateral pledged by Borrower following default by Guarantor hereunder: (A) the amount of the debt may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price, and (B) Lender may collect from Guarantor even if Lender, by foreclosing on the real property collateral, has destroyed any right Guarantor may have to collect from Borrower. This is an unconditional and irrevocable waiver of any rights and defenses Guarantor may have because Borrower's debt is secured by real property. These rights and defenses waived by Guarantor include, but are not limited to, any rights or defenses based upon Sections 580a, 580b, 580d or 726 of the California Code of Civil Procedure. Without limiting the foregoing, Guarantor hereby waives any and all benefits that might otherwise be available to any Guarantor under California Civil Code Sections 2809, 2810, 2819, 2839, 2845, 2850, 2899 and 3433. 7. Guarantor agrees to pay reasonable attorneys' fees and all other costs and expenses which may be incurred in the enforcement of this Guarantee or the collection of the Indebtedness. 8. Any notices, demands, requests and consents permitted or required hereunder or under any other Loan Document shall be in writing, may be delivered personally or sent by certified mail with postage prepaid or by reputable courier service with charges prepaid. Any notice or demand sent to Guarantor by certified mail or reputable courier service shall be addressed to Guarantor at the address set forth opposite Guarantor's name below or such other address in the United States of America as Guarantor shall designate in a notice to Lender given in the manner described herein. Any notice sent to Lender by certified mail or reputable courier service shall be addressed to The Northwestern Mutual Life Insurance Company to the attention of the Real Estate Investment Department at 720 East Wisconsin Avenue, Milwaukee, WI 53202 or at such other addresses as Lender shall designate in a notice given in the manner described herein. Any notice given to Lender shall refer to the Loan No. set forth above. Any notice or demand hereunder shall be deemed given when received. Any notice or demand which is rejected, the acceptance of delivery of which is refused or which is incapable of being delivered during normal business hours at the address specified herein or such other address designated pursuant hereto shall be deemed received as of the date of attempted delivery. 9. This Guarantee shall be governed by and construed in all respects in accordance with the laws of the State of California without regard to any conflict of law principles. With respect to any action, lawsuit or other legal proceeding concerning any dispute arising under or related to this Guarantee, Guarantor hereby irrevocably consents to the jurisdiction of the courts located in the State of California and irrevocably waives any defense of improper venue, forum nonconveniens or lack of personal jurisdiction in any such action, lawsuit or other legal proceeding brought in any court located in State of California. Nothing contained herein shall affect the rights of Lender to commence an action, lawsuit or other legal proceeding against Guarantor in any other jurisdiction. Executed as of the 24th day of October, 2001. Mailing Address: MOTOROLA, INC., a Delaware corporation 1303 East Algonquin Road Schamburg, Illinois 60196 By: Attention: Treasurer ------------------------------------- Its: EX-99.10 4 a2072365zex-99_10.txt (800) 688 - 1933 LOAN NO. C-332628 ENVIRONMENTAL INDEMNITY AGREEMENT THIS ENVIRONMENTAL INDEMNITY AGREEMENT is entered into as of October 24, 2001 by the undersigned ("Indemnitors") in favor of The Northwestern Mutual Life Insurance Company ("Northwestern") and the other Indemnified Parties referred to herein. RECITALS A. Northwestern is contemporaneously herewith making a loan (the "Loan") to Next Level Communications, Inc., a Delaware corporation ("Borrower") secured or to be secured by a Mortgage, Deed to Secure A Debt or Deed of Trust and Security Agreement from Borrower in favor of Northwestern (the "Lien Instrument") on the fee title and/or leasehold interest in the Property described in Exhibit "A" attached hereto (the Lien Instrument and all other agreements, certificates and documents (as they may be amended from time to time) at any time executed by or for the benefit of Borrower in connection with the Loan, other than this Environmental Indemnity Agreement, hereinafter, collectively, the "Loan Documents"). B. In order to induce Northwestern to make the Loan, Indemnitors have agreed to execute and deliver this Environmental Indemnity Agreement. C. Each of the Indemnitors has a substantial direct or indirect interest in the Property, financial or otherwise. AGREEMENT NOW, THEREFORE, in consideration of the recitals and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Indemnitors hereby agree and covenant for the benefit of Northwestern and the other Indemnified Parties as follows: 1. The following definitions shall apply to this Environmental Indemnity Agreement: (a) "Environmental Activity or Condition" means the presence, use, generation, manufacture, production, storage, release, threatened release, discharge, disposal or transportation of any Hazardous Substance on, onto, in, under, over or from the Property or the violation of any Environmental Law because of the condition of, or activity on, the Property. 1 (b) "Environmental Law" means all law relating to hazardous waste, chemical substances or mixtures or hazardous, toxic, dangerous or unhealthy substances or conditions or relating to the interaction of the use or ownership of property and the environment, whether such law is: (i) criminal or civil, (ii) federal, state or local, (iii) statutory, common law or administrative regulation, or (iv) currently in effect or enacted in the future. (c) "Hazardous Substance" means any substance which (i) is designated or characterized as hazardous, toxic or dangerous or similarly designated or characterized under any Environmental Law, (ii) is regulated under any Environmental Law or by any governmental or quasi-governmental agency, or (iii) could be a hazard to health, safety or property values. Without limiting the foregoing, Hazardous Substances shall include underground storage tanks and the contents thereof, asbestos, urea formaldehyde insulation, polychlorinated biphenyls, dioxins and petroleum products. (d) "Property" means the property described in Exhibit "A" attached hereto, including the soil, surface water, ground water, air and improvements on, beneath or above such property. 2. Indemnitors hereby agree to indemnify, defend and hold Northwestern and its wholly-owned affiliates and their respective trustees, officers, policyholders, employees and agents (collectively, the "Indemnified Parties") harmless from and against any and all damages, liabilities, losses, costs and expenses, including reasonable attorneys' fees, (collectively, "Damages") suffered or incurred by any of the Indemnified Parties as a result of any Environmental Activity or Condition which would not have been suffered or incurred if Northwestern had not made the Loan; provided that Indemnitors shall have no liability for Damages arising from or caused by the negligence or willful misconduct of any Indemnified Party or any of its employees. The liability of Indemnitors as set forth in the preceding sentence includes, without limitation, the following: (a) Any costs of, or liability for, i nvestigation, cleanup, removal, treatment, remediation or monitoring of any Hazardous Substance; (b) Any damages resulting from the diminution in value or unmarketability of the Property or any other property caused by such Environmental Activity or Condition; (c) Any consequential or punitive damages suffered or incurred by any of the Indemnified Parties as a result of such Environmental Activity or Condition; (d) Any fines, penalties, assessments, judgments or other liabilities resulting from any claim, judgment or finding concerning the violation of any Environmental Law; and 2 (e) Any amounts expended by any of the Indemnified Parties in good faith to settle or compromise any claim or allegation of liability covered by this Environmental Indemnity Agreement, provided that so long as the Specified Conditions (defined below) are satisfied, the Indemnified Parties shall not settle or compromise any such claims or allegations without the prior written consent of the Indemnitors, which consent shall not be unreasonably withheld or delayed. The liability of Indemnitors hereunder shall continue, without reduction or change, upon and subsequent to Northwestern becoming owner of the Property through foreclosure, deed-in-lieu of foreclosure or otherwise, excepting only Damages resulting from actions taken either by Northwestern, by successive owners of the Property acquiring title from or through Northwestern or by those contracting with Northwestern or any such successive owner, subsequent to Northwestern becoming owner of the Property; provided, however, that Indemnitors shall nonetheless be responsible for the actions of any party investigating or cleaning up Hazardous Substances, whether or not contracted for by Northwestern, if Indemnitors are otherwise liable hereunder or otherwise for such investigation or clean up. The liability of Indemnitors hereunder shall not be reduced or otherwise affected by any Environmental Activity or Condition occurring or existing prior to Northwestern becoming owner of the Property even if caused in whole or part by a predecessor in title, tenant, trespasser or other third person, whether on or off of the Property. 3. The liability of Indemnitors under this Environmental Indemnity Agreement (i) shall not be subject to any limitations on liability set forth in any of the documents evidencing the Loan, and (ii) shall be an unsecured obligation of Indemnitors to each of the Indemnified Parties, notwithstanding the terms of the Lien Instrument or any other agreement. 4. Without limitation, the obligations and liability of any Indemnitor under this Environmental Indemnity Agreement shall in no way be waived, released, discharged, reduced, mitigated or otherwise affected by: (a) The repayment of the Loan and/or the satisfaction or release, invalidity, defect or deficiency of the Lien Instrument or any other Loan Document, and notwithstanding any act, omission or thing which might otherwise operate as a legal or equitable discharge of the Borrower, any other Indemnitor or any guarantor of the Loan; or (b) Any neglect, delay or forbearance of Northwestern in demanding, requiring or enforcing payment of the indemnity due hereunder; or (c) The receivership, bankruptcy, insolvency or dissolution of Borrower or any Indemnitor or any affiliate thereof, notwithstanding the operation of a stay in connection with any such proceeding or the discharge of any obligations of Borrower or 3 any other Indemnitor or affiliate with respect to liability that constitutes Damages covered by this Environmental Indemnity Agreement; or (d) Any sale or refinancing of, or other transactions related to, the Property by Borrower or Northwestern; or (e) Any of the Indemnitors transferring or divesting any or all of his, her or its estate, right, title or interest in or to the Property or any interest in any entity. 5. Any claim for indemnity or defense hereunder shall be made in accordance with this Section 5. (a) To assert an indemnity claim under this Environmental Indemnity Agreement, an Indemnified Party shall notify the Indemnitors in writing as soon as reasonably practical under the circumstances stating the facts which entitle an Indemnified Party to make a claim for indemnification. (b) If the "Specified Conditions" (as defined below) are and continue to be satisfied, the Indemnitors shall, at their own cost, expense and risk: (i) defend all suits, actions, or other legal or administrative proceedings that may be threatened, brought or instituted against an Indemnified Party on account of any matter or matters which the Indemnitors have agreed to defend pursuant to this Environmental Indemnity Agreement; (ii) select engineers and other consultants and develop and implement plans for investigation, cleanup, removal, treatment, remediation or monitoring of any Hazardous Substance; (iii) pay or satisfy any judgment, decree or settlement that may be rendered against or agreed to by an Indemnified Party in any such suit, action or other legal or administrative proceeding; (iv) reimburse such Indemnified Party for any and all reasonable expenses, including, without limitation, investigation, remediation and/or cleanup costs and all legal expenses incurred in connection with any of such suits, actions or other legal or administrative proceedings or in connection with enforcing this Environmental Indemnity Agreement; and (v) reimburse such Indemnified Party for any loss occasioned by the diminution in the value of the Property caused by the presence of any Hazardous Substance or the breach of any representation, warranty or obligation of the Indemnitors hereunder. (c) If the Specified Conditions are not satisfied, (i) without limiting the other provisions hereof, in the event any claim (whether or not a judicial or 4 administrative action is involved) is asserted against any of the Indemnified Parties with respect to any Environmental Activity or Condition, Northwestern shall have the right to select the engineers, other consultants and attorneys for the defense of the Indemnified Parties, to determine the appropriate legal strategy for such defense and to compromise or settle such claim, all in Northwestern's discretion, and Indemnitors shall be liable to Northwestern in accordance with the terms hereof for all Damages suffered or incurred by Northwestern in this regard, and (ii) as additional assurance for the timely performance of the obligations of Indemnitors hereunder, each Indemnitor hereby assigns to Northwestern, to the extent of the Damages, any rights such Indemnitor may have against any other person or entity (including, without limitation, any present, future, or former owners, tenants, or other occupants or users of the property or any portion thereof) relating to the matters covered by this Environmental Indemnity Agreement. (d) Any law firm selected by the Indemnitors to defend an indemnified claim shall be subject to the approval of Northwestern which approval shall not be unreasonably withheld or delayed; provided that, unless such claim is caused solely by any act of an Indemnified Party, upon thirty (30) days' prior written notice, an Indemnified Party may elect to defend, using a law firm selected by such Indemnified Party, any such claim, loss, action, legal or administrative proceeding at the cost and expense of the Indemnitors, if, in the reasonable judgment of such Indemnified Party: (i) the defense is not proceeding or being conducted in a satisfactory or timely manner, or (ii) there is a conflict of interest between any of the parties to such lawsuit, action, legal or administrative proceeding. (e) If an Indemnified Party exercises its right to designate counsel pursuant to the preceding clause, all reasonable costs and expenses thereof shall be paid by the Indemnitors promptly after upon written demand by such an Indemnified Party, with appropriate supporting documentation. (f) If the Specified Conditions have been and continue to be satisfied, in the event the Indemnitors shall pay to an Indemnified Party any claim under this Environmental Indemnity Agreement, then the Indemnitors shall be subrogated to any rights of such Indemnified Party relating thereto, and such Indemnified Party will cooperate with the Indemnitors, at the cost and expense of the Indemnitors, in enforcing such rights; provided, that such subrogation shall not be a derogation of any rights of any Indemnified Party under this Environmental Indemnity Agreement, and shall not be construed to limit the obligations of the Indemnitors hereunder. (g) "Specified Conditions" means all of the following conditions, which must be satisfied at all times: (i) Northwestern has not acquired legal possession and/or title to the 5 Property, and (ii) No receiver or trustee has been appointed to manage the Property, and (iii) There is no default hereunder or (A) with respect to Next Level, under any document evidencing or given in connection with the Loan, or (B) with respect to Motorola, under the Guarantee of even date herewith, and (iv) Indemnitors have provided Northwestern, prior to taking the described action(s) and whenever subsequently requested, with evidence reasonably satisfactory to Northwestern that: (x) if applicable, remediation of all Hazardous Substances was promptly commenced and is being diligently pursued, and (y) if applicable, after remediation of such Hazardous Substances there will be no material violations of Environmental Law with respect to the Property, and (z) Indemnitors have sufficient financial, technical and other capabilities to handle any potential claim and the settlement thereof. 6. The liability of Indemnitors shall be joint and several. No action or proceeding brought or instituted under this Environmental Indemnity Agreement and no recovery made as a result thereon shall be a bar or defense to any further action or proceeding under this Environmental Indemnity Agreement. 7. No Indemnitor may assign its obligations under this Environmental Indemnity Agreement without the prior written consent of Northwestern, which may be withheld in its sole discretion. The covenants, agreements, indemnities, terms and conditions contained in this Environmental Indemnity Agreement shall extend to, and be binding upon, the Indemnitors, their heirs, executors, administrators, successors and permitted assigns, and shall inure to the benefit of, and may be enforced by, Northwestern or any of the other Indemnified Parties and its and their successors and assigns. 8. Each provision of this Environmental Indemnity Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Environmental Indemnity Agreement shall be prohibited, invalid or ineffective under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity without invalidating the remainder of such provision or the remaining provisions of this Environmental Indemnity Agreement. 9. Indemnitors shall reimburse Northwestern and the other Indemnified Parties for all reasonable attorneys' fees and expenses incurred in connection with the enforcement of the Indemnified Parties' rights under this Environmental Indemnity Agreement, including those incurred in any case, action, proceeding, claim under the Federal Bankruptcy Code or any successor statute. Any and all amounts not paid by Indemnitors when due hereunder shall bear interest from the date due until the date paid 6 at the Default Rate (as defined in that certain Promissory Note of even date herewith executed by Borrower in connection with the Loan). 10. This Environmental Indemnity Agreement is not intended to be, and shall not be construed to be, a guaranty, but rather is intended to constitute the primary obligation of each Indemnitor. Each Indemnitor is primarily liable for the Damages and other obligations hereunder, and is not intended to be a guarantor or surety or otherwise secondarily liable with respect to matters covered hereby, notwithstanding the fact that the Borrower and/or other Indemnitors may also be signatories hereto or that they or other parties (such as guarantors of the Loan) may have liability under the Loan Documents for environmental losses covered hereby. Without limiting or lessening the primary liability of Indemnitors hereunder, Northwestern may, without notice to Indemnitors, (a) grant extensions of time or any other indulgences on the Loan and related obligations; (b) take, give up, modify, vary, exchange, renew or abstain from perfecting or taking advantage of any security for the Loan and related obligations; and (c) accept or make compositions or other arrangements with Borrower under the Loan Documents, realize on any security, and otherwise deal with Borrower and other parties and security as Northwestern may deem expedient; and each Indemnitor hereby waives any right to require Northwestern: (d) to proceed against Borrower or any other party or to proceed against or apply any security it may hold for the Loan or otherwise, before proceeding against one or more of the Indemnitors; (e) to require Northwestern to pursue any other remedy for the benefit of Indemnitors. Northwestern may, at its election, following a default by Motorola, Inc. hereunder or under the Guarantee by Motorola, Inc. of even date herewith ("Guarantee"), foreclose upon any security held by it in one or more judicial or non-judicial sales without affecting or impairing the liability of Indemnitors, whether or not the indebtedness evidenced by the Loan Documents shall have been paid in full. Indemnitors waive all rights or defenses arising out of any election of remedies by Northwestern following a default by Motorola, Inc. hereunder or under the Guarantee, notwithstanding that such election may operate to impair or extinguish any right or remedy of Indemnitors against Borrower or any other security. Notwithstanding anything to the contrary in this Environmental Indemnity Agreement or the Guarantee, so long as Motorola, Inc. has not defaulted under this 7 Environmental Indemnity Agreement, Northwestern shall not, without the prior written consent of Motorola, Inc., release any material portion of the collateral securing the Loan. 11. By executing this Environmental Indemnity Agreement, each Indemnitor acknowledges that its liability hereunder shall be joint and several and shall survive the dissolution of any or all of the Borrower or the other Indemnitors, and that any of the Indemnified Parties may recover from any or all of the Indemnitors without first proceeding against the Borrower, any other Indemnitor or any guarantor of the obligations of any of them. 12. In addition, except to the extent that any obligation hereunder has been fully and completely satisfied by any of the Indemnitors, each Indemnitor hereby waives absolutely and irrevocably any right of subrogation whatsoever to the claims of any Indemnified Party against Borrower or any other Indemnitor and any right of indemnity, reimbursement or contribution from or against Borrower or any other Indemnitor with respect to any amounts paid by an Indemnified Party hereunder. Each Indemnitor further agrees that, to the extent that the waiver of its rights of subrogation and contribution as set forth herein is found by a court of competent jurisdiction to be void or voidable for any reason, any rights of subrogation or contribution such Indemnitor may have shall be junior and subordinate to the rights of the Indemnified Parties against any Indemnitor hereunder. 13. No consent by any Indemnitor shall be required for any assignment or reassignment of the rights of Northwestern hereunder to one or more purchasers of the Loan or the Property or any portion of either in each case in accordance with the terms of the Lien Instrument. 14. This Environmental Indemnity Agreement shall be governed by and construed in all respects in accordance with the internal laws of the State of California without regard to any conflict of law principles. With respect to any action, lawsuit or other legal proceeding concerning any dispute arising under or related to this Environmental Indemnity Agreement, Indemnitors hereby irrevocably consent to the jurisdiction of the courts located in the State of California and irrevocably waive any right to trial by jury and any defense of improper venue, forum nonconveniens or lack of personal jurisdiction in any such action, lawsuit or other legal proceeding brought in any court located in the State of California. Nothing contained herein shall affect the rights of Northwestern to commence any action, lawsuit or other legal proceeding, or otherwise to proceed, against any Indemnitor in any other jurisdiction. 8 IN WITNESS WHEREOF, the undersigned Indemnitors have executed this Environmental Indemnity Agreement as of the day and year first above written. INDEMNITORS NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation By: ------------------------------------- Its: ------------------------------------ Attest: --------------------------------- Its: ------------------------------------ MOTOROLA, INC., a Delaware corporation By: ------------------------------------- Its: ------------------------------------ #170494 9 EX-99.11 5 a2072365zex-99_11.txt COMMON STOCK PURCHASE WARRANT NO. 10 WARRANT NO. 010 NEXT LEVEL COMMUNICATIONS, INC. COMMON STOCK PURCHASE WARRANT For good and valuable consideration, NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation (the "COMPANY"), hereby grants to MOTOROLA, INC., a Delaware Corporation (the "WARRANTHOLDER"), the right to subscribe for and purchase from the Company Four-Hundred Thousand (400,000) validly issued, fully paid and nonassessable shares (the "WARRANT SHARES") of the Company's Common Stock, par value $.01 per share (the "COMMON STOCK"), at the purchase price per share (the per share "Exercise Price") identified below, at any time prior to 5:00 p.m., New York City time on the expiration date identified below (the "EXPIRATION DATE"), all subject to the terms, conditions and adjustments herein set forth. 1. EXERCISE OF WARRANT 1.1. EXERCISE. Subject to the terms and conditions set forth herein, this Warrant may be exercised, in whole or in part and at any time or from time to time, during normal business hours on any Business Day (as hereinafter defined) on or prior to the Expiration Date by the Warrantholder by: (a) the surrender of this Warrant to the Company, with a duly executed Exercise Form (in the form attached hereto as EXHIBIT A) specifying the number of Warrant Shares to be purchased and (b) tender to the Company (and delivery for the account of the Company upon receipt from the Company of appropriate wiring instructions) of the aggregate Exercise Price for the number of Warrant Shares specified in the Exercise Form in immediately available funds in lawful money of the United States of America. As used herein, "Business Day" means any day other than a Saturday, Sunday or a day on which national banks are authorized by law to close in the State of New York or California. 1.2. WARRANT SHARES CERTIFICATE. A stock certificate or certificates for the Warrant Shares for which this Warrant is exercised shall be delivered to the Warrantholder promptly after any exercise under Section 1.1 hereof. If this Warrant shall have been exercised only in part, the Company shall, immediately after receipt of this Warrant, deliver to the Warrantholder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant. 1.3. PAYMENT OF TAXES. The issuance of certificates for Warrant Shares shall be made without charge to the Warrantholder for any stock transfer or other issuance tax in respect thereto; provided, however, that the Warrantholder shall be required to pay any and all taxes that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Warrantholder as reflected upon the books of the Company. 1.4. EXERCISE PRICE. Subject to adjustment as provided in Section 6.1 or 6.2 hereof, the per share "EXERCISE PRICE" is [________ DOLLARS AND __________ CENTS ($_.__)]. WARRANT NO. 010 1.5. EXPIRATION DATE. The expiration date of this Warrant shall be, and the term "EXPIRATION DATE" means, October __, 2006. 2. TRANSFERS AND EXCHANGES 2.1. RESTRICTIONS ON TRANSFER OF WARRANTS OR SHARES (a) Neither this Warrant not any warrant issued in substitution for all or any part of this Warrant may be sold, transferred, or otherwise disposed of for value, in whole or in part, except to a successor to all or a substantial part of the business of Warrantholder. Subject to the foregoing provisions, this Warrant may be exchanged at the option of the Warrantholder, when surrendered to the Company at its office, for another Warrant or other Warrants of the like tenor and representing in the aggregate a like number of Warrant Shares. (b) The Warrant Shares shall not be transferable until the thirty-sixth (36th) day after the Warrant exercise pursuant to which such respective Warrant Shares shall have been issued. 2.2. RESTRICTIVE LEGENDS (a) Each warrant issued in substitution for all or part of this Warrant shall be stamped or otherwise imprinted with a legend appropriately referring to the foregoing restriction on transfer of the Warrants. (b) Except as otherwise permitted by this Section 2.2, each stock certificate for Warrant Shares issued upon the exercise of any Warrant and each stock certificate issued upon the direct or indirect transfer of any such Warrant Shares shall be stamped or otherwise imprinted with a legend in substantially the following form: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. (c) Notwithstanding the foregoing, the Warrantholder may require the Company to issue a stock certificate for Warrant Shares without such legend if such Warrant Shares have been registered for resale under the Securities Act or the removal of such legend is otherwise appropriate under that Act and the rules and regulations thereunder. 3. RESERVATION AND REGISTRATION OF SHARES, ETC. The Company covenants and agrees as follows: 2 WARRANT NO. 010 3.1. All Warrant Shares that are issued upon the exercise of this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free from all taxes, liens, security interests, charges, and other encumbrances imposed by or through the Company with respect to the issuance thereof, other than taxes in respect of any transfer occurring contemporaneously with such issue. 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant and all other outstanding warrants. 4. LOSS OR DESTRUCTION OF WARRANT. Subject to the terms and conditions hereof, upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of such bond or indemnification as the Company may reasonably require, and, in the case of such mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor. 5. OWNERSHIP OF WARRANT. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer. 6. CERTAIN ADJUSTMENTS 6.1. ADJUSTMENTS TO NUMBER OF WARRANT SHARES. The number of Warrant Shares purchasable upon the exercise of this Warrant and the per share Exercise Price shall be subject to adjustment after the date hereof as follows: (a) STOCK DIVIDENDS. If at any time after the date of this Warrant (set forth on the signature page hereof) (i) the Company shall declare or pay a stock dividend payable in shares of Common Stock or (ii) the number of shares of Common Stock shall have been increased by a subdivision or split-up of shares of Common Stock, then, on the date of the declaration or payment of such dividend or immediately after the effective date of subdivision or split-up, as the case may be, the number of shares to be delivered upon exercise of this Warrant will be increased so that the Warrantholder will be entitled to receive the number of shares of Common Stock that such Warrantholder would have owned immediately following such action had this Warrant been exercised immediately prior thereto, and the per share Exercise Price will be adjusted as provided below in paragraph 6.2. (b) COMBINATION OF STOCK. If at any time after the date of this Warrant the number of shares of Common Stock outstanding shall have been decreased by a combination of the outstanding shares of Common Stock (including a reverse stock-split), then, immediately after the effective date of such combination, the number of shares of Common Stock to be delivered upon exercise of this Warrant will be decreased so that the Warrantholder thereafter will be entitled to receive the number of shares of Common Stock that such Warrantholder would have owned immediately following such action had this Warrant been exercised 3 WARRANT NO. 010 immediately prior thereto, and the per share Exercise Price will be adjusted as provided below in paragraph 6.2. (c) REORGANIZATION, ETC. If at any time after the date of this Warrant any capital reorganization of the Company, or any reclassification of the Common Stock, or any consolidation of the Company with or merger of the Company with or into any other person, shall be effected in such a way that the holders of Common Stock shall be entitled to receive stock, other securities and/or assets (whether such stock, other securities and/or assets are issued or distributed by the Company or another person) with respect to or in exchange for Common Stock, then, upon exercise of this Warrant the Warrantholder shall have the right to receive the kind and amount of stock, other securities and/or assets receivable upon such reorganization, reclassification, consolidation or merger by a holder of the number of shares of Common Stock that such Warrantholder would have been entitled to receive upon exercise of this Warrant had this Warrant been exercised immediately before such reorganization, reclassification, consolidation or merger. The Company shall not effect any such capital reorganization, reclassification of the Common Stock, or consolidation or merger of the Company with or into any other person, unless prior to or simultaneously with the consummation thereof, the successor entity (if other than the Company) resulting from such reorganization, reclassification consolidation or merger shall assume by written instrument executed and delivered to Warrantholder, the obligation to deliver to Warrantholder such shares of stock, securities or assets as, in accordance with the foregoing provisions, Warrantholder may be entitled to receive. In the event of such an adjustment, the per share Exercise Price shall be adjusted, if necessary, so that the aggregate Exercise Price for exercise of this Warrant in full will be unchanged. (d) STOCK AND RIGHTS OFFERING AT LESS THAN FAIR MARKET VALUE (i) If at any time after the date of this Warrant the Company shall issue to the holders of its Common Stock, or sell or fix a record date for the issuance or sale to the holders of its Common Stock, or grant to the holders of its Common Stock rights to purchase, additional shares of its Common Stock without consideration or at a price per share that is less than Fair Market Value per share of Common Stock (as defined in Section 7.1 hereof) on the date of such issuance or such record date then, immediately after the date of such issuance or sale or on such record date, the number of shares of Common Stock to be delivered upon exercise of this Warrant shall be increased so that the Warrantholder thereafter will be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock such Warrantholder would have been entitled to receive immediately before the date of such issuance or sale or such record date by a fraction, the denominator of which will be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock that the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such Fair Market Value, and the numerator of which will be the number of shares of Common Stock outstanding on such date plus the number of additional shares of Common Stock offered for subscription or purchase, and the per share Exercise Price shall be adjusted as provided below in paragraph 6.2. (ii) If at any time after the date of this Warrant the Company shall distribute to all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings of the Company) or rights or warrants to subscribe 4 WARRANT NO. 010 for or purchase any of its securities (any of the foregoing being hereinafter in this paragraph (d)(ii) called the "Securities"), other than pursuant to a reorganization, reclassification, consolidation or merger described in paragraph (c), then in each such case, unless the Company elects to reserve shares or other units of such Securities for distribution to the Warrantholder upon exercise of the Warrants of such Warrantholder so that, in addition to the shares of the Common Stock to which such Warrantholder is entitled, such Warrantholder will receive upon such exercise the amount and kind of such Securities that such Warrantholder would have received if the Warrantholder had, immediately prior to the record date for the distribution of the Securities, exercised the Warrant, then the number of shares of Common Stock to be delivered to such Warrantholder upon exercise of this Warrant shall be increased so that the Warrantholder thereafter shall be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares such Warrantholder would have been entitled to receive immediately before such record date, had the Warrantholder exercised the Warrant immediately prior thereto by a fraction, the denominator of which shall be the Fair Market Value per share of Common Stock on such record date minus the then fair market value (as reasonably determined by the Board of Directors of the Company), of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock and the numerator of which shall be the Fair Market Value per share of the Common Stock, and the per share Exercise Price shall be adjusted as provided below in paragraph 6.2. (iii) For the purpose of making any adjustment required under this Section 6.1(d), the consideration received by the Company for any issue or sale of securities shall (a) to the extent it consists of cash be computed as the gross amount of cash received by the Company before deduction of any expenses payable by the Company and any underwriting or similar commissions, discounts, compensation or concessions paid or allowed by the Company in connection with such issue or sale, (b) to the extent it consists of property other than cash, be computed at the fair value of that property as reasonably determined in good faith by the Board of Directors and (c) if additional shares of Common Stock, securities convertible into Common Stock or rights or options to purchase either additional shares of Common Stock or such convertible securities or are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such additional shares of Common Stock, such convertible securities or rights or options. (e) FRACTIONAL SHARES. No fractional shares of Common Stock or scrip shall be issued to any Warrantholder in connection with the exercise of this Warrant. Instead of any fractional shares of Common Stock that would otherwise be issuable to such Warrantholder, the Company will pay to such Warrantholder a cash adjustment in respect of such fractional interest in an amount equal to that fractional interest of the Fair Market Value per share of Common Stock as of the close of business on the Business Day immediately preceding the exercise of the Warrant. (f) CARRYOVER. Notwithstanding any other provision of this Section 6.1, no adjustment shall be made to the number of shares of Common Stock to be delivered to the Warrantholder (or to the per share Exercise Price) if such adjustment represents less than 1% of the number of shares to be so delivered, but any lesser adjustment shall be carried forward and 5 WARRANT NO. 010 shall be made at the time and together with the next subsequent adjustment that together with any adjustments so carried forward shall amount to 1% or more of the number of shares to be so delivered. 6.2. EXERCISE PRICE ADJUSTMENT. Except in cases where an adjustment of the per share Exercise Price is provided for above, whenever the number of Warrant Shares purchasable upon the exercise of the Warrant becomes subject to adjustment as provided pursuant to this Section 6, the per share Exercise Price payable upon the exercise of this Warrant shall be adjusted by multiplying such per share Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Warrant Shares purchasable immediately thereafter; provided, however, that the per share Exercise Price shall in no event be less than the par value of such Warrant Share. 6.3. NO DILUTION OR IMPAIRMENT (a) If any event shall occur as to which the provisions of Section 6.1 are not strictly applicable but the failure to make any adjustment would adversely affect the purchase rights represented by the Warrants contrary to the essential intent and principles of such Section, then, in each such case, appropriate adjustments shall be made so as to preserve those rights without dilution but also without enlargement. (b) The Company will not, by amendment of its certificate of incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in reasonable good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholders against dilution or other impairment. Without limiting the generality of the foregoing, the Company (1) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock on the exercise of the Warrants from time to time outstanding and (2) will not take any action that would result in an adjustment of the number of Warrant Shares issuable upon exercise of this Warrant in full or of the per share Exercise Price if the total number of Warrant Shares issuable after the action upon the exercise of all of the Warrants in full would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purposes of issue upon such exercise. (c) The parties agree that the provisions of Section 6.1 shall be interpreted and applied so that there shall not be multiple adjustments, under different subsections of Section 6.1, of the per share Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant in full with respect to a single dilutive event, in a fashion that would "double-count" such dilutive event. 6.4. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the per share Exercise Price is adjusted, as herein provided, the Company shall promptly send to the Warrantholder a notice of such adjustment or adjustments setting forth the effective date(s) 6 WARRANT NO. 010 thereof, the number of Warrant Shares and the per share Exercise Price in effect prior to and after such adjustment(s), a brief statement of the facts requiring such adjustment(s) and the computation by which such adjustment(s) was (were) made. 7. MISCELLANEOUS 7.1. The "FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the "DETERMINATION DATE") shall mean the average of the Daily Sales Prices (as defined below) of the Common Stock on the primary securities exchange or market on which it is listed or traded on the last 20 Business Days prior to the Determination Date. The "DAILY SALES PRICE" shall be the closing price for bona fide transactions of the Common Stock at the end of each day or, if no such transaction takes place that day, the average of the closing bid and asked prices for such day. If the Common Stock was, but is no longer listed or traded on a primary securities exchange or market, then the Board of Directors of Motorola, Inc. (or a duly constituted committee thereof) shall determine in good faith the Fair Market Value of the Common Stock on the basis of such quotations, appraisals and/or evaluations as it considers appropriate. As used in this paragraph, a primary securities exchange or market includes national securities exchanges registered under the Securities Exchange Act of 1934, as amended, the Nasdaq Stock Market National Market, and any successor to the foregoing. If the Common Stock is listed or traded on more than one primary securities exchange or market, the Fair Market Value shall be determined on the basis of the exchange or market on which the largest volume of shares of the Common Stock is traded during the period in question. 7.2. BINDING EFFECT; BENEFITS. This Warrant shall inure to the benefit of and shall be binding upon the Company and the Warrantholder and their respective successors and permitted assigns. Nothing in this Warrant, expressed or implied, is intended to or shall confer on any person other than the Company and the Warrantholder or their respective successors or assigns any rights, remedies, obligations or liabilities under or by reason of this Warrant. 7.3. AMENDMENTS. Any provision of this Warrant may be amended and the observance thereof waived only with the written consent of the Company and the Warrantholder. 7.4. SECTION AND OTHER HEADINGS. The section and other headings contained in this Warrant are for reference purposes only and shall not be deemed to be a part of this Warrant or to affect the meaning or interpretation of this Warrant. 7.5. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be delivered personally (including by commercial courier service), telecopied (with machine confirmation and hard copy following by mail or personal delivery) or sent by certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally or when so telecopied, or three days after being sent by certified, registered or express mail, as follows: 7 WARRANT NO. 010 - if to the Company to: Next Level Communications, Inc. 6085 State Farm Drive Rohnert Park, CA 94928 Attention: Chief Financial Officer Telecopy No. (707) 584-6859 - or if to the Warrantholder to: Motorola, Inc. 1303 East Algonquin Road Schaumburg, IL 60196 Attention: Treasurer Telecopy No. (847) 576-4768. Any party may by notice given in accordance with this Section designate another address or person for receipt of notices hereunder. 7.6. SEVERABILITY. Any term or provision of this Warrant 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 terms and provisions of this Warrant or affecting the validity or enforceability of any of the terms or provisions of this Warrant in any other jurisdiction. 7.7. GOVERNING LAW; CONSENT TO JURISDICTION. This Warrant shall be deemed to be a contract made under the laws of the State of New York. Each of the Company and the Warrantholder hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Warrant. Each of the Company and the Warrantholder irrevocably waives, to the fullest extent permitted by applicable law, any objection that each may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 7.8. COUNTERPARTS; EXECUTION. This Warrant may be executed, issued, and delivered in counterparts, each of which shall be an original instrument but both of which, taken together, shall be one and the same Warrant. This Warrant may be executed, issued, and delivered by facsimile. 7.9. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant shall be determined as conferring upon the Warrantholder any rights as a stockholder of the Company or as imposing any liabilities on the Warrantholder to purchase any securities whether such liabilities are asserted by the Company or by creditors or stockholders of the Company or otherwise. 8 WARRANT NO. 010 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer. NEXT LEVEL COMMUNICATIONS, INC. By: --------------------------------------- Name: ------------------------------------ (Please print) Title: ----------------------------------- Dated: October __, 2001 Acknowledged and Agreed: MOTOROLA, INC. By: ---------------------------------- Name: -------------------------------- (Please print) Title: -------------------------------- - -------------------------------------------------------------------------------- THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. IN ADDITION TO THE OTHER RESTRICTIONS ON TRANSFER SET FORTH HEREIN, NEITHER THIS WARRANT NOR THOSE SECURITIES, NOR ANY INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE WARRANTHOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. - -------------------------------------------------------------------------------- WARRANT NO. 010 Exhibit A EXERCISE FORM (TO BE EXECUTED UPON EXERCISE OF THE ATTACHED WARRANT) The undersigned Holder hereby exercises the right, represented by this Warrant, to purchase ______________ of the Warrant Shares and herewith tenders payment for such Warrant Shares to the order of Next Level Communications, Inc. in the amount of $________________. The undersigned requests that a certificate for the Warrant Shares resulting from the above exercise be registered in the name of the undersigned and that such certificates be delivered to the undersigned's address below. The undersigned represents that it is acquiring such Warrant Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof (subject, however, to any requirement of law that the disposition thereof shall at all times be within its control). Dated: __________________, 200__ Holder: By: --------------------------- ------------------------------------- (Please print) (Signature of Holder if Holder is an individual or of authorized representative if Holder is an entity) - ----------------------------------- ------------------------------------- (Street Address of Holder) (Print signer's name and title if Holder is an entity) - ----------------------------------- (City) (State) (Zip Code) EX-99.12 6 a2072365zex-99_12.txt 12/11/01 AMENDMENT TO CREDIT AGREEMENT AMENDMENT NO. 4 AMENDMENT NO. 4 dated as of December 11, 2001 in respect of the Credit Agreement (Multi-Draw Term Loan Facility) dated as of May 16, 2001 and amended by Amendment No. 1 dated as of July 25, 2001, Amendment No. 2 dated as of September 28, 2001 and Amendment No. 3 dated as of October 15, 2001 (the "CREDIT AGREEMENT") between NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation (the "BORROWER"), and MOTOROLA, INC., a Delaware corporation (the "LENDER"). Pursuant to Amendment No. 2, the amount of the Commitment was increased from $60,000,000 to $64,000,000 and the $4,000,000 amount of such increase was promptly thereafter borrowed. Pursuant to Amendment No. 3, an amount of $2,953,626 owed by the Borrower to the Lender in connection with a Tax Allocation and Sharing Agreement with respect to certain tax losses of the Borrower for the tax year 2000 was deemed to have been borrowed under the Credit Agreement and accordingly the amount of the Commitment was increased from $64,000,000 to $66,953,626. The $4,000,000 amount borrowed pursuant to Amendment No. 2 was subsequently repaid (and unavailable to be reborrowed under the terms of the Credit Agreement) on or around October 24, 2001 in connection with the Borrower's entering into a mortgage loan transaction with The Northwestern Mutual Life Insurance Company. Accordingly, as of the date of this Amendment No. 4, the outstanding principal amount borrowed under the Credit Agreement is $62,953,626. The Borrower has requested that the Credit Agreement be amended to increase the amount of the Commitment to Eighty Two Million Nine Hundred Fifty Three Thousand Six Hundred Twenty Six Dollars ($82,953,626), representing an additional Twenty Million Dollars ($20,000,000) available to be borrowed (and combined with the $4,000,000 reduction in the Commitment resulting from the repayment described in the preceding paragraph will result in a net increase in the Commitment of $16,000,000), and the Lender has agreed to such an increase on the terms and conditions set forth herein. Accordingly, the parties hereto hereby agree as follows: Section 1. DEFINITIONS. Terms defined in the Credit Agreement are used herein as defined therein. Section 2. AMENDMENTS. 2.1 The amount "$66,953,626" (reflecting Amendment No. 3) on the cover page of the Credit Agreement and in the preamble of the Credit Agreement is hereby amended to read "$82,953,626". -2- 2.2 The words "Sixty Six Million Nine Hundred Fifty Three Thousand Six Hundred Twenty Six Dollars ($66,953,626)" (reflecting Amendment No. 3) in the definition of "Commitment" in Section 1.01 of the Credit Agreement is hereby amended to read "Eighty Two Million Nine Hundred Fifty Three Thousand Six Hundred Twenty Six Dollars ($82,953,626)". 2.3 There is hereby added to Section 1.01 (Certain Defined Terms) the following definition in its correct alphabetical order: "Convertible Promissory Note" shall mean the Promissory Note dated as of December 11, 2001, representing Loans of up to $20,000,000 and containing provisions allowing the conversion of the Debt represented thereby into common stock or other securities of the Borrower on the terms contained therein. 2.4 The definition of "Notes" in Section 1.01 is hereby amended and restated in its entirety to read as follows: "Notes" shall mean any promissory notes executed and delivered pursuant to Section 2.06(c) hereof, including, without limitation, the Convertible Promissory Note. 2.5 The first sentence of Section 2.07 (Optional Prepayments and Conversions or Continuations of Loans) is hereby amended by changing the "and" before clause (c) to "," and by adding the following new clause (d) at the end of such sentence: ", and (d) no prepayment of the Debt represented by the Convertible Note may be made while there are any other Loans outstanding hereunder and any prepayment of the Debt represented by the Convertible Note shall be in compliance with the provisions of such note." 2.6 Section 4.01(b) (Application of Payments) is hereby amended by adding at the beginning thereof the words "Subject to Section 2.07(d), the" and deleting "The". Section 3. WARRANT. In consideration for the Lender entering into this Amendment No. 4, the Borrower is hereby granting the Lender a Warrant for 2,500,000 shares of common stock of the Borrower. Section 4. REPRESENTATION AND WARRANTIES; NO DEFAULTS. The Borrower hereby represents and warrants to the Lender that (i) except as publicly disclosed and except with respect to changes in the disclosure schedules that are not individually or in the aggregate material, the representations and warranties made by it in or pursuant to the Loan Documents, after giving effect to the amendment effected hereby, are true and correct on and as of the date hereof as if made on and as of such date (or, if any such representation is expressly stated to have been made as of a specific date, as of such specific date) and (ii) no Default or Event of Default, after giving effect to the amendment effected hereby, has occurred and is continuing. Section 5. MISCELLANEOUS. Except as expressly herein provided, the Loan Documents shall remain unchanged and in full force and effect. This Amendment No. 4 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment No. 4 -3- by signing any such counterpart. This Amendment No. 4 shall be governed by, and construed in accordance with, the law of the State of New York. Section 6. FEES OF SPECIAL COUNSEL. If not previously paid by the Borrower, the Lender may offset from the amount of any subsequent borrowing any amount owed to Special Counsel (i) pursuant to invoice number 889017 of Special Counsel dated November 1, 2001 and (ii) for the matters described in Section 10.03 of the Credit Agreement for which an invoice has been provided to the Borrower prior to such borrowing. [Remainder of page intentionally left blank.] -4- IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 4 to be duly executed as of the day and year first above written. NEXT LEVEL COMMUNICATIONS, INC. By:___________________________ Name: Title: MOTOROLA, INC. By:___________________________ Name: Title: EX-99.13 7 a2072365zex-99_13.txt CONVERTIBLE PROMISSORY NOTE DATED 12/11/01 PROMISSORY NOTE $20,000,000 December 11, 2001 FOR VALUE RECEIVED, NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation (the "BORROWER"), hereby promises to pay to the order of Motorola, Inc. (the "LENDER"), the principal sum of Twenty Million Dollars (or if less, the outstanding principal amount hereof), in lawful money of the United States of America and in immediately available funds, on the dates and in the principal amounts provided in the Credit Agreement, and to pay interest on the unpaid principal amount of each such Loan, at such office, in like money and funds, for the period commencing on the date of such Loan until such Loan shall be paid in full, at the rates per annum and on the dates provided in the Credit Agreement. The date, amount, Type, interest rate and duration of Interest Period (if applicable) of each Loan made by the Lender to the Borrower, and each payment made on account of the principal thereof, shall be recorded by the Lender on its books and, prior to any transfer of this Note, endorsed by the Lender on the schedule attached hereto or any continuation thereof, PROVIDED that the failure of the Lender to make any such recordation or endorsement shall not affect the obligations of the Borrower to make a payment when due of any amount owing under the Credit Agreement or hereunder in respect of the Loans made by the Lender. This Note is one of the Notes referred to in the Credit Agreement dated as of May 16, 2001 (as amended by Amendment No. 1 dated as of July 15, 2001, Amendment No. 2 dated as of September 28, 2001, Amendment No. 3 dated as of October 15, 2001 and Amendment No. 4 dated concurrently herewith, and as further modified and supplemented and in effect from time to time, the "CREDIT AGREEMENT") between Next Level Communications, Inc. and Motorola, Inc., providing for Loans in an aggregate principal amount not to exceed $82,953,626, and evidences certain Loans made by the Lender to the Borrower thereunder. Terms used but not defined in this Note have the respective meanings assigned to them in the Credit Agreement. The Credit Agreement provides for the acceleration of the maturity of this Note upon the occurrence of certain events and for mandatory prepayments of Loans upon the terms and conditions specified therein. This Note may be prepaid as a whole or in part at any time prior to the Maturity Date upon at least ten Business Days prior written notice to the Lender, during which time the Lender may exercise the conversion option described below. Any such prepayment shall be applied first to the payment of expenses due under this Note, second to interest accrued on this Note and third, if the amount of prepayment exceeds the amount of all such expenses and accrued interest, to the payment of principal of this Note. 1 CONVERSION (a) CONVERSION INTO COMPANY SECURITIES. The Lender, at its option, may convert all or part of the sum of the principal and accrued interest then outstanding on the Note into (i) common stock of the Borrower, par value $.01 per share ("Common Stock"), or other securities, upon the occurrence of the closing of the Borrower's Next Financing (as defined below), upon the same price and other terms and conditions as are provided to investors in such Next Financing (e.g., in the case of securities issuable in such Next Financing at a conversion price equal to the per share purchase price paid for such securities by the investors in such Next Financing), or (ii) Common Stock, at a conversion price of $4.29 per share, subject to adjustment as provided below in the Conversion Price Adjustment provisions below, if a Next Financing has not occurred and (A) the Borrower delivers a notice of prepayment as described above or (B) the Maturity Date will occur within thirty days from the date of such conversion. "Next Financing" means the Borrower's next round of equity financing after the date of this Note in which at least $15,000,000 is raised. To the extent that the investors in the Next Financing are provided with other rights (including, without limitation, warrants, registration rights, antidilution rights, preemptive rights, future investment rights and discounts, and any other property, rights or privileges), the Lender, if it exercises its option to convert, shall be given such other rights on the same terms as such rights are offered to such investors. The Common Stock or other securities described above into which the principal and accrued interest then outstanding on the Note may be converted pursuant to clause (i) or (ii) above is hereinafter called the "Company Securities". The price at which the principal and accrued interest then outstanding on the Note may be converted pursuant to clause (i) or (ii) above is hereinafter called the "Conversion Price". The Borrower shall deliver to the Lender any proposed term sheet or letter of intent containing the material terms of a proposed Next Financing. The Lender shall thereafter have ten (10) Business Days either (i) to decline to exercise its conversion option with respect to such Next Financing or (ii) tentatively to elect to exercise its conversion option with respect to such Next Financing, subject to the Lender's review and approval of the definitive documentation for such Next Financing. If the Lender fails to respond within such ten (10) Business Day period, it shall be deemed to have elected not to exercise its conversion option with respect to such Next Financing. If the Lender tentatively elects to exercise its conversion option as described above, then at any time prior to the closing of such Next Financing, the Lender may withdraw its election to convert if the material terms of such Next Financing change from those previously presented to the Lender at the time of its tentative election to convert or if the definitive documents relating to such Next Financing are not, in the reasonable judgment of the Lender, acceptable to the Lender. If the material terms of such Next Financing change after the Lender has declined to exercise its option to convert, the Borrower shall present a changed term sheet or letter of intent to the Lender and the decision process described above shall begin again. (b) MECHANICS AND EFFECT OF CONVERSION. No fractional shares of Company Securities shall be issued upon conversion of this Note. Upon the conversion of all of the principal and accrued interest outstanding under this Note, in lieu of the 2 Borrower issuing any fractional shares to the Lender, the Borrower shall pay to the Lender the amount of outstanding principal that is not so converted, such payment to be in the form as provided below. On partial conversion of this Note, the Borrower shall issue to the Lender (i) the shares of Company Securities into which a portion of this Note is converted and (ii) a new convertible promissory note having identical terms to this Note, except that the principal amount thereof shall equal the difference between (A) the principal amount of this Note immediately prior to such conversion minus (B) the portion of such principal amount converted into Company Securities. Upon conversion of this Note pursuant to the terms hereof, the Lender shall surrender this Note, duly endorsed, at the principal office of the Borrower. At its expense, the Borrower shall, as soon as practicable thereafter, issue and deliver to such the Lender at such principal office a certificate or certificates for the number of shares of such Company Securities to which the Lender shall be entitled upon such conversion, together with any other securities and property to which the Lender is entitled upon such conversion under the terms of this Note. (c) RESERVATION OF STOCK ISSUABLE UPON CONVERSION. The Borrower shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock, solely for the purpose of effecting the conversion of this Note, such number of its shares of Common Stock as shall from time to time be sufficient to effect the conversion of this Note; and if at any time the number of authorized but unissued shares of Common Stock shall not be sufficient to effect the conversion of this Note, the Borrower will take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number of shares as shall be sufficient for such purpose. (d) PAYMENT OF TAXES. The Borrower will pay all transfer taxes or charges that may be imposed with respect to the issue or delivery of shares of Company Securities upon conversion of this Note, except for any tax or other charge imposed in connection with any transfer involved in the issue and delivery of shares of Company Securities in a name other than that in which this Note was registered. CONVERSION PRICE ADJUSTMENTS. The Conversion Price Adjustments provided below apply only if a Next Financing has not occurred and (A) the Borrower delivers a notice of prepayment as described above or (B) the Maturity Date will occur within thirty days and, in either such case, the Lender exercises its conversion option as described above. (a) ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS. If the Borrower shall at any time or from time to time after the date of this Note (the "Date of Original Issue") effect a stock split or subdivision of the outstanding Common Stock, the Conversion Price in effect immediately before that subdivision shall be proportionately decreased, and, conversely, if the Borrower shall at any time or from time to time after the Date of Original Issue combine the outstanding shares of Common Stock into a smaller number of shares, the Conversion Price in effect immediately before the 3 combination shall be proportionately increased. Any adjustment under this paragraph shall become effective at the close of business on the date the stock split, subdivision or combination becomes effective. (b) ADJUSTMENT FOR COMMON STOCK DIVIDENDS AND DISTRIBUTIONS. If the Borrower at any time or from time to time after the Date of Original Issue issues, or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable solely in additional shares of Common Stock, in each such event the Conversion Price that is then in effect shall be decreased as of the time of such issuance or, in the event such record date is fixed, as of the close of business on such record date, by multiplying the Conversion Price then in effect by a fraction (i) the numerator of which is the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date, and (ii) the denominator of which is the sum of the total number of shares of Common Stock issued and outstanding immediately prior to the time of such issuance or the close of business on such record date plus the number of shares of Common Stock issuable in payment of such dividend or distribution; provided, however, that if such record date is fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Conversion Price shall be recomputed accordingly as of the close of business on such record date and thereafter the Conversion Price shall be adjusted pursuant to this paragraph to reflect the actual payment of such dividend or distribution. (c) ADJUSTMENTS FOR OTHER DIVIDENDS AND DISTRIBUTIONS. If the Borrower at any time or from time to time after the Date of Original Issue issues, or fixes a record date for the determination of holders of Common Stock entitled to receive a dividend or other distribution payable in securities of the Borrower other than shares of Common Stock or other property, in each such event provision shall be made so that the holder of this Note shall receive upon conversion hereof, in addition to the number of shares of Common Stock receivable hereupon, the amount of securities of the Borrower or other property which such holder would have received had this Note been converted into Common Stock on the date of such event and had they thereafter, during the period from the date of such event to and including the conversion date, retained such securities or other property receivable by them as aforesaid during such period, subject to all other adjustments called for during such period under this Note with respect to the rights of the holders of this Note or with respect to such other securities or other property by their terms. As used herein, the term "other property" does not include cash. (d) ADJUSTMENT FOR RECLASSIFICATION, EXCHANGE AND SUBSTITUTION. If at any time or from time to time after the Date of Original Issue, the Common Stock issuable upon the conversion of this Note is changed into the same or a different number of shares of any class or series of stock, whether by recapitalization, reclassification or otherwise (other than a subdivision or combination of shares or stock dividend or a reorganization, merger, consolidation or sale of assets provided for elsewhere in this Note), then in any such event the Lender shall have the right thereafter to convert this Note into the kind and amount of stock and other securities and property receivable upon such recapitalization, reclassification or other change by holders of the number of shares 4 of Common Stock into which this Note could have been converted immediately prior to such recapitalization, reclassification or change, all subject to further adjustment as provided herein or with respect to such other securities or property by the terms thereof. (e) REORGANIZATIONS. If at any time or from time to time after the Date of Original Issue there is a capital reorganization of the Common Stock (other than a recapitalization, subdivision, combination, reclassification, exchange or substitution of shares provided for elsewhere in this Note), as a part of such capital reorganization provision shall be made so that the Lender shall thereafter be entitled to receive upon conversion of this Note the number of shares of stock or other securities or property of the Borrower to which a holder of the number of shares of Common Stock deliverable upon such conversion would have been entitled on such capital reorganization, subject to adjustment in respect of such stock or securities by the terms thereof. In any such case, appropriate adjustment shall be made in the application of the provisions of this Note with respect to the rights of the holders after such capital reorganization to the end that the provisions of this Note (including adjustment of the Conversion Price then in effect and the number of shares issuable upon conversion of this Note) shall be applicable after that event and be as nearly equivalent as practicable. (f) SALE OF SHARES BELOW FAIR MARKET VALUE. (i) If at any time or from time to time after the Date of Original issue, the Borrower issues or sells, or is deemed by the provisions of clause (iii) of this paragraph (f) to have issued or sold, Additional Shares of Common Stock (as hereinafter defined), other than a subdivision or combination of shares of Common Stock or as a dividend or other distribution of Common Stock as provided for elsewhere in this Note, for an Effective Price (as hereinafter defined) less than the then effective Fair Market Value, then and in each such case the then existing Conversion Price shall be reduced as of the close of business on the date of such issue or sale to a price equal to the product of dividing (A) (1) the number of shares of Common Stock Equivalents Outstanding (as hereinafter defined) immediately preceding such issue or sale multiplied by the then existing applicable Fair Market Value, plus (2) the Aggregate Consideration Received (as hereinafter defined) by the Borrower for the total number of Additional Shares of Common Stock so issued or sold, by (B) (1) the number of shares of Common Stock Equivalents Outstanding immediately preceding such issue or sale plus (2) the number of Additional Shares of Common Stock so issued or sold. (ii) For the purpose of making any adjustment required under this paragraph (f): (A) "ADDITIONAL SHARES OF COMMON STOCK" means all shares of Common Stock issued by the Borrower, whether or not subsequently reacquired or retired by the Borrower, other than Management Common Stock (as defined below) or Common Stock issued upon the exercise or conversion of Convertible Securities outstanding on the Date of Original Issue. 5 (B) "AGGREGATE CONSIDERATION RECEIVED" by the Borrower for any issue or sale of securities shall (1) to the extent it consists of cash, be computed at the gross amount of cash received by the Borrower before deduction of any underwriting or similar commissions, compensation or concessions paid or allowed by the Borrower in connection with such issue or sale and without deduction of any expenses payable by the Borrower, (2) to the extent it consists of property other than cash, be computed at the fair value of that property as determined in good faith by the Board of Directors of the Borrower, and (3) if Additional Shares of Common Stock or Convertible Securities are issued or sold together with other stock or securities or other assets of the Borrower for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors of the Borrower to be allocable to such Additional Shares of Common Stock or Convertible Securities. (C) "COMMON STOCK EQUIVALENTS OUTSTANDING" means all shares of Common Stock that are outstanding plus all shares of Common Stock issuable upon conversion of this Note or other Convertible Securities. (D) "CONVERTIBLE SECURITIES" means stock or other securities (including options, warrants and other rights) of the Borrower convertible into shares of Common Stock. (E) "EFFECTIVE PRICE" of Additional Shares of Common Stock means the quotient determined by dividing the total number of Additional Shares of Common Stock issued or sold, or deemed to have been issued or sold by the Borrower under this paragraph (f), into the Aggregate Consideration Received, or deemed to have been received by the Borrower for such issue under this paragraph (f), for such Additional Shares of Common Stock. (F) "FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the "DETERMINATION DATE") shall mean the average of the Daily Sales Prices (as defined below) of the Common Stock on the primary securities exchange or market on which it is listed or traded on the last 20 Business Days prior to the Determination Date. The "DAILY SALES PRICE" shall be the closing price for bona fide transactions of the Common Stock at the end of each day or, if no such transaction takes place that day, the average of the closing bid and asked prices for such day. If the Common Stock was, but is no longer listed or traded on a primary securities exchange or market, then the Board of Directors of Motorola, Inc. (or a duly constituted committee thereof) shall determine in good faith the Fair Market Value of the Common Stock on the basis of such quotations, appraisals and/or evaluations as it considers appropriate. As used in this paragraph, a primary securities exchange or market includes national securities exchanges registered under the Securities Exchange Act of 1934, as amended, the Nasdaq Stock Market National Market, and any successor to the foregoing. If the Common Stock is listed or traded on more than one primary securities exchange or market, the Fair Market Value shall be determined on the basis of the exchange or market on which the largest volume of shares of the Common Stock is traded during the period in question. 6 (G) "MANAGEMENT COMMON STOCK" means all shares of Common Stock issued or sold, or deemed to have been issued or sold by the Borrower under this paragraph (f), to employees, officers, directors, consultants or advisers of the Borrower or any of its subsidiaries pursuant to any stock purchase plan, stock option plan, stock bonus plan or other plan or agreement approved by the Board of Directors of the Borrower; provided that the total number of shares of Management Common Stock shall not exceed 10,000,000. (iii) For the purpose of making any adjustment to the Conversion Price required under this paragraph (f), if the Borrower issues or sells any Convertible Securities and if the Effective Price of the shares of Common Stock issuable upon conversion of the Convertible Securities is less than the Conversion Price then in effect, the Borrower shall be deemed to have issued at the time of the issuance of such Convertible Securities that number of Additional Shares of Common Stock equal to the maximum number of shares of Common Stock issuable upon conversion thereof and to have received as consideration for the issuance of such shares an amount equal to the total amount of the consideration, if any, received by the Borrower for the issuance of such Convertible Securities, plus the minimum amounts of consideration, if any, payable to the Borrower (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities) upon the conversion thereof, provided that: (A) if the minimum amounts of such consideration cannot be ascertained, but are a function of antidilution or similar protective clauses, the Borrower shall be deemed to have received the minimum amounts of consideration without reference to such clauses; (B) if the minimum amount of consideration payable to the Borrower upon the conversion of Convertible Securities is reduced over time or on the occurrence or non-occurrence of specified events other than by reason of antidilution adjustments, the Effective Price shall be recalculated using the figure to which such minimum amount of consideration is reduced; and (C) if the minimum amount of consideration payable to the Borrower upon the conversion of Convertible Securities is subsequently increased, the Effective Price shall be again recalculated using the increased minimum amount of consideration payable to the Borrower upon the conversion of Convertible Securities. (D) no further adjustment of the Conversion Price, adjusted or subject to adjustment upon the issuance of such Convertible Securities, shall be made as a result of the actual issuance of shares of Common Stock on the conversion of any such Convertible Securities. If the conversion privilege represented by any such Convertible Securities shall expire without having been exercised, the Conversion Price adjusted upon the issuance of such Convertible Securities shall be readjusted to the Conversion Price which would have been in effect had an adjustment been made on the basis that the only shares of Common Stock so issued were the shares of Common Stock, if any, actually issued or sold on the exercise of such rights of conversion of such Convertible Securities, and such shares of Common Stock, if any, were issued or sold for 7 the consideration received for issuing or selling the Convertible Securities actually converted, plus the consideration, if any, actually received by the Borrower (other than by cancellation of liabilities or obligations evidenced by such Convertible Securities) on the conversion of such Convertible Securities, provided that such readjustment shall not apply to prior conversions of this Note. (g) CERTIFICATE OF ADJUSTMENT. In each case of an adjustment or readjustment of any Conversion Price for the number of shares of Common Stock or other securities issuable upon conversion of this Note, the Borrower, at its own expense, shall cause its Chief Financial Officer to compute such adjustment or readjustment in accordance with the provisions hereof and prepare a certificate showing such adjustment or readjustment, and shall mail such certificate, by first class mail, postage prepaid, to the Lender at the Lender's address as provided in the Credit Agreement. The certificate shall set forth such adjustment or readjustment, showing in detail the facts upon which such adjustment or readjustment is based. No adjustment in the Conversion Price shall be required to be made unless it would result in an increase or decrease of at least one cent, but any adjustments not made because of this sentence shall be carried forward and taken into account in any subsequent adjustment otherwise required hereunder. (h) NOTICES OF RECORD DATE. Upon (i) the establishment by the Borrower of a record of the holders of any class of securities for the purpose of determining the holders thereof who are entitled to receive any dividend or other distribution, or (ii) any capital reorganization of the Borrower, any reclassification or recapitalization of the capital stock of the Borrower, any merger or consolidation of the Borrower with or into any other Borrower, or any transfer of all or substantially all the assets of the Borrower to any other person or any voluntary or involuntary dissolution, liquidation or winding up of the Borrower, the Borrower shall mail to the Lender at least twenty days prior to the record date specified therein a notice specifying (A) the date on which any such record is to be taken for the purpose of such dividend or distribution and a description of such dividend or distribution, (B) the date on which any such reorganization, reclassification, transfer, consolidation, merger, dissolution, liquidation or winding up is expected to become effective, and (C) the date, if any, that is to be fixed as to when the holders of record of Common Stock (or other securities) shall be entitled to exchange their shares of Common Stock (or other securities) for securities or other property deliverable upon such reorganization, reclassification transfer, consolidation, merger, dissolution, liquidation or winding up. (i) NO IMPAIRMENT. The Borrower shall not amend its Certificate of Incorporation or participate in any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action for the purpose of avoiding or seeking to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Borrower, but shall at all times in good faith assist in carrying out all such action as may be reasonably necessary or appropriate in order to protect the conversion rights of the holder of this Note against dilution or other impairment as provided herein. 8 Except as permitted by Section 10.06 of the Credit Agreement, this Note may not be assigned by the Lender to any other Person. This Note shall be governed by, and construed in accordance with, the law of the State of New York. NEXT LEVEL COMMUNICATIONS, INC. By: ----------------------------------------- Title: 9 SCHEDULE OF LOANS This Note evidences Loans made under the within-described Credit Agreement to the Borrower, on the dates, in the principal amounts, of the Types, bearing interest at the rates and having Interest Periods (if applicable) of the durations set forth below, subject to the payments, Continuations, Conversions and prepayments of principal set forth below:
PRINCIPAL MATURITY AMOUNT UNPAID DATE AMOUNT OF TYPE INTEREST DATE PAID OR PRINCIPAL NOTATION MADE LOAN OF LOAN RATE OF LOAN PREPAID AMOUNT MADE BY - ---- --------- ------- -------- ------- ------- --------- --------
10
EX-99.14 8 a2072365zex-99_14.txt COMMON STOCK PURCHASE WARRANT NO. 11 WARRANT NO. 011 NEXT LEVEL COMMUNICATIONS, INC. COMMON STOCK PURCHASE WARRANT For good and valuable consideration, NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation (the "COMPANY"), hereby grants to MOTOROLA, INC., a Delaware Corporation (the "WARRANTHOLDER"), the right to subscribe for and purchase from the Company Two Million Five Hundred Thousand (2,500,000) validly issued, fully paid and nonassessable shares (the "WARRANT SHARES") of the Company's Common Stock, par value $.01 per share (the "COMMON STOCK"), at the purchase price per share (the per share "Exercise Price") identified below, at any time prior to 5:00 p.m., New York City time on the expiration date identified below (the "EXPIRATION DATE"), all subject to the terms, conditions and adjustments herein set forth. 1. EXERCISE OF WARRANT 1.1. EXERCISE. Subject to the terms and conditions set forth herein, this Warrant may be exercised, in whole or in part and at any time or from time to time, during normal business hours on any Business Day (as hereinafter defined) on or prior to the Expiration Date by the Warrantholder by: (a) the surrender of this Warrant to the Company, with a duly executed Exercise Form (in the form attached hereto as EXHIBIT A) specifying the number of Warrant Shares to be purchased; and (b) tender to the Company (and delivery for the account of the Company upon receipt from the Company of appropriate wiring instructions) of the aggregate Exercise Price for the number of Warrant Shares specified in the Exercise Form in immediately available funds in lawful money of the United States of America. As used herein, "Business Day" means any day other than a Saturday, Sunday or a day on which national banks are authorized by law to close in the State of New York or California. 1.2. WARRANT SHARES CERTIFICATE. A stock certificate or certificates for the Warrant Shares for which this Warrant is exercised shall be delivered to the Warrantholder promptly after any exercise under Section 1.1 hereof. If this Warrant shall have been exercised only in part, the Company shall, immediately after receipt of this Warrant, deliver to the Warrantholder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant. 1.3. PAYMENT OF TAXES. The issuance of certificates for Warrant Shares shall be made without charge to the Warrantholder for any stock transfer or other issuance tax in respect thereto; provided, however, that the Warrantholder shall be required to pay any and all taxes that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Warrantholder as reflected upon the books of the Company. 1.4. EXERCISE PRICE. Subject to adjustment as provided in Section 6.1 or 6.2 hereof, the per share "EXERCISE PRICE" is Four Dollars and Twenty Nine Cents ($4.29). WARRANT NO. 011 1.5. EXPIRATION DATE. The expiration date of this Warrant shall be, and the term "EXPIRATION DATE" means, December 10, 2006. 2. TRANSFERS AND EXCHANGES 2.1. RESTRICTIONS ON TRANSFER OF WARRANTS OR SHARES (a) Neither this Warrant not any warrant issued in substitution for all or any part of this Warrant may be sold, transferred, or otherwise disposed of for value, in whole or in part, except to a successor to all or a substantial part of the business of Warrantholder. Subject to the foregoing provisions, this Warrant may be exchanged at the option of the Warrantholder, when surrendered to the Company at its office, for another Warrant or other Warrants of the like tenor and representing in the aggregate a like number of Warrant Shares. (b) The Warrant Shares shall not be transferable until the thirty-sixth (36th) day after the Warrant exercise pursuant to which such respective Warrant Shares shall have been issued. 2.2. RESTRICTIVE LEGENDS (a) Each warrant issued in substitution for all or part of this Warrant shall be stamped or otherwise imprinted with a legend appropriately referring to the foregoing restriction on transfer of the Warrants. (b) Except as otherwise permitted by this Section 2.2, each stock certificate for Warrant Shares issued upon the exercise of any Warrant and each stock certificate issued upon the direct or indirect transfer of any such Warrant Shares shall be stamped or otherwise imprinted with a legend in substantially the following form: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. (c) Notwithstanding the foregoing, the Warrantholder may require the Company to issue a stock certificate for Warrant Shares without such legend if such Warrant Shares have been registered for resale under the Securities Act of 1933 or the removal of such legend is otherwise appropriate under that Act and the rules and regulations thereunder. 3. RESERVATION AND REGISTRATION OF SHARES, ETC. The Company covenants and agrees as follows: 2 WARRANT NO. 011 3.1. All Warrant Shares that are issued upon the exercise of this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free from all taxes, liens, security interests, charges, and other encumbrances imposed by or through the Company with respect to the issuance thereof, other than taxes in respect of any transfer occurring contemporaneously with such issue. 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant and all other outstanding warrants. 4. LOSS OR DESTRUCTION OF WARRANT. Subject to the terms and conditions hereof, upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of such bond or indemnification as the Company may reasonably require, and, in the case of such mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor. 5. OWNERSHIP OF WARRANT. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer. 6. CERTAIN ADJUSTMENTS 6.1. ADJUSTMENTS TO NUMBER OF WARRANT SHARES. The number of Warrant Shares purchasable upon the exercise of this Warrant and the per share Exercise Price shall be subject to adjustment after the date hereof as follows: (a) STOCK DIVIDENDS. If at any time after the date of this Warrant (set forth on the signature page hereof) (i) the Company shall declare or pay a stock dividend payable in shares of Common Stock or (ii) the number of shares of Common Stock shall have been increased by a subdivision or split-up of shares of Common Stock, then, on the date of the declaration or payment of such dividend or immediately after the effective date of subdivision or split-up, as the case may be, the number of shares to be delivered upon exercise of this Warrant will be increased so that the Warrantholder will be entitled to receive the number of shares of Common Stock that such Warrantholder would have owned immediately following such action had this Warrant been exercised immediately prior thereto, and the per share Exercise Price will be adjusted as provided below in paragraph 6.2. (b) COMBINATION OF STOCK. If at any time after the date of this Warrant the number of shares of Common Stock outstanding shall have been decreased by a combination of the outstanding shares of Common Stock (including a reverse stock-split), then, immediately after the effective date of such combination, the number of shares of Common Stock to be delivered upon exercise of this Warrant will be decreased so that the Warrantholder thereafter will be entitled to receive the number of shares of Common Stock that such Warrantholder would have owned immediately following such action had this Warrant been exercised 3 WARRANT NO. 011 immediately prior thereto, and the per share Exercise Price will be adjusted as provided below in paragraph 6.2. (c) REORGANIZATION, ETC. If at any time after the date of this Warrant any capital reorganization of the Company, or any reclassification of the Common Stock, or any consolidation of the Company with or merger of the Company with or into any other person, shall be effected in such a way that the holders of Common Stock shall be entitled to receive stock, other securities and/or assets (whether such stock, other securities and/or assets are issued or distributed by the Company or another person) with respect to or in exchange for Common Stock, then, upon exercise of this Warrant the Warrantholder shall have the right to receive the kind and amount of stock, other securities and/or assets receivable upon such reorganization, reclassification, consolidation or merger by a holder of the number of shares of Common Stock that such Warrantholder would have been entitled to receive upon exercise of this Warrant had this Warrant been exercised immediately before such reorganization, reclassification, consolidation or merger. The Company shall not effect any such capital reorganization, reclassification of the Common Stock, or consolidation or merger of the Company with or into any other person, unless prior to or simultaneously with the consummation thereof, the successor entity (if other than the Company) resulting from such reorganization, reclassification consolidation or merger shall assume by written instrument executed and delivered to Warrantholder, the obligation to deliver to Warrantholder such shares of stock, securities or assets as, in accordance with the foregoing provisions, Warrantholder may be entitled to receive. In the event of such an adjustment, the per share Exercise Price shall be adjusted, if necessary, so that the aggregate Exercise Price for exercise of this Warrant in full will be unchanged. (d) STOCK AND RIGHTS OFFERING AT LESS THAN FAIR MARKET VALUE (i) If at any time after the date of this Warrant the Company shall issue to the holders of its Common Stock, or sell or fix a record date for the issuance or sale to the holders of its Common Stock, or grant to the holders of its Common Stock rights to purchase, additional shares of its Common Stock without consideration or at a price per share that is less than Fair Market Value per share of Common Stock (as defined in Section 7.1 hereof) on the date of such issuance or such record date then, immediately after the date of such issuance or sale or on such record date, the number of shares of Common Stock to be delivered upon exercise of this Warrant shall be increased so that the Warrantholder thereafter will be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock such Warrantholder would have been entitled to receive immediately before the date of such issuance or sale or such record date by a fraction, the denominator of which will be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock that the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such Fair Market Value, and the numerator of which will be the number of shares of Common Stock outstanding on such date plus the number of additional shares of Common Stock offered for subscription or purchase, and the per share Exercise Price shall be adjusted as provided below in paragraph 6.2. (ii) If at any time after the date of this Warrant the Company shall distribute to all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings of the Company) or rights or warrants to subscribe 4 WARRANT NO. 011 for or purchase any of its securities (any of the foregoing being hereinafter in this paragraph (d)(ii) called the "Securities"), other than pursuant to a reorganization, reclassification, consolidation or merger described in paragraph (c), then in each such case, unless the Company elects to reserve shares or other units of such Securities for distribution to the Warrantholder upon exercise of the Warrants of such Warrantholder so that, in addition to the shares of the Common Stock to which such Warrantholder is entitled, such Warrantholder will receive upon such exercise the amount and kind of such Securities that such Warrantholder would have received if the Warrantholder had, immediately prior to the record date for the distribution of the Securities, exercised the Warrant, then the number of shares of Common Stock to be delivered to such Warrantholder upon exercise of this Warrant shall be increased so that the Warrantholder thereafter shall be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares such Warrantholder would have been entitled to receive immediately before such record date, had the Warrantholder exercised the Warrant immediately prior thereto by a fraction, the denominator of which shall be the Fair Market Value per share of Common Stock on such record date minus the then fair market value (as reasonably determined by the Board of Directors of the Company), of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock and the numerator of which shall be the Fair Market Value per share of the Common Stock, and the per share Exercise Price shall be adjusted as provided below in paragraph 6.2. (iii) For the purpose of making any adjustment required under this Section 6.1(d), the consideration received by the Company for any issue or sale of securities shall (a) to the extent it consists of cash be computed as the gross amount of cash received by the Company before deduction of any expenses payable by the Company and any underwriting or similar commissions, discounts, compensation or concessions paid or allowed by the Company in connection with such issue or sale, (b) to the extent it consists of property other than cash, be computed at the fair value of that property as reasonably determined in good faith by the Board of Directors and (c) if additional shares of Common Stock, securities convertible into Common Stock or rights or options to purchase either additional shares of Common Stock or such convertible securities or are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such additional shares of Common Stock, such convertible securities or rights or options. (e) FRACTIONAL SHARES. No fractional shares of Common Stock or scrip shall be issued to any Warrantholder in connection with the exercise of this Warrant. Instead of any fractional shares of Common Stock that would otherwise be issuable to such Warrantholder, the Company will pay to such Warrantholder a cash adjustment in respect of such fractional interest in an amount equal to that fractional interest of the Fair Market Value per share of Common Stock as of the close of business on the Business Day immediately preceding the exercise of the Warrant. (f) CARRYOVER. Notwithstanding any other provision of this Section 6.1, no adjustment shall be made to the number of shares of Common Stock to be delivered to the Warrantholder (or to the per share Exercise Price) if such adjustment represents less than 1% of the number of shares to be so delivered, but any lesser adjustment shall be carried forward and 5 WARRANT NO. 011 shall be made at the time and together with the next subsequent adjustment that together with any adjustments so carried forward shall amount to 1% or more of the number of shares to be so delivered. 6.2. EXERCISE PRICE ADJUSTMENT. Except in cases where an adjustment of the per share Exercise Price is provided for above, whenever the number of Warrant Shares purchasable upon the exercise of the Warrant becomes subject to adjustment as provided pursuant to this Section 6, the per share Exercise Price payable upon the exercise of this Warrant shall be adjusted by multiplying such per share Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Warrant Shares purchasable immediately thereafter; provided, however, that the per share Exercise Price shall in no event be less than the par value of such Warrant Share. 6.3. NO DILUTION OR IMPAIRMENT (a) If any event shall occur as to which the provisions of Section 6.1 are not strictly applicable but the failure to make any adjustment would adversely affect the purchase rights represented by the Warrants contrary to the essential intent and principles of such Section, then, in each such case, appropriate adjustments shall be made so as to preserve those rights without dilution but also without enlargement. (b) The Company will not, by amendment of its certificate of incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in reasonable good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholders against dilution or other impairment. Without limiting the generality of the foregoing, the Company (1) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock on the exercise of the Warrants from time to time outstanding and (2) will not take any action that would result in an adjustment of the number of Warrant Shares issuable upon exercise of this Warrant in full or of the per share Exercise Price if the total number of Warrant Shares issuable after the action upon the exercise of all of the Warrants in full would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purposes of issue upon such exercise. (c) The parties agree that the provisions of Section 6.1 shall be interpreted and applied so that there shall not be multiple adjustments, under different subsections of Section 6.1, of the per share Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant in full with respect to a single dilutive event, in a fashion that would "double-count" such dilutive event. 6.4. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the per share Exercise Price is adjusted, as herein provided, the Company shall promptly send to the Warrantholder a notice of such adjustment or adjustments setting forth the effective date(s) 6 WARRANT NO. 011 thereof, the number of Warrant Shares and the per share Exercise Price in effect prior to and after such adjustment(s), a brief statement of the facts requiring such adjustment(s) and the computation by which such adjustment(s) was (were) made. 7. MISCELLANEOUS 7.1. The "FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the "DETERMINATION DATE") shall mean the average of the Daily Sales Prices (as defined below) of the Common Stock on the primary securities exchange or market on which it is listed or traded on the last 20 Business Days prior to the Determination Date. The "DAILY SALES PRICE" shall be the closing price for bona fide transactions of the Common Stock at the end of each day or, if no such transaction takes place that day, the average of the closing bid and asked prices for such day. If the Common Stock was, but is no longer listed or traded on a primary securities exchange or market, then the Board of Directors of Motorola, Inc. (or a duly constituted committee thereof) shall determine in good faith the Fair Market Value of the Common Stock on the basis of such quotations, appraisals and/or evaluations as it considers appropriate. As used in this paragraph, a primary securities exchange or market includes national securities exchanges registered under the Securities Exchange Act of 1934, as amended, the Nasdaq Stock Market National Market, and any successor to the foregoing. If the Common Stock is listed or traded on more than one primary securities exchange or market, the Fair Market Value shall be determined on the basis of the exchange or market on which the largest volume of shares of the Common Stock is traded during the period in question. 7.2. BINDING EFFECT; BENEFITS. This Warrant shall inure to the benefit of and shall be binding upon the Company and the Warrantholder and their respective successors and permitted assigns. Nothing in this Warrant, expressed or implied, is intended to or shall confer on any person other than the Company and the Warrantholder or their respective successors or assigns any rights, remedies, obligations or liabilities under or by reason of this Warrant. 7.3. AMENDMENTS. Any provision of this Warrant may be amended and the observance thereof waived only with the written consent of the Company and the Warrantholder. 7.4. SECTION AND OTHER HEADINGS. The section and other headings contained in this Warrant are for reference purposes only and shall not be deemed to be a part of this Warrant or to affect the meaning or interpretation of this Warrant. 7.5. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be delivered personally (including by commercial courier service), telecopied (with machine confirmation and hard copy following by mail or personal delivery) or sent by certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally or when so telecopied, or three days after being sent by certified, registered or express mail, as follows: 7 WARRANT NO. 011 - if to the Company to: Next Level Communications, Inc. 6085 State Farm Drive Rohnert Park, CA 94928 Attention: Chief Financial Officer Telecopy No. (707) 584-6859 - or if to the Warrantholder to: Motorola, Inc. 1303 East Algonquin Road Schaumburg, IL 60196 Attention: Treasurer Telecopy No. (847) 576-4768. Any party may by notice given in accordance with this Section designate another address or person for receipt of notices hereunder. 7.6. SEVERABILITY. Any term or provision of this Warrant 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 terms and provisions of this Warrant or affecting the validity or enforceability of any of the terms or provisions of this Warrant in any other jurisdiction. 7.7. GOVERNING LAW; CONSENT TO JURISDICTION. This Warrant shall be deemed to be a contract made under the laws of the State of New York. Each of the Company and the Warrantholder hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Warrant. Each of the Company and the Warrantholder irrevocably waives, to the fullest extent permitted by applicable law, any objection that each may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 7.8. COUNTERPARTS; EXECUTION. This Warrant may be executed, issued, and delivered in counterparts, each of which shall be an original instrument but both of which, taken together, shall be one and the same Warrant. This Warrant may be executed, issued, and delivered by facsimile. 7.9. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant shall be determined as conferring upon the Warrantholder any rights as a stockholder of the Company or as imposing any liabilities on the Warrantholder to purchase any securities whether such liabilities are asserted by the Company or by creditors or stockholders of the Company or otherwise. 8 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer. NEXT LEVEL COMMUNICATIONS, INC. By: --------------------------------------- Name: ------------------------------------ (Please print) Title: ----------------------------------- Dated: December 11, 2001 Acknowledged and Agreed: MOTOROLA, INC. By: ---------------------------------- Name: -------------------------------- (Please print) Title: -------------------------------- - -------------------------------------------------------------------------------- THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. IN ADDITION TO THE OTHER RESTRICTIONS ON TRANSFER SET FORTH HEREIN, NEITHER THIS WARRANT NOR THOSE SECURITIES, NOR ANY INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE WARRANTHOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. - -------------------------------------------------------------------------------- WARRANT NO. 011 Exhibit A EXERCISE FORM (TO BE EXECUTED UPON EXERCISE OF THE ATTACHED WARRANT) The undersigned Holder hereby exercises the right, represented by this Warrant, to purchase ______________ of the Warrant Shares and herewith tenders payment for such Warrant Shares to the order of Next Level Communications, Inc. in the amount of $________________. The undersigned requests that a certificate for the Warrant Shares resulting from the above exercise be registered in the name of the undersigned and that such certificates be delivered to the undersigned's address below. The undersigned represents that it is acquiring such Warrant Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof (subject, however, to any requirement of law that the disposition thereof shall at all times be within its control). Dated: __________________, 200__ Holder: By: --------------------------- ------------------------------------- (Please print) (Signature of Holder if Holder is an individual or of authorized representative if Holder is an entity) - ----------------------------------- ------------------------------------- (Street Address of Holder) (Print signer's name and title if Holder is an entity) - ----------------------------------- (City) (State) (Zip Code) EX-99.15 9 a2072365zex-99_15.txt SECURITIES PURCHASE AGREEMENT DATED 2/20/02 THE SECURITIES OFFERED HEREBY HAVE NOT BEEN REGISTERED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME ARE REGISTERED AND QUALIFIED IN ACCORDANCE WITH THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR AN EXEMPTION FROM SUCH REGISTRATION AND QUALIFICATION IS AVAILABLE. HEDGING TRANSACTIONS INVOLVING THE SECURITIES OFFERED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT. SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "AGREEMENT") is entered into as of February 20, 2002 between Motorola, Inc., a Delaware corporation (the "PURCHASER"), and Next Level Communications, Inc., a Delaware corporation (the "COMPANY"). Whereas the Company designs and markets broadband communications equipment that enables telephone companies and other communications service providers to cost-effectively deliver a full suite of voice, high-speed data and digital video services over the existing copper telephone wire infrastructure, as described in the Company's Annual Report on Form 10-K for the period ending December 31, 2000 filed on March 19, 2001, and the other documents of the Company on file with the United States Securities and Exchange Commission (together, the "SEC DOCUMENTS"); and Whereas the Company desires to sell to the Purchaser, and the Purchaser desires to acquire: (i) shares of the Company's duly authorized Series A Convertible Preferred Stock (the "SERIES A PREFERRED") and (ii) warrants to purchase shares of common stock, par value $0.01 per share, of the Company (the "COMMON STOCK"), pursuant to an exemption from registration under the United States Securities Act of 1933, as amended (the "SECURITIES ACT"), provided by Rule 506 of Regulation D promulgated thereunder ("REGULATION D"). Now, therefore, in consideration of the premises and of the mutual covenants and agreements contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows: SECTION 1. ISSUANCE OF THE SHARES AND THE WARRANTS. 1.1 PURCHASE AND SALE OF SECURITIES; THE CLOSING. In reliance upon the representations of the Company contained in SECTION 1.2 and the representations of the Purchaser contained in SECTION 1.3, and subject to the terms and conditions described herein, the Company shall sell to the Purchaser and the Purchaser shall purchase from the Company: (i) 6,912,442 shares of Series A Preferred (the "SHARES"), at a purchase price per share of $4.34; and (ii) (A) a warrant to purchase 3,456,221 shares of Common Stock at an exercise price per share equal to $2.17, and upon other terms as provided in the form attached hereto as EXHIBIT A, and (B) a warrant to purchase 3,456,221 shares of Common Stock at an exercise price per share equal to $2.60, and upon other terms as provided in the form attached hereto as EXHIBIT A (the warrants described in this clause (ii), the "WARRANTS"). (The Shares, the Warrants and the Common Stock underlying the Shares and the Warrants are referred to herein collectively as the "SECURITIES"). The Shares and the Warrants shall be sold to the Purchaser in consideration of the payment by the Purchaser to the Company of Thirty Million United States Dollars (US$30,000,000) (the "PURCHASE PRICE"). The Shares shall be convertible into Common Stock at an initial conversion ratio of two shares of Common Stock for each Share (as further provided in the Certificate of Designation, Rights and Preferences of the Series A Convertible Preferred Stock in the form attached hereto as EXHIBIT B (the "CERTIFICATE")). The closing (the "CLOSING") of the purchase and sale of the Securities shall be held as of 10:00 a.m., local time on February 20, 2002 (the "CLOSING DATE"), at the Los Angeles offices of Arnold & Porter, counsel to the Purchaser, or at such other time or place or on such other date as the parties hereto may mutually agree. On the Closing Date, the Purchaser will deliver to the Company immediately available funds in the amount of the Purchase Price by wire transfer to such Company account as is designated by the Company in writing. On the Closing Date, the Company will deliver to the Purchaser executed Warrants, certificates representing the Shares in proper legal form and a registration rights agreement with respect to the Common Stock underlying the Shares and the Warrants in the form attached hereto as EXHIBIT C (the "REGISTRATION RIGHTS AGREEMENT"). 1.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents and warrants to the Purchaser that on the date hereof and as of the Closing Date: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and is duly qualified as a foreign corporation in each jurisdiction in which the character of the properties owned or held under lease by it or the nature of the business transacted by it requires such qualification and in which the failure so to qualify would (x) adversely affect the legality, validity or enforceability of this Agreement or the related transaction documents, (y) have or result in a material adverse effect on the results of operations, assets or condition (financial or otherwise) of the Company and its subsidiaries, taken as a whole, or (z) adversely impair the Company's ability to perform fully on a timely basis its obligations under this Agreement or any of the related transaction documents (any of (x), (y) or (z), a "MATERIAL ADVERSE EFFECT"). For purposes of this Agreement, Material Adverse Effect will not include general economic and industry conditions. The Company has all requisite power to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and all other documents and agreements contemplated hereby and thereby, and to perform the provisions hereof and thereof and to consummate the transactions contemplated hereby and thereby. (b) The execution, delivery and performance of this Agreement and all other documents and agreements contemplated hereby to be executed, delivered and performed by the Company, and the consummation of the transactions contemplated hereby or thereby, have been duly authorized and approved by the Company. This Agreement and all other documents and agreements contemplated hereby to be executed and delivered by the Company have each been duly authorized, executed and delivered by, and each is the valid and binding obligation of, the 2 Company, enforceable against it in accordance with its terms, except as may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws or by legal or equitable principles relating to or limiting creditors' rights generally. (c) The authorized capital stock of the Company is 400,000,000 shares of Common Stock, par value $.01 per share, of which approximately 86,000,000 shares are issued and outstanding as of the date hereof; 70,000,000 shares of Class B Non-Voting Common Stock, par value $.01 per share, none of which are issued and outstanding; and 10,000,000 shares of preferred stock, par value $.01 per share of which none will be issued and outstanding immediately prior to the close and of which 9,000,000 shares have been designated as Series A Preferred. The Shares will, when issued, be duly and validly issued, fully paid and nonassessable; the Common Stock underlying the Shares will, when issued upon conversion, be duly and validly issued, fully paid and nonassessable; and the Common Stock underlying the Warrants will, when issued upon exercise, be duly and validly issued, fully paid and nonassessable. As of the Closing Date, except as disclosed in the SEC Documents and except, with respect to clause (i), the stock options issued pursuant to existing stock option plans that have been previously disclosed in writing to the Purchaser, (i) the Company will not have outstanding any stock or securities convertible or exchangeable for any shares of its capital stock other than the Warrants and will not have outstanding any rights or options to subscribe for or to purchase its capital stock or any stock or securities convertible into or exchangeable for its capital stock, other than the Warrants; (ii) the Company will not be subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of its capital stock, except with respect to the Series A Preferred Stock; (iii) there are no statutory or contractual stockholders' preemptive rights or other similar rights with respect to the issuance of the Warrants hereunder; and (iv) there are no agreements among the Company's stockholders with respect to the voting or transfer of the company's capital stock. The Company will use the proceeds from the sale of the Securities to finance current operations and not to make any payments or distributions to debt or equity holders, in their capacity as such, other than to the Purchaser. (d) The consummation of the transactions contemplated by this Agreement and the performance of the terms and provisions of this Agreement and the other documents and agreements contemplated hereby or thereby will not: (i) contravene, result in any breach of, or constitute a default under any indenture, mortgage, deed of trust, bank loan or credit agreement, corporate charter, bylaws or other material agreement or instrument to which the Company is a party or by which the Company or any of its properties is bound; (ii) conflict with or result in a breach of any of the terms, conditions or provisions of any order of any court, arbitrator or federal, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign (collectively, "GOVERNMENTAL PERSON") applicable to the Company; (iii) violate any material provision of any statute or other rule or regulation of any Governmental Person applicable to the Company; (iv) violate or conflict with the terms of any "lockup" or similar provision of any underwriting or similar agreement to which the Company or its subsidiaries is a party; and (v) result in the creation or imposition of any lien, claim or other encumbrance upon any of the assets of the Company. (e) No consent, approval or authorization of, or registration, filing or declaration with, any person or entity not obtained as of the Closing Date is required for the 3 transfer, sale or issuance of the Securities or the valid delivery of the Securities or for the performance by the Company of this Agreement and the other documents and agreements contemplated hereby, other than the filings, registrations or qualifications under securities laws or that may be required to be made or obtained in connection with the offers, transfer, sale or delivery of the Securities or any interest therein. Neither the Company nor any of its affiliates, nor any person acting on its or their behalf has offered or will offer or sell the Securities in the United States by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) under the Securities Act. (f) Upon issuance (including payment of the purchase or exercise price therefor), the Purchaser shall acquire good and marketable title to the Securities free and clear of all covenants, conditions, restrictions, taxes, security interests, liens, pledges, charges, encumbrances, rights of first refusal, options and adverse claims or rights of any kind whatsoever arising through the Company or pursuant to any agreement entered into by the Company. (g) The Securities have been duly and validly authorized will not subject the holders thereof to personal liability solely by reason of being such holders. (h) There is no pending or, to the actual knowledge of the Company, threatened action, suit, proceeding or investigation before any Governmental Person having jurisdiction over the Company that would or (i) adversely affect the Company's execution or performance under this Agreement or the Warrants or (ii) except as set forth in the SEC Documents, materially adversely affect the results of the operations of the Company. Since the date of the latest audited financial statements included in the SEC Documents, except as specifically disclosed in the SEC Documents or public earnings announcements as of the date of this Agreement, (a) there has been no event, occurrence or development that has or that is reasonably likely to result in a Material Adverse Effect, (b) the Company has not incurred any liabilities (contingent or otherwise) other than (x) liabilities incurred in the ordinary course of business consistent with past practice and (y) liabilities not required to be reflected in the Company's financial statements pursuant to United States generally accepted accounting principles or required to be disclosed in filings made with the Securities and Exchange Commission, (c) the Company has not altered its method of accounting or the identity of its auditors, (d) the Company has not declared or made any payment or distribution of cash or other property to its stockholders or officers or directors (other than in compliance with existing Company stock option plans) with respect to its capital stock, or purchased, redeemed (or made any agreements to purchase or redeem) any shares of its capital stock. The Company has not taken any steps, and does not currently expect to take any steps, to seek protection pursuant to any bankruptcy law nor does the Company have any knowledge or reason to believe that its creditors intend to initiate involuntary bankruptcy proceedings. (i) The SEC Documents consisting solely of the Company's Annual Report on Form 10-K for the period ending December 31, 2000 and all filings of the Company with the Securities and Exchange Commission made thereafter (i) were prepared in all material respects in accordance with the requirements of the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, as the case may be, and (ii) did not at the time they were filed (or if amended or superseded by a filing prior to the date of this Agreement, then on the date of such filing) contain any untrue statement of a material fact or omit to state a material fact 4 required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. (j) No broker's or finder's or placement fee or commission will be payable to any broker or agent engaged by the Company or any of its officers, directors or agents with respect to the issue of the Securities or the transactions contemplated by this Agreement. The Company agrees to indemnify the Purchaser and its agents and hold them harmless from and against any claim, demand or liability for broker's or finder's or placement fees or similar commissions, whether or not payable by the company, alleged to have been incurred in connection with such transactions, other than any broker's or finder's fees payable to persons engaged by the Purchaser without the knowledge of the Company. (k) All representations and warranties of the Company set forth in this Agreement, the Warrants and the Registration Rights Agreement are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. 1.3 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER. The Purchaser represents, warrants and covenants to the Company that on the date hereof, as of the Closing Date and as of the date of any conversion of the Shares, exercise of the Warrants or any transfer of the Securities by it: (a) The Purchaser has all requisite power to execute and deliver this Agreement and any Securities exercised or converted, and all other documents and agreements contemplated hereby and thereby, and to perform the provisions hereof and thereof and to consummate the transactions contemplated hereby and thereby. (b) The execution, delivery and performance of this Agreement and any Securities exercised or converted, and all other documents and agreements contemplated hereby and thereby, and the consummation of the transactions contemplated hereby or thereby, have been and will be prior to such exercise or conversion duly authorized and approved by the Purchaser. This Agreement, and all other documents and agreements contemplated hereby, including any Securities exercised or converted, have each been, or will be upon exercise or conversion, duly authorized, executed and delivered by, and each is the valid and binding obligation of, the Purchaser enforceable against the Purchaser in accordance with its terms, except as may be limited by applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws or by legal or equitable principles relating to or limiting creditors' rights generally. (c) The Purchaser is an "accredited investor" within the meaning of Regulation D under the Securities Act, and is acquiring the Securities for investment for its own account, and not with a view to distribution subject, nevertheless, to any requirement of law that the disposition of its property shall at all times be within its control. The Purchaser has such knowledge and experience in financial and business matters that it is capable of evaluating the merits and risks of purchasing the Securities. The Purchaser is aware that it may be required to 5 bear the economic risk of an investment in the Securities for an indefinite period, and it is able to do so. The Purchaser acknowledges (i) that the Securities being acquired by it are not being registered under the Securities Act on the grounds that (A) the offer and sale of the Securities are exempt from registration under Section 4(2) of the Securities Act as not involving any public offering, or (B) such issuance is exempt from registration under Rule 506 of Regulation D and (ii) the Company's reliance on such exemptions is predicated in part on the representations made to the Company by the Purchaser in this SECTION 1.3. (d) The Purchaser acknowledges and agrees that until one year after the conclusion of the transactions contemplated hereby, an offer or sale of the Securities within the United States may violate the registration requirements of the Securities Act if such offer or sale is made otherwise than in accordance with Rule 144 under the Securities Act or pursuant to an effective registration statement under the Securities Act. The Purchaser acknowledges that the exemption from registration provided by Rule 144 may not be available. SECTION 2. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The Purchaser's obligation to purchase and pay for the Shares and the Warrants on the Closing Date shall be subject to the satisfaction on or before the Closing Date of the following conditions: 2.1 PROCEEDINGS SATISFACTORY. All proceedings taken on or prior to the Closing Date in connection with the issuance of the Shares and the Warrants and the consummation of the transactions contemplated hereby and all documents and papers relating thereto shall be reasonably satisfactory in form and substance to the Purchaser and its counsel. Without limiting the generality of the foregoing, (i) all shareholder approvals required in connection with the Shares and the Warrants shall have been obtained, (ii) all board of director approvals required in connection with the Shares and the Warrants shall have been obtained, including, without limitation, approval of an independent committee of the Company's board of directors as advised by an independent financial advisor, (iii) any required filings and approvals under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, shall have been made or obtained, as applicable, (iv) any required filings and approvals under the NASD rule 4350, as amended, shall have been made or obtained, as applicable, and (v) any required filings and approvals with respect to any other third party shall have been made or obtained, as applicable. 2.2 REPRESENTATIONS TRUE. All representations and warranties of the Company contained herein shall be true and correct in all respects on and as of the Closing Date with the same effect as though such representations and warranties had been made on and as of the Closing Date and the Company shall have performed in all respects all agreements on its part required to be performed under this Agreement on or prior to the Closing Date. 2.3 THE PURCHASE BY THE PURCHASER PERMITTED BY APPLICABLE LAWS. The sale and the payment for the Shares and the Warrants: (i) shall not be prohibited by any applicable law or governmental regulation, release, interpretation or opinion; (ii) shall not subject the Purchaser to 6 any penalty under or pursuant to any applicable law or governmental regulation; and (iii) shall be permitted by the laws and regulations of the jurisdictions to which the Purchaser is subject. 2.4 EXECUTION AND DELIVERY OF DOCUMENTS. The Purchaser shall have received, duly executed and delivered and in form and substance reasonably satisfactory to the Purchaser and its counsel: (i) certificates representing the Shares, (ii) the Warrants, (iii) the Registration Rights Agreement, (iv) evidence that the Certificate of Designation for the Series A Preferred has been filed on or prior to the Closing Date with the Secretary of State of the State of Delaware, and (v) such other documents and information as the Purchaser may reasonably request. 2.5 NO MATERIAL ADVERSE EFFECT. Except as previously disclosed in the SEC Documents or public earnings announcements as of the date of this Agreement, since December 31, 2000, there has been no event, occurrence or development that has or that is reasonably likely to result in a Material Adverse Effect. In addition, no investigation, action, suit or proceeding shall have been threatened or instituted against the Company or the Purchaser, which, in any such case, in the judgment of the Purchaser, challenges, or might result in a challenge to, the consummation of the transactions contemplated hereby, or which claims, or might give rise to a claim for, damages against the Purchaser as a result of the consummation of such transactions. 2.6 FEES AND EXPENSES. The Company shall have paid the fees and expenses of the Purchaser described in Section 3.3 that have accrued as of the Closing Date. SECTION 3. COVENANTS. The Company covenants and agrees that both before and after the issuance of the Shares and the Warrants: 3.1 CORPORATE EXISTENCE. The Company will do or cause to be done all things necessary to preserve and keep in full force and effect the Company's corporate existence in accordance with the rights (charter and statutory), licenses and franchises of the Company; PROVIDED, HOWEVER, that the foregoing shall not restrict any merger involving the Company, whether or not it is the surviving corporation. 3.2 COMPLIANCE WITH LAWS. The Company shall comply in all respects with all applicable laws, statutes and regulations of any Governmental Person, a violation of which would result in a Material Adverse Effect. 3.3 PAYMENT OF EXPENSES. In the event the transactions contemplated by this Agreement are consummated, the Company shall promptly pay to the Purchaser all reasonable costs and out-of-pocket expenses of the Purchaser, including without limitation its reasonable attorneys' fees, incurred in connection with the negotiation, preparation, execution and delivery of this Agreement, the Certificates representing the Shares, the Warrants and any other documents related to the Purchaser's investment in the Company, and defense or enforcement costs related thereto. 7 3.4 PUBLIC INFORMATION. The Company shall make available at all times current public information with respect to the Company within the meaning of Rule 144(c) under the Securities Act. 3.5 ENCUMBRANCES. The Company shall cause the Securities to be, upon delivery, conversion or exercise, as the case may be, fully paid, nonassessable, free of preemptive rights and free from all taxes, liens, charges, security interests, rights of first refusal or other encumbrances arising through the Company or pursuant to any agreement entered into by the Company. 3.6 AUTHORIZATION. The Company will have at all times authorized and reserved for issuance, free from preemptive rights, a sufficient number of shares of Common Stock to satisfy the conversion and exercise rights of the Purchaser pursuant to the terms and conditions of the Certificate and the Warrants and to satisfy the issuance of any other shares of Common Stock that are reserved for issuance or that are issuable upon the exercise, conversion, exchange or satisfaction of any outstanding securities or obligations or rights of the Company. The Company shall not issue any of its Series A Preferred to any person other than the Purchaser and shall not issue any other sub-Series of its Series A Preferred to any other person if, after such issuance, the Purchaser would not then hold a majority of the Series A Preferred. SECTION 4. TAXES. The Company will pay all taxes (including interest and penalties), other than taxes imposed on the income of the Purchaser, which may be payable in respect of the execution and delivery of this Agreement or of the execution and delivery (but not the subsequent transfer) of any of the Securities or of any amendment of, or waiver or consent under or with respect to, this Agreement or of any of the Securities and will save the Purchaser and all subsequent holders of the Securities harmless against any loss or liability resulting from nonpayment or delay in payment of any such tax. SECTION 5. MISCELLANEOUS. 5.1 PRIVATE PLACEMENT; LEGEND. The Purchaser acknowledges and agrees that the Securities have not been registered under the Securities Act and, to the extent they constitute securities subject to registration under Section 5 of the Securities Act, may not be offered or sold unless registered under the Securities Act, or an exemption from such registration requirements is available. The certificates or instruments representing or evidencing the Shares shall bear a legend in substantially the following form, unless counsel to the Company shall have advised the Company that such legend is no longer needed: THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF ARE SUBJECT TO A SECURITIES PURCHASE AGREEMENT DATED AS OF FEBRUARY 20, 2002, (THE "SECURITIES PURCHASE AGREEMENT") A COPY OF WHICH IS ON FILE 8 AT THE PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED TO THE HOLDER ON REQUEST TO THE SECRETARY OF THE COMPANY. THE SECURITIES REPRESENTED BY THIS CERTIFICATE AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS THE SAME ARE REGISTERED AND QUALIFIED IN ACCORDANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, OR IN THE OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY SUCH REGISTRATION AND QUALIFICATION ARE NOT REQUIRED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAW. The Warrants shall bear a legend in substantially the following form, unless counsel to the Company shall have advised the Company that such legend is no longer needed: THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. IN ADDITION TO THE OTHER RESTRICTIONS ON TRANSFER SET FORTH HEREIN, NEITHER THIS WARRANT NOR THOSE SECURITIES, NOR ANY INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE WARRANTHOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. 5.2 INDEMNIFICATION. The Company agrees to indemnify, defend and hold harmless the Purchaser and its successors, assigns, subsidiaries, affiliates and all of the officers, directors, employees, partners and agents (including attorneys and accountants) of each of the aforementioned persons or entities, and each of them, from and against any and all losses, claims, damages, liabilities, expenses, demands, causes of action, suits, debts, obligations, rights, promises, acts, agreements and damages of any kind or nature whatsoever, whether at law or in equity, whether known or unknown, foreseen or unforeseen, heretofore or hereafter arising out of, relating to, connected with or incidental to the failure of any representation or warranty made by the Company or in any other documents or agreements contemplated hereby or the failure of the Company to comply in all material respects with the covenants contained in this Agreement or in any other documents or agreements contemplated hereby. 5.3 RELIANCE ON REPRESENTATIONS. All representations, warranties, covenants and agreements of the Company and the Purchaser herein shall be deemed to be material and to have been relied upon by the Purchaser or the Company, as applicable, and shall survive the execution and delivery of this Agreement and of the Securities. 9 5.4 SURVIVAL OF THE REPRESENTATIONS, WARRANTIES, ETC. The respective agreements, representations, warranties, indemnities and other statements made by or on behalf of the Company and the Purchaser, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation made by or on behalf of the other party to this Agreement and will survive delivery of any payment for the Securities. 5.5 SUCCESSORS AND ASSIGNS. This Agreement shall bind and inure to the benefit of and be enforceable by the Company, the Purchaser and each of their respective successors and assigns. The Purchaser shall be permitted to transfer the Securities in accordance with their terms and the terms of this Agreement and in accordance with applicable restrictions under applicable federal and state securities laws. 5.6 NOTICES. All notices and other communications provided for in this Agreement shall be in writing and delivered by registered or certified mail, postage prepaid, or delivered by overnight courier (for next business day delivery) or telecopied, addressed as set forth on the signature page hereof, or at such other address as any of the parties hereto may hereafter designate by notice to the other parties given in accordance with this Section. Any such notice or communication shall be deemed to have been duly given on the seventh day after being so mailed, the next business day after delivery by overnight courier, when received when transmitted by telecopy with confirmation of successful transmission or upon receipt when delivered personally. 5.7 COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Signatures may be exchanged by telecopy, with original signatures to follow. Each of the parties hereto agrees that it will be bound by its own telecopied signature and that it accepts the telecopied signatures of the other parties to this Agreement. The original signature pages shall be forwarded to the Company or its counsel and the Company or its counsel will provide all of the parties hereto with a copy of the entire Agreement. 5.8 AMENDMENTS. This Agreement may only be amended by a writing duly executed by the parties hereto. 5.9 SEVERABILITY. If any term or provision of this Agreement or any other document executed in connection herewith shall be determined to be illegal or unenforceable, all other terms and provisions hereof and thereof shall nevertheless remain effective and shall be enforced to the fullest extent permitted by applicable law. 5.10 GOVERNING LAW. EXCEPT TO THE EXTENT THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY SELECTED IN A DOCUMENT OR PORTION THEREOF, THIS AGREEMENT AND ALL AMENDMENTS, SUPPLEMENTS, WAIVERS AND CONSENTS RELATING HERETO OR THERETO SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW. 5.11 ENTIRE AGREEMENT. This Agreement (including its exhibits) contains the entire Agreement of the parties hereto with respect to the transactions contemplated hereby and 10 supersedes all previous oral and written, and all previous contemporaneous oral negotiations, commitments and understandings. 5.12 FURTHER ASSURANCES. Each party agrees promptly to execute and deliver such documents and to take such other acts as are reasonably necessary to effectuate the purposes of this Agreement. 5.13 HEADINGS. The headings contained herein are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 5.14 WAIVER OF JURY TRIAL. EACH PARTY HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT, THE SECURITIES OR ANY OTHER AGREEMENTS RELATING TO THE SECURITIES OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION. NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT, THE SECURITIES OR ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE SECURITIES. 5.15 THIRD-PARTY BENEFICIARY. Any permitted transferee of any part of the Securities shall be a third party beneficiary of the Company's obligations under this Agreement or the Warrants, as applicable. Such person shall have all the rights of a third party beneficiary with respect to the enforcement against the Company of any provision of this Agreement or the Warrants. 5.16 WAIVER OF CREDIT AGREEMENT SECTION 2.08. The Purchaser hereby waives any requirement of Section 2.08 of the Credit Agreement between the Purchaser and the Company dated as of May 16, 2001, as amended (the "Credit Agreement'), that would require the Purchase Price or any portion thereof to be used concurrently herewith or promptly thereafter to pay obligations as described in such Section 2.08; provided, however, that the Purchaser reserves the right to have the Purchase Price count toward the applicable limits of such Section 2.08 and be applied as provided therein upon any subsequent triggering event under such Section 2.08. The preceding waiver shall be effective only in the specific instance described herein and for the specific purpose for which it was given, and nothing contained herein shall be construed to limit or bar any rights or remedies of the Purchaser which it may have on any other occasion with respect to the Credit Agreement, the terms and conditions of which shall remain in full force and effect except as specifically set forth in this Section 5.16. [SIGNATURE PAGE FOLLOWS] 11 In witness whereof, the parties hereto execute this Agreement as of the date first set forth above. THE PURCHASER: MOTOROLA, INC. By: ________________________________ Address for Notices: Motorola, Inc. 1303 East Algonquin Road Schaumberg, IL 60196 Attn: Treasurer Fax: (847) 576-4768 THE COMPANY: NEXT LEVEL COMMUNICATIONS, INC. By: ________________________________ Address for Notices: Next Level Communications, Inc. 6085 State Farm Drive Rohnert Park, CA 94928 Attn: Chief Financial Officer Fax: (707) 584-6859 12 EXHIBIT A FORM OF WARRANTS A-1 EXHIBIT B CERTIFICATE OF DESIGNATION, RIGHTS AND PREFERENCES OF THE SERIES A CONVERTIBLE PREFERRED STOCK OF NEXT LEVEL COMMUNICATIONS, INC. B-1 EXHIBIT C FORM OF REGISTRATION RIGHTS AGREEMENT C-1 EX-99.16 10 a2072365zex-99_16.txt COMMON STOCK PURCHASE WARRANT SERIES A 001 WARRANT NO. SERIES A 001 NEXT LEVEL COMMUNICATIONS, INC. COMMON STOCK PURCHASE WARRANT For good and valuable consideration, NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation (the "COMPANY"), hereby grants to MOTOROLA, INC., a Delaware Corporation (the "WARRANTHOLDER"), the right to subscribe for and purchase from the Company Three Million Four Hundred Fifty Six Thousand Two Hundred Twenty One (3,456,221) validly issued, fully paid and nonassessable shares (the "WARRANT SHARES") of the Company's Common Stock, par value $.01 per share (the "COMMON STOCK"), at the purchase price per share (the per share "Exercise Price") identified below, at any time prior to 5:00 p.m., New York City time on the expiration date identified below (the "EXPIRATION DATE"), all subject to the terms, conditions and adjustments herein set forth. 1. EXERCISE OF WARRANT 1.1. EXERCISE. Subject to the terms and conditions set forth herein, this Warrant may be exercised, in whole or in part and at any time or from time to time, during normal business hours on any Business Day (as hereinafter defined) on or prior to the Expiration Date by the Warrantholder by: (a) the surrender of this Warrant to the Company, with a duly executed Exercise Form (in the form attached hereto as EXHIBIT A) specifying the number of Warrant Shares to be purchased; and (b) tender to the Company (and delivery for the account of the Company upon receipt from the Company of appropriate wiring instructions) of the aggregate Exercise Price for the number of Warrant Shares specified in the Exercise Form in immediately available funds in lawful money of the United States of America. As used herein, "Business Day" means any day other than a Saturday, Sunday or a day on which national banks are authorized by law to close in the State of New York or California. 1.2. WARRANT SHARES CERTIFICATE. A stock certificate or certificates for the Warrant Shares for which this Warrant is exercised shall be delivered to the Warrantholder promptly after any exercise under Section 1.1 hereof. If this Warrant shall have been exercised only in part, the Company shall, immediately after receipt of this Warrant, deliver to the Warrantholder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant. 1.3. PAYMENT OF TAXES. The issuance of certificates for Warrant Shares shall be made without charge to the Warrantholder for any stock transfer or other issuance tax in respect thereto; provided, however, that the Warrantholder shall be required to pay any and all taxes that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Warrantholder as reflected upon the books of the Company. 1.4. EXERCISE PRICE. Subject to adjustment as provided in Section 6.1 or 6.2 hereof, the per share "EXERCISE PRICE" is Two Dollars and Seventeen Cents ($2.17). WARRANT NO. SERIES A 001 1.5. EXPIRATION DATE. The expiration date of this Warrant shall be, and the term "EXPIRATION DATE" means, February 19, 2007. 2. TRANSFERS AND EXCHANGES 2.1. RESTRICTIONS ON TRANSFER OF WARRANTS OR SHARES (a) Neither this Warrant not any warrant issued in substitution for all or any part of this Warrant may be sold, transferred, or otherwise disposed of for value, in whole or in part, except to a successor to all or a substantial part of the business of Warrantholder. Subject to the foregoing provisions, this Warrant may be exchanged at the option of the Warrantholder, when surrendered to the Company at its office, for another Warrant or other Warrants of the like tenor and representing in the aggregate a like number of Warrant Shares. (b) The Warrant Shares shall not be transferable until the thirty-sixth (36th) day after the Warrant exercise pursuant to which such respective Warrant Shares shall have been issued. 2.2. RESTRICTIVE LEGENDS (a) Each warrant issued in substitution for all or part of this Warrant shall be stamped or otherwise imprinted with a legend appropriately referring to the foregoing restriction on transfer of the Warrants. (b) Except as otherwise permitted by this Section 2.2, each stock certificate for Warrant Shares issued upon the exercise of any Warrant and each stock certificate issued upon the direct or indirect transfer of any such Warrant Shares shall be stamped or otherwise imprinted with a legend in substantially the following form: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. (c) Notwithstanding the foregoing, the Warrantholder may require the Company to issue a stock certificate for Warrant Shares without such legend if such Warrant Shares have been registered for resale under the Securities Act of 1933 or the removal of such legend is otherwise appropriate under that Act and the rules and regulations thereunder. 3. RESERVATION AND REGISTRATION OF SHARES, ETC. The Company covenants and agrees as follows: 2 WARRANT NO. SERIES A 001 3.1. All Warrant Shares that are issued upon the exercise of this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free from all taxes, liens, security interests, charges, and other encumbrances imposed by or through the Company with respect to the issuance thereof, other than taxes in respect of any transfer occurring contemporaneously with such issue. 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant and all other outstanding warrants. 4. LOSS OR DESTRUCTION OF WARRANT. Subject to the terms and conditions hereof, upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of such bond or indemnification as the Company may reasonably require, and, in the case of such mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor. 5. OWNERSHIP OF WARRANT. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer. 6. CERTAIN ADJUSTMENTS 6.1. ADJUSTMENTS TO NUMBER OF WARRANT SHARES. The number of Warrant Shares purchasable upon the exercise of this Warrant and the per share Exercise Price shall be subject to adjustment after the date hereof as follows: (a) STOCK DIVIDENDS. If at any time after the date of this Warrant (set forth on the signature page hereof) (i) the Company shall declare or pay a stock dividend payable in shares of Common Stock or (ii) the number of shares of Common Stock shall have been increased by a subdivision or split-up of shares of Common Stock, then, on the date of the declaration or payment of such dividend or immediately after the effective date of subdivision or split-up, as the case may be, the number of shares to be delivered upon exercise of this Warrant will be increased so that the Warrantholder will be entitled to receive the number of shares of Common Stock that such Warrantholder would have owned immediately following such action had this Warrant been exercised immediately prior thereto, and the per share Exercise Price will be adjusted as provided below in paragraph 6.2. (b) COMBINATION OF STOCK. If at any time after the date of this Warrant the number of shares of Common Stock outstanding shall have been decreased by a combination of the outstanding shares of Common Stock (including a reverse stock-split), then, immediately after the effective date of such combination, the number of shares of Common Stock to be delivered upon exercise of this Warrant will be decreased so that the Warrantholder thereafter will be entitled to receive the number of shares of Common Stock that such Warrantholder would have owned immediately following such action had this Warrant been exercised 3 WARRANT NO. SERIES A 001 immediately prior thereto, and the per share Exercise Price will be adjusted as provided below in paragraph 6.2. (c) REORGANIZATION, ETC. If at any time after the date of this Warrant any capital reorganization of the Company, or any reclassification of the Common Stock, or any consolidation of the Company with or merger of the Company with or into any other person, shall be effected in such a way that the holders of Common Stock shall be entitled to receive stock, other securities and/or assets (whether such stock, other securities and/or assets are issued or distributed by the Company or another person) with respect to or in exchange for Common Stock, then, upon exercise of this Warrant the Warrantholder shall have the right to receive the kind and amount of stock, other securities and/or assets receivable upon such reorganization, reclassification, consolidation or merger by a holder of the number of shares of Common Stock that such Warrantholder would have been entitled to receive upon exercise of this Warrant had this Warrant been exercised immediately before such reorganization, reclassification, consolidation or merger. The Company shall not effect any such capital reorganization, reclassification of the Common Stock, or consolidation or merger of the Company with or into any other person, unless prior to or simultaneously with the consummation thereof, the successor entity (if other than the Company) resulting from such reorganization, reclassification consolidation or merger shall assume by written instrument executed and delivered to Warrantholder, the obligation to deliver to Warrantholder such shares of stock, securities or assets as, in accordance with the foregoing provisions, Warrantholder may be entitled to receive. In the event of such an adjustment, the per share Exercise Price shall be adjusted, if necessary, so that the aggregate Exercise Price for exercise of this Warrant in full will be unchanged. (d) STOCK AND RIGHTS OFFERING AT LESS THAN FAIR MARKET VALUE (i) If at any time after the date of this Warrant the Company shall issue to the holders of its Common Stock, or sell or fix a record date for the issuance or sale to the holders of its Common Stock, or grant to the holders of its Common Stock rights to purchase, additional shares of its Common Stock without consideration or at a price per share that is less than Fair Market Value per share of Common Stock (as defined in Section 7.1 hereof) on the date of such issuance or such record date then, immediately after the date of such issuance or sale or on such record date, the number of shares of Common Stock to be delivered upon exercise of this Warrant shall be increased so that the Warrantholder thereafter will be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock such Warrantholder would have been entitled to receive immediately before the date of such issuance or sale or such record date by a fraction, the denominator of which will be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock that the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such Fair Market Value, and the numerator of which will be the number of shares of Common Stock outstanding on such date plus the number of additional shares of Common Stock offered for subscription or purchase, and the per share Exercise Price shall be adjusted as provided below in paragraph 6.2. (ii) If at any time after the date of this Warrant the Company shall distribute to all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings of the Company) or rights or warrants to subscribe 4 WARRANT NO. SERIES A 001 for or purchase any of its securities (any of the foregoing being hereinafter in this paragraph (d)(ii) called the "Securities"), other than pursuant to a reorganization, reclassification, consolidation or merger described in paragraph (c), then in each such case, unless the Company elects to reserve shares or other units of such Securities for distribution to the Warrantholder upon exercise of the Warrants of such Warrantholder so that, in addition to the shares of the Common Stock to which such Warrantholder is entitled, such Warrantholder will receive upon such exercise the amount and kind of such Securities that such Warrantholder would have received if the Warrantholder had, immediately prior to the record date for the distribution of the Securities, exercised the Warrant, then the number of shares of Common Stock to be delivered to such Warrantholder upon exercise of this Warrant shall be increased so that the Warrantholder thereafter shall be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares such Warrantholder would have been entitled to receive immediately before such record date, had the Warrantholder exercised the Warrant immediately prior thereto by a fraction, the denominator of which shall be the Fair Market Value per share of Common Stock on such record date minus the then fair market value (as reasonably determined by the Board of Directors of the Company), of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock and the numerator of which shall be the Fair Market Value per share of the Common Stock, and the per share Exercise Price shall be adjusted as provided below in paragraph 6.2. (iii) For the purpose of making any adjustment required under this Section 6.1(d), the consideration received by the Company for any issue or sale of securities shall (a) to the extent it consists of cash be computed as the gross amount of cash received by the Company before deduction of any expenses payable by the Company and any underwriting or similar commissions, discounts, compensation or concessions paid or allowed by the Company in connection with such issue or sale, (b) to the extent it consists of property other than cash, be computed at the fair value of that property as reasonably determined in good faith by the Board of Directors and (c) if additional shares of Common Stock, securities convertible into Common Stock or rights or options to purchase either additional shares of Common Stock or such convertible securities or are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such additional shares of Common Stock, such convertible securities or rights or options. (e) FRACTIONAL SHARES. No fractional shares of Common Stock or scrip shall be issued to any Warrantholder in connection with the exercise of this Warrant. Instead of any fractional shares of Common Stock that would otherwise be issuable to such Warrantholder, the Company will pay to such Warrantholder a cash adjustment in respect of such fractional interest in an amount equal to that fractional interest of the Fair Market Value per share of Common Stock as of the close of business on the Business Day immediately preceding the exercise of the Warrant. (f) CARRYOVER. Notwithstanding any other provision of this Section 6.1, no adjustment shall be made to the number of shares of Common Stock to be delivered to the Warrantholder (or to the per share Exercise Price) if such adjustment represents less than 1% of the number of shares to be so delivered, but any lesser adjustment shall be carried forward and 5 WARRANT NO. SERIES A 001 shall be made at the time and together with the next subsequent adjustment that together with any adjustments so carried forward shall amount to 1% or more of the number of shares to be so delivered. 6.2. EXERCISE PRICE ADJUSTMENT. Except in cases where an adjustment of the per share Exercise Price is provided for above, whenever the number of Warrant Shares purchasable upon the exercise of the Warrant becomes subject to adjustment as provided pursuant to this Section 6, the per share Exercise Price payable upon the exercise of this Warrant shall be adjusted by multiplying such per share Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Warrant Shares purchasable immediately thereafter; provided, however, that the per share Exercise Price shall in no event be less than the par value of such Warrant Share. 6.3. NO DILUTION OR IMPAIRMENT (a) If any event shall occur as to which the provisions of Section 6.1 are not strictly applicable but the failure to make any adjustment would adversely affect the purchase rights represented by the Warrants contrary to the essential intent and principles of such Section, then, in each such case, appropriate adjustments shall be made so as to preserve those rights without dilution but also without enlargement. (b) The Company will not, by amendment of its certificate of incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in reasonable good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholders against dilution or other impairment. Without limiting the generality of the foregoing, the Company (1) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock on the exercise of the Warrants from time to time outstanding and (2) will not take any action that would result in an adjustment of the number of Warrant Shares issuable upon exercise of this Warrant in full or of the per share Exercise Price if the total number of Warrant Shares issuable after the action upon the exercise of all of the Warrants in full would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purposes of issue upon such exercise. (c) The parties agree that the provisions of Section 6.1 shall be interpreted and applied so that there shall not be multiple adjustments, under different subsections of Section 6.1, of the per share Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant in full with respect to a single dilutive event, in a fashion that would "double-count" such dilutive event. 6.4. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the per share Exercise Price is adjusted, as herein provided, the Company shall promptly send to the Warrantholder a notice of such adjustment or adjustments setting forth the effective date(s) 6 WARRANT NO. SERIES A 001 thereof, the number of Warrant Shares and the per share Exercise Price in effect prior to and after such adjustment(s), a brief statement of the facts requiring such adjustment(s) and the computation by which such adjustment(s) was (were) made. 7. MISCELLANEOUS 7.1. The "FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the "DETERMINATION DATE") shall mean the average of the Daily Sales Prices (as defined below) of the Common Stock on the primary securities exchange or market on which it is listed or traded on the last 20 Business Days prior to the Determination Date. The "DAILY SALES PRICE" shall be the closing price for bona fide transactions of the Common Stock at the end of each day or, if no such transaction takes place that day, the average of the closing bid and asked prices for such day. If the Common Stock was, but is no longer listed or traded on a primary securities exchange or market, then the Board of Directors of Motorola, Inc. (or a duly constituted committee thereof) shall determine in good faith the Fair Market Value of the Common Stock on the basis of such quotations, appraisals and/or evaluations as it considers appropriate. As used in this paragraph, a primary securities exchange or market includes national securities exchanges registered under the Securities Exchange Act of 1934, as amended, the Nasdaq Stock Market National Market, and any successor to the foregoing. If the Common Stock is listed or traded on more than one primary securities exchange or market, the Fair Market Value shall be determined on the basis of the exchange or market on which the largest volume of shares of the Common Stock is traded during the period in question. 7.2. BINDING EFFECT; BENEFITS. This Warrant shall inure to the benefit of and shall be binding upon the Company and the Warrantholder and their respective successors and permitted assigns. Nothing in this Warrant, expressed or implied, is intended to or shall confer on any person other than the Company and the Warrantholder or their respective successors or assigns any rights, remedies, obligations or liabilities under or by reason of this Warrant. 7.3. AMENDMENTS. Any provision of this Warrant may be amended and the observance thereof waived only with the written consent of the Company and the Warrantholder. 7.4. SECTION AND OTHER HEADINGS. The section and other headings contained in this Warrant are for reference purposes only and shall not be deemed to be a part of this Warrant or to affect the meaning or interpretation of this Warrant. 7.5. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be delivered personally (including by commercial courier service), telecopied (with machine confirmation and hard copy following by mail or personal delivery) or sent by certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally or when so telecopied, or three days after being sent by certified, registered or express mail, as follows: 7 WARRANT NO. SERIES A 001 - if to the Company to: Next Level Communications, Inc. 6085 State Farm Drive Rohnert Park, CA 94928 Attention: Chief Financial Officer Telecopy No. (707) 584-6859 - or if to the Warrantholder to: Motorola, Inc. 1303 East Algonquin Road Schaumburg, IL 60196 Attention: Treasurer Telecopy No. (847) 576-4768. Any party may by notice given in accordance with this Section designate another address or person for receipt of notices hereunder. 7.6. SEVERABILITY. Any term or provision of this Warrant 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 terms and provisions of this Warrant or affecting the validity or enforceability of any of the terms or provisions of this Warrant in any other jurisdiction. 7.7. GOVERNING LAW; CONSENT TO JURISDICTION. This Warrant shall be deemed to be a contract made under the laws of the State of New York. Each of the Company and the Warrantholder hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Warrant. Each of the Company and the Warrantholder irrevocably waives, to the fullest extent permitted by applicable law, any objection that each may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 7.8. COUNTERPARTS; EXECUTION. This Warrant may be executed, issued, and delivered in counterparts, each of which shall be an original instrument but both of which, taken together, shall be one and the same Warrant. This Warrant may be executed, issued, and delivered by facsimile. 7.9. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant shall be determined as conferring upon the Warrantholder any rights as a stockholder of the Company or as imposing any liabilities on the Warrantholder to purchase any securities whether such liabilities are asserted by the Company or by creditors or stockholders of the Company or otherwise. 8 WARRANT NO. SERIES A 001 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer. NEXT LEVEL COMMUNICATIONS, INC. By: _______________________________ Name: _____________________________ (Please print) Title: ____________________________ Dated: February 20, 2002 Acknowledged and Agreed: MOTOROLA, INC. By: ________________________________ Name: ______________________________ (Please print) Title: _____________________________ - -------------------------------------------------------------------------------- THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. IN ADDITION TO THE OTHER RESTRICTIONS ON TRANSFER SET FORTH HEREIN, NEITHER THIS WARRANT NOR THOSE SECURITIES, NOR ANY INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE WARRANTHOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. - -------------------------------------------------------------------------------- WARRANT NO. SERIES A 001 Exhibit A EXERCISE FORM (TO BE EXECUTED UPON EXERCISE OF THE ATTACHED WARRANT) The undersigned Holder hereby exercises the right, represented by this Warrant, to purchase ______________ of the Warrant Shares and herewith tenders payment for such Warrant Shares to the order of Next Level Communications, Inc. in the amount of $________________. The undersigned requests that a certificate for the Warrant Shares resulting from the above exercise be registered in the name of the undersigned and that such certificates be delivered to the undersigned's address below. The undersigned represents that it is acquiring such Warrant Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof (subject, however, to any requirement of law that the disposition thereof shall at all times be within its control). Dated: __________________, 200__ Holder: ____________________________ By: ___________________________________ (Please print) (Signature of Holder if Holder is an individual or of authorized representative if Holder is an entity) ____________________________________ (Street Address of Holder) ___________________________________ (Print signer's name and title if Holder is an entity) ____________________________________ (City) (State) (Zip Code) EX-99.17 11 a2072365zex-99_17.txt COMMON STOCK PURCHASE WARRANT SERIES A 002 WARRANT NO. SERIES A 002 NEXT LEVEL COMMUNICATIONS, INC. COMMON STOCK PURCHASE WARRANT For good and valuable consideration, NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation (the "COMPANY"), hereby grants to MOTOROLA, INC., a Delaware Corporation (the "WARRANTHOLDER"), the right to subscribe for and purchase from the Company Three Million Four Hundred Fifty Six Thousand Two Hundred Twenty One (3,456,221) validly issued, fully paid and nonassessable shares (the "WARRANT SHARES") of the Company's Common Stock, par value $.01 per share (the "COMMON STOCK"), at the purchase price per share (the per share "Exercise Price") identified below, at any time prior to 5:00 p.m., New York City time on the expiration date identified below (the "EXPIRATION DATE"), all subject to the terms, conditions and adjustments herein set forth. 1. EXERCISE OF WARRANT 1.1. EXERCISE. Subject to the terms and conditions set forth herein, this Warrant may be exercised, in whole or in part and at any time or from time to time, during normal business hours on any Business Day (as hereinafter defined) on or prior to the Expiration Date by the Warrantholder by: (a) the surrender of this Warrant to the Company, with a duly executed Exercise Form (in the form attached hereto as EXHIBIT A) specifying the number of Warrant Shares to be purchased; and (b) tender to the Company (and delivery for the account of the Company upon receipt from the Company of appropriate wiring instructions) of the aggregate Exercise Price for the number of Warrant Shares specified in the Exercise Form in immediately available funds in lawful money of the United States of America. As used herein, "Business Day" means any day other than a Saturday, Sunday or a day on which national banks are authorized by law to close in the State of New York or California. 1.2. WARRANT SHARES CERTIFICATE. A stock certificate or certificates for the Warrant Shares for which this Warrant is exercised shall be delivered to the Warrantholder promptly after any exercise under Section 1.1 hereof. If this Warrant shall have been exercised only in part, the Company shall, immediately after receipt of this Warrant, deliver to the Warrantholder a new Warrant evidencing the rights to purchase the remaining Warrant Shares, which new Warrant shall in all other respects be identical with this Warrant. 1.3. PAYMENT OF TAXES. The issuance of certificates for Warrant Shares shall be made without charge to the Warrantholder for any stock transfer or other issuance tax in respect thereto; provided, however, that the Warrantholder shall be required to pay any and all taxes that may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the then Warrantholder as reflected upon the books of the Company. 1.4. EXERCISE PRICE. Subject to adjustment as provided in Section 6.1 or 6.2 hereof, the per share "EXERCISE PRICE" is Two Dollars and Sixty Cents ($2.60). WARRANT NO. SERIES A 002 1.5. EXPIRATION DATE. The expiration date of this Warrant shall be, and the term "EXPIRATION DATE" means, February 19, 2007. 2. TRANSFERS AND EXCHANGES 2.1. RESTRICTIONS ON TRANSFER OF WARRANTS OR SHARES (a) Neither this Warrant not any warrant issued in substitution for all or any part of this Warrant may be sold, transferred, or otherwise disposed of for value, in whole or in part, except to a successor to all or a substantial part of the business of Warrantholder. Subject to the foregoing provisions, this Warrant may be exchanged at the option of the Warrantholder, when surrendered to the Company at its office, for another Warrant or other Warrants of the like tenor and representing in the aggregate a like number of Warrant Shares. (b) The Warrant Shares shall not be transferable until the thirty-sixth (36th) day after the Warrant exercise pursuant to which such respective Warrant Shares shall have been issued. 2.2. RESTRICTIVE LEGENDS (a) Each warrant issued in substitution for all or part of this Warrant shall be stamped or otherwise imprinted with a legend appropriately referring to the foregoing restriction on transfer of the Warrants. (b) Except as otherwise permitted by this Section 2.2, each stock certificate for Warrant Shares issued upon the exercise of any Warrant and each stock certificate issued upon the direct or indirect transfer of any such Warrant Shares shall be stamped or otherwise imprinted with a legend in substantially the following form: THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND NEITHER THE SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. (c) Notwithstanding the foregoing, the Warrantholder may require the Company to issue a stock certificate for Warrant Shares without such legend if such Warrant Shares have been registered for resale under the Securities Act of 1933 or the removal of such legend is otherwise appropriate under that Act and the rules and regulations thereunder. 3. RESERVATION AND REGISTRATION OF SHARES, ETC. The Company covenants and agrees as follows: 2 WARRANT NO. SERIES A 002 3.1. All Warrant Shares that are issued upon the exercise of this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable, and free from all taxes, liens, security interests, charges, and other encumbrances imposed by or through the Company with respect to the issuance thereof, other than taxes in respect of any transfer occurring contemporaneously with such issue. 3.2. During the period within which this Warrant may be exercised, the Company will at all times have authorized and reserved a sufficient number of shares of Common Stock to provide for the exercise of the rights represented by this Warrant and all other outstanding warrants. 4. LOSS OR DESTRUCTION OF WARRANT. Subject to the terms and conditions hereof, upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant and, in the case of loss, theft or destruction, of such bond or indemnification as the Company may reasonably require, and, in the case of such mutilation, upon surrender and cancellation of this Warrant, the Company will execute and deliver a new Warrant of like tenor. 5. OWNERSHIP OF WARRANT. The Company may deem and treat the person in whose name this Warrant is registered as the holder and owner hereof (notwithstanding any notations of ownership or writing hereon made by anyone other than the Company) for all purposes and shall not be affected by any notice to the contrary, until presentation of this Warrant for registration of transfer. 6. CERTAIN ADJUSTMENTS 6.1. ADJUSTMENTS TO NUMBER OF WARRANT SHARES. The number of Warrant Shares purchasable upon the exercise of this Warrant and the per share Exercise Price shall be subject to adjustment after the date hereof as follows: (a) STOCK DIVIDENDS. If at any time after the date of this Warrant (set forth on the signature page hereof) (i) the Company shall declare or pay a stock dividend payable in shares of Common Stock or (ii) the number of shares of Common Stock shall have been increased by a subdivision or split-up of shares of Common Stock, then, on the date of the declaration or payment of such dividend or immediately after the effective date of subdivision or split-up, as the case may be, the number of shares to be delivered upon exercise of this Warrant will be increased so that the Warrantholder will be entitled to receive the number of shares of Common Stock that such Warrantholder would have owned immediately following such action had this Warrant been exercised immediately prior thereto, and the per share Exercise Price will be adjusted as provided below in paragraph 6.2. (b) COMBINATION OF STOCK. If at any time after the date of this Warrant the number of shares of Common Stock outstanding shall have been decreased by a combination of the outstanding shares of Common Stock (including a reverse stock-split), then, immediately after the effective date of such combination, the number of shares of Common Stock to be delivered upon exercise of this Warrant will be decreased so that the Warrantholder thereafter will be entitled to receive the number of shares of Common Stock that such Warrantholder would have owned immediately following such action had this Warrant been exercised 3 WARRANT NO. SERIES A 002 immediately prior thereto, and the per share Exercise Price will be adjusted as provided below in paragraph 6.2. (c) REORGANIZATION, ETC. If at any time after the date of this Warrant any capital reorganization of the Company, or any reclassification of the Common Stock, or any consolidation of the Company with or merger of the Company with or into any other person, shall be effected in such a way that the holders of Common Stock shall be entitled to receive stock, other securities and/or assets (whether such stock, other securities and/or assets are issued or distributed by the Company or another person) with respect to or in exchange for Common Stock, then, upon exercise of this Warrant the Warrantholder shall have the right to receive the kind and amount of stock, other securities and/or assets receivable upon such reorganization, reclassification, consolidation or merger by a holder of the number of shares of Common Stock that such Warrantholder would have been entitled to receive upon exercise of this Warrant had this Warrant been exercised immediately before such reorganization, reclassification, consolidation or merger. The Company shall not effect any such capital reorganization, reclassification of the Common Stock, or consolidation or merger of the Company with or into any other person, unless prior to or simultaneously with the consummation thereof, the successor entity (if other than the Company) resulting from such reorganization, reclassification consolidation or merger shall assume by written instrument executed and delivered to Warrantholder, the obligation to deliver to Warrantholder such shares of stock, securities or assets as, in accordance with the foregoing provisions, Warrantholder may be entitled to receive. In the event of such an adjustment, the per share Exercise Price shall be adjusted, if necessary, so that the aggregate Exercise Price for exercise of this Warrant in full will be unchanged. (d) STOCK AND RIGHTS OFFERING AT LESS THAN FAIR MARKET VALUE (i) If at any time after the date of this Warrant the Company shall issue to the holders of its Common Stock, or sell or fix a record date for the issuance or sale to the holders of its Common Stock, or grant to the holders of its Common Stock rights to purchase, additional shares of its Common Stock without consideration or at a price per share that is less than Fair Market Value per share of Common Stock (as defined in Section 7.1 hereof) on the date of such issuance or such record date then, immediately after the date of such issuance or sale or on such record date, the number of shares of Common Stock to be delivered upon exercise of this Warrant shall be increased so that the Warrantholder thereafter will be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares of Common Stock such Warrantholder would have been entitled to receive immediately before the date of such issuance or sale or such record date by a fraction, the denominator of which will be the number of shares of Common Stock outstanding on such date plus the number of shares of Common Stock that the aggregate offering price of the total number of shares so offered for subscription or purchase would purchase at such Fair Market Value, and the numerator of which will be the number of shares of Common Stock outstanding on such date plus the number of additional shares of Common Stock offered for subscription or purchase, and the per share Exercise Price shall be adjusted as provided below in paragraph 6.2. (ii) If at any time after the date of this Warrant the Company shall distribute to all holders of its Common Stock any shares of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (excluding cash dividends or distributions paid from retained earnings of the Company) or rights or warrants to subscribe 4 WARRANT NO. SERIES A 002 for or purchase any of its securities (any of the foregoing being hereinafter in this paragraph (d)(ii) called the "Securities"), other than pursuant to a reorganization, reclassification, consolidation or merger described in paragraph (c), then in each such case, unless the Company elects to reserve shares or other units of such Securities for distribution to the Warrantholder upon exercise of the Warrants of such Warrantholder so that, in addition to the shares of the Common Stock to which such Warrantholder is entitled, such Warrantholder will receive upon such exercise the amount and kind of such Securities that such Warrantholder would have received if the Warrantholder had, immediately prior to the record date for the distribution of the Securities, exercised the Warrant, then the number of shares of Common Stock to be delivered to such Warrantholder upon exercise of this Warrant shall be increased so that the Warrantholder thereafter shall be entitled to receive the number of shares of Common Stock determined by multiplying the number of shares such Warrantholder would have been entitled to receive immediately before such record date, had the Warrantholder exercised the Warrant immediately prior thereto by a fraction, the denominator of which shall be the Fair Market Value per share of Common Stock on such record date minus the then fair market value (as reasonably determined by the Board of Directors of the Company), of the portion of the capital stock or assets or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock and the numerator of which shall be the Fair Market Value per share of the Common Stock, and the per share Exercise Price shall be adjusted as provided below in paragraph 6.2. (iii) For the purpose of making any adjustment required under this Section 6.1(d), the consideration received by the Company for any issue or sale of securities shall (a) to the extent it consists of cash be computed as the gross amount of cash received by the Company before deduction of any expenses payable by the Company and any underwriting or similar commissions, discounts, compensation or concessions paid or allowed by the Company in connection with such issue or sale, (b) to the extent it consists of property other than cash, be computed at the fair value of that property as reasonably determined in good faith by the Board of Directors and (c) if additional shares of Common Stock, securities convertible into Common Stock or rights or options to purchase either additional shares of Common Stock or such convertible securities or are issued or sold together with other stock or securities or other assets of the Company for a consideration which covers both, be computed as the portion of the consideration so received that may be reasonably determined in good faith by the Board of Directors to be allocable to such additional shares of Common Stock, such convertible securities or rights or options. (e) FRACTIONAL SHARES. No fractional shares of Common Stock or scrip shall be issued to any Warrantholder in connection with the exercise of this Warrant. Instead of any fractional shares of Common Stock that would otherwise be issuable to such Warrantholder, the Company will pay to such Warrantholder a cash adjustment in respect of such fractional interest in an amount equal to that fractional interest of the Fair Market Value per share of Common Stock as of the close of business on the Business Day immediately preceding the exercise of the Warrant. (f) CARRYOVER. Notwithstanding any other provision of this Section 6.1, no adjustment shall be made to the number of shares of Common Stock to be delivered to the Warrantholder (or to the per share Exercise Price) if such adjustment represents less than 1% of the number of shares to be so delivered, but any lesser adjustment shall be carried forward and 5 WARRANT NO. SERIES A 002 shall be made at the time and together with the next subsequent adjustment that together with any adjustments so carried forward shall amount to 1% or more of the number of shares to be so delivered. 6.2. EXERCISE PRICE ADJUSTMENT. Except in cases where an adjustment of the per share Exercise Price is provided for above, whenever the number of Warrant Shares purchasable upon the exercise of the Warrant becomes subject to adjustment as provided pursuant to this Section 6, the per share Exercise Price payable upon the exercise of this Warrant shall be adjusted by multiplying such per share Exercise Price immediately prior to such adjustment by a fraction, of which the numerator shall be the number of Warrant Shares purchasable upon the exercise of the Warrant immediately prior to such adjustment, and of which the denominator shall be the number of Warrant Shares purchasable immediately thereafter; provided, however, that the per share Exercise Price shall in no event be less than the par value of such Warrant Share. 6.3. NO DILUTION OR IMPAIRMENT (a) If any event shall occur as to which the provisions of Section 6.1 are not strictly applicable but the failure to make any adjustment would adversely affect the purchase rights represented by the Warrants contrary to the essential intent and principles of such Section, then, in each such case, appropriate adjustments shall be made so as to preserve those rights without dilution but also without enlargement. (b) The Company will not, by amendment of its certificate of incorporation or through any consolidation, merger, reorganization, transfer of assets, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of the Warrants, but will at all times in reasonable good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Warrantholders against dilution or other impairment. Without limiting the generality of the foregoing, the Company (1) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable shares of Common Stock on the exercise of the Warrants from time to time outstanding and (2) will not take any action that would result in an adjustment of the number of Warrant Shares issuable upon exercise of this Warrant in full or of the per share Exercise Price if the total number of Warrant Shares issuable after the action upon the exercise of all of the Warrants in full would exceed the total number of shares of Common Stock then authorized by the Company's certificate of incorporation and available for the purposes of issue upon such exercise. (c) The parties agree that the provisions of Section 6.1 shall be interpreted and applied so that there shall not be multiple adjustments, under different subsections of Section 6.1, of the per share Exercise Price and number of Warrant Shares issuable upon exercise of this Warrant in full with respect to a single dilutive event, in a fashion that would "double-count" such dilutive event. 6.4. NOTICE OF ADJUSTMENT. Whenever the number of Warrant Shares or the per share Exercise Price is adjusted, as herein provided, the Company shall promptly send to the Warrantholder a notice of such adjustment or adjustments setting forth the effective date(s) 6 WARRANT NO. SERIES A 002 thereof, the number of Warrant Shares and the per share Exercise Price in effect prior to and after such adjustment(s), a brief statement of the facts requiring such adjustment(s) and the computation by which such adjustment(s) was (were) made. 7. MISCELLANEOUS 7.1. The "FAIR MARKET VALUE" of a share of Common Stock as of a particular date (the "DETERMINATION DATE") shall mean the average of the Daily Sales Prices (as defined below) of the Common Stock on the primary securities exchange or market on which it is listed or traded on the last 20 Business Days prior to the Determination Date. The "DAILY SALES PRICE" shall be the closing price for bona fide transactions of the Common Stock at the end of each day or, if no such transaction takes place that day, the average of the closing bid and asked prices for such day. If the Common Stock was, but is no longer listed or traded on a primary securities exchange or market, then the Board of Directors of Motorola, Inc. (or a duly constituted committee thereof) shall determine in good faith the Fair Market Value of the Common Stock on the basis of such quotations, appraisals and/or evaluations as it considers appropriate. As used in this paragraph, a primary securities exchange or market includes national securities exchanges registered under the Securities Exchange Act of 1934, as amended, the Nasdaq Stock Market National Market, and any successor to the foregoing. If the Common Stock is listed or traded on more than one primary securities exchange or market, the Fair Market Value shall be determined on the basis of the exchange or market on which the largest volume of shares of the Common Stock is traded during the period in question. 7.2. BINDING EFFECT; BENEFITS. This Warrant shall inure to the benefit of and shall be binding upon the Company and the Warrantholder and their respective successors and permitted assigns. Nothing in this Warrant, expressed or implied, is intended to or shall confer on any person other than the Company and the Warrantholder or their respective successors or assigns any rights, remedies, obligations or liabilities under or by reason of this Warrant. 7.3. AMENDMENTS. Any provision of this Warrant may be amended and the observance thereof waived only with the written consent of the Company and the Warrantholder. 7.4. SECTION AND OTHER HEADINGS. The section and other headings contained in this Warrant are for reference purposes only and shall not be deemed to be a part of this Warrant or to affect the meaning or interpretation of this Warrant. 7.5. NOTICES. All notices and other communications required or permitted hereunder shall be in writing and shall be delivered personally (including by commercial courier service), telecopied (with machine confirmation and hard copy following by mail or personal delivery) or sent by certified, registered or express mail, postage prepaid. Any such notice shall be deemed given when so delivered personally or when so telecopied, or three days after being sent by certified, registered or express mail, as follows: 7 WARRANT NO. SERIES A 002 - if to the Company to: Next Level Communications, Inc. 6085 State Farm Drive Rohnert Park, CA 94928 Attention: Chief Financial Officer Telecopy No. (707) 584-6859 - or if to the Warrantholder to: Motorola, Inc. 1303 East Algonquin Road Schaumburg, IL 60196 Attention: Treasurer Telecopy No. (847) 576-4768. Any party may by notice given in accordance with this Section designate another address or person for receipt of notices hereunder. 7.6. SEVERABILITY. Any term or provision of this Warrant 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 terms and provisions of this Warrant or affecting the validity or enforceability of any of the terms or provisions of this Warrant in any other jurisdiction. 7.7. GOVERNING LAW; CONSENT TO JURISDICTION. This Warrant shall be deemed to be a contract made under the laws of the State of New York. Each of the Company and the Warrantholder hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Warrant. Each of the Company and the Warrantholder irrevocably waives, to the fullest extent permitted by applicable law, any objection that each may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 7.8. COUNTERPARTS; EXECUTION. This Warrant may be executed, issued, and delivered in counterparts, each of which shall be an original instrument but both of which, taken together, shall be one and the same Warrant. This Warrant may be executed, issued, and delivered by facsimile. 7.9. NO RIGHTS OR LIABILITIES AS STOCKHOLDER. Nothing contained in this Warrant shall be determined as conferring upon the Warrantholder any rights as a stockholder of the Company or as imposing any liabilities on the Warrantholder to purchase any securities whether such liabilities are asserted by the Company or by creditors or stockholders of the Company or otherwise. 8 WARRANT NO. SERIES A 002 IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officer. NEXT LEVEL COMMUNICATIONS, INC. By: _______________________________ Name: _____________________________ (Please print) Title: ______________________________ Dated: February 20, 2002 Acknowledged and Agreed: MOTOROLA, INC. By: ________________________________ Name: ______________________________ (Please print) Title: _____________________________ - -------------------------------------------------------------------------------- THIS WARRANT AND ANY SECURITIES ACQUIRED UPON THE EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. IN ADDITION TO THE OTHER RESTRICTIONS ON TRANSFER SET FORTH HEREIN, NEITHER THIS WARRANT NOR THOSE SECURITIES, NOR ANY INTEREST THEREIN, MAY BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND SUCH LAWS OR AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS THAT, IN THE OPINION OF COUNSEL FOR THE WARRANTHOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO COUNSEL FOR THIS CORPORATION, IS AVAILABLE. - -------------------------------------------------------------------------------- Exhibit A EXERCISE FORM (TO BE EXECUTED UPON EXERCISE OF THE ATTACHED WARRANT) The undersigned Holder hereby exercises the right, represented by this Warrant, to purchase ______________ of the Warrant Shares and herewith tenders payment for such Warrant Shares to the order of Next Level Communications, Inc. in the amount of $________________. The undersigned requests that a certificate for the Warrant Shares resulting from the above exercise be registered in the name of the undersigned and that such certificates be delivered to the undersigned's address below. The undersigned represents that it is acquiring such Warrant Shares for its own account for investment and not with a view to, or for sale in connection with, any distribution thereof (subject, however, to any requirement of law that the disposition thereof shall at all times be within its control). Dated: __________________, 200__ Holder: ____________________________ By: ___________________________________ (Please print) (Signature of Holder if Holder is an individual or of authorized representative if Holder is an entity) ____________________________________ (Street Address of Holder) ___________________________________ (Print signer's name and title if Holder is an entity) ____________________________________ (City) (State) (Zip Code) EX-99.19 12 a2072365zex-99_19.txt AMENDMENT #2 TO REG RIGHTS AGRMNT DATED 12/11/01 AMENDMENT NO. 2 to the REGISTRATION RIGHTS AGREEMENT dated as of May 16, 2001 between NEXT LEVEL COMMUNICATIONS, INC and MOTOROLA, INC This AMENDMENT NO. 2, dated as of December 11, 2001, is entered into in respect of the Registration Rights Agreement dated as of May 16, 2001, as amended by Amendment No. 1 dated as of October 24, 2001 (the "REGISTRATION RIGHTS AGREEMENT") between NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation ("NEXT LEVEL") and MOTOROLA, INC., a Delaware corporation ("MOTOROLA"). WHEREAS, in connection with Amendment No. 4 dated concurrently herewith to the Credit Agreement dated as of May 16, 2001, by and between Next Level and Motorola (the "Credit Agreement"), Next Level has granted to Motorola warrants to purchase Two Million Five Hundred Thousand (2,500,000) shares of Common Stock, par value $0.01 per share, of Next Level (as further defined herein, the "Common Stock") subject to the terms and conditions set forth therein. In connection therewith, Next Level and Motorola hereby agree to amend the Registration Rights Agreement as follows: SECTION 1 DEFINITIONS Except as otherwise provided herein, terms defined in the Registration Rights Agreement are used herein as defined there. SECTION 2 AMENDMENTS 2.1 The second paragraph of the recitals to the Registration Rights Agreement is hereby deleted in its entirety and replaced with the following: WHEREAS, in connection with the Credit Agreement dated as of May 16, 2001, by and between Next Level and Motorola (the "Credit Agreement"), Next Level has granted to Motorola warrants to purchase Seven Million Five Hundred Thousand (7,500,000) shares of Common Stock, par value $0.01 per share, of Next Level (as further defined herein, the "Common Stock") subject to the terms and conditions set forth therein; and WHEREAS, in connection with Motorola's guarantee (the "Motorola Guarantee") of Next Level's obligation to the Northwestern Mutual Life Insurance Company, which obligation was incurred by Next Level in connection with a Twenty Million Dollar ($20,000,000) real estate financing, Next Level has granted to Motorola warrants to purchase an additional Four Hundred Thousand (400,000) shares of the Common Stock, par value $0.01 per share, of Next Level, subject to the terms and conditions set forth therein; and Page 1 of 4 WHEREAS, in connection with Amendment No. 4 dated as of December 11, 2001 to the Credit Agreement dated as of May 16, 2001, by and between Next Level and Motorola (as amended from time to time, the "Credit Agreement"), Next Level has granted to Motorola warrants to purchase Two Million Five Hundred Thousand (2,500,000) shares of Common Stock, par value $0.01 per share, of Next Level, subject to the terms and conditions set forth therein (such warrants, together with the warrants previously issued pursuant to the Credit Agreement, are referred to collectively, as the "Warrants," as such term is further defined below); 2.2 The definition of "COMMON STOCK" in Section 1.1 of the Registration Rights Agreement is hereby amended and restated in its entirety to read as follows: ""COMMON STOCK" means the Common Stock of Next Level or any other class of Next Level stock for which the Convertible Promissory Note or the Warrants become exercisable or convertible, but excluding, in the case of securities issued at the time of the next round of financing as described in the Convertible Promissory Note, any securities other than Common Stock of Next Level." 2.3 There is hereby added to Section 1.1 of the Registration Rights Agreement the following definition in its correct alphabetical order: ""CONVERTIBLE PROMISSORY NOTE" means the Promissory Note dated as of December 11, 2001, representing loans of up to $20,000,000 and containing provisions allowing the conversion of the debt represented thereby into Common Stock or other Next Level securities on the terms contained therein." 2.4 The definition of "HOLDER" in Section 1.1 of the Registration Rights Agreement is hereby amended and restated in its entirety to read as follows: ""HOLDER" means the holder of any Registrable Security or of a Warrant or of the Convertible Promissory Note." 2.5 The first sentence of the definition of "Registrable Securities" in Section 1.1 of the Registration Rights Agreement is hereby amended and restated in its entirety to read as follows: "REGISTRABLE SECURITIES" shall mean, collectively, any shares or other securities issued or issuable upon exercise of the Warrants, conversion of the Convertible Promissory Note, or in exchange for or in respect of any such securities, but excluding, in the case of securities issued at the time of the next round of financing as described in the Convertible Promissory Note, any securities other than Common Stock of Next Level." 2.6 Section 2.1(a)(ii) of the Registration Rights Agreement is hereby amended and restated in its entirety to read as follows: "the Holders may collectively exercise their rights under this Section 2.1 on not more than five (5) occasions." SECTION 3 MISCELLANEOUS Except as expressly herein provided, the Registration Rights Agreement shall remain unchanged and in full force and effect. This Amendment No. 2 may be executed in any number of counterparts, all of which taken together shall constitute one and the same amendatory instrument and any of the parties hereto may execute this Amendment No. 2 by Page 2 of 4 signing any such counterpart. This Amendment No. 2 may be executed and delivered by facsimile. This Amendment No. 2 shall be governed by, and construed in accordance with, the law of the State of New York. Page 3 of 4 IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly executed as of the day and year first above written. NEXT LEVEL COMMUNICATIONS, INC. By:____________________________________________ Name:_____________________________________ Title:____________________________________ MOTOROLA, INC. By:____________________________________________ Name:_____________________________________ Title:____________________________________ Page 4 of 4 EX-99.20 13 a2072365zex-99_20.txt REG RIGHTS AGREEMENT DTD 2/20/02 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement"), dated as of February 20, 2002, is entered into by and between MOTOROLA, INC., a Delaware corporation ("Motorola"), and NEXT LEVEL COMMUNICATIONS, INC., a Delaware corporation ("Next Level"). WHEREAS, in connection with the Securities Purchase Agreement dated as of February 20, 2002, by and between Next Level and Motorola (the "Purchase Agreement"), (i) Next Level has granted to Motorola warrants (the "Warrants") to purchase Six Million Nine Hundred Twelve Thousand Four Hundred Forty Two (6,912,442) shares of Common Stock, par value $0.01 per share, of Next Level, subject to the terms and conditions set forth therein and (ii) Next Level has issued to Motorola 6,912,442 shares of Next Level's Series A Preferred Stock, each of which shares is convertible into two shares of Common Stock, par value $0.01 per share, of Next Level, for a total of 13,824,884 such common shares, subject to the terms and conditions set forth therein; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Motorola and Next Level, for themselves, their successors, and assigns, hereby agree as follows: ARTICLE I DEFINITIONS 1.1 DEFINITIONS. As used in this Agreement, the following terms will have the following meanings, applicable both to the singular and the plural forms of the terms described: "AGREEMENT" has the meaning ascribed thereto in the preamble hereto, as such agreement may be amended and supplemented from time to time in accordance with its terms. "COMMON STOCK" means the Common Stock of Next Level or any other class of Next Level stock for which the Warrants become exercisable or convertible or for which the Series A Preferred Shares become convertible. "HOLDER" means the holder of any Registrable Security or of a Warrant. "NEXT LEVEL ENTITIES" means Next Level and any subsidiaries of Next Level. "PERSON" means any individual, partnership, limited liability company, joint venture, corporation, trust, unincorporated organization, government (and any department or agency thereof) or other entity. "REGISTRABLE SECURITIES" shall mean, collectively, any shares or other securities issued or issuable upon exercise of the Warrants or upon conversion of Series A Preferred Shares or in exchange for or in respect of any such securities. As to any particular Registrable Securities, such Registrable Securities shall cease to be Registrable Securities when (i) a registration statement with respect to the sale by the Holder thereof shall have been declared effective under the Securities Act and such securities shall have been disposed of in accordance with such registration statement, (ii) they shall have been distributed to the public in accordance with Rule 144, (iii) they shall have been otherwise transferred, new certificates for them not bearing a legend restricting further transfer shall have been delivered by Next Level and subsequent disposition of them shall not require registration or qualification of them under the Securities Act or any state securities or blue sky law then in effect or (iv) they shall have ceased to be outstanding. "REGISTRATION EXPENSES" means any and all expenses incident to performance of or compliance with any registration of securities pursuant to this Agreement, including, without limitation, (i) the fees, disbursements and expenses of Next Level's counsel and accountants and the reasonable fees and expenses of counsel selected by the Holders in accordance with this Agreement in connection with the registration of the securities to be disposed of; (ii) all expenses, including filing fees, in connection with the preparation, printing and filing of the registration statement, any preliminary prospectus or final prospectus, any other offering document and amendments and supplements thereto and the mailing and delivering of copies thereof to any underwriters and dealers; (iii) the cost of printing or producing any underwriting agreements and blue sky or legal investment memoranda and any other documents in connection with the offering, sale or delivery of the securities to be disposed of; (iv) all expenses in connection with the qualification of the securities to be disposed of for offering and sale under state securities laws, including the fees and disbursements of counsel for the underwriters or the Holders of securities in connection with such qualification and in connection with any blue sky and legal investment surveys; (v) the filing fees incident to securing any required review by the National Association of Securities Dealers, Inc. of the terms of the sale of the securities to be disposed of; (vi) transfer agents' and registrars', fees and expenses and the fees and expenses of any other agent or trustee appointed in connection with such offering; (vii) all security engraving and security printing expenses; (viii) all fees and expenses payable in connection with the listing of the securities on any securities exchange or automated interdealer quotation system or the rating of such securities; (ix) any other fees and disbursements of underwriters customarily paid by the sellers of securities, but excluding underwriting discounts and commissions and transfer taxes, if any; and (x) other reasonable out-of-pocket expenses of Holders other than legal fees and expenses referred to in clause(s) (i) and/or (iv) above. "RULE 144" means Rule 144 (or any successor rule to similar effect) promulgated under the Securities Act. "RULE 415 OFFERING" means an offering on a delayed or continuous basis pursuant to Rule 415 (or any successor rule to similar effect) promulgated under the Securities Act. "SEC" means the United States Securities and Exchange Commission. "SECURITIES ACT" means the Securities Act of 1933, as amended, or any successor statute. "SERIES A PREFERRED SHARES" means the Series A Preferred shares issued by Next Level to Motorola pursuant to the Purchase Agreement and any shares issued in substitution for, or replacement or, such shares. "WARRANT" means any of those certain warrants granted by Next Level to Motorola pursuant to the Purchase Agreement and any warrants issued in substitution for, or replacement or, such warrants. 2 1.2 INTERNAL REFERENCES. Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Agreement and references to the parties shall mean the parties to this Agreement. ARTICLE II REGISTRATION RIGHTS 2.1 DEMAND REGISTRATION - REGISTRABLE SECURITIES. (a) Upon written notice provided at any time from a majority in interest of the Holders, requesting that Next Level effect the registration under the Securities Act of any or all of the Registrable Securities held by such Holders, which notices shall specify the intended method or methods of disposition of such Registrable Securities, Next Level shall use its best efforts to effect the registration under the Securities Act and applicable state securities laws of such Registrable Securities for disposition in accordance with the intended method or methods of disposition stated in such request (including in a Rule 415 Offering, if Next Level is then eligible to register such Registrable Securities on Form S-3 (or a successor form) for such offering); provided that, (i) with respect to any registration statement filed, or to be filed, pursuant to this Section 2.1, if Next Level shall furnish to the Holders that have made such request a certified resolution of the Board of Directors of Next Level stating that in the Board of Directors' good faith judgment it would (because of the existence of, or in anticipation of, any acquisition or financing activity, or the unavailability for reasons beyond Next Level's reasonable control of any required financial statements, or any other event or condition of similar significance to Next Level) be seriously disadvantageous (a "Disadvantageous Condition") to Next Level for such a registration statement to be maintained effective, or to be filed and become effective, and setting forth the general reasons for such judgment, Next Level shall be entitled to cause such registration statement to be withdrawn and the effectiveness of such registration statement terminated, or, in the event no registration statement has yet been filed, shall be entitled not to file any such registration statement, until such Disadvantageous Condition no longer exists (notice of which Next Level shall promptly deliver to such Holders). Upon receipt of any such notice of a Disadvantageous Condition, such Holders shall forthwith discontinue use of the prospectus contained in such registration statement and, if so directed by Next Level, each such Holder will deliver to Next Level all copies, other than permanent file copies then in such Holder's possession, of the prospectus then covering such Registrable Securities current at the time of receipt of such notice; provided, that the filing of any such registration statement may not be delayed for a period in excess of 60 days in any calendar year due to the occurrence of one or more Disadvantageous Conditions; (ii) the Holders may collectively exercise their rights under this Section 2.1 and under Section 2.1 of the Registration Rights Agreement by and between Motorola and Next Level dated as of May 16, 2001, as amended (the "Existing Registration Rights Agreement"), on not more than four (4) occasions; 3 (iii) except as otherwise provided in Section 2.2 or elsewhere in this Agreement, the Holders shall not have the right to exercise registration rights pursuant to this Section 2.1 within the 180-day period following the date hereof or following the registration and sale of Registrable Securities effected pursuant to a prior exercise of the registration rights provided in this Section 2.1. (b) Notwithstanding any other provision of this Agreement to the contrary, a registration requested by a Holder pursuant to this Section 2.1 shall not be deemed to have been effected (and, therefore, not requested for purposes of paragraph (a) above), (i) if it shall not have become effective, (ii) if after it has become effective such registration is interfered with by any stop order, injunction or other order or requirement of the SEC or other governmental agency or court for any reason other than a misrepresentation or an omission by a Holder or ceases to be maintained effective due to a Disadvantageous Condition and, as a result thereof, the Registrable Securities requested to be registered cannot be completely distributed in accordance with the plan of distribution set forth in the related registration statement or (iii) if the conditions to closing specified in the purchase agreement or underwriting agreement entered into in connection with such registration are not satisfied or waived other than by reason of some act or omission by a Holder within its control. (c) In the event that any registration pursuant to this Section 2.1 shall involve, in whole or in part, an underwritten offering, the Holders of a majority of the Registrable Securities to be registered pursuant to this Section 2.1 shall have the right to designate an underwriter or underwriters reasonably acceptable to Next Level as the lead or managing underwriters of such underwritten offering and, in connection with each registration pursuant to this Section 2.1, such Holders may select one counsel reasonably acceptable to Next Level to represent all such Holders. (d) Next Level shall have the right to cause the registration of additional equity securities for sale for its account or any existing or former directors, officers or employees of the Next Level Entities in any registration of Registrable Securities requested for the benefit of the Holders pursuant to paragraph (a) above; provided, however, that, if such Holders are advised in writing (with a copy to Next Level) by a nationally recognized investment banking firm selected by such Holders reasonably acceptable to Next Level (which shall be the lead underwriter or a managing underwriter in the case of an underwritten offering) that, in such firm's good faith view, the inclusion of such additional equity securities in such registration would be likely to have an adverse effect on the price, timing or distribution of the offering and sale of the Registrable Securities then contemplated by such Holders, the registration of such additional equity securities or part thereof shall not be permitted. The Holders of the Registrable Securities to be registered pursuant to this Section 2.1 may require that any such additional equity securities be included in the offering proposed by such Holders on the same conditions as the Registrable Securities that are included therein. In the event that the number of Registrable Securities requested to be included in such registration by such Holders exceeds the number which, in the good faith view (delivered in writing) of such investment banking firm, can be sold without adversely affecting the price, timing, distribution or sale of securities in the offering, the number shall be allocated pro rata among the requesting Holders on the basis of the relative number of Registrable Securities then held by each such Holder (including Registrable Securities such Holder may acquire on exercise of such Holder's Warrant(s)), PROVIDED THAT any number in 4 excess of a Holder's request may be reallocated among the remaining requesting Holders in a like manner. 2.2 PIGGYBACK REGISTRATION. In the event that Next Level at any time after the date hereof proposes to register any Common Stock or any securities convertible into or exchangeable for Common Stock under the Securities Act, whether or not for sale for its own account and including pursuant to Section 2.1 (such stock or securities, "Other Securities"), in a manner that would permit registration of Registrable Securities for sale for cash to the public under the Securities Act, it shall at each such time give prompt written notice to each of the Holders of its intention to do so and of the rights of such Holders under this Section 2.2. Subject to the terms and conditions hereof, such notice shall offer each such Holder the opportunity to include in such registration statement such number of the Registrable Securities of such Holder as such Holder may request. Upon the written request of any such Holder made within 15 days after the receipt of Next Level's notice (which request shall specify the number of Registrable Securities intended to be disposed of and the intended method of disposition thereof), Next Level shall use its best efforts to effect, in connection with the registration of the Other Securities, the registration under the Securities Act of all Registrable Securities which Next Level has been so requested to register, to the extent required to permit the disposition (in accordance with such intended method of disposition thereof) of the Registrable Securities so requested to be registered; provided, that: (a) if, at any time after giving such written notice of its intention to register any Other Securities and prior to the effective date of the registration statement filed in connection with such registration, Next Level shall determine for any reason not to register the Other Securities, Next Level may, at its election, give written notice of such determination to such Holders and thereupon Next Level shall be relieved of its obligation to register such Registrable Securities in connection with the registration of such Other Securities, without prejudice, however, to the rights of the Holders immediately to request that such registration be effected as a registration under Section 2.1 to the extent permitted thereunder; (b) if a nationally recognized investment banking firm selected by Next Level advises Next Level in writing that, in such firm's good faith view, all or a part of such Registrable Securities cannot be sold and the inclusion of all or a part of such Registrable Securities in such registration would be likely to have an adverse effect upon the price, timing or distribution of the offering and sale of the Other Securities then contemplated, Next Level shall include in such registration: (i) first, the Other Securities being sold for its own account or the Other Securities which are Registrable Securities included pursuant to Section 2.1 and/or any Other Securities being registered pursuant to any demand registration rights held by Persons other than Next Level and the Holders and (ii) second, up to the full number of Registrable Securities requested to be included pursuant to this Section 2.2 and the remaining Other Securities that are requested to be included in such registration in excess of the number of securities referred to in clause (i) which, in the good faith view of such investment banking firm, can be sold without adversely affecting such offering, such full number to be allocated pro rata among the holders of the securities referred to in this clause (ii) based on the relative number of securities requested to be included by each such holder (provided further that, in the event that such investment banking firm advises in writing that less than all of such Registrable Securities may be included in such offering, one or more of such Holders may withdraw their request for registration of their Registrable Securities under this Section 2.2 and ninety (90) days subsequent 5 to the effective date of the registration statement for the registration of such Other Securities request that such registration be effected as a registration under Section 2.1 to the extent permitted thereunder); (c) Next Level shall not be required to effect any registration of Registrable Securities under this Section 2.2 incidental to the registration of any of its securities in connection with mergers, acquisitions, exchange offers, subscription offers, dividend reinvestment plans or stock option or other executive or employee benefit or compensation plans; and (d) no registration of Registrable Securities effected under this Section 2.2 shall relieve Next Level of its obligation to effect a registration of Registrable Securities pursuant to Section 2.1. 2.3 EXPENSES. Next Level shall pay all Registration Expenses with respect to a particular offering (or proposed offering). Notwithstanding the foregoing, each of the Holders and Next Level shall be responsible for its own internal administrative and similar costs, which shall not constitute Registration Expenses. 2.4 REGISTRATION AND QUALIFICATION. If and whenever Next Level is required to effect the registration of any Registrable Securities under the Securities Act as provided in Sections 2.1 or 2.2, Next Level shall as promptly as practicable: (a) prepare, file and use its best efforts to cause to become effective a registration statement under the Securities Act relating to the Registrable Securities to be offered; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities until the earlier of (A) such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition set forth in such registration statement and (B) the expiration of three months after such registration statement becomes effective; provided, that such three-month period shall be extended for such number of days that equals the number of days elapsing from (x) the date the written notice contemplated by paragraph (f) below is given by Next Level to (y) the date on which Next Level delivers to the Holders of Registrable Securities the supplement or amendment contemplated by paragraph (f) below; (c) furnish to the Holders of Registrable Securities and to any underwriter of such Registrable Securities such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, such documents incorporated by reference in such registration statement or prospectus, and such other documents, as the Holders of Registrable Securities or such underwriter may reasonably request, and upon request a copy of any and all transmittal letters or other correspondence to or received from, the SEC or any other governmental agency or self- 6 regulatory body or other body having jurisdiction (including any domestic or foreign securities exchange) relating to such offering; (d) use its best efforts to register or qualify all Registrable Securities covered by such registration statement under the securities or blue sky laws of such U.S. jurisdictions as the Holders of such Registrable Securities or any underwriter to such Registrable Securities shall reasonably request, and use its reasonable best efforts to obtain all appropriate registrations, permits and consents in connection therewith, and do any and all other acts and things which may be necessary or advisable to enable the Holders of Registrable Securities or any such underwriter to consummate the disposition in such jurisdictions of its Registrable Securities covered by such registration statement; provided, that Next Level shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any such jurisdiction wherein it is not so qualified or to consent to general service of process in any such jurisdiction; (e) use commercially reasonable efforts (i) to furnish to each of the Holders of Registrable Securities included in such registration (each, a "Selling Holder") and to any underwriter of such Registrable Securities an opinion of counsel for Next Level addressed to each Selling Holder and dated the date of the closing under the underwriting agreement (if any) (or if such offering is not underwritten, dated the effective date of the registration statement) and (ii) to furnish to each Selling Holder a "cold comfort" letter addressed to each Selling Holder and signed by the independent public accountants who have audited the financial statements of Next Level included in such registration statement, in each such case covering substantially the same matters with respect to such registration statement (and the prospectus included therein) as are customarily covered in opinions of issuer's counsel and in accountants' letters delivered to underwriters in underwritten public offerings of securities and such other matters as the Selling Holders may reasonably request and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements; (f) as promptly as practicable, notify the Selling Holders in writing (i) at any time when a prospectus relating to a registration pursuant to Sections 2.1 or 2.2 is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and (ii) of any request by the SEC or any other regulatory body or other body having jurisdiction for any amendment of or supplement to any registration statement or other document relating to such offering, and in either such case, at the request of the Selling Holders prepare and furnish to the Selling Holders a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, 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 light of the circumstances under which they are made, not misleading; (g) if requested by the lead or managing underwriters, use its best efforts to list all such Registrable Securities covered by such registration on each securities exchange and 7 automated inter-dealer quotation system on which common equity securities of Next Level are then listed; (h) to the extent reasonably requested by the lead or managing underwriters, send appropriate officers of Next Level to attend and participate in any "road shows" scheduled in connection with any such registration, with all out-of-pocket costs and expense incurred by Next Level or such officers in connection with such attendance to be paid by Next Level; and (i) furnish for delivery in connection with the closing of any offering of Registrable Securities pursuant to a registration effected pursuant to Sections 2.1 or 2.2 unlegended certificates representing ownership of the Registrable Securities being sold in such denominations as shall be requested by the Selling Holders or the underwriters. 2.5 UNDERWRITING; DUE DILIGENCE. (a) If requested by the underwriters for any underwritten offering of Registrable Securities pursuant to a registration requested under this Agreement, Next Level shall enter into an underwriting agreement with such underwriters for such offering, which agreement will contain such representations and warranties by Next Level and such other terms and provisions as are customarily contained in underwriting agreements of Next Level to the extent relevant and as are customarily contained in underwriting agreements generally with respect to secondary distributions to the extent relevant, including, without limitation, indemnification and contribution provisions substantially to the effect and to the extent provided in Section 2.6, and agreements as to the provision of opinions of counsel and accountants' letters to the effect and to the extent provided in Section 2.4(e). The Selling Holders on whose behalf the Registrable Securities are to be distributed by such underwriters shall be parties to any such underwriting agreement and the representations and warranties by, and the other agreements on the part of, Next Level to and for the benefit of such underwriters, shall also be made to and for the benefit of such Selling Holders. Such underwriting agreement shall also contain such representations and warranties by such Selling Holders and such other terms and provisions as are customarily contained in underwriting agreements with respect to secondary distributions, when relevant, including, without limitation, indemnification and contribution provisions substantially to the effect and to the extent provided in Section 2.6. (b) In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act pursuant to this Agreement, Next Level shall give the Holders of such Registrable Securities and the underwriters, if any, and their respective counsel and accountants, such reasonable and customary access to its books and records and such opportunities to discuss the business of Next Level with its officers and the independent public accountants who have certified the financial statements of Next Level as shall be necessary, in the opinion of such Holders and such underwriters or their respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act. 2.6 INDEMNIFICATION AND CONTRIBUTION. (a) In the case of each offering of Registrable Securities made pursuant to this Agreement, Next Level agrees to indemnify and hold harmless, to the extent permitted by law, each of the Selling Holders, each underwriter of Registrable Securities so offered and each 8 Person, if any, who controls any of the foregoing Persons within the meaning of the Securities Act and the officers, directors, affiliates, employees and agents of each of the foregoing, against any and all losses, liabilities, costs (including reasonable attorney's fees and disbursements and reasonable costs of investigation and preparation), claims and damages, joint or several, to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, insofar as such losses, liabilities, costs, claims and damages (or actions or proceedings in respect thereof, whether or not such indemnified Person is a party thereto) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or in any offering memorandum or other offering document relating to the offering and sale of such Registrable Securities, or any amendment thereof or supplement thereto, or in any document incorporated by reference therein, or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however that Next Level shall not be liable to any Person in any such case to the extent that any such loss, liability, cost, claim or damage arises out of or relates to any untrue statement or alleged untrue statement, or any omission, if such statement or omission shall have been made in reliance upon and in conformity with information relating to a Selling Holder, another holder of securities included in such registration statement or underwriter furnished in writing to Next Level by or on behalf of such Selling Holder, other holder or underwriter specifically for use in the registration statement (or in any preliminary or final prospectus included therein), offering memorandum or other offering document, or any amendment thereof or supplement thereto. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of any Selling Holder, any other holder or any underwriter and shall survive the transfer of such securities. The foregoing indemnity agreement is in addition to any liability that Next Level may otherwise have to each Selling Holder, other holder or underwriter of the Registrable Securities or any controlling person of the foregoing and the officers, directors, affiliates, employees and agents of each of the foregoing; provided, further, that, in the case of an offering with respect to which a Selling Holder has designated the lead or managing underwriters (or a Selling Holder is offering Registrable Securities directly, without an underwriter), this indemnity does not apply to any loss, liability, cost, claim or damage arising out of or relating to any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus or offering memorandum if a copy of a final prospectus or offering memorandum was available on a timely basis and not sent or given by or on behalf of any underwriter (or such Selling Holder or other holder, as the case may be) to such Person asserting such loss, liability, cost, claim or damage at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act and such untrue statement or omission had been corrected in such final prospectus or offering memorandum. (b) In the case of each offering made pursuant to this Agreement, each Selling Holder, by exercising its registration rights hereunder, agrees to indemnify and hold harmless, and to use reasonable best efforts to cause each underwriter of Registrable Securities included in such offering (in the same manner and to the same extent as set forth in Section 2.6(a)) to agree to indemnify and hold harmless, Next Level, each other underwriter who participates in such offering, each other Selling Holder or other holder with securities included in such offering and in the case of an underwriter, such Selling Holder or other holder, and each Person, if any, who controls any of the foregoing within the meaning of the Securities Act and the officers, directors, affiliates, employees and agents of each of the foregoing, against any and 9 all losses, liabilities, costs (including reasonable attorney's fees and disbursements and reasonable costs of investigation and preparation), claims and damages to which they or any of them may become subject, under the Securities Act or otherwise, including any amount paid in settlement of any litigation commenced or threatened, insofar as such losses, liabilities, costs, claims and damages (or actions or proceedings in respect thereof, whether or not such indemnified Person is a party thereto) arise out of or are based upon any untrue statement or alleged untrue statement by such Selling Holder or underwriter, as the case may be, of a material fact contained in the registration statement (or in any preliminary or final prospectus included therein) or in any offering memorandum or other offering document relating to the offering and sale of such Registrable Securities prepared by Next Level or at its direction, or any amendment thereof or supplement thereto, or any omission by such Selling Holder or underwriter, as the case may be, or alleged omission by such Selling Holder or underwriter, as the case may be, of a material fact required to be stated therein or necessary to make the statements therein not misleading, but in each case only to the extent that such untrue statement of a material fact is contained in, or such material fact is omitted from such registration statement or prospectus in reliance on and in conformity with information relating to such Selling Holder or underwriter, as the case may be, furnished in writing to Next Level by or on behalf of such Selling Holder or underwriter, as the case may be, specifically for use in such registration statement (or in any preliminary or final prospectus included therein), offering memorandum or other offering document, or any amendment thereof or supplement thereto. The foregoing indemnity is in addition to any liability which such Selling Holder or underwriter, as the case may be, may otherwise have to Next Level, or controlling persons and the officers, directors, affiliates, employees, and agents of each of the foregoing; provided, however, that, in the case of an offering made pursuant to this Agreement with respect to which Next Level has designated the lead or managing underwriters (or Next Level is offering securities directly, without an underwriter), this indemnity does not apply to any loss, liability, cost, claim, or damage arising out of or based upon any untrue statement or alleged untrue statement or omission or alleged omission in any preliminary prospectus or offering memorandum if a copy of a final prospectus or offering memorandum was not sent or given by or on behalf of any underwriter (or Next Level, as the case may be) to such Person asserting such loss, liability, cost, claim or damage at or prior to the written confirmation of the sale of the Registrable Securities as required by the Securities Act and such untrue statement or omission had been corrected in such final prospectus or offering memorandum. (c) Each party indemnified under paragraph (a) or (b) above shall, promptly after receipt of notice of a claim or action against such indemnified party in respect of which indemnity may be sought hereunder, notify the indemnifying party in writing of the claim or action; provided, that the failure to notify the indemnifying party shall not relieve it from any liability that it may have to an indemnified party on account of the indemnity agreement contained in paragraph (a) or (b) above except to the extent that the indemnifying party is prejudiced thereby. If any such claim or action shall be brought against an indemnified party, and it shall have notified the indemnifying party thereof, unless in such indemnified party's reasonable judgment a conflict of interest between such indemnified party and indemnifying parties may exist in respect of such claim, the indemnifying party shall be entitled to participate therein, and, to the extent that it wishes, jointly with any other similarly notified indemnifying party, to assume the defense thereof with counsel reasonably satisfactory to the indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party); provided that, if an indemnified party and an indemnifying party shall have 10 conflicting claims or defenses, the indemnifying party shall not have control of such conflicting claims or defenses and the indemnified party shall be entitled to appoint separate counsel for such claims and defenses at the cost and expense of the indemnifying party. After notice from the indemnifying party to the indemnified party of its election to assume the defense of such claim or action, the indemnifying party shall not be liable to the indemnified party under this Section 2.6 for any legal or other expenses subsequently incurred by the indemnified party in connection with the defense thereof other than reasonable costs of investigation. If the indemnifying party does not assume the defense of such claim or action, it is understood that the indemnifying party shall not, in connection with any one such claim or action or separate but substantially similar or related claims or actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the fees and expenses of more than one separate firm of attorneys (in addition to one separate firm of local attorneys in each such jurisdiction) at any time for all such indemnified parties. No indemnifying party shall (i) without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding, or (ii) be liable for any settlement of any such action effected without its written consent, but if settled with its written consent or if there be a final judgment of the plaintiff in any such action, the indemnifying party agrees to indemnify and hold harmless any indemnified party from and against any loss of liability by reason of such settlement or judgment. (d) If the indemnification provided for in this Section 2.6 shall for any reason be unavailable (other than in accordance with its terms) to an indemnified party in respect of any loss, liability, cost, claim or damage referred to therein, then each indemnifying party shall, in lieu of indemnifying such indemnified party, contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, cost, claim or damage in such proportion as shall be appropriate to reflect the relative fault of the indemnifying party on the one hand and the indemnified party on the other with respect to the statements or omissions which resulted in such loss, liability, cost, claim or damage as well as any other relevant equitable considerations. The relative fault shall be determined by reference to whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the indemnifying party on the one hand or the indemnified party on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission, but not by reference to any indemnified party's stock ownership in Next Level. The amount paid or payable by an indemnified party as a result of the loss, cost, claim, damage or liability, or action in respect thereof, referred to above in this paragraph (d) shall be deemed to include, for purposes of this paragraph (d), 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. (e) Indemnification and contribution similar to that specified in the preceding paragraphs of this Section 2.6 (with appropriate modifications) shall be given by Next 11 Level, the Selling Holders and underwriters with respect to any required registration or other qualification of securities under any state law or regulation or governmental authority. (f) The obligations of the parties under this Section 2.6 shall be in addition to any liability that any party may otherwise have to any other party. 2.7 RULE 144 AND FORM S-3. Commencing 90 days after the date hereof, Next Level shall use its best efforts to ensure that the conditions to the availability of Rule 144 set forth in paragraph (c) thereof shall be satisfied. Upon the request of any Holder of Registrable Securities, Next Level will deliver to such Holder a written statement as to whether it has complied with such requirements. Next Level further agrees to use its reasonable efforts to cause all conditions to the availability of Form S-3 (or any successor form) under the Securities Act of the filing of registration statements under this Agreement to be met as soon as practicable after the date hereof. 2.8 TRANSFER OF REGISTRATION RIGHTS. Any Holder may transfer all or any portion of its rights under this Agreement to any transferee of Registrable Securities owned by such Holder. Any transfer of registration rights pursuant to this Section 2.8 shall be effective upon receipt by Next Level of (i) written notice from such Holder stating the name and address of any transferee and identifying the number of Registrable Securities with respect to which the rights under this Agreement are being transferred and the nature of the rights so transferred and (ii) a written agreement from such transferee to be bound by the terms of this Agreement. The Holders may exercise their rights hereunder in such priority as they shall agree upon among themselves. 2.9 HOLDBACK AGREEMENT. If Next Level effects any registration of equity securities of Next Level or any securities convertible into or exchangeable or exercisable for any equity securities of Next Level pursuant to this Agreement or otherwise in which 20% or more of the securities registered thereby are Registrable Securities, each Holder agrees not to effect any public sale or distribution, including any sale under Rule 144, of any equity security of Next Level or any security convertible into or exchangeable or exercisable for any equity security of Next Level (otherwise than through the registered public offering then being made) within 7 days prior to or 90 days (or such lesser period as the lead or managing underwriters may permit) after the effective date of the registration statement (or the commencement of the offering to the public of such Registrable Securities in the case of Rule 415 offerings). Next Level hereby also so agrees; provided, that, subject to Section 2.5(a) hereof, Next Level shall not be so restricted from effecting any public sale or distribution of any security in connection with any merger, acquisition, exchange offer, subscription offer, dividend reinvestment plan or stock option or other executive or employee benefit or compensation plan. ARTICLE III MISCELLANEOUS 3.1 ASSISTANCE IN DISPOSITION OF SHARES. Regardless of whether one or more Holders or other parties shall have requested registration of Common Stock hereunder, but subject to any market stand-off, hold-back, or similar provisions that may apply, one or more Holders of Registrable Securities may at any time request that Next Level assist such Holder(s) in the sale of such securities on favorable terms. In such an event, Next Level shall use its 12 commercially reasonable best efforts to assist such Holder (or such Holders, on an equitable basis) in identifying opportunities and making arrangements for a private placement, block trade, or other sale, transfer, or exchange of such securities on reasonable and favorable terms consistent with all applicable securities laws and regulations. 3.2 LIMITATION OF LIABILITY. No party hereto shall be liable hereunder for any special, indirect, incidental or consequential damages of the other arising in connection with this Agreement. 3.3 AMENDMENTS. This Agreement may not be amended or terminated orally, but only by a writing duly executed by or on behalf of each of the parties hereto, or their respective permitted transferees or assignees. Any such amendment shall be validly and sufficiently authorized for purposes of this Agreement if it is signed on behalf of the parties hereto by any of their respective presidents or vice presidents. 3.4 TERM. This Agreement shall remain in effect until no Registrable Securities remain outstanding; provided, that the provisions of Sections 2.6, 2.7 and 3.2 shall survive any such expiration. 3.5 SEVERABILITY. If any provision of this Agreement or the application of any such provision to any party or circumstances shall be determined by any court of competent jurisdiction to be invalid, illegal or unenforceable to any extent, the remainder of this Agreement or such provision or the application of such provision to such party or circumstances, other than those to which it is so determined to be invalid, illegal or unenforceable, shall remain in full force and effect to the fullest extent permitted by law and shall not be affected thereby, unless such a construction would be unreasonable. 3.6 NOTICES. All notices and other communications required or permitted hereunder shall be in writing, shall be deemed duly given upon actual receipt, and shall be delivered (a) in person (including by commercial courier service), (b) by registered or certified mail, postage prepaid, or (c) by facsimile or other generally accepted means of electronic transmission (provided that a copy of any notice delivered pursuant to this clause (c) shall also be sent pursuant to clause (b)), addressed as follows: (a) if to Next Level, to: Next Level Communications, Inc. 6085 State Farm Drive Rohnert Park, CA 94928 Attention: Chief Financial Officer Telecopy No. (707) 584-6859 (b) If to Motorola, to: Motorola, Inc. 1303 East Algonquin Road Schaumburg, IL 60196 Attention: Treasurer Telecopy No. (847) 576-4768. 13 or to such other addresses or telecopy numbers as may be specified by like notice to the other parties. 3.7 FURTHER ASSURANCES. The parties hereto shall execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such instruments and take such other action as may be necessary or advisable to carry out their obligations under this Agreement and under any exhibit, document or other instrument delivered pursuant hereto. 3.8 COUNTERPARTS; EXECUTION. This Agreement may be executed and delivered in counterparts, each of which shall be deemed an original instrument, but all of which together shall constitute but one and the same agreement. This Agreement may be executed and delivered by facsimile. 3.9 GOVERNING LAW; CONSENT TO JURISDICTION. This Agreement and the transactions contemplated hereby shall be construed in accordance with, and governed by, the laws of the State of New York. Each of Next Level and Motorola hereby submits to the nonexclusive jurisdiction of the United States District Court for the Southern District of New York and of any New York state court sitting in New York City for the purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby. Each of Next Level and Motorola irrevocably waives, to the fullest extent permitted by applicable law, any objection that each may now or hereafter have to the laying of the venue of any such proceeding brought in such a court and any claim that any such proceeding brought in such a court has been brought in an inconvenient forum. 3.10 ENTIRE AGREEMENT. This Agreement constitutes the entire understanding of the parties hereto with respect to the subject matter hereof. 3.11 TRANSFERS AND ASSIGNMENTS. This Agreement shall be binding upon, and shall inure to the benefit of, the parties hereto and their respective successors and permitted assigns (including transferees). Nothing contained in this Agreement, express or implied, is intended to confer upon any other person or entity any benefits, rights or remedies. 3.12 SPECIFIC PERFORMANCE. The parties hereto acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. Accordingly, it is agreed that they shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of competent jurisdiction in the United States or any state thereof, in addition to any other remedy to which they may be entitled at law or equity. 14 IN WITNESS WHEREOF, the parties hereto have executed this Agreement the day and year first above written. NEXT LEVEL COMMUNICATIONS, INC. By: ____________________________ Name: __________________________ Title: _________________________ MOTOROLA, INC. By: ____________________________ Name: __________________________ Title: _________________________
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