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As filed with the Securities and Exchange Commission on August 21, 1998
Registration No. 333-58437
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
PRE-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ANTEC CORPORATION
(Exact name of registrant as specified in its charter)
3661
(Primary Standard Industrial Classification Code Number)
_____________________________________________
STATE OF DELAWARE 36-3892082
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
5720 Peachtree Parkway, NW, Norcross, Georgia 30092
(770) 441-0007
(Address including zip code, and telephone number, including area code, of
registrant's principal executive offices)
_______________
James E. Knox
5720 Peachtree Parkway, NW, Norcross, Georgia 30092
(770) 441-0007
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
_______________
With copies to:
Stuart L. Goodman
Schiff Hardin & Waite, 7300 Sears Tower, Chicago, IL 60606 (312) 258-5500
_______________
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act, or until this Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
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PROSPECTUS
August ___, 1998
ANTEC CORPORATION
CONVERTIBLE SUBORDINATED NOTES
COMMON STOCK
Securities Offered: Up to $115,000,000 Original Principal Amount 4 1/2%
Convertible Subordinated Notes due May 15, 2003, held
by various selling Shareholders.
4,791,667 shares of Common Stock, issuable by ANTEC
upon conversion of the Notes. ANTEC Common Stock, which
trades on the NASDAQ National Market, closed at $22.65
per share on August 19, 1998.
Conversion Rights: The Notes are Convertible into Common Stock at an
Initial Conversion Price of $24.00 per share.
Interest Payment Dates: May 15 and November 15 each year.
Redemption: At the option of ANTEC beginning May 15, 2001 at
101.8%, subject to a declining Redemption Premium.
At the option of the Holder upon a "Change in Control"
at 100% of the Principal Amount together with accrued
and unpaid interest and Liquidated Damage. There can be
no assurance that in the event of a Change in Control
the Company would either have, or have access to,
adequate funds to redeem the Notes.
Security: None. The Notes are Unsecured Obligations of ANTEC.
Subordination: Subordinated to all "Senior Indebtedness" ($39.3
million at December 31, 1998, as adjusted) and
effectively, all of the Liabilities of the Subsidiaries
of ANTEC. The Company had $75.8 million of current
liabilities as of December 31, 1997. Because of how the
Company manages its operations, these current
liabilities could be viewed as obligations of the
Company's subsidiaries and therefore senior to the
Notes.
SEE "INVESTMENT CONSIDERATIONS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF
CERTAIN INFORMATION THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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AVAILABLE INFORMATION
ANTEC Corporation ("ANTEC" or the "Company") files annual, quarterly and
special reports, proxy statements and other information with the Securities and
Exchange Commission (the "SEC"). You may read and copy any reports, statements
or other information ANTEC files at the SEC's public reference rooms in
Washington, D.C. (450 Fifth Street N.W., Room 1024, 20549), New York, New York
(7 World Trade Center, Suite 1350, New York, NY 10048) and Chicago, Illinois
(500 West Madison Street, Suite 1400, Chicago, IL 60661). Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. ANTEC's
SEC filings are also available to the public from commercial document retrieval
services and at the web site maintained by the SEC at "http://www.sec.gov."
ANTEC filed a Registration Statement on Form S-3 to register with the SEC
the Notes and the Shares (the "Registration Statement"). This Prospectus is a
part of that Registration Statement and constitutes a prospectus of ANTEC. As
allowed by SEC rules, this Prospectus does not contain all the information that
can be found in the Registration Statement or the exhibits to the Registration
Statement.
THE STATEMENTS IN THIS PROSPECTUS THAT USE SUCH WORDS AS "BELIEVE,"
"EXPECT," "SEEKS," "INTEND," "ANTICIPATE," "CONTEMPLATE," "ESTIMATE," OR "PLAN"
OR SIMILAR EXPRESSIONS ARE FORWARD-LOOKING STATEMENTS. THE COMPANY'S BUSINESS IS
DEPENDENT UPON GENERAL ECONOMIC CONDITIONS AS WELL AS COMPETITIVE,
TECHNOLOGICAL, AND REGULATORY DEVELOPMENTS AND TRENDS SPECIFIC TO THE COMPANY'S
INDUSTRY AND CUSTOMERS. THESE CONDITIONS AND EVENTS COULD BE SUBSTANTIALLY
DIFFERENT THAN THE COMPANY BELIEVES OR EXPECTS AND THESE DIFFERENCES MAY CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THE FORWARD-LOOKING STATEMENTS MADE OR
THE RESULTS WHICH COULD BE EXPECTED TO ACCOMPANY SUCH STATEMENTS. SPECIFIC
FACTORS WHICH COULD CAUSE SUCH MATERIAL DIFFERENCES INCLUDE, BUT ARE NOT LIMITED
TO: DESIGN OR MANUFACTURING DEFECTS IN THE COMPANY'S PRODUCTS WHICH COULD
CURTAIL SALES AND SUBJECT THE COMPANY TO SUBSTANTIAL COSTS FOR REMOVAL,
REPLACEMENT, AND REINSTALLATION OF SUCH PRODUCTS; MANUFACTURING OR PRODUCT
DEVELOPMENT PROBLEMS THAT THE COMPANY DOES NOT ANTICIPATE; AN INABILITY TO
ABSORB OR ADJUST COSTS IN RESPONSE TO LOWER SALES VOLUMES THAN THE COMPANY
ANTICIPATES; UNANTICIPATED COSTS OR INEFFICIENCIES FROM THE ONGOING
CONSOLIDATION OF CERTAIN OF THE COMPANY'S ACTIVITIES; LOSS OF KEY MANAGEMENT,
SALES OR TECHNICAL EMPLOYEES; DECISIONS BY THE COMPANY'S LARGER CUSTOMERS TO
CANCEL CONTRACTS OR ORDERS AS THEY ARE ENTITLED TO DO OR NOT TO ENTER INTO NEW
CONTRACTS OR ORDERS WITH THE COMPANY BECAUSE OF DISSATISFACTION, TECHNOLOGICAL
OR COMPETITIVE CHANGES OR CHANGES IN CONTROL OR OTHERWISE; AND INABILITY AS A
RESULT OF THE COMPANY'S INEXPERIENCE, TO DELIVER CONSTRUCTION SERVICES WITHIN
ANTICIPATED COSTS AND TIME FRAMES WHICH COULD CAUSE LOSS OF BUSINESS, OPERATING
LOSSES AND DAMAGE CLAIMS. THE ABOVE LISTING OF FACTORS IS REPRESENTATIVE OF THE
FACTORS WHICH COULD AFFECT THE COMPANY'S FORWARD-LOOKING STATEMENTS AND IS NOT
INTENDED AS AN ALL ENCOMPASSING LIST OF SUCH FACTORS. SOME OF THESE FACTORS, AND
OTHER FACTORS WHICH COULD HAVE SIMILAR IMPACTS, ARE DESCRIBED MORE FULLY BELOW.
IN PROVIDING FORWARD-LOOKING STATEMENTS THE COMPANY IS NOT UNDERTAKING ANY
OBLIGATION TO UPDATE THESE STATEMENTS PUBLICLY OR OTHERWISE, WHETHER AS A RESULT
OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
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INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
Some of the information that may need to be considered with respect to the
Notes is not physically included in this Prospectus, but rather is "incorporated
by reference" to documents that have been filed by ANTEC with the SEC. The
information that is incorporated by reference consists of:
(a) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997;
(b) the Company's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 1998;
(c) the proxy statement (other than the information contained in
"Compensation Committee Report on Executive Compensation" and
"Performance Graph") for the Company's Annual Meeting of Stockholders
held May 7, 1998;
(d) the Company's Report on Form 8-K filed April 29, 1998; and
(e) the Company's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 1998
All documents filed by ANTEC under the Securities Exchange Act of 1934
after the date of this Prospectus are incorporated by reference into this
Prospectus.
Any statement contained in a document that is incorporated by reference
shall be deemed to be modified or superseded for all purposes to the extent that
a statement contained herein (or in any other document that is subsequently
filed with the SEC and incorporated by reference) modifies or is contrary to
such previous statement. All information contained or incorporated by reference
in this Prospectus relating to ANTEC and its subsidiaries has been supplied by
ANTEC.
The Company will provide, without charge, to each person (including any
beneficial owner) to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any and all of the information that has been
incorporated by reference in this Prospectus (not including exhibits to such
information unless such exhibits are specifically incorporated by reference
into such information). Such requests should be directed to: Secretary, ANTEC
Corporation, 5720 Peachtree Parkway, NW Norcross, GA 30092.
THE COMPANY
ANTEC is a developer, manufacturer and supplier of optical and radio
frequency ("RF") transmission equipment for the construction, rebuilding and
maintenance of broadband communications systems. ANTEC supplies equipment and
services for these systems primarily to cable television operators, earning a
reputation as a high-quality, one-stop provider of substantially all of the
equipment needed for a cable television system between the headend and the home.
The Company has developed a full line of technologically advanced fiber optic
products to capitalize on current and future upgrades of cable systems employing
hybrid-fiber coax ("HFC") technology capable of providing state-of-the-art
video, voice and data services. ANTEC has strong long-term relationships with
its customers, serving major domestic cable operators. To capitalize on the
growing worldwide telecommunications industry, the Company has developed
important relationships with domestic telephone and international broadband
communications providers. In 1997, the Company generated approximately 76% of
its net sales domestically and approximately 24% of its net sales
internationally.
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From its inception in 1969 until its initial public offering in 1993, ANTEC
was primarily a distributor of cable television equipment and was owned and
operated by Anixter International, Inc. ("Anixter"). Since that time, the
Company has completed several important strategic acquisitions and formed joint
ventures designed to expand significantly the Company's product offerings and
provide state-of-the-art manufacturing capabilities. Currently, the Company
believes that it is the provider with the broadest offering of products and
services in its industry. As a result of these acquisitions, a substantial
component of the Company's sales consist of manufactured products which
typically carry higher gross margins than distributed products.
The Company manufactures products in the United States and Mexico in ISO
9001 certified facilities and through relationships with third party
manufacturers in China, Malaysia and Taiwan. In addition, through its Telewire
Division the Company distributes products manufactured by others. The Company
serves its customers through an efficient delivery network consisting of 25
sales and stocking locations in the United States, Argentina, Brazil, Canada,
China, Italy, Spain and the United Kingdom. For most customer needs, the Company
maintains complete inventories and is able to provide overnight as well as
staged delivery of products.
RECENT DEVELOPMENTS
On May 21, 1998, the Company entered into a new credit facility (the "New
Credit Facility"). The New Credit Facility permits ANTEC to borrow on a
revolving basis up to an amount equal to the sum of 85% of eligible domestic
accounts receivable plus 60% of eligible domestic inventory, limited in
aggregate amount outstanding at any time to $100.0 million; provided that at no
time may eligible inventory included in the Company's borrowing base exceed an
amount equal to 50% of the aggregate amount outstanding under the New Credit
Facility. The New Credit Facility provides for interest based upon LIBOR or ABR
plus, in either instance, a margin (starting at 200 basis points in the case of
a LIBOR-based loan and 100 basis points for an ABR-based loan) based upon
ANTEC's fixed charge coverage ratio, and is secured by substantially all of
ANTEC's (and its subsidiaries') assets in the United States and a pledge of 65%
of the stock of each of ANTEC's foreign subsidiaries. ANTEC's prior credit
facility was, with the exception of the stock of ANTEC's subsidiaries,
unsecured. The New Credit Facility contains various financial covenants,
including limitations on indebtedness; limitations on mergers, acquisitions,
consolidations, asset dispositions and asset transfers; limitations on
dividends, share repurchases, investments and certain other payments;
limitations on capital expenditures; a minimum fixed charge coverage ratio; a
minimum ratio for debt to total capital; and a minimum net worth. The Bank of
New York and Bank of America will co-manage the facility.
On June 4, 1998, ANTEC purchased 4,376,500 shares of Common Stock from
Anixter for $63,459,250. Anixter no longer is a shareholder of ANTEC.
INVESTMENT CONSIDERATIONS
In addition to the other information contained in this Prospectus, the
following factors should be considered carefully by investors before purchasing
the securities offered hereby.
LEVERAGE
The Company is highly leveraged. As of December 31, 1997, the Company's
total indebtedness as adjusted to give effect to the sale of the Notes and the
application of net proceeds therefrom, would have been approximately $139.3
million compared to stockholders' equity of $232.3 million. In addition, the New
Credit Facility provides, among other things, covenants limiting the incurrence
of additional debt and liens. The degree to which the Company is leveraged and
such covenants may adversely affect the Company's ability to finance its future
operations, to
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compete effectively against better capitalized competitors and to withstand
downturns in its business or the economy generally, and could limit its ability
to pursue business opportunities that may be in the interests of the Company and
its security holders.
OPERATING LOSSES
The Company recently has experienced significant operating losses. The
Company had an operating loss of approximately $23.1 million for the year ended
December 31, 1997, and recorded a non-recurring charge of $12 million in the
first quarter of 1998 in connection with the consolidation plan being
implemented concurrently with the creation of the new President and Chief
Operating Officer organization in Atlanta. There can be no assurance that such
losses will not continue.
DEPENDENCE ON THE CABLE TELEVISION INDUSTRY AND CABLE TELEVISION CAPITAL
SPENDING
Approximately 60% of the Company's revenues come from sales of systems and
equipment to the domestic cable television industry. Demand for these products
depends primarily on capital spending by cable television operators for
constructing, rebuilding or upgrading their systems. Capital spending in the
cable industry has been cyclical. The amount of this capital spending, and,
therefore the Company's sales and profitability, will be affected by a variety
of factors, including general economic conditions, consolidation in the
industry, the financial condition of domestic cable television operators and
their access to financing, competition from direct-to-home ("DTH") or direct
broadcast satellite television providers, and wireless television providers and
telephone companies, satellite master antenna television ("SMATV") providers,
and Internet video providers, technological developments in the broadband
communications industry, and new legislation and regulation of cable television
operations as described below.
In recent years, cable television capital spending has been affected
significantly by new legislation and regulation, on the federal, state and local
levels, and many aspects of such regulation are currently the subject of
judicial proceedings and administrative or legislative proposals. From time to
time, the Federal Communications Commission ("FCC") has adopted technical
standards applicable to the equipment used by, and operations of, cable
television operators, and there may be changes in such standards in the future
which may affect cable television capital spending. During 1993 and 1994, the
FCC adopted rules under the Cable Television Consumer Protection and Competition
Act of 1992 (the "1992 Cable Act"), regulating rates that cable television
operators may charge for lower tiers of service and generally not regulating the
rates for higher tiers of service. In 1996, the Telecommunications Act of 1996
(the "Telecom Act") was enacted to eliminate certain governmental barriers to
competition among local and long distance telephone, cable television,
broadcasting and wireless services. When fully implemented by the FCC, the
Telecom Act may significantly impact the communications industry and alter
federal, state and local laws and regulations regarding the provision of cable
and telephony services. Among other things, the Telecom Act eliminates
substantially all restrictions on the entry of telephone companies and certain
electric public utilities into the cable television business. Telephone
companies may now enter the cable television business as traditional cable
operators (subject to limitations on their acquiring existing cable systems in
their telephone service areas), as common carrier conduits for programming
supplied by others, as operators of wireless distribution systems, or as hybrid
common carrier/cable operator providers of programming on so-called "open video
systems." The FCC also recently adopted rules affecting the ownership of and
access to cable in multiple dwelling units. The economic impact of the 1992
Cable Act, the Telecom Act and the rules thereunder on the cable television
industry and the Company is still uncertain. However, the entrance of telephone
companies into the cable industry and the consolidation of cable companies and
telephone companies, as the result of the new Federal legislation
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discussed above, may negatively affect not only the level of capital spending in
the cable industry in general, but the portion thereof received by the Company.
As for competition faced by cable television operators from wireless
television providers, the FCC has pending proposed rule changes which would
allow multichannel multipoint distribution service ("MMDS") providers to offer
two-way telecommunications services, which could lead to greater competition
from MMDS operators. Also, the FCC has recently completed auctions for radio
spectrum licenses for local multipoint distribution service ("LMDS"); these
broadband licenses could be used to provide video or high-speed
telecommunications transmissions, which could compete against cable television
systems.
TELECOMMUNICATIONS INDUSTRY COMPETITION AND TECHNOLOGICAL CHANGES
The Company will be significantly affected by the competition among cable
television, DTH, SMATV, MMDS, and LMDS operators, satellite television providers
and telephone companies, and other operators to provide video, voice and
data/Internet services. In particular, although cable television operators have
historically provided television services to the majority of U.S. households,
DTH or direct broadcast satellite television has attracted a growing number of
subscribers, and the regional telephone companies have begun to offer competing
cable and wireless cable services. This competitive environment is characterized
by rapid technological change, particularly with respect to developments in
digital compression and broadband access technology. New digital technologies
enable the compression of many channels into the bandwidth currently used by one
analog channel. In addition, new wireless technologies may be used in the future
to bypass existing distribution systems.
The Company's products and services compete with those of a substantial
number of domestic companies. The Company's top two competitors, General
Instruments and Scientific-Atlanta, have greater resources, financial and
otherwise, than the Company. The rapid technological changes occurring in the
Company's markets may lead to the entry of new competitors, including those with
substantially greater resources than the Company's. The Company's ability to
anticipate technological changes and to introduce enhanced products on a timely
basis will be a significant factor in the Company's ability to expand and remain
competitive. Actions by existing competitors and the entry of new competitors
may have an adverse impact on the Company's sales and profitability. The
industry is characterized by rapid technological change. Technological changes
also could lead to the obsolescence of some of the Company's products, which
could have a material adverse effect on the Company's business.
A component of ANTEC's strategy for technological innovation involves the
products that ANTEC anticipates the joint venture the Company and Northern
Telecom formed in 1995 ("Arris") will develop. Arris designs, manufactures, and
sells products that enable the provision of telephone services over HFC systems
for video distribution. To date, Arris' products have been installed only on a
limited basis, and there is no certainty that these products will gain wide
acceptance or be profitable for either Arris or the Company. Through December
31, 1997, Arris had operating losses, of which ANTEC funded approximately $3.4
million and Northern Telecom funded the remainder with debt. ANTEC is obligated
to fund 25% of the future losses up to an aggregate additional investment by
ANTEC of approximately $5.1 million . Should ANTEC ever decide not to fund its
share of Arris' losses above this agreed upon amount, ANTEC's interest in Arris
would be diluted if its partner decides to fund any further losses with equity.
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DEPENDENCE ON KEY CUSTOMERS
The cable industry is highly concentrated, with the majority of domestic
subscribers being served by approximately ten major domestic multi-system
operators ("MSOs"). Historically, a majority of the Company's sales have been to
relatively few customers. In 1997, over 36% of the Company's revenues were
obtained from sales to the ten largest MSOs. Traditionally, a significant
portion of the Company's revenue is derived from sales to Tele-Communications,
Inc. ("TCI"), aggregating $157.1 million, $153.7 million and $46.6 million for
the years ended December 31, 1995, 1996 and 1997, respectively. The October 1996
decision by TCI to cease accepting shipments of the products the Company and its
competitors traditionally sold to it had a material adverse effect on the
Company's financial performance in 1997. Sales to TCI in 1998 are expected to be
substantially greater than 1997 sales, but not as high as prior years. The
Company is not able to project future sales levels to TCI. A future decision by
TCI or other large cable companies to reduce purchases could have a material
adverse effect on the Company's business in the future. In addition, the
consolidation in the cable industry can have an adverse effect on the Company's
business as participants reduce capital expenditures. In 1997 for example, the
Company experienced a material slow-down in sales due in part to the impact of
trades, swaps and partnerships that occurred among domestic cable operators
throughout most of 1997. Recently TCI announced that it had agreed to be
acquired by AT&T Corp. The consequences, if any, to the Company of this
acquisition are not yet determinable.
The Company believes that transactions between suppliers like the Company
and operators in the cable television industry are highly relationship based.
Contracts with suppliers specify pricing, warranty and delivery terms, but do
not typically provide for minimum purchase amounts. As a result, even though the
Company has contractual relationships with a number of customers, there is no
certainty as to the amount of products that will be sold pursuant to those
contracts. For example, under the Company's joint venture regarding turn-key
contracts with TCI, the specific work to be performed and the type and supplier
of the equipment to be used, which may or may not be sold by the Company, will
be specified by TCI and governed by discrete project documentation to be agreed
upon by TCI and the joint venture for each segment or phase as the work
progresses. The benefit of such contracts to the Company depends on the Company
providing products that are needed to upgrade these systems.
RELIANCE ON KEY PERSONNEL
The future success of the Company depends in part on its ability to attract
and retain key executive, marketing, engineering and sales personnel.
Competition for qualified personnel in the cable industry is intense, and the
loss of certain key personnel could have a material adverse effect on the
Company. Even though the Company has entered into employment contracts with its
key executive officers, and it has a stock option program which is intended to
provide substantial incentives for its key employees to remain with the Company,
no assurances can be given that the Company will be able to retain its key
personal, or attract new key personnel.
SUBORDINATION
The Notes are subordinated in right of payment to all existing and future
Senior Indebtedness of the Company and, effectively, all existing and future
liabilities (including trade payables) of its subsidiaries. The Indenture (as
defined) does not restrict the incurrence of Senior Indebtedness or other
indebtedness by the Company or its subsidiaries. By reason of such subordination
of the Notes, in the event of the insolvency, bankruptcy, liquidation,
reorganization, dissolution or winding up of the business of the Company or
similar proceeding, or upon a default in payment with respect to any
indebtedness of the Company or an event of default with respect to such
indebtedness resulting in the acceleration thereof, the assets of the Company
will be available to pay the amounts due on the Notes
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only after all Senior Indebtedness has been paid in full. The Notes rank pari
passu with all other unsecured, subordinated obligations of the Company. See
"Description of Notes -- Subordination."
At December 31, 1997, after giving effect to the issuance of the Notes, the
incurrence of indebtedness under the New Credit Facility and the application of
the estimated net proceeds therefrom, approximately $39.3 million of outstanding
indebtedness of the Company would have constituted Senior Indebtedness. In
addition, because of how the Company manages its operations, its current
liabilities (e.g., accounts payable) could be viewed as obligations of the
Company's subsidiaries and, therefore, senior to the Notes. As of December 31,
1997, the Company had $75.8 million of current liabilities. The Company's New
Credit Facility provides for borrowing of up to $85.0 million, subject to a
borrowing base limitation. $70.0 million was outstanding under the prior credit
facility as of December 31, 1997. Indebtedness under the New Credit Facility
would be Senior Indebtedness.
LACK OF PUBLIC MARKET
The Notes are eligible for trading through the PORTAL Market. Although the
Company has been advised by Donaldson Lufkin & Jenrette that it is currently
making a market in the Notes, it is not obligated to do so and may discontinue
such market making at any time without notice. In addition, such market making
activity is subject to the limits imposed by the Securities Act and the Exchange
Act. Accordingly, there can be no assurance that any market for the Notes will
be maintained. If a trading market is not maintained, holders of the Notes may
experience difficulty in reselling, or an inability to sell, the Notes. Future
trading prices of the Notes will depend on many factors, including, among other
things, prevailing interest rates, the Company's operating results and the
market for similar securities. Depending on prevailing interest rates, the
market for similar securities and other factors, including the financial
condition of the Company, the Notes may trade at a discount from their principal
amount.
The Notes were sold in reliance upon exemptions from regulation under the
Securities Act and applicable state securities laws. Therefore, the Notes may be
transferred or resold only in compliance with the registration provisions of the
Securities Act and applicable state securities laws. The Notes and the Shares
are being registered to permit secondary trading of such securities by the
holders thereof (the "Selling Securityholders") by use of this Prospectus. The
Company may prohibit offers and sales of Notes and Shares pursuant to the shelf
registration statement filed under the Securities Act (the "Shelf Registration
Statement") to which this Prospectus relates at any time if (A)(i) the Company
is in possession of material non-public information relating to the Company,
(ii) the Company determines (based on advice of counsel) that such prohibition
is necessary in order to avoid a requirement to disclose such material
non-public information to the public and (iii) the Company determines in good
faith that public disclosure of such material non-public information would not
be in the best interests of the Company and its stockholders, or (B)(i) the
Company has made a public announcement relating to an acquisition or business
combination transaction including the Company and/or one or more of its
subsidiaries that is material to the Company and its subsidiaries taken as a
whole and (ii) the Company determines in good faith that (x) offers and sales of
Transfer Restricted Securities (as defined below) pursuant to the Shelf
Registration prior to the consummation of such transaction (or such earlier date
as the Company shall determine) is not in the best interests of the Company and
its stockholders or (y) it would be impracticable at the time to obtain any
financial statements relating to such acquisition or business combination
transaction that would be required to be set forth in the Shelf Registration.
The Company has agreed to file this Registration Statement with the Commission
and to use its reasonable best efforts to cause this Registration Statement to
become effective with respect to the Notes and the Common Stock issuable upon
conversion thereof. See "Description of the Notes -- Registration Rights;
Liquidated Damages."
INTERNATIONAL OPERATIONS; FOREIGN CURRENCY RISKS
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United States broadband system designs and equipment are increasingly being
employed in international markets, where cable television homes passed
penetration is relatively lower than in the United States. However, there can be
no assurance that international markets will continue to develop or that the
Company will receive additional contracts to supply its equipment in
international markets.
A significant portion of the Company's products is manufactured or
assembled in Mexico and other countries outside the United States. The Company's
sales of its equipment into international markets have been and are expected in
the future to be an important part of the Company's business. These foreign
operations are subject to the usual risks inherent in conducting operations
abroad, including risks with respect to currency exchange rates, economic and
political destabilization, restrictive actions and taxation by foreign
governments, nationalization, the laws and policies of the United States
affecting trade, foreign investment and loans, and foreign tax laws. Even though
all of the Company's international sales have been dollar denominated, the
Company's business could be adversely affected if relevant currencies fluctuate
relative to the United States dollar.
FRAUDULENT CONVEYANCE RISKS; PREFERENTIAL TRANSFER
Under applicable provisions of the federal bankruptcy law or comparable
provisions of state fraudulent transfer law, if the Company, at the time of
issuance of, or making any payment in respect of, the Notes, (a)(i) was or was
rendered insolvent thereby, was engaged in or about to engage in a business or
transaction for which its assets constituted unreasonably small capital, or
intended to incur, or believed that it would incur, debts beyond its ability to
pay such debts as they matured, and (ii) received less than reasonably
equivalent value or fair consideration for such issuance, or (b) issued the
Notes or made any payment thereunder with intent to hinder, defraud or delay any
of its creditors, the obligations of the Company under some or all of the Notes
could be voided or held to be unenforceable by a court, the obligations of the
Company under the Notes could be subordinated to claims of other creditors or
the holders would be required to return payments already received. In any of the
foregoing cases, there could be no assurance that the holders would ultimately
recover the amounts owing under the Notes.
The measure of insolvency for purposes of the foregoing will vary depending
upon the law applied in any such case. Generally, however, the Company or its
subsidiaries would be considered insolvent if the sum of its or their debts,
including contingent liabilities, was greater than all of its assets at a fair
valuation, if it had unreasonably small capital to conduct its business, or if
the present fair salable value of its assets were less than the amount that
would be required to pay the probable liability on its existing debts, including
contingent liabilities, as they become absolute and matured. The Company was not
insolvent at the time of or as a result of the initial issuance of the Notes and
believes that it will not engage in a business or transaction for which its
remaining assets would constitute unreasonably small capital, and the Company
has not and does not intend to incur or believe that it will incur debts beyond
its ability to pay such debts as they mature. There can be no assurance,
however, that a court passing on such questions would agree with the Company's
analysis.
SEC INVESTIGATION - LITIGATION
The Securities and Exchange Commission has instituted civil litigation
against Mr. Bruce Van Wagner, one of the Company's directors. In general, these
proceedings allege that Mr. Van Wagner provided material non-public information
to family members and others that led the recipients to sell Shares based upon
that information. In general, the Commission is seeking disgorgement of the
profits, a penalty equal to three times the disgorged profits and injunctive
relief. Mr. Van Wagner has denied these allegations and is vigorously defending
the litigation. The Company is reimbursing Mr. Van Wagner the costs of
defending this litigation, which in 1997, had aggregated $90,000. In addition,
various members of the Company's management have provided testimony to the
Commission
8
<PAGE> 11
in connection with these proceedings (and a prior investigation) and would
expect to continue to provide testimony to the Commission when and as requested.
USE OF PROCEEDS
Although the Company received proceeds in connection with the initial
private placement of the Notes, the Company will not receive any of the proceeds
from the sale of the Notes or the Shares by the Selling Securityholders.
Approximately $73.5 million of the proceeds from the initial private placement
were used to repay the Company's obligations under its revolving credit
facility. The remainder was temporarily invested and, together with borrowings
under the New Credit Facility, was used to repurchase approximately 4.4 million
Shares for approximately $63.5 million.
RATIO OF EARNINGS TO FIXED CHARGES
The Company's ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
Six Months
Fiscal Year Ended Ended
December 31, June 30,
------------- ------------
1997 1996 1995 1994 1993 1998 1997
---- ------ ------ ------ ---- ----- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges(1) -- 3.2x 1.9x 4.9x 2.9x -- --
Fixed Charges Coverage
Deficiency(2) 29.0 -- -- -- -- 0.3 21.8
</TABLE>
(1) For purposes of the calculation of ratio of earnings to fixed charges,
earnings are defined as earnings before income taxes plus fixed charges.
Fixed charges consist of interest expense on all indebtedness and rental
expense.
(2) In millions of dollars.
DESCRIPTION OF NOTES
Set forth below is a summary of the material provisions of the Notes. The
Notes were issued pursuant to an indenture (the "Indenture") dated as of May 8,
1998 by and between the Company and The Bank of New York as trustee (the
"Trustee"). The following description of the Notes, the Indenture and the
Registration Rights Agreement (as defined herein) summarizes the material
provisions thereof, and is qualified in its entirety by reference to, all of the
provisions of the Indenture and the Registration Rights Agreement, including the
definitions therein of certain terms. Copies of the Indenture and the
Registration Rights Agreement may be obtained from the Company upon request.
Capitalized terms used herein without definition have the meanings ascribed to
them in the Indenture or the Registration Rights Agreement, as appropriate. As
used in this section, the "Company" refers to ANTEC Corporation, exclusive of
its Subsidiaries. Wherever particular provisions or defined terms of the
Indenture (or the form of Note which is part thereof) or the Registration Rights
Agreement are referred to in this summary, such provisions or defined terms are
incorporated by reference as a part of the statements made and such statements
are qualified in their
9
<PAGE> 12
entirety by such reference. Certain definitions of terms used in the following
summary are set forth under "Certain Definitions."
GENERAL
The Notes are general, unsecured obligations of the Company, limited in
aggregate principal amount to $115 million. The Notes are subordinated in right
of payment to all existing and future Senior Indebtedness, as described under
"Subordination" below. The Notes will be issued only in fully registered form,
without coupons, in denominations of $1,000 and integral multiples thereof.
The Notes will mature on May 15, 2003. The Notes bear interest at the rate
per annum stated on the cover page of this Prospectus from their date of
issuance, or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually in cash in arrears on May 15
and November 15 of each year, commencing November 15, 1998 to the persons in
whose names such Notes are registered at the close of business on May 1 and
November 1 immediately preceding such Interest Payment Dates. Principal of,
premium on, if any, interest on, and Liquidated Damages with respect to, the
Notes will be payable, the Notes will be convertible and the Notes may be
presented for registration of transfer or exchange, at the office or agency of
the Company maintained for such purpose, which office or agency shall be
maintained in New York, New York. Interest will be calculated on the basis of a
360-day year consisting of twelve 30-day months.
At the option of the Company, payment of interest and Liquidated Damages
may be made by check mailed to the holders of the Notes (the "Holders") at the
addresses set forth upon the registry books of the Company. No service charge
will be made for any registration of transfer or exchange of Notes, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Until otherwise designated
by the Company, the Company's office or agency will be the corporate trust
office of the Trustee presently located in New York, New York.
The Indenture does not contain any financial covenants or any restrictions
on the payment of dividends, the issuance or repurchase of securities of the
Company or the incurrence of indebtedness, including Senior Indebtedness. The
Indenture contains no covenants or other provisions to afford protection to
Holders of Notes in the event of a highly leveraged transaction or a change of
control of the Company, except to the limited extent described under
"Repurchase of Notes at the Option of the Holder Upon a Change of Control."
CONVERSION RIGHTS
Each Holder of Notes has the right at any time prior to the close of
business on the Stated Maturity of the Notes, unless previously redeemed or
repurchased, at the Holder's option, to convert any portion of the principal
amount thereof that is $1,000 or an integral multiple thereof into shares of
Common Stock at the Conversion Price set forth on the cover page of this
Prospectus (subject to adjustment as described below). The right to convert a
Note called for redemption or delivered for repurchase and not withdrawn will
terminate at the close of business on the Business Day immediately prior to the
Redemption Date or Repurchase Date, as applicable, for such Note, unless the
Company subsequently fails to pay the applicable Redemption Price or Repurchase
Price, as the case may be.
In the case of any Note that has been converted into Common Stock after
any Record Date, but on or before the next Interest Payment Date, interest, the
stated due date of which is on such Interest Payment Date, shall be payable on
such Interest Payment Date notwithstanding such conversion, and such interest
shall be paid to the Holder
10
<PAGE> 13
of such Note who is a Holder on such Record Date. Any Note converted after any
Record Date but before the next Interest Payment Date (other than Notes called
for redemption) must be accompanied by payment of an amount equal to the
interest payable on such Interest Payment Date on the principal amount of Notes
being surrendered for conversion; provided that no such payment shall be
required with respect to interest payable on May 15, 2001. No fractional shares
of Common Stock will be issued upon conversion but, in lieu thereof, an
appropriate amount will be paid in cash by the Company based on the market price
of Common Stock (determined in accordance with the Indenture) at the close of
business on the day of conversion. As a result of the foregoing provisions,
Holders who surrender Notes for conversion on a date that is not an Interest
Payment Date will not receive any interest for the period from the Interest
Payment Date next preceding the date of conversion to the date of conversion or
for any later period, except for Notes that are called for redemption on a
Redemption Date between a Record Date and the corresponding Interest Payment
Date as provided above.
The Conversion Price will be subject to adjustment in certain events,
including (a) any payment of a dividend (or other distribution) payable in
Common Stock on any class of Capital Stock of the Company, (b) any issuance to
all or substantially all holders of Common Stock of rights, options or warrants
entitling them to subscribe for or purchase Common Stock at less than the then
Current Market Price of Common Stock (determined in accordance with the
Indenture); provided, however, that if such rights, options or warrants are
only exercisable upon the occurrence of certain triggering events, then the
Conversion Price will not be adjusted until such triggering events occur, (c)
certain subdivisions, combinations or reclassifications of the outstanding
Common Stock, (d) any distribution to all or substantially all holders of
Common Stock of evidences of indebtedness, shares of Capital Stock (other than
Common Stock), cash or other assets (including securities, but excluding those
dividends, rights, options, warrants and distributions referred to above and
distributions in connection with the liquidation, dissolution or winding up of
the Company and excluding dividends and distributions paid exclusively in cash
and in mergers and consolidations to which the second succeeding paragraph
applies), (e) any distribution consisting exclusively of cash (excluding any
cash portion of distributions referred to in (d) above, or cash distributed
upon a merger or consolidation to which the second succeeding paragraph
applies) to all or substantially all holders of Common Stock in an aggregate
amount that, combined together with (i) all other such all-cash distributions
made within the then preceding 12 months in respect of which no adjustments
have been made and (ii) any cash and the fair market value of other
consideration paid or payable in respect of any tender offer by the Company or
any of its Subsidiaries for Common Stock concluded within the preceding 12
months in respect of which no adjustment has been made exceeds 15.0% of the
Company's market capitalization (defined as being the product of the then
Current Market Price of the Common Stock multiplied by the number of shares of
Common Stock then outstanding) on the record date of such distribution, and (f)
the completion of a tender offer made by the Company or any of its Subsidiaries
for Common Stock to the extent that the aggregate consideration, together with
(i) any cash and other consideration payable in a tender offer by the Company
or any of its Subsidiaries for Common Stock expiring with the 12 months
preceding the expiration of such tender offer in respect of which no adjustment
has been made and (ii) the aggregate amount of any such all-cash distributions
referred to in (e) above to all holders of Common Stock within the 12 months
preceding the expiration of such tender offer in respect of which no
adjustments have been made, exceeds 15.0% of the Company's market
capitalization on the expiration of such tender offer. In the event of a
distribution to all or substantially all of the holders of Common Stock of
rights, warrants or options to subscribe for or purchase any securities (other
than those referred to in (b) above), the Company may instead of making an
adjustment in the Conversion Price, provide that each Holder of a Note, who
converts the Note after the record date for such distribution and prior to the
expiration of such rights, shall be entitled to receive upon such conversion of
the Note, in addition to shares of Common Stock, an appropriate number of such
rights, warrants or options. No adjustment of the Conversion Price will be
required to be made until the cumulative adjustments amount to one percent or
more of the Conversion Price as last adjusted.
11
<PAGE> 14
The Company, from time to time and to the extent permitted by law, may
reduce the Conversion Price by any amount for any period of at least 20
Business Days, in which case the Company shall give at least 15 days notice of
such reduction to the Trustee and the Holders, if the Board of Directors has
made a determination that such reduction would be in the best interests of the
Company, which determination shall be conclusive. The Company may, at its
option, make such reductions in the Conversion Price, in addition to those set
forth above, as the Board of Directors deems advisable to avoid or diminish any
income tax to holders of Common Stock resulting from any dividend or
distribution of stock (or rights to acquire stock) or from any event treated as
such for United States Federal income tax purposes. See "Certain United States
Income Tax Considerations."
In case of any reclassification or change of outstanding shares of Common
Stock issuable upon conversion of the Notes (other than certain changes in par
value) or consolidation or merger of the Company with or into another Person or
any consolidation or merger of another Person with or into the Company (with
certain exceptions), or in case of any sale, transfer or conveyance of all or
substantially all of the assets of the Company, each Note then outstanding
will, without the consent of any Holder of Notes, become convertible only into
the kind and amount of securities, cash and other property receivable upon such
reclassification, change, consolidation, merger, sale, transfer or conveyance
by a holder of the number of shares of Common Stock into which such Note was
convertible immediately prior thereto after giving effect to any adjustment
required to be made as set forth above; provided that if the kind or amount of
securities, cash and other property is not the same for each share of Common
Stock held immediately prior to such reclassification, change, consolidation,
merger, sale, transfer, or conveyance, any Holder who fails to exercise any
right of election shall receive per share the kind and amount of securities,
cash or other property received per share by a plurality of such shares.
The Company will use all reasonable efforts to cause all registrations to
be made with, and to obtain any approvals by, any governmental authority under
any Federal or state law of the United States that may be required on the part
of the Company in connection with the conversion of the Notes into Common
Stock. If at any time during the two-year period following the date of the
original issuance of the Notes a registration statement under the Securities
Act covering the shares of Common Stock issuable upon conversion of the Notes
is not effective or is otherwise unavailable for effecting resales of such
shares, shares of Common Stock issued upon conversion of the Notes may not be
sold or otherwise transferred except in accordance with or pursuant to an
exemption from, or otherwise in a transaction not subject to, the registration
requirements of the Securities Act.
SUBORDINATION
The Notes are general, unsecured obligations of the Company, subordinated
in right of payment to all existing and future Senior Indebtedness. Adjusted to
give effect to the issuance of the Notes, the incurrence of indebtedness under
the New Credit Facility and the application of the estimated net proceeds
therefrom, including the Repurchase and the repayment of the Company's Existing
Credit Facility, the Company would have had outstanding $39.3 million of Senior
Indebtedness as of December 31, 1997. The Notes are effectively subordinated in
right of payment to all existing and future liabilities (including trade
payables) of the Company's subsidiaries. The Company had $75.8 million of
current liabilities as of December 31, 1997. Because of how the Company
manages its operations, these current liabilities could be viewed as
obligations of the Company's subsidiaries and therefore senior to the Notes.
The Indenture does not restrict the incurrence of Senior Indebtedness or other
indebtedness by the Company or its Subsidiaries or the ability of the Company
to transfer assets or business operations to its Subsidiaries, subject to the
provisions described under "Repurchase of Notes at the Option of the Holder
Upon a Change of Control" and "Limitation on Merger, Sale or Consolidation."
12
<PAGE> 15
The Indenture provides that no payment may be made by the Company,
directly or through any Subsidiary, on account of the principal of, premium, if
any, or interest on and Liquidated Damages or any other obligations under or
with respect to, the Notes, or to acquire any of the Notes (including
repurchases of Notes at the option of the Holder) for cash or property (other
than Junior Securities), or on account of the redemption provisions of the
Notes (collectively, the "Subordinated Obligations"), (i) upon the maturity of
any Senior Indebtedness, by lapse of time, acceleration (unless waived) or
otherwise, unless and until all principal of, premium, if any, and interest on,
and fees, charges, expenses, indemnifications and all other amounts payable in
respect of Designated Senior Indebtedness are first paid in full, or (ii) in
the event of default in the payment of any principal of, premium, if any, or
interest on, any Designated Senior Indebtedness when it becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise (collectively, a "Payment Default"), unless and until
such Payment Default has been cured or waived or otherwise has ceased to exist.
The payment of cash, property or securities (other than Junior Securities) upon
conversion of a Note will constitute payment on a Note and therefore will be
subject to the subordination provisions in the Indenture.
Upon (i) the happening of an event of default (other than a Payment
Default) that permits, or would permit with (a) the passage of time, (b) the
giving of notice, (c) the making of any payment of the Notes then required to
be made or (d) any combination thereof (collectively, a "Non-Payment Default"),
the holders of Designated Senior Indebtedness or their representative
immediately to accelerate the maturity of such Designated Senior Indebtedness
and (ii) written notice of such Non-Payment Default being given to the Company
and the Trustee by the holders of such Designated Senior Indebtedness or their
representative (a "Payment Notice"), then, unless and until such Non-Payment
Default has been cured or waived or otherwise has ceased to exist, no payment
(by setoff or otherwise) may be made by or on behalf of the Company, directly
or through any Subsidiary, on account of the Subordinated Obligations, in any
such case other than payments made with Junior Securities. Notwithstanding the
foregoing, unless (i) the Designated Senior Indebtedness in respect of which
such Non-Payment Default exists has been declared due and payable in its
entirety within 179 days after the Payment Notice is delivered as set forth
above (the "Payment Blockage Period"), and (ii) such declaration has not been
rescinded or waived, at the end of the Payment Blockage Period, the Company
shall be required to pay to the Holders of the Notes all regularly scheduled
payments on the Notes that were not paid during the Payment Blockage Period due
to the foregoing prohibitions (and upon the making of such payments any
acceleration of the Notes made during the Payment Blockage Period shall be of
no further force or effect) and to resume all other payments as and when due on
the Notes. Not more than one Payment Notice may be given in any consecutive
365-day period, irrespective of the number of defaults with respect to Senior
Indebtedness during such period. In no event, however, may the total number of
days during which any Payment Blockage Period is or Payment Blockage Periods
are in effect exceed 179 days in the aggregate during any consecutive 365-day
period.
Upon any distribution of assets of the Company upon any dissolution,
winding up, total or partial liquidation or reorganization of the Company,
whether voluntary or involuntary, in bankruptcy, insolvency, receivership or a
similar proceeding or upon assignment for the benefit of the creditors or any
marshaling of assets or liabilities (i) the holders of all Senior Indebtedness
will first be entitled to receive payment in full before the Holders of the
Notes are entitled to receive any payment (other than Junior Securities) on
account of the Subordinated Obligations and (ii) any payment or distribution of
assets of the Company of any kind or character, whether in cash, property or
securities (other than Junior Securities) to which the Holders of the Notes or
the Trustee on behalf of the Holders would be entitled (by setoff or
otherwise), except for the subordination provisions contained in the Indenture,
will be paid by the liquidating trustee or agent or other person making such a
payment or distribution directly to the holders of Senior Indebtedness or their
representative to the extent necessary to make payment in full of all such
Senior Indebtedness remaining unpaid, after giving effect to any concurrent
payment or distribution, or provision therefor, to the holders of such Senior
Indebtedness.
13
<PAGE> 16
In the event that, notwithstanding the foregoing, any payment or
distribution of assets of the Company or any Subsidiary (other than Junior
Securities) shall be received by the Holders of the Notes or the Trustee on
behalf of the Holders or any Paying Agent at a time when such payment or
distribution is prohibited by the foregoing provisions, such payment or
distribution shall be held in trust for the benefit of the holders of Senior
Indebtedness, and shall be paid or delivered by such Holders or the Trustee or
such Paying Agent, as the case may be, to the holders of the Senior
Indebtedness remaining unpaid or unprovided for or their representative or
representatives, or to the trustee or trustees under any indenture pursuant to
which any instruments evidencing any of such Senior Indebtedness may have been
issued, ratably according to the aggregate amounts remaining unpaid on account
of the Senior Indebtedness held or represented by each, for application to the
payment of all Senior Indebtedness remaining unpaid, to the extent necessary to
pay or to provide for the payment of all such Senior Indebtedness in full after
giving effect to any concurrent payment or distribution, or provision therefor,
to the holders of such Senior Indebtedness.
No provision contained in the Indenture or the Notes affects the
obligation of the Company, which is absolute and unconditional, to pay, when
due, principal of, premium, if any, and interest on the Notes. The
subordination provisions of the Indenture and the Notes does not prevent the
occurrence of any Default or Event of Default under the Indenture or limit the
rights of the Trustee or any Holder of any Notes, subject to the preceding
paragraphs, to pursue any other rights or remedies with respect to the Notes.
The Company conducts certain of its operations through its Subsidiaries.
Accordingly, the Company's ability to meet its cash obligations in the future
in part will be dependent upon the ability of its Subsidiaries to make cash
distributions to the Company. The ability of its Subsidiaries to make
distributions to the Company is and will continue to be restricted by, among
other limitations, applicable provisions of the laws of national and state
governments and may be restricted by contractual provisions. The Indenture does
not limit the ability of the Company's Subsidiaries to incur such contractual
restrictions in the future. The right of the Company to participate in the
assets of any Subsidiary (and thus the ability of Holders of the Notes to
benefit indirectly from such assets) is generally subject to the prior claims
of creditors, including trade creditors, of that Subsidiary except to the
extent that the Company itself is recognized as a creditor of such Subsidiary,
in which case the Company's claims would still be subject to any security
interest of other non-subordinated or pari passu creditors of such Subsidiary.
Substantially all of the Company's domestic subsidiaries have guaranty the
indebtedness under the New Credit Facility. The Notes, therefor, are
effectively subordinated to obligations to creditors, including trade
creditors, of Subsidiaries of the Company with respect to the assets of the
Subsidiaries against which such creditors have a more direct claim.
As a result of these subordination provisions, in the event of the
liquidation, bankruptcy, reorganization, insolvency, receivership or similar
proceeding or an assignment for the benefit of the creditors of the Company or
any of its Subsidiaries or a marshaling of assets or liabilities of the Company
and its Subsidiaries, Holders of Notes may receive ratably less than other
creditors.
REDEMPTION AT THE COMPANY'S OPTION
The Notes are not subject to redemption prior to May 15, 2001 and will be
redeemable on and after such date at the option of the Company, in whole or in
part, upon not less than 30 nor more than 60 days' notice to each Holder, at
the following Redemption Prices (expressed as percentages of the principal
amount) if redeemed during the 12-month period commencing May 15 of the years
indicated below, in each case (subject to the right of Holders of record on a
Record Date to receive interest due on an Interest Payment Date that is on or
prior to such Redemption Date) together with accrued and unpaid interest and
Liquidated Damages, if any, to, but excluding, the Redemption Date:
14
<PAGE> 17
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2001 101.800%
2002 and thereafter 100.900%
</TABLE>
In the case of a partial redemption, the Trustee shall select the Notes or
portions thereof for redemption on a pro rata basis, by lot or in such other
manner it deems appropriate and fair. The Notes may be redeemed in part in
multiples of $1,000 only.
Notice of any redemption will be sent, by first-class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption (the
"Redemption Date"), to the Holder of each Note to be redeemed to such Holder's
last address as then shown upon the registry books of the Registrar. The notice
of redemption must state the Redemption Date, the Redemption Price and the
amount of accrued interest and Liquidated Damages, if any, to be paid. Any
notice that relates to a Note to be redeemed in part only must state the
portion of the principal amount to be redeemed and must state that on and after
the Redemption Date, upon surrender of such Note, a new Note or Notes in
principal amount equal to the unredeemed portion thereof will be issued. On and
after the Redemption Date, interest will cease to accrue on the Notes or
portions thereof called for redemption, unless the Company defaults in its
obligations with respect thereto. The Notes do not have the benefit of any
sinking fund.
REPURCHASE OF NOTES AT THE OPTION OF THE HOLDER UPON A CHANGE OF CONTROL
The Indenture provides that in the event that a Change of Control has
occurred, the Company is required to make an irrevocable and unconditional
(except as described below) offer (the "Repurchase Offer") to purchase all
Notes on the date ("Repurchase Date") that is no later than 45 Business Days
(except as described below) after the occurrence of such Change of Control at a
cash price (the "Repurchase Price") equal to 100% of the principal amount
thereof, together with accrued and unpaid interest and Liquidated Damages, if
any, to (but excluding) the Repurchase Date. A Holder of Notes may accept the
Repurchase Offer with respect to all or a portion of its Notes (provided that
the principal amount of such Notes must be $1,000 or an integral multiple
thereof). The Repurchase Offer shall be made within 25 Business Days following
a Change of Control and shall remain open for 20 Business Days following its
commencement except to the extent that a longer period is required by
applicable law (the "Repurchase Offer Period"). Upon expiration of the
Repurchase Offer Period, the Company shall purchase all Notes tendered in
response to the Repurchase Offer. If required by applicable law, the Repurchase
Date and the Repurchase Offer Period may be extended as so required.
On or before the Repurchase Date, the Company will (i) accept for payment
Notes or portions thereof properly tendered pursuant to the Repurchase Offer,
(ii) deposit with the Paying Agent cash sufficient to pay the Repurchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any) of
all Notes so tendered and (iii) deliver to the Trustee the Notes so accepted,
together with an officers' certificate listing the Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail to the
Holders of Notes so accepted payment in an amount equal to the Repurchase Price
(together with accrued and unpaid interest and Liquidated Damages, if any), and
the Trustee will promptly authenticate and mail or deliver to such Holders a
new Note or Notes equal in principal amount to any unpurchased portion of the
Notes surrendered. Any Notes not so accepted will be promptly mailed or
delivered by the Company to the Holder thereof. The Company will announce
publicly the results of the Repurchase Offer on or as soon as practicable after
the Repurchase Date.
15
<PAGE> 18
The phrase "all or substantially all" of the assets of the Company, as
included in the definition of Change of Control, is likely to be interpreted by
reference to applicable state law at the relevant time, and will be dependent
on the facts and circumstances existing at such time. As a result, there may be
a degree of uncertainty in ascertaining whether a sale or transfer of "all or
substantially all" of the assets of the Company has occurred.
The Change of Control purchase feature of the Notes may make more
difficult or discourage a takeover of the Company, and, thus, the removal of
incumbent management. The Change of Control purchase feature resulted from
negotiations between the Company and the Donaldson, Lufkin & Jenrette.
The provisions of the Indenture relating to a Change of Control may not
afford the Holders of the Notes protection in the event of a highly leveraged
transaction, reorganization, restructuring, merger, spin-off or similar
transaction that may adversely affect Holders, if such transaction does not
constitute a Change of Control. Moreover, certain events with respect to the
Company which may involve an actual change of control of the Company may not
constitute a Change of Control for purposes of the Indenture. For instance,
one or more shareholders could acquire a significant portion, but less than 50%
of the Company's Shares (the threshold in the definition of "Change of
Control") and thereby by able to exert substantial influence with respect to
the Company.
The right to require the Company to repurchase Notes as a result of the
occurrence of a Change of Control could create an event of default under Senior
Indebtedness as a result of which any repurchase could be blocked by the
subordination provisions of the Notes. Failure of the Company to repurchase the
Notes when required would result in an Event of Default with respect to the
Notes whether or not such repurchase is permitted by the subordination
provisions. See "-- Subordination." In addition, there can be no assurance
that in the event of a Change in Control the Company would either have, or have
access to, adequate funds to redeem the Notes.
Except as described herein, no modification of the Indenture regarding the
provisions on repurchase at the option of any Holder of a Note upon a Change of
Control that adversely affects a Holder is permissible without the consent of
the Holder of the Note so affected. In the event of a Change of Control, if
Holders of in excess of two-thirds of the outstanding aggregate principal
amount of the Notes so determine at any time following the occurrence of such
Change of Control and before the close of business on the Business Day
immediately preceding the Repurchase Date, such event shall not be treated as a
Change of Control for purposes of the Indenture. In such event, (i) the Company
shall not be required to make the Repurchase Offer, (ii) to the extent the
Repurchase Offer has already been made, such Repurchase Offer shall be deemed
revoked and (iii) to the extent any Notes have been tendered in response to any
such revoked Repurchase Offer, such tender shall be rescinded and the Notes so
tendered shall be promptly returned to the Holders thereof. For purposes of any
such determination by the Holders of the outstanding Notes, Notes held by the
Company or an Affiliate of the Company (including any Person that would become
an Affiliate of the Company (or its successor) as a consequence of the event or
series of events that otherwise would be treated as a Change of Control for
purposes of the Indenture) shall be disregarded.
To the extent applicable, the Company will comply with the provisions of
Rule 13e-4 and 14e-1 or any other tender offer rules under the Exchange Act and
any other securities laws, and will file a Schedule 13e-4 or any other schedule
if required under such rules, in connection with any offer by the Company to
repurchase Notes at the option of the Holders upon a Change of Control.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company may not, directly or indirectly,
consolidate with or merge with or into, or sell, lease, convey or transfer all
or substantially all of its assets (on a consolidated basis), whether in a
single
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transaction or a series of related transactions, to another Person or group of
affiliated Persons (other than to its wholly owned Subsidiaries), unless (i)
either (a) in the case of a merger or consolidation, the Company is the
surviving entity or (b) the resulting, surviving or transferee entity is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the Notes and the Indentures;
and (ii) no Default or Event of Default shall exist immediately before or after
giving effect to such transaction.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company in accordance with the foregoing, the
successor corporation formed by such consolidation or into which the Company is
merged or to which such transfer is made, shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under the Indenture
with the same effect as if such successor corporation had been named therein as
the Company, and the Company will be released from its obligations under the
Indenture and the Notes, except as to any obligations that arise from or as a
result of such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more subsidiaries, which properties and assets, if held by the Company instead
of such subsidiary, would constitute all or substantially all of the properties
and assets of the Company, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the Company.
REPORTS
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall deliver to the
Trustee, within 15 days after it is or would have been required to file such
with the Commission, annual and quarterly consolidated financial statements
substantially equivalent to financial statements that would have been included
in reports filed with the Commission if the Company were subject to the
requirements of Section 13 or 15(d) of the Exchange Act, including, with
respect to annual information only, a report thereon by the Company's certified
independent public accountants as such would be required in such reports to the
Commission and, in each case, together with a management's discussion and
analysis of financial condition and results of operations as such would be so
required. In addition, for so long as the Notes or the Common Stock into which
they are convertible are Transfer Restricted Securities, the Company will
continue to provide to Holders the information specified by Rule 144A(d)(4).
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the
Company to pay any installment of interest on the Notes as and when due and
payable and the continuance of any such failure for 30 days, (ii) the failure
by the Company to pay all or any part of the principal of, or premium, if any,
on the Notes when and as the same become due and payable at maturity,
redemption, by acceleration or otherwise, including, without limitation,
pursuant to any Repurchase Offer, (iii) the failure of the Company to perform
any conversion of Notes required under the Indenture and the continuance of any
such failure for 30 days, (iv) the failure by the Company to observe or perform
any other covenant or agreement contained in the Notes or the Indenture and,
subject to certain exceptions, the continuance of such failure for a period of
60 days after written notice is given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of the Notes outstanding, (v) certain events of bankruptcy, insolvency
or reorganization in respect of the Company or any of its Significant
Subsidiaries, (vi) failure of the Company or any Significant Subsidiary to make
any payment at maturity, including any applicable grace period, in respect of
Indebtedness (other than non-recourse obligations) in an amount in excess of
$10 million, and continuance of such failure for 30 days after written notice
is given to the Company by the Trustee or to the
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Company and the Trustee by the Holders of at least 25% in aggregate principal
amount of Notes outstanding, (vii) default by the Company or any Significant
Subsidiary with respect to any Indebtedness, which default results in the
acceleration of Indebtedness in an amount in excess of $10 million without such
Indebtedness having been discharged or such acceleration having been rescinded
or annulled for 30 days after written notice is given to the Company by the
Trustee or to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of Notes outstanding and (viii) final unsatisfied
judgments not covered by insurance aggregating in excess of $10 million, at any
one time rendered against the Company or any of its Significant Subsidiaries and
not stayed, bonded or discharged within 60 days. The Indenture will provide that
if a Default occurs and is continuing, the Trustee must, within 90 days after
the Trustee's receiving actual notice of occurrence of such Default, give to the
Holders notice of such Default, but the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interest of the Holders, except in the case of a Default
in the payment of the principal of, premium, if any, or interest on any of the
Notes when due or in the payment of any redemption or repurchase obligation.
The Indenture provides that if an Event of Default occurs and is
continuing (other than an Event of Default specified in clause (v) above with
respect to the Company), then in every such case, unless the principal of all
of the Notes shall have already become due and payable, either the Trustee or
the Holders of at least 25% in aggregate principal amount of the Notes then
outstanding, by notice in writing to the Company (and to the Trustee if given
by Holders), may declare all principal, premium, if any, accrued interest and
Liquidated Damages, if any, on or with respect to the Notes to be due and
payable immediately. If an Event of Default specified in clause (v) above with
respect to the Company occurs, all principal, premium, if any, accrued interest
and Liquidated Damages, if any, will be immediately due and payable on all
outstanding Notes without any declaration or other act on the part of the
Trustee or the Holders. The Holders of no less than a majority in aggregate
principal amount of Notes generally are authorized to rescind such acceleration
if all existing Events of Default, other than the non-payment of the principal
of, premium, if any, and interest on, and Liquidated Damages with respect to,
the Notes that have become due solely by such acceleration, have been cured or
waived.
Prior to the declaration of acceleration of the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
outstanding may waive on behalf of all the Holders any default, except a
default in the payment of principal of, interest on, or Liquidated Damages with
respect to, any Note not yet cured, or a default with respect to any covenant
or provision that cannot be modified or amended without the consent of the
Holder of each outstanding Note affected. Subject to the provisions of the
Indenture relating to the duties of the Trustee, the Trustee will be under no
obligation to exercise any of its rights or powers under the Indenture at the
request, order or direction of any of the Holders, unless such Holders have
offered to the Trustee reasonable security or indemnity. Subject to all
provisions of the Indenture and applicable law, the Holders of a majority in
aggregate principal amount of the Notes at the time outstanding will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee.
The Indenture provides that no Holder may pursue any remedy under the
Indenture, except for a default in the payment of principal, premium, if any,
or interest or Liquidated Damages, if any, on the Notes, unless the Holder
gives to the Trustee written notice of a continuing Event of Default, the
Holders of at least 25.0% in principal amount of the outstanding Notes make a
written request to the Trustee to pursue the remedy, such Holders offer to the
Trustee indemnity satisfactory to the Trustee against any loss, liability or
expense, the Trustee does not comply with the request within 60 days after the
receipt of the request and the offer of indemnity, and the Trustee shall not
have received a contrary direction from the Holders of a majority in principal
amount of the outstanding Notes.
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AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company and the Trustee
to enter into a supplemental indenture for certain limited purposes without the
consent of the Holders. With the consent of the Holders of not less than a
majority in aggregate principal amount of the Notes at the time outstanding,
the Company and the Trustee are permitted to amend or supplement the Indenture
or any supplemental indenture or modify or waive the rights of the Holders;
provided that no such modification may, without the consent of each Holder
affected thereby: (i) change the Stated Maturity of any Note or reduce the
principal amount thereof or the rate (or extend the time for payment) of
interest thereon or any premium payable upon the redemption thereof, or change
the place of payment where, or the coin or currency in which, any Note or any
premium or the interest thereon is payable, or impair the right to institute
suit for the conversion of any Note or the enforcement of any such payment on
or after the due date thereof (including, in the case of redemption, on or
after the Redemption Date), or reduce the Repurchase Price, or alter the
Repurchase Offer (other than as set forth herein) or redemption provisions in a
manner adverse to the Holders, or (ii) reduce the percentage in principal
amount of the outstanding Notes, the consent of whose Holders is required for
any such amendment, supplemental indenture or waiver provided for in the
Indenture or (iii) adversely affect the right of such Holder to convert Notes
or alter, in a manner that adversely affects the right of such Holder, the
provisions relating to anti-dilution protection in respect thereof. A
supplemental indenture entered into in compliance with the "Limitation on
Merger, Sale or Consolidation" covenant would not require the consent of the
Holders of the Notes.
NO PERSONAL LIABILITY OF SHAREHOLDERS, OFFICERS, DIRECTORS AND EMPLOYEES
The Indenture provides that no shareholder, employee, officer, director or
partner, as such, past, present or future, of the Company or any successor
corporation shall have any personal liability in respect of the obligations of
the Company under the Indenture or the Notes by reason of his, her or its
status as such shareholder, employee, officer, director or partner.
TRANSFER AND EXCHANGE
A Holder may transfer or exchange the Notes in accordance with the
Indenture. The Company or Trustee may require a Holder, among other things, to
furnish appropriate endorsements, legal opinions and transfer documents, and to
pay any taxes and fees required by law or permitted by the Indenture. The
Company is not required to transfer or exchange any Notes selected for
redemption. Also, the Company is not required to transfer or exchange any Notes
for a period of 15 days before the mailing of a Repurchase Offer or notice of
redemption.
The registered Holder of a Note may be treated as the owner of it for all
purposes.
BOOK ENTRY, DELIVERY AND FORM
Notes currently held by "qualified institutional buyers," as defined in
Rule 144A under the Securities Act ("QIBs"), are currently evidenced by one
U.S. Global Note, which was deposited on the date of the closing of the sale of
the Notes (the "Closing Date") with, or on behalf of, the Depository and
registered in the name of Cede and Co. ("Cede") as the Depository's nominee.
Any purchaser (a "Public Holder") of Notes pursuant to this Prospectus
will receive a beneficial interest in an unrestricted global note (the
"Registered Global Note") which will be deposited with, or on behalf of, the
Depository and registered in the name of Cede as the Depository's nominee.
Except as set forth below, the Registered
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Global Note may be transferred, in whole or in part, only to another nominee of
the Depository or to a successor of the Depository or its nominee.
A Public Holder may hold its interest in the Registered Global Note
directly through the Depository if such Public Holder is a participant in the
Depository, or indirectly through organizations which are participants in the
Depository (the "Participants"). Transfers between Participants will be
effected in the ordinary way in accordance with the Depository's rules and will
be settled in federal funds.
The Depository has advised the Company that it is a limited-purpose trust
company that was created to hold securities for its Participants and to
facilitate the clearance and settlement of transactions in such securities
between Participants through electronic book-entry changes in accounts of its
Participants. The Depository's Participants include securities brokers and
dealers (including the Donaldson, Lufkin & Jenrette), banks and trust
companies, clearing corporations and certain other organizations. Access to the
Depository's system is also available to other entities such as banks, brokers,
dealers and trust companies (collectively, "Indirect Participants") that clear
through or maintain a custodial relationship with a Participant, either
directly or indirectly. Public Holders who are not Participants may
beneficially own securities held by or on behalf of the Depository only through
Participants or Indirect Participants.
The Company expects that pursuant to procedures established by the
Depository, (i) upon deposit of the Registered Global Note, the Depository will
credit the accounts of Participants with an interest in the Registered Global
Note and (ii) ownership of the Notes evidenced by the Registered Global Note
will be shown on, and the transfer of ownership thereof will be effected only
through, records maintained by the Depository (with respect to the interests of
Participants), the Participants and the Indirect Participants. The laws of some
states require that certain persons take physical delivery in definitive form
of securities that they own and that security interests in negotiable
instruments can only be perfected by delivery of certificates representing the
instruments. Consequently, the ability to transfer Notes evidenced by the
Registered Global Note will be limited to such extent.
So long as the Depository or its nominee is the registered owner of a
Note, the Depository or such nominee, as the case may be, will be considered
the sole owner or holder of the Notes represented by the Registered Global Note
for all purposes under the Indenture. Except as provided below, owners of
beneficial interests in the Registered Global Note will not be entitled to have
Notes represented by such Registered Global Note registered in their names,
will not receive or be entitled to receive physical delivery of Certificated
Notes, and will not be considered the owners or holders thereof under the
Indenture for any purpose, including with respect to the giving of any
directions, instructions or approvals to the Trustee thereunder. As a result,
the ability of a Person having a beneficial interest in Notes represented by
the Registered Global Note to pledge such interest to Persons that do not
participate in the Depository's system, or to otherwise take actions with
respect to such interest, may be affected by the lack of a physical certificate
evidencing such interest.
Neither the Company nor the Trustee will have any responsibility or
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests in the Registered Global Note by the
Depository, or for maintaining, supervising or reviewing any records of the
Depository relating to such beneficial ownership interests.
Payments with respect to the principal of, premium, if any, interest on,
and liquidated damages with respect to, the Registered Global Note registered
in the name of the Depository or its nominee on the applicable record date will
be payable by the Trustee to or at the direction of the Depository or its
nominee in its capacity as the registered Holder of the Registered Global Note
under the Indenture. Under the terms of the Indenture, the Company and the
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Trustee may treat the Person in whose name the Registered Global Note is
registered as the owner thereof for the purpose of receiving such payments and
for any and all other purposes whatsoever. Consequently, neither the Company,
nor the Trustee has or will have any responsibility or liability for the payment
of such amounts to beneficial owners of the Registered Global Note (including,
principal, premium, if any, interest, or liquidated damages with respect
thereto), or to immediately credit the accounts of the relevant Participants
with such payment, in amounts proportionate to their respective holdings in
principal amount of beneficial interests in the Registered Global Note as shown
on the records of the Depository. Payments by the Participants and the Indirect
Participants to the beneficial owners of the Registered Global Note will be
governed by standing instructions and customary practice and will be the
responsibility of the Participants or the Indirect Participants.
Holders who desire to convert their Notes into Common Stock pursuant to
the terms of the Notes should contact their brokers or other Participants or
Indirect Participants to obtain information on procedures, including proper
forms and cut-off times, for submitting such requests.
If (i) the Company notifies the Trustee in writing that the Depository is
no longer willing or able to act as a Depository and a successor is not
appointed by the Company within 90 days or (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of Notes
in definitive form under the Indenture, then, upon surrender by the Depository
of the Registered Global Note, Certificated Notes will be issued to each person
that the Depository identifies as the beneficial owner of the Notes represented
by the Registered Global Note. In addition, subject to certain conditions, any
Person having a beneficial interest in the Registered Global Note may, upon
request to the Trustee, exchange such beneficial interest for Notes in the form
of Certificated Notes. Upon any such issuance, the Trustee is required to
register such Certificated Notes in the name of such Person or Persons (or the
nominee of any thereof), and cause the same to be delivered thereto.
Neither the Company nor the Trustee shall be liable for any delay by the
Depository or any Participant or Indirect Participant in identifying the
beneficial owners of the Registered Global Note, and the Company and the
Trustee may conclusively rely on, and shall be protected in relying on,
instructions from the Depository for all purposes (including with respect to
the registration and delivery, and the respective principal amounts, of the
Notes to be issued).
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Company and Donaldson, Lufkin & Jenrette entered into the Registration
Rights Agreement on May 8, 1998 (the "Registration Rights Agreement"). Pursuant
to the Registration Rights Agreement, the Company filed with the Commission the
Shelf Registration Statement on Form S-3 of which this Prospectus is a part to
cover resales of Transfer Restricted Securities by the holders thereof who
satisfy certain conditions relating to the provision of information in
connection with the Shelf Registration Statement. The Company will use its
reasonable best efforts to keep the Shelf Registration Statement effective
until the earlier of such date that is two years after the latest date of
initial issuance of the Notes or the date all Transfer Restricted Securities
covered by the Shelf Registration Statement have been sold or there cease to be
outstanding any Transfer Restricted Securities. For purposes of the foregoing,
"Transfer Restricted Securities" means each Note and share of Common Stock
issued upon conversion thereof until the earlier of the date on which such Note
or share of Common Stock has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or the
date on which such Note or share of Common Stock is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act (or any similar provisions then in force).
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The Company will provide to each Holder of Transfer Restricted Securities
included in the Shelf Registration Statement copies of the prospectus contained
in the Shelf Registration Statement, notify each such Holder when the Shelf
Registration Statement has become effective and take certain other actions as
are required to permit resales of the Transfer Restricted Securities. A Holder
who sells Transfer Restricted Securities pursuant to the Shelf Registration
Statement generally will be required to be named as a selling securityholder in
the related prospectus and to deliver a prospectus to purchasers and will be
bound by the provisions of the Registration Rights Agreement which are
applicable to such Holder (including certain indemnification provisions).
Holders of the Transfer Restricted Securities will be required to make certain
representations to the Company (as described in the Registration Rights
Agreement) and will be required to deliver promptly information to be used in
connection with the Shelf Registration Statement in order to have their
Transfer Restricted Securities included in the Shelf Registration Statement. If
a Holder fails to provide such information within the prescribed time periods,
the Transfer Restricted Securities of such Holder will not be included in the
Shelf Registration Statement and the Holder will not be entitled to any
Liquidated Damages. A Holder's ability to sell such Transfer Restricted
Securities may be limited or the price at which such Transfer Restricted
Securities can be sold may be adversely affected if the Transfer Restricted
Securities are not included in the Shelf Registration Statement.
GOVERNING LAW
The Indenture and the Notes and the Registration Rights Agreement provide
that they are to be governed in accordance with the laws of the State of New
York, without regard to choice of laws provisions.
THE TRUSTEE
The Bank of New York is the Trustee under the Indenture. A successor
Trustee may be appointed in accordance with the terms of the Indenture.
The Indenture contains certain limitations on the rights of the Trustee,
in the event it becomes a creditor of the Company, to obtain payment of claims
in certain cases, or to realize on certain property received in respect of any
such claim as security or otherwise. The Trustee will be permitted to engage in
other transactions with the Company and its Subsidiaries; provided, however,
that if it acquires any conflicting interest (as defined), it must eliminate
such conflict or resign.
In case an Event of Default shall occur (and shall not be cured or
waived), the Trustee will be required to use the degree of care of a prudent
person in the conduct of its own affairs in the exercise of its powers. Subject
to such provisions, the Trustee will be under no obligation to exercise any of
its rights or powers under the Indenture at the request of any of the Holders
of Notes, unless they shall have offered to the Trustee reasonable security or
indemnity.
ABSENCE OF PUBLIC MARKET; TRANSFER RESTRICTIONS
The Notes have not been registered under the Securities Act and will be
subject to significant restrictions on resale. There is no existing market for
the Notes and there can be no assurance as to the liquidity of any markets that
may develop for the Notes, the ability of the Holders to sell their Notes or at
what price Holders of the Notes will be able to sell their Notes. Future
trading prices of the Notes will depend upon many factors including, among
other things, prevailing interest rates, the Company's operating results, the
price of the Common Stock and the market for similar securities. Donaldson,
Lufkin & Jenrette has informed the Company that it is making a market in the
Notes offered hereby; however, Donaldson, Lufkin & Jenrette is not obligated to
do so and any such market making
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activity may be terminated at any time without notice to the Holders of the
Notes. The Notes are expected to be eligible for trading on the PORTAL Market.
The Company has applied for listing of the Notes on the Nasdaq National Market
System.
CERTAIN DEFINITIONS
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
that is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is
a party that is required to be classified and accounted for as a capital lease
obligation under GAAP.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
indebtedness), warrants, options, participation or other equivalents of or
interests (however designated) in stock issued by that Person.
"Change of Control" means (i) an event or series of events as a result of
which any "person" or "group" (as such terms are used in Sections 13(d)(3) and
14(d) of the Exchange Act) (excluding the Company or any wholly owned
Subsidiary thereof or any employee benefit plan of the Company or any such
subsidiary) is or becomes, directly or indirectly, the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, whether or not
applicable) of more than 50.0% of the combined voting power of the then
outstanding securities entitled to vote generally in elections of directors,
managers or trustees, as applicable, of the Company or any successor entity
("Voting Stock"), (ii) the completion of any consolidation or merger of the
Company with or into any other Person, or sale, conveyance, transfer or lease
by the Company of all or substantially all of its assets to any Person, or any
merger of any other Person into the Company in a single transaction or series
of related transactions, and, in the case of any such transaction or series of
related transactions, the outstanding Common Stock is changed or exchanged as a
result, unless the shareholders of the Company immediately before such
transaction own, directly or indirectly, immediately following such
transaction, at least a majority of the combined voting power of the
outstanding voting securities of the Person resulting from such transaction in
substantially the same proportion as their ownership of the Voting Stock
immediately before such transaction, or (iii) such time as the Continuing
Directors do not constitute a majority of the Board of Directors (or, if
applicable, a successor corporation to the Company).
"Continuing Director" means at any date a member of the Company's Board of
Directors (i) who was a member of such board on the date of initial issuance of
the Notes or (ii) who was nominated or elected by at least a majority of the
directors who were such Continuing Directors at the time of such nomination or
election or whose election to the Company's Board of Directors was recommended
or endorsed by at least a majority of the directors who were such Continuing
Directors at the time of such nomination or election.
"Credit Facility" means that certain Credit and Guarantee Agreement, to be
entered into pursuant to a commitment letter dated as of April 21, 1998, among
the Company, the subsidiary guarantors party thereto, the various lenders party
thereto, Bank of America National Trust and Savings Association, as Collateral
Agent, and The Bank of New York, as administrative agent, as such agreement may
be amended, restated, modified, renewed, refunded, replaced or refinanced from
time to time thereafter, including any notes, guaranties, security or pledge
agreements, letters of credit and other documents or instruments executed
pursuant thereto and any exhibits or schedules to any of the foregoing, as the
same may be in effect from time to time, in each case, as such agreements may
be amended, modified, supplemented, renewed, refunded, replaced, refinanced,
extended or restated from time
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to time (whether with the original agents and lenders or other agents and
lenders or otherwise, and whether provided under the original credit agreement
or other credit agreements or otherwise), including any appendices, exhibits or
schedules to any of the foregoing.
"Designated Senior Debt" means (i) any Indebtedness outstanding under the
Credit Facility and (ii) any other Senior Indebtedness, the principal amount of
which is $10 million or more and that has been designated by the Company as
"Designated Senior Debt."
"Indebtedness" of any Person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such Person, (i)
in respect of borrowed money (whether or not the lender has recourse to all or
any portion of the assets of such person), (ii) evidenced by credit or loan
agreements, bonds, notes, debentures or similar instruments (including, without
limitation, notes or similar instruments given in connection with the
acquisition of any business, properties or assets of any kind), (iii) evidenced
by bankers' acceptances or similar instruments issued or accepted by banks,
(iv) for the payment of money relating to a Capitalized Lease Obligation or (v)
evidenced by a letter of credit, bank guarantee or a reimbursement obligation
of such Person with respect to any letter of credit; (b) all obligations of
such Person issued or assumed as the deferred purchase price of property or
services (but excluding trade accounts payable or accrued liabilities arising
in the ordinary course of business); (c) all net obligations of such Person
under Interest Swap and Hedging Obligations; (d) all liabilities of others of
the kind described in the preceding clauses, (a),(b) or (c) that such Person
has guaranteed or that is otherwise its legal liability, or which is secured by
a lien on property of such Person, and all obligations to purchase, redeem or
acquire any Capital Stock; and (e) any and all deferrals, renewals, extensions,
modifications, replacements, restatements, refinancings and refundings (whether
direct or indirect) of, or any indebtedness or obligation issued in exchange
for, any liability of the kind described in any of the preceding clauses (a),
(b), (c) or (d), or this clause (e), whether or not between or among the same
parties.
"Interest Swap and Hedging Obligations" means the obligations of any
Person under any interest rate or currency protection agreement, future
agreement, option agreement, swap agreement, cap agreement or other interest
rate or currency hedge agreement, collar agreement or other similar agreement
or arrangement to which such Person is a party or beneficiary.
"Junior Securities" means Capital Stock in the Company and any
Indebtedness of the Company, in each case that is subordinated to all Senior
Indebtedness (and any debt securities issued in exchange for Senior
Indebtedness) to substantially the same extent as, or to a greater extent than,
the Notes are subordinated to Senior Indebtedness pursuant to the Indenture.
"Senior Indebtedness" means all obligations of the Company to pay the
principal of, premium, if any, interest (including all interest accruing
subsequent to the commencement of any bankruptcy or similar proceeding, whether
or not a claim for post-petition interest is allowed as a claim in any such
proceeding) and rent payable on or in connection with, and all letters of
credit, reimbursement obligations and fees, costs, expenses and other amounts
and liabilities accrued or due on or in connection with, the New Credit
Facility and any other Indebtedness of the Company, whether outstanding on the
date of the Indenture or thereafter created, incurred, assumed, guaranteed or
in effect guaranteed by the Company, unless the instrument creating or
evidencing such Indebtedness expressly provides that such Indebtedness is not
senior or superior in right of payment to the Notes or is pari passu with, or
subordinated to, the Notes; provided that in no event shall Senior Indebtedness
include (a) Indebtedness of the Company owed or owing to any Subsidiary of the
Company, (b) Indebtedness of the Company representing any account payable or
other accrued current liability or obligation incurred in the ordinary course
of business in
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connection with the obtaining of materials or services, (c) any liability for
taxes owed or owing by the Company or any Subsidiary of the Company or (d) the
Notes.
"Significant Subsidiary" means any Subsidiary which is a "significant
subsidiary" of the Company within the meaning of Rule 1-02(w) of Regulation S-X
promulgated by the Commission as in effect as of the Issue Date.
"Stated Maturity" when used with respect to any Note, means May 15, 2003.
"Subsidiary" with respect to any Person, means (i) a corporation a
majority of whose Capital Stock with voting power normally entitled to vote in
the election of directors is at the time, directly or indirectly, owned by such
Person, by such Person and one or more Subsidiaries of such Person or by one or
more Subsidiaries of such Person, (ii) a partnership in which such Person or a
Subsidiary of such Person is, at the time, a general partner and owns alone or
together with one or more Subsidiaries of such Person a majority of the
partnership interests, or (iii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries of such Person or such Person and
one or more Subsidiaries of such Person, directly or indirectly, at the date of
determination thereof, has at least a majority ownership interest.
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company is 55,000,000 shares
consisting of 50,000,000 shares of Common Stock, par value $0.01 per share, and
5,000,000 shares of Preferred Stock, par value $1.00 per share (the "Preferred
Stock"), in such series and with such voting powers, designations, preferences
and relative, participating, optional or other special rights, and
qualifications, limitations or restrictions thereof, as may be fixed from time
to time by the Board of Directors for each series. The following summary
description of certain provisions of the Company's Restated Certificate of
Incorporation (the "Certificate of Incorporation") and the By-laws does not
purport to be complete and is qualified in its entirety by reference to said
provisions.
COMMON STOCK
Holders of Common Stock are entitled to one vote for each share held on
all matters submitted to a vote of stockholders and do not have cumulative
voting rights. Holders of a majority of the shares of Common Stock entitled to
vote in any election of Directors may elect all of the Directors standing for
election. Holders of Common Stock are entitled to receive ratably such
dividends, if any, as may be declared by the Board of Directors out of funds
legally available therefor, subject to any preferential dividend rights of
outstanding Preferred Stock. Upon the liquidation, dissolution or winding up of
the Company, the holders of Common Stock are entitled to receive ratably the
net assets of the Company available after the payment of all debts and other
liabilities and subject to the prior rights of any outstanding Preferred Stock.
Holders of Common Stock have no preemptive, subscription, redemption or
conversion rights.
The outstanding shares of Common Stock are, and the Common Stock issuable
upon conversion of the Notes will be, when issued and paid for, fully paid and
non-assessable.
The rights, preferences and privileges of holders of Common Stock are
subject to, and may be adversely affected by, the rights of the holders of
shares of any series of preferred stock which the Company may designate and
issue in the future.
PREFERRED STOCK
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<PAGE> 28
The Company has authorized 5,000,000 shares of preferred stock which may
be issued with such preferences and voting rights as the Board of Directors,
without further approval by the stockholders, may determine by duly adopted
resolution. See "Certain Charter and By-Law Provisions." No shares of ANTEC
Preferred Stock are currently issued and outstanding.
CERTAIN CHARTER AND BY-LAW PROVISIONS
Pursuant to the provisions of the Delaware General Corporation Law (the
"DGCL"), ANTEC has adopted provisions in its Certificate of Incorporation and
Bylaws which require ANTEC to indemnify its officers and directors to the
fullest extent permitted by law, and eliminate the personal liability of its
directors to ANTEC or its stockholders for monetary damages for breach of their
duty of due care except (i) for any breach of the duty of loyalty; (ii) for
acts or omissions not in good faith or which involve intentional misconduct or
knowing violations of law; (iii) for liability under Section 174 of the DGCL
(relating to certain unlawful dividends, stock repurchases or stock
redemptions); or (iv) for any transaction from which the director derived any
improper personal benefit. These provisions do not eliminate a director's duty
of care. Moreover, the provisions do not apply to claims against a Director for
violation of certain laws, including Federal securities laws. The Company
believes that these provisions will assist the Company in attracting or
retaining qualified individuals to serve as Directors and officers.
The Company's Restated Certificate of Incorporation includes a provision
which allows the Board of Directors, without stockholder approval, to issue up
to 5,000,000 shares of preferred stock with voting, liquidation and conversion
rights that could be superior to and adversely affect the voting power of
holders of Common Stock. The issuance of preferred stock could have the effect
of delaying, deferring or preventing a change in control of the Company. The
Company has no present plans to issue any shares of preferred stock.
DELAWARE ANTI-TAKEOVER LAW
The Company is a Delaware corporation that is subject to Section 203 of
the DGCL ("Section 203"). Under Section 203 certain "business combinations"
between a Delaware corporation, whose stock generally is publicly traded or
held of record by more than 2,000 stockholders, and an "interested stockholder"
are prohibited for a three-year period following the date that such stockholder
became an interested stockholder, unless (i) the corporation has elected in its
certificate of incorporation not to be governed by Section 203 (the Company has
not made such election), (ii) the business combination was approved by the
board of directors of the corporation before the other party to the business
combination became an interested stockholder, (iii) upon consummation of the
transaction that made it an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation outstanding at the
commencement of the transaction (excluding voting stock owned by directors who
are also officers or held in employee benefit plans in which the employees do
not have a confidential right to tender or vote stock held by the plan) or (iv)
the business combination is approved by the board of directors of the
corporation and ratified by two-thirds of the voting stock which the interested
stockholder did not own. The three-year prohibition also does not apply to
certain business combinations proposed by an interested stockholder following
the announcement or notification of certain extraordinary transactions
involving the corporation and a person who had not been an interested
stockholder during the previous three years or who became an interested
stockholder with the approval of a majority of the corporation's directors. The
term "business combination" is defined generally to include mergers or
consolidations between a Delaware corporation and an interested stockholder,
transactions with an interested stockholder involving the assets or stock of
the corporation or its majority-owned subsidiaries, and transactions which
increase an interested stockholder's percentage ownership of stock. The term
"interested stockholder" is defined generally as those stockholders who become
beneficial owners of 15% or more of a Delaware corporation's voting stock,
together with the affiliates or associates of that stockholder.
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<PAGE> 29
CERTAIN UNITED STATES INCOME TAX CONSIDERATIONS
The following is a summary of certain material United States federal
income tax considerations relating to the purchase, ownership and disposition
of the Notes and of the Common Stock into which Notes may be converted, but is
not intended and does not purport to be a complete analysis of all the
potential federal income or estate tax, or other tax considerations relating
thereto. This summary is based on the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), applicable Treasury Regulations promulgated
or proposed thereunder ("Treasury Regulations"), court decisions and current
administrative rulings and practice, all of which are subject to change,
possibly on a retroactive basis. For purposes of this section, the term
"Holders" assumes that each Holder is (i) an individual who is a citizen or
resident of the United States, (ii) a corporation, partnership or other entity
created or organized under the laws of the United States or any state or
political subdivision thereof, (iii) an estate, the income of which is subject
to United States federal income taxation -- regardless of source, or (iv) a
trust which is subject to the supervision of a court within the United States
and the control of a United States person. This summary deals only with holders
that will hold Notes and the Common Stock into which Notes may be converted as
capital assets, and does not address tax considerations applicable to investors
that may be subject to special tax rules such as banks, tax-exempt
organizations, insurance companies, dealers in securities or enterprises,
persons that will hold Notes as a position in a hedging, straddle or conversion
transaction, or persons that have a functional currency other than the U.S.
dollar. This summary discusses the tax considerations applicable to persons who
purchase Notes upon their initial offering and does not discuss the tax
considerations applicable to subsequent purchasers of Notes. The Company has
not sought any ruling from the Internal Revenue Service (the "IRS") with
respect to the statements made and the conclusions reached in this summary, and
there can be no assurance that the IRS will agree with such statements and
conclusions. INVESTORS CONSIDERING THE PURCHASE OF NOTES SHOULD CONSULT THEIR
OWN TAX ADVISORS WITH RESPECT TO THE APPLICATION OF THE UNITED STATES FEDERAL
INCOME AND ESTATE TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION OR UNDER ANY APPLICABLE TAX TREATY.
SALE, EXCHANGE, REDEMPTION OR RETIREMENT OF THE NOTES
Upon the sale, exchange, redemption or retirement at maturity or other
disposition of a Note, Holder generally will recognize capital gain or loss
equal to the difference between (i) the amount of cash proceeds and the fair
market value of any property received on the sale, exchange, redemption or
retirement or other disposition (except to the extent such amount is
attributable to accrued interest income, which is taxable as ordinary income)
and (ii) such Holder's adjusted tax basis in the Note. A Holder's adjusted tax
basis in a Note generally will equal the cost of the Note to such Holder, less
any principal payments received by such Holder. Such capital gain or loss will
be long-term capital gain or loss if the individual Holder's holding period for
the Note is more than one year at the time of sale, exchange, redemption or
retirement. Under current law 20% is the maximum rate of tax on long term
capital gains on most capital assets held by an individual for more than 18
months and 28% is the maximum rate of tax on most capital assets held by an
individual more than one year and up to 18 months.
CONVERSION OF THE NOTES
A Holder generally will not recognize any income, gain or loss upon
conversion of a Note into Common Stock, except with respect to cash received in
lieu of a fractional share of Common Stock or attributable to accrued interest
on the converted Note. Such Holder's tax basis in the Common Stock received on
conversion of a Note will be the same as such Holder's adjusted tax basis in
the converted portion of the Note at the time of conversion
27
<PAGE> 30
(reduced by any basis allocable to a fractional share interest), and the holding
period for the Common Stock received on conversion will generally include the
holding period of the portion of the Note converted.
Cash received in lieu of a fractional share of Common Stock upon
conversion will be treated as a payment in exchange for the fractional share of
Common Stock and thus generally will result in capital gain or loss (measured
by the difference between the cash received for the fractional share and the
Holder's adjusted tax basis in the fractional share).
SALE OF COMMON STOCK
Upon the sale or exchange of Common Stock, a Holder generally will
recognize capital gain or loss equal to the difference between (i) the amount
of cash and the fair market value of any property received upon the sale or
exchange and (ii) such Holder's adjusted tax basis in the Common Stock. Such
capital gain or loss will be long-term if the individual Holder's holding
period for the Common Stock is more than twelve months at the time of the sale
or exchange. In 1997, legislation was enacted which, among other things,
reduces to 20% the maximum rate of tax on long term capital gains on most
capital assets held by an individual for more than 18 months and under which
gain on most capital assets held by an individual more than one year and up to
18 months is subject to tax at a maximum rate of 28%. Capital gain recognized
by a corporate Holder will continue to be subject to tax at ordinary income tax
rates applicable to corporations.
LIQUIDATED DAMAGES
Any Liquidated Damages resulting from the contingencies described in the
"Description of Notes -- Registration Rights; Liquidated Damages" will be
includable as ordinary income by each holder.
SELLING SECURITYHOLDERS
The Notes were originally acquired from the Company by Donaldson, Lufkin &
Jenrette on May 8, 1998. Donaldson, Lufkin & Jenrette has advised the Company
that it resold the Notes in transactions exempt from the registration
requirements of the Securities Act to "qualified institutional buyers" (as
defined in Rule 144A of the Securities Act). These subsequent purchasers, or
their transferees, pledgees, donees or successors, may from time to time offer
and sell any or all of the Notes and/or Shares pursuant to this Prospectus
provided that they are named herein as Selling Securityholders.
The Notes and the Shares are being registered pursuant to the Registration
Rights Agreement, which provides that the Company file the Shelf Registration
Statement with regard to the Notes and the Shares within 60 days of the date of
original issuance of the Notes and use its reasonable best efforts to cause
such Shelf Registration Statement to become effective within 120 days of the
original issuance of the Notes and to keep such Shelf Registration Statement
continuously effective until the earlier of such date that is two years after
the latest date of initial issuance of the Notes, or the date when all Transfer
Restricted Securities covered by such Shelf Registration Statement have been
sold pursuant thereto or there cease to be outstanding any Transfer Restricted
Securities. Although none of the Selling Securityholders has advised the
Company that it currently intends to sell all or any of the Notes or Shares
pursuant to this Prospectus, the Selling Securityholders may choose to sell the
Notes and/or Shares from time to time upon notice to the Company. See "Plan of
Distribution."
The following table sets forth information, as of July 31, 1998, unless
otherwise indicated, with respect to the Selling Securityholders and the
respective principal amounts of Notes beneficially owned by each Selling
28
<PAGE> 31
Securityholders that may be offered pursuant to this Prospectus. Such
information has been obtained from the Selling Securityholders. None of the
Selling Securityholders has, or within the past three years has had, any
position, office or other material relationship with the Company or any of its
predecessors or affiliates, except as noted below. Because the Selling
Securityholders may offer all or some portion of the Notes or the Common Stock
issuable upon conversion thereof pursuant to this Prospectus, no estimate can be
given as to the amount of the Notes or the Common Stock issuable upon conversion
thereof that will be held by the Selling Securityholders upon termination of any
such sales. In addition, the Selling Securityholders identified below may have
sold, transferred or otherwise disposed of all or a portion of their Convertible
Notes since July 31, 1998 in transactions exempt from the registration
requirements of the Securities Act.
<TABLE>
<CAPTION>
Name of Selling Principal Principal Amount of Shares Amount
Securityholder Amount of Notes Amount of Notes Owned (1)(2) Shares Offered
Owned Offered Hereby Hereby(2)(3)
<S> <C> <C> <C> <C>
AIG/National Union $500,000 $500,000 20,833 20,833
Fire Insurance
Alexandra Global $2,000,000 $2,000,000 83,333 83,333
Investment Fund 1 LTD.
Allstate Insurance Co. $2,000,000 $2,000,000 83,333 83,333
Aloha Airlines $100,000 $100,000 4,167 4,167
Non-Pilots Pension
Trust
Aloha Airlines Pilots $60,000 $60,000 2,500 2,500
Retirement Trust
American Travelers $950,000 $950,000 39,583 39,583
Insurance Co. -
Convertible
Argent Classic $1,000,000 $1,000,000 41,667 41,667
Convertible Arbitrage
Fund (Bermuda) L.P.
Arkansas Pers $1,400,000 $1,400,000 58,333 58,333
BNP Arbitrage SNC $5,070,000 $5,070,000 216,750 211,250
</TABLE>
29
<PAGE> 32
<TABLE>
<S> <C> <C> <C> <C>
Canadian Imperial $1,750,000 $1,750,000 72,917 72,917
Holdings, Inc.
Capitol American Life $950,000 $950,000 39,583 39,583
Insurance Co. -
Convertible
CFW-C, L.P. $5,000,000 $5,000,000 208,333 208,333
Christian Science $250,000 $250,000 10,417 10,417
Trustees for Gifts
and Endowments
CIBC Oppenheimer Corp. $500,000 $500,000 20,833 20,833
Combined Insurance $460,000 $460,000 19,167 19,167
Company of America
Continental Casualty $4,000,000 $4,000,000 341,667 166,667
Company
Delaware Pers $1,000,000 $1,000,000 41,667 41,667
Donaldson, Lufkin & $670,000 $670,000 27,917 27,917
Jenrette Securities
Corp.
Evergreen Fund For $500,000 $500,000 20,833 20,833
Total Return
Fidelity Management $240,000 $240,000 10,000 10,000
Trust Company on
behalf of accounts
managed by it
Fidelity Commonwealth $6,925,000 $6,925,000 288,542 288,542
Trust: Fidelity Small
Cap Stock Fund
Fidelity Advisor $285,000 $285,000 11,875 11,875
Series I Fidelity
Advisor Growth &
Income Fund
</TABLE>
30
<PAGE> 33
<TABLE>
<S> <C> <C> <C> <C>
Fidelity Hasting $5,065,000 $5,065,000 211,042 211,042
Street Trust: Fidelity
First Church of $300,000 $300,000 12,500 12,500
Christ, Scientist
Endowment
Forum Capital Markets $40,000 $40,000 1,667 1,667
L.L.C.
General Motors $8,000,000 $8,000,000 333,333 333,333
Employees Domestic
Group Trust
Great American $950,000 $950,000 39,583 39,583
Reserve Insurance Co.
- Convertible
Hawaiian Airlines $140,000 $140,000 5,833 5,833
Pilots Retirement Plan
Hawaiian Airlines $25,000 $25,000 1,042 1,042
Pension Plan for
Salaried Employees
Hawaiian Airlines $90,000 $90,000 3,750 3,750
Employees Pension
Plan - IAM
Hillside Capital $350,000 $350,000 14,583 14,583
Incorporated
Corporate Account
ICI American Holdings $425,000 $425,000 17,708 17,708
Trust
J.P. Morgan & Co. $5,000,000 $5,000,000 208,333 208,333
Incorporated
Kapiolani Medical $200,000 $200,000 8,333 8,333
Center
Lincoln National $2,035,000 $2,035,000 84,792 84,792
Convertible
Securities Fund
</TABLE>
31
<PAGE> 34
<TABLE>
<S> <C> <C> <C> <C>
Main Stay Convertible $5,000,000 $5,000,000 208,333 208,333
Fund
Mass Mutual Corporate $900,000 $900,000 37,500 37,500
Value Partners Limited
Mass Mutual $150,000 $150,000 6,250 6,250
Participation
Investors
Mass Mutual Corporate $300,000 $300,000 12,500 12,500
Investors
Mass Mutual High $1,800,000 $1,800,000 75,000 75,000
Yield Partners II
L.L.C
Massachusetts Mutual $1,350,000 $1,350,000 56,250 56,250
Life Insurance Company
Merrill Lynch $225,000 $225,000 9,375 9,375
Insurance Group
Nalco Chemical Co. $225,000 $225,000 9,375 9,375
National Steele $700,000 $700,000 29,167 29,167
Corporation
Nations Banc $5,000,000 $5,000,000 208,333 208,333
Montgomery Securities
Occidental Petroleum $35,000 $35,000 1,458 1,458
Corporation
Paloma Securities $2,500,000 $2,500,000 104,167 104,167
L.L.C.
Partner Reinsurance $255,000 $255,000 10,625 10,625
Company Ltd.
</TABLE>
32
<PAGE> 35
<TABLE>
<S> <C> <C> <C> <C>
Phoenix Home Life $535,000 $535,000 22,292 22,292
Convertible Fund
Prim Board $1,900,000 $1,900,000 79,167 79,167
Provident Life & $1,000,000 $1,000,000 41,667 41,667
Accident Insurance
Company
Provident Life and $1,000,000 $1,000,000 41,667 41,667
Accident Insurance
Company
Queens Health Care $50,000 $50,000 2,083 2,083
Plan
Raythern Company $820,000 $820,000 34,167 34,167
Master Pension Trust
SG Cowen Securities $4,700,000 $4,700,000 195,833 195,833
Corp.
Shell Pension Trust $150,000 $150,000 6,250 6,250
Silverton $2,500,000 $2,500,000 104,167 104,167
International Fund
Limited
Southern Farm Bureau $475,000 $475,000 19,792 19,792
Life Insurance - FRIC
Starvest Combined $700,000 $700,000 29,167 29,167
Portfolio
State of Connecticut $1,965,000 $1,965,000 81,875 81,875
Combined Investment
Funds
State of Oregon Equity $4,000,000 $4,000,000 166,667 166,667
State of Oregon/SAIF $4,000,000 $4,000,000 166,667 166,667
Corporation
</TABLE>
33
<PAGE> 36
<TABLE>
<S> <C> <C> <C> <C>
State of Oregon Equity $3,000,000 $3,000,000 125,000 125,000
Summer Hill Global $100,000 $100,000 4,167 4,167
Partners L.P.
The Gabelli Global $1,000,000 $1,000,000 41,667 41,667
Convertible
Securities Fund
The Gabelli Global $100,000 $100,000 4,167 4,167
Convertible
Securities Fund
The Northwestern $1,250,000 $1,250,000 52,083 52,083
Mutual Life Insurance
Company
Theremo Electron $1,000,000 $1,000,000 41,667 41,667
Balanced Investment
Fund
TQA Vantage Fund, Ltd. $1,250,000 $1,250,000 52,083 52,083
University of South $215,000 $215,000 8,958 8,958
Florida
Van Kampen American $1,030,000 $1,030,000 42,917 42,917
Capital Convertible
Securities Fund
Van Kampen Harbor Fund $6,100,000 $6,100,000 142,083 254,167
Walker Art Center $265,000 $265,000 11,042 11,042
Zeneca Holdings Trust $425,000 $425,000 17,708 17,708
</TABLE>
- -------------------------
(1) Includes the Shares into which the Notes held by such Selling Securityholder
are convertible at the Conversion Price.
(2) The Conversion Price and the number of Shares issuable upon conversion of
the Notes are subject to adjustment under certain circumstances. See
"Description of Notes -- Conversion Rights." Accordingly, the number of Shares
August 21, 1998
34
<PAGE> 37
issuable upon conversion of the Notes may increase or decrease from time to
time. Fractional shares will not be issued upon conversion of the Notes;
rather, cash will be paid in lieu of fractional shares, if any.
(3) Assumes that the full amount of Notes held by the Selling Securityholder
are converted into Shares at the Conversion Price and offered by such Shares by
such Selling Securityholder pursuant to the Prospectus.
Because the Selling Securityholders may, pursuant to the Prospectus, offer
all or some portion of the Notes and Shares they presently hold or, with
respect to Shares, have the right to acquire upon conversion of such Notes, no
estimate can be given as to the amount or percentage of the Notes and Shares
that will be held by the Selling Securityholders upon termination of any such
sales. In addition, the Selling Securityholders identified above may have sold,
transferred or otherwise disposed of all or a portion of their Notes and Shares
since the date on which they provided the information regarding their Notes and
Shares, in transactions exempt from the registration requirements of the
Securities Act. See "Plan of Distribution." The Selling Securityholders may
sell all, part or none of the Notes or Shares listed above.
The Company may from time to time include additional Selling
Securityholders and information about such Selling Securityholders' plans of
distribution in future supplements to the Prospectus.
35
<PAGE> 38
PLAN OF DISTRIBUTION
The Notes and the Shares are being registered to permit public secondary
trading of such securities by the holders thereof from time to time after the
date of this Prospectus. The Company has agreed, among other things, to bear
all expenses (other than underwriting discounts and selling commissions) in
connection with the registration and sale of the Notes and the Shares covered
by this Prospectus.
The Company will not receive any of the proceeds from the offering of Notes
or the Shares by the Selling Securityholders. The Company has been advised by
the Selling Securityholders that the Selling Securityholders may sell all or a
portion of the Notes and Shares beneficially owned by them and offered hereby
from time to time on any exchange on which the securities are listed on terms to
be determined at the times of such sales. The Selling Securityholders may also
make private sales directly or through a broker or brokers. Alternatively, any
of the Selling Securityholders may from time to time offer the Notes or the
Shares beneficially owned by them through underwriters, dealers or agents, who
may receive compensation in the form of underwriting discounts, commissions or
concessions from the Selling Securityholders and the purchasers of the Notes or
Shares for whom they may act as agent. The aggregate proceeds to the Selling
Securityholders from the sale of the Notes or Shares offered by them hereby will
be the purchase price of such Notes or Shares less discounts and commissions, if
any. The Notes and the Shares may be sold from time to time in one or more
transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the holders of such securities or by agreement between such
holders and underwriters or dealers who may receive fees or commissions in
connection therewith.
The outstanding Common Stock is listed for trading on the Nasdaq National
Market, and the Shares have been approved for listing on the Nasdaq National
Market. Although the Company has been advised by Donaldson, Lufkin & Jenrette
that it is currently making a market in the Notes, it is not obligated to do so
and may discontinue such market making at any time without notice. Accordingly,
there can be no assurance that any market for the Notes will be maintained. The
Company has, however, applied for listing of the Notes on the Nasdaq National
Market. See "Investment Considerations -- Lack of Public Market."
The Selling Securityholders and any broker and any broker-dealers, agents
or underwriters that participate with the Selling Securityholders in the
distribution of the Notes or the Shares may be deemed to be "underwriters"
within the meaning of the Securities Act, in which event any commissions
received by such broker-dealers, agents or underwriters and any profit on the
resale of the Notes or the Shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
In addition, any securities covered by this Prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this Prospectus. There is no
assurance that any Selling Securityholder will sell any or all of the Notes or
Shares described herein, and any Selling Securityholder may transfer, devise or
gift such securities by other means not described herein.
The Notes were initially issued and sold in transactions exempt from the
registration requirements of the Securities Act to persons reasonably believed
by Donaldson, Lufkin & Jenrette to be "qualified institutional buyers" (as
defined in Rule 144A under the Securities Act) or institutional "accredited
investors" (as defined in Rule 510(a)(1), (2), (3) or (7) under the Securities
Act). Pursuant to the Registration Rights Agreement, the Company
36
<PAGE> 39
has agreed to indemnify Donaldson, Lufkin & Jenrette and each Selling
Securityholder, and each Selling Securityholder has agreed to indemnify the
Company, Donaldson, Lufkin & Jenrette and each other Selling Stockholder against
certain liabilities arising under the Securities Act.
The Company has agreed to use its reasonable best efforts to cause the
Shelf Registration Statement to which this Prospectus relates to become
effective within 120 days of the original issuance of the Notes and to use its
reasonable best efforts to keep the Shelf Registration Statement effective for
a period of two years from the effective date thereof, or until the Shelf
Registration is no longer required for transfer of the Notes or the Shares. The
Company may prohibit offers and sales of Notes and Shares pursuant to the Shelf
Registration Statement to which this Prospectus relates at any time if (A)(i)
the Company is in possession of material non-public information relating to the
Company, (ii) the Company determines (based on advice of counsel) that such
prohibition is necessary in order to avoid a requirement to disclose such
material non-public information to the public and (iii) the Company determines
in good faith that public disclosure of such material non-public information
would not be in the best interests of the Company and its stockholders, or
(B)(i) the Company has made a public announcement relating to an acquisition or
business combination transaction including the Company and/or one or more of
its subsidiaries that is material to the Company and its subsidiaries taken as
a whole and (ii) the Company determines in good faith that (x) offers and sales
of Transfer Restricted Securities pursuant to the Shelf Registration prior to
the consummation of such transaction (or such earlier date as the Company shall
determine) is not in the best interests of the Company and its stockholders or
(y) it would be impracticable at the time to obtain any financial statements
relating to such acquisition or business combination transaction that would be
required to be set forth in the Shelf Registration. Expenses of preparing and
filing the Shelf Registration Statement to which this Prospectus relates and
all post-effective amendments thereto will be borne by the Company.
EXPERTS
The consolidated financial statements of ANTEC Corporation at December 31,
1996 and 1997 and for each of the three years in the period ended December 31,
1997 incorporated by reference in this Prospectus have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report incorporated
herein by reference, which as to the years 1995 and 1996 is based in part on
the report of KPMG Peat Marwick, independent auditors.
LEGAL MATTERS
Certain legal matters with respect to the legality of the issuance of the
Notes and Shares offered hereby will be passed upon for the Company by Schiff
Hardin & Waite, Chicago, Illinois.
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS
OF THE COMPANY SINCE THAT DATE.
37
<PAGE> 40
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
Available Information 1
Incorporation of Certain Information by Reference 2
The Company 2
Investment Considerations 3
Use of Proceeds 9
Ratio of Earnings to Fixed Charges 9
Description of Notes 9
Description of Capital Stock 25
Certain United States Income Tax Considerations 27
Selling Securityholders 28
Plan of Distribution 36
Experts 37
Legal Matters 37
</TABLE>
38
<PAGE> 41
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the various expenses in connection with the
issuance of the securities being registered. All of the amounts shown are
estimates except the SEC registration fee. Such expenses will be borne by the
Company.
The following table sets forth all expenses in connection with the
distribution of the Securities being registered. All amounts shown below are
estimates, except the registration fee:
<TABLE>
<CAPTION>
Amount
------
<S> <C>
Registration fee of Securities and Exchange Commission $33,925
NASDAQ Additional Share listing 17,500
Legal fees and expenses 7,500
Accountants' fees and expenses 5,000
Trustee's fees and expenses 5,000
Printing fees 500
Miscellaneous expenses 2,075
-------
Total $71,500
=======
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law empowers a Delaware
corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other
than an action by or in the right of such corporation) by reason of the fact
that such person is or was a director, officer, employee or agent of such
corporation, or is or was serving at the request of such corporation as a
director, officer, employee or agent of another corporation or enterprise. A
corporation may indemnify such person against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause to
believe such person's conduct was unlawful. A Delaware corporation may
indemnify officers and directors in an action by or in the right of the
corporation to procure a judgment in its favor under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the corporation. Where a
present or former officer or director is successful on the merits or otherwise
in the defense of any action referred to above, the corporation must indemnify
such person against the expenses (including attorneys' fees) which such person
actually and reasonably incurred in connection therewith. The indemnification
provided is not deemed to be exclusive of any other rights to which an officer
or director may be entitled under any corporation's by-laws, agreement, vote or
otherwise.
II-1
<PAGE> 42
ITEM 16. EXHIBITS
4.1 Form of Note (included in Exhibit 4.2)
4.2* Indenture between the Registrant and the Trustee dated as of May 8, 1998
4.3 Registration Rights Agreement dated as of May 8, 1998 between the
Registrant and Donaldson, Lufkin and Jenrette Securities Corporation, and
the Company
5.1 Opinion of Schiff Hardin & Waite
10.1 Credit Agreement
10.2 Purchase Agreement
12.1 Computation of Ratio of Earnings to Fixed Charges
23.1 Consent of Ernst and Young LLP
23.2 Consent of Counsel (included in Exhibit 5.1)
24.1 Powers of Attorney (included on signature page)
25.1 Statement of Eligibility of Trustee (Form T-1)
* Incorporated by reference to ANTEC Corporation's quarterly report on Form
10-Q for the quarterly period ended March 31, 1998, filed May 14, 1998, as
exhibit 10.28.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate
II-2
<PAGE> 43
offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that paragraphs (1)(i) and
(1)(ii) do not apply if the registration statement is on Form S-3,
Form S-8 or Form F-3, and the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed with or furnished to the Commission by the registrant
pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
that are incorporated by reference in the registration statement.
(2) That, for the purposes of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Act of 1934) that is incorporated by reference in this Registration
Statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the Registrant of expenses incurred or paid by a director,
officer or controlling person of the Registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the Registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.
II-3
<PAGE> 44
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has duly caused this amendment to the Company's Form S-3
Registration Statement to be signed on its behalf by the undersigned thereunto
duly authorized, in the City of Norcross, and the State of Georgia, on the 21st
day of August, 1998.
ANTEC CORPORATION
By: /s/ JOHN M. EGAN*
------------------------------------
John M. Egan, Chairman,
Chief Executive Officer and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on June 30, 1998.
/s/ JOHN M. EGAN* /s/ LAWRENCE A. MARGOLIS*
------------------------------ -------------------------------
John M. Egan Lawrence A. Margolis
Chairman, Chief Executive Executive Vice President, Chief
Officer and Director Financial Officer and Secretary
(Principal Executive Officer) (Principal Financial Officer)
/s/ Mark Scagliuso /s/ ROD F. DAMMEYER*
------------------------------ -------------------------------
Mark Scagliuso Rod F. Dammeyer,
Vice President and Controller Director
(Principal Accounting Officer)
/s/ ROBERT J. STANZIONE*
------------------------------ -------------------------------
Robert J. Stanzione Ian Craig, Director
President, Chief Operating
Director and Officer
/s/ JAMES L. FAUST* /s/ WILLIAM H. LAMBERT*
------------------------------ -------------------------------
James L. Faust, Director William H. Lambert,
Director
/s/ JOHN R. PETTY* /s/ BILL SCHLEYER*
------------------------------ -------------------------------
John R. Petty, Director Bill Schleyer,
Director
/s/ SAMUEL K. SKINNER*
------------------------------ -------------------------------
Samuel K. Skinner, Director Bruce Van Wagner,
Director
*By: /s/ James E. Knox
---------------------------
James E. Knox
Attorney-in-Fact
II-4
<PAGE> 1
EXHIBIT 23.1
CONSENT OF THE INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-58437) in Pre-Effective Amendment No. 1
and related prospectus of ANTEC Corporation for the registration of $115,000,000
4 1/2% Convertible Subordinated Notes due 2003 and to the incorporation by
reference therein of our report dated January 30, 1998, with respect to the
consolidated financial statements of ANTEC Corporation included in its Annual
Report (Form 10-K) for the year ended December 31, 1997, filed with the
Securities and Exchange Commission.
ERNST & YOUNG LLP
Chicago, Illinois
August 21, 1998
