THIS AGREEMENT is
entered into as of this 15th day of January, 2007, by and between
Tandberg Television ASA, a Norwegian public limited liability
company listed on the Oslo Stock Exchange with its principal place
of business at Frystikkalléen 3, 0661 Oslo, Norway
(“Tandberg”), and ARRIS Group, Inc., a Delaware
corporation with its principal place of business at 3871 Lakefield
Drive, Suwanee, Georgia, USA (“ARRIS”).
WHEREAS, ARRIS
intends to enter into a business combination with Tandberg pursuant
to a recommended public offer (the “Offer”) for the
outstanding securities of Tandberg.
WHEREAS, as
incentive for ARRIS to prepare and launch the Offer and in
consideration of the time and expenses both parties will undertake
with respect to the Offer, the parties wish to set forth certain
understandings and arrangements.
NOW, THEREFORE, in
consideration of the agreements and obligations set forth herein
and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, each party, for the
benefit of the other party hereby agrees as follows:
1.1 Press
Announcement . (a) Contemporaneously with the execution of
this Agreement, Tandberg and ARRIS shall issue a joint press
release in the form attached hereto as Annex A (the
“Press Announcement”) announcing the Offer for Tandberg
shareholders to tender each of Tandberg’s issued and
outstanding shares (the “Shares”) in exchange for
consideration having a value of 96 Norwegian Kroner
(“NOK”) per Share consisting of the following:
(i) not less than NOK 80 in cash (the “Cash
Consideration”) and (ii) shares of ARRIS common stock
(the “Exchange Shares”) with a value of up to NOK 16
per Share (the “Share Consideration” and with the Cash
Consideration, the “Offer Consideration”). ARRIS shall
have the right to increase the amount of the Cash Consideration
(with a corresponding and equal reduction in the value of the Share
Consideration) so long as the total value of the Offer
Consideration equals NOK 96 per Share. The number of Exchange
Shares to be issued per Share shall be determined by dividing the
amount of the Share Consideration by the Average Closing Price of
the ARRIS common stock. In no event shall ARRIS be required to
issue a number of Exchange Shares in excess of 19.9% of its common
stock issued and outstanding on the date of settlement (the
“Stock Threshold”). In the event the calculation of the
number of Exchange Shares would exceed the Stock Threshold, the
value of the Cash Consideration shall be increased by such an
amount (and decrease the value of the Share Consideration by an
equal amount) that the Exchange Shares are less than the Stock
Threshold.
ARRIS shall use
its reasonable best efforts to issue the Exchange Shares without
registration under the Securities Act of 1933, as amended (the
“Securities Act”) pursuant to Rule 802 under the
Securities Act (the “Exempt Issuance”) and to ensure
that all Exchange Shares issued under an Exempt Issuance shall be
issued without any restrictions on transferability and the
certificates representing such shares shall contain no restrictive
transfer legends. In the event any Exchange Shares issued pursuant
to an Exempt Issuance would be subject to restrictions on
transferability (except with respect to any restrictions that
result from the holder of such Exchange Shares being deemed an
“affiliate” of ARRIS, as such term is defined in
Rule 144
1
under the
Securities Act), as determined by ARRIS, as reasonably consented to
by Tandberg, as soon as practicable following the settlement of the
Offer, but in no event later than three business days after
completion of the Reconciliation (as defined below), ARRIS shall
cause to be filed a registration statement for resale of such
Exchange Shares on Form S-3 for a continuous offering under
Rule 415 promulgated under the Securities Act, for an
“Automatic Shelf Offering” (as defined in Rule 405
promulgated under the Securities Act)(the “S-3 Registration
Statement”). In the event ARRIS is not eligible to use Form
S-3, then ARRIS shall file a registration statement for resale of
such Exchange Shares pursuant to a continuous offering on another
available form, including Form S-1(the “S-1 Registration
Statement”). ARRIS shall take all steps reasonably necessary
to cause such registration statement to become effective under the
Securities Act as promptly as possible and shall cause such
registration statement to remain effective at all times until the
date on which the Exchange Shares are sold or otherwise disposed
of.
In the event ARRIS
concludes in its reasonable judgment that the Exchange Shares may
not be issued pursuant to an Exempt Issuance, ARRIS shall cause to
be filed a Registration Statement on Form S-4 (the “S-4
Registration Statement” and with the S-1 Registration
Statement and the S-3 Registration Statement, the
“Registration Statement”) with respect to the Exchange
Shares as soon as practicable following the completion of the
reconciliation of Tandberg’s historical financial statements
required under the Securities Act to be included in the
Registration Statement, but in no event more than three business
days after completion of such Reconciliation (the “Registered
Issuance”).
As used herein,
“Average Closing Price” shall mean the volume weighted
average share price of the ARRIS common stock on the Nasdaq Global
Select Market for the ten (10) trading-day period ending two
trading days before the settlement of the Offer. For purposes of
this Agreement, (i) whenever a calculation requires that an
exchange rate between NOK and United States Dollars be applied, the
parties agree to use the reported exchange rate for the NOK to the
U.S. Dollar quoted by the Federal Reserve Bank of New York (or such
other source as the parties shall agree in writing) representing
the average of ten previous 12:00 noon rates ending on the
applicable business day, and (ii) “business day” means
a day other than Saturday, Sunday or any day on which the Oslo
Børs is authorized or obligated to close.
(b) Tandberg
shareholders shall have the right to receive their pro rata share
of the Offer Consideration in a ratio of Cash Consideration and
Share Consideration elected by such Tandberg shareholder,
provided , however , that such elections shall be
subject to pro rata adjustment in order to ensure that the
aggregate Cash Consideration does not exceed an amount equal to the
product of (i) the Cash Consideration and (ii) the number
of Shares outstanding as of the date of this Agreement plus any
Shares of restricted stock that will vest in accordance with
Section 1.2(c) below.
(c) All
restricted stock of Tandberg issued pursuant to restricted stock
unit awards or otherwise granted under Tandberg plans that by their
terms would, by its terms or by action of Tandberg’s board of
directors, vest upon a change in control of Tandberg will vest and
be exercisable to the fullest extent set forth in such awards, and
to the extent unexercised in full by the closing of the Offer, will
be terminated. Any options to acquire Shares that are not exercised
in full by the closing of the Offer will be terminated.
1.2 Offer
Document; Securities Law Filings . (a) Subject to
applicable laws and regulations, ARRIS shall prepare an offer to
purchase relating to the Offer (the “Offer Document”)
for delivery to the holders of the Shares, as required by the
Norwegian Securities Trading Act of 1997 and the regulations
thereunder (the “Trading Act”), which Offer
Document
2
shall be
approved by the Oslo Børs in accordance with the Trading Act.
The Offer will be made according to the terms set forth in
Section 1 of Annex B. Tandberg agrees to provide ARRIS in a
timely manner with all information relating to Tandberg and its
affiliates required to be included in the Offer Document to comply
with the disclosure requirements contained in the Trading Act.
Unless a shorter period is required by applicable regulatory
authorities, not less than three (3) business days prior to the
date on which ARRIS is to file the Offer Document with the Oslo
Børs, Tandberg and its counsel shall be given the opportunity
to review and comment thereon.
(b) In
the event of a Registered Issuance, ARRIS shall prepare the
Registration Statement and Tandberg shall furnish all information
concerning it and the holders of its capital stock as ARRIS may
reasonably request in connection with the preparation of the
Registration Statement. None of the information supplied or to be
supplied by or on behalf of ARRIS or Tandberg for inclusion or
incorporation by reference in the Registration Statement will, at
the time the Registration Statement becomes effective under the
Securities Act, or at the time the Offer Document, which shall
include the Registration Statement) is first mailed to
Tandberg’s shareholders, contain any untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading. The consolidated financial statements of each of ARRIS
and Tandberg supplied or to be supplied by the applicable party for
inclusion or incorporation by reference in the Registration
Statement will comply as to form in all material respects with the
accounting requirements and rules and regulations of the U.S.
Securities and Exchange Commission (the “SEC”)
applicable to each party and fairly present the financial condition
of each party as of the respective date thereof and the
consolidated results of operations and cash flows of each party for
the respective period then ended. ARRIS shall provide Tandberg and
its representatives, including its counsel and auditors, reasonable
opportunity and time to review and provide comments to the
Registration Statement prior to the time ARRIS files such
Registration Statement with the SEC or any amendment or supplement
thereto and such document is made publicly available. ARRIS shall
not file, submit or furnish any document with the SEC relating to
the Registration Statement in a form to which Tandberg reasonably
objects. As promptly as practicable after becoming aware of such
event or development, ARRIS shall notify each holder of Exchange
Shares that is registering such shares in the Registration
Statement, of any untrue statement of a material fact in the
prospectus or any supplements thereto contained in the Registration
Statement, or omission to state a material fact required therein,
in light of the circumstances under which they were made, not
misleading. ARRIS shall take all other actions reasonably necessary
for the holder of Exchange Shares to resell such shares, if
applicable.
ARRIS shall use
commercially reasonable efforts to cause the Registration Statement
to comply with the rules and regulations promulgated by the SEC, to
respond promptly to any comments of the SEC or its staff and to
have the Registration Statement declared effective under the
Securities Act as promptly as practicable after it is filed with
the SEC. ARRIS will promptly provide in writing to Tandberg and its
counsel any comments, written or oral, of the SEC with respect to
the Registration Statement and Tandberg shall cooperate with ARRIS
in preparing responses to such comments. All information supplied
by or on behalf of ARRIS or Tandberg for inclusion or incorporation
by reference in the Registration Statement will comply as to form
in all material respects with the applicable requirements of the
Securities Act. ARRIS shall also promptly file, use commercially
reasonable efforts to cause to become effective as promptly as
possible and, if required, mail to Tandberg’s shareholders,
any amendment to the Registration Statement that becomes necessary
after the date the Registration Statement is declared effective or
the Offer Document is first mailed to Tandberg’s
shareholders. ARRIS will provide to holders
3
of the Exchange
Shares the number of copies of the prospectus to the Registration
Statement that are reasonably requested.
(c) Tandberg
shall furnish all information concerning it and the holders of its
capital stock as ARRIS may reasonably request in connection with a
determination by ARRIS that the offer and sale of the Exchange
Shares in the Offer will qualify for an Exempt Issuance, including,
without limitation, requesting, pursuant to a written letter
approved in advance by ARRIS, information from nominees holding any
Shares regarding any shares that may be held by a U.S.
Person.
(d) ARRIS
and Tandberg shall use commercially reasonable efforts to cause the
Offer Document to comply with the Trading Act, to respond promptly
to any comments of the staff of the Oslo Børs and to have the
Offer Document approved under the Trading Act as promptly as
practicable after it is filed with the Oslo Børs. ARRIS will
promptly provide in writing to Tandberg and its counsel any
comments of the Oslo Børs with respect to the Offer Document
and Tandberg shall cooperate with ARRIS in preparing responses to
such comments. All information supplied by or on behalf of ARRIS or
Tandberg for inclusion in the Offer Document will comply as to form
in all material respects with the applicable requirements of the
Trading Act. ARRIS shall also promptly file, use commercially
reasonable efforts to cause to be approved as promptly as possible
and, if required, mail to Tandberg shareholders any amendment to
the Offer Document that becomes necessary after the date the Offer
Document is first mailed to Tandberg’s
shareholders.
(e) ARRIS
represents and warrants that (i) Tandberg security holders
that are residents of the United States will participate in the
Offer on terms at least as favorable as those offered to any other
holder of Tandberg’s securities, and (ii) it will
provide such United States securityholders with the Offer Document
and any other related document on a comparable basis that such
documents are provided to other securityholders.
1.3 Compliance
with the Trading Act . Each of Tandberg and ARRIS undertakes to
comply with the Trading Act and the Oslo Børs’ rulings
on interpretation and implementation thereof.
2.1 Tandberg
Board Recommendation . (a) The Press Announcement shall
include a statement that Tandberg’s board of directors
unanimously recommends that Tandberg’s shareholders tender
their Shares in exchange for the Offer Consideration on the terms
of the Offer (the “Tandberg Board Recommendation”), and
the Tandberg Board Recommendation shall not be withdrawn by the
Tandberg board of directors except as permitted by
Section 2.1(b) below.
(b) Notwithstanding
anything to the contrary contained in Section 2.1(a), at any
time prior to the public announcement of the satisfaction of all
conditions to the Offer, the Tandberg Board Recommendation may be
withdrawn by the Tandberg board of directors (a “Tandberg
Change in Recommendation”) under the following circumstances:
(i) an Acquisition Proposal is made to Tandberg and is not
withdrawn; (ii) Tandberg promptly provides ARRIS with written
notice of the Acquisition Proposal setting forth the identity of
the offeror and the material terms of the offer and further
provides at least two (2) business days prior written notice
of any meeting of Tandberg’s board of directors to consider
and determine whether such Acquisition Proposal is a Superior
Proposal; (iii) Tandberg’s board of directors determines that
such Acquisition Proposal constitutes a Superior Proposal;
(iv) Tandberg’s board of directors
4
determines in
good faith, after consultation with Tandberg’s outside legal
counsel, that, in light of such Superior Proposal, the withdrawal
of the Tandberg Board Recommendation is required to comply with the
board’s fiduciary obligations to its shareholders under
applicable law or the Trading Act; and (v) neither Tandberg
nor any of its representatives shall have violated in any material
respect any of the restrictions set forth in Section 10
below.
(c) For
purposes of this Agreement: (i) “Acquisition Proposal”
shall mean any offer, proposal, inquiry or indication of interest
(other than an offer, proposal, inquiry or indication of interest
by ARRIS under this Agreement) contemplating or otherwise relating
to any Acquisition Transaction; (ii) “Superior
Proposal” shall mean an unsolicited, bona fide written offer
by a third party to all of Tandberg’s shareholders to
purchase all of the outstanding common stock of Tandberg on terms
that the board of directors of Tandberg determines, in good faith
by a majority vote, after consultation with its financial advisor
and outside legal counsel and taking into account all the terms and
conditions of the Acquisition Proposal, are more favorable to all
of Tandberg’s shareholders, from a financial point of view,
than the transactions contemplated by the Offer (including the
terms, if any, proposed by ARRIS to amend or modify the Offer);
(iii) “Acquisition Transaction” shall mean: any
transaction or series of transactions involving (A) any
merger, consolidation, share exchange, business combination,
issuance of securities, acquisition of securities, tender offer,
exchange offer or other similar transaction (1) in which
Tandberg or any of its affiliates is a constituent corporation,
(2) in which a person or “group” (as defined in
the Securities Exchange Act of 1934, as amended, and the rules
promulgated thereunder) of persons directly or indirectly acquires
beneficial or record ownership of securities representing more than
50% of the outstanding securities of any class of voting securities
of Tandberg or any of its subsidiaries, or (3) in which
Tandberg or any of its affiliates issues or sells securities
representing more than 50% of the outstanding securities of any
class of voting securities of Tandberg or any of its affiliates as
of the date of this Agreement; or (B) any sale (other than in
the ordinary course of business), lease (other than in the ordinary
course of business), exchange, transfer (other than in the ordinary
course of business), license (other than nonexclusive licenses in
the ordinary course of business), acquisition or disposition of any
business or businesses or assets that constitute or account for 20%
or more of the consolidated net revenues, net income or assets of
Tandberg, or any of its businesses or subsidiaries.
3. CONDITIONS TO AND COMPLETION
OF THE OFFER
The completion of
the Offer shall be conditional upon the satisfaction of the
conditions set forth in Section 2 of Annex B hereto
(the “Offer Conditions”), any of which can be
unilaterally waived by ARRIS, except as set forth in Annex B
. ARRIS may withdraw the Offer in accordance with the Trading
Act.
4.1
Termination . This Agreement may be terminated (i) by
ARRIS on written notice to Tandberg if the Offer is terminated or
withdrawn by ARRIS on the basis that any of the conditions set
forth in the Offer have not been fulfilled, (ii) by mutual
written consent of both parties, (iii) by ARRIS on written
notice to Tandberg if there is a Tandberg Change in Recommendation,
(iv) by ARRIS on written notice to Tandberg, upon a material
breach of any covenant under this Agreement by Tandberg if such
breach is not cured within ten days of delivery of written notice
of such breach by ARRIS to Tandberg, (v) by ARRIS on written
notice to Tandberg if there has been a Material Adverse Effect (as
defined herein) with respect to Tandberg, (vi) by ARRIS on
written notice to Tandberg if Tandberg is unable to complete and
deliver to ARRIS the reconciliation of its historical financial
statements to U.S. GAAP, including
5
establishing
vendor specific objective evidence (“VSOE”) for
historic and future sales, for the periods and in the form
required, in the case of an Exempt Issuance, by the Oslo Børs
and, in the case of a Registered Issuance, the SEC (the
“Reconciliation”), by such date that, in the judgment
ARRIS, with the consent of Tandberg, which consent shall not be
unreasonably withheld, is reasonably necessary in order to settle
the Offer by the then current termination date of the commitment
under the Commitment Letter (as defined in Section 8(b)),
(vii) by Tandberg on written notice to ARRIS upon a Tandberg
Change in Recommendation, (viii) by Tandberg on written notice
to ARRIS, upon a material breach of any covenant under this
Agreement by ARRIS, if such breach is not cured within ten days of
delivery of written notice of such breach by Tandberg to ARRIS,
(ix) by Tandberg on written notice to ARRIS if there has been
a Material Adverse Effect with respect to ARRIS, (x) by either
party if the public announcement of the satisfaction of all
conditions to the Offer has not been made by September 30,
2007 (the “Termination Date”), provided however, that
the right to terminate under this Section 4.1(x) shall not be
available to any party whose material failure to fulfill any
obligation hereunder has been the principal cause of, or resulted
in, the failure satisfy the conditions of the Offer by the
Termination Date. For purposes of this Agreement, “Material
Adverse Effect” shall mean, with respect to any party
hereto,
|
