<PAGE> 1
FILED PURSUANT TO RULE 424(b)(3)
Registration No. 333-58437
PROSPECTUS SUPPLEMENT
AUGUST 17, 1999
ANTEC CORPORATION
CONVERTIBLE SUBORDINATED NOTES
COMMON STOCK
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<S> <C>
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 (FOR RESALE BY SELLING SHAREHOLDERS AFTER CONVERSION OF
THE NOTES) ISSUABLE BY ANTEC UPON CONVERSION OF THE NOTES. ANTEC COMMON STOCK, WHICH
TRADES ON THE NASDAQ NATIONAL MARKET UNDER THE SYMBOL "ANTC."
ORIGINAL PROSPECTUS: PROSPECTUS DATED NOVEMBER 17, 1998
PURPOSE OF SUPPLEMENT: TO UPDATE INFORMATION CONTAINED UNDER CAPTION "SELLING SECURITYHOLDERS" BEGINNING ON
PAGE 30.
</TABLE>
SEE "RISK FACTORS" BEGINNING ON PAGE 4 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.
<PAGE> 2
0384930.DOC
SELLING SECURITY HOLDERS
THE FOLLOWING ADDITIONS AND CORRECTIONS ARE MADE TO THE TABLE OF
SELLING SECURITYHOLDERS BEGINNING ON PAGE 30 OF THE ORIGINAL PROSPECTUS:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT AMOUNT OF SHARES
PRINCIPAL AMOUNT OF NOTES OFFERED AMOUNT OF SHARES OFFERED
NAME OF SELLING SECURITYHOLDER OF NOTES OWNED(1) HEREBY(1) OWNED(1)(2)(3) HEREBY(1)(3)(4)
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Donaldson, Lufkin & Jenrette $9,502,000 $9,502,000 395,917 395,917
Securities Corp.
Fidelity Advisor Series I Fidelity $2,013,000 $2,013,000 83,875 83,875
Advisor Growth & Income Fund
Forum Capital Markets LLC $2,800,000 $2,800,00 116,667 116,667
Lipper Comvertible Series II, L.P. $1,000,000 $1,000,000 41,667 41,667
Mainstay VP - Convertible Portfolio $ 500,000 $ 500,000 20,833 20,833
Mainstay Strategic Value Fund $ 200,000 $ 200,000 8,333 8,333
Peoples Benefit Life Insurance $2,800,000 $2,800,000 116,667 116,667
Company
Warburg Dillon Read LLC $1,000,000 $1,000,000 41,667 41,667
</TABLE>
(1) Based upon information provided by the Selling Securityholders.
(2) Includes the Shares into which the Notes held by such Selling
Securityholder are convertible at the Conversion Price.
(3) 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" in the Original Prospectus.
Accordingly, the number of Shares 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.
(4) 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.
<PAGE> 3
PROSPECTUS
NOVEMBER 17, 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 (FOR RESALE
BY SELLING SHAREHOLDERS AFTER CONVERSION OF
THE NOTES) ISSUABLE BY ANTEC UPON CONVERSION
OF THE NOTES. ANTEC COMMON STOCK, WHICH
TRADES ON THE NASDAQ NATIONAL MARKET, CLOSED
AT $19 5/8 PER SHARE ON NOVEMBER 16, 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 "RISK FACTORS" 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.
<PAGE> 4
TABLE OF CONTENTS
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AVAILABLE INFORMATION.............................................................................................1
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE.................................................................2
THE COMPANY.......................................................................................................2
RISK FACTORS......................................................................................................4
USE OF PROCEEDS...................................................................................................9
RATIO OF EARNINGS TO FIXED CHARGES................................................................................9
DESCRIPTION OF NOTES.............................................................................................10
DESCRIPTION OF CAPITAL STOCK.....................................................................................26
CERTAIN UNITED STATES INCOME TAX CONSIDERATIONS..................................................................28
SELLING SECURITYHOLDERS..........................................................................................29
PLAN OF DISTRIBUTION.............................................................................................35
EXPERTS..........................................................................................................36
LEGAL MATTERS....................................................................................................36
</TABLE>
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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
<PAGE> 6
OBLIGATION TO UPDATE THESE STATEMENTS PUBLICLY OR OTHERWISE, WHETHER AS A RESULT
OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE.
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 as amended August 21, 1998 and
November 17, 1998;
(b) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended March 31, 1998 as amended August 21, 1998 and
November 17, 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;
(e) the Company's Quarterly Report on Form 10-Q for the quarterly
period ended June 30, 1998, as amended November 17, 1998; and
(f) the Company's Report on Form 10-Q for the quarterly period
ended September 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
2
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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.
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.
3
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RISK FACTORS
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 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
4
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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 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.
5
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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 as such funds are needed by Arris which is
expected to be in 1998. 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.
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. Sales to TCI for the six month period ended June 30, 1998
were $61.1 million compared to $16.4 million in 1997. 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
6
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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 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
7
<PAGE> 12
(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
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
8
<PAGE> 13
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 paying for the defenses for Mr. Van Wagner and
his family which are intertwined. These defenses cost $90,000 in 1997 and
$15,000 in the first six months of 1998. Payments for the remainder of 1998 not
expected to be materially different. In addition, various members of the
Company's management have provided testimony to the Commission in connection
with these proceedings (and a prior investigation) and would expect to continue
to provide testimony 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>
FISCAL YEAR ENDED SIX MONTHS ENDED JUNE 30
DECEMBER 31
- ----------------------------------------------------------------------------------------------------------------------
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>
9
<PAGE> 14
(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 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.
10
<PAGE> 15
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 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)
11
<PAGE> 16
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.
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.
12
<PAGE> 17
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."
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
13
<PAGE> 18
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.
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.
14
<PAGE> 19
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:
<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
15
<PAGE> 20
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.
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.
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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 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.
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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 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
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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.
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
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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 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.
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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
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
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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).
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
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<PAGE> 27
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 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.
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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 to time (whether
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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
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<PAGE> 30
in 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.
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<PAGE> 31
PREFERRED STOCK
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
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<PAGE> 32
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.
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
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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 (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
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<PAGE> 34
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
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>
PRINCIPAL AMOUNT AMOUNT OF SHARES
PRINCIPAL AMOUNT OF NOTES OFFERED AMOUNT OF SHARES OFFERED
NAME OF SELLING SECURITYHOLDER OF NOTES OWNED HEREBY OWNED(1)(2) HEREBY(2)(3)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
AIG/National Union Fire Insurance $ 500,000 $ 500,000 20,833 20,833
Alexandra Global Investment Fund 1 $2,000,000 $2,000,000 83,333 83,333
LTD
Allstate Insurance Co. $2,000,000 $2,000,000 83,333 83,333
Aloha Airlines Non-Pilots Pension $ 100,000 $ 100,000 4,167 4,167
Trust
Aloha Airlines Pilots Retirement $ 60,000 $ 60,000 2,500 2,500
Trust
American Travelers Insurance Co. - $ 950,000 $ 950,000 39,583 39,583
Convertible
Argent Classic Convertible Arbitrage $1,000,000 $1,000,000 41,667 41,667
Fund (Bermuda) L.P.
Arkansas Pers $1,400,000 $1,400,000 58,333 58,333
BNP Arbitrage SNC $7,070,000 $7,070,000 300,084 294,583
</TABLE>
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<PAGE> 35
<TABLE>
<S> <C> <C> <C> <C>
Canadian Imperial Holdings, Inc. $1,750,000 $1,750,000 72,917 72,917
Capitol American Life $ 950,000 $ 950,000 39,583 39,583
Insurance Co. - Convertible $5,000,000 $5,000,000 208,333 208,333
CFW-C,L.P
Christian Science Trustees for Gifts $ 250,000 $ 250,000 10,417 10,417
and Endowments
CIBC Oppenheimer Corp. $ 500,000 $ 500,000 20,833 20,833
Combined Insurance Company of America $ 460,000 $ 460,000 19,167 19,167
Continental Casualty Company $4,000,000 $4,000,000 341,667 166,667
Delaware Pers $1,000,000 $1,000,000 41,667 41,667
Deutsche Bank Securities(4) $5,000,000 $5,000,000 208,333 203,888
Donaldson, Luflin & Jenrette $2,502,000 $2,502,000 104,250 104,250
Securities Corp.(4)
Evergren Fund for Total Return $ 500,000 $ 500,000 20,833 20,888
Fidelity Management Trust Company on $ 240,000 $ 240,000 10,000 10,000
behalf of accounts managed by it
Fidelity Commonwealth Trust: $6,925,000 $6,925,000 288,542 288,542
Fidelity Small Cap Stock Fund
Fidelity Advisor Series I Fidelity $ 285,000 $ 285,000 11,875 11,875
Advisor Growth & Income Fund
Fidelity Hasting Street Trust: $5,065,000 $5,065,000 211,042 211,042
Fidelity
First Church of Christ, Scientist $ 300,000 $ 300,000 12,500 12,500
Endowment
Forum Capital Markets L.L.C $ 40,000 $ 40,000 1,667 1,667
</TABLE>
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<PAGE> 36
<TABLE>
<S> <C> <C> <C> <C>
General Motors Employees Domestic $8,000,000 $8,000,000 333,333 333,333
Group Trust
Great American Reserve Insurance Co. $ 950,000 $ 950,000 39,583 39,583
- - Convertible
Hawaiian Airlines Pilots Retirement $ 140,000 $ 140,000 5,833 5,833
Plan
Hawaiian Airlines Pension Plan for $ 25,000 $ 25,000 1,042 1,042
Salaries Employees
Hawaiian Airlines Employees Pension $ 90,000 $ 90,000 3,750 3,750
Plan - IAM
Hillside Capital Incorporated $ 350,000 $ 350,000 14,583 14,583
Corporate Account
ICI American Holdings $ 425,000 $ 425,000 17,708 17,708
J.P. Morgan & Co. Incorporated $5,000,000 $5,000,000 208,333 203,333
Kapiolanai Medical Center $ 200,000 $ 200,000 8,333 8,333
Lincoln National Convertible $2,475,000 $2,475,000 103,125 103,125
Securities Fund(4)
Main Stay Convertible Fund $5,000,000 $5,000,000 208,333 203,333
Mass Mutual Corporate Value Partners $ 900,000 $ 900,000 37,500 37,500
Limited
Mass Mutual Participation Investors $ 150,000 $ 150,000 6,250 6,250
Mass Mutual Corporate Investors $ 300,000 $ 300,000 12,500 12,500
Mass Mutual High Yield Partners II $1,800,000 $1,800,000 75,000 75,000
L.L.C
Massachusetts Mutual Life Insurance $1,350,000 $1,350,000 56,250 56,250
Company
Merrill Lynch Insurance Group $ 225,000 $ 225,000 9,375 9,375
Nalco Chemical Co. $ 225,000 $ 225,000 9,375 9,375
</TABLE>
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<PAGE> 37
<TABLE>
<S> <C> <C> <C> <C>
National Steele Corporation $ 700,000 $ 700,000 29,167 29,167
Nations Banc Montgomery Securities $5,000,000 $5,000,000 208,333 208,333
Occidental Petroleum Corporation $ 35,000 $ 35,000 1,458 1,458
Paloma Securities L.L.C $2,500,000 $2,500,000 104,167 104,167
Partner Reinsurance Company Ltd. $ 255,000 $ 255,000 10,625 10,625
Phoenix Home Life Convertible Fund $ 535,000 $ 535,000 22,292 22,292
Prim Board $1,900,000 $1,900,000 79,167 79,167
Provident Life & Accident Insurance $1,000,000 $1,000,000 41,667 41,667
Company
Provident Life and Accident $1,000,000 $1,000,000 41,667 41,667
Insurance Company
Queens Health Care Plan $ 50,000 $ 50,000 2,083 2,083
Raythern Company Master Pension Trust $ 820,000 $ 820,000 34,167 34,167
SG Cowen Securities Corp. $4,700,000 $4,700,000 195,833 195,833
Shell Pension Trust $ 150,000 $ 150,000 6,250 6,250
Silverton International Fund Limited $2,500,000 $2,500,000 104,167 104,167
Southern Farm Bureau Life Insurance $ 475,000 $ 475,000 19,792 19,792
- - FRIC
Starvest Combined Portfolio $ 700,000 $ 700,000 29,167 29,167
State of Connecticut Combined $1,965,000 $1,965,000 81,875 81,875
Investment Funds
State of Oregon Equity $4,000,000 $4,000,000 166,667 166,667
State of Oregon/SAIF Corporation $4,000,000 $4,000,000 166,667 166,667
</TABLE>
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<PAGE> 38
<TABLE>
<S> <C> <C> <C> <C>
State of Oregon Equity $3,000,000 $3,000,000 125,000 125,000
Summer Hill Global Partners, L.P. $ 100,000 $ 100,000 4,167 4,167
The Gabelli Global Convertible $1,000,000 $1,000,000 41,667 41,667
Securities Fund
The Gabelli Global Convertible $ 100,000 $ 100,000 4,167 4,167
Securities Fund
The Northwestern Mutual Life $1,250,000 $1,250,000 52,083 52,083
Insurance Company
Theremo Electron Balanced Investment $1,000,000 $1,000,000 41,667 41,667
Fund
TQA Vantage Fund, Ltd. $1,250,000 $1,250,000 52,083 52,083
University of South Florida $ 215,000 $ 215,000 8,958 8,958
Van Kampen American Capital $1,030,000 $1,030,000 42,917 42,917
Convertible Securities Fund
Van Kampen Harbor Fund $6,100,000 $6,100,000 142,083 254,167
Walker Art Center(4) $ 325,000 $ 325,000 13,541 13,541
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
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.
(4) As of November 1, 1998.
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
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<PAGE> 39
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.
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 "Risk Factors -- 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.
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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 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.
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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.
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