EXHIBIT 10.2
EARNOUT SHARE AGREEMENT
between
NORTEL NETWORKS LLC
and
ANTEC CORPORATION
dated as of March 31, 1999
2
EARNOUT SHARE AGREEMENT (the "Agreement"), dated as of March 31, 1999, made by and between Nortel Networks LLC ("Nortel") and Antec Corporation ("Antec").
W I T N E S S E T H:
WHEREAS, this Agreement is being entered into as part of a series of transactions between Nortel, Antec and Arris Interactive L.L.C. ("Arris") which include, among other events, the execution of an Asset Sale and Contribution Agreement between Nortel, on the one hand, and Arris, on the other, pursuant to which Nortel contributed certain assets obtained by Nortel from Bay Network, Inc.'s Broadband Technology Division to Arris in return for an increased membership interest in Arris;
WHEREAS, as part of such transaction, Nortel and Antec have entered into the Amended and Restated Limited Liability Company Agreement of Arris (the "LLC Agreement"), pursuant to which Nortel's interest in Arris will be adjusted upon the achievement by Arris of certain performance goals and Nortel shall have the right to require Antec to purchase such incremental increase in exchange for shares of Antec Common Stock as described in this Agreement; and
NOW, THEREFORE, in consideration of the mutual promises of the parties hereto, and of good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by and between the parties hereto as follows:
1. CERTAIN DEFINITIONS
Capitalized terms used in this Agreement are used as defined in this Section 1 or elsewhere in this Agreement. Terms not otherwise defined are used herein as defined in the LLC Agreement. As used herein:
"Agreement" has the meaning specified in the first paragraph hereof.
"Antec" means Antec Corporation, a
Delaware corporation.
"Arris" has the meaning specified in the recitals hereto.
"Commission" means the United States Securities and Exchange Commission, or any other Federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $0.01 par value per share, of Antec.
"Earnout Revenue" is defined in the LLC Agreement.
"Effective Date" shall mean the date of this Agreement.
1 3
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or any similar Federal statute, and the rules and regulations of the Commission issued under such Act, as they each may, from time to time, be in effect.
"Exercise Notice" has the meaning specified in Section 2.a below.
"LLC Agreement" has the meaning set forth in the recitals hereto.
"Nortel" has the meaning specified in the first paragraph hereof.
"Registration Statement" means a registration statement filed by Antec with the Commission for a public offering and sale of Common Stock (other than a registration statement on Form S-8 or Form S-4, or their successors, or any other form for a similar limited purpose, or any registration statement covering only securities proposed to be issued in exchange for securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 9.E.
"Securities Act" means the Securities Act of 1933, as amended, or any similar Federal statute, and the rules and regulations of the Commission issued under such Act, as they each may, from time to time, be in effect.
"Share Amount" means 2,747,252 shares of Common Stock, as adjusted pursuant to Section 5 below.
"Shares" means the shares of Antec Common Stock purchasable by Nortel hereunder.
2. SHARE PURCHASE
a. Upon Nortel's written election to receive shares hereunder (the "Exercise Notice") given in accordance with Section 2.05(g) of the LLC Agreement, Antec shall issue and sell to Nortel, and Nortel shall purchase from Antec, the Shares in consideration of the incremental membership interest in Arris described in Section 2.05(g) of the LLC Agreement (the "Incremental Interest"). Each party hereto acknowledges and agrees that, at the time of such purchase, the Incremental Interest shall have a value of not less than the aggregate par value of the Shares.
b. The number of Shares shall be calculated as follows:
(i) If the Earnout Revenue is equal to or greater than US $300,000,000, the number of Shares shall be the Share Amount.
(ii) If the Earnout Revenue is equal to or greater than US $180,000,000 but lower than US $300,000,000, the number of Shares shall equal
Share Amount x (Earnout Revenue - $180,000,000)/$120,000,000
2 4
(iii) If the Earnout Revenue is less than $180,000,000, then the number of Shares shall be zero.
3. CLOSING.
a. The closing of the issuance of Shares under this Agreement shall take place on the date specified by Nortel in its exercise notice, which shall be no later than thirty (30) days following such Exercise Notice (the "Closing Date"), at the offices of Hale and Dorr LLP, 60 State Street, Boston, MA 02109, or at such other time and place as the parties may agree. On the Closing Date, Antec will deliver to Nortel a certificate or certificates in the name of Nortel (or its designee(s)) representing the Shares in the denominations designated by Nortel, and Nortel will purchase such Shares from Antec by delivering to Antec an instrument of assignment for the Incremental Interest in the form reasonably satisfactory to each of Nortel and Antec.
b. Upon the delivery by Nortel to Antec of the Exercise Notice and the instrument of assignment for the Incremental Interest as set forth in Section 3.a above, Nortel shall be deemed to be the holder of record of the Shares, notwithstanding that the stock transfer books of Antec shall then be closed or that certificates representing such Shares shall not then be actually delivered to Nortel. Antec shall pay all expenses that may be payable in connection with the preparation, issuance and delivery of stock certificates in the name of Nortel.
4. TERMINATION.
This Agreement, and all rights and obligations of the parties hereunder, shall immediately terminate and be of no further force or effect on the earliest to occur of:
a. Nortel's failure to exercise its right under Section 2.05(g) of the LLC Agreement to require Antec to purchase the Incremental Interest as set forth herein;
b. A determination (made in accordance with Section 2.05(g) of the LLC Agreement) that the Earnout Revenue is less than $180,000,000; and
c. The tenth anniversary of the issuance of the Shares.
3 5
5. ADJUSTMENTS.
(a) Adjustment for Stock Splits and Combinations. If Antec shall at any time or from time to time after the Effective Date effect a subdivision of the outstanding Common Stock, the Share Amount then in effect immediately before that subdivision shall be proportionately increased. If Antec shall at any time or from time to time after the Effective Date combine the outstanding shares of Common Stock, the Share Amount then in effect immediately before the combination shall be proportionately decreased. Any adjustment under this paragraph shall become effective at the close of business on the date the subdivision or combination becomes effective.
(b) Adjustment for Certain Dividends and Distributions. In the event Antec at any time, or from time to time after the Effective Date shall make or issue, or fix a record date for the determination of holders of Common Stock entitled to receive, a dividend or other distribution payable in additional shares of Common Stock (or securities convertible into or exchangeable for shares of Common Stock), then and in each such event the Share Amount then in effect immediately before such event shall be increased as of the time of such issuance or, in the event such a record date shall have been fixed, as of the close of business on such record date, by multiplying the Share Amount then in effect by the number of shares of Common Stock (or the amount of such other securities) issuable in payment of such dividend or other distribution per each share of Common Stock; provided, however, if such record date shall have been fixed and such dividend is not fully paid or if such distribution is not fully made on the date fixed therefor, the Share Amount shall be recomputed accordingly as of the close of business on such record date and thereafter the Share Amount shall be adjusted pursuant to this paragraph as of the time of actual payment of such dividend or distributions.
(c) Adjustments for Changes and Distributions. The Share Amount shall be appropriately adjusted to reflect any of the following changes in the Common Stock for distributions to all holders of the Common Stock on a proportional basis based on a record date between the Effective Date and the issuance of the Shares:
(1) To the extent not adjusted therefor by operation of
Sections 5(a) and (b) hereof, any dividend of cash or property (other
than shares of Common Stock of Antec) which is not intended to be
periodically repeated for the indefinite future, or
(2) the right to buy securities or any asset for less than
fair market value.
(d) Adjustment for Merger or Reorganization, etc. If there shall occur any reorganization, recapitalization, consolidation or merger involving Antec in which the Common Stock is converted into or exchanged for securities, cash or other property (other than a transaction covered by paragraphs (a), (b) or (c) of this Section 5), then, following any such reorganization, recapitalization, consolidation or merger, Nortel shall be entitled to receive hereunder the kind and amount of securities, cash or other property which a holder of the number of shares of Common Stock of Antec that would have been issuable under this Agreement had
4 6
such issuance occurred immediately prior to such reorganization, recapitalization, consolidation or merger would have been entitled to receive pursuant to such transaction; and, in such case, appropriate adjustment (as determined in good faith by the Board of Directors) shall be made in the application of the provisions in this Section 5 set forth with respect to the rights and interest thereafter of Nortel, to the end that the provisions set forth in this Section 5 shall thereafter be applicable, as nearly as reasonably may be, in relation to any shares of stock or other property thereafter deliverable hereunder.
(e) No Impairment. Antec will not, by amendment of its Certificate of Incorporation or through any reorganization, transfer of assets, consolidation, merger, 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 to be observed or performed hereunder by Antec, but will at all times in good faith assist in the carrying out of all the provisions of this Section 5 and in the taking of all such action as may be necessary or appropriate in order to protect the rights of Nortel hereunder against impairment.
(f) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Share Amount pursuant to this Section 5, Antec at its expense shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to Nortel a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. Antec shall, upon the written request at any time of Nortel, furnish or cause to be furnished to Nortel a certificate setting forth the Share Amount and the amount, if any, of other securities, cash or property which then would be received hereunder.
(g) Notice of Record Date. In the event:
(i) Antec shall take a record of the holders of its
Common Stock (or other stock or securities at the
time issuable hereunder) for the purpose of
entitling or enabling them to receive any dividend
or other distribution, or to receive any right to
subscribe for a purchase any shares of stock of any
class or any other securities, or to receive any
other right; or
(ii) of any capital reorganization of Antec, any
reclassification of the Common Stock of Antec, any
consolidation or merger of Antec with or into
another corporation (other than a consolidation or
merger in which Antec is the surviving entity and
its Common Stock is not converted into or exchanged
for any other securities or property), or any
transfer of all or substantially all of the assets
of Antec; or
(iii) of the voluntary or involuntary dissolution, liquidation
or winding-up of Antec,
5 7
then, and in each such case, Antec will mail or cause to be mailed to Nortel a notice specifying, as the case may be, (i) the record date for such dividend, distribution or right, and the amount and character of such dividend, distribution or right, or (ii) the effective date on which such reorganization, reclassification, consolidation, merger, transfer, dissolution, liquidation or winding-up is to take place, and the time, if any is to be fixed, as of which the holders of record of Common Stock (or such other stock or securities at the time issuable hereunder) shall be entitled to exchange their shares of Common Stock (or such other stock or securities) for securities or other property deliverable upon such reorganization, ...