8-K

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

___________________________

FORM 8-K

Current Report
Dated June 7, 2002

of

ARRIS GROUP, INC.

A Delaware Corporation
IRS Employer Identification No. 58-2588724
SEC File Number 001-16631

11450 Technology Circle
Duluth, Georgia 30097
(678) 473-2000

TABLE OF CONTENTS

	Item 5. Other Events.
	Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
SIGNATURES
Fourth Amendment to Credit Agreement
Option Agreement, Dated June 7, 2002
Second Amended Investor Rights Agreement

Item 5. Other Events.

     Arris Group, Inc. (the “Company”) is filing this Current Report on Form 8-K (this “Report”) to file the certain agreements that the Company recently entered into.

     In connection with the Company's sale of its Keptel product line on April 24, 2002, the Company's credit facility was amended to reduce the commitment amount under the credit facility to $143.0 million, to extend until March 31, 2003 the time period by which the Company must redeem or refinance approximately $54 million of the Company's remaining 4½% convertible subordinated notes, and to address other incidental matters. A copy of the Fourth Amendment to Credit Agreement is attached as Exhibit 10.1 to this Report.

     On June 7, 2002, the Company entered into an Option Agreement with Nortel Networks LLC (“Nortel Networks”) and Nortel Networks Inc. that permits Arris Interactive L.L.C., a subsidiary of the Company, to redeem Nortel Networks’ membership interest in Arris Interactive at a discount of up to 40% if Nortel Networks is able to sell a minimum of 10 million shares, or such lesser number of shares as Nortel Networks may elect to sell, in a firm commitment underwritten offering on or before June 30, 2002. The amount of the discount is based on the percentage of shares of the Company’s common stock that Nortel Networks owns as of June 30, 2002. The discount percentage will be determined according to the following parameters:

Nortel Networks' Ownership Percentage
of the Company's Common Stock	Discount
as of June 30, 2002	Percentage
Less than 20%	40	%
20% or more, but less than 21.5%	30	%
21.5% or more, but less than 23%	27.5	%
23% or more, but less than 25%	25	%
25% or more, but less than 27%	21	%
27% or more	20	%

     In addition, the Option Agreement provides that the term of the option commences on the closing date of the sale by Nortel Networks of at least 10 million shares, or such lesser number of shares as Nortel Networks may elect to sell, in a firm commitment underwritten offering and expires on June 30, 2003. The Company originally issued the new membership interest to Nortel Networks in connection with the Company's acquisition from Nortel Networks in August 2001 of the portion of Arris Interactive that the Company did not own. The Option Agreement is attached as Exhibit 10.2 to this Report.

     As part of the Company’s negotiations relating to the Option Agreement, the Company agreed to amend the terms of the existing Amended and Restated Investor Rights Agreement. The effectiveness of the amendments are subject to the sale by Nortel Networks of a minimum of 10 million shares of the Company's common stock, or such lesser number of shares as Nortel Networks may elect to sell, in a firm commitment underwritten offering on or before June 30, 2002. The amendments will become effective upon the later of September 30, 2002, and the date that Nortel Networks’ ownership percentage drops below 27% of the Company’s common stock and would remove restrictions on Nortel Networks’ ability to sell shares of the company’s common stock. In addition, the amendments provide that Nortel Networks would agree not to challenge a shareholder rights plan in the event that the Company decides to adopt such a plan. The amendments are set forth in a Second Amended and Restated Investor Rights Agreement, dated as of June 7, 2002, a copy of which is attached as Exhibit 10.3 to this Report.

Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.

(c) Exhibits

10.1	Fourth Amendment to Credit Agreement, dated as of May 31, 2002.
10.2	Option Agreement by and among Nortel Networks LLC, Arris Interactive L.L.C. and Arris Group, Inc., dated as of June 7, 2002.
10.3	Second Amended and Restated Investor Rights Agreement by and among Nortel Networks LLC, Nortel Networks Inc. and Arris Group, Inc., dated as of June 7, 2002.

2

SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Arris Group, Inc.
	By:	/s/ Lawrence A. Margolis       Lawrence A. Margolis       Executive Vice President
Dated: June 7, 2002

3 EX-10.1 3 g76775exv10w1.txt FOURTH AMENDMENT TO CREDIT AGREEMENT EXHIBIT 10.1 FOURTH AMENDMENT TO CREDIT AGREEMENT This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT") is dated as of May 31, 2002 and entered into by and among ARRIS INTERNATIONAL, INC., a Delaware corporation (the "COMPANY"), ARRIS INTERACTIVE L.L.C., a Delaware limited liability company ("ARRIS"), EACH OF COMPANY'S SUBSIDIARIES LISTED ON THE SIGNATURE PAGES HEREOF (Company, Arris and each such subsidiary are individually referred to herein as a "BORROWER" and, collectively, on a joint and several basis, as the "BORROWERS"), THE FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually referred to herein as a "LENDER" and collectively as "LENDERS"), CREDIT SUISSE FIRST BOSTON, as syndication agent for Lenders (in such capacity, "SYNDICATION AGENT") and THE CIT GROUP/BUSINESS CREDIT, INC., as administrative agent and collateral agent for Lenders (in such capacity, "ADMINISTRATIVE AGENT"), and is made with reference to that certain Credit Agreement dated as of August 3, 2001, as amended by that certain First Amendment to Credit Agreement dated as of January 8, 2002 (the "FIRST AMENDMENT"), as supplemented by that certain Acknowledgement dated as of March 21, 2002, as further amended by that certain Second Amendment to Credit Agreement dated as of April 17, 2002 and as further amended by that certain Third Amendment to Credit Agreement dated as of April 24, 2002 (as so amended, and supplemented as of the date hereof, the "CREDIT AGREEMENT"), by and among the Borrowers, Lenders, Syndication Agent and Administrative Agent. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. RECITALS WHEREAS, in connection with the redemption of the Senior Convertible Notes, Borrowers and Lenders desire to amend the Credit Agreement to, upon completion of a Successful Retirement of Notes (as defined below), allow Borrowers to use (A) the proceeds from the Keptel Sale and (B) excess cash from operations to redeem the remaining Convertible Subordinated Notes; WHEREAS, the Borrowers and Lenders desire to further amend the Credit Agreement to: (i) reduce the Revolving Loan Commitments to $143,000,000 by terminating the Revolving Loan Commitments of two of the Lenders; (ii) remove the reserve of $20,000,000 implemented against the Borrowing Base under the First Amendment in connection with the Cadant Acquisition; (iii) modify the availability of the Revolving Loan Commitments in connection with Eligible Inventory; (iv) amend the Cash Management System and (iv) make certain other amendments as set forth below; NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT 1.1 AMENDMENTS TO SECTION 1: PROVISIONS RELATING TO DEFINED TERMS A. Subsection 1.1 of the Credit Agreement is hereby amended by adding thereto the following definitions, which shall be inserted in proper alphabetical order: "ELIGIBLE INVENTORY AMOUNT" means the lesser of (x) 80% of the orderly liquidation value of each category of Eligible Inventory of Borrowers set forth i`n the Emerald Appraisal, in each case minus liquidation costs and (y) $60,000,000. "FOURTH AMENDMENT" means the Fourth Amendment to this Agreement dated as of May 31, 2002. "FOURTH AMENDMENT EFFECTIVE DATE" means the date the Fourth Amendment to this Agreement became effective in accordance with its terms. "INVENTORY INCLUSION REQUIREMENTS" means as of any date, that (i) at least thirty (30) days prior to such date, Company has provided written notice to Administrative Agent, requesting the inclusion of the Eligible Inventory Amount in the Borrowing Base and (ii) an update to the Emerald Appraisal prepared by Emerald Technology Valuations, LLC or such other independent third party consultant selected by Administrative Agent and approved by Requisite Lenders and in form and substance satisfactory to Administrative Agent, was completed and delivered to Administrative Agent no more than ninety (90) days prior to such date. "REPAID LENDERS" has the meaning assigned to that term in subsection 2.4A(iii)(a). "SUCCESSFUL RETIREMENT OF NOTES" shall mean the retirement or cancellation of Convertible Subordinated Notes in the aggregate principal amount of $69,000,000 which have been retired or cancelled by (a) the exchange therefor for or the conversion thereof into Holdings Common Stock in accordance with the terms of subsection 7.5 hereof, (b) the refinancing thereof in accordance with the terms of subsection 7.1(ix) hereof or (c) any combination thereof. B. Subsection 1.1 of the Credit Agreement is hereby further amended by deleting the definitions of "Borrowing Base", "Emerald Appraisal" and "Revolving Commitment Termination Date" therefrom in their entirety and substituting the following therefore: "BORROWING BASE" means, as of any date of determination, the amount by which: (a) the sum of (i) eighty five percent (85%) of the Net Amount of Eligible Accounts, (ii) the lesser of (x) eighty five percent (85%) of the Net Amount of Eligible Foreign Accounts and (y) $5,000,000, (iii) the lesser of (x) eighty five (85%) of the Net Amount of Eligible Canadian Accounts and (y) $3,000,000 and (iv) if as of such date the 2 Inventory Inclusion Requirements have been satisfied, the Eligible Inventory Amount exceeds (b) the sum of (i) such reserves (which may reflect forward-looking industry information provided by independent third parties) as Administrative Agent may from time to time require in its reasonable discretion plus (ii) $10,000,000. "EMERALD APPRAISAL" means the net orderly liquidation analysis of the inventory of the Borrowers and their respective Subsidiaries conducted by Emerald Technology Valuations, LLC and delivered to Agents prior to the Closing Date, in form and substance reasonably satisfactory to Agents, as such appraisal may be updated by Emerald Technology Valuations, LLC or such other independent third party consultant selected by Administrative Agent and approved by Requisite Lenders from time to time in accordance with subsection 6.12. "REVOLVING LOAN COMMITMENT TERMINATION DATE" means August 3, 2004; provided, however, that if a Successful Retirement of Notes has not occurred prior to March 31, 2003, the Revolving Loan Commitment Termination Date shall be March 31, 2003. 1.2 AMENDMENTS TO SECTION 2: AMOUNTS AND TERMS OF COMMITMENTS AND LOANS A. Subsection 2.4A(iii)(a) of the Credit Agreement is hereby amended by deleting the proviso at the end of such subsection and substituting therefore the following: "; provided, further, that notwithstanding anything in this clause (a) to the contrary, on the Fourth Amendment Effective Date, the Revolving Loan Commitment of IBM Credit Corporation and Credit Suisse First Boston (the "REPAID LENDERS") shall be reduced to zero in accordance with the terms of the Fourth Amendment and no further reduction to the Revolving Loan Commitment of any other Lender shall occur as a result of the Keptel Sale." 1.3 AMENDMENTS TO SECTION 6: AFFIRMATIVE COVENANTS A. Subsection 6.12 is hereby amended by deleting clause (i) of such subsection in its entirety and substituting therefore the following: "(i) If an Event of Default or Potential Event of Default has occurred and is continuing, Holdings shall and shall cause its Subsidiaries to fully cooperate in the preparation of updates to the Emerald Appraisal as often as the Administrative Agent shall request in its discretion." 1.4 AMENDMENTS TO SECTION 7: BORROWERS' NEGATIVE COVENANTS A. Subsection 7.5 of the Credit Agreement is hereby amended by deleting the period at the end of clause (x) and substituting therefore "; and", and adding the following clause (xi)to the end thereof: 3 "(xi) So long as (i) a Successful Retirement of Notes has occurred, (ii) no Event of Default has occurred and is continuing, (iii) no blockage notice has been delivered in accordance with the terms of the Convertible Subordinated Note Indenture and (iv) no Loans are outstanding, Company may use the Net Asset Sale Proceeds from the Keptel Sale (to the extent such Net Asset Sale Proceeds are not required to repay Outstanding Revolving Loans of the Repaid Lenders in accordance with subsection 2.4A(iii)(a)) and cash from the operations of Holdings and its Subsidiaries to redeem the Convertible Subordinated Notes in accordance with the terms of the Convertible Subordinated Notes and the Convertible Subordinated Note Indenture." B. Subsection 7.6 of the Credit Agreement is hereby amended by deleting subsection 7.6E in its entirety. 1.5 AMENDMENT TO SCHEDULE 6.10: CASH MANAGEMENT SYSTEM A. The section under the heading "Amounts held in Deposit Accounts or Otherwise:" contained in Schedule 6.10 to the Credit Agreement is hereby amended by (i) deleting the "and" at the end of subsection (viii) thereof, (ii) by deleting the "." at the end of subsection (ix) thereof and substituting therefore a ";" and (iii) adding the following subsection (xi) at the end thereof: "(xi) amounts maintained on deposit in (A) any securities account established to hold Cash Equivalents (each a "SECURITIES ACCOUNT") in accordance with the terms of the Credit Agreement and approved by Administrative Agent and (B) any other restricted deposit accounts established to hold proceeds of any Securities Account (each a "RESTRICTED DEPOSIT ACCOUNT") in accordance with the terms of the Credit Agreement and approved by Administrative Agent; provided, however, that Holdings and each Borrower shall have caused the Loan Party with such Securities Account or Restricted Deposit Account to have duly authorized, executed and delivered a Blocked Account Agreement (as hereinafter defined) in form and substance satisfactory to the Administrative Agent." B. The section entitled "Deposits into Master Disbursement Accounts, Disbursement Accounts, Petty Cash Accounts and Miscellaneous Accounts" contained in Schedule 6.10 is hereby amended by deleting such section in its entirety and substituting therefore the following: "Deposits into Master Disbursement Accounts, Disbursement Accounts, Petty Cash Accounts, Miscellaneous Accounts, Securities Accounts and Restricted Deposit Accounts: Holdings, Borrowers and their Subsidiaries shall not make any deposits, and shall not instruct their customers to make deposits, into the (i) Master Disbursement Accounts other than (x) proceeds of Loans and (y) amounts transferred from the Collateral Account, (ii) the Disbursement Accounts, Petty Cash Accounts, Miscellaneous Accounts and Securities Accounts other than amounts transferred 4 from the Master Disbursement Accounts and (iii) the Restricted Deposit Accounts other than amounts transferred from a Securities Account." SECTION 2. REPAYMENT OF LOANS AND TERMINATION OF COMMITMENTS OF IBM CREDIT CORPORATION AND CREDIT SUISSE FIRST BOSTON. The Borrowers and Lenders acknowledge and agree that on the Fourth Amendment Effective Date: (i) the Borrowers shall repay any outstanding Revolving Loans of IBM Credit Corporation and Credit Suisse First Boston and (ii) so long as any payment required by the foregoing clause (i) has been received, (w) the Revolving Loan Commitment of each of IBM Credit Corporation and Credit Suisse First Boston shall terminate, (x) each of IBM Credit Corporation and Credit Suisse First Boston shall relinquish its rights (other than any rights which survive the termination of the Credit Agreement under subsection 10.10B of the Credit Agreement) under the Credit Agreement, (y) Credit Suisse First Boston shall resign as Syndication Agent and The CIT Group/Business Credit, Inc. shall be appointed successor Syndication Agent and (z) each of IBM Credit Corporation and Credit Suisse First Boston shall be released from its obligations under the Credit Agreement and shall cease to be a party thereto. As of the date hereof, the amount of each Revolving Lender's Revolving Loan Commitment is set forth opposite its name on Schedule 1 annexed hereto. SECTION 3. REMOVAL OF RESERVE ON BORROWING BASE RELATED TO CADANT ACQUISITION Lenders hereby acknowledge and agree that Administrative Agent may remove the reserve of $20,000,000 placed against the Borrowing Base in connection with the Cadant Acquisition in accordance with the terms of the First Amendment. SECTION 4. BORROWERS' REPRESENTATIONS AND WARRANTIES In order to induce Lenders to enter into this Amendment and to amend the Credit Agreement in the manner provided herein, Borrowers represent and warrant to each Lender that the following statements are true, correct and complete: A. CORPORATE POWER AND AUTHORITY. Each Borrower has all requisite corporate power and authority to enter into this Amendment, and perform its obligations under, the Credit Agreement as amended by the First Amendment, the Second Amendment, the Third Amendment and this Amendment (the "AMENDED AGREEMENT"). B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this Amendment and the performance of the Amended Agreement have been duly authorized by all necessary corporate action on the part of each of the Borrowers. C. NO CONFLICT. The execution and delivery by Borrowers of this Amendment and the performance by Borrowers of the Amended Agreement do not and will not (i) violate any provision of any law or any governmental rule or regulation 5 applicable to any Borrower or any of their respective Subsidiaries, the Certificate or Articles of Incorporation or Bylaws or Certificate of Formation or Operating Agreement, as applicable, of any Borrower or any of its Subsidiaries or any order, judgment or decree of any court or other agency of government binding on any Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of any Borrower or any of its Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of any Borrower or any of its Subsidiaries (other than Liens created under any of the Loan Documents in favor of Administrative Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of any Borrower or any of its Subsidiaries. D. GOVERNMENTAL CONSENTS. The execution and delivery by each Borrower of this Amendment and the performance by the Borrowers of the Amended Agreement and the transactions contemplated by this Amendment do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body. E. BINDING OBLIGATION. This Amendment and the Amended Agreement have been duly executed and delivered by each Borrower and is the legally valid and binding obligations of the Borrowers, enforceable against the Borrowers in accordance with their respective terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability. F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT AGREEMENT. The representations and warranties contained in Section 5 of the Credit Agreement are and will be true, correct and complete in all material respects on and as of the First Amendment Effective Date to the same extent as though made on and as of that date, except to the extent such representations and warranties specifically relate to an earlier date, in which case they were true, correct and complete in all material respects on and as of such earlier date. G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will result from the consummation of the transactions contemplated by this Amendment that would constitute an Event of Default or a Potential Event of Default. SECTION 5. ACKNOWLEDGEMENT AND CONSENT Holdings, each Borrower and each Subsidiary Guarantor hereby acknowledges that such Loan Party has read this Amendment and consents to the terms hereof and further hereby confirms and agrees that, notwithstanding the effectiveness of this Amendment, the obligations of such Loan Party under each of the Loan Documents to which such Loan Party is a party shall not be impaired and each of the Loan Documents to which such Loan Party is a party are, and shall continue to be, in full force and effect and are hereby confirmed and ratified in all respects. 6 Holdings and each Subsidiary Guarantor acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Amendment, such Loan Party is not required by the terms of the Credit Agreement or any other Loan Document to consent to the amendments to the Credit Agreement effected pursuant to this Amendment and (ii) nothing in the Credit Agreement, this Amendment or any other Loan Document shall be deemed to require the consent of such Loan Party to any future amendments to the Credit Agreement. SECTION 6. MISCELLANEOUS A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS. (i) On and after the Fourth Amendment Effective Date, each reference in the Credit Agreement to "this Agreement", "hereunder", "hereof", "herein" or words of like import referring to the Credit Agreement, and each reference in the other Loan Documents to the "Credit Agreement", "thereunder", "thereof" or words of like import referring to the Credit Agreement shall mean and be a reference to the Amended Agreement. (ii) Except as specifically amended by this Amendment, the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. (iii) The execution, delivery and performance of this Amendment shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of Administrative Agent or any Lender under, the Credit Agreement or any of the other Loan Documents. B. FEES AND EXPENSES. Company acknowledges that all costs, fees and expenses as described in subsection 10.2 of the Credit Agreement incurred by Agents and their counsel with respect to this Amendment and the documents and transactions contemplated hereby shall be for the account of Borrowers. C. HEADINGS. Section and subsection headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose or be given any substantive effect. D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such 7 counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Amendment shall become effective upon (i) receipt by Administrative Agent of an amendment fee equal to $218,750, to be distributed among each Lender that has executed and delivered a counterpart of this Amendment (other than Credit Suisse First Boston and IBM Credit Corporation), in proportion to the amount of each such Lender's Revolving Loan Exposure to the aggregate amount of the Revolving Loan Exposure of all such Lenders, in each case after giving effect to Section 2 of this Amendment and (ii) the execution of a counterpart hereof by each of the Borrowers, each of the Subsidiary Guarantors, Holdings and each Lender and receipt by Company and Administrative Agent of written or telephonic notification of such execution and authorization of delivery. [Remainder of page intentionally left blank] 8 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. HOLDINGS: ARRIS GROUP, INC. By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Vice President, Chief Financial Officer & Secretary COMPANY: ARRIS INTERNATIONAL, INC. By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Executive Vice President, Chief Financial Officer & Secretary ARRIS: ARRIS INTERACTIVE L.L.C. By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Executive Vice President SUBSIDIARIES OF COMPANY: ANTEC ASSET MANAGEMENT COMPANY By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: President ANTEC LICENSING COMPANY By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: President S-1 TEXSCAN CORPORATION By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Chairman of the Board ELECTRONIC CONNECTOR CORPORATION OF ILLINOIS By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Vice President POWER GUARD, INC. By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Vice President ELECTRONIC SYSTEM PRODUCTS INC. By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Vice President KEPTEL, INC. By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Vice President S-2 SUBSIDIARY GUARANTORS, for purposes of Section 3 only, TEXSCAN DE MEXICO, S.A. DE C.V. By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Chairman KEPTEL DE MEXICO S.A. DE C.V. By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Chairman ANTEC INTERNATIONAL CORPORATION By: /s/ Lawrence A. Margolis ------------------------------------- Name: Lawrence A. Margolis Title: Director S-3 LENDERS: THE CIT GROUP/BUSINESS CREDIT, INC., individually and as Administrative Agent and Collateral Agent By: /s/ John F. Bohan --------------------------------------- Name: John F. Bohan Title: Vice President S-4 CREDIT SUISSE FIRST BOSTON, individually and as Syndication Agent By: /s/ Jay Chall --------------------------------------- Name: Jay Chall Title: Director By: /s/ James P. Morgan --------------------------------------- Name: James P. Morgan Title: Director S-5 AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO By: /s/ Clare J. D'Cruz --------------------------------------- Name: Clare J. D'Cruz Title: Vice President S-6 COMERICA BANK By: /s/ Guy Camerlengo --------------------------------------- Name: Guy Camerlengo Title: Assistant Vice President S-7 CONGRESS FINANCIAL CORPORATION (SOUTHERN) By: /s/ Morris P. Holloway --------------------------------------- Name: Morris P. Holloway Title: Senior Vice President S-8 FLEET CAPITAL CORPORATION By: /s/ Douglas Strange --------------------------------------- Name: Douglas Strange Title: Vice President S-9 GMAC COMMERCIAL CREDIT LLC By: /s/ Joseph A. Klapkowski --------------------------------------- Name: Joseph A. Klapkowski Title: S-10 IBM CREDIT CORPORATION By: /s/ Thomas S. Curcio --------------------------------------- Name: Thomas S. Curcio Title: Manger of Credit S-11 PNC BANK, NATIONAL ASSOCIATION By: /s/ Eric Huff --------------------------------------- Name: Eric Huff Title: Assistant Vice President By: --------------------------------------- Name: Title: S-12 SCHEDULE 1

LENDER COMMITMENT PRO RATA SHARE - ------ ------------------ -------------- The CIT Group/Business Credit, Inc. $ 22,500,000.00 15.7342657343% American National Bank and Trust Company of Chicago $ 22,500,000.00 15.7342657343% Comerica Bank $ 10,000,000.00 6.9930069930% Congress Financial Corporation (Southern) $ 25,000,000.00 17.4825174825% Fleet Capital Corporation $ 22,500,000.00 15.7342657343% GMAC Commercial Credit LLC $ 22,500,000.00 15.7342657343% PNC, National Association $ 18,000,000.00 12.5874125874% ================== ============== $ 143,000,000.00 100%

S-1 EX-10.2 4 g76775exv10w2.txt OPTION AGREEMENT, DATED JUNE 7, 2002 EXHIBIT 10.2 OPTION AGREEMENT by and among NORTEL NETWORKS LLC, ARRIS INTERACTIVE L.L.C. and ARRIS GROUP, INC. Dated as of June 7, 2002 TABLE OF CONTENTS

Page ---- ARTICLE I DEFINITIONS...............................................................1 1.01 Definitions............................................................1 ARTICLE II GRANT OF OPTION; EXERCISE PRICE..........................................3 2.01 Grant of Option........................................................3 2.02 Full Exercise Price....................................................4 2.03 Time and Manner of Exercise............................................4 2.04 Conditions to the Exercise of the Option...............................4 ARTICLE III CLOSING.................................................................5 3.01 Time, Place and Manner of Closing......................................5 3.02 Actions at Closing.....................................................5 3.03 Effect of Closing......................................................5 ARTICLE IV REPRESENTATIONS AND WARRANTIES...........................................6 4.01 Representations and Warranties of Arris................................6 4.02 Representations and Warranties of Nortel...............................7 ARTICLE V PRE-CLOSING COVENANTS.....................................................8 5.01 Transfer of Class B Interest...........................................8 5.02 Registration and Offering..............................................9 ARTICLE VI CONDITIONS TO CLOSING....................................................9 6.01 Conditions to Each Party's Obligation to Effect the Transactions.......9 6.02 Conditions to Obligation of Arris.....................................10 6.03 Conditions to Obligation of Nortel....................................10 ARTICLE VII TERMINATION............................................................11 7.01 Termination...........................................................11 7.02 Effect of Termination and Abandonment.................................13 ARTICLE VIII MISCELLANEOUS.........................................................13 8.01 Amendment; Extension; Waiver..........................................13 8.02 Counterparts..........................................................13 8.03 Governing Law.........................................................13 8.04 Expenses..............................................................14

i TABLE OF CONTENTS

Page ---- 8.05 Notices...............................................................14 8.06 Entire Understanding..................................................15 8.07 Assignment; Third Party Beneficiaries.................................15 8.08 Incorporation of Exhibits.............................................15 8.09 Press Releases........................................................16 8.10 Interpretation........................................................16 8.11 Severability..........................................................16 8.12 Investor Rights Agreement.............................................16 8.13 Amendment of LLC Agreement............................................16

Exhibits Exhibit A Form of Cross-Receipt Exhibit B Form of Termination Agreement Exhibit C Form of Exercise Notice -ii- OPTION AGREEMENT THIS OPTION AGREEMENT (this "Agreement"), dated as of June 7, 2002, is made by and among NORTEL NETWORKS LLC, a Delaware limited liability company ("Nortel"), ARRIS INTERACTIVE L.L.C., a Delaware limited liability company (the "Company") and ARRIS GROUP, INC., a Delaware corporation ("Arris"). Capitalized terms not otherwise defined herein shall have the respective meanings given them in the Second Amended and Restated Limited Liability Company Agreement, dated and effective as of August 3, 2001 (the "LLC Agreement"), of the Company. WHEREAS, each of Nortel and Arris is a Member of the Company; WHEREAS, Nortel is the sole Class B Member of the Company holding all of the Class B Interest; WHEREAS, Nortel is also the holder of shares (the "Shares") of common stock, par value $.01 per share, of Arris (the "Arris Common Stock"); WHEREAS, Nortel has requested Arris to undertake the Registration and Offering, and Arris desires to undertake the same; and WHEREAS, in connection with such Registration and Offering and the sale of some or all of the Shares by Nortel pursuant thereto, Arris and the Company desire the Company to obtain from Nortel, and Nortel desires to grant to the Company, an option to redeem all or a portion of the Class B Unreturned Capital and accrued but unpaid Class B Return (to the extent not previously added to Class B Unreturned Capital) of Nortel's Class B Interest in the Company, in each case subject to, and on, the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the mutual promises, covenants and agreements set forth herein, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, and intending to be legally bound hereby, the parties agree as follows: ARTICLE I DEFINITIONS 1.01 Definitions. The following capitalized terms used in this Agreement shall have the respective meanings ascribed to them below: "Agreement" shall have the meaning given it in the introductory paragraph hereof. "Ancillary Agreements" shall mean, collectively, the Termination Agreement and the Cross-Receipt. "Arris" shall have the meaning given it in the introductory paragraph hereof. "Arris Common Stock" shall have the meaning given it in the third recital hereof. "Business Day" shall mean each day on which banking institutions in both of Toronto, Canada and New York, New York are not authorized or required to close. "Class B Interest Exchange" shall mean the exchange of Nortel's Class B Interest for New Securities pursuant to Section 8.03 of the LLC Agreement. "Closing" shall have the meaning given it in Section 3.01. "Closing Date" shall mean any date on which a Closing occurs. "Company" shall have the meaning given it in the introductory paragraph hereof. "Cross-Receipt" shall mean the Cross-Receipt substantially in the form of Exhibit A. "Discount Percentage" shall mean, with respect to any particular exercise of the Option, the percentage determined by reference to the Nortel Ownership Percentage (determined as of the date of the Exercise Notice relating to such exercise), as follows:

Nortel Ownership Percentage Discount Percentage --------------------------- ------------------- Less than 20% 60% 20% or more, but less than 21.5% 70% 21.5% or more, but less than 23% 72.5% 23% or more, but less than 25% 75% 25% or more, but less than 27% 79% 27% or more 80%

"Exercise Notice" shall have the meaning given to it in Section 2.03. "Exercise Period" shall mean the period commencing at the time of consummation of the Offering (or, if later, on June 30, 2002) and ending at 11:59 p.m., Boston time, on June 30, 2003. "Full Exercise Price" shall have the meaning given to it in Section 2.02. "Governmental Authority" means any court, administrative agency or commission or other foreign or domestic federal, state, provincial or local governmental authority or instrumentality. "HSR Act" shall have the meaning given to it in Section 4.01(c). "Investor Rights Agreement" shall have the meaning given it in Section 8.12. "LLC Agreement" shall have the meaning given it in the introductory paragraph hereof. -2- "Material Adverse Effect" shall mean with respect to the referenced Person, any change, circumstance or effect that is or is reasonably likely to be materially adverse to the business, condition (financial or otherwise) or results of operations of such Person and its Affiliates taken as a whole. "Nortel" shall have the meaning given it in the introductory paragraph hereof. "Nortel Ownership Percentage" shall mean the percentage of shares of Arris Common Stock outstanding as of 11:59 p.m., Boston time, on June 30, 2002 (or, if the underwriters' over-allotment option relating to the Offering is exercised after June 30, 2002, then as of 11:59 p.m., Boston time, on the date of the most recent such exercise occurring on or prior to the date of determination of the Nortel Ownership Percentage) that is held of record by Nortel as of such time. "Offering" shall mean the public offering and sale of at least Ten Million (10,000,000) Shares (or such lesser number of Shares as Nortel may elect to sell) held by Nortel in a firm commitment underwriting pursuant to the Registration Statement. "Option" shall have the meaning given to it in Section 2.01. "Registration" shall mean the shelf registration for resale under the Securities Act of at least Twenty-One Million (21,000,000) Shares held by Nortel, to be made by Arris as contemplated by Section 5.02. "Registration Rights Agreement" shall mean the Registration Rights Agreement, dated as of August 3, 2001, by and between Nortel and Arris. "Registration Statement" shall mean the registration statement under the Securities Act, initially filed by Arris with the SEC prior to the date hereof to effect the Registration as contemplated by Section 5.02. "SEC" shall mean the United States Securities and Exchange Commission, or any successor agency. "Shares" shall have the meaning given it in the third recital hereof. "Termination Agreement" shall mean the Termination Agreement substantially in the form of Exhibit B. "Transactions" shall mean the transactions contemplated hereby and/or by any of the Ancillary Agreements to occur at any Closing. ARTICLE II GRANT OF OPTION; EXERCISE PRICE 2.01 Grant of Option. Upon the terms and conditions set forth herein, Nortel hereby grants to the Company an option to redeem all or a portion of the Class B Unreturned Capital and -3- accrued but unpaid Class B Return (to the extent not previously added to Class B Unreturned Capital) of the Class B Interest held by Nortel in the Company, subject to, and on, the terms and conditions set forth below (the "Option"); provided that each exercise of the Option shall be solely for the Full Exercise Price or any lesser amount in excess of $20,000,000. 2.02 Full Exercise Price. The price payable by the Company in order to exercise the Option in full (the "Full Exercise Price") shall be equal to the amount required to be paid to Nortel hereunder (whether pursuant to a single exercise of the Option or otherwise) in order to reduce each of the Class B Unreturned Capital and accrued but unpaid Class B Return (to the extent not previously added to Class B Unreturned Capital) to zero (giving effect to the adjustment contemplated by Section 3.03). 2.03 Time and Manner of Exercise. Upon the terms and subject to the conditions set forth herein (including Section 2.04), the Option shall be exercisable by the Company at any time, and from time to time, during the Exercise Period by delivering to Nortel, in the manner set forth in Section 8.05, written notice in the form attached hereto as Exhibit C (an "Exercise Notice"). Upon such delivery of an Exercise Notice, the Company shall be irrevocably obligated to consummate the Transactions contemplated by such Exercise Notice, subject to the terms and conditions of this Agreement, including those set forth in Article VI. 2.04 Conditions to the Exercise of the Option. The right of the Company to exercise the Option hereunder shall be conditioned upon and subject to the following conditions: (a) the representations and warranties of Arris and the Company set forth in this Agreement (without giving effect to any standard, qualification or exception contained therein with respect to materiality or Material Adverse Effect) shall be true and correct, as of the date of this Agreement and as of the date of the relevant Exercise Notice as though made as of the date of such Exercise Notice (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), except as would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Arris and would not prevent or impair Arris' or the Company's ability to consummate the Transactions; (b) the Company, Arris and their Affiliates shall have performed in all material respects (without giving effect to any standard, qualification or exception contained therein with respect to materiality or Material Adverse Effect) all obligations required to be performed by them as of or prior to the date of the relevant Exercise Notice under this Agreement or any other agreement in effect between the Company and/or Arris (and/or their Affiliates) and Nortel (and/or its Affiliates); (c) no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition preventing the consummation of the Transactions shall be in effect or -4- pending, and no proceeding brought by any Governmental Authority seeking any of the foregoing shall be pending; and (d) The Offering shall have been consummated not later than June 30, 2002. ARTICLE III CLOSING 3.01 Time, Place and Manner of Closing. In the event that an Exercise Notice is duly and validly given by the Company hereunder prior to the expiration of the Exercise Period, consummation of the Transactions contemplated by such Exercise Notice (a "Closing") shall take place at 10:00 a.m., Boston time, on the tenth (10th) Business Day after the date of Nortel's receipt of such Exercise Notice, at the offices of Hale and Dorr LLP at 60 State Street, Boston, Massachusetts, or by facsimile, or at such other time and place as the parties hereto may mutually agree in writing. 3.02 Actions at Closing. At each Closing: (a) The Company shall deliver to Nortel, by wire transfer or immediately available U.S. funds to the bank account designated by Nortel by written notice to the Company not later than three (3) Business Days prior to the Closing, the amount of the Full Exercise Price or any lesser amount in excess of $20 million; (b) If, as a result of the Transactions consummated at such Closing, the amount of Class B Unreturned Capital is reduced to zero by operation of Section 3.03, then Nortel, Arris and the Company shall execute and deliver to each other the Termination Agreement, and Arris shall deliver to Nortel the Termination Agreement executed by each other Affiliate of Arris that is a party thereto; and (c) Each of Nortel and the Company shall execute and deliver to the other the Cross-Receipt. A Closing shall not be deemed to occur until all of the actions set forth in clauses (a) through (c) of this Section 3.02 have been completed with respect to such Closing. 3.03 Effect of Closing. If any Closing occurs, then the amount paid by the Company pursuant to Section 3.02(a) shall be applied as set forth in the last sentence of Section 8.02(a) of the LLC Agreement, as if such payment were a redemption payment referenced therein; provided, however, that, solely for the purposes of this sentence and the related calculation of the Class B Unreturned Capital and Class B Return of Nortel's Class B Interest remaining outstanding after giving effect to the Option exercise consummated at such Closing, the amount so paid by the Company shall first be deemed adjusted by dividing the same by the Discount Percentage applicable to such Closing. -5- ARTICLE IV REPRESENTATIONS AND WARRANTIES 4.01 Representations and Warranties of Arris. Arris and the Company each represents and warrants to Nortel jointly and severally, that: (a) Organization and Standing. Arris is a corporation and the Company is a limited liability company, in each case duly organized, validly existing and in good standing under the laws of the State of Delaware. (b) Authority. (i) The execution and delivery of this Agreement and the Ancillary Agreements, the exercise of the Option and the consummation of the Transactions have been duly authorized by all necessary corporate or limited liability company (as applicable) action of Arris and the Company prior to the date hereof (which action has not been rescinded or modified in any way). (ii) This Agreement is, and each Ancillary Agreement to be entered into at the Closing will be, a legal, valid and binding agreement of the Company and (to the extent that it is a party thereto) Arris, enforceable in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights or by general equity principles, whether considered at law or in equity). (c) No Defaults. Subject to the receipt of the applicable regulatory approvals, and expiration of the applicable waiting periods, referred to in Section 4.01(d) and required filings under federal and state securities laws, the execution, delivery and performance of this Agreement and the Ancillary Agreements, the exercise of the Option and the consummation of the Transactions by Arris and the Company do not and will not (i) constitute a breach or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Arris or the Company or to which Arris or the Company or any of their respective properties or assets are subject or bound, (ii) constitute a breach, violation or default under, the articles or certificate of incorporation or by-laws of Arris or the certificate of formation or limited liability company agreement of the Company or (iii) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument, except in the case of (i) and (iii), where such breach, violation or default or the failure to obtain such consents or approvals would not in the aggregate have a Material Adverse Effect on Arris and would not prevent or impair Arris' or the Company's ability to consummate the Transactions. -6- (d) Regulatory Approvals. No consents or approvals of, or filings or registrations with, any Governmental Authority are necessary for the Company to exercise the Option or for the Company or Arris to consummate the Transactions, except for (i) as may be required under, and other applicable requirements of, the HSR Act, the Competition Act (Canada) and antitrust or other competition laws of other jurisdictions; (ii) the filing with the SEC and declaration of effectiveness of the Registration Statement; and (iii) such filings as are required to be made or approvals as are required to be obtained under the securities or "Blue Sky" laws of various states in connection with the Offering. (e) Solvency. Immediately after giving effect to the Transactions and the closing of any financing to be obtained by the Company, Arris or any of their Affiliates in order to effect the Transactions, the Company, Arris and each of their relevant Affiliates shall be able to pay its debts as they become due and shall own property having a fair saleable value greater than the amounts required to pay its debts (including a reasonable estimate of the amount of all contingent liabilities). Immediately after giving effect to the Transactions and the closing of any financing to be obtained by the Company, Arris or any of their Affiliates in order to effect the Transactions, the Company, Arris and each of their relevant Affiliates shall have adequate capital to carry on its business. No transfer of property is being made and no obligation is being incurred in connection with the Transactions and the closing of any financing to be obtained by the Company, Arris or any of their Affiliates in order to effect the Transactions with the intent to hinder, delay or defraud either present or future creditors of the Company, Arris or any of their Affiliates. 4.02 Representations and Warranties of Nortel. Nortel represents and warrants to the Company and Arris that: (a) Organization and Standing. Nortel is a limited liability company organized, validly existing and in good standing under the laws of the State of Delaware. (b) Authority. (i) The execution and delivery of this Agreement and the Ancillary Agreements and the consummation of the Transactions have been duly authorized by all necessary limited liability company action of Nortel prior to the date hereof (which action has not been rescinded or modified in any way). (ii) This Agreement is, and each Ancillary Agreement to be entered into at the Closing will be, a legal, valid and binding agreement of Nortel (to the extent that it is a party thereto), enforceable in accordance with its terms (except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer and similar laws of general applicability relating to or affecting creditors' rights or by general equity principles, whether considered at law or in equity). -7- (c) No Defaults. Subject to the receipt of the applicable regulatory approvals, and expiration of the applicable waiting periods, referred to in Section 4.02(d) and required filings under federal, state and foreign securities laws, the execution, delivery and performance of this Agreement and the Ancillary Agreements and the consummation of the Transactions by Nortel do not and will not (i) constitute a breach or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of Nortel or to which Nortel or any of its respective properties or assets are subject or bound, (ii) constitute a breach, violation or default under, the certificate of formation or limited liability company agreement of Nortel, or (iii) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license, agreement, indenture or instrument, except in the case of (i) and (iii), where such breach, violation or default or the failure to obtain such consents or approvals would not in the aggregate have a Material Adverse Effect on Nortel and would not prevent or impair Nortel's ability to consummate the Transactions. (d) Regulatory Approvals. No consents or approvals of, or filings or registrations with, any Governmental Authority are necessary for Nortel to consummate the Transactions, except for (i) as may be required under, and other applicable requirements of, the HSR Act, the Competition Act (Canada) and antitrust or other competition laws of other jurisdictions, and (ii) as may be required under, and other applicable requirements of, federal, state and foreign securities laws. (e) Title to Class B Interest. Nortel has good and valid title to the Class B Interest, free and clear of all liens or encumbrances (other than liens or encumbrances, if any, imposed by the provisions of the LLC Agreement or the Subordination Agreement). ARTICLE V PRE-CLOSING COVENANTS 5.01 Transfer of Class B Interest. Nortel agrees that, from the date hereof until the expiration of the Exercise Period (or, if earlier, until the termination of this Agreement in accordance with its terms), without the prior written consent of the Company, Nortel shall not Transfer its Class B Interest or any portion thereof (including through granting a lien or pledge) to any Person other than pursuant to a redemption by the Company hereunder or under the LLC Agreement unless such Person agrees to become bound by the provisions of this Agreement to the same extent as Nortel was so bound as of immediately prior to such Transfer. In the event that Nortel Transfers all of its Class B Interest in compliance with the preceding sentence, Nortel shall assign this Agreement to the Transferee(s) of such Class B Interest (with no consent or approval of the Company, Arris or any of their Affiliates being necessary for such assignment) and shall have no further liabilities or obligations to the Company, Arris or any of their Affiliates hereunder. -8- 5.02 Registration and Offering. (a) Each of Nortel and Arris agrees that, except to the extent otherwise provided herein or expressly agreed by Nortel and Arris in writing, the provisions of the Registration Rights Agreement shall apply to the Registration and Offering hereunder to the same extent as if (i) Nortel, as the "Investor" under the Registration Rights Agreement, validly required registration of the Shares to be included in the Registration under Section 1 of the Registration Rights Agreement, and (ii) as a "Selling Stockholder" within the meaning of Section 1(c) of the Registration Rights Agreement, Nortel validly requested that the Registration Statement provide for a delayed or continuous offering of the Shares covered thereby pursuant to Rule 415 promulgated under the Securities Act or any similar rule then in effect. (b) Each of Nortel and Arris agrees that (i) the Offering shall be pursuant to a firm commitment underwriting, as if a valid request for the same were made by Nortel as a "Selling Stockholder" under Section 1(c) of the Registration Rights Agreement, and (ii) J. P. Morgan Securities Inc. shall act as a lead managing underwriter for the Offering, together with one other nationally recognized investment banking firm to be selected by mutual written agreement of Nortel and Arris. (c) Arris shall cause each of Messrs. Stanzione, Margolis, Potts and Lakin, each of whom is an officer of Arris, to (i) devote such time as may be necessary for the expeditious preparation and filing of the Registration Statement and such responses to comments and other activities as may be necessary to achieve expeditious effectiveness of the Registration Statement, (ii) commencing upon the initial filing of the Registration Statement with the SEC, devote such time as, in the opinion of the managing underwriters, be necessary for appropriate preparation for the road show to be undertaken in connection with the Offering, (iii) devote such time as Nortel may request to such road show, not to exceed two (2) weeks, and (iv) use their respective best efforts to cooperate with and expedite the Registration and the Offering. ARTICLE VI CONDITIONS TO CLOSING 6.01 Conditions to Each Party's Obligation to Effect the Transactions. The respective obligation of each of Nortel, the Company and Arris to consummate the Transactions at each Closing (once the applicable Exercise Notice has been validly given by the Company hereunder) is subject to the prior fulfillment or written waiver by each of them of each of the following conditions: (a) All regulatory approvals required to consummate the Transactions contemplated by the applicable Exercise Notice shall have been obtained and shall remain in full force and effect and all statutory waiting periods in respect thereof shall have -9- expired, except any such approvals failure to obtain which would not reasonably be expected to have a Material Adverse Effect on Nortel or Arris following such Closing. (b) No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, judgment, decree, injunction or other order (whether temporary, preliminary or permanent) which is in effect and enjoins or prohibits consummation of the Transactions contemplated by the applicable Exercise Notice. (c) There shall have been no Class B Interest Exchange prior to, or at the time of, such Closing. 6.02 Conditions to Obligation of Arris. The obligation of the Company and Arris to consummate the Transactions at each Closing (once the applicable Exercise Notice has been validly given by the Company hereunder) is also subject to the fulfillment or written waiver by the Company and Arris at or prior to such Closing of each of the following conditions: (a) Representations and Warranties. All representations and warranties of Nortel set forth in this Agreement (without giving effect to any standard, qualification or exception contained therein with respect to materiality or Material Adverse Effect) shall be true and correct, as of the date of this Agreement and as of such Closing as though made at and as of such Closing (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), except as would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on Nortel's ability to consummate the Transactions to be consummated at such Closing, and the Company shall have received a certificate, dated the applicable Closing Date, signed on behalf of Nortel by an appropriate authorized signatory thereof to such effect. (b) Performance of Obligations. Nortel and its Affiliates shall have performed in all material respects (without giving effect to any standard, qualification or exception contained therein with respect to materiality or Material Adverse Effect) all obligations required to be performed by them at or prior to such Closing under this Agreement or any other agreement in effect between the Company and/or Arris (and/or their Affiliates) and Nortel (and/or its Affiliates), and the Company shall have received a certificate, dated the applicable Closing Date, signed on behalf of Nortel by an appropriate authorized signatory thereof to such effect. 6.03 Conditions to Obligation of Nortel. The obligation of Nortel to consummate the Transactions at each Closing (once the applicable Exercise Notice has been validly given by the Company hereunder) is also subject to the fulfillment or written waiver by Nortel prior to such Closing of each of the following conditions: -10- (a) Representations and Warranties. All representations and warranties of the Company and Arris set forth in this Agreement (without giving effect to any standard, qualification or exception contained therein with respect to materiality or Material Adverse Effect) shall be true and correct, as of the date of this Agreement and as of such Closing as though made at and as of such Closing (except that representations and warranties that by their terms speak as of the date of this Agreement or some other date shall be true and correct as of such date), except as would not have or reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the ability of the Company and Arris to consummate the Transactions to be consummated at such Closing; and Nortel shall have received a certificate, dated applicable Closing Date, signed on behalf of Arris by the Chief Executive Officer or the Chief Financial Officer of Arris, and on behalf of the Company by an appropriate authorized signatory thereof, to such effect. (b) Performance of Obligations. Arris and its Affiliates shall have performed in all material respects (without giving effect to any standard, qualification or exception contained therein with respect to materiality or Material Adverse Effect) all obligations required to be performed by them at or prior to such Closing under this Agreement or any other agreement in effect between the Company and/or Arris (and/or their Affiliates) and Nortel (and/or its Affiliates), and Nortel shall have received a certificate, dated the applicable Closing Date, signed on behalf of Arris by the Chief Executive Officer or the Chief Financial Officer of Arris, and on behalf of the Company by an appropriate authorized signatory thereof, to such effect. ARTICLE VII TERMINATION 7.01 Termination. This Agreement may be terminated, and the Transactions to be consummated at any subsequent Closing may be abandoned: (a) Mutual Consent. At any time prior to the redemption in full of Nortel's Class B Interest hereunder or under the LLC Agreement, by the mutual consent of Nortel and the Company. (b) Breach. At any time prior to such redemption (i) by Nortel, in the event of either: (x) a breach by the Company or Arris of any representation or warranty contained herein which would result in the non-satisfaction of the conditions set forth in Section 6.03(a), which breach is not capable of being cured or has not been cured within 10 calendar days after the giving of written notice to the breaching party of such breach; or (y) a material breach by the Company, Arris or any of their Affiliates of any of the covenants or agreements contained herein or in any other agreement in effect between the Company, Arris (and/or their -11- Affiliates) and Nortel (and/or its Affiliates), which breach is not capable of being cured or has not been cured within 10 calendar days after the giving of written notice to the breaching party of such breach. (ii) by the Company, in the event of either: (x) a breach by Nortel of any representation or warranty contained herein which would result in the non-satisfaction of the conditions set forth in Section 6.02(a), which breach is not capable of being cured or has not been cured within 10 calendar days after the giving of written notice to the breaching party of such breach; or (y) a material breach by Nortel or any of its Affiliates of any of the covenants or agreements contained herein or in any other agreement in effect between Arris (and/or its Affiliates) and Nortel (and/or its Affiliates), which breach is not capable of being cured or has not been cured within 10 calendar days after the giving of written notice to the breaching party of such breach. (c) Delay of Registration or Offering. By Nortel, in the event that (i) the Registration Statement has not become effective on or prior to June 15, 2002, or (ii) the Offering (other than the closing of any exercises of over-allotment options by the underwriters of the Offering) has not been consummated on or prior to June 30, 2002; provided that, at the election of Nortel, the provisions of Section 5.02 shall continue in effect until June 30, 2003 notwithstanding termination of this Agreement pursuant to this Section 7.01(c). (d) Delay of Closing. At any time prior to the redemption in full of Nortel's Class B Interest hereunder or under the LLC Agreement, by Nortel or the Company, in the event that such redemption does not occur by the earlier of (i) the tenth (10th) Business Day after delivery to Nortel, pursuant to Section 2.03, of the Exercise Notice contemplating such redemption, and (ii) July 15, 2003, except to the extent that the failure of such redemption to occur arises out of or results from the knowing action or inaction of the party seeking to terminate pursuant to this Section 7.01(d) which action or inaction is in violation of its (or one of its Affiliates') obligations under this Agreement. (e) No Governmental Approval. (i) By the Company or Nortel in the event the approval of any Governmental Authority required for consummation of the Transactions shall have been denied by final non-appealable action of such Governmental Authority. (ii) By Nortel in the event any required approval of a Governmental Authority contains any final non-appealable conditions, restrictions or requirements which would reasonably be expected to (A) following a Closing, have a Material Adverse Effect on Nortel or Arris or (B) require Nortel, Arris or any of their respective Affiliates to sell or otherwise dispose of, or to hold separately, or to permit the sale or other disposition of, any of their -12- respective assets, whether as a condition to obtaining any approval from a Governmental Authority or any other Person or for any other reason. (iii) By Arris in the event any required approval of a Governmental Authority contains any final, non-appealable conditions, restrictions or requirements which would reasonably be expected to, following a Closing, have a Material Adverse Effect on Arris or require Arris or any of its Affiliates to sell or otherwise dispose of, or to hold separately, or to permit the sale or other disposition of, any of their respective assets, whether as a condition to obtaining any approval of any Governmental Authority or any other Person or for any other reason. 7.02 Effect of Termination and Abandonment. In the event of termination of this Agreement and the abandonment of the Transactions pursuant to this Article VII, no party to this Agreement (nor any of their respective officers, directors or agents) shall have any liability or further obligation to the other party hereunder except (i) as otherwise set forth in Section 7.01(c), and (ii) that termination shall not relieve a party from liability for any willful breach of this Agreement or any liability or obligation arising under the Registration Rights Agreement. ARTICLE VIII MISCELLANEOUS 8.01 Amendment; Extension; Waiver. (a) Except as otherwise provided in Section 5.01 with respect to Transfers by Nortel of its Class B Interest, this Agreement may be amended only by an instrument in writing signed on behalf of each of the parties hereto. (b) Either party hereto may, to the extent legally allowed, (i) extend the time for the performance of any of the obligations or other acts of the other party, (ii) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto and (iii) waive compliance by the other party with any of the agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in a written instrument signed on behalf of such party, but such extension or waiver or failure to insist on strict compliance with an obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. 8.02 Counterparts. This Agreement may be executed in one or more counterparts, each of which when executed shall be deemed to constitute an original but all of which when taken together shall constitute one and the same instrument. 8.03 Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Delaware, without regard to the conflict of law principles thereof. -13- 8.04 Expenses. Except as otherwise provided herein, each party hereto will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated hereby, except that (i) all costs and expenses of either party hereto relating to the Registration and the Offering shall be borne as specified in the Registration Rights Agreement, as if the Registration were undertaken and made pursuant thereto and Nortel were the only "Selling Stockholder" under the Registration Rights Agreement participating therein, and (ii) Arris shall also reimburse and pay to Nortel, not later than thirty (30) days after receipt of Nortel's invoice therefor (with interest on any overdue amounts payable by Arris to Nortel at the rate of 12% per annum or, if lower, the maximum lawful rate), all of Nortel's and its Affiliates' costs and expenses relating to Nortel's and its relevant Affiliates' (and its and their respective officers, directors and employees) participation in the road show relating to the Offering. 8.05 Notices. All notices, requests and other communications hereunder to a party shall be in writing and shall be deemed given if personally delivered, telecopied (with confirmation) or three Business Days after being mailed by registered or certified mail (return receipt requested) or one Business Day after being delivered by overnight courier to such party at its address set forth below or such other address as such party may specify by notice to the parties hereto. If to Nortel, to: Nortel Networks Inc. 2221 Lakeside Blvd. Richardson, Texas 75082-4399 Attn: Craig Johnson, Mergers and Acquisitions Fax: 972-685-3122 Phone: 972-684-7255 With a copy to: Nortel Networks Inc. 200 Athens Way Nashville, Tennessee 37228 Attn: Corporate Secretary Fax: 615-432-4067 Phone: 615-432-4000 Nortel Networks Limited 8200 Dixie Road, Suite 100 Brampton, Ontario, Canada L6T 5P6 Attn: Corporate Secretary Fax: 905-863-8386 Phone: 905-863-0000 -14- With a copy to: Hale and Dorr LLP 60 State Street Boston, Massachusetts 02109 Attention: Dimitri P. Racklin Fax: (617) 526-5000 Phone: (617) 526-6462 If to Arris, to: Arris Group, Inc. 11450 Technology Circle Duluth, Georgia 30097 Attention: Lawrence Margolis Fax: (678) 473-8470 Phone: (678) 473-8129 With a copy to: Troutman Sanders LLP 600 Peachtree Street Suite 5200 Atlanta, GA 30308 Attention: W. Brinkley Dickerson, Jr. Fax: 404-885-3900 Phone: 404-885-3000 8.06 Entire Understanding. This Agreement and the documents and instruments referenced herein represent the entire understanding of the parties hereto with reference to the transactions contemplated hereby and thereby supersede any and all other oral or written agreements heretofore made to the extent (but only to the extent) such agreements relate to the subject matter hereof. 8.07 Assignment; Third Party Beneficiaries. Except in the event of a Transfer by Nortel of its Class B Interest prior to the Closing (in which case Section 5.01 shall apply), neither this Agreement, nor any of the rights, interests or obligations hereunder, shall be assigned by either of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other party. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties hereto and their respective successors and assigns. Except as set forth in Section 8.12, nothing in this Agreement, express or implied, is intended to confer upon any Person, other than the parties hereto or their respective successors or permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement. 8.08 Incorporation of Exhibits. All Exhibits shall be deemed to constitute an integral part of this Agreement for all purposes. -15- 8.09 Press Releases. Nortel and Arris shall jointly agree on an initial press release with respect to the Transactions. Neither the Company nor Arris will, without the prior approval of Nortel, issue (i) any other press release or (ii) any written statement for general circulation (including any written statement circulated to employees, customers or other third parties) relating to the transactions contemplated hereby; except, in the case of clause (ii) above, as otherwise required by applicable law or regulation or rules of the Nasdaq Stock Market, Inc. 8.10 Interpretation. When a reference is made in this Agreement to Articles, Sections or Exhibits, such reference shall be to an Article or Section of, or Exhibit to, this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement are for reference purposes only and are not part of this Agreement. Whenever the words "include", "includes" or "including" are used in this Agreement, they shall be deemed to be followed by the words "without limitation". Any reference to "herein" or "hereof" or similar terms shall refer to the agreement as a whole rather than to the individual paragraph, Section or Article. Time shall be deemed to be of the essence in the interpretation and enforcement of this Agreement. 8.11 Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so broad as to be unenforceable, the provision shall be interpreted to be only so broad as it is enforceable. 8.12 Investor Rights Agreement. Arris acknowledges and agrees that (i) the execution and delivery of this Agreement by the parties hereto and the consummation of the Transactions do not constitute a breach or violation of, or otherwise conflict with, the terms and provisions of the Amended and Restated Investor Rights Agreement, dated as of April 9, 2001, by and among Nortel, Nortel Networks Inc. and Arris, as amended by the First Amendment to Amended and Restated Investor Rights Agreement, dated as of August 3, 2001 (as amended, the "Investor Rights Agreement"), and (ii) to the extent the execution and delivery of this Agreement by the parties hereto or the consummation of the Transactions constitutes a breach or violation of, or otherwise conflicts with, the terms and provisions of the Investor Rights Agreement, Arris hereby waives any such breach, violation or conflict. Without limiting the foregoing, Arris acknowledges and agrees that the Registration and the Offering contemplated by this Agreement shall be deemed to constitute a "bona fide public offering effected in accordance with the Registration Rights Agreement" as contemplated by Section 3.3(b)(i) of the Investor Rights Agreement. Each of Arris and Nortel acknowledges and agrees that Nortel Networks Inc. shall be an express third party beneficiary of the provisions of this Section 8.12. 8.13 Amendment of LLC Agreement. This Option Agreement shall be deemed to be, and shall constitute, an amendment of the LLC Agreement to the full extent necessary or advisable to give effect to the provisions hereof. To the extent that any provisions of the -16- LLC Agreement are inconsistent with the provisions of this Option Agreement or impose any additional requirements for the execution and delivery of this Option Agreement or any of the Ancillary Agreements or the consummation of the Transactions, the LLC Agreement shall be deemed amended hereby in all respects necessary to eliminate all such inconsistencies and additional requirements. [THE NEXT PAGE IS THE SIGNATURE PAGE] -17- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first above written. ARRIS INTERACTIVE L.L.C. By: Arris Group, Inc. Its: Managing Member By: /s/ Lawrence A. Margolis ----------------------------------- Name: Lawrence A. Margolis Title: Executive Vice President & CFO ARRIS GROUP, INC. By: /s/ Lawrence A. Margolis ----------------------------------- Name: Lawrence A. Margolis Title: Executive Vice President & CFO NORTEL NETWORKS LLC By: Nortel Networks Inc. Its: Managing Member By: /s/ Deborah J. Noble ----------------------------------- Name: Deborah J. Noble Title: Assistant Secretary [Signature page to Option Agreement among Nortel Networks LLC, Arris Interactive L.L.C. and Arris Group, Inc.] -18- EXHIBIT A CROSS RECEIPT Reference is made to the Option Agreement, dated as of June __, 2002 (the "Option Agreement"), by and between NORTEL NETWORKS LLC, a Delaware limited liability company ("Nortel"), ARRIS INTERACTIVE L.L.C., a Delaware limited liability company (the "Company"), and ARRIS GROUP, INC., a Delaware corporation ("Arris"). Capitalized terms used but not defined herein shall have the respective meanings ascribed to such terms in the Option Agreement. Nortel hereby acknowledges receipt from the Company of $_____________ (the "Redemption Payment"). Both parties acknowledge that such Redemption Payment was applied to redeem [the Class B Interest in full] OR [a portion of the Class B Unreturned Capital and Class B Return (to the extent not previously added to Class B Unreturned Capital) of the Class B Interest as provided in Section 3.03 of the Option Agreement]. NORTEL NETWORKS LLC By: Nortel Networks Inc. Its: Managing Member By: ------------------------------- Name: Title: ARRIS INTERACTIVE L.L.C. By: Arris Group, Inc. Its: Managing Member By: --------------------------------- Name: Title: ARRIS GROUP, INC. By: ------------------------------- Name: Title: Dated: , 200 ------------ - EXHIBIT C NOTICE OF EXERCISE OF OPTION To: Nortel Networks LLC Reference is made to the Option Agreement (the "Option Agreement"), dated as of ______________________, 2002, by and among Nortel Networks LLC, Arris Interactive L.L.C. and Arris Group, Inc. Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Option Agreement. The Company hereby irrevocably exercises the Option [in full] [in part in the amount of _____________________________ (U.S.$ _________)]. The Company and Arris shall be obligated to consummate the Transactions contemplated by the Option Agreement to be consummated in connection with such exercise at the Closing relating thereto, subject to the terms of the Option Agreement. Dated: , 200 ---------------- - ARRIS INTERACTIVE L.L.C. By: Arris Group, Inc. Its: Managing Member By: ------------------------------- Name: Title: EX-10.3 5 g76775exv10w3.txt SECOND AMENDED INVESTOR RIGHTS AGREEMENT EXHIBIT 10.3 SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT THIS SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT, dated as of June 7, 2002 (this "Agreement"), by and among NORTEL NETWORKS LLC, a limited liability company organized under the laws of Delaware ("Investor"), NORTEL NETWORKS INC., a Delaware corporation ("Parent"), and ARRIS GROUP, INC., f/k/a Broadband Parent Corporation, a Delaware corporation (the "Company"). WHEREAS, pursuant to an Agreement and Plan of Reorganization dated as of October 18, 2000, as amended by that First Amendment to Agreement and Plan of Reorganization dated as of April 9, 2001 (the "Plan of Reorganization"), among the Company, ANTEC Corporation, Broadband Transition Corporation, Parent, the Investor and Arris Interactive L.L.C., Investor received at the Closing (as such term is defined in the Plan of Reorganization) shares of Common Stock of the Company (the "Shares"); WHEREAS, as an inducement to the Company and ANTEC Corporation to enter into the Plan of Reorganization, Investor and Parent agreed to enter into an Amended and Restated Investor Rights Agreement dated as of April 9, 2001, as amended by the First Amendment to Amended and Restated Investor Rights Agreement dated as of August 3, 2001 (the "Original Agreement"), among the Company, the Investor and the Parent, to provide for certain agreements and obligations of the parties following the Closing; and WHEREAS, the parties hereto desire to amend and restate in its entirety the Original Agreement. NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and agreements contained herein, the parties hereto hereby agree as follows: SECTION 1 DEFINITIONS Section 1.1. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below: "Affiliate" of a Person has the meaning set forth in Rule 12b-2 under the Exchange Act. "Agreement" has the meaning set forth in the preamble hereto. "Associate" of a Person has the meaning set forth in Rule 12b-2 under the Exchange Act. "Auction" shall mean an auction of at least 90% of the outstanding Voting Securities of the Company, through stock sale, merger or comparable transaction, or sale of all of substantially all of the assets of the Company, conducted, in any such instance, by a nationally recognized investment banking firm selected by the Company and reasonably acceptable to the Investor. An "Auction" may include either (i) a broad or narrow solicitation of interest and may or may not involve multiple rounds of bidding as determined by the Board or a committee thereof or (ii) any recapitalization, combination, merger, reverse merger, forward triangular merger, reverse triangular merger, asset sale or similar transaction. "Beneficially Own" with respect to any securities means having "beneficial ownership" of such securities (as determined pursuant to Rule 13d-3 under the Exchange Act without limitation by the 60-day provision in paragraph (d)(1)(i) thereof). The terms "Beneficial Ownership" and "Beneficial Owner" have correlative meanings. "Board" or "Board of Directors" means the Board of Directors of the Company. "Business Day" means any day, other than a Saturday, Sunday or a day on which banking institutions in the State of Delaware are authorized or obligated by law or executive order to close. "Certificate of Incorporation" means the Certificate of Incorporation of the Company, as amended from time to time. "Change in Control" means the occurrence of any of the following events: (a) the direct or indirect purchase or acquisition by any Person or 13D Group (other than an Excluded Person) of Beneficial Ownership of Voting Securities of the Company if, after giving effect to such acquisition, such Person or 13D Group would Beneficially Own Voting Securities representing a Voting Ownership Percentage of 20% or more; or (b) the consummation by the Company or any of its Subsidiaries of a merger, consolidation or other business combination (including a sale of all or substantially all of the assets of the Company (other than to wholly-owned Subsidiaries of the Company)), whether or not stockholder approval is required, if immediately after giving effect to such transaction, the Persons who Beneficially Owned Voting Securities immediately prior to such transaction Beneficially Own in the aggregate Voting Securities (or voting securities in the case of a surviving entity other than the Company) representing a Voting Ownership Percentage (or voting power in the case of a surviving entity other than the Company) of less than 50% immediately after giving effect to such transaction; or (c) the consummation by the Company of a plan of complete liquidation or dissolution of the Company. "Change in Control Transaction" means a transaction which, if consummated, would result in a Change in Control. "Closing" means the closing of the transactions contemplated by the Plan of Reorganization. 2 "Closing Date" means the date of the Closing. "Commission" means the Securities and Exchange Commission or any successor federal agency. "Common Stock" means the Common Stock, par value $0.01 per share, of the Company. "Company" has the meaning set forth in the preamble hereto. "Confidentiality Agreement" has the meaning set forth in Section 4.1(a) hereof. "Control" with respect to any Person means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or board membership, by contract or otherwise. "Derivative Securities" means any subscriptions, options, conversion rights, warrants, phantom stock rights or other agreements, securities or commitments of any kind obligating the Company or any of its Subsidiaries to issue, grant, deliver or sell, or cause to be issued, granted, delivered or sold (i) any Voting Securities of the Company, (ii) any securities convertible into, exercisable for or exchangeable for any Voting Securities of the Company, or (iii) any obligations measured by the price or value of any shares of capital stock of the Company. "Director" shall mean a director of the Company. "Disposition" has the meaning set forth in Section 3.3 hereof. "Exchange Act" means the Securities Exchange Act of 1934, as amended, or any successor federal statute, and the rules and regulations promulgated from time to time thereunder. "Excluded Person" means (i) any member of the Investor Group, (ii) any wholly-owned subsidiary of the Company or (iii) any underwriter temporarily holding Voting Securities in connection with a public offering of such securities. "GAAP" means United States generally accepted accounting principles. "Governmental Entity" means any government or any agency, bureau, board, commission, court, department, political subdivision, tribunal, or other instrumentality of any government (including any regulatory or administrative agency), whether federal, state or local, domestic or foreign. "Independent Director" means a person who (apart from such directorship) (i) is not a current officer or employee of the Company or any Affiliate of the Company, (ii) is not a current director, officer or employee of the Investor, Parent or any member of the Investor Group, (iii) has not been in the past three years an officer, employee, stockholder holding more than 10% 3 of the voting interest of, partner or Affiliate of the Company, the Investor, Parent, or the Investor Group. "Initial Investor Nominee Notice" has the meaning set forth in Section 2.1(a) hereof. "Investor" has the meaning set forth in the preamble hereto. "Investor Group" shall mean (a) the Investor, (b) Parent, (c) any Subsidiary of the Investor or Parent, (d) any Affiliate of the Investor or Parent, and (e) any Person with whom the Investor, Parent or any Person included in the foregoing clauses (c) or (d) is part of a 13D Group. "Investor Nominee Notice" has the meaning set forth in Section 2.1(a) hereof. "Investor Nominee" has the meaning set forth in Section 2.1(a) hereof; provided, however, that John (Ian) Anderson Craig shall not be deemed an Investor Nominee unless expressly agreed to in writing by the Investor. "Law" means any law, treaty, statute, ordinance, code, rule or regulation of a Governmental Entity. "LLC Conversion Shares" shall mean shares of Common Stock (a) issued pursuant to Section 8.03(a)(i) of the New LLC Agreement, (b) issuable upon conversion of the Company preferred stock that may be issued pursuant to Section 8.03(a)(ii) of the New LLC Agreement or (c) issuable upon conversion of the subordinated note of the Company that may be issued pursuant to Section 8.03(a)(iii) of the New LLC Agreement. "Market Price," shall mean on any trading day, with respect to shares of Common Stock or any other security which is listed on a national securities exchange, the last sale price regular way, or, in case no such sale takes place on such day, the average of the closing bid and asked prices regular way, in either case on the principal national securities exchange on which the Common Stock or other security is listed or admitted to trading, or, if the Common Stock or other security is not listed or admitted to trading on any national securities exchange but is designated as a national market system security by the NASD, the last sale price, or, in case no such sale takes place on such day, the average of the closing bid and asked prices, in either case as report on the NASD Automated Quotation/National Market System, or if the Common Stock or other security is not so designated as a national market system security, the average of the highest reported bid and lowest reported asked prices as furnished by the NASD or similar organization if the NASD is no longer reporting such information. "NASD" means the National Association of Securities Dealers, Inc., or any successor organization. "New LLC Agreement" shall mean that certain Second Amended and Restated Limited Liability Company Agreement of Arris Interactive L.L.C., dated as of August 3, 2001. 4 "Offering" shall have the meaning set forth in that certain Option Agreement dated as of June 7, 2002 by and among the Investor, Arris Interactive L.L.C. and the Company. "Ownership Cap" means a Voting Ownership Percentage of greater than 49.9%. "Parent" has the meaning set forth in the preamble hereto. "Person" means any individual, corporation, company, association, partnership, joint venture, limited liability company, trust or unincorporated organization, group (within the meaning of Rule 13d-5 under the Exchange Act) or a government or any agency or political subdivision thereof. "Plan of Reorganization" has the meaning set forth in the preamble hereto. "Process" has the meaning set forth in Section 4.2 hereof. "Public Stockholders" means the stockholders of the Company other than (a) the members of the Investor Group,(b) any Person who has made a Third-Party Offer, (c) any Affiliate of any Person included in the foregoing clause (b), and (d) any Person with whom any Person included in the foregoing clauses (b) or (c) is part of a 13D Group. "Purchasing Person" has the meaning set forth in Section 3.3(b)(II) hereof. "Purchaser Standstill Agreement" has the meaning set forth in Section 3.3(b)(II) hereof. "Qualified Offer" shall mean a written offer by the Investor, Parent or any member of the Investor Group to acquire at least 90% of the outstanding Voting Securities of the Company, through stock acquisition, merger or similar transaction, or all or substantially all of the assets of the Company. "Registration Rights Agreement" means the Registration Rights Agreement to be entered into by the Company and the Investor in connection with the transactions contemplated by the Plan of Reorganization. "Representatives" means, with respect to any Person, any of such Person's officers, directors, partners, employees, agents, attorneys, accountants, consultants or financial or other advisors or other Person associated with or acting on behalf of such Person. "Required Disposition" has the meaning set forth in Section 3.5 hereof. "Required Disposition Amount" has the meaning set forth in Section 3.5 hereof. "Securities Act" means the Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations promulgated from time to time thereunder. "Sell Down Period" has the meaning set forth in Section 3.5 hereof. 5 "Shares" has the meaning set forth in the preamble hereto. "Standstill Period" means the period commencing on the date hereof and ending on the termination of this Agreement pursuant to Section 5. "Subsidiary" means, as to any Person, any other Person more than fifty percent (50%) of the shares of the voting stock or other voting interests of which are owned or controlled, or the ability to select or elect more than fifty percent (50%) of the directors or similar managers is held, directly or indirectly, by such first Person or one or more of its Subsidiaries or by such first Person and one or more of its Subsidiaries. A Subsidiary that is directly or indirectly wholly-owned by another Person except for directors' qualifying shares shall be deemed wholly-owned for purposes of this Agreement. "Third-Party Offer" means a written offer by a Third-Party Person to acquire some, all or no shares of Common Stock held by members of the Investor Group and at least 90% of the outstanding shares of Common Stock held by the Public Stockholders, through stock acquisition, merger or similar transaction; provided, however, that a majority of the outstanding shares of Common Stock held by the Public Stockholders must be tendered in connection with this offer; and provided further, however, that the per share consideration offered to members of the Investor Group may be below the per share consideration offered to the Public Stockholders. "Third-Party Person" means any Person other than (a) the Investor, (b) Parent, (c) any Subsidiary of the Investor or Parent, or (d) any Affiliate of any Person included in the foregoing clauses (a), (b) or (c). "13D Group" shall mean any group of Persons who, with respect to those acquiring, holding, voting or disposing of Voting Securities would, assuming ownership of the requisite percentage thereof, be required under Section 13(d) of the Exchange Act to file a statement on Schedule 13D with the Commission as a "person" within the meaning of Section 13(d)(3) of the Exchange Act, or who would be considered a "person" for purposes of Section 13(g)(3) of the Exchange Act. "Total Voting Power" shall mean, calculated at a particular point in time, the aggregate Votes represented by all then outstanding Voting Securities then entitled to vote. "Ultimate Parent Entity" has the meaning set forth in Section 3.1. "Votes" shall mean, at any time, with respect to any Voting Securities, the total number of votes that would be entitled to be cast by the holders of such Voting Securities generally (by the terms of such Voting Securities, the Certificate of Incorporation or any certificate of designations for such Voting Securities) in a meeting for the election of Directors held at such time. "Voting Ownership Percentage" shall mean, calculated at a particular point in time, the Voting Power represented by the Voting Securities Beneficially Owned by the Person whose Voting Ownership Percentage is being determined. 6 "Voting Power" shall mean, calculated at a particular point in time, the ratio, expressed as a percentage, of (a) the Votes represented by the Voting Securities then entitled to vote with respect to which the Voting Power is being determined to (b) Total Voting Power. "Voting Securities" means the shares of Common Stock and any other securities of the Company entitled to vote generally for the election of directors, and any securities which are convertible into, or exercisable or exchangeable for, Voting Securities. Section 1.2. General Interpretive Principles. Whenever used in this Agreement, except as otherwise expressly provided or unless the context otherwise requires, any noun or pronoun shall be deemed to include the plural as well as the singular and to cover all genders. The name assigned this Agreement and the section captions used herein are for convenience of reference only and shall not be construed to affect the meaning, construction or effect hereof. Unless otherwise specified, the terms "hereof," "herein" and similar terms refer to this Agreement as a whole (including the exhibits, schedules and disclosure statements hereto), and references herein to Sections refer to Sections of this Agreement. SECTION 2 GOVERNANCE Section 2.1. Directors Designated by the Investor. (a) Immediately following the Closing, the Board shall appoint as additional Directors the two (2) Investor Nominees (as defined in Section 2.1(b) below) who have been designated by the Investor in the Investor Nominee Notice (as defined in Section 2.1(b) below, the "Initial Investor Nominee Notice"). In the event of a vacancy caused by the removal, resignation or other cessation of service of any Investor Nominee from the Board, the Board shall promptly notify the Investor of any such removal, resignation or other cessation of service and shall elect as a Director (to serve until the Company's immediately succeeding annual meeting of stockholders) a new Investor Nominee who has been designated by the Investor in an additional Investor Nominee Notice that has been provided to the Company at least six (6) days prior the date of a regular meeting of the Board. The Investor shall nominate each Investor Nominee pursuant to an additional Investor Nominee Notice in advance of each meeting of stockholders at which such Investor Nominee is to be elected. (b) The Investor shall provide notice to the Company (the "Investor Nominee Notice") as required by Section 2.1(a) above for each Investor Nominee, which notice shall contain the name of the person(s) it has designated to become Director(s) (the "Investor Nominees"). In addition, upon request by the Company, the Investor shall provide all information required by Regulation 14A and Schedule 14A under the Exchange Act with respect to each such Investor Nominee. (c) The Company agrees, subject to Section 2.2 below, to include such Investor Nominee to be added to or retained on the Board pursuant to this Agreement in the slate of nominees recommended by the Board to the Company's stockholders for election as Directors and shall use its reasonable efforts to cause the election or reelection of each such Investor 7 Nominee to the Board at each meeting of stockholders at which such Investor Nominee is up for election, including soliciting proxies in favor of the election of such persons, it being understood that efforts consistent with those used for other members of the slate recommended by the Board shall be deemed reasonable. In the event that, notwithstanding the provisions of this Section 2.1(c), any one or more Investor Nominees is not elected to the Board then, at the written request of the Investor made within thirty (30) days after the date of the stockholder meeting at which such one or more Investor Nominees were not elected, the Company shall promptly call a special meeting of the Company's stockholders (such special meeting to be held on a date not more than 60 days after receipt of such written request of the Investor) proposing the election of such Investor Nominees not elected to the Board or alternative Investor Nominees as may be designated by the Investor in accordance with Section 2.1 and in connection with such special meeting shall use its reasonable efforts to cause the election of such Investor Nominees by the stockholders of the Company, including recommending the election of such Investor Nominees and soliciting proxies in favor of the election of such Investor Nominees by the stockholders of the Company. In the event the Investor elects to call a special meeting of stockholders pursuant to this section, the Company shall, until such time as each such Investor Nominee being proposed by the Investor is elected to the Board, invite such Investor Nominee who was not elected to the Board to attend meetings of the Board as an observer, and the Company shall afford to such Investor Nominee, on as nearly equivalent basis as is possible (other than the right to vote) as would have been the case if such Investor Nominee had been elected to the Board, the opportunity to meaningfully participate in, express views with respect to and have influence on the deliberations of the Board, including through receipt, at the same time as the Board receives the same, of all information and material as is distributed to the Board. The parties hereto agree that the Investor Nominees are not assuming any fiduciary duty toward the Company or its stockholders by virtue of the grant or exercise of observer rights to such Investor Nominees, as described in the immediately preceding sentence. At the direction of the Investor, the Company shall use reasonable efforts to cause the removal from the Board of Directors of any Investor Nominee. (d) Except for any Investor Nominee who is an Independent Director, the Investor acknowledges that the Investor Nominees to the Board will not be entitled to receive any compensation as directors. Section 2.2. Resignation of Investor Nominees. Unless otherwise agreed by the Company, (a) subject to clause (b) below, at such time that the Investor Group's Voting Ownership Percentage falls below 20%, Investor shall be entitled to only one Investor Nominee on the Board and the Investor shall cause one Investor Nominee then serving on the Board to offer his or her resignation from the Board immediately thereafter, and (b) the Investor shall cause all of the Investor Nominees then serving on the Board to offer their resignations from the Board immediately at any time after the Investor Group's Voting Ownership Percentage falls below 10%. Section 2.3. Composition of the Board; Independent Directors. From and after the Closing, the Company shall use its reasonable best efforts to ensure that not less than 60% of the members of the Board are Independent Directors; provided, however, that upon the removal, resignation or other cessation of service of an Independent Director (other than an Independent 8 Director who was an Investor Nominee, in which case the replacement of such director shall be in accordance with Section 2.1), the Company and the Board shall have a reasonable amount of time (not to exceed 60 days after such removal, resignation or other cessation of service) to replace such director with another Independent Director. Section 2.4. Board Size. From and after the Closing, the Company agrees that the number of Directors constituting the whole Board shall not exceed 15 members. Section 2.5. Failure to Notify. Notwithstanding anything to the contrary in this Section 2, if the Investor fails to provide an Investor Nominee Notice to the Company with respect to any election of Directors, it shall be deemed that the Investor Nominees then serving as Directors, if any, shall be the Investor Nominees for reelection. Section 2.6. Written Consent. The parties hereto agree that the provisions of Section 2 shall be deemed to apply to any written consent of stockholders in lieu of a meeting. SECTION 3 ADDITIONAL AGREEMENTS Section 3.1. Standstill Agreement. Subject to Sections 3.1(k) and 3.4 hereof, during the Standstill Period, and, unless the Company shall have breached its obligation to nominate Investor Nominees pursuant to Section 2, the Investor and Parent shall not, and each of them shall cause each other member of the Investor Group not to, directly or indirectly, alone or in concert with others: (a) acquire, offer or propose to acquire or agree to acquire, whether by purchase, tender or exchange offer, through the acquisition of control of another person, by joining a partnership, limited partnership, syndicate or other 13D Group or otherwise, Beneficial Ownership of any Voting Securities, Derivative Securities or any other securities of the Company or any rights to acquire (whether currently, upon lapse of time, following the satisfaction of any conditions, upon the occurrence of any event or any combination of the foregoing) any Voting Securities, other than (i) the acquisition of the Shares pursuant to the Plan of Reorganization, (ii) the acquisition of Voting Securities as a result of any stock splits, stock dividends or other distributions, recapitalizations or offerings made available by the Company to holders of Voting Securities generally or (iii) in a transaction in which the Investor or Parent or an Affiliate of the Investor or Parent acquires a previously unaffiliated business entity that, to the knowledge of the Investor or Parent after reasonable inquiry (which inquiry shall be satisfied by the receipt of a written representation to such effect from the to-be-acquired business entity), owns shares of Voting Securities that represent less than 5% of the Company's outstanding Voting Securities; or (iv) the acquisition of the LLC Conversion Shares, provided, that all such Voting Securities shall be subject to the terms of this Agreement; provided, further, that in the event a transaction contemplated by clause (iii) hereof, causes the Investor Group's Voting Ownership Percentage to exceed the Ownership Cap, the Investor will use reasonable best efforts to transfer, or cause such Affiliate to transfer, within twelve months following the consummation of such transaction and in a manner consistent with Section 3.5, such number of Voting Securities previously owned by 9 the unaffiliated entity, so as to reduce the Voting Ownership Percentage of the Investor Group to no more than the Ownership Cap, and the Investor or such Affiliate will cause all such Voting Securities, pending their transfer, to be voted in accordance with the requirements of Section 3.2 below; (b) propose or seek to effect any merger, business combination, restructuring, recapitalization or similar transaction involving the Company or any of its Subsidiaries or the sale of all or substantially all of the assets of the Company or any of its Subsidiaries except pursuant to Section 4.2 hereof; (c) deposit any Voting Securities in a voting trust or subject any Voting Securities to any arrangement or agreement with respect to the voting of such Voting Securities, unless such voting trust provides that the Voting Securities will be voted consistent with the provisions of this Agreement; (d) except for the exercise by the Investor Nominees of their fiduciary duties and except pursuant to Section 2 hereof, seek election to, seek to place a representative on, or seek the removal of any member of, the Board; (e) engage in any "solicitation" (within the meaning of Rule 14a-1 under the Exchange Act) of proxies or consents (whether or not relating to the election or removal of directors) with respect to the Company, or become a "participant" in any "election contest" (within the meaning of the Exchange Act) or, unless the execution by the Investor, Parent or member of the Investor Group is first approved by the Board, execute any written consent in lieu of a meeting of the holders of any class of Voting Securities that is solicited by or on behalf of any stockholder of the Company; (f) call or seek to have called any meeting of the stockholders of the Company (except for the exercise by the Investor of its rights pursuant to this Agreement); (g) unless approved by the Board of Directors, initiate, propose or otherwise solicit stockholders for the approval of any stockholder proposal (as described in Rule 14a-8 under the Exchange Act) with respect to the Company; (h) form, join or in any way participate in or assist in the formation of a 13D Group with respect to any Voting Securities, other than any such "group" consisting exclusively of the Investor, Parent and other Affiliates of the Investor or Parent who have acquired Voting Securities in accordance with this Agreement; (i) disclose or publicly announce any intention, plan or arrangement inconsistent with the foregoing; or (j) intentionally finance any other persons in connection with any of the foregoing types of activities; provided, however, that nothing in this Section 3.1 shall (i) limit any rights of the members of the Investor Group under the Registration Rights Agreement, (ii) prohibit any individual who is serving as a Director of the Company, solely in his or her capacity as a Director, from (x) exercising his or her fiduciary duties, (y) taking any action or making any 10 statement at any meeting of the Board of Directors or of any committee thereof, or (z) making any statement or disclosure required under federal securities laws or other applicable Law, (iii) restrict any disclosure or statements required to be made by any member of the Investor Group under applicable Law to the extent any such requirement does not arise from actions by the Investor Group inconsistent with this Agreement, (iv) limit the rights of the Investor Group pursuant to Sections 2, 3.2, 3.4 or 4.2 hereof or (v) limit the ability of any member of the Investor Group, in its sole discretion, directly or indirectly, alone or in concert with others, from participating in discussions or negotiations with a Third-Party Person with respect to a Third-Party Offer (it being acknowledged and agreed that (A) the members of the Investor Group can indicate to such Third-Party Person their preliminary interests or intentions with respect to such Third-Party Offer and (B) no member of the Investor Group shall be deemed to be in breach of this Section 3.1 to the extent that a majority of the outstanding shares of Common Stock held by the Public Stockholders is not tendered in connection with such Third-Party Offer); provided, however, with respect to clause (v), that such member of the Investor Group (A) provide the Company with written notice of the identity of such Third-Party Person as soon as reasonably practicable after either the Chief Financial Officer of Nortel Networks Corporation (or any successor thereto) (the "Ultimate Parent Entity") or the senior member of the Ultimate Parent Entity's Mergers and Acquisitions Group (or any successor thereto) becomes aware of discussions or negotiations by a member of the Investor Group relating to a bona fide Third-Party Offer and (B) allow the Company to participate in such discussions or negotiations. (k) Notwithstanding anything contained herein to the contrary, in the event the Offering is consummated, the restrictions set forth in Section 3.1(c) and the proviso set forth in Section 3.1(j)(v) shall automatically terminate on the later of (i) September 30, 2002, and (ii) the date on which the Investor Group ceases to Beneficially Own at least 27% of the Total Voting Power of the Company. Section 3.2. Voting. At all times during the Standstill Period and to the full extent permitted by Delaware law, the Investor and Parent shall and shall cause each other member of the Investor Group to vote all Voting Securities which they Beneficially Own, at any stockholder meeting or in connection with any action by written consent at or in which such Voting Securities are entitled to vote, in favor of the slate of nominees (including any Investor Nominee to be included in such slate in accordance with Section 2) proposed by the Board; provided, that any Investor Nominee nominated by the Investor for inclusion in such slate pursuant to Section 2.1 is so included. Notwithstanding the foregoing, any member of the Investor Group, in its sole discretion, may freely vote any Voting Securities which it Beneficially Owns on any proposed Change in Control Transaction which requires the approval of the Company's stockholders generally. Section 3.3. Restricted Dispositions. Subject to Section 3.3A below, during any period of time during the Standstill Period when the Investor Group shall Beneficially Own Voting Securities representing at least 10% of the Total Voting Power of the Company, the Investor and Parent shall not and shall cause each other member of the Investor Group not to, directly or indirectly (including, without limitation, through the disposition or transfer of any equity interest in another Person), sell, assign, transfer, pledge, hypothecate, grant any option with respect to or otherwise dispose of any interest in (or enter into an agreement or understanding with respect to 11 the foregoing) any Voting Securities (a "Disposition"), except as set forth below in this Section 3.3. (a) Dispositions may be made to Affiliates of the Investor, Parent or members of the Investor Group; provided, that such Affiliates agree in writing to be bound by this Agreement to the same extent as the Investor and Parent and such Affiliates at all times remain Affiliates of the Investor, Parent or members of the Investor Group. (b) Dispositions of Voting Securities may be made to Persons other than members of the Investor Group pursuant to (i) a bona fide public offering effected in accordance with the Registration Rights Agreement, (ii) in bona fide open market "brokers' transactions" or transactions directly with a "market maker" as permitted by the provisions of Rule 144 as currently promulgated under the Securities Act, and (iii) in privately-negotiated transactions to (A) any Person specified in Rule 13d-1(b)(1)(ii) promulgated under the Exchange Act who would be eligible based on such person's status and passive intent with respect to the ownership, holding and voting of such Voting Securities to report such person's ownership of such Voting Securities (assuming such person owned a sufficient number of such Voting Securities to require such filing) on Schedule 13G or (B) any other Person; provided, however, that: (i) Dispositions shall not be made pursuant to clause (iii)(A) of this Section 3.3(b) if any Person to whom the Disposition in question is made would, to the knowledge of the Investor after reasonable inquiry (which inquiry shall be satisfied by the receipt of a written representation to such effect from such Person), after giving effect to such Disposition, together with such Person's Affiliates and Associates and the members of any 13D Group existing with respect to Voting Securities of which such Person is a part Beneficially Own Voting Securities representing more than 10% of the Total Voting Power then outstanding. (ii) Dispositions shall not be made pursuant to clause (iii)(B) of this Section 3.3(b) unless the Person purchasing the Voting Securities, together with such Person's Affiliates and Associates and the members of any 13D Group existing with respect to Voting Securities of which such Person is a part (any such Person and its Affiliates, Associates and 13D Group members being collectively referred to herein as a "Purchasing Person"), shall have executed and delivered to the Company a written agreement (which agreement shall be addressed to the Company and reasonably satisfactory in form and substance to the Company) (a "Purchaser Standstill Agreement") of each such Purchasing Person to be bound by Section 3 of this Agreement to the same extent as the Investor as if references to the Investor in such Section were to such Purchasing Person. (iii) No Disposition shall be made (other than pursuant to Section 3.3(b)(i)) if such Disposition would constitute a distribution in violation of Regulation M under the Exchange Act by reason of any repurchase program of the Company then announced. (c) Dispositions may be made to the Company in accordance with Section 3.4 hereof. 12 (d) Dispositions may be made pursuant to a tender offer, exchange offer or any other transaction (x) which is recommended to stockholders of the Company by the Board of Directors (or, in the case of a tender or exchange offer, which is not within 10 Business Days of the commencement thereof opposed by the Board of Directors) or (y) in the case of a merger or other business combination transaction, which has been approved by the stockholders of the Company (including approval without a meeting pursuant to the short-form merger provisions of the Delaware General Corporation Law) in a manner so as to be legally binding on all stockholders of the Company and so as to require the disposition by such stockholders of their shares pursuant to such merger or other business combination transaction (without regard to this Agreement). (e) [Intentionally omitted.] (f) Dispositions may be made pursuant to a Third-Party Offer, it being acknowledged and agreed that the Investor Group has sole discretion with respect to the number of Voting Securities, if any, sold by the Investor Group in the Third-Party Offer. (g) If the Investor intends to effect a Disposition in accordance with Section 3.3(b)(iii), it shall give the Company as much prior notice of such intention as is reasonably practicable, but in any event at least three (3) days prior to the closing of such intention as is reasonably practicable, but in any event at least three (3) days prior to the closing of such Disposition. Section 3.3A. Unrestricted Dispositions. Notwithstanding anything contained herein to the contrary, in the event the Offering is consummated, on and after the later of (i) September 30, 2002, and (ii) the date on which the Investor Group ceases to Beneficially Own at least 27% of the Total Voting Power of the Company, the Investor Group shall be permitted to make a Disposition to any Person or Persons in any manner at any time and from time to time, subject to the provisions set forth below in this Section 3.3A. (a) Dispositions may be made to Affiliates of the Investor, Parent or members of the Investor Group; provided, that such Affiliates agree in writing to be bound by this Agreement to the same extent as the Investor and Parent and such Affiliates at all times remain Affiliates of the Investor, Parent or members of the Investor Group. (b) Dispositions of Voting Securities may be made to Persons other than members of the Investor Group pursuant to (i) a bona fide public offering effected in accordance with the Registration Rights Agreement, (ii) in bona fide open market "brokers' transactions" or transactions directly with a "market maker" as permitted by the provisions of Rule 144 as currently promulgated under the Securities Act, and (iii) in privately-negotiated transactions to (A) any Person specified in Rule 13d-1(b)(1)(ii) promulgated under the Exchange Act who would be eligible based on such person's status and passive intent with respect to the ownership, holding and voting of such Voting Securities to report such person's ownership of such Voting Securities (assuming such person owned a sufficient number of such Voting Securities to require such filing) on Schedule 13G or (B) any other Person; provided, however, that no Disposition shall be made if such Disposition would constitute a distribution in violation 13 of Regulation M under the Exchange Act by reason of any repurchase program of the Company then announced. (c) Dispositions may be made to the Company in accordance with Section 3.4 hereof. Section 3.4. Qualified Offer. Notwithstanding anything to the contrary contained in Section 3.1, the Investor, Parent or any member of the Investor Group may make a Qualified Offer in accordance with the following procedure: (a) In connection with any Qualified Offer, the Investor shall deliver the Qualified Offer in writing to the Company. In the event that the Company does not accept such Qualified Offer in writing within thirty (30) days after receipt, such offer shall be deemed withdrawn and the Company shall promptly commence an Auction in which the Investor, Parent and the Investor Group will be given a full and fair opportunity, as conclusively determined by the Board in good faith, to participate on terms, and to have any bid submitted by the Investor, Parent or any member of the Investor Group in such Auction evaluated on a basis, no less and no more favorable to the Investor than those afforded to other Auction participants. (b) Any Auction shall be subject to the following provisions: (i) The Auction shall be completed within 90 days after the Company receives the Qualified Offer and the corresponding sale shall close within 90 days after completion of the Auction. (ii) In the event that (A) the Investor Group is not the successful bidder in an Auction conducted pursuant to Section 3.4(a) or does not elect to participate in the Auction, and (B) the Company has received a fairness opinion from a nationally-recognized investment banking firm, which is selected by the Company and reasonably acceptable to the Investor, to the effect that the successful bidder's transaction provides the Company or its stockholders, as the case may be, with the highest value of all of the bids received in the Auction, then the Investor and Parent shall, and each of them shall cause the Investor Group to, vote all of their Voting Securities in favor of the successful bidder's transaction (provided that this agreement to vote in favor of such transaction does not waive any other rights that any member of the Investor Group may have under Delaware law, other than dissenter's rights), tender their shares (in the event of a tender or exchange offer), and otherwise reasonably cooperate in consummating the transaction. (iii) The Company, the Investor and Parent agree that the purchase price per share set forth in the Qualified Offer is highly confidential and, as such, the Company on the one hand and the Investor, Parent and the Investor Group, on the other, shall not, to the extent legally permissible, disclose such purchase price per share to any third party without the prior written consent of the other party. (c) To the extent that the consideration in a Qualified Offer or in any competing bid in an Auction is securities, the value of any securities offered shall equal the 14 average Market Price per share or per unit of such securities during the 30 consecutive trading days immediately preceding the Company's receipt of the Qualified Offer or the receipt of the bid by the Company, respectively. In the case of any securities not theretofore traded, the value of such securities shall be determined by a nationally recognized investment banking firm selected by the Company and reasonably acceptable to the Investor. The Investor and the Company shall use their reasonable best efforts to cause any such determination of value to be made within five (5) business days following the Company's receipt of a Qualified Offer or a bid, as the case may be. Section 3.5. Required Dispositions. If, at any time during the Standstill Period, the Voting Ownership Percentage of the Investor Group shall exceed the Ownership Cap, solely as a result of any transactions contemplated by Section 3.1(a)(iii) then, if and to the extent requested by the Company by written notice to the Investor which may be made at any time, the Investor shall, within twelve months after such request (the "Sell Down Period"), dispose of, or cause the other members of the Investor Group to dispose of (a "Required Disposition"), such number of Voting Securities owned by the Investor Group as shall be necessary to reduce the Voting Ownership Percentage of the Investor Group to no more than the Ownership Cap (the "Required Disposition Amount"); provided that any such Required Disposition shall be subject to the provisions of Section 3.3 and provided, further, that the Investor agrees that such Voting Securities in excess of the Ownership Cap shall be voted by the Investor Group at any meeting of stockholders (or action by written consent in lieu of any such meeting) in accordance with Section 2. Notwithstanding the foregoing, if any Required Disposition during the applicable Sell Down Period (A) would result in liability or potential liability to the Investor or other members of the Investor Group under Section 16(b) of the Exchange Act, or the rules and regulations promulgated thereunder, or (B) would be prohibited as a result of the restrictions set forth in the Registration Rights Agreement on transfer of Voting Securities, then such Sell Down Period (x) shall, in the case of clause (A) above, begin on the first date on which such Required Disposition may be effected without liability or potential liability under Section 16(b) of the Exchange Act, or the rules and regulations promulgated thereunder, and (y) with respect to clause (B) above, be extended by the number of days that the Investor Group is restricted from selling Voting Securities under the Registration Rights Agreement. Section 3.6. Shareholder Rights Plan. In the event the Company adopts a shareholder rights plan, the Investor hereby agrees and covenants not to bring any claim or cause of action against the Company or its Board of Directors in connection with the adoption or administration of such plan, provided that (i) such plan is customary for a company similarly-situated to the Company and (ii) no member of the Investor Group is deemed an "acquiring person" (as such term is customarily defined) solely by reason of its ownership of Shares on the date of adoption of the shareholder rights plan. In addition, the foregoing agreement shall not be applicable in the event the Offering is not consummated, although the limitation contained in this sentence is not intended to imply any limitations on the Company's ability to adopt a shareholder rights plan under such circumstances. SECTION 4 ADDITIONAL COVENANTS 15 Section 4.1. Certain Information. (a) Subject to applicable law and the provisions of this Agreement, all information provided to the Investor or the Company hereunder shall be provided in confidence in accordance with the provisions of the Confidentiality Agreement (the "Confidentiality Agreement"), dated May 9, 2000, between ANTEC Corporation and Parent. (b) To the extent reasonably requested by the Investor, the Company will and will cause its Representatives to provide information regarding the Company and its Subsidiaries, and otherwise cooperate with, the Investor so as to enable the Investor to prepare financial statements in accordance with GAAP and to comply with its disclosure requirements under securities laws and regulations. The costs associated with providing the foregoing information shall be borne by the Investor. (c) From time to time upon reasonable advance request by the Company, the Investor will notify the Company of the amount of each class of Voting Securities then Beneficially Owned by the Investor Group. From time to time upon reasonable advance request by the Investor, the Company will provide the Investor with information known to the Company with respect to the number of votes entitled to be voted by stockholders of the Company at the time of such request; provided, however, that the Company shall not be obligated pursuant to this Section 4.1(c) to make any general solicitation of stockholders of the Company in connection therewith. Section 4.2. Right to Participate in Sale of the Company. So long as the Investor Group shall Beneficially Own Voting Securities representing at least 20% of the Total Voting Power of the Company, the Company shall not enter into, and the Board shall not publicly recommend to stockholders or approve, a definitive agreement providing for a Change in Control Transaction, unless prior thereto (i) the Investor shall have been given at least 30 days prior notice of the proposed Change in Control Transaction and of the material terms thereof and the Investor (or any other member of the Investor Group or Third-Party Person designated by the Investor) shall have been given a full and fair opportunity, as conclusively determined by the Board in good faith, to participate in the bidding process (the "Process") undertaken by the Company (if any) in advance of such Change in Control Transaction on terms, and to have any proposal submitted by the Investor (or such other member of the Investor Group or Third-Party Person) pursuant to clause (ii) below evaluated on a basis, no less and no more favorable to the Investor (or such other member of the Investor Group or Third-Party Person) than those afforded to other interested parties, (ii) the Investor (or such other member of the Investor Group or Third-Party Person) shall have been permitted notwithstanding the restrictions contained in Section 3.1, to submit a proposal for an alternative transaction during the Interim Period (as defined below) or in connection with such Process, subject in any event to the Board's right to accept or reject any such proposal as may be made, (iii) the Interim Period shall have terminated or (iv) the Change in Control Transaction resulted from an Auction conducted in accordance with Section 3.4. "Interim Period" shall mean the period commencing on the date of the delivery to the Investor by the Company of written notice (such notice, the "Change in Control Transaction Notice") of its consideration of an action in respect of a Change in Control Transaction and ending on the date which is the later of (i) the 30th day thereafter, and (ii) the public announcement by the Company of the taking of any action in respect of a Change in Control Transaction. 16 Section 4.3. Publicity. Except as required by Law or by obligations pursuant to any listing agreement with any relevant securities exchange, neither the Company or any of its Affiliates nor the Investor, Parent or any of their Affiliates shall, without the prior written consent of the other, which consent shall not be unreasonably withheld or delayed, make any public announcement or issue any press release with respect to the transactions contemplated by this Agreement. Prior to making any public disclosure required by applicable Law or pursuant to any listing agreement with any relevant national exchange, the disclosing party shall consult with the other party, to the extent feasible, as to the content of such public announcement or press release. Notwithstanding the foregoing, the Investor, Parent and the Company may, in meetings with securities and other financial analysts and press interviews, disclose information (other than non-public information) concerning the transactions contemplated hereby and the Investor's and Parents' investment in the Company and in a manner not inconsistent with prior joint public announcements regarding the transactions and in a manner consistent with the other terms of this Agreement. Section 4.4. Legend. The Investor agrees to the placement on certificates representing the Shares of a legend substantially as set forth below, unless the Company determines otherwise, in accordance with the opinion of counsel: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR NON-U.S. JURISDICTION AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE SECURITIES LAWS OF SUCH OTHER JURISDICTIONS. THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS (INCLUDING PROVISIONS THAT RESTRICT THE TRANSFER OF SUCH SECURITIES) OF AN AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT DATED AS OF APRIL 9, 2001 AMONG THE COMPANY, NORTEL NETWORKS LLC AND NORTEL NETWORKS INC., COPIES OF WHICH ARE ON FILE AT THE OFFICES OF THE SECRETARY OF THE COMPANY." Section 4.5. Amendment to Lock-Up Agreement. The Investor hereby agrees to notify the Company of any waivers or amendments to that certain Lock-Up Agreement, dated as of June 7, 2002, made by and between the Investor and Liberty ANTC, Inc. (formerly known as TCI TSX, Inc.), promptly after the effective date of any such waivers or amendments. SECTION 5 TERMINATION 17 Section 5.1. Termination. (a) Subject to Section 5.2 hereof, this Agreement may be terminated by notice in writing at any time by either the Investor or the Company if: (i) the Plan of Reorganization is terminated; (ii) a transaction pursuant to a Third-Party Offer is consummated; or (iii) the Company and the Investor so mutually agree in writing. (b) Subject to Section 5.2 hereof, and without limiting any liability of the Company or the Investor for any breach of its obligations hereunder, this Agreement may be terminated by notice in writing by either the Investor or the Company at any time after the Investor Group, collectively, ceases to Beneficially Own at least 10% of the Total Voting Power of the Company. Section 5.2. Effect of Termination. If this Agreement is terminated in accordance with Section 5.1 hereof, this Agreement shall become null and void and of no further force and effect except that (i) the terms and provisions of this Section 5, Section 4.1(a) and Section 6.1 shall remain in full force and effect, and (ii) any termination of this Agreement shall not relieve any party hereto from any liability for any breach of its obligations hereunder. SECTION 6 MISCELLANEOUS Section 6.1. Fees and Expenses. Each party shall bear its own expenses, including the fees and expenses of any Representatives engaged by it, incurred in connection with the this Agreement and the transactions contemplated hereby. Section 6.2. Notices. All notices, requests and other communications hereunder to a party shall be in writing and shall be deemed given if personally delivered, telecopied (with confirmation) or three Business Days after being mailed by registered or certified mail (return receipt requested) or one Business Day after being delivered by overnight courier to such party at its address set forth below or such other address as such party may specify by notice to the parties hereto: if to Investor: Nortel Networks LLC 200 Athens Way Nashville, TN 37228 Attn: Legal Department Facsimile: (615) 432-4067 and with a copy to: 18 Nortel Networks Inc. 2221 Lakeside Blvd. Richardson, TX 75082 Attn: Robert Fishman Facsimile: (972) 684-3888 if to Parent: Nortel Networks Inc. 200 Athens Way Nashville, TN 37228 Attn: Legal Department Facsimile: (615) 432-4067 and with a copy to: Nortel Network Inc. 2221 Lakeside Blvd. Richardson, TX 75082 Attn: Robert Fishman Facsimile: (972) 684-3888 if to the Company: Arris Group, Inc. 11450 Technology Circle Duluth, GA 30097 Attn: Larry Margolis Facsimile: (678) 473-8470 and with a copy to: ANTEC Corporation 11450 Technology Circle Duluth, GA 30097 Attn: Bob Stanzione Facsimile: (678) 473-8470 Section 6.3. Entire Understanding; Amendment. This Agreement and the documents described herein or attached or delivered pursuant hereto (including, without limitation, the Plan of Reorganization and the Registration Rights Agreement) and the Confidentiality Agreement set forth the entire agreement between the parties hereto with respect to the matters provided herein and therein. Any provision of this Agreement may be amended or modified in whole or in part at 19 any time by an agreement in writing among the parties hereto executed in the same manner as this Agreement. No failure on the part of any party to exercise, and no delay in exercising, any right shall operate as waiver thereof, nor shall any single or partial exercise by either party of any right preclude any other or future exercise thereof or the exercise of any other right. Section 6.4. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed to constitute an original but all of which when taken together shall constitute one and the same instrument. Section 6.5. Governing Law. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Delaware, without regard to the conflict of law principles thereof. Section 6.6. Assignment; No Third Party Beneficiaries. (a) Neither this Agreement, nor any of the rights, interests or obligations shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties; provided, however that (i) the Investor may assign its rights, interests and obligations under this Agreement to any other Affiliate of the Investor in connection with a transfer of Voting Securities to such Affiliate, without the consent or approval of any other party hereto, and (ii) in the event of such assignment, the assignee shall agree in writing to be bound by the provisions of this Agreement. (b) This Agreement shall not confer any rights or remedies upon any person other than the parties to this Agreement and their respective successors and permitted assigns; provided, however, that the provisions of this Agreement are intended for the benefit of members of the Investor Group. Section 6.7. Remedies; Waiver. To the extent permitted by Law, all rights and remedies existing under this Agreement and any related agreements or documents are cumulative to, and are exclusive of, any rights or remedies otherwise available under applicable Law. No failure on the part of any party to exercise, or delay in exercising, any right hereunder shall be deemed a waiver thereof, nor shall any single or partial exercise preclude any further or other exercise of such or any other right. Section 6.8. Specific Performance. Each party hereto acknowledges that, in view of the uniqueness of the transactions contemplated by this Agreement, the other party would not have an adequate remedy at law for money damages in the event that this Agreement has not been performed in accordance with its terms. Each party therefore agrees that the other party shall be entitled to specific enforcement of the terms hereof in addition to any other remedy to which it may be entitled, at law or in equity. Section 6.9. Severability. Any term or provision of this Agreement which is invalid or unenforceable in any jurisdiction shall, as to that jurisdiction, be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining terms and provisions of this Agreement or affecting the validity or enforceability of any of the terms or provisions of this Agreement in any other jurisdiction. If any provision of this Agreement is so 20 broad as to be unenforceable, the provision shall be interpreted to be only so broad as it is enforceable. Section 6.10. Amendment and Restatement. This Agreement amends and restates in its entirety the Original Agreement. The Original Agreement is hereby terminated in its entirety and is of no further force or effect. The Investor, the Parent and the Company hereby waive any and all rights, claims, causes of action or otherwise with respect to the Original Agreement. [Remainder of page intentionally left blank.] 21 IN WITNESS WHEREOF, this Agreement has been executed on behalf of the parties hereto by their respective duly authorized officers, all as of the date first above written. NORTEL NETWORKS LLC By: Nortel Networks Inc. Its: Managing Member By: /s/ Deborah J. Noble ---------------------------------- Name: Deborah J. Noble Title: Assistant Secretary NORTEL NETWORKS INC. By: /s/ Deborah J. Noble ---------------------------------- Name: Deborah J. Noble Title: Assistant Secretary ARRIS GROUP, INC. f/k/a Broadband Parent Corporation By: /s/ Lawrence A. Margolis ---------------------------------- Name: Lawrence A. Margolis Title: Executive Vice President & CFO 22 -----END PRIVACY-ENHANCED MESSAGE-----

EX-10.1

                                                                    EXHIBIT 10.1


                                FOURTH AMENDMENT
                               TO CREDIT AGREEMENT

                  This FOURTH AMENDMENT TO CREDIT AGREEMENT (this "AMENDMENT")
is dated as of May 31, 2002 and entered into by and among ARRIS INTERNATIONAL,
INC., a Delaware corporation (the "COMPANY"), ARRIS INTERACTIVE L.L.C., a
Delaware limited liability company ("ARRIS"), EACH OF COMPANY'S SUBSIDIARIES
LISTED ON THE SIGNATURE PAGES HEREOF (Company, Arris and each such subsidiary
are individually referred to herein as a "BORROWER" and, collectively, on a
joint and several basis, as the "BORROWERS"), THE FINANCIAL INSTITUTIONS LISTED
ON THE SIGNATURE PAGES HEREOF (each individually referred to herein as a
"LENDER" and collectively as "LENDERS"), CREDIT SUISSE FIRST BOSTON, as
syndication agent for Lenders (in such capacity, "SYNDICATION AGENT") and THE
CIT GROUP/BUSINESS CREDIT, INC., as administrative agent and collateral agent
for Lenders (in such capacity, "ADMINISTRATIVE AGENT"), and is made with
reference to that certain Credit Agreement dated as of August 3, 2001, as
amended by that certain First Amendment to Credit Agreement dated as of January
8, 2002 (the "FIRST AMENDMENT"), as supplemented by that certain Acknowledgement
dated as of March 21, 2002, as further amended by that certain Second Amendment
to Credit Agreement dated as of April 17, 2002 and as further amended by that
certain Third Amendment to Credit Agreement dated as of April 24, 2002 (as so
amended, and supplemented as of the date hereof, the "CREDIT AGREEMENT"), by and
among the Borrowers, Lenders, Syndication Agent and Administrative Agent.
Capitalized terms used herein without definition shall have the same meanings
herein as set forth in the Credit Agreement.


                                    RECITALS

                  WHEREAS, in connection with the redemption of the Senior
Convertible Notes, Borrowers and Lenders desire to amend the Credit Agreement
to, upon completion of a Successful Retirement of Notes (as defined below),
allow Borrowers to use (A) the proceeds from the Keptel Sale and (B) excess cash
from operations to redeem the remaining Convertible Subordinated Notes;


                  WHEREAS, the Borrowers and Lenders desire to further amend the
Credit Agreement to: (i) reduce the Revolving Loan Commitments to $143,000,000
by terminating the Revolving Loan Commitments of two of the Lenders; (ii) remove
the reserve of $20,000,000 implemented against the Borrowing Base under the
First Amendment in connection with the Cadant Acquisition; (iii) modify the
availability of the Revolving Loan Commitments in connection with Eligible
Inventory; (iv) amend the Cash Management System and (iv) make certain other
amendments as set forth below;


                  NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto agree
as follows:




                  SECTION 1.        AMENDMENTS TO THE CREDIT AGREEMENT

                  1.1      AMENDMENTS TO SECTION 1: PROVISIONS RELATING TO
                           DEFINED TERMS

                           A. Subsection 1.1 of the Credit Agreement is hereby
         amended by adding thereto the following definitions, which shall be
         inserted in proper alphabetical order:

                  "ELIGIBLE INVENTORY AMOUNT" means the lesser of (x) 80% of the
         orderly liquidation value of each category of Eligible Inventory of
         Borrowers set forth i`n the Emerald Appraisal, in each case minus
         liquidation costs and (y) $60,000,000.


                  "FOURTH AMENDMENT" means the Fourth Amendment to this
         Agreement dated as of May 31, 2002.

                  "FOURTH AMENDMENT EFFECTIVE DATE" means the date the Fourth
         Amendment to this Agreement became effective in accordance with its
         terms.


                  "INVENTORY INCLUSION REQUIREMENTS" means as of any date, that
         (i) at least thirty (30) days prior to such date, Company has provided
         written notice to Administrative Agent, requesting the inclusion of the
         Eligible Inventory Amount in the Borrowing Base and (ii) an update to
         the Emerald Appraisal prepared by Emerald Technology Valuations, LLC or
         such other independent third party consultant selected by
         Administrative Agent and approved by Requisite Lenders and in form and
         substance satisfactory to Administrative Agent, was completed and
         delivered to Administrative Agent no more than ninety (90) days prior
         to such date.


                  "REPAID LENDERS" has the meaning assigned to that term in
         subsection 2.4A(iii)(a).


                  "SUCCESSFUL RETIREMENT OF NOTES" shall mean the retirement or
         cancellation of Convertible Subordinated Notes in the aggregate
         principal amount of $69,000,000 which have been retired or cancelled by
         (a) the exchange therefor for or the conversion thereof into Holdings
         Common Stock in accordance with the terms of subsection 7.5 hereof, (b)
         the refinancing thereof in accordance with the terms of subsection
         7.1(ix) hereof or (c) any combination thereof.


                           B. Subsection 1.1 of the Credit Agreement is hereby
         further amended by deleting the definitions of "Borrowing Base",
         "Emerald Appraisal" and "Revolving Commitment Termination Date"
         therefrom in their entirety and substituting the following therefore:

                  "BORROWING BASE" means, as of any date of determination, the
         amount by which: (a) the sum of (i) eighty five percent (85%) of the
         Net Amount of Eligible Accounts, (ii) the lesser of (x) eighty five
         percent (85%) of the Net Amount of Eligible Foreign Accounts and (y)
         $5,000,000, (iii) the lesser of (x) eighty five (85%) of the Net Amount
         of Eligible Canadian Accounts and (y) $3,000,000 and (iv) if as of such
         date the


                                       2


         Inventory Inclusion Requirements have been satisfied, the Eligible
         Inventory Amount exceeds (b) the sum of (i) such reserves (which may
         reflect forward-looking industry information provided by independent
         third parties) as Administrative Agent may from time to time require in
         its reasonable discretion plus (ii) $10,000,000.

                  "EMERALD APPRAISAL" means the net orderly liquidation analysis
         of the inventory of the Borrowers and their respective Subsidiaries
         conducted by Emerald Technology Valuations, LLC and delivered to Agents
         prior to the Closing Date, in form and substance reasonably
         satisfactory to Agents, as such appraisal may be updated by Emerald
         Technology Valuations, LLC or such other independent third party
         consultant selected by Administrative Agent and approved by Requisite
         Lenders from time to time in accordance with subsection 6.12.


                  "REVOLVING LOAN COMMITMENT TERMINATION DATE" means August 3,
         2004; provided, however, that if a Successful Retirement of Notes has
         not occurred prior to March 31, 2003, the Revolving Loan Commitment
         Termination Date shall be March 31, 2003.

                  1.2      AMENDMENTS TO SECTION 2: AMOUNTS AND TERMS OF
                           COMMITMENTS AND LOANS

                           A. Subsection 2.4A(iii)(a) of the Credit Agreement is
         hereby amended by deleting the proviso at the end of such subsection
         and substituting therefore the following:

         "; provided, further, that notwithstanding anything in this clause (a)
to the contrary, on the Fourth Amendment Effective Date, the Revolving Loan
Commitment of IBM Credit Corporation and Credit Suisse First Boston (the "REPAID
LENDERS") shall be reduced to zero in accordance with the terms of the Fourth
Amendment and no further reduction to the Revolving Loan Commitment of any other
Lender shall occur as a result of the Keptel Sale."

                  1.3      AMENDMENTS TO SECTION 6: AFFIRMATIVE COVENANTS

                           A. Subsection 6.12 is hereby amended by deleting
         clause (i) of such subsection in its entirety and substituting
         therefore the following:

                  "(i)     If an Event of Default or Potential Event of Default
         has occurred and is continuing, Holdings shall and shall cause its
         Subsidiaries to fully cooperate in the preparation of updates to the
         Emerald Appraisal as often as the Administrative Agent shall request in
         its discretion."

                  1.4      AMENDMENTS TO SECTION 7: BORROWERS' NEGATIVE
                           COVENANTS

                           A. Subsection 7.5 of the Credit Agreement is hereby
         amended by deleting the period at the end of clause (x) and
         substituting therefore "; and", and adding the following clause (xi)to
         the end thereof:


                                       3


                  "(xi)    So long as (i) a Successful Retirement of Notes has
         occurred, (ii) no Event of Default has occurred and is continuing,
         (iii) no blockage notice has been delivered in accordance with the
         terms of the Convertible Subordinated Note Indenture and (iv) no Loans
         are outstanding, Company may use the Net Asset Sale Proceeds from the
         Keptel Sale (to the extent such Net Asset Sale Proceeds are not
         required to repay Outstanding Revolving Loans of the Repaid Lenders in
         accordance with subsection 2.4A(iii)(a)) and cash from the operations
         of Holdings and its Subsidiaries to redeem the Convertible Subordinated
         Notes in accordance with the terms of the Convertible Subordinated
         Notes and the Convertible Subordinated Note Indenture."

                           B. Subsection 7.6 of the Credit Agreement is hereby
         amended by deleting subsection 7.6E in its entirety.

                  1.5      AMENDMENT TO SCHEDULE 6.10: CASH MANAGEMENT SYSTEM

                           A. The section under the heading "Amounts held in
         Deposit Accounts or Otherwise:" contained in Schedule 6.10 to the
         Credit Agreement is hereby amended by (i) deleting the "and" at the end
         of subsection (viii) thereof, (ii) by deleting the "." at the end of
         subsection (ix) thereof and substituting therefore a ";" and (iii)
         adding the following subsection (xi) at the end thereof:

                           "(xi) amounts maintained on deposit in (A) any
                  securities account established to hold Cash Equivalents (each
                  a "SECURITIES ACCOUNT") in accordance with the terms of the
                  Credit Agreement and approved by Administrative Agent and (B)
                  any other restricted deposit accounts established to hold
                  proceeds of any Securities Account (each a "RESTRICTED DEPOSIT
                  ACCOUNT") in accordance with the terms of the Credit Agreement
                  and approved by Administrative Agent; provided, however, that
                  Holdings and each Borrower shall have caused the Loan Party
                  with such Securities Account or Restricted Deposit Account to
                  have duly authorized, executed and delivered a Blocked Account
                  Agreement (as hereinafter defined) in form and substance
                  satisfactory to the Administrative Agent."

                           B. The section entitled "Deposits into Master
         Disbursement Accounts, Disbursement Accounts, Petty Cash Accounts and
         Miscellaneous Accounts" contained in Schedule 6.10 is hereby amended by
         deleting such section in its entirety and substituting therefore the
         following:

                  "Deposits into Master Disbursement Accounts, Disbursement
                  Accounts, Petty Cash Accounts, Miscellaneous Accounts,
                  Securities Accounts and Restricted Deposit Accounts:

                  Holdings, Borrowers and their Subsidiaries shall not make any
                  deposits, and shall not instruct their customers to make
                  deposits, into the (i) Master Disbursement Accounts other than
                  (x) proceeds of Loans and (y) amounts transferred from the
                  Collateral Account, (ii) the Disbursement Accounts, Petty Cash
                  Accounts, Miscellaneous Accounts and Securities Accounts other
                  than amounts transferred


                                       4

                  from the Master Disbursement Accounts and (iii) the Restricted
                  Deposit Accounts other than amounts transferred from a
                  Securities Account."

                  SECTION 2.        REPAYMENT OF LOANS AND TERMINATION OF
                                    COMMITMENTS OF IBM CREDIT CORPORATION AND
                                    CREDIT SUISSE FIRST BOSTON.

                  The Borrowers and Lenders acknowledge and agree that on the
Fourth Amendment Effective Date: (i) the Borrowers shall repay any outstanding
Revolving Loans of IBM Credit Corporation and Credit Suisse First Boston and
(ii) so long as any payment required by the foregoing clause (i) has been
received, (w) the Revolving Loan Commitment of each of IBM Credit Corporation
and Credit Suisse First Boston shall terminate, (x) each of IBM Credit
Corporation and Credit Suisse First Boston shall relinquish its rights (other
than any rights which survive the termination of the Credit Agreement under
subsection 10.10B of the Credit Agreement) under the Credit Agreement, (y)
Credit Suisse First Boston shall resign as Syndication Agent and The CIT
Group/Business Credit, Inc. shall be appointed successor Syndication Agent and
(z) each of IBM Credit Corporation and Credit Suisse First Boston shall be
released from its obligations under the Credit Agreement and shall cease to be a
party thereto.

                  As of the date hereof, the amount of each Revolving Lender's
Revolving Loan Commitment is set forth opposite its name on Schedule 1 annexed
hereto.

                  SECTION 3.        REMOVAL OF RESERVE ON BORROWING BASE RELATED
                                    TO CADANT ACQUISITION

                  Lenders hereby acknowledge and agree that Administrative Agent
may remove the reserve of $20,000,000 placed against the Borrowing Base in
connection with the Cadant Acquisition in accordance with the terms of the First
Amendment.

                  SECTION 4.        BORROWERS' REPRESENTATIONS AND WARRANTIES

                  In order to induce Lenders to enter into this Amendment and to
amend the Credit Agreement in the manner provided herein, Borrowers represent
and warrant to each Lender that the following statements are true, correct and
complete:


                           A. CORPORATE POWER AND AUTHORITY. Each Borrower has
         all requisite corporate power and authority to enter into this
         Amendment, and perform its obligations under, the Credit Agreement as
         amended by the First Amendment, the Second Amendment, the Third
         Amendment and this Amendment (the "AMENDED AGREEMENT").

                           B. AUTHORIZATION OF AGREEMENTS. The execution and
         delivery of this Amendment and the performance of the Amended Agreement
         have been duly authorized by all necessary corporate action on the part
         of each of the Borrowers.

                           C. NO CONFLICT. The execution and delivery by
         Borrowers of this Amendment and the performance by Borrowers of the
         Amended Agreement do not and will not (i) violate any provision of any
         law or any governmental rule or regulation


                                       5


         applicable to any Borrower or any of their respective Subsidiaries, the
         Certificate or Articles of Incorporation or Bylaws or Certificate of
         Formation or Operating Agreement, as applicable, of any Borrower or any
         of its Subsidiaries or any order, judgment or decree of any court or
         other agency of government binding on any Borrower or any of its
         Subsidiaries, (ii) conflict with, result in a breach of or constitute
         (with due notice or lapse of time or both) a default under any
         Contractual Obligation of any Borrower or any of its Subsidiaries,
         (iii) result in or require the creation or imposition of any Lien upon
         any of the properties or assets of any Borrower or any of its
         Subsidiaries (other than Liens created under any of the Loan Documents
         in favor of Administrative Agent on behalf of Lenders), or (iv) require
         any approval of stockholders or any approval or consent of any Person
         under any Contractual Obligation of any Borrower or any of its
         Subsidiaries.

                           D. GOVERNMENTAL CONSENTS. The execution and delivery
         by each Borrower of this Amendment and the performance by the Borrowers
         of the Amended Agreement and the transactions contemplated by this
         Amendment do not and will not require any registration with, consent or
         approval of, or notice to, or other action to, with or by, any federal,
         state or other governmental authority or regulatory body.

                           E. BINDING OBLIGATION. This Amendment and the Amended
         Agreement have been duly executed and delivered by each Borrower and is
         the legally valid and binding obligations of the Borrowers, enforceable
         against the Borrowers in accordance with their respective terms, except
         as may be limited by bankruptcy, insolvency, reorganization, moratorium
         or similar laws relating to or limiting creditors' rights generally or
         by equitable principles relating to enforceability.

                           F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES
         FROM CREDIT AGREEMENT. The representations and warranties contained in
         Section 5 of the Credit Agreement are and will be true, correct and
         complete in all material respects on and as of the First Amendment
         Effective Date to the same extent as though made on and as of that
         date, except to the extent such representations and warranties
         specifically relate to an earlier date, in which case they were true,
         correct and complete in all material respects on and as of such earlier
         date.

                           G. ABSENCE OF DEFAULT. No event has occurred and is
         continuing or will result from the consummation of the transactions
         contemplated by this Amendment that would constitute an Event of
         Default or a Potential Event of Default.

                  SECTION 5.        ACKNOWLEDGEMENT AND CONSENT

                  Holdings, each Borrower and each Subsidiary Guarantor hereby
acknowledges that such Loan Party has read this Amendment and consents to the
terms hereof and further hereby confirms and agrees that, notwithstanding the
effectiveness of this Amendment, the obligations of such Loan Party under each
of the Loan Documents to which such Loan Party is a party shall not be impaired
and each of the Loan Documents to which such Loan Party is a party are, and
shall continue to be, in full force and effect and are hereby confirmed and
ratified in all respects.


                                       6


                  Holdings and each Subsidiary Guarantor acknowledges and agrees
that (i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Loan Party is not required by the terms of the Credit Agreement
or any other Loan Document to consent to the amendments to the Credit Agreement
effected pursuant to this Amendment and (ii) nothing in the Credit Agreement,
this Amendment or any other Loan Document shall be deemed to require the consent
of such Loan Party to any future amendments to the Credit Agreement.


                  SECTION 6.        MISCELLANEOUS

                           A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT
         AND THE OTHER LOAN DOCUMENTS.

                  (i)      On and after the Fourth Amendment Effective Date,
each reference in the Credit Agreement to "this Agreement", "hereunder",
"hereof", "herein" or words of like import referring to the Credit Agreement,
and each reference in the other Loan Documents to the "Credit Agreement",
"thereunder", "thereof" or words of like import referring to the Credit
Agreement shall mean and be a reference to the Amended Agreement.

                  (ii)     Except as specifically amended by this Amendment, the
Credit Agreement and the other Loan Documents shall remain in full force and
effect and are hereby ratified and confirmed.

                  (iii)    The execution, delivery and performance of this
Amendment shall not, except as expressly provided herein, constitute a waiver of
any provision of, or operate as a waiver of any right, power or remedy of
Administrative Agent or any Lender under, the Credit Agreement or any of the
other Loan Documents.

                           B. FEES AND EXPENSES. Company acknowledges that all
         costs, fees and expenses as described in subsection 10.2 of the Credit
         Agreement incurred by Agents and their counsel with respect to this
         Amendment and the documents and transactions contemplated hereby shall
         be for the account of Borrowers.

                           C. HEADINGS. Section and subsection headings in this
         Amendment are included herein for convenience of reference only and
         shall not constitute a part of this Amendment for any other purpose or
         be given any substantive effect.

                           D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND
         OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
         CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
         STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE
         GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO
         CONFLICTS OF LAWS PRINCIPLES.

                           E. COUNTERPARTS; EFFECTIVENESS. This Amendment may be
         executed in any number of counterparts and by different parties hereto
         in separate counterparts, each of which when so executed and delivered
         shall be deemed an original, but all such


                                       7


         counterparts together shall constitute but one and the same instrument;
         signature pages may be detached from multiple separate counterparts and
         attached to a single counterpart so that all signature pages are
         physically attached to the same document. This Amendment shall become
         effective upon (i) receipt by Administrative Agent of an amendment fee
         equal to $218,750, to be distributed among each Lender that has
         executed and delivered a counterpart of this Amendment (other than
         Credit Suisse First Boston and IBM Credit Corporation), in proportion
         to the amount of each such Lender's Revolving Loan Exposure to the
         aggregate amount of the Revolving Loan Exposure of all such Lenders, in
         each case after giving effect to Section 2 of this Amendment and (ii)
         the execution of a counterpart hereof by each of the Borrowers, each of
         the Subsidiary Guarantors, Holdings and each Lender and receipt by
         Company and Administrative Agent of written or telephonic notification
         of such execution and authorization of delivery.

                  [Remainder of page intentionally left blank]


                                       8




                  IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered by their respective officers
thereunto duly authorized as of the date first written above.


HOLDINGS:                        ARRIS GROUP, INC.


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name:   Lawrence A. Margolis
                                      Title:  Vice President, Chief Financial
                                              Officer & Secretary


COMPANY:                         ARRIS INTERNATIONAL, INC.


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name:  Lawrence A. Margolis
                                      Title: Executive Vice President, Chief
                                             Financial Officer & Secretary


ARRIS:                           ARRIS INTERACTIVE L.L.C.


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name:  Lawrence A. Margolis
                                      Title: Executive Vice President


SUBSIDIARIES OF COMPANY:         ANTEC ASSET MANAGEMENT COMPANY


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name:  Lawrence A. Margolis
                                      Title: President


                                 ANTEC LICENSING COMPANY


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name: Lawrence A. Margolis
                                      Title:  President


                                      S-1


                                 TEXSCAN CORPORATION


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name: Lawrence A. Margolis
                                      Title: Chairman of the Board


                                 ELECTRONIC CONNECTOR CORPORATION OF ILLINOIS


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name: Lawrence A. Margolis
                                      Title: Vice President


                                 POWER GUARD, INC.


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name: Lawrence A. Margolis
                                      Title: Vice President


                                 ELECTRONIC SYSTEM PRODUCTS INC.


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name:  Lawrence A. Margolis
                                      Title: Vice President


                                 KEPTEL, INC.


                                 By:  /s/ Lawrence A. Margolis
                                      -------------------------------------
                                      Name:  Lawrence A. Margolis
                                      Title: Vice President


                                      S-2



SUBSIDIARY GUARANTORS,
for purposes of Section 3 only,      TEXSCAN DE MEXICO, S.A. DE C.V.


                                     By:  /s/ Lawrence A. Margolis
                                          -------------------------------------
                                          Name:  Lawrence A. Margolis
                                          Title: Chairman


                                     KEPTEL DE MEXICO S.A. DE C.V.


                                     By:  /s/ Lawrence A. Margolis
                                          -------------------------------------
                                          Name:  Lawrence A. Margolis
                                          Title: Chairman


                                     ANTEC INTERNATIONAL CORPORATION


                                     By:  /s/ Lawrence A. Margolis
                                          -------------------------------------
                                          Name:  Lawrence A. Margolis
                                          Title: Director


                                      S-3



LENDERS:                             THE CIT GROUP/BUSINESS CREDIT, INC.,
                                     individually and as Administrative Agent
                                     and Collateral Agent


                                     By:      /s/ John F. Bohan
                                         ---------------------------------------
                                         Name:  John F. Bohan
                                         Title: Vice President


                                      S-4



                                     CREDIT SUISSE FIRST BOSTON,
                                     individually and as Syndication Agent


                                     By:      /s/ Jay Chall
                                         ---------------------------------------
                                          Name:  Jay Chall
                                          Title: Director

                                     By:      /s/ James P. Morgan
                                         ---------------------------------------
                                          Name:  James P. Morgan
                                          Title: Director



                                      S-5



                                     AMERICAN NATIONAL BANK AND
                                     TRUST COMPANY OF CHICAGO


                                     By:      /s/ Clare J. D'Cruz
                                         ---------------------------------------
                                          Name:  Clare J. D'Cruz
                                          Title: Vice President


                                      S-6



                                     COMERICA BANK


                                     By:      /s/ Guy Camerlengo
                                         ---------------------------------------
                                          Name:  Guy Camerlengo
                                          Title: Assistant Vice President



                                      S-7



                                     CONGRESS FINANCIAL CORPORATION (SOUTHERN)


                                     By:      /s/ Morris P. Holloway
                                         ---------------------------------------
                                          Name:  Morris P. Holloway
                                          Title: Senior Vice President



                                      S-8


                                     FLEET CAPITAL CORPORATION


                                     By:      /s/ Douglas Strange
                                         ---------------------------------------
                                          Name:  Douglas Strange
                                          Title: Vice President


                                      S-9


                                     GMAC COMMERCIAL CREDIT LLC


                                     By:      /s/ Joseph A. Klapkowski
                                         ---------------------------------------
                                          Name: Joseph A. Klapkowski
                                          Title:



                                      S-10



                                     IBM CREDIT CORPORATION


                                     By:        /s/ Thomas S. Curcio
                                         ---------------------------------------
                                          Name:  Thomas S. Curcio
                                          Title: Manger of Credit


                                      S-11



                                     PNC BANK, NATIONAL ASSOCIATION


                                     By:      /s/ Eric Huff
                                         ---------------------------------------
                                          Name:  Eric Huff
                                          Title: Assistant Vice President


                                     By:
                                         ---------------------------------------
                                          Name:
                                          Title:



                                      S-12



                                   SCHEDULE 1







LENDER                                            COMMITMENT              PRO RATA SHARE
- ------                                        ------------------          --------------
                                                                    
The CIT Group/Business  Credit, Inc.          $    22,500,000.00           15.7342657343%

American National Bank and Trust
Company of Chicago                            $    22,500,000.00           15.7342657343%
Comerica Bank                                 $    10,000,000.00            6.9930069930%

Congress Financial Corporation
(Southern)                                    $    25,000,000.00           17.4825174825%
Fleet Capital Corporation                     $    22,500,000.00           15.7342657343%
GMAC Commercial Credit LLC                    $    22,500,000.00           15.7342657343%
PNC, National Association                     $    18,000,000.00           12.5874125874%
                                              ==================           ==============
                                              $   143,000,000.00                     100%



                                      S-1

EX-10.2

                                                                    EXHIBIT 10.2







                                OPTION AGREEMENT

                                  by and among

                              NORTEL NETWORKS LLC,

                            ARRIS INTERACTIVE L.L.C.

                                       and

                                ARRIS GROUP, INC.


                            Dated as of June 7, 2002






                                TABLE OF CONTENTS



                                                                                   Page
                                                                                   ----

                                                                                
ARTICLE I  DEFINITIONS...............................................................1

   1.01       Definitions............................................................1

ARTICLE II  GRANT OF OPTION; EXERCISE PRICE..........................................3

   2.01       Grant of Option........................................................3

   2.02       Full Exercise Price....................................................4

   2.03       Time and Manner of Exercise............................................4

   2.04       Conditions to the Exercise of the Option...............................4

ARTICLE III  CLOSING.................................................................5

   3.01       Time, Place and Manner of Closing......................................5

   3.02       Actions at Closing.....................................................5

   3.03       Effect of Closing......................................................5

ARTICLE IV  REPRESENTATIONS AND WARRANTIES...........................................6

   4.01       Representations and Warranties of Arris................................6

   4.02       Representations and Warranties of Nortel...............................7

ARTICLE V  PRE-CLOSING COVENANTS.....................................................8

   5.01       Transfer of Class B Interest...........................................8

   5.02       Registration and Offering..............................................9

ARTICLE VI  CONDITIONS TO CLOSING....................................................9

   6.01       Conditions to Each Party's Obligation to Effect the Transactions.......9

   6.02       Conditions to Obligation of Arris.....................................10

   6.03       Conditions to Obligation of Nortel....................................10

ARTICLE VII  TERMINATION............................................................11

   7.01       Termination...........................................................11

   7.02       Effect of Termination and Abandonment.................................13

ARTICLE VIII  MISCELLANEOUS.........................................................13

   8.01       Amendment; Extension; Waiver..........................................13

   8.02       Counterparts..........................................................13

   8.03       Governing Law.........................................................13

   8.04       Expenses..............................................................14



                                        i


                                TABLE OF CONTENTS



                                                                                   Page
                                                                                   ----

                                                                                
   8.05       Notices...............................................................14

   8.06       Entire Understanding..................................................15

   8.07       Assignment; Third Party Beneficiaries.................................15

   8.08       Incorporation of Exhibits.............................................15

   8.09       Press Releases........................................................16

   8.10       Interpretation........................................................16

   8.11       Severability..........................................................16

   8.12       Investor Rights Agreement.............................................16

   8.13       Amendment of LLC Agreement............................................16




Exhibits

Exhibit A         Form of Cross-Receipt

Exhibit B         Form of Termination Agreement

Exhibit C         Form of Exercise Notice


                                      -ii-






                                OPTION AGREEMENT

         THIS OPTION AGREEMENT (this "Agreement"), dated as of June 7, 2002, is
made by and among NORTEL NETWORKS LLC, a Delaware limited liability company
("Nortel"), ARRIS INTERACTIVE L.L.C., a Delaware limited liability company (the
"Company") and ARRIS GROUP, INC., a Delaware corporation ("Arris"). Capitalized
terms not otherwise defined herein shall have the respective meanings given them
in the Second Amended and Restated Limited Liability Company Agreement, dated
and effective as of August 3, 2001 (the "LLC Agreement"), of the Company.

         WHEREAS, each of Nortel and Arris is a Member of the Company;

         WHEREAS, Nortel is the sole Class B Member of the Company holding all
of the Class B Interest;

         WHEREAS, Nortel is also the holder of shares (the "Shares") of common
stock, par value $.01 per share, of Arris (the "Arris Common Stock");

         WHEREAS, Nortel has requested Arris to undertake the Registration and
Offering, and Arris desires to undertake the same; and

         WHEREAS, in connection with such Registration and Offering and the sale
of some or all of the Shares by Nortel pursuant thereto, Arris and the Company
desire the Company to obtain from Nortel, and Nortel desires to grant to the
Company, an option to redeem all or a portion of the Class B Unreturned Capital
and accrued but unpaid Class B Return (to the extent not previously added to
Class B Unreturned Capital) of Nortel's Class B Interest in the Company, in each
case subject to, and on, the terms and conditions set forth herein.

         NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein, and other good and valuable consideration, the
sufficiency and receipt of which are hereby acknowledged, and intending to be
legally bound hereby, the parties agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

1.01     Definitions. The following capitalized terms used in this Agreement
         shall have the respective meanings ascribed to them below:

         "Agreement" shall have the meaning given it in the introductory
         paragraph hereof.

         "Ancillary Agreements" shall mean, collectively, the Termination
         Agreement and the Cross-Receipt.





         "Arris" shall have the meaning given it in the introductory paragraph
         hereof.

         "Arris Common Stock" shall have the meaning given it in the third
         recital hereof.

         "Business Day" shall mean each day on which banking institutions in
         both of Toronto, Canada and New York, New York are not authorized or
         required to close.

         "Class B Interest Exchange" shall mean the exchange of Nortel's Class B
         Interest for New Securities pursuant to Section 8.03 of the LLC
         Agreement.

         "Closing" shall have the meaning given it in Section 3.01.

         "Closing Date" shall mean any date on which a Closing occurs.

         "Company" shall have the meaning given it in the introductory paragraph
         hereof.

         "Cross-Receipt" shall mean the Cross-Receipt substantially in the form
         of Exhibit A.

         "Discount Percentage" shall mean, with respect to any particular
         exercise of the Option, the percentage determined by reference to the
         Nortel Ownership Percentage (determined as of the date of the Exercise
         Notice relating to such exercise), as follows:



           Nortel Ownership Percentage                  Discount Percentage
           ---------------------------                  -------------------
                                                     
           Less than 20%                                60%
           20% or more, but less than 21.5%             70%
           21.5% or more, but less than 23%             72.5%
           23% or more, but less than 25%               75%
           25% or more, but less than 27%               79%
           27% or more                                  80%


         "Exercise Notice" shall have the meaning given to it in Section 2.03.

         "Exercise Period" shall mean the period commencing at the time of
         consummation of the Offering (or, if later, on June 30, 2002) and
         ending at 11:59 p.m., Boston time, on June 30, 2003.

         "Full Exercise Price" shall have the meaning given to it in Section
         2.02.

         "Governmental Authority" means any court, administrative agency or
         commission or other foreign or domestic federal, state, provincial or
         local governmental authority or instrumentality.

         "HSR Act" shall have the meaning given to it in Section 4.01(c).

         "Investor Rights Agreement" shall have the meaning given it in Section
         8.12.

         "LLC Agreement" shall have the meaning given it in the introductory
         paragraph hereof.


                                      -2-


         "Material Adverse Effect" shall mean with respect to the referenced
         Person, any change, circumstance or effect that is or is reasonably
         likely to be materially adverse to the business, condition (financial
         or otherwise) or results of operations of such Person and its
         Affiliates taken as a whole.

         "Nortel" shall have the meaning given it in the introductory paragraph
         hereof.

         "Nortel Ownership Percentage" shall mean the percentage of shares of
         Arris Common Stock outstanding as of 11:59 p.m., Boston time, on June
         30, 2002 (or, if the underwriters' over-allotment option relating to
         the Offering is exercised after June 30, 2002, then as of 11:59 p.m.,
         Boston time, on the date of the most recent such exercise occurring on
         or prior to the date of determination of the Nortel Ownership
         Percentage) that is held of record by Nortel as of such time.

         "Offering" shall mean the public offering and sale of at least Ten
         Million (10,000,000) Shares (or such lesser number of Shares as Nortel
         may elect to sell) held by Nortel in a firm commitment underwriting
         pursuant to the Registration Statement.

         "Option" shall have the meaning given to it in Section 2.01.

         "Registration" shall mean the shelf registration for resale under the
         Securities Act of at least Twenty-One Million (21,000,000) Shares held
         by Nortel, to be made by Arris as contemplated by Section 5.02.

         "Registration Rights Agreement" shall mean the Registration Rights
         Agreement, dated as of August 3, 2001, by and between Nortel and Arris.

         "Registration Statement" shall mean the registration statement under
         the Securities Act, initially filed by Arris with the SEC prior to the
         date hereof to effect the Registration as contemplated by Section 5.02.

         "SEC" shall mean the United States Securities and Exchange Commission,
         or any successor agency.

         "Shares" shall have the meaning given it in the third recital hereof.

         "Termination Agreement" shall mean the Termination Agreement
         substantially in the form of Exhibit B.

         "Transactions" shall mean the transactions contemplated hereby and/or
         by any of the Ancillary Agreements to occur at any Closing.

                                   ARTICLE II

                         GRANT OF OPTION; EXERCISE PRICE

2.01     Grant of Option. Upon the terms and conditions set forth herein, Nortel
         hereby grants to the Company an option to redeem all or a portion of
         the Class B Unreturned Capital and


                                      -3-


         accrued but unpaid Class B Return (to the extent not previously added
         to Class B Unreturned Capital) of the Class B Interest held by Nortel
         in the Company, subject to, and on, the terms and conditions set forth
         below (the "Option"); provided that each exercise of the Option shall
         be solely for the Full Exercise Price or any lesser amount in excess of
         $20,000,000.

2.02     Full Exercise Price. The price payable by the Company in order to
         exercise the Option in full (the "Full Exercise Price") shall be equal
         to the amount required to be paid to Nortel hereunder (whether pursuant
         to a single exercise of the Option or otherwise) in order to reduce
         each of the Class B Unreturned Capital and accrued but unpaid Class B
         Return (to the extent not previously added to Class B Unreturned
         Capital) to zero (giving effect to the adjustment contemplated by
         Section 3.03).

2.03     Time and Manner of Exercise. Upon the terms and subject to the
         conditions set forth herein (including Section 2.04), the Option shall
         be exercisable by the Company at any time, and from time to time,
         during the Exercise Period by delivering to Nortel, in the manner set
         forth in Section 8.05, written notice in the form attached hereto as
         Exhibit C (an "Exercise Notice"). Upon such delivery of an Exercise
         Notice, the Company shall be irrevocably obligated to consummate the
         Transactions contemplated by such Exercise Notice, subject to the terms
         and conditions of this Agreement, including those set forth in Article
         VI.

2.04     Conditions to the Exercise of the Option. The right of the Company to
         exercise the Option hereunder shall be conditioned upon and subject to
         the following conditions:

         (a)      the representations and warranties of Arris and the Company
                  set forth in this Agreement (without giving effect to any
                  standard, qualification or exception contained therein with
                  respect to materiality or Material Adverse Effect) shall be
                  true and correct, as of the date of this Agreement and as of
                  the date of the relevant Exercise Notice as though made as of
                  the date of such Exercise Notice (except that representations
                  and warranties that by their terms speak as of the date of
                  this Agreement or some other date shall be true and correct as
                  of such date), except as would not have or reasonably be
                  expected to have, individually or in the aggregate, a Material
                  Adverse Effect on Arris and would not prevent or impair Arris'
                  or the Company's ability to consummate the Transactions;

         (b)      the Company, Arris and their Affiliates shall have performed
                  in all material respects (without giving effect to any
                  standard, qualification or exception contained therein with
                  respect to materiality or Material Adverse Effect) all
                  obligations required to be performed by them as of or prior to
                  the date of the relevant Exercise Notice under this Agreement
                  or any other agreement in effect between the Company and/or
                  Arris (and/or their Affiliates) and Nortel (and/or its
                  Affiliates);

         (c)      no temporary restraining order, preliminary or permanent
                  injunction or other order issued by any court of competent
                  jurisdiction or other legal restraint or prohibition
                  preventing the consummation of the Transactions shall be in
                  effect or


                                      -4-


                  pending, and no proceeding brought by any Governmental
                  Authority seeking any of the foregoing shall be pending; and

         (d)      The Offering shall have been consummated not later than June
                  30, 2002.

                                  ARTICLE III

                                     CLOSING

3.01     Time, Place and Manner of Closing. In the event that an Exercise Notice
         is duly and validly given by the Company hereunder prior to the
         expiration of the Exercise Period, consummation of the Transactions
         contemplated by such Exercise Notice (a "Closing") shall take place at
         10:00 a.m., Boston time, on the tenth (10th) Business Day after the
         date of Nortel's receipt of such Exercise Notice, at the offices of
         Hale and Dorr LLP at 60 State Street, Boston, Massachusetts, or by
         facsimile, or at such other time and place as the parties hereto may
         mutually agree in writing.

3.02     Actions at Closing.  At each Closing:

         (a)      The Company shall deliver to Nortel, by wire transfer or
                  immediately available U.S. funds to the bank account
                  designated by Nortel by written notice to the Company not
                  later than three (3) Business Days prior to the Closing, the
                  amount of the Full Exercise Price or any lesser amount in
                  excess of $20 million;

         (b)      If, as a result of the Transactions consummated at such
                  Closing, the amount of Class B Unreturned Capital is reduced
                  to zero by operation of Section 3.03, then Nortel, Arris and
                  the Company shall execute and deliver to each other the
                  Termination Agreement, and Arris shall deliver to Nortel the
                  Termination Agreement executed by each other Affiliate of
                  Arris that is a party thereto; and

         (c)      Each of Nortel and the Company shall execute and deliver to
                  the other the Cross-Receipt.

         A Closing shall not be deemed to occur until all of the actions set
         forth in clauses (a) through (c) of this Section 3.02 have been
         completed with respect to such Closing.

3.03     Effect of Closing. If any Closing occurs, then the amount paid by the
         Company pursuant to Section 3.02(a) shall be applied as set forth in
         the last sentence of Section 8.02(a) of the LLC Agreement, as if such
         payment were a redemption payment referenced therein; provided,
         however, that, solely for the purposes of this sentence and the related
         calculation of the Class B Unreturned Capital and Class B Return of
         Nortel's Class B Interest remaining outstanding after giving effect to
         the Option exercise consummated at such Closing, the amount so paid by
         the Company shall first be deemed adjusted by dividing the same by the
         Discount Percentage applicable to such Closing.


                                      -5-


                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

4.01     Representations and Warranties of Arris. Arris and the Company each
         represents and warrants to Nortel jointly and severally, that:

         (a)      Organization and Standing. Arris is a corporation and the
                  Company is a limited liability company, in each case duly
                  organized, validly existing and in good standing under the
                  laws of the State of Delaware.

         (b)      Authority.

                  (i)      The execution and delivery of this Agreement and the
                           Ancillary Agreements, the exercise of the Option and
                           the consummation of the Transactions have been duly
                           authorized by all necessary corporate or limited
                           liability company (as applicable) action of Arris and
                           the Company prior to the date hereof (which action
                           has not been rescinded or modified in any way).

                  (ii)     This Agreement is, and each Ancillary Agreement to be
                           entered into at the Closing will be, a legal, valid
                           and binding agreement of the Company and (to the
                           extent that it is a party thereto) Arris, enforceable
                           in accordance with its terms (except as such
                           enforceability may be limited by applicable
                           bankruptcy, insolvency, reorganization, moratorium,
                           fraudulent transfer and similar laws of general
                           applicability relating to or affecting creditors'
                           rights or by general equity principles, whether
                           considered at law or in equity).

         (c)      No Defaults. Subject to the receipt of the applicable
                  regulatory approvals, and expiration of the applicable waiting
                  periods, referred to in Section 4.01(d) and required filings
                  under federal and state securities laws, the execution,
                  delivery and performance of this Agreement and the Ancillary
                  Agreements, the exercise of the Option and the consummation of
                  the Transactions by Arris and the Company do not and will not
                  (i) constitute a breach or violation of, or a default under,
                  any law, rule or regulation or any judgment, decree, order,
                  governmental permit or license, or agreement, indenture or
                  instrument of Arris or the Company or to which Arris or the
                  Company or any of their respective properties or assets are
                  subject or bound, (ii) constitute a breach, violation or
                  default under, the articles or certificate of incorporation or
                  by-laws of Arris or the certificate of formation or limited
                  liability company agreement of the Company or (iii) require
                  any consent or approval under any such law, rule, regulation,
                  judgment, decree, order, governmental permit or license,
                  agreement, indenture or instrument, except in the case of (i)
                  and (iii), where such breach, violation or default or the
                  failure to obtain such consents or approvals would not in the
                  aggregate have a Material Adverse Effect on Arris and would
                  not prevent or impair Arris' or the Company's ability to
                  consummate the Transactions.


                                      -6-



         (d)      Regulatory Approvals. No consents or approvals of, or filings
                  or registrations with, any Governmental Authority are
                  necessary for the Company to exercise the Option or for the
                  Company or Arris to consummate the Transactions, except for
                  (i) as may be required under, and other applicable
                  requirements of, the HSR Act, the Competition Act (Canada) and
                  antitrust or other competition laws of other jurisdictions;
                  (ii) the filing with the SEC and declaration of effectiveness
                  of the Registration Statement; and (iii) such filings as are
                  required to be made or approvals as are required to be
                  obtained under the securities or "Blue Sky" laws of various
                  states in connection with the Offering.

         (e)      Solvency. Immediately after giving effect to the Transactions
                  and the closing of any financing to be obtained by the
                  Company, Arris or any of their Affiliates in order to effect
                  the Transactions, the Company, Arris and each of their
                  relevant Affiliates shall be able to pay its debts as they
                  become due and shall own property having a fair saleable value
                  greater than the amounts required to pay its debts (including
                  a reasonable estimate of the amount of all contingent
                  liabilities). Immediately after giving effect to the
                  Transactions and the closing of any financing to be obtained
                  by the Company, Arris or any of their Affiliates in order to
                  effect the Transactions, the Company, Arris and each of their
                  relevant Affiliates shall have adequate capital to carry on
                  its business. No transfer of property is being made and no
                  obligation is being incurred in connection with the
                  Transactions and the closing of any financing to be obtained
                  by the Company, Arris or any of their Affiliates in order to
                  effect the Transactions with the intent to hinder, delay or
                  defraud either present or future creditors of the Company,
                  Arris or any of their Affiliates.

4.02     Representations and Warranties of Nortel. Nortel represents and
         warrants to the Company and Arris that:

         (a)      Organization and Standing. Nortel is a limited liability
                  company organized, validly existing and in good standing under
                  the laws of the State of Delaware.

         (b)      Authority.

                  (i)      The execution and delivery of this Agreement and the
                           Ancillary Agreements and the consummation of the
                           Transactions have been duly authorized by all
                           necessary limited liability company action of Nortel
                           prior to the date hereof (which action has not been
                           rescinded or modified in any way).

                  (ii)     This Agreement is, and each Ancillary Agreement to be
                           entered into at the Closing will be, a legal, valid
                           and binding agreement of Nortel (to the extent that
                           it is a party thereto), enforceable in accordance
                           with its terms (except as such enforceability may be
                           limited by applicable bankruptcy, insolvency,
                           reorganization, moratorium, fraudulent transfer and
                           similar laws of general applicability relating to or
                           affecting creditors' rights or by general equity
                           principles, whether considered at law or in equity).


                                      -7-


                  (c)      No Defaults. Subject to the receipt of the applicable
                           regulatory approvals, and expiration of the
                           applicable waiting periods, referred to in Section
                           4.02(d) and required filings under federal, state and
                           foreign securities laws, the execution, delivery and
                           performance of this Agreement and the Ancillary
                           Agreements and the consummation of the Transactions
                           by Nortel do not and will not (i) constitute a breach
                           or violation of, or a default under, any law, rule or
                           regulation or any judgment, decree, order,
                           governmental permit or license, or agreement,
                           indenture or instrument of Nortel or to which Nortel
                           or any of its respective properties or assets are
                           subject or bound, (ii) constitute a breach, violation
                           or default under, the certificate of formation or
                           limited liability company agreement of Nortel, or
                           (iii) require any consent or approval under any such
                           law, rule, regulation, judgment, decree, order,
                           governmental permit or license, agreement, indenture
                           or instrument, except in the case of (i) and (iii),
                           where such breach, violation or default or the
                           failure to obtain such consents or approvals would
                           not in the aggregate have a Material Adverse Effect
                           on Nortel and would not prevent or impair Nortel's
                           ability to consummate the Transactions.

                  (d)      Regulatory Approvals. No consents or approvals of, or
                           filings or registrations with, any Governmental
                           Authority are necessary for Nortel to consummate the
                           Transactions, except for (i) as may be required
                           under, and other applicable requirements of, the HSR
                           Act, the Competition Act (Canada) and antitrust or
                           other competition laws of other jurisdictions, and
                           (ii) as may be required under, and other applicable
                           requirements of, federal, state and foreign
                           securities laws.

                  (e)      Title to Class B Interest. Nortel has good and valid
                           title to the Class B Interest, free and clear of all
                           liens or encumbrances (other than liens or
                           encumbrances, if any, imposed by the provisions of
                           the LLC Agreement or the Subordination Agreement).

                                   ARTICLE V

                              PRE-CLOSING COVENANTS

5.01     Transfer of Class B Interest. Nortel agrees that, from the date hereof
         until the expiration of the Exercise Period (or, if earlier, until the
         termination of this Agreement in accordance with its terms), without
         the prior written consent of the Company, Nortel shall not Transfer its
         Class B Interest or any portion thereof (including through granting a
         lien or pledge) to any Person other than pursuant to a redemption by
         the Company hereunder or under the LLC Agreement unless such Person
         agrees to become bound by the provisions of this Agreement to the same
         extent as Nortel was so bound as of immediately prior to such Transfer.
         In the event that Nortel Transfers all of its Class B Interest in
         compliance with the preceding sentence, Nortel shall assign this
         Agreement to the Transferee(s) of such Class B Interest (with no
         consent or approval of the Company, Arris or any of their Affiliates
         being necessary for such assignment) and shall have no further
         liabilities or obligations to the Company, Arris or any of their
         Affiliates hereunder.


                                      -8-


5.02     Registration and Offering.

         (a)      Each of Nortel and Arris agrees that, except to the extent
                  otherwise provided herein or expressly agreed by Nortel and
                  Arris in writing, the provisions of the Registration Rights
                  Agreement shall apply to the Registration and Offering
                  hereunder to the same extent as if (i) Nortel, as the
                  "Investor" under the Registration Rights Agreement, validly
                  required registration of the Shares to be included in the
                  Registration under Section 1 of the Registration Rights
                  Agreement, and (ii) as a "Selling Stockholder" within the
                  meaning of Section 1(c) of the Registration Rights Agreement,
                  Nortel validly requested that the Registration Statement
                  provide for a delayed or continuous offering of the Shares
                  covered thereby pursuant to Rule 415 promulgated under the
                  Securities Act or any similar rule then in effect.

         (b)      Each of Nortel and Arris agrees that (i) the Offering shall be
                  pursuant to a firm commitment underwriting, as if a valid
                  request for the same were made by Nortel as a "Selling
                  Stockholder" under Section 1(c) of the Registration Rights
                  Agreement, and (ii) J. P. Morgan Securities Inc. shall act as
                  a lead managing underwriter for the Offering, together with
                  one other nationally recognized investment banking firm to be
                  selected by mutual written agreement of Nortel and Arris.

         (c)      Arris shall cause each of Messrs. Stanzione, Margolis, Potts
                  and Lakin, each of whom is an officer of Arris, to (i) devote
                  such time as may be necessary for the expeditious preparation
                  and filing of the Registration Statement and such responses to
                  comments and other activities as may be necessary to achieve
                  expeditious effectiveness of the Registration Statement, (ii)
                  commencing upon the initial filing of the Registration
                  Statement with the SEC, devote such time as, in the opinion of
                  the managing underwriters, be necessary for appropriate
                  preparation for the road show to be undertaken in connection
                  with the Offering, (iii) devote such time as Nortel may
                  request to such road show, not to exceed two (2) weeks, and
                  (iv) use their respective best efforts to cooperate with and
                  expedite the Registration and the Offering.

                                   ARTICLE VI

                              CONDITIONS TO CLOSING

6.01     Conditions to Each Party's Obligation to Effect the Transactions. The
         respective obligation of each of Nortel, the Company and Arris to
         consummate the Transactions at each Closing (once the applicable
         Exercise Notice has been validly given by the Company hereunder) is
         subject to the prior fulfillment or written waiver by each of them of
         each of the following conditions:

         (a)      All regulatory approvals required to consummate the
                  Transactions contemplated by the applicable Exercise Notice
                  shall have been obtained and shall remain in full force and
                  effect and all statutory waiting periods in respect thereof
                  shall have


                                      -9-


                  expired, except any such approvals failure to obtain which
                  would not reasonably be expected to have a Material Adverse
                  Effect on Nortel or Arris following such Closing.

         (b)      No Governmental Authority of competent jurisdiction shall have
                  enacted, issued, promulgated, enforced or entered any statute,
                  rule, regulation, judgment, decree, injunction or other order
                  (whether temporary, preliminary or permanent) which is in
                  effect and enjoins or prohibits consummation of the
                  Transactions contemplated by the applicable Exercise Notice.

         (c)      There shall have been no Class B Interest Exchange prior to,
                  or at the time of, such Closing.

6.02     Conditions to Obligation of Arris. The obligation of the Company and
         Arris to consummate the Transactions at each Closing (once the
         applicable Exercise Notice has been validly given by the Company
         hereunder) is also subject to the fulfillment or written waiver by the
         Company and Arris at or prior to such Closing of each of the following
         conditions:

         (a)      Representations and Warranties. All representations and
                  warranties of Nortel set forth in this Agreement (without
                  giving effect to any standard, qualification or exception
                  contained therein with respect to materiality or Material
                  Adverse Effect) shall be true and correct, as of the date of
                  this Agreement and as of such Closing as though made at and as
                  of such Closing (except that representations and warranties
                  that by their terms speak as of the date of this Agreement or
                  some other date shall be true and correct as of such date),
                  except as would not have or reasonably be expected to have,
                  individually or in the aggregate, a Material Adverse Effect on
                  Nortel's ability to consummate the Transactions to be
                  consummated at such Closing, and the Company shall have
                  received a certificate, dated the applicable Closing Date,
                  signed on behalf of Nortel by an appropriate authorized
                  signatory thereof to such effect.

         (b)      Performance of Obligations. Nortel and its Affiliates shall
                  have performed in all material respects (without giving effect
                  to any standard, qualification or exception contained therein
                  with respect to materiality or Material Adverse Effect) all
                  obligations required to be performed by them at or prior to
                  such Closing under this Agreement or any other agreement in
                  effect between the Company and/or Arris (and/or their
                  Affiliates) and Nortel (and/or its Affiliates), and the
                  Company shall have received a certificate, dated the
                  applicable Closing Date, signed on behalf of Nortel by an
                  appropriate authorized signatory thereof to such effect.

6.03     Conditions to Obligation of Nortel. The obligation of Nortel to
         consummate the Transactions at each Closing (once the applicable
         Exercise Notice has been validly given by the Company hereunder) is
         also subject to the fulfillment or written waiver by Nortel prior to
         such Closing of each of the following conditions:


                                      -10-


         (a)      Representations and Warranties. All representations and
                  warranties of the Company and Arris set forth in this
                  Agreement (without giving effect to any standard,
                  qualification or exception contained therein with respect to
                  materiality or Material Adverse Effect) shall be true and
                  correct, as of the date of this Agreement and as of such
                  Closing as though made at and as of such Closing (except that
                  representations and warranties that by their terms speak as of
                  the date of this Agreement or some other date shall be true
                  and correct as of such date), except as would not have or
                  reasonably be expected to have, individually or in the
                  aggregate, a Material Adverse Effect on the ability of the
                  Company and Arris to consummate the Transactions to be
                  consummated at such Closing; and Nortel shall have received a
                  certificate, dated applicable Closing Date, signed on behalf
                  of Arris by the Chief Executive Officer or the Chief Financial
                  Officer of Arris, and on behalf of the Company by an
                  appropriate authorized signatory thereof, to such effect.

         (b)      Performance of Obligations. Arris and its Affiliates shall
                  have performed in all material respects (without giving effect
                  to any standard, qualification or exception contained therein
                  with respect to materiality or Material Adverse Effect) all
                  obligations required to be performed by them at or prior to
                  such Closing under this Agreement or any other agreement in
                  effect between the Company and/or Arris (and/or their
                  Affiliates) and Nortel (and/or its Affiliates), and Nortel
                  shall have received a certificate, dated the applicable
                  Closing Date, signed on behalf of Arris by the Chief Executive
                  Officer or the Chief Financial Officer of Arris, and on behalf
                  of the Company by an appropriate authorized signatory thereof,
                  to such effect.

                                  ARTICLE VII

                                   TERMINATION

7.01     Termination. This Agreement may be terminated, and the Transactions to
         be consummated at any subsequent Closing may be abandoned:

         (a)      Mutual Consent. At any time prior to the redemption in full of
                  Nortel's Class B Interest hereunder or under the LLC
                  Agreement, by the mutual consent of Nortel and the Company.

         (b)      Breach. At any time prior to such redemption

                  (i)      by Nortel, in the event of either: (x) a breach by
                           the Company or Arris of any representation or
                           warranty contained herein which would result in the
                           non-satisfaction of the conditions set forth in
                           Section 6.03(a), which breach is not capable of being
                           cured or has not been cured within 10 calendar days
                           after the giving of written notice to the breaching
                           party of such breach; or (y) a material breach by the
                           Company, Arris or any of their Affiliates of any of
                           the covenants or agreements contained herein or in
                           any other agreement in effect between the Company,
                           Arris (and/or their


                                      -11-


                           Affiliates) and Nortel (and/or its Affiliates), which
                           breach is not capable of being cured or has not been
                           cured within 10 calendar days after the giving of
                           written notice to the breaching party of such breach.

                  (ii)     by the Company, in the event of either: (x) a breach
                           by Nortel of any representation or warranty contained
                           herein which would result in the non-satisfaction of
                           the conditions set forth in Section 6.02(a), which
                           breach is not capable of being cured or has not been
                           cured within 10 calendar days after the giving of
                           written notice to the breaching party of such breach;
                           or (y) a material breach by Nortel or any of its
                           Affiliates of any of the covenants or agreements
                           contained herein or in any other agreement in effect
                           between Arris (and/or its Affiliates) and Nortel
                           (and/or its Affiliates), which breach is not capable
                           of being cured or has not been cured within 10
                           calendar days after the giving of written notice to
                           the breaching party of such breach.

         (c)      Delay of Registration or Offering. By Nortel, in the event
                  that (i) the Registration Statement has not become effective
                  on or prior to June 15, 2002, or (ii) the Offering (other than
                  the closing of any exercises of over-allotment options by the
                  underwriters of the Offering) has not been consummated on or
                  prior to June 30, 2002; provided that, at the election of
                  Nortel, the provisions of Section 5.02 shall continue in
                  effect until June 30, 2003 notwithstanding termination of this
                  Agreement pursuant to this Section 7.01(c).

         (d)      Delay of Closing. At any time prior to the redemption in full
                  of Nortel's Class B Interest hereunder or under the LLC
                  Agreement, by Nortel or the Company, in the event that such
                  redemption does not occur by the earlier of (i) the tenth
                  (10th) Business Day after delivery to Nortel, pursuant to
                  Section 2.03, of the Exercise Notice contemplating such
                  redemption, and (ii) July 15, 2003, except to the extent that
                  the failure of such redemption to occur arises out of or
                  results from the knowing action or inaction of the party
                  seeking to terminate pursuant to this Section 7.01(d) which
                  action or inaction is in violation of its (or one of its
                  Affiliates') obligations under this Agreement.

         (e)      No Governmental Approval.

                  (i)      By the Company or Nortel in the event the approval of
                           any Governmental Authority required for consummation
                           of the Transactions shall have been denied by final
                           non-appealable action of such Governmental Authority.

                  (ii)     By Nortel in the event any required approval of a
                           Governmental Authority contains any final
                           non-appealable conditions, restrictions or
                           requirements which would reasonably be expected to
                           (A) following a Closing, have a Material Adverse
                           Effect on Nortel or Arris or (B) require Nortel,
                           Arris or any of their respective Affiliates to sell
                           or otherwise dispose of, or to hold separately, or to
                           permit the sale or other disposition of, any of their


                                      -12-


                           respective assets, whether as a condition to
                           obtaining any approval from a Governmental Authority
                           or any other Person or for any other reason.

                  (iii)    By Arris in the event any required approval of a
                           Governmental Authority contains any final,
                           non-appealable conditions, restrictions or
                           requirements which would reasonably be expected to,
                           following a Closing, have a Material Adverse Effect
                           on Arris or require Arris or any of its Affiliates to
                           sell or otherwise dispose of, or to hold separately,
                           or to permit the sale or other disposition of, any of
                           their respective assets, whether as a condition to
                           obtaining any approval of any Governmental Authority
                           or any other Person or for any other reason.

7.02     Effect of Termination and Abandonment. In the event of termination of
         this Agreement and the abandonment of the Transactions pursuant to this
         Article VII, no party to this Agreement (nor any of their respective
         officers, directors or agents) shall have any liability or further
         obligation to the other party hereunder except (i) as otherwise set
         forth in Section 7.01(c), and (ii) that termination shall not relieve a
         party from liability for any willful breach of this Agreement or any
         liability or obligation arising under the Registration Rights
         Agreement.

                                  ARTICLE VIII

                                  MISCELLANEOUS

8.01     Amendment; Extension; Waiver.

         (a)      Except as otherwise provided in Section 5.01 with respect to
                  Transfers by Nortel of its Class B Interest, this Agreement
                  may be amended only by an instrument in writing signed on
                  behalf of each of the parties hereto.

         (b)      Either party hereto may, to the extent legally allowed, (i)
                  extend the time for the performance of any of the obligations
                  or other acts of the other party, (ii) waive any inaccuracies
                  in the representations and warranties of the other party
                  contained herein or in any document delivered pursuant hereto
                  and (iii) waive compliance by the other party with any of the
                  agreements or conditions contained herein. Any agreement on
                  the part of a party hereto to any such extension or waiver
                  shall be valid only if set forth in a written instrument
                  signed on behalf of such party, but such extension or waiver
                  or failure to insist on strict compliance with an obligation,
                  covenant, agreement or condition shall not operate as a waiver
                  of, or estoppel with respect to, any subsequent or other
                  failure.

8.02     Counterparts. This Agreement may be executed in one or more
         counterparts, each of which when executed shall be deemed to constitute
         an original but all of which when taken together shall constitute one
         and the same instrument.

8.03     Governing Law. This Agreement shall be governed by, and interpreted in
         accordance with, the laws of the State of Delaware, without regard to
         the conflict of law principles thereof.


                                      -13-


8.04     Expenses. Except as otherwise provided herein, each party hereto will
         bear all expenses incurred by it in connection with this Agreement and
         the transactions contemplated hereby, except that (i) all costs and
         expenses of either party hereto relating to the Registration and the
         Offering shall be borne as specified in the Registration Rights
         Agreement, as if the Registration were undertaken and made pursuant
         thereto and Nortel were the only "Selling Stockholder" under the
         Registration Rights Agreement participating therein, and (ii) Arris
         shall also reimburse and pay to Nortel, not later than thirty (30) days
         after receipt of Nortel's invoice therefor (with interest on any
         overdue amounts payable by Arris to Nortel at the rate of 12% per annum
         or, if lower, the maximum lawful rate), all of Nortel's and its
         Affiliates' costs and expenses relating to Nortel's and its relevant
         Affiliates' (and its and their respective officers, directors and
         employees) participation in the road show relating to the Offering.

8.05     Notices. All notices, requests and other communications hereunder to a
         party shall be in writing and shall be deemed given if personally
         delivered, telecopied (with confirmation) or three Business Days after
         being mailed by registered or certified mail (return receipt requested)
         or one Business Day after being delivered by overnight courier to such
         party at its address set forth below or such other address as such
         party may specify by notice to the parties hereto.


         If to Nortel, to:

         Nortel Networks Inc.
         2221 Lakeside Blvd.
         Richardson, Texas 75082-4399
         Attn:  Craig Johnson, Mergers and Acquisitions
         Fax:  972-685-3122
         Phone: 972-684-7255

         With a copy to:

         Nortel Networks Inc.
         200 Athens Way
         Nashville, Tennessee 37228
         Attn:  Corporate Secretary
         Fax:  615-432-4067
         Phone:   615-432-4000

         Nortel Networks Limited
         8200 Dixie Road, Suite 100
         Brampton, Ontario, Canada  L6T 5P6
         Attn:  Corporate Secretary
         Fax: 905-863-8386
         Phone: 905-863-0000


                                      -14-


         With a copy to:

         Hale and Dorr LLP
         60 State Street
         Boston, Massachusetts  02109
         Attention:  Dimitri P. Racklin
         Fax:  (617) 526-5000
         Phone:  (617) 526-6462

         If to Arris, to:

         Arris Group, Inc.
         11450 Technology Circle
         Duluth, Georgia  30097
         Attention:  Lawrence Margolis
         Fax:  (678) 473-8470
         Phone: (678) 473-8129

         With a copy to:

         Troutman Sanders LLP
         600 Peachtree Street
         Suite 5200
         Atlanta, GA 30308
         Attention: W. Brinkley Dickerson, Jr.
         Fax: 404-885-3900
         Phone: 404-885-3000

8.06     Entire Understanding. This Agreement and the documents and instruments
         referenced herein represent the entire understanding of the parties
         hereto with reference to the transactions contemplated hereby and
         thereby supersede any and all other oral or written agreements
         heretofore made to the extent (but only to the extent) such agreements
         relate to the subject matter hereof.

8.07     Assignment; Third Party Beneficiaries. Except in the event of a
         Transfer by Nortel of its Class B Interest prior to the Closing (in
         which case Section 5.01 shall apply), neither this Agreement, nor any
         of the rights, interests or obligations hereunder, shall be assigned by
         either of the parties hereto (whether by operation of law or otherwise)
         without the prior written consent of the other party. Subject to the
         preceding sentence, this Agreement will be binding upon, inure to the
         benefit of and be enforceable by the parties hereto and their
         respective successors and assigns. Except as set forth in Section 8.12,
         nothing in this Agreement, express or implied, is intended to confer
         upon any Person, other than the parties hereto or their respective
         successors or permitted assigns, any rights, remedies, obligations or
         liabilities under or by reason of this Agreement.

8.08     Incorporation of Exhibits. All Exhibits shall be deemed to constitute
         an integral part of this Agreement for all purposes.


                                      -15-


8.09     Press Releases. Nortel and Arris shall jointly agree on an initial
         press release with respect to the Transactions. Neither the Company nor
         Arris will, without the prior approval of Nortel, issue (i) any other
         press release or (ii) any written statement for general circulation
         (including any written statement circulated to employees, customers or
         other third parties) relating to the transactions contemplated hereby;
         except, in the case of clause (ii) above, as otherwise required by
         applicable law or regulation or rules of the Nasdaq Stock Market, Inc.

8.10     Interpretation. When a reference is made in this Agreement to Articles,
         Sections or Exhibits, such reference shall be to an Article or Section
         of, or Exhibit to, this Agreement unless otherwise indicated. The table
         of contents and headings contained in this Agreement are for reference
         purposes only and are not part of this Agreement. Whenever the words
         "include", "includes" or "including" are used in this Agreement, they
         shall be deemed to be followed by the words "without limitation". Any
         reference to "herein" or "hereof" or similar terms shall refer to the
         agreement as a whole rather than to the individual paragraph, Section
         or Article. Time shall be deemed to be of the essence in the
         interpretation and enforcement of this Agreement.

8.11     Severability. Any term or provision of this Agreement which is invalid
         or unenforceable in any jurisdiction shall, as to that jurisdiction, be
         ineffective to the extent of such invalidity or unenforceability
         without rendering invalid or unenforceable the remaining terms and
         provisions of this Agreement or affecting the validity or
         enforceability of any of the terms or provisions of this Agreement in
         any other jurisdiction. If any provision of this Agreement is so broad
         as to be unenforceable, the provision shall be interpreted to be only
         so broad as it is enforceable.

8.12     Investor Rights Agreement. Arris acknowledges and agrees that (i) the
         execution and delivery of this Agreement by the parties hereto and the
         consummation of the Transactions do not constitute a breach or
         violation of, or otherwise conflict with, the terms and provisions of
         the Amended and Restated Investor Rights Agreement, dated as of April
         9, 2001, by and among Nortel, Nortel Networks Inc. and Arris, as
         amended by the First Amendment to Amended and Restated Investor Rights
         Agreement, dated as of August 3, 2001 (as amended, the "Investor Rights
         Agreement"), and (ii) to the extent the execution and delivery of this
         Agreement by the parties hereto or the consummation of the Transactions
         constitutes a breach or violation of, or otherwise conflicts with, the
         terms and provisions of the Investor Rights Agreement, Arris hereby
         waives any such breach, violation or conflict. Without limiting the
         foregoing, Arris acknowledges and agrees that the Registration and the
         Offering contemplated by this Agreement shall be deemed to constitute a
         "bona fide public offering effected in accordance with the Registration
         Rights Agreement" as contemplated by Section 3.3(b)(i) of the Investor
         Rights Agreement. Each of Arris and Nortel acknowledges and agrees that
         Nortel Networks Inc. shall be an express third party beneficiary of the
         provisions of this Section 8.12.

8.13     Amendment of LLC Agreement. This Option Agreement shall be deemed to
         be, and shall constitute, an amendment of the LLC Agreement to the full
         extent necessary or advisable to give effect to the provisions hereof.
         To the extent that any provisions of the


                                      -16-


         LLC Agreement are inconsistent with the provisions of this Option
         Agreement or impose any additional requirements for the execution and
         delivery of this Option Agreement or any of the Ancillary Agreements or
         the consummation of the Transactions, the LLC Agreement shall be deemed
         amended hereby in all respects necessary to eliminate all such
         inconsistencies and additional requirements.



                      [THE NEXT PAGE IS THE SIGNATURE PAGE]


                                      -17-



         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.

                                   ARRIS INTERACTIVE L.L.C.

                                   By:      Arris Group, Inc.
                                   Its:     Managing Member

                                   By:      /s/ Lawrence A. Margolis
                                            -----------------------------------
                                   Name:    Lawrence A. Margolis
                                   Title:   Executive Vice President & CFO

                                   ARRIS GROUP, INC.


                                   By:      /s/ Lawrence A. Margolis
                                            -----------------------------------
                                   Name:    Lawrence A. Margolis
                                   Title:   Executive Vice President & CFO

                                   NORTEL NETWORKS LLC

                                   By:      Nortel Networks Inc.
                                   Its:     Managing Member


                                   By:      /s/ Deborah J. Noble
                                            -----------------------------------
                                   Name:    Deborah J. Noble
                                   Title:   Assistant Secretary

















[Signature page to Option Agreement among Nortel Networks LLC, Arris Interactive
L.L.C. and Arris Group, Inc.]


                                      -18-





                                                                       EXHIBIT A

                                  CROSS RECEIPT


         Reference is made to the Option Agreement, dated as of June __, 2002
(the "Option Agreement"), by and between NORTEL NETWORKS LLC, a Delaware limited
liability company ("Nortel"), ARRIS INTERACTIVE L.L.C., a Delaware limited
liability company (the "Company"), and ARRIS GROUP, INC., a Delaware corporation
("Arris"). Capitalized terms used but not defined herein shall have the
respective meanings ascribed to such terms in the Option Agreement.

         Nortel hereby acknowledges receipt from the Company of $_____________
(the "Redemption Payment"). Both parties acknowledge that such Redemption
Payment was applied to redeem [the Class B Interest in full] OR [a portion of
the Class B Unreturned Capital and Class B Return (to the extent not previously
added to Class B Unreturned Capital) of the Class B Interest as provided in
Section 3.03 of the Option Agreement].

                                            NORTEL NETWORKS LLC

                                            By:      Nortel Networks Inc.
                                            Its:     Managing Member


                                            By:
                                                 -------------------------------
                                            Name:
                                            Title:

                                            ARRIS INTERACTIVE L.L.C.

                                            By:      Arris Group, Inc.
                                            Its:     Managing Member

                                            By:
                                               ---------------------------------
                                            Name:
                                            Title:

                                            ARRIS GROUP, INC.


                                            By:
                                                 -------------------------------
                                            Name:
                                            Title:

Dated:             , 200
       ------------     -





                                                                       EXHIBIT C

                          NOTICE OF EXERCISE OF OPTION


To:      Nortel Networks LLC

         Reference is made to the Option Agreement (the "Option Agreement"),
dated as of ______________________, 2002, by and among Nortel Networks LLC,
Arris Interactive L.L.C. and Arris Group, Inc. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to such terms in the
Option Agreement.

         The Company hereby irrevocably exercises the Option [in full] [in part
in the amount of _____________________________ (U.S.$ _________)]. The Company
and Arris shall be obligated to consummate the Transactions contemplated by the
Option Agreement to be consummated in connection with such exercise at the
Closing relating thereto, subject to the terms of the Option Agreement.




Dated:                  , 200
        ----------------     -           ARRIS INTERACTIVE L.L.C.

                                         By:      Arris Group, Inc.
                                         Its:     Managing Member

                                         By:
                                            -------------------------------
                                         Name:
                                         Title:

EX-10.3

                                                                    EXHIBIT 10.3

              SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT


         THIS SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT, dated as of
June 7, 2002 (this "Agreement"), by and among NORTEL NETWORKS LLC, a limited
liability company organized under the laws of Delaware ("Investor"), NORTEL
NETWORKS INC., a Delaware corporation ("Parent"), and ARRIS GROUP, INC., f/k/a
Broadband Parent Corporation, a Delaware corporation (the "Company").

         WHEREAS, pursuant to an Agreement and Plan of Reorganization dated as
of October 18, 2000, as amended by that First Amendment to Agreement and Plan of
Reorganization dated as of April 9, 2001 (the "Plan of Reorganization"), among
the Company, ANTEC Corporation, Broadband Transition Corporation, Parent, the
Investor and Arris Interactive L.L.C., Investor received at the Closing (as such
term is defined in the Plan of Reorganization) shares of Common Stock of the
Company (the "Shares");

         WHEREAS, as an inducement to the Company and ANTEC Corporation to enter
into the Plan of Reorganization, Investor and Parent agreed to enter into an
Amended and Restated Investor Rights Agreement dated as of April 9, 2001, as
amended by the First Amendment to Amended and Restated Investor Rights Agreement
dated as of August 3, 2001 (the "Original Agreement"), among the Company, the
Investor and the Parent, to provide for certain agreements and obligations of
the parties following the Closing; and

         WHEREAS, the parties hereto desire to amend and restate in its entirety
the Original Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:

                                   SECTION 1

                                   DEFINITIONS

         Section 1.1. Definitions. As used in this Agreement, the following
terms shall have the meanings set forth below:

                  "Affiliate" of a Person has the meaning set forth in Rule
12b-2 under the Exchange Act.

                  "Agreement" has the meaning set forth in the preamble hereto.

                  "Associate" of a Person has the meaning set forth in Rule
12b-2 under the Exchange Act.

                  "Auction" shall mean an auction of at least 90% of the
outstanding Voting Securities of the Company, through stock sale, merger or
comparable transaction, or sale of all of substantially all of the assets of the
Company, conducted, in any such instance, by a nationally





recognized investment banking firm selected by the Company and reasonably
acceptable to the Investor. An "Auction" may include either (i) a broad or
narrow solicitation of interest and may or may not involve multiple rounds of
bidding as determined by the Board or a committee thereof or (ii) any
recapitalization, combination, merger, reverse merger, forward triangular
merger, reverse triangular merger, asset sale or similar transaction.

                  "Beneficially Own" with respect to any securities means having
"beneficial ownership" of such securities (as determined pursuant to Rule 13d-3
under the Exchange Act without limitation by the 60-day provision in paragraph
(d)(1)(i) thereof). The terms "Beneficial Ownership" and "Beneficial Owner" have
correlative meanings.

                  "Board" or "Board of Directors" means the Board of Directors
of the Company.

                  "Business Day" means any day, other than a Saturday, Sunday or
a day on which banking institutions in the State of Delaware are authorized or
obligated by law or executive order to close.

                  "Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as amended from time to time.

                  "Change in Control" means the occurrence of any of the
following events:

                           (a)      the direct or indirect purchase or
acquisition by any Person or 13D Group (other than an Excluded Person) of
Beneficial Ownership of Voting Securities of the Company if, after giving effect
to such acquisition, such Person or 13D Group would Beneficially Own Voting
Securities representing a Voting Ownership Percentage of 20% or more; or

                           (b)      the consummation by the Company or any of
its Subsidiaries of a merger, consolidation or other business combination
(including a sale of all or substantially all of the assets of the Company
(other than to wholly-owned Subsidiaries of the Company)), whether or not
stockholder approval is required, if immediately after giving effect to such
transaction, the Persons who Beneficially Owned Voting Securities immediately
prior to such transaction Beneficially Own in the aggregate Voting Securities
(or voting securities in the case of a surviving entity other than the Company)
representing a Voting Ownership Percentage (or voting power in the case of a
surviving entity other than the Company) of less than 50% immediately after
giving effect to such transaction; or

                           (c)      the consummation by the Company of a plan of
complete liquidation or dissolution of the Company.

                  "Change in Control Transaction" means a transaction which, if
consummated, would result in a Change in Control.

                  "Closing" means the closing of the transactions contemplated
by the Plan of Reorganization.


                                       2


                  "Closing Date" means the date of the Closing.

                  "Commission" means the Securities and Exchange Commission or
any successor federal agency.

                  "Common Stock" means the Common Stock, par value $0.01 per
share, of the Company.

                  "Company" has the meaning set forth in the preamble hereto.

                  "Confidentiality Agreement" has the meaning set forth in
Section 4.1(a) hereof.

                  "Control" with respect to any Person means the possession,
direct or indirect, of the power to direct or cause the direction of the
management and policies of such Person, whether through the ownership of voting
securities or board membership, by contract or otherwise.

                  "Derivative Securities" means any subscriptions, options,
conversion rights, warrants, phantom stock rights or other agreements,
securities or commitments of any kind obligating the Company or any of its
Subsidiaries to issue, grant, deliver or sell, or cause to be issued, granted,
delivered or sold (i) any Voting Securities of the Company, (ii) any securities
convertible into, exercisable for or exchangeable for any Voting Securities of
the Company, or (iii) any obligations measured by the price or value of any
shares of capital stock of the Company.

                  "Director" shall mean a director of the Company.

                  "Disposition" has the meaning set forth in Section 3.3 hereof.

                  "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations
promulgated from time to time thereunder.

                  "Excluded Person" means (i) any member of the Investor Group,
(ii) any wholly-owned subsidiary of the Company or (iii) any underwriter
temporarily holding Voting Securities in connection with a public offering of
such securities.

                  "GAAP" means United States generally accepted accounting
principles.

                  "Governmental Entity" means any government or any agency,
bureau, board, commission, court, department, political subdivision, tribunal,
or other instrumentality of any government (including any regulatory or
administrative agency), whether federal, state or local, domestic or foreign.

                  "Independent Director" means a person who (apart from such
directorship) (i) is not a current officer or employee of the Company or any
Affiliate of the Company, (ii) is not a current director, officer or employee of
the Investor, Parent or any member of the Investor Group, (iii) has not been in
the past three years an officer, employee, stockholder holding more than 10%


                                       3


of the voting interest of, partner or Affiliate of the Company, the Investor,
Parent, or the Investor Group.

                  "Initial Investor Nominee Notice" has the meaning set forth in
Section 2.1(a) hereof.

                  "Investor" has the meaning set forth in the preamble hereto.

                  "Investor Group" shall mean (a) the Investor, (b) Parent, (c)
any Subsidiary of the Investor or Parent, (d) any Affiliate of the Investor or
Parent, and (e) any Person with whom the Investor, Parent or any Person included
in the foregoing clauses (c) or (d) is part of a 13D Group.

                  "Investor Nominee Notice" has the meaning set forth in Section
2.1(a) hereof.

                  "Investor Nominee" has the meaning set forth in Section 2.1(a)
hereof; provided, however, that John (Ian) Anderson Craig shall not be deemed an
Investor Nominee unless expressly agreed to in writing by the Investor.

                  "Law" means any law, treaty, statute, ordinance, code, rule or
regulation of a Governmental Entity.

                  "LLC Conversion Shares" shall mean shares of Common Stock (a)
issued pursuant to Section 8.03(a)(i) of the New LLC Agreement, (b) issuable
upon conversion of the Company preferred stock that may be issued pursuant to
Section 8.03(a)(ii) of the New LLC Agreement or (c) issuable upon conversion of
the subordinated note of the Company that may be issued pursuant to Section
8.03(a)(iii) of the New LLC Agreement.

                  "Market Price," shall mean on any trading day, with respect to
shares of Common Stock or any other security which is listed on a national
securities exchange, the last sale price regular way, or, in case no such sale
takes place on such day, the average of the closing bid and asked prices regular
way, in either case on the principal national securities exchange on which the
Common Stock or other security is listed or admitted to trading, or, if the
Common Stock or other security is not listed or admitted to trading on any
national securities exchange but is designated as a national market system
security by the NASD, the last sale price, or, in case no such sale takes place
on such day, the average of the closing bid and asked prices, in either case as
report on the NASD Automated Quotation/National Market System, or if the Common
Stock or other security is not so designated as a national market system
security, the average of the highest reported bid and lowest reported asked
prices as furnished by the NASD or similar organization if the NASD is no longer
reporting such information.

                  "NASD" means the National Association of Securities Dealers,
Inc., or any successor organization.

                  "New LLC Agreement" shall mean that certain Second Amended and
Restated Limited Liability Company Agreement of Arris Interactive L.L.C., dated
as of August 3, 2001.


                                       4


                  "Offering" shall have the meaning set forth in that certain
Option Agreement dated as of June 7, 2002 by and among the Investor, Arris
Interactive L.L.C. and the Company.

                  "Ownership Cap" means a Voting Ownership Percentage of greater
than 49.9%.

                  "Parent" has the meaning set forth in the preamble hereto.

                  "Person" means any individual, corporation, company,
association, partnership, joint venture, limited liability company, trust or
unincorporated organization, group (within the meaning of Rule 13d-5 under the
Exchange Act) or a government or any agency or political subdivision thereof.

                  "Plan of Reorganization" has the meaning set forth in the
preamble hereto.

                  "Process" has the meaning set forth in Section 4.2 hereof.

                  "Public Stockholders" means the stockholders of the Company
other than (a) the members of the Investor Group,(b) any Person who has made a
Third-Party Offer, (c) any Affiliate of any Person included in the foregoing
clause (b), and (d) any Person with whom any Person included in the foregoing
clauses (b) or (c) is part of a 13D Group.

                  "Purchasing Person" has the meaning set forth in Section
3.3(b)(II) hereof.

                  "Purchaser Standstill Agreement" has the meaning set forth in
Section 3.3(b)(II) hereof.

                  "Qualified Offer" shall mean a written offer by the Investor,
Parent or any member of the Investor Group to acquire at least 90% of the
outstanding Voting Securities of the Company, through stock acquisition, merger
or similar transaction, or all or substantially all of the assets of the
Company.

                  "Registration Rights Agreement" means the Registration Rights
Agreement to be entered into by the Company and the Investor in connection with
the transactions contemplated by the Plan of Reorganization.

                  "Representatives" means, with respect to any Person, any of
such Person's officers, directors, partners, employees, agents, attorneys,
accountants, consultants or financial or other advisors or other Person
associated with or acting on behalf of such Person.

                  "Required Disposition" has the meaning set forth in Section
3.5 hereof.

                  "Required Disposition Amount" has the meaning set forth in
Section 3.5 hereof.

                  "Securities Act" means the Securities Act of 1933, as amended,
or any successor federal statute, and the rules and regulations promulgated from
time to time thereunder.

                  "Sell Down Period" has the meaning set forth in Section 3.5
hereof.


                                       5


                  "Shares" has the meaning set forth in the preamble hereto.

                  "Standstill Period" means the period commencing on the date
hereof and ending on the termination of this Agreement pursuant to Section 5.

                  "Subsidiary" means, as to any Person, any other Person more
than fifty percent (50%) of the shares of the voting stock or other voting
interests of which are owned or controlled, or the ability to select or elect
more than fifty percent (50%) of the directors or similar managers is held,
directly or indirectly, by such first Person or one or more of its Subsidiaries
or by such first Person and one or more of its Subsidiaries. A Subsidiary that
is directly or indirectly wholly-owned by another Person except for directors'
qualifying shares shall be deemed wholly-owned for purposes of this Agreement.

                  "Third-Party Offer" means a written offer by a Third-Party
Person to acquire some, all or no shares of Common Stock held by members of the
Investor Group and at least 90% of the outstanding shares of Common Stock held
by the Public Stockholders, through stock acquisition, merger or similar
transaction; provided, however, that a majority of the outstanding shares of
Common Stock held by the Public Stockholders must be tendered in connection with
this offer; and provided further, however, that the per share consideration
offered to members of the Investor Group may be below the per share
consideration offered to the Public Stockholders.

                  "Third-Party Person" means any Person other than (a) the
Investor, (b) Parent, (c) any Subsidiary of the Investor or Parent, or (d) any
Affiliate of any Person included in the foregoing clauses (a), (b) or (c).

                  "13D Group" shall mean any group of Persons who, with respect
to those acquiring, holding, voting or disposing of Voting Securities would,
assuming ownership of the requisite percentage thereof, be required under
Section 13(d) of the Exchange Act to file a statement on Schedule 13D with the
Commission as a "person" within the meaning of Section 13(d)(3) of the Exchange
Act, or who would be considered a "person" for purposes of Section 13(g)(3) of
the Exchange Act.

                  "Total Voting Power" shall mean, calculated at a particular
point in time, the aggregate Votes represented by all then outstanding Voting
Securities then entitled to vote.

                  "Ultimate Parent Entity" has the meaning set forth in Section
3.1.

                  "Votes" shall mean, at any time, with respect to any Voting
Securities, the total number of votes that would be entitled to be cast by the
holders of such Voting Securities generally (by the terms of such Voting
Securities, the Certificate of Incorporation or any certificate of designations
for such Voting Securities) in a meeting for the election of Directors held at
such time.

                  "Voting Ownership Percentage" shall mean, calculated at a
particular point in time, the Voting Power represented by the Voting Securities
Beneficially Owned by the Person whose Voting Ownership Percentage is being
determined.


                                       6


                  "Voting Power" shall mean, calculated at a particular point in
time, the ratio, expressed as a percentage, of (a) the Votes represented by the
Voting Securities then entitled to vote with respect to which the Voting Power
is being determined to (b) Total Voting Power.

                  "Voting Securities" means the shares of Common Stock and any
other securities of the Company entitled to vote generally for the election of
directors, and any securities which are convertible into, or exercisable or
exchangeable for, Voting Securities.

         Section 1.2. General Interpretive Principles. Whenever used in this
Agreement, except as otherwise expressly provided or unless the context
otherwise requires, any noun or pronoun shall be deemed to include the plural as
well as the singular and to cover all genders. The name assigned this Agreement
and the section captions used herein are for convenience of reference only and
shall not be construed to affect the meaning, construction or effect hereof.
Unless otherwise specified, the terms "hereof," "herein" and similar terms refer
to this Agreement as a whole (including the exhibits, schedules and disclosure
statements hereto), and references herein to Sections refer to Sections of this
Agreement.

                                   SECTION 2

                                   GOVERNANCE

         Section 2.1. Directors Designated by the Investor. (a) Immediately
following the Closing, the Board shall appoint as additional Directors the two
(2) Investor Nominees (as defined in Section 2.1(b) below) who have been
designated by the Investor in the Investor Nominee Notice (as defined in Section
2.1(b) below, the "Initial Investor Nominee Notice"). In the event of a vacancy
caused by the removal, resignation or other cessation of service of any Investor
Nominee from the Board, the Board shall promptly notify the Investor of any such
removal, resignation or other cessation of service and shall elect as a Director
(to serve until the Company's immediately succeeding annual meeting of
stockholders) a new Investor Nominee who has been designated by the Investor in
an additional Investor Nominee Notice that has been provided to the Company at
least six (6) days prior the date of a regular meeting of the Board. The
Investor shall nominate each Investor Nominee pursuant to an additional Investor
Nominee Notice in advance of each meeting of stockholders at which such Investor
Nominee is to be elected.

                  (b)      The Investor shall provide notice to the Company (the
"Investor Nominee Notice") as required by Section 2.1(a) above for each Investor
Nominee, which notice shall contain the name of the person(s) it has designated
to become Director(s) (the "Investor Nominees"). In addition, upon request by
the Company, the Investor shall provide all information required by Regulation
14A and Schedule 14A under the Exchange Act with respect to each such Investor
Nominee.

                  (c)      The Company agrees, subject to Section 2.2 below, to
include such Investor Nominee to be added to or retained on the Board pursuant
to this Agreement in the slate of nominees recommended by the Board to the
Company's stockholders for election as Directors and shall use its reasonable
efforts to cause the election or reelection of each such Investor


                                       7


Nominee to the Board at each meeting of stockholders at which such Investor
Nominee is up for election, including soliciting proxies in favor of the
election of such persons, it being understood that efforts consistent with those
used for other members of the slate recommended by the Board shall be deemed
reasonable. In the event that, notwithstanding the provisions of this Section
2.1(c), any one or more Investor Nominees is not elected to the Board then, at
the written request of the Investor made within thirty (30) days after the date
of the stockholder meeting at which such one or more Investor Nominees were not
elected, the Company shall promptly call a special meeting of the Company's
stockholders (such special meeting to be held on a date not more than 60 days
after receipt of such written request of the Investor) proposing the election of
such Investor Nominees not elected to the Board or alternative Investor Nominees
as may be designated by the Investor in accordance with Section 2.1 and in
connection with such special meeting shall use its reasonable efforts to cause
the election of such Investor Nominees by the stockholders of the Company,
including recommending the election of such Investor Nominees and soliciting
proxies in favor of the election of such Investor Nominees by the stockholders
of the Company. In the event the Investor elects to call a special meeting of
stockholders pursuant to this section, the Company shall, until such time as
each such Investor Nominee being proposed by the Investor is elected to the
Board, invite such Investor Nominee who was not elected to the Board to attend
meetings of the Board as an observer, and the Company shall afford to such
Investor Nominee, on as nearly equivalent basis as is possible (other than the
right to vote) as would have been the case if such Investor Nominee had been
elected to the Board, the opportunity to meaningfully participate in, express
views with respect to and have influence on the deliberations of the Board,
including through receipt, at the same time as the Board receives the same, of
all information and material as is distributed to the Board. The parties hereto
agree that the Investor Nominees are not assuming any fiduciary duty toward the
Company or its stockholders by virtue of the grant or exercise of observer
rights to such Investor Nominees, as described in the immediately preceding
sentence. At the direction of the Investor, the Company shall use reasonable
efforts to cause the removal from the Board of Directors of any Investor
Nominee.

                  (d)      Except for any Investor Nominee who is an Independent
Director, the Investor acknowledges that the Investor Nominees to the Board will
not be entitled to receive any compensation as directors.

         Section 2.2. Resignation of Investor Nominees. Unless otherwise agreed
by the Company, (a) subject to clause (b) below, at such time that the Investor
Group's Voting Ownership Percentage falls below 20%, Investor shall be entitled
to only one Investor Nominee on the Board and the Investor shall cause one
Investor Nominee then serving on the Board to offer his or her resignation from
the Board immediately thereafter, and (b) the Investor shall cause all of the
Investor Nominees then serving on the Board to offer their resignations from the
Board immediately at any time after the Investor Group's Voting Ownership
Percentage falls below 10%.

         Section 2.3. Composition of the Board; Independent Directors. From and
after the Closing, the Company shall use its reasonable best efforts to ensure
that not less than 60% of the members of the Board are Independent Directors;
provided, however, that upon the removal, resignation or other cessation of
service of an Independent Director (other than an Independent


                                       8


Director who was an Investor Nominee, in which case the replacement of such
director shall be in accordance with Section 2.1), the Company and the Board
shall have a reasonable amount of time (not to exceed 60 days after such
removal, resignation or other cessation of service) to replace such director
with another Independent Director.

         Section 2.4. Board Size. From and after the Closing, the Company agrees
that the number of Directors constituting the whole Board shall not exceed 15
members.

         Section 2.5. Failure to Notify. Notwithstanding anything to the
contrary in this Section 2, if the Investor fails to provide an Investor Nominee
Notice to the Company with respect to any election of Directors, it shall be
deemed that the Investor Nominees then serving as Directors, if any, shall be
the Investor Nominees for reelection.

         Section 2.6. Written Consent. The parties hereto agree that the
provisions of Section 2 shall be deemed to apply to any written consent of
stockholders in lieu of a meeting.

                                   SECTION 3

                              ADDITIONAL AGREEMENTS

         Section 3.1. Standstill Agreement. Subject to Sections 3.1(k) and 3.4
hereof, during the Standstill Period, and, unless the Company shall have
breached its obligation to nominate Investor Nominees pursuant to Section 2, the
Investor and Parent shall not, and each of them shall cause each other member of
the Investor Group not to, directly or indirectly, alone or in concert with
others:

                  (a)      acquire, offer or propose to acquire or agree to
acquire, whether by purchase, tender or exchange offer, through the acquisition
of control of another person, by joining a partnership, limited partnership,
syndicate or other 13D Group or otherwise, Beneficial Ownership of any Voting
Securities, Derivative Securities or any other securities of the Company or any
rights to acquire (whether currently, upon lapse of time, following the
satisfaction of any conditions, upon the occurrence of any event or any
combination of the foregoing) any Voting Securities, other than (i) the
acquisition of the Shares pursuant to the Plan of Reorganization, (ii) the
acquisition of Voting Securities as a result of any stock splits, stock
dividends or other distributions, recapitalizations or offerings made available
by the Company to holders of Voting Securities generally or (iii) in a
transaction in which the Investor or Parent or an Affiliate of the Investor or
Parent acquires a previously unaffiliated business entity that, to the knowledge
of the Investor or Parent after reasonable inquiry (which inquiry shall be
satisfied by the receipt of a written representation to such effect from the
to-be-acquired business entity), owns shares of Voting Securities that represent
less than 5% of the Company's outstanding Voting Securities; or (iv) the
acquisition of the LLC Conversion Shares, provided, that all such Voting
Securities shall be subject to the terms of this Agreement; provided, further,
that in the event a transaction contemplated by clause (iii) hereof, causes the
Investor Group's Voting Ownership Percentage to exceed the Ownership Cap, the
Investor will use reasonable best efforts to transfer, or cause such Affiliate
to transfer, within twelve months following the consummation of such transaction
and in a manner consistent with Section 3.5, such number of Voting Securities
previously owned by


                                       9


the unaffiliated entity, so as to reduce the Voting Ownership Percentage of the
Investor Group to no more than the Ownership Cap, and the Investor or such
Affiliate will cause all such Voting Securities, pending their transfer, to be
voted in accordance with the requirements of Section 3.2 below;

                  (b)      propose or seek to effect any merger, business
combination, restructuring, recapitalization or similar transaction involving
the Company or any of its Subsidiaries or the sale of all or substantially all
of the assets of the Company or any of its Subsidiaries except pursuant to
Section 4.2 hereof;

                  (c)      deposit any Voting Securities in a voting trust or
subject any Voting Securities to any arrangement or agreement with respect to
the voting of such Voting Securities, unless such voting trust provides that the
Voting Securities will be voted consistent with the provisions of this
Agreement;

                  (d)      except for the exercise by the Investor Nominees of
their fiduciary duties and except pursuant to Section 2 hereof, seek election
to, seek to place a representative on, or seek the removal of any member of, the
Board;

                  (e)      engage in any "solicitation" (within the meaning of
Rule 14a-1 under the Exchange Act) of proxies or consents (whether or not
relating to the election or removal of directors) with respect to the Company,
or become a "participant" in any "election contest" (within the meaning of the
Exchange Act) or, unless the execution by the Investor, Parent or member of the
Investor Group is first approved by the Board, execute any written consent in
lieu of a meeting of the holders of any class of Voting Securities that is
solicited by or on behalf of any stockholder of the Company;

                  (f)      call or seek to have called any meeting of the
stockholders of the Company (except for the exercise by the Investor of its
rights pursuant to this Agreement);

                  (g)      unless approved by the Board of Directors, initiate,
propose or otherwise solicit stockholders for the approval of any stockholder
proposal (as described in Rule 14a-8 under the Exchange Act) with respect to the
Company;

                  (h)      form, join or in any way participate in or assist in
the formation of a 13D Group with respect to any Voting Securities, other than
any such "group" consisting exclusively of the Investor, Parent and other
Affiliates of the Investor or Parent who have acquired Voting Securities in
accordance with this Agreement;

                  (i)      disclose or publicly announce any intention, plan or
arrangement inconsistent with the foregoing; or

                  (j)      intentionally finance any other persons in connection
with any of the foregoing types of activities; provided, however, that nothing
in this Section 3.1 shall (i) limit any rights of the members of the Investor
Group under the Registration Rights Agreement, (ii) prohibit any individual who
is serving as a Director of the Company, solely in his or her capacity as a
Director, from (x) exercising his or her fiduciary duties, (y) taking any action
or making any


                                       10


statement at any meeting of the Board of Directors or of any committee thereof,
or (z) making any statement or disclosure required under federal securities laws
or other applicable Law, (iii) restrict any disclosure or statements required to
be made by any member of the Investor Group under applicable Law to the extent
any such requirement does not arise from actions by the Investor Group
inconsistent with this Agreement, (iv) limit the rights of the Investor Group
pursuant to Sections 2, 3.2, 3.4 or 4.2 hereof or (v) limit the ability of any
member of the Investor Group, in its sole discretion, directly or indirectly,
alone or in concert with others, from participating in discussions or
negotiations with a Third-Party Person with respect to a Third-Party Offer (it
being acknowledged and agreed that (A) the members of the Investor Group can
indicate to such Third-Party Person their preliminary interests or intentions
with respect to such Third-Party Offer and (B) no member of the Investor Group
shall be deemed to be in breach of this Section 3.1 to the extent that a
majority of the outstanding shares of Common Stock held by the Public
Stockholders is not tendered in connection with such Third-Party Offer);
provided, however, with respect to clause (v), that such member of the Investor
Group (A) provide the Company with written notice of the identity of such
Third-Party Person as soon as reasonably practicable after either the Chief
Financial Officer of Nortel Networks Corporation (or any successor thereto) (the
"Ultimate Parent Entity") or the senior member of the Ultimate Parent Entity's
Mergers and Acquisitions Group (or any successor thereto) becomes aware of
discussions or negotiations by a member of the Investor Group relating to a bona
fide Third-Party Offer and (B) allow the Company to participate in such
discussions or negotiations.

                  (k)      Notwithstanding anything contained herein to the
contrary, in the event the Offering is consummated, the restrictions set forth
in Section 3.1(c) and the proviso set forth in Section 3.1(j)(v) shall
automatically terminate on the later of (i) September 30, 2002, and (ii) the
date on which the Investor Group ceases to Beneficially Own at least 27% of the
Total Voting Power of the Company.

         Section 3.2. Voting. At all times during the Standstill Period and to
the full extent permitted by Delaware law, the Investor and Parent shall and
shall cause each other member of the Investor Group to vote all Voting
Securities which they Beneficially Own, at any stockholder meeting or in
connection with any action by written consent at or in which such Voting
Securities are entitled to vote, in favor of the slate of nominees (including
any Investor Nominee to be included in such slate in accordance with Section 2)
proposed by the Board; provided, that any Investor Nominee nominated by the
Investor for inclusion in such slate pursuant to Section 2.1 is so included.
Notwithstanding the foregoing, any member of the Investor Group, in its sole
discretion, may freely vote any Voting Securities which it Beneficially Owns on
any proposed Change in Control Transaction which requires the approval of the
Company's stockholders generally.

         Section 3.3. Restricted Dispositions. Subject to Section 3.3A below,
during any period of time during the Standstill Period when the Investor Group
shall Beneficially Own Voting Securities representing at least 10% of the Total
Voting Power of the Company, the Investor and Parent shall not and shall cause
each other member of the Investor Group not to, directly or indirectly
(including, without limitation, through the disposition or transfer of any
equity interest in another Person), sell, assign, transfer, pledge, hypothecate,
grant any option with respect to or otherwise dispose of any interest in (or
enter into an agreement or understanding with respect to


                                       11


the foregoing) any Voting Securities (a "Disposition"), except as set forth
below in this Section 3.3.

                  (a)      Dispositions may be made to Affiliates of the
Investor, Parent or members of the Investor Group; provided, that such
Affiliates agree in writing to be bound by this Agreement to the same extent as
the Investor and Parent and such Affiliates at all times remain Affiliates of
the Investor, Parent or members of the Investor Group.

                  (b)      Dispositions of Voting Securities may be made to
Persons other than members of the Investor Group pursuant to (i) a bona fide
public offering effected in accordance with the Registration Rights Agreement,
(ii) in bona fide open market "brokers' transactions" or transactions directly
with a "market maker" as permitted by the provisions of Rule 144 as currently
promulgated under the Securities Act, and (iii) in privately-negotiated
transactions to (A) any Person specified in Rule 13d-1(b)(1)(ii) promulgated
under the Exchange Act who would be eligible based on such person's status and
passive intent with respect to the ownership, holding and voting of such Voting
Securities to report such person's ownership of such Voting Securities (assuming
such person owned a sufficient number of such Voting Securities to require such
filing) on Schedule 13G or (B) any other Person; provided, however, that:

                           (i)      Dispositions shall not be made pursuant to
clause (iii)(A) of this Section 3.3(b) if any Person to whom the Disposition in
question is made would, to the knowledge of the Investor after reasonable
inquiry (which inquiry shall be satisfied by the receipt of a written
representation to such effect from such Person), after giving effect to such
Disposition, together with such Person's Affiliates and Associates and the
members of any 13D Group existing with respect to Voting Securities of which
such Person is a part Beneficially Own Voting Securities representing more than
10% of the Total Voting Power then outstanding.

                           (ii)     Dispositions shall not be made pursuant to
clause (iii)(B) of this Section 3.3(b) unless the Person purchasing the Voting
Securities, together with such Person's Affiliates and Associates and the
members of any 13D Group existing with respect to Voting Securities of which
such Person is a part (any such Person and its Affiliates, Associates and 13D
Group members being collectively referred to herein as a "Purchasing Person"),
shall have executed and delivered to the Company a written agreement (which
agreement shall be addressed to the Company and reasonably satisfactory in form
and substance to the Company) (a "Purchaser Standstill Agreement") of each such
Purchasing Person to be bound by Section 3 of this Agreement to the same extent
as the Investor as if references to the Investor in such Section were to such
Purchasing Person.

                           (iii)    No Disposition shall be made (other than
pursuant to Section 3.3(b)(i)) if such Disposition would constitute a
distribution in violation of Regulation M under the Exchange Act by reason of
any repurchase program of the Company then announced.

                  (c)      Dispositions may be made to the Company in accordance
with Section 3.4 hereof.


                                       12


                  (d)      Dispositions may be made pursuant to a tender offer,
exchange offer or any other transaction (x) which is recommended to stockholders
of the Company by the Board of Directors (or, in the case of a tender or
exchange offer, which is not within 10 Business Days of the commencement thereof
opposed by the Board of Directors) or (y) in the case of a merger or other
business combination transaction, which has been approved by the stockholders of
the Company (including approval without a meeting pursuant to the short-form
merger provisions of the Delaware General Corporation Law) in a manner so as to
be legally binding on all stockholders of the Company and so as to require the
disposition by such stockholders of their shares pursuant to such merger or
other business combination transaction (without regard to this Agreement).

                  (e)      [Intentionally omitted.]

                  (f)      Dispositions may be made pursuant to a Third-Party
Offer, it being acknowledged and agreed that the Investor Group has sole
discretion with respect to the number of Voting Securities, if any, sold by the
Investor Group in the Third-Party Offer.

                  (g)      If the Investor intends to effect a Disposition in
accordance with Section 3.3(b)(iii), it shall give the Company as much prior
notice of such intention as is reasonably practicable, but in any event at least
three (3) days prior to the closing of such intention as is reasonably
practicable, but in any event at least three (3) days prior to the closing of
such Disposition.

         Section 3.3A. Unrestricted Dispositions. Notwithstanding anything
contained herein to the contrary, in the event the Offering is consummated, on
and after the later of (i) September 30, 2002, and (ii) the date on which the
Investor Group ceases to Beneficially Own at least 27% of the Total Voting Power
of the Company, the Investor Group shall be permitted to make a Disposition to
any Person or Persons in any manner at any time and from time to time, subject
to the provisions set forth below in this Section 3.3A.

                  (a)      Dispositions may be made to Affiliates of the
Investor, Parent or members of the Investor Group; provided, that such
Affiliates agree in writing to be bound by this Agreement to the same extent as
the Investor and Parent and such Affiliates at all times remain Affiliates of
the Investor, Parent or members of the Investor Group.

                  (b)      Dispositions of Voting Securities may be made to
Persons other than members of the Investor Group pursuant to (i) a bona fide
public offering effected in accordance with the Registration Rights Agreement,
(ii) in bona fide open market "brokers' transactions" or transactions directly
with a "market maker" as permitted by the provisions of Rule 144 as currently
promulgated under the Securities Act, and (iii) in privately-negotiated
transactions to (A) any Person specified in Rule 13d-1(b)(1)(ii) promulgated
under the Exchange Act who would be eligible based on such person's status and
passive intent with respect to the ownership, holding and voting of such Voting
Securities to report such person's ownership of such Voting Securities (assuming
such person owned a sufficient number of such Voting Securities to require such
filing) on Schedule 13G or (B) any other Person; provided, however, that no
Disposition shall be made if such Disposition would constitute a distribution in
violation


                                       13


of Regulation M under the Exchange Act by reason of any repurchase program of
the Company then announced.

                  (c)      Dispositions may be made to the Company in accordance
with Section 3.4 hereof.

         Section 3.4. Qualified Offer. Notwithstanding anything to the contrary
contained in Section 3.1, the Investor, Parent or any member of the Investor
Group may make a Qualified Offer in accordance with the following procedure:

                  (a)      In connection with any Qualified Offer, the Investor
shall deliver the Qualified Offer in writing to the Company. In the event that
the Company does not accept such Qualified Offer in writing within thirty (30)
days after receipt, such offer shall be deemed withdrawn and the Company shall
promptly commence an Auction in which the Investor, Parent and the Investor
Group will be given a full and fair opportunity, as conclusively determined by
the Board in good faith, to participate on terms, and to have any bid submitted
by the Investor, Parent or any member of the Investor Group in such Auction
evaluated on a basis, no less and no more favorable to the Investor than those
afforded to other Auction participants.

                  (b)      Any Auction shall be subject to the following
provisions:

                           (i)      The Auction shall be completed within 90
days after the Company receives the Qualified Offer and the corresponding sale
shall close within 90 days after completion of the Auction.

                           (ii)     In the event that (A) the Investor Group is
not the successful bidder in an Auction conducted pursuant to Section 3.4(a) or
does not elect to participate in the Auction, and (B) the Company has received a
fairness opinion from a nationally-recognized investment banking firm, which is
selected by the Company and reasonably acceptable to the Investor, to the effect
that the successful bidder's transaction provides the Company or its
stockholders, as the case may be, with the highest value of all of the bids
received in the Auction, then the Investor and Parent shall, and each of them
shall cause the Investor Group to, vote all of their Voting Securities in favor
of the successful bidder's transaction (provided that this agreement to vote in
favor of such transaction does not waive any other rights that any member of the
Investor Group may have under Delaware law, other than dissenter's rights),
tender their shares (in the event of a tender or exchange offer), and otherwise
reasonably cooperate in consummating the transaction.

                           (iii)    The Company, the Investor and Parent agree
that the purchase price per share set forth in the Qualified Offer is highly
confidential and, as such, the Company on the one hand and the Investor, Parent
and the Investor Group, on the other, shall not, to the extent legally
permissible, disclose such purchase price per share to any third party without
the prior written consent of the other party.

                  (c)      To the extent that the consideration in a Qualified
Offer or in any competing bid in an Auction is securities, the value of any
securities offered shall equal the


                                       14


average Market Price per share or per unit of such securities during the 30
consecutive trading days immediately preceding the Company's receipt of the
Qualified Offer or the receipt of the bid by the Company, respectively. In the
case of any securities not theretofore traded, the value of such securities
shall be determined by a nationally recognized investment banking firm selected
by the Company and reasonably acceptable to the Investor. The Investor and the
Company shall use their reasonable best efforts to cause any such determination
of value to be made within five (5) business days following the Company's
receipt of a Qualified Offer or a bid, as the case may be.

         Section 3.5. Required Dispositions. If, at any time during the
Standstill Period, the Voting Ownership Percentage of the Investor Group shall
exceed the Ownership Cap, solely as a result of any transactions contemplated by
Section 3.1(a)(iii) then, if and to the extent requested by the Company by
written notice to the Investor which may be made at any time, the Investor
shall, within twelve months after such request (the "Sell Down Period"), dispose
of, or cause the other members of the Investor Group to dispose of (a "Required
Disposition"), such number of Voting Securities owned by the Investor Group as
shall be necessary to reduce the Voting Ownership Percentage of the Investor
Group to no more than the Ownership Cap (the "Required Disposition Amount");
provided that any such Required Disposition shall be subject to the provisions
of Section 3.3 and provided, further, that the Investor agrees that such Voting
Securities in excess of the Ownership Cap shall be voted by the Investor Group
at any meeting of stockholders (or action by written consent in lieu of any such
meeting) in accordance with Section 2. Notwithstanding the foregoing, if any
Required Disposition during the applicable Sell Down Period (A) would result in
liability or potential liability to the Investor or other members of the
Investor Group under Section 16(b) of the Exchange Act, or the rules and
regulations promulgated thereunder, or (B) would be prohibited as a result of
the restrictions set forth in the Registration Rights Agreement on transfer of
Voting Securities, then such Sell Down Period (x) shall, in the case of clause
(A) above, begin on the first date on which such Required Disposition may be
effected without liability or potential liability under Section 16(b) of the
Exchange Act, or the rules and regulations promulgated thereunder, and (y) with
respect to clause (B) above, be extended by the number of days that the Investor
Group is restricted from selling Voting Securities under the Registration Rights
Agreement.

         Section 3.6. Shareholder Rights Plan. In the event the Company adopts a
shareholder rights plan, the Investor hereby agrees and covenants not to bring
any claim or cause of action against the Company or its Board of Directors in
connection with the adoption or administration of such plan, provided that (i)
such plan is customary for a company similarly-situated to the Company and (ii)
no member of the Investor Group is deemed an "acquiring person" (as such term is
customarily defined) solely by reason of its ownership of Shares on the date of
adoption of the shareholder rights plan. In addition, the foregoing agreement
shall not be applicable in the event the Offering is not consummated, although
the limitation contained in this sentence is not intended to imply any
limitations on the Company's ability to adopt a shareholder rights plan under
such circumstances.

                                   SECTION 4

                              ADDITIONAL COVENANTS


                                       15


         Section 4.1. Certain Information. (a) Subject to applicable law and the
provisions of this Agreement, all information provided to the Investor or the
Company hereunder shall be provided in confidence in accordance with the
provisions of the Confidentiality Agreement (the "Confidentiality Agreement"),
dated May 9, 2000, between ANTEC Corporation and Parent.

                  (b)      To the extent reasonably requested by the Investor,
the Company will and will cause its Representatives to provide information
regarding the Company and its Subsidiaries, and otherwise cooperate with, the
Investor so as to enable the Investor to prepare financial statements in
accordance with GAAP and to comply with its disclosure requirements under
securities laws and regulations. The costs associated with providing the
foregoing information shall be borne by the Investor.

                  (c)      From time to time upon reasonable advance request by
the Company, the Investor will notify the Company of the amount of each class of
Voting Securities then Beneficially Owned by the Investor Group. From time to
time upon reasonable advance request by the Investor, the Company will provide
the Investor with information known to the Company with respect to the number of
votes entitled to be voted by stockholders of the Company at the time of such
request; provided, however, that the Company shall not be obligated pursuant to
this Section 4.1(c) to make any general solicitation of stockholders of the
Company in connection therewith.

         Section 4.2. Right to Participate in Sale of the Company. So long as
the Investor Group shall Beneficially Own Voting Securities representing at
least 20% of the Total Voting Power of the Company, the Company shall not enter
into, and the Board shall not publicly recommend to stockholders or approve, a
definitive agreement providing for a Change in Control Transaction, unless prior
thereto (i) the Investor shall have been given at least 30 days prior notice of
the proposed Change in Control Transaction and of the material terms thereof and
the Investor (or any other member of the Investor Group or Third-Party Person
designated by the Investor) shall have been given a full and fair opportunity,
as conclusively determined by the Board in good faith, to participate in the
bidding process (the "Process") undertaken by the Company (if any) in advance of
such Change in Control Transaction on terms, and to have any proposal submitted
by the Investor (or such other member of the Investor Group or Third-Party
Person) pursuant to clause (ii) below evaluated on a basis, no less and no more
favorable to the Investor (or such other member of the Investor Group or
Third-Party Person) than those afforded to other interested parties, (ii) the
Investor (or such other member of the Investor Group or Third-Party Person)
shall have been permitted notwithstanding the restrictions contained in Section
3.1, to submit a proposal for an alternative transaction during the Interim
Period (as defined below) or in connection with such Process, subject in any
event to the Board's right to accept or reject any such proposal as may be made,
(iii) the Interim Period shall have terminated or (iv) the Change in Control
Transaction resulted from an Auction conducted in accordance with Section 3.4.
"Interim Period" shall mean the period commencing on the date of the delivery to
the Investor by the Company of written notice (such notice, the "Change in
Control Transaction Notice") of its consideration of an action in respect of a
Change in Control Transaction and ending on the date which is the later of (i)
the 30th day thereafter, and (ii) the public announcement by the Company of the
taking of any action in respect of a Change in Control Transaction.


                                       16


         Section 4.3. Publicity. Except as required by Law or by obligations
pursuant to any listing agreement with any relevant securities exchange, neither
the Company or any of its Affiliates nor the Investor, Parent or any of their
Affiliates shall, without the prior written consent of the other, which consent
shall not be unreasonably withheld or delayed, make any public announcement or
issue any press release with respect to the transactions contemplated by this
Agreement. Prior to making any public disclosure required by applicable Law or
pursuant to any listing agreement with any relevant national exchange, the
disclosing party shall consult with the other party, to the extent feasible, as
to the content of such public announcement or press release. Notwithstanding the
foregoing, the Investor, Parent and the Company may, in meetings with securities
and other financial analysts and press interviews, disclose information (other
than non-public information) concerning the transactions contemplated hereby and
the Investor's and Parents' investment in the Company and in a manner not
inconsistent with prior joint public announcements regarding the transactions
and in a manner consistent with the other terms of this Agreement.

         Section 4.4. Legend. The Investor agrees to the placement on
certificates representing the Shares of a legend substantially as set forth
below, unless the Company determines otherwise, in accordance with the opinion
of counsel:

         "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
         REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES
         ACT"), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR
         NON-U.S. JURISDICTION AND MAY NOT BE OFFERED, SOLD, TRANSFERRED OR
         OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION
         STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT
         SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY
         APPLICABLE SECURITIES LAWS OF SUCH OTHER JURISDICTIONS. THE SECURITIES
         REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
         (INCLUDING PROVISIONS THAT RESTRICT THE TRANSFER OF SUCH SECURITIES) OF
         AN AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT DATED AS OF APRIL 9,
         2001 AMONG THE COMPANY, NORTEL NETWORKS LLC AND NORTEL NETWORKS INC.,
         COPIES OF WHICH ARE ON FILE AT THE OFFICES OF THE SECRETARY OF THE
         COMPANY."

         Section 4.5. Amendment to Lock-Up Agreement. The Investor hereby agrees
to notify the Company of any waivers or amendments to that certain Lock-Up
Agreement, dated as of June 7, 2002, made by and between the Investor and
Liberty ANTC, Inc. (formerly known as TCI TSX, Inc.), promptly after the
effective date of any such waivers or amendments.

                                   SECTION 5

                                   TERMINATION


                                       17


         Section 5.1. Termination. (a) Subject to Section 5.2 hereof, this
Agreement may be terminated by notice in writing at any time by either the
Investor or the Company if:

                           (i)      the Plan of Reorganization is terminated;

                           (ii)     a transaction pursuant to a Third-Party
Offer is consummated; or

                           (iii)    the Company and the Investor so mutually
agree in writing.

                  (b)      Subject to Section 5.2 hereof, and without limiting
any liability of the Company or the Investor for any breach of its obligations
hereunder, this Agreement may be terminated by notice in writing by either the
Investor or the Company at any time after the Investor Group, collectively,
ceases to Beneficially Own at least 10% of the Total Voting Power of the
Company.

         Section 5.2. Effect of Termination. If this Agreement is terminated in
accordance with Section 5.1 hereof, this Agreement shall become null and void
and of no further force and effect except that (i) the terms and provisions of
this Section 5, Section 4.1(a) and Section 6.1 shall remain in full force and
effect, and (ii) any termination of this Agreement shall not relieve any party
hereto from any liability for any breach of its obligations hereunder.

                                   SECTION 6

                                  MISCELLANEOUS

         Section 6.1. Fees and Expenses. Each party shall bear its own expenses,
including the fees and expenses of any Representatives engaged by it, incurred
in connection with the this Agreement and the transactions contemplated hereby.

         Section 6.2. Notices. All notices, requests and other communications
hereunder to a party shall be in writing and shall be deemed given if personally
delivered, telecopied (with confirmation) or three Business Days after being
mailed by registered or certified mail (return receipt requested) or one
Business Day after being delivered by overnight courier to such party at its
address set forth below or such other address as such party may specify by
notice to the parties hereto:

                           if to Investor:

                                    Nortel Networks LLC
                                    200 Athens Way
                                    Nashville, TN 37228
                                    Attn: Legal Department
                                    Facsimile: (615) 432-4067

                                    and with a copy to:


                                       18


                                    Nortel Networks Inc.
                                    2221 Lakeside Blvd.
                                    Richardson, TX 75082
                                    Attn:  Robert Fishman
                                    Facsimile: (972) 684-3888


                           if to Parent:

                                    Nortel Networks Inc.
                                    200 Athens Way
                                    Nashville, TN 37228
                                    Attn: Legal Department
                                    Facsimile: (615) 432-4067

                                    and with a copy to:

                                    Nortel Network Inc.
                                    2221 Lakeside Blvd.
                                    Richardson, TX 75082
                                    Attn:  Robert Fishman
                                    Facsimile: (972) 684-3888


                           if to the Company:

                                    Arris Group, Inc.
                                    11450 Technology Circle
                                    Duluth, GA 30097
                                    Attn:  Larry Margolis
                                    Facsimile: (678) 473-8470

                                    and with a copy to:

                                    ANTEC Corporation
                                    11450 Technology Circle
                                    Duluth, GA 30097
                                    Attn:  Bob Stanzione
                                    Facsimile:  (678) 473-8470

         Section 6.3. Entire Understanding; Amendment. This Agreement and the
documents described herein or attached or delivered pursuant hereto (including,
without limitation, the Plan of Reorganization and the Registration Rights
Agreement) and the Confidentiality Agreement set forth the entire agreement
between the parties hereto with respect to the matters provided herein and
therein. Any provision of this Agreement may be amended or modified in whole or
in part at


                                       19


any time by an agreement in writing among the parties hereto executed in the
same manner as this Agreement. No failure on the part of any party to exercise,
and no delay in exercising, any right shall operate as waiver thereof, nor shall
any single or partial exercise by either party of any right preclude any other
or future exercise thereof or the exercise of any other right.

         Section 6.4. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to constitute an original but
all of which when taken together shall constitute one and the same instrument.

         Section 6.5. Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the State of Delaware, without
regard to the conflict of law principles thereof.

         Section 6.6. Assignment; No Third Party Beneficiaries. (a) Neither this
Agreement, nor any of the rights, interests or obligations shall be assigned by
any of the parties hereto (whether by operation of law or otherwise) without the
prior written consent of the other parties; provided, however that (i) the
Investor may assign its rights, interests and obligations under this Agreement
to any other Affiliate of the Investor in connection with a transfer of Voting
Securities to such Affiliate, without the consent or approval of any other party
hereto, and (ii) in the event of such assignment, the assignee shall agree in
writing to be bound by the provisions of this Agreement.

                  (b)      This Agreement shall not confer any rights or
remedies upon any person other than the parties to this Agreement and their
respective successors and permitted assigns; provided, however, that the
provisions of this Agreement are intended for the benefit of members of the
Investor Group.

         Section 6.7. Remedies; Waiver. To the extent permitted by Law, all
rights and remedies existing under this Agreement and any related agreements or
documents are cumulative to, and are exclusive of, any rights or remedies
otherwise available under applicable Law. No failure on the part of any party to
exercise, or delay in exercising, any right hereunder shall be deemed a waiver
thereof, nor shall any single or partial exercise preclude any further or other
exercise of such or any other right.

         Section 6.8. Specific Performance. Each party hereto acknowledges that,
in view of the uniqueness of the transactions contemplated by this Agreement,
the other party would not have an adequate remedy at law for money damages in
the event that this Agreement has not been performed in accordance with its
terms. Each party therefore agrees that the other party shall be entitled to
specific enforcement of the terms hereof in addition to any other remedy to
which it may be entitled, at law or in equity.

         Section 6.9. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so


                                       20


broad as to be unenforceable, the provision shall be interpreted to be only so
broad as it is enforceable.

         Section 6.10. Amendment and Restatement. This Agreement amends and
restates in its entirety the Original Agreement. The Original Agreement is
hereby terminated in its entirety and is of no further force or effect. The
Investor, the Parent and the Company hereby waive any and all rights, claims,
causes of action or otherwise with respect to the Original Agreement.


                 [Remainder of page intentionally left blank.]


                                       21




         IN WITNESS WHEREOF, this Agreement has been executed on behalf of the
parties hereto by their respective duly authorized officers, all as of the date
first above written.



                                  NORTEL NETWORKS LLC
                                  By: Nortel Networks Inc.
                                  Its: Managing Member


                                  By:      /s/ Deborah J. Noble
                                           ----------------------------------
                                           Name: Deborah J. Noble
                                           Title: Assistant Secretary


                                  NORTEL NETWORKS INC.



                                  By:      /s/ Deborah J. Noble
                                           ----------------------------------
                                           Name: Deborah J. Noble
                                           Title: Assistant Secretary


                                  ARRIS GROUP, INC.
                                  f/k/a Broadband Parent Corporation



                                  By:      /s/ Lawrence A. Margolis
                                           ----------------------------------
                                           Name: Lawrence A. Margolis
                                           Title: Executive Vice President & CFO

                                       22