UNITED STATES DISTRICT COURT
DISTRICT OF COLUMBIA
UNITED STATES OF AMERICA,
Plaintiff,
v.
CommScope, Inc., and
Andrew Corporation,
Defendants.
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Case No: 1:07-cv-02200
Filed: 12/6/2007
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FINAL JUDGMENT
WHEREAS, Plaintiff, United States of America, filed its Complaint
on December 6, 2007, the United States and defendants, CommScope, Inc.
("CommScope") and Andrew Corporation ("Andrew"), by their respective
attorneys, have consented to the entry of this Final Judgment without
trial or adjudication of any issue of fact or law, and without this
Final Judgment constituting any evidence against or admission by any
party regarding any issue of fact or law;
AND WHEREAS, defendants agree to be bound by the provisions of this
Final Judgment pending its approval by the Court;
AND WHEREAS, the essence of this Final Judgment is the prompt and
certain divestiture of certain rights or assets by Andrew and CommScope
to assure that competition is not substantially lessened;
AND WHEREAS, the United States requires Andrew and CommScope to make
certain divestitures for the purpose of remedying the loss of competition
alleged in the Complaint;
AND WHEREAS, defendants have represented to the United States that
the divestiture required below can and will be made and that defendants
will later raise no claim of hardship or difficulty as grounds for asking
the Court to modify any of the divestiture provisions contained below;
NOW THEREFORE, before any testimony is taken, without trial or adjudication
of any issue of fact or law, and upon consent of the parties, it is
ORDERED, ADJUDGED AND DECREED:
I. Jurisdiction
This Court has jurisdiction over the subject matter of and each of
the parties to this action. The Complaint states a claim upon which
relief may be granted against defendants under Section 7 and Section
8 of the Clayton Act, as amended (15 U.S.C. §§ 18, 19).
II. Definitions
As used in this Final Judgment:
- "CommScope" means defendant CommScope, Inc., a Delaware corporation
with its headquarters in Hickory, North Carolina, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates, partnerships
and joint ventures, and their directors, officers, managers, agents,
and employees.
- "Andrew" means defendant Andrew Corporation, a Delaware corporation
with its headquarters in Westchester, Illinois, its successors and
assigns, and its subsidiaries, divisions, groups, affiliates, partnerships
and joint ventures, and their directors, officers, managers, agents,
and employees.
- "Acquirer" means the entity or person to whom defendants divest
their interests in the Andes Holdings.
- "Andes" means Andes Industries, Inc., a Nevada corporation with
its headquarters in Gilbert, Arizona, its successors and assigns,
and its subsidiaries, divisions, groups, affiliates, partnerships
and joint ventures, and their directors, officers, managers, agents,
and employees.
- "PCT" means PCT International, Inc., a wholly-owned subsidiary of
Andes.
- "Yantai Factory" means the factory in Yantai City, China formerly
operated by Andrew Broadband Telecommunications (Yantai) Co., Ltd.,
now operated by PCT Broadband Communications (Yantai) Co. Ltd., a
subsidiary of Andes located in Yantai City, China, and used to manufacture,
inter alia, coaxial cable.
- "IRA" means the Amended and Restated Investor Rights Agreement dated
March 30, 2007 between Andes and Andrew.
- "Andes Holdings" means stock representing Andrew's entire ownership
interest in Andes, the Z-Wire IP, as well as all notes of indebtedness
in favor of Andrew by Andes, and warrants to acquire additional stock
of Andes, including but not limited to:
- Senior Note dated April 2, 2007 issued in favor of Andrew for
the amount of $9,035,000;
- Senior Note dated March 30, 2007 issued in favor of Andrew Corporation
Mauritius for the amount of $5,592,000;
- Promissory Note, dated September 29, 2006, issued in favor of
Andrew for the amount of $1,016,000; and
- Warrant to Acquire Common Stock of Andes dated April 2, 2007,
held by Andrew and Andrew Corporation Mauritius.
- "Youtsey" means Steve Youtsey, Chief Executive Officer of and stockholder
in Andes.
- "Drop Cable" means 75 ohm coaxial cable used by cable television
companies to connect their transmission systems with their customers'
premises and equipment inside the customers' premises.
- "Z-Wire IP" means all intellectual property concerning the "Z-Wire"
product now made and sold by PCT and PCT Broadband Communications
(Yantai) Co. Ltd. This intellectual property shall include, but not
be limited to, the "Z-Wire" Trademark, Serial No. 78,658,023 and the
patent, U.S. Patent No. 7,084,343 B1, dated August 1, 2006, concerning
the Z-Wire product.
III. Applicability
- This Final Judgment applies to CommScope and Andrew, as defined
above, and all other persons in active concert or participation with
any of them who receive actual notice of this Final Judgment by personal
service or otherwise.
- If, prior to complying with Sections IV and V of this Final Judgment,
defendants sell or otherwise dispose of all or substantially all of
their assets or of lesser business units that include the Andes Holdings,
they shall require the purchaser to be bound by the provisions of
this Final Judgment. Defendants need not obtain such an agreement
from the Acquirer of the assets divested pursuant to this Final Judgment.
IV. Divestitures
- Defendants are ordered and directed, within 90 calendar days after
the filing of the Complaint in this matter, or five (5) calendar days
after notice of the entry of this Final Judgment by the Court, whichever
is later, to divest the Andes Holdings in a manner consistent with
this Final Judgment to an Acquirer acceptable to the United States,
in its sole discretion. Divestiture of all the Andes Holdings shall
be made to one Acquirer. The United States, in its sole discretion,
may agree to one or more extensions of this time period, not to exceed
60 calendar days in total, and shall notify the Court in such circumstances.
If within the initial period for divestiture, plus any extensions,
an agreement with a prospective Acquirer has been reached and the
prospective Acquirer, and the terms of the acquisition agreement,
have been approved by the United States, and the defendants have provided
the written notice of intent to sell required by Section 4.1(b) of
the IRA ("IRA 4.1(b)"), the time for completing the divestiture shall
automatically be extended, in order to allow defendants to comply
with the right of first refusal provision in IRA 4.1(b). The period
of this extension shall not exceed five (5) days past the date on
which both Andes and Youtsey have failed to timely (a) deliver a Right
of First Refusal ("ROFR") Notice accompanied by a Reasonable Assurances
Letter pursuant to IRA 4.1(b); or (b) consummate the purchase of Andrew's
ownership interest in Andes pursuant to IRA 4.1(b). Defendants agree
to use their best efforts to divest the Andes Holdings as expeditiously
as possible.
- In accomplishing the divestiture ordered by this Final Judgment,
defendants promptly shall make known, by usual and customary means,
the availability of the Andes Holdings. Defendants shall inform any
person making inquiry regarding a possible purchase of the Andes Holdings
that they are being divested pursuant to this Final Judgment and provide
that person with a copy of this Final Judgment. Defendants shall offer
to furnish to all prospective acquirers, subject to customary confidentiality
assurances, all information and documents that are available to them
relating to the Andes Holdings or to Andes, to the extent permitted
by Sections IV(C) and VIII(B) below or by Sections V(A) and V(B) of
the Hold Separate and Stipulation Order, and customarily provided
in a due diligence process, except such information or documents subject
to the attorney-client or work-product privileges. Defendants shall
make available such information to the United States at the same time
that such information is made available to any other person.
- Defendants shall, at the option of Andes, continue to provide the
services now provided pursuant to the Transition Services Agreement
dated March 30, 2007, according to the terms of that Agreement, until
the end of February 2008. At the end of the period in which defendants
provide transition services, defendants shall, at the option of Andes,
provide a copy in a format acceptable to Andes from the relevant Andrew
servers of all historic data concerning operation of the Yantai Factory.
In any event, defendants shall maintain the operations software and
the data on the servers for a period of two months after completion
of the transition services period, and, during those two months, shall
make available to Andes any information on the servers that is requested
by Andes, except the licensed software itself. At the end of those
two months, defendants shall erase from the servers all data relating
to the operations of the Yantai Factory, but they may keep one copy
of that data, which copy they shall place in the custody of their
outside counsel. Defendants shall not access or use the Andes data
on the servers or the copy for any purpose; provided, however, that,
pursuant to a protective order issued by the Court, outside counsel
and employees whose participation is necessary may access the Andes
data to the extent necessary for the defense of a lawsuit or in connection
with a regulatory or tax proceeding of which the defendants are, or
one of them is, the subject.
- To the extent that Andrew now provides services, materials or building
space to Andes, defendants shall, at the option of Andes, continue
to provide those services, materials and building space on the existing
terms until the end of the period in which defendants provide transition
services pursuant to Section IV(C) above. During the period in which
defendants continue to provide services to Andes, they may not reduce
the quality or timeliness of those services, including services under
both this and Section IV(C) above.
- Defendants shall divest to the Acquirer, as part of the Andes Holdings,
the Z-Wire IP. The Acquirer shall acquire this intellectual property
subject to Andrew's rights and obligations under the Technology Licensing
Agreement dated March 30, 2007, between Andrew and PCT Broadband Communications
(Yantai) Co. Ltd. Andrew shall assign its part in that agreement to
the Acquirer, the Acquirer shall assume Andrew's position as licensor
under the agreement, and PCT Broadband Communications (Yantai) Co.
Ltd. shall remain the licensee. As part of the divestiture of the
Z-Wire IP, the Acquirer shall offer defendants a non-exclusive, royalty-free
license to use U.S. Patent No. 7,084,343 B1, provided that the license
does not permit defendants to use the Z-Wire IP to develop, make,
use or sell Drop Cable products and provided that the license does
not directly or indirectly affect Andes' ability to use the Z-Wire
IP. Prior to the divestiture of the Z-Wire IP, defendants shall, at
the option of Andes, grant Andes and PCT a perpetual, worldwide and
royalty-free license to use the "Z-Wire" trademark, Serial No. 78,658,023,
and the Z-Wire trademark, Serial No. 78,658,023 shall be divested
to the Acquirer subject to that license.
- Defendants shall not take any action that will jeopardize, delay
or impede in any way the divestiture of the Andes Holdings.
- Unless the United States otherwise consents in writing, the divestiture
pursuant to Section IV, or by trustee appointed pursuant to Section
V, of this Final Judgment, shall include the entire Andes Holdings,
and shall be accomplished in such a way as to satisfy the United States,
in its sole discretion, that Andes will remain a viable competitor
in the market for Drop Cable, and that the divestiture will remedy
the competitive harm alleged in the Complaint resulting from CommScope's
acquisition of Andrew. In addition, the divestiture, whether pursuant
to Section IV or Section V of this Final Judgment, shall be made to
an Acquirer that in the United States' sole judgment has the intent
and capability of investing in Andes in such a manner as to support
the continued competitive operations of its Drop Cable business and
shall be accomplished so as to satisfy the United States, in its sole
discretion, that none of the terms of any agreement between the Acquirer
and defendants unreasonably raises Andes' costs, lowers Andes' efficiency,
or otherwise interferes in the ability of Andes to compete effectively.
- Upon completion of the divestiture to the Acquirer, neither the
defendants nor the trustee shall have any rights under the IRA.
- Nothing in this Final Judgment shall prohibit defendants from seeking
payment of the notes within the Andes Holdings or for services or
products supplied under the terms of any agreement with Andes, and
taking action to collect any amounts past due under those agreements,
including institution of legal proceedings to collect those overdue
amounts; provided, however, that defendants may not undertake legal
actions that would jeopardize the divestiture required by this Final
Judgment or Andes' continuing viability, including, but not limited
to, seeking accelerated payment of principal or other amounts not
currently overdue or seeking to place Andes in involuntary bankruptcy;
nor may defendants exercise any right under the Warrant to acquire
additional Andes stock.
V. Appointment of Trustee
- If defendants have not divested the Andes Holdings within the time
period specified in Section IV(A), defendants shall notify the United
States of that fact in writing. Upon application of the United States,
the Court shall appoint a trustee selected by the United States and
approved by the Court to effect the divestiture of the Andes Holdings.
- After the appointment of a trustee becomes effective, only the trustee
shall have the right to sell the Andes Holdings. The trustee shall
have the power and authority to accomplish the divestiture to an Acquirer
acceptable to the United States at such price and on such terms as
are then obtainable upon reasonable effort by the trustee, subject
to the provisions of Sections IV, V, and VI of this Final Judgment,
and shall have such other powers as this Court deems appropriate.
Subject to Section V(D) of this Final Judgment, the trustee may hire
at the cost and expense of defendants any investment bankers, attorneys,
or other agents, who shall be solely accountable to the trustee, reasonably
necessary in the trustee's judgment to assist in the divestiture.
- Defendants shall not object to a sale by the trustee on any ground
other than the trustee's malfeasance. Any such objections by defendants
must be conveyed in writing to the United States and the trustee within
ten (10) calendar days after the trustee has provided the notice required
under Section VI.
- The trustee shall serve at the cost and expense of defendants, on
such terms and conditions as the United States approves, and shall
account for all monies derived from the sale of the assets sold by
the trustee and all costs and expenses so incurred. After approval
by the Court of the trustee's accounting, including fees for its services
and those of any professionals and agents retained by the trustee,
all remaining money shall be paid to CommScope (or to Andrew if Andrew
has not been acquired by CommScope at that time) and the trust shall
then be terminated. The compensation of the trustee and any professionals
and agents retained by the trustee shall be reasonable in light of
the value of the Andes Holdings and based on a fee arrangement providing
the trustee with an incentive based on the price and terms of the
divestiture and the speed with which it is accomplished, but timeliness
is paramount.
- Defendants shall use their best efforts to assist the trustee in
accomplishing the required divestiture. The trustee and any consultants,
accountants, attorneys, and other persons retained by the trustee
shall have full and complete access to Andrew's personnel responsible
for its Andes investment and to documents and information concerning
Andes in Andrew's possession, subject to reasonable protection for
trade secret or other confidential research, development, or commercial
information. Defendants shall take no action to interfere with or
to impede the trustee's accomplishment of the divestiture.
- After its appointment, the trustee shall file monthly reports with
the United States and the Court setting forth the trustee's efforts
to accomplish the divestiture ordered under this Final Judgment. To
the extent such reports contain information that the trustee deems
confidential, such reports shall not be filed in the public docket
of the Court. Such reports shall include the name, address, and telephone
number of each person who, during the preceding month, made an offer
to acquire, expressed an interest in acquiring, entered into negotiations
to acquire, or was contacted or made an inquiry about acquiring, the
Andes Holdings, and shall describe in detail each contact with any
such person. The trustee shall maintain full records of all efforts
made to divest the Andes Holdings.
- If the trustee has not accomplished the divestiture ordered under
the this Final Judgment within six months after its appointment, the
trustee shall promptly file with the Court a report setting forth
(1) the trustee's efforts to accomplish the required divestiture,
(2) the reasons, in the trustee's judgment, why the required divestiture
has not been accomplished, and (3) the trustee's recommendations.
To the extent such reports contain information that the trustee deems
confidential, such reports shall not be filed in the public docket
of the Court. The trustee shall at the same time furnish such report
to the United States which shall have the right to make additional
recommendations consistent with the purpose of the trust. The Court
thereafter shall enter such orders as it shall deem appropriate to
carry out the purpose of the Final Judgment, which may, if necessary,
include extending the trust and the term of the trustee's appointment
by a period requested by the United States.
VI. Notice of Proposed Divestiture
- Within two (2) business days following execution of a definitive
divestiture agreement, defendants or the trustee, whichever is then
responsible for effecting the divestiture required herein, shall notify
the United States of any proposed divestiture required by Section
IV or V of this Final Judgment. If the trustee is responsible, it
shall similarly notify defendants. The notice shall set forth the
details of the proposed divestiture and list the name, address, and
telephone number of each person not previously identified who offered
or expressed an interest in or desire to acquire any ownership interest
in the Andes Holdings, together with full details of the same.
- Within fifteen (15) calendar days of receipt by the United States
of such notice, the United States may request from defendants, the
proposed Acquirer, any other third party, or the trustee, if applicable,
additional information concerning the proposed divestiture, the proposed
Acquirer, and any other potential Acquirer. Defendants and the trustee
shall furnish any additional information requested within fifteen
(15) calendar days of the receipt of the request, unless the parties
shall otherwise agree.
- Within thirty (30) calendar days after receipt of the notice or
within twenty (20) calendar days after the United States has been
provided with the additional information requested from defendants,
the proposed Acquirer, any third party, and the trustee, whichever
is later, the United States shall provide written notice to defendants
and the trustee, if there is one, stating whether or not it objects
to the proposed divestiture. If the United States provides written
notice that it does not object, the divestiture may be consummated,
subject only to defendants' limited right to object to the sale under
Section V(C) of this Final Judgment. Absent written notice that the
United States does not object to the proposed Acquirer or upon objection
by the United States, a divestiture proposed under Section IV or Section
V shall not be consummated. Upon objection by defendants under Section
V(C), a divestiture proposed under Section V shall not be consummated
unless approved by the Court.
VII. Financing
Defendants shall not finance all or any part of any purchase made
pursuant to Section IV or V of this Final Judgment.
VIII. Hold Separate
- Until the divestiture required by this Final Judgment has been
accomplished, the defendants shall be bound by, and shall take all
steps necessary to comply with, the Hold Separate Stipulation and
Order entered by this Court. The Hold Separate Stipulation and Order
shall survive entry of this Final Judgment until the divestiture has
been completed.
- Defendants shall not access or use any written confidential information
provided to defendants by Andes about Andes' business operations,
or access or use any written confidential information still possessed
by Andrew about its former Drop Cable business and the Yantai Factory.
Outside counsel for defendants and employees whose participation is
necessary, may, however, access such information to the extent necessary
to meet legal or regulatory requirements or to conduct a defense of
a lawsuit, but only subject to a protective order by the Court. Defendants
may also designate a third party agent approved by the United States
to access on their behalf such confidential business information to
which defendants are otherwise entitled for the purpose of sharing
that information with bona fide prospective acquirers of the Andes
Holdings. The agent shall identify to Andes in advance all prospective
acquirers with whom confidential information will be shared, and shall,
at Andes' request, require those prospective acquirers to execute
confidentiality agreements binding them to keep the information confidential
and to use it for no purpose other than to evaluate the prospective
acquisition. The agent may not in any circumstances share any Andes
confidential information with defendants.
- Defendants shall take no action that would diminish the value of
the Andes Holdings.
IX. Survival of Agreements
The Trademark License Agreement dated March 30, 2007 among Andrew,
PCT and Andes, shall remain in force according to its terms. CommScope
shall comply with Andrew's obligations under that agreement. Defendants
shall not unreasonably interfere with the rights of Andes and PCT to
use the subject intellectual property licensed under that agreement.
Prior to the divestiture, the Trademark License Agreement shall, with
respect to the "Z-Wire" trademark, Serial No. 78,658,023, be superseded
by the new Z-Wire trademark license described in Section IV(E) above.
X. Affidavits
- Within twenty (20) calendar days of the filing of the Complaint
in this matter, and every thirty (30) calendar days thereafter until
the divestiture has been completed under Section IV or V, defendants
shall deliver to the United States an affidavit as to the fact and
manner of its compliance with Section IV or V of this Final Judgment.
Each such affidavit with respect to Section IV shall include the name,
address, and telephone number of each person who, during the preceding
thirty (30) calendar days, made an offer to acquire, expressed an
interest in acquiring, entered into negotiations to acquire, or was
contacted or made an inquiry about acquiring, any interest in the
Andes Holdings, and shall describe in detail each contact with any
such person during that period. Each such affidavit with respect to
Section IV shall also include a description of the efforts defendants
have taken to solicit buyers for the Andes Holdings, and to provide
required information to prospective acquirers, including the limitations,
if any, on such information. Assuming the information set forth in
the affidavit is true and complete, any objection by the United States
to information provided by defendants, including limitation on information,
shall be made within fourteen (14) calendar days of receipt of such
affidavit.
- Within twenty (20) calendar days of the filing of the Complaint
in this matter, defendants shall deliver to the United States an affidavit
that describes in reasonable detail all actions defendants have taken
and all steps defendants have implemented on an ongoing basis to comply
with Section VIII of this Final Judgment. Defendants shall deliver
to the United States an affidavit describing any changes to the efforts
and actions outlined in defendants' earlier affidavits filed pursuant
to this section within fifteen (15) calendar days after the change
is implemented.
- Defendants shall keep all records of all efforts made to preserve
and divest the Andes Holdings until one year after such divestiture
has been completed.
XI. Compliance Inspection
- For the purposes of determining or securing compliance with this
Final Judgment, or of determining whether the Final Judgment should
be modified or vacated, and subject to any legally recognized privilege,
from time to time authorized representatives of the United States
Department of Justice, including consultants and other persons retained
by the United States, shall, upon written request of an authorized
representative of the Assistant Attorney General in charge of the
Antitrust Division, and on reasonable notice to defendants, be permitted:
- access during defendants' office hours to inspect and copy,
or at the option of the United States, to require defendants to
provide hard copy or electronic copies of, all books, ledgers,
accounts, records, data, and documents in the possession, custody,
or control of defendants, relating to any matters contained in
this Final Judgment; and
- to interview, either informally or on the record, defendants'
officers, employees, or agents, who may have their individual
counsel present, regarding such matters. The interviews shall
be subject to the reasonable convenience of the interviewee and
without restraint or interference by defendants.
- Upon the written request of an authorized representative of the
Assistant Attorney General in charge of the Antitrust Division, defendants
shall submit written reports or responses to written interrogatories,
under oath if requested, relating to any of the matters contained
in this Final Judgment as may be requested.
- No information or documents obtained by the means provided in this
section shall be divulged by the United States to any person other
than an authorized representative of the executive branch of the United
States, except in the course of legal proceedings to which the United
States is a party (including grand jury proceedings), or for the purpose
of securing compliance with this Final Judgment, or as otherwise required
by law.
- If at the time information or documents are furnished by defendants
to the United States, defendants represent and identify in writing
the material in any such information or documents to which a claim
of protection may be asserted under Rule 26(c)(7) of the Federal Rules
of Civil Procedure, and defendants mark each pertinent page of such
material, "Subject to claim of protection under Rule 26(c)(7) of the
Federal Rules of Civil Procedure," then the United States shall give
defendants ten (10) calendar days notice prior to divulging such material
in any legal proceeding (other than a grand jury proceeding).
XII. Restrictions on Acquisition
Defendants may not reacquire all or any part of Andes or the Andes
Holdings within the term of this Final Judgment, unless: 1) Defendants
have, not earlier than the date three years after the Andes Holdings
are divested, filed a Notification and Report required by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, and all applicable waiting periods
under that Act have expired, or; 2) if no such Notification
and Report is required, defendants have, not earlier than the date three
years after the Andes Holdings are divested, provided written notice
to the United States containing information equivalent to that required
in a Hart-Scott-Rodino Notification and Report, and either thirty days
thereafter the United States has not issued a request for further information
and documents, or, if the United States has issued such a further request,
thirty days have expired since the date on which defendants certify
that they have substantially complied with that further request,
and; 3) in either or both of the preceding cases, the United States
has not objected in writing to the reacquisition. Provided, further,
that the Andes Holdings are deemed to include any license defendants
might acquire to use any part of the Z-Wire IP for Drop Cable. Nothing
in this Final Judgment affects any ability defendants may otherwise
have to acquire any parts of Andes' business that solely concern products
other than Drop Cable.
XIII. Retention of Jurisdiction
This Court retains jurisdiction to enable any party to this Final
Judgment to apply to this Court at any time for further orders and directions
as may be necessary or appropriate to carry out or construe this Final
Judgment, to modify any of its provisions, to enforce compliance, and
to punish violations of its provisions.
XIV. Expiration of Final Judgment
Unless this Court grants an extension, this Final Judgment shall expire
ten years from the date of its entry.
XV. Public Interest Determination
Entry of this Final Judgment is in the public interest. The parties
have complied with the requirements of the Antitrust Procedures and
Penalties Act, 15 U.S.C. § 16, including making copies available
to the public of this Final Judgment, the Competitive Impact Statement,
and any comments thereon and the United States's responses to comments.
Based upon the record before the Court, which includes the Competitive
Impact Statement and any comments and response to comments filed with
the Court, entry of this Final Judgment is in the public interest.
Date:__________________ |
Court approval subject to procedures
of Antitrust Procedures and Penalties
Act, 15 U.S.C. § 16
_______________________________
United States District Judge |
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