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EXHIBIT 10.2
SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT dated as of August 3, 2001 among NORTEL
NETWORKS LLC, a Delaware limited liability company (together with its
successors and assigns, "Nortel"), THE CIT GROUP/BUSINESS CREDIT, INC., as
Administrative Agent (with its successors and assigns, the "Agent"), ARRIS
GROUP, INC., a Delaware corporation ("Holdings"), and ARRIS INTERACTIVE L.L.C.,
a Delaware limited liability company ("Arris"; Holdings and Arris each an
"Obligor" and, collectively, the "Obligors").
SECTION 1 OBLIGATIONS SUBORDINATE TO SENIOR DEBT. Each Obligor
covenants and agrees, and each Subordinated Creditor likewise covenants and
agrees, that (a) to the extent and in the manner hereinafter set forth in this
Agreement, the payment of the Subordinated Obligations is hereby expressly made
subordinated and subject in right of payment to the prior payment in full in
cash of all Senior Debt and (b) the terms and conditions of such subordination
are for the benefit of the Senior Creditors and each Senior Creditor may
enforce such subordination.
SECTION 2 PAYMENT OVER OF PROCEEDS UPON DISSOLUTION.
(a) In the event of any Bankruptcy:
(i) the Senior Creditors shall be
entitled to receive payment in full in cash of all amounts due or to
become due on or in respect of all Senior Debt (including any
interest, fees or other amounts that will become due but for the
commencement of any Bankruptcy at the rates specified in the Senior
Credit Agreement, whether or not a claim for any of the same is
allowed) before any Subordinated Creditor is entitled to receive any
direct or indirect payment, redemption or other distribution on
account of Subordinated Obligations, including, without limitation, by
exercise of set-off and any payment, redemption or other distribution
that may be payable or deliverable by reason of any other Indebtedness
being subordinated in right of payment to the Subordinated
Obligations;
(ii) any payment, redemption or other
distribution of assets of any Obligor of any kind or character,
whether in cash, property or securities (including, without
limitation, securities of such Obligor or any successor), by set-off
or otherwise, to which any Subordinated Creditor would be entitled on
account of the Subordinated Obligations but for the provisions of this
Agreement, including any such payment, redemption or other
distribution that may be payable or deliverable by reason of the
payment of any other Indebtedness of such Obligor being subordinated
to the payment of Subordinated Obligations, shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the Agent for the
benefit of the Senior Creditors, to the extent necessary to make
payment in full in cash of all such Senior Debt remaining unpaid,
after giving effect to any concurrent payment or distribution to or
for the Agent and/or the Senior Creditors; and
(iii) if, notwithstanding the foregoing,
any Subordinated Creditor shall have received any such payment,
redemption or other distribution of assets of any Obligor of any kind
or character on account of the Subordinated Obligations, whether
property or securities (including, without limitation, securities of
such Obligor or any successor thereto), including any such payment,
redemption or other distribution that may be payable or deliverable by
reason of the payment of any other Indebtedness of such Obligor being
subordinated to the payment of the Subordinated Obligations before all
Senior Debt is paid in full, then such payment, redemption or other
distribution shall be paid over or delivered, in accordance with
Section 10 hereof, forthwith to the trustee in bankruptcy, receiver,
liquidating trustee, custodian, assignee, agent or other Person making
payment or distribution of assets of such Obligor for application to
the payment of all Senior Debt remaining unpaid, to the extent
necessary to pay such Senior Debt in full in cash, after giving effect
to any concurrent payment, redemption or other distribution to or for
the Agent and/or the Senior Creditors;
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(b) If, notwithstanding the provisions of this
Agreement, there shall occur any consolidation of any Obligor with, or any
merger of any Obligor into, another corporation or the liquidation or
dissolution of any Obligor following any conveyance, transfer or lease of its
properties and assets substantially as an entirety to another corporation in
accordance with the terms of the Senior Credit Agreement, such consolidation,
merger or liquidation shall not be deemed a Bankruptcy; provided that no
Bankruptcy other than as described in this subsection (b) shall have occurred
and be continuing at the time of such consolidation, merger or liquidation.
(c) In order to enable any Senior Creditor or
any trustee, agent or representative acting on behalf of any Senior Creditor to
enforce its rights hereunder in any Bankruptcy, each Senior Creditor is hereby
irrevocably authorized and empowered during the course of any such Bankruptcy
in its respective discretion to present for and on behalf of the Subordinated
Creditors such proofs of claim against the Obligors on account of the
Subordinated Obligations as such Senior Creditor may deem expedient or proper
and to vote such proofs of claim in any such Bankruptcy if the Subordinated
Creditors shall not have filed a proof of claim and provided such Senior
Creditor with a copy of such proof of claim with an acknowledgement of filing
by a date 10 days prior to the date on which such filing would be barred.
SECTION 3 NO PAYMENT IN CERTAIN CIRCUMSTANCES. If (i) any
Obligor shall fail to pay when due (after giving effect to any applicable grace
periods), upon acceleration or otherwise, any amount or obligation with respect
to Senior Debt under the Senior Credit Agreement (a "Payment Default"), which
Payment Default shall not have been cured or waived in writing in accordance
with the terms of the Senior Credit Agreement, or (ii) an Event of Default
(other than a Payment Default) under and as defined in the Senior Credit
Agreement shall occur and be continuing, which shall not have been cured or
waived in writing in accordance with the terms of the Senior Credit Agreement
or otherwise cease to exist (a "Non-Payment Default"), and the Obligors and
each Subordinated Creditor receive written notice of such Non-Payment Default
from either the Agent or the holders of at least a majority in aggregate
principal amount of the Senior Debt under the Senior Credit Agreement at the
time outstanding (a "Non-Payment Blockage Notice"), then no payment, redemption
or other distribution on account of the Subordinated Obligations shall be made
by any Obligor or otherwise on account of the Subordinated Obligations (i) in
the case of any Payment Default, unless and until (x) such Senior Debt shall
have been paid in full in cash, any commitments to lend under the Senior Credit
Agreement have been terminated and any letters of credit issued under the
Senior Credit Agreement have been cancelled or have terminated or (y) until
such Payment Default shall have been cured or waived in writing in accordance
with the terms of the Senior Credit Agreement, or (ii) in the case of any
Non-Payment Default, from the date on which the Obligors and each Subordinated
Creditor receive such Non-Payment Blockage Notice until (but excluding) the
earlier of (1) 179 days after such date or (2) the date, if any, on which the
Senior Debt under the Senior Credit Agreement is paid in full in cash, any
commitments to lend under the Senior Credit Agreement have been terminated and
any letters of credit issued under the Senior Credit Agreement have been
cancelled or have terminated or (3) the date, if any, on which such Non-Payment
Default is waived in accordance with the terms of the Senior Credit Agreement
or otherwise cured or ceases to exist (a "Non-Payment Blockage Period");
provided that Non-Payment Blockage Periods may only be in place for an
aggregate of 179 days during any 365 day period.
In the event that, notwithstanding the foregoing, any Subordinated
Creditor shall have received any payment, redemption or other distribution on
account of the Subordinated Obligations contrary to the foregoing provisions of
this Section 3, then such payment, redemption or other distribution shall be
paid over and delivered forthwith to the Agent for the benefit of Senior
Creditors (or their agent or trustee) in accordance with Section 10 hereof.
SECTION 4 ACCELERATION RIGHTS; REMEDIES. So long as any Event
of Default has occurred and is continuing, no Subordinated Creditor shall take
any action, judicial or otherwise, to accelerate or collect payment on the
Subordinated Obligations or to pursue any other remedy with respect to the
Subordinated Obligations (including, without limitation, commencing or joining
with any other creditor of any Obligor in commencing any proceeding in
bankruptcy); provided that, in the event of a Bankruptcy, if neither the Agent
nor the Senior Creditors have filed a proof of claim with respect to the
Subordinated Obligations by a date 5 days prior to the date on which such
filing would be barred, the Subordinated Creditors may file a proof of claim
with respect to the Subordinated
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Obligations and take such other action which is reasonably necessary to
preserve such proof of claim. For the avoidance of doubt, nothing in this
Section 4 or otherwise in this Agreement shall be construed to prohibit or in
any way limit any of the Subordinated Creditors from taking any action,
judicial or otherwise, to accelerate or collect payment on any obligations of
any Obligor other than the Subordinated Obligations or to pursue any other
remedy with respect to such other obligations.
SECTION 5 PAYMENT OTHERWISE PERMITTED. Nothing contained in
this Agreement shall prevent the Obligors, at any time except as set forth in
Section 2 or under the conditions described in Section 3, from making payments
at any time in connection with (1) to the extent permitted by the terms of the
applicable Subordinated Documents and the Senior Credit Agreement, any
mandatory redemptions of the Arris New Membership Interest or Holdings
Preferred Stock, if any, (2) to the extent permitted by the terms of the
applicable Senior Credit Agreement or this Agreement, scheduled payment of
principal and interest under the Subordinated Note, if any and (3) to the
extent permitted by the terms of the applicable Subordinated Documents and the
Senior Credit Agreement, all fees, expenses and indemnities with respect to the
Subordinated Obligations properly payable to the Subordinated Creditors
pursuant to the Subordinated Documents, except that in no event shall a
Subordinated Creditor demand, accept or receive any of the foregoing to the
extent such payment would be prohibited under the terms of the Senior Credit
Agreement or this Agreement. Subject to Section 10, any payment received by a
Subordinated Creditor at a time when the Subordinated Creditor is entitled to
receive and any Obligor is not prohibited from making such payment (whether
such prohibition is contained in the applicable Organizational Documents, the
Senior Credit Agreement, this Agreement or otherwise) shall be for the benefit
of the Subordinated Creditor, and the Subordinated Creditor shall have no
obligation (contingent or otherwise) to deliver such payments to the Agent or
any of the Senior Creditors.
SECTION 6 SUBROGATION TO RIGHTS OF SENIOR CREDITORS. Subject
to, and solely effective following, the final payment in full in cash of all
Senior Debt, the termination of any commitments to lend under the Senior Credit
Agreement and the cancellation or termination of any letters of credit issued
under the Senior Credit Agreement, the Subordinated Creditors shall be
subrogated to the rights of the Senior Creditors to receive payments and
distributions of cash, property and securities applicable to such Senior Debt
to the extent of the payments or distributions made to the Agent or any Senior
Creditor, or otherwise applied to payment of the Senior Debt pursuant to the
provisions of this Agreement, until the principal of and interest on the
Subordinated Obligations shall be paid in full in cash or the Subordinated
Obligations shall have been redeemed. For purposes of such subrogation, no
payments or distributions to the Agent or any Senior Creditor of any cash,
property or securities to which the Subordinated Creditors would be entitled
except for the provisions of this Agreement, and no payments over pursuant to
the provisions of this Agreement to the Agent or any Senior Creditor by the
Subordinated Creditors shall, as among the Obligors, their creditors (other
than the Senior Creditors) and the Subordinated Creditors, be deemed to be a
payment or distribution by the Obligors to or on account of the Senior Debt.
SECTION 7 PROVISIONS SOLELY TO DEFINE RELATIVE RIGHTS; LIMITED
NOTICE AND CONSENT REQUIREMENTS. The provisions of this Agreement are and are
intended solely for the purpose of defining the relative rights of the
Subordinated Creditors on the one hand and the Senior Creditors on the other
hand. Nothing contained in this Agreement is intended to or shall (i) impair,
as among the Obligors, their creditors (other than the Senior Creditors) and
the Subordinated Creditors, the obligation of the Obligors, which is absolute
and unconditional, to pay to the Subordinated Creditors the redemption payments
and/or principal of, and return, premium and/or interest on, and any other
amount payable by the Obligors under the Subordinated Documents as and when the
same shall become due and payable in accordance with their terms; or (ii)
affect the relative rights against the Obligors of the Subordinated Creditors
and the Obligors' creditors (other than the Senior Creditors); or (iii) prevent
the Subordinated Creditors from exercising all remedies otherwise permitted by
applicable law upon default under the Subordinated Documents, subject to the
rights, if any, of the Senior Creditors under this Agreement (x) upon the
occurrence of a Bankruptcy, to receive, pursuant to and in accordance with
Section 2, cash, property and securities otherwise payable or deliverable to
the Subordinated Creditors, (y) under the conditions specified in Section 3, to
prevent any payment, redemption or other distribution prohibited by such
Section or (z) under Section 4.
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SECTION 8 NO WAIVER OF SUBORDINATION PROVISIONS; AMENDMENT. No
right of any present or future Senior Creditor to enforce subordination as
provided herein shall at any time in any way be prejudiced or impaired by any
act or failure to act on the part of any Obligor or by any act, or failure to
act, in good faith on the part of any such Senior Creditor, or by any
non-compliance by any Obligor with the terms, provisions, and covenants of this
Agreement, regardless of any knowledge thereof any such Senior Creditor may
have or be otherwise charged with.
SECTION 9 RELIANCE ON JUDICIAL ORDER OR CERTIFICATE OF
LIQUIDATING AGENT. Upon any payment or distribution of assets of any Obligor or
any other payment, redemption or other distribution on account of the
Subordinated Obligations referred to in this Agreement, the Subordinated
Creditors shall be entitled to rely upon any unstayed, final, nonappealable
order or decree entered by any court of competent jurisdiction in which a
Bankruptcy is pending for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the amount thereof or payable
thereon, the amount or amounts paid or distributed thereon, the Senior
Creditors, and all other facts pertinent thereto or to this Agreement.
SECTION 10 TURNOVER; MISCELLANEOUS SUBORDINATION PROVISIONS.
(a) If a payment, redemption or other
distribution is made to any holder of Subordinated Obligations that because of
this Agreement should not have been made to it, such holder shall segregate
such payment redemption or other distribution from its other funds and property
and hold it in trust for the benefit of, and, upon written request, pay it over
(in the same form as received, with any necessary endorsement) to, the Agent on
behalf of the Senior Creditors as their respective interests may appear, for
application (in the case of cash) to, or as collateral (in the case of non-cash
property or securities) for the payment or prepayment of, all obligations with
respect to Senior Debt remaining unpaid to the extent necessary to pay such
obligations in full in accordance with their terms, after giving effect to any
concurrent payment or distribution to or for the Senior Creditors.
(b) A distribution may consist of cash,
securities or other property, by set-off or otherwise, and a payment or
distribution on account of any obligations with respect to the holders of
Subordinated Obligations shall include any redemption, purchase or other
acquisition of the Subordinated Obligations.
(c) For the purpose of this Agreement, all
Senior Debt now or hereafter existing shall not be deemed to have been paid in
full unless the Senior Creditors or the Agent on behalf of the Senior Creditors
shall have received payment in full in cash.
(d) The agreements contained in this Agreement
shall continue to be effective or be reinstated, as the case may be, if at any
time any payment of any of the Senior Debt is rescinded or must otherwise be
returned by Agent and/or any Senior Creditor upon any Bankruptcy of any
Obligor, all as though such payment had not been made.
(e) All rights and interests under this
Agreement of the Senior Creditors, and all agreements and obligations of the
holders of Subordinated Obligations and the Obligors under this Agreement,
shall remain in full force and effect irrespective of (i) any lack of validity
or enforceability of the Senior Credit Agreement, any promissory notes
evidencing the Indebtedness thereunder, or any other agreement or instrument
relating thereto or to any other Senior Debt, including, without limitation,
any agreement referred to in the definition of Senior Credit Agreement, or (ii)
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, any holders of Subordinated Obligations or the Obligors.
(f) The provisions set forth in this Agreement
constitute a continuing agreement and shall (i) be and remain in full force and
effect until payment in full in cash of all Senior Debt, the termination of any
commitments to lend under the Senior Credit Agreement and the cancellation or
termination of any letters of credit issued under the Senior Credit Agreement,
(ii) be binding upon the holders of Subordinated Obligations, the Obligors and
their respective successors, transferees and assigns, and (iii) inure to the
benefit of, and be enforceable directly by, each of the Senior Creditors and
their respective successors, transferees and assigns.
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(g) No waiver of the rights of the Senior
Creditors hereunder shall be deemed made unless the same shall be in writing,
duly signed by an authorized officer of the Agent or the holders of a majority
of the outstanding principal amount of the Senior Debt, and each waiver, if
any, shall apply only to the specific instance involved and shall in no way
impair the rights of such holder, or the obligations of the Subordinated
Creditors, in any other respect at any other time.
(h) The subordination provisions contained
herein are for the benefit of the holders of the Senior Debt from time to time
and, so long as (x) any Senior Debt is outstanding under any agreement, (y) any
commitments to lend under the Senior Credit Agreement have not been terminated
or (z) any letters of credit issued under the Senior Credit Agreement have not
been cancelled or terminated, may not be rescinded, canceled or modified in any
way without the prior written consent thereto of all holders of Senior Debt and
the Subordinated Creditors.
(i) Each Subordinated Creditor represents and
warrants that as of the date hereof it has not made or permitted to be made and
shall not make or permit any assignment, transfer, pledge, or disposition for
collateral purposes or otherwise, of all or any part of the Subordinated
Obligations or any collateral or other security for the Subordinated
Obligations, if any, so long as this Agreement remains in effect; provided that
any Subordinated Creditor shall be permitted to make an assignment, transfer,
pledge, or disposition for collateral purposes or otherwise, of all or any part
of the Subordinated Obligations or any collateral or other security for the
Subordinated Obligations, so long as prior to any such assignment, transfer,
pledge, or disposition such Person agrees in a writing delivered to the Agent
to be bound by the terms of this Agreement, such writing to be satisfactory in
form and substance to Agent.
(j) This Agreement constitutes a continuing
agreement of subordination, even though at times there are no outstanding
extensions of credit under the Senior Credit Agreement or other agreements
evidencing the Senior Debt.
(k) Each Subordinated Creditor delivers this
Agreement based solely on such Subordinated Creditor's independent
investigation of (or decision not to investigate) the financial condition of
the Obligors, Arris International and the other Borrowers and is not relying on
any information furnished by the Agent or any Senior Creditor. Each
Subordinated Creditor assumes full responsibility for obtaining any further
information concerning the financial condition of the Obligors, Arris
International and the other Borrowers (as defined in the Senior Credit
Agreement), the status of the Senior Debt or any other matter which such
Subordinated Creditor may deem necessary or appropriate now or later. Each
Subordinated Creditor waives any duty on the part of the Agent or any Senior
Creditor and agrees that such Subordinated Creditor is not relying upon nor
expecting the Agent or any Senior Creditor to disclose to such Subordinated
Creditor any fact now or later known by the Agent or any Senior Creditor,
whether relating to the operations or condition of the Obligors, Arris
International and the other Borrowers (as defined in the Senior Credit
Agreement), the existence, liabilities or financial condition of any guarantor
of the Senior Debt, the occurrence of any default with respect to the Senior
Debt, or otherwise, notwithstanding any effect such fact may have upon such
Subordinated Creditor's risk or such Subordinated Creditor's rights against any
Obligor. Each Subordinated Creditor knowingly accepts the full range of risk
encompassed in this Agreement, which risk includes, without limitation, the
possibility that any Obligor, Arris International or any of the other Borrowers
(as defined in the Senior Credit Agreement) may incur Senior Debt to the Agent
or the Senior Creditors after the financial condition of such Obligor, Arris
International or any other Borrower (as defined in the Senior Credit
Agreement), or its ability to pay its debts as they mature, has deteriorated.
Each Subordinated Creditor acknowledges and agrees that the Agent's and the
Senior Creditors' rights under this Agreement are not conditioned upon pursuit
by the Agent or any Senior Creditor of any remedy the Agent or any Senior
Creditor may have against any Obligor, Arris International or any other
Borrower (as defined in the Senior Credit Agreement) or any other person or any
other security.
(l) Agent, acting on behalf of the Senior
Creditors, in its sole discretion, without notice to any Subordinated Creditor,
may release, exchange, enforce and otherwise deal with any security now or
later held by Agent or any Senior Creditors for payment of the Senior Debt or
release any party now or later liable
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for payment of the Senior Debt without affecting in any manner the Agent's or
the Senior Creditors' rights under this Agreement. Each Subordinated Creditor
acknowledges and agrees that neither the Agent nor any Senior Creditor has any
obligation to acquire or perfect any lien on or security interest in any
asset(s), whether realty or personalty, to secure payment of the Senior Debt,
and such Subordinated Creditor is not relying upon assets in which the Agent,
for the benefit of Senior Creditors, has or may have a lien or security
interest for payment of the Senior Debt.
(m) Notwithstanding any prior revocation,
termination, surrender, or discharge of this Agreement in whole or in part, the
effectiveness of this Agreement shall automatically continue or be reinstated
to the extent effective under applicable law in the event that any payment
received or credit given by the Agent or any Senior Creditor in respect of the
Senior Debt is returned, disgorged, or rescinded under any applicable state or
federal law, including, without limitation, laws pertaining to bankruptcy or
insolvency, in which case this Agreement shall be enforceable against any
Subordinated Creditor as if the returned, disgorged, or rescinded payment or
credit had not been received or given by the Agent or any Senior Creditor, and
whether or not the Agent or any Senior Creditor relied upon this payment or
credit or changed its position as a consequence of it. In the event of
continuation or reinstatement of this Agreement, each Subordinated Creditor
agrees upon demand by the Agent to execute and deliver to the Agent those
documents which the Agent determines are necessary to further evidence (in the
public records or otherwise) this continuation or reinstatement, although the
failure of such Subordinated Creditor to do so shall not affect in any way the
reinstatement or continuation.
(n) Each Subordinated Creditor waives any right
to require the Agent or any Senior Creditor to: (a) proceed against any person
or property; (b) give notice of the terms, time and place of any public or
private sale of personal property security held from the Obligors or any other
person, or otherwise comply with Section 9-504 of any applicable Uniform
Commercial Code; or (c) pursue any other remedy in the Agent's or such Senior
Creditor's power. Except as otherwise provided in this Agreement, each
Subordinated Creditor waives notice of acceptance of this Agreement and
presentment, demand, protest, notice of protest, dishonor, notice of dishonor,
notice of default, notice of intent to accelerate or demand payment of any
Senior Debt, any and all other notices to which the undersigned might otherwise
be entitled, and diligence in collecting any Senior Debt, and agrees that the
Agent and Senior Creditors may, once or any number of times, modify the terms
of any Senior Debt, compromise, extend, increase, accelerate, renew or forbear
to enforce payment of any or all Senior Debt, or permit the Obligors to incur
additional Senior Debt, all without notice to any Subordinated Creditor and
without affecting in any manner the unconditional obligations of any
Subordinated Creditor under this Agreement (provided, however, that the maximum
aggregate principal amount of Senior Debt at any time outstanding shall at all
times be limited to $200 million).
(o) Each Subordinated Creditor acknowledges
that the Agent and Senior Creditors have the right to sell, assign, transfer,
negotiate or grant participations or any interest in, any or all of the Senior
Debt and any related obligations, including, without limitation, this
Agreement. In connection with the above, but without limiting its ability to
make other disclosures to the full extent allowable, the Agent and each of the
Senior Creditors may disclose all documents and information which the Agent and
such Senior Creditors now or later has or acquires relating to any Subordinated
Creditor and this Agreement, however obtained. Each Subordinated Creditor
further agrees that the Agent and such Senior Creditor may disclose such
documents and information to the Obligors or any of their Subsidiaries or
Affiliates. Each Subordinated Creditor further agrees that the Agent and any
Senior Creditor may provide information relating to this Agreement or relating
to such Subordinated Creditor to the Agent's or such Senior Creditor's parent,
Affiliates, Subsidiaries and service providers. Each Subordinated Creditor
further agrees that in the event the Senior Debt is replaced with a new credit
facility, such Subordinated Creditor shall enter into a subordination agreement
with the refinancing or replacing lenders with substantially the same terms and
conditions of this Agreement and such subordination shall extend for the term
of the replacing or refinanced credit facility.
(p) Subordinated Creditors agree to reimburse
the Agent and Senior Creditors upon demand for any and all costs and expenses
(including, without limitation, court costs, legal fees, and reasonable
attorney fees, whether or not suit is instituted and, if instituted, whether at
the trial or appellate level, in a
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bankruptcy, probate or administrative proceeding, or otherwise) incurred in
enforcing any of the duties and obligations of Subordinated Creditors under
this Agreement.
(q) Each Subordinated Creditor waives any
defense against the enforceability of this Agreement based upon or arising by
reason of the application by any of Arris International, Arris or any other
Borrower (as defined in the Senior Credit Agreement) of the proceeds of any
Indebtedness for purposes other than the purposes represented by the Arris
International, Arris and the other Borrowers (as defined in the Senior Credit
Agreement) to the Agent or Senior Creditors or intended or understood by the
Agent and Senior Creditors or any Subordinated Creditor.
(r) The rights of the Agent and Senior
Creditors under this Agreement are in addition to, and not in substitution of,
their respective rights under applicable law.
SECTION 11. LEGEND. Subordinated Creditors and each Obligor will
cause each note, certificate and other instrument (if any) evidencing the
Subordinated Obligations to be endorsed with the following legend:
"ANY PAYMENT UNDER THIS INSTRUMENT IS SUBORDINATED TO THE
PRIOR PAYMENT IN CASH IN FULL OF THE SENIOR DEBT (AS DEFINED
IN THE SUBORDINATION AGREEMENT DATED AS OF AUGUST 3, 2001, BY
AND AMONG ARRIS INTERACTIVE L.L.C., ARRIS GROUP, INC., NORTEL
NETWORKS LLC AND THE CIT GROUP/BUSINESS CREDIT, INC.)
PURSUANT TO, AND TO THE EXTENT PROVIDED IN, SUCH
SUBORDINATION AGREEMENT"
Each Subordinated Creditor hereby agrees to ▇▇▇▇ its books of account in such a
manner as shall be effective to give proper notice of the effect of this
Agreement. Each Subordinated Creditor will at its expense and at any time and
from time to time promptly execute and deliver all further instruments and
documents and take all further action that the Agent may reasonably request in
order to protect any right or interest granted or purported to be granted
hereunder or to enable the Senior Creditors to exercise and enforce their
rights and remedies hereunder.
SECTION 12. AMENDMENT OF SUBORDINATED DOCUMENTS. Each
Subordinated Creditor hereby agrees that it will not amend, modify or otherwise
alter (or suffer to be amended, modified or altered, to the extent such matters
are within the control of any such Subordinated Creditor) any of the terms and
conditions of the Subordinated Documents without prior written notice to and
the approval of the Agent.
SECTION 13. NOTICE. Unless otherwise specifically provided
herein, all communications under this Agreement shall be in writing and shall
be deemed to have been given (i) on the date of service if served personally on
the party to whom notice is to be given, (ii) on the day of transmission if
sent by facsimile transmission to the telecopy number given below, and
confirmation of receipt is obtained promptly after completion of transmission;
(iii) on the day after delivery to Federal Express or similar overnight
courier, or (iv) on the fifth day after mailing, if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed, return receipt requested, to the party as
follows:
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If to the Agent or any Senior Creditor:
The CIT Group/Business Credit, Inc.
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▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Regional Credit Manager
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
O'Melveny & ▇▇▇▇▇ LLP
Citigroup Center
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Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to Nortel: Nortel Networks Inc.
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Attn: Legal Department
With a copy to:
Nortel Networks Inc.
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇ and ▇▇▇▇ LLP
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Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
If to Holdings: Arris Group, Inc.
c/o Arris International, Inc.
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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With a copy to:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
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Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If to Arris: Arris Interactive L.L.C.
c/o Arris International, Inc.
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Attention: ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
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Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change its address for purposes of this Section
13 by giving the other parties written notice of the new address in the manner
set forth above.
SECTION 14. COUNTERPARTS. This Agreement may be executed in any
number or counterparts, each of which shall be an original, but all of which
shall constitute one and the same instrument.
SECTION 15. DEFINITIONS.
The following terms, as used herein, have the following respective
meanings:
"Agent" means (i) so long as the Senior Credit Agreement is in effect,
The CIT Group/Business Credit, Inc., in its capacity as administrative agent
for the Lenders party to the Senior Credit Agreement or any successor or other
Agent appointed pursuant to the Senior Credit Agreement and (ii) if there is no
Senior Credit Agreement in effect, thereafter any agent designated as
representative of holders of all other Senior Debt.
"Arris International" means Arris International, Inc., a Delaware
corporation (formerly known as Antec Corporation).
"Arris Membership Agreement" means that certain Second Amended and
Restated Limited Liability Company Agreement of Arris Interactive L.L.C. dated
as of August __, 2000, by and among Arris International, Holdings and Nortel,
as amended, restated, supplemented or otherwise modified from time to time in
accordance with Section 12 and the Senior Credit Agreement.
"Arris Organizational Documents" means the Arris Membership Agreement
and any other documents pursuant to which Arris is organized, as amended,
restated, supplemented or otherwise modified from time to time in accordance
with Section 12 and the Senior Credit Agreement.
"Arris New Membership Interest" means the Class B Interest (as defined
in the Arris Membership Agreement) and all rights associated with such Class B
Membership Interest including, without limitation, the Class B Return (as
defined in the Arris Membership Agreement), any redemption rights, and all
other rights to receive allocations, distributions and any other payments under
the Arris Membership Agreement.
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"Bankruptcy" means the occurrence of any of the events in Section 8.6
or 8.7 of the Senior Credit Agreement.
"Closing Date" has the meaning assigned to that term in the Senior
Credit Agreement.
"Holdings Preferred Stock" means any preferred stock of Holdings
issued by Holdings in exchange for any Arris New Membership Interest in
accordance with the terms of the Arris Membership Agreement (as amended,
restated, supplemented or otherwise recredited in accordance with Section 12
and the Senior Credit Agreement).
"Holdings Subordinated Guaranty" means that certain Subordinated
Guaranty dated as of August __, 2001 by Holdings issued for the benefit of
Nortel, as amended, restated, supplemented or otherwise modified from time to
time in accordance with Section 12 and the Senior Credit Agreement.
"Indebtedness", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to capital
leases that is properly classified as a liability on a balance sheet in
conformity with generally accepted accounting principles, (iii) notes payable
and drafts accepted representing extensions of credit whether or not
representing obligations for borrowed money, (iv) any obligation owed for all
or any part of the deferred purchase price of property or services, which
purchase price is (a) due more than six months from the date of incurrence of
the obligation in respect thereof or (b) evidenced by a note or similar written
instrument, and (v) all indebtedness secured by any lien on any property or
asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person.
"Lender" shall mean each accredited investor, bank or other financial
institution now or hereafter party to the Senior Credit Agreement, and
"Lenders" shall mean all such banks and financial institutions, collectively.
"Non-Payment Blockage Notice" shall have the meaning set forth in
Section 3.
"Non-Payment Blockage Period" shall have the meaning set forth in
Section 3.
"Non-Payment Default" shall have the meaning set forth in Section 3.
"Payment Default" shall have the meaning set forth in Section 3.
"Person" has the meaning set forth in the Senior Credit Agreement.
"Reorganization Agreement" shall mean the Agreement and Plan of
Reorganization dated as of October 18, 2000, by and among Arris International,
Holdings, Broadband Transition Corporation, Nortel, Nortel Networks Inc. and
Arris as amended as of April 9, 2001 and as further amended as of the date
hereof, as amended, amended and restated, supplemented or otherwise modified
after the date hereof in accordance with the Senior Credit Agreement.
"Senior Credit Agreement" shall mean the Credit Agreement dated as of
August 3, 2001, by and among Arris, Arris International and the subsidiaries of
Arris International listed on the signature pages thereof, the several Lenders
from time to time parties thereto, the Agent, and Credit Suisse First Boston as
syndication agent, lead arranger and book running manager, as such agreement
may be amended, supplemented, restated, amended and restated, refinanced,
restructured or otherwise modified from time to time (in whole or in part
without limitation as to terms, extensions of maturities, increasing the amount
of borrowings or other conditions or covenants), and all related notes,
collateral documents, guarantees, Hedge Agreements (as defined in the Senior
Credit Agreement), instruments and agreements entered into in connection
therewith, as the same may be amended, supplemented, restated, restructured,
amended and restated, refinanced or otherwise modified from time to time.
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"Senior Creditor" shall mean any Person now or hereafter holding
Senior Debt, including, without limitation, any Lender, and "Senior Creditors"
shall mean all such Persons, collectively.
"Senior Debt" shall mean (i) all Indebtedness, obligations and other
liabilities of each Obligor, whether outstanding as of the date hereof or
hereafter created, incurred or assumed by any Obligor, arising under or in
respect of the Senior Credit Agreement and the other Loan Documents (as defined
in the Senior Credit Agreement) including, without limitation, the principal
of, the premium and interest on, all loans, letters of credit, guaranties and
other extensions of credit under the Senior Credit Agreement and the other Loan
Documents and all commitment, facility, agency and other fees payable under or
in connection therewith and all expenses, reimbursements, indemnities and other
amounts and liabilities payable or owing by any Obligor thereunder and further
including without limitation, any of the foregoing obligations and amounts
which would become due or accrue or arise but for the commencement of any
applicable Bankruptcy, whether or not a claim is allowed for the same in any
such proceeding and (ii) any amendments, supplements, amendments and
restatements, refinancings, restructurings, renewals, extensions or
modifications of any of the foregoing; provided that the maximum aggregate
principal amount of Senior Debt at any time outstanding shall at all times be
limited to TWO HUNDRED MILLION DOLLARS ($200,000,000).
"Subordinated Creditor" shall mean each of Nortel and each other
Person who, now or in the future, holds any Arris New Membership Interest,
Holdings Preferred Stock or Subordinated Note, if any, and/or is the
beneficiary under the Holdings Subordinated Guaranty, and "Subordinated
Creditors" shall mean all such Persons, collectively.
"Subordinated Documents" means the Arris Organizational Documents, the
Holdings Preferred Stock, the Holdings Subordinated Guaranty and the
Subordinated Note.
"Subordinated Note" means any subordinated note issued by Holdings to
any Subordinated Creditor in exchange for any Arris New Membership Interest in
accordance with the Arris Membership Agreement, as such subordinated note may
be amended, restated, supplemented or otherwise modified from time to time in
accordance with Section 12 and the Senior Credit Agreement.
"Subordinated Obligations" means (i) all Indebtedness, obligations to
make redemptions, distributions or dividends and any other obligations or
liabilities of each Obligor, whether outstanding as the date hereof or
hereafter created, incurred or assumed by any Obligor, arising under or in
respect of the Subordinated Documents (including, without limitation, the Arris
New Membership Interest, the Holdings Preferred Stock, the Holdings
Subordinated Guaranty and the Subordinated Note), including, without
limitation, the principal of, the premium and interest on, all loans and other
extension of credit under the Subordinated Documents and all redemption
obligations, rights to receive dividends distributions, allocations and any
other payments or fees payable thereunder or pursuant thereto and all expenses,
reimbursements, indemnities and amounts and liabilities payable or owing by any
Obligor thereunder and further including, without limitation, any of the
foregoing obligations and amounts which would become due or accrue or arise but
for the commencement of any applicable Bankruptcy, whether or not a claim is
allowed for the same in any such proceeding, and (ii) any amendments,
restatements, refinancings, restructurings, renewals, extensions or
modifications of any of the foregoing. For the avoidance of doubt,
"Subordinated Obligations" shall not include, in any event, payments to be made
by or on behalf of, or any other obligations of, any of the Obligors with
respect to or in connection with any purchase, lease, license or other
acquisition of goods, services, space and/or intellectual property rights from
or to any Subordinated Creditor, including but not limited to payments and
obligations relating to cost reimbursements and other obligations under or
pursuant to any of the Ancillary Agreements (as defined in the Reorganization
Agreement).
SECTION 16. THIS AGREEMENT AND ALL THE TERMS HEREIN, INCLUDING THE
TERMS REGARDING SUBORDINATION, SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK IN ALL RESPECTS, INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, WITHOUT REGARD TO THE
CHOICE OF LAW PROVISIONS THEREOF.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
ARRIS INTERNATIONAL, INC
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name:
Title:
ARRIS INTERACTIVE L.L.C.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name:
Title:
NORTEL NETWORKS LLC
By: Nortel Networks Inc.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name:
Title:
THE CIT GROUP/BUSINESS CREDIT, INC.,
as Administrative Agent
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇
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Name:
Title:
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