Exhibit 4.2
EXECUTION COPY
LUCENT TECHNOLOGIES INC.
CommScope, Inc.
0000 Xxxxxxx-Xxxxx Xxxxxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxx Xxxxxxxx 00000
The Furukawa Electric Co., Ltd.
0-0 Xxxxxxxxxx
0-xxxxx
Xxxxxxx-xx
Xxxxx 000-0000
Xxxxx
July 24, 2001
Financing Agreement
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Dear Sirs:
We understand that, in connection with the proposed sale by
Lucent Technologies Inc. ("Lucent") of the business of Lucent conducted
through its Optical Fiber Solutions Group (the "OFS Business") to The
Furukawa Electric Co., Ltd., a corporation organized under the laws of
Japan ("Furukawa"), pursuant to the Asset and Stock Purchase Agreement
dated as of July 24, 2001, by and between Lucent and Furukawa (the "OFS
Purchase Agreement"), CommScope, Inc., a Delaware corporation
("CommScope"), and Furukawa have entered into certain arrangements pursuant
to which Furukawa will assign its purchase rights under the OFS Purchase
Agreement with respect to certain of the assets of the OFS Business to one
or more joint venture entities to be formed by Furukawa and CommScope (the
"JVs"). We understand further that, under the arrangements between Furukawa
and CommScope, the purchase price for CommScope's interests in the JVs will
be $651,280,000 in cash (the "JV Interest Purchase Amount") and that
CommScope intends to raise the funds in respect of the JV Interest Purchase
Amount through bank facilities or other third-party debt or equity
financing arrangements (the "Financing"). CommScope has obtained commitment
letters from Canadian Imperial Bank of Commerce and CIBC World Markets
Corp. relating to the Financing, which are attached as Annex I to this
agreement. Finally, we understand that Furukawa intends to use the JV
Interest Purchase Amount to satisfy in part its obligations to pay to
Lucent the purchase price under the OFS Purchase Agreement. The purpose of
this agreement is to set forth certain agreements between and among Lucent,
Furukawa and CommScope with respect to the Financing and the OFS Purchase
Agreement. Capitalized terms used but not defined herein shall have the
meanings ascribed in the OFS Purchase Agreement.
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1. Commitments Relating to the Financing; Lucent's Agreement to
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Accept CommScope Securities in Lieu of a Portion of the Cash
------------------------------------------------------------
Purchase Price under the OFS Purchase Agreement
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(a) CommScope shall use its reasonable best efforts to complete
the Financing prior to the closing of the purchase by Furukawa of the OFS
Business pursuant to the OFS Purchase Agreement (the "Closing") so that the
full amount of the JV Interest Purchase Amount will be available at the
Closing to be paid to Lucent in cash as part of the consideration to be
paid by or on behalf of Furukawa for the OFS Business pursuant to the OFS
Purchase Agreement.
(b) If CommScope is unable to complete all of the Financing prior
to the Closing, Lucent will accept, in lieu of a portion of the cash
purchase price payable by or on behalf of Furukawa under the OFS Purchase
Agreement not to exceed the lesser of (i) the amount by which the JV
Interest Purchase Amount exceeds CommScope's cash contribution to the JVs
provided by the Financing as of the Closing and (ii) $250,000,000 (such
portion, the "Backstop Amount"), the issuance by CommScope to Lucent at the
Closing of that number of shares of common stock, par value $.01 per share,
of CommScope (the "Common Stock") having a Fair Market Value (as defined
below) with respect to the date on which the Closing occurs (the "Closing
Date") equal to the Backstop Amount. "Fair Market Value" means, with
respect to any date, the value determined based on the average per share
closing price of the Common Stock, as reported on the New York Stock
Exchange Composite Transactions Tape (as reported by The Wall Street
Journal (Northeast edition), or if not reported thereby, by any other
authoritative source) for 5 randomly selected trading days chosen from the
10 trading days immediately preceding such date. If the number of shares of
Common Stock that CommScope would otherwise be required to issue to Lucent
pursuant to the immediately preceding sentence would exceed the lower of
(x) 10.2 million shares of Common Stock and (y) that number of shares of
Common Stock that CommScope is able to issue without obtaining the approval
of its stockholders under applicable stock exchange rules and regulations
(as such number may be adjusted from time to time based on changes in the
number of outstanding shares of Common Stock, the "Share Cap"), CommScope's
obligations in respect thereof shall be deemed satisfied if CommScope
issues (or causes to be issued) to Lucent (i) that number of shares of
Common Stock as is equal to the Share Cap and (ii) that number of shares of
preferred stock of CommScope (the terms of which are attached hereto as
Annex II, the "Preferred Stock") having a value at the Closing (the
"Preferred Stock Face Value") equal to the difference between the Fair
Market Value with respect to the Closing Date of the shares of Common Stock
so issued and the Backstop Amount. The dividend rate of the Preferred Stock
will be determined such that shares of Preferred Stock would be expected to
trade at par as of the Closing Date, by mutual agreement of CommScope and
Lucent. If CommScope and Lucent cannot agree, they shall appoint an
independent investment bank of national reputation that will make such
determination, which shall be final and binding on CommScope and Lucent.
The shares of Common Stock and Preferred Stock, if any, issued to Lucent as
contemplated by this agreement are hereinafter referred to as the "Shares".
2. Post-Closing Financing Commitment; Repurchase of Shares
-------------------------------------------------------
Notwithstanding the occurrence of the Closing and CommScope's
issuance of the Shares to Lucent, CommScope shall, for up to 12 months
following the Closing, continue to use its commercially reasonable efforts
to complete the Financing or to otherwise raise funds in an amount equal to
the Backstop Amount. To the extent
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consistent with CommScope's existing bank facilities and any bank
facilities entered into by CommScope in connection with the Financing, and
other than for working capital purposes or to fund any shortfall in the JV
Interest Purchase Amount that was not provided by CommScope in connection
with the Closing, if within 12 months following the Closing Date, CommScope
completes the Financing or otherwise raises funds in an amount equal to or
greater than the Backstop Amount, CommScope, promptly upon its receipt of
such funds, first, shall repurchase from Lucent the Preferred Stock for an
amount in cash equal to the Preferred Stock Face Value, and, second, shall
repurchase from Lucent the Common Stock held by Lucent for an amount in
cash equal to the then current Fair Market Value.
3. No Extraordinary Transactions
-----------------------------
During the period from the date of this agreement to the earlier
of the termination of this agreement pursuant to its terms or the issuance
of Shares, CommScope shall carry on its business in all material respects
in the ordinary course consistent with past practice and in compliance in
all material respects with all applicable laws and regulations. Without
limiting the generality of the foregoing, during the period from the date
of this agreement and continuing until the earlier of the termination of
this agreement pursuant to its terms or the issuance of Shares, CommScope
shall not, without Lucent's prior written consent:
(i) directly or indirectly acquire or agree to acquire by
merging or consolidating with, or by purchasing all or a
substantial portion of the assets of, or by any other
manner, any assets constituting a business or any
corporation, partnership, joint venture or association or
other entity or division thereof, or any direct or
indirect interest in any of the foregoing, in each case
that is material to CommScope and its subsidiaries, taken
as a whole, other than CommScope's investment in the JVs
or its participation in any of the other transactions
contemplated by the OFS Purchase Agreement;
(ii) except in the ordinary course of business consistent with
past practice, directly or indirectly sell, lease,
license, sell and leaseback, mortgage or otherwise
encumber or subject to any lien or other encumbrance or
otherwise dispose of any properties or assets or any
interest therein, in each case that are material to
CommScope and its subsidiaries, taken as a whole, other
than in connection with the Financing and the transactions
contemplated by the OFS Purchase Agreement;
(iii) acquire, merge or agree to acquire or be acquired, by
merging or consolidating with, or by purchasing a
substantial equity interest in any business or any
corporation, partnership, association, or other business
organization or division thereof, in each case in a
transaction that is material to CommScope and its
subsidiaries taken as a whole, other than CommScope's
investment in the JVs or its participation in any of the
transactions contemplated by the OFS Purchase Agreement;
or
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(iv) authorize any of, or commit, resolve or agree to take any
of, the foregoing actions.
4. Registration Rights
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At or prior to the issuance of the Shares to Lucent, CommScope
shall enter into a registration rights agreement with Lucent in customary
form that provides for registration rights, including demand and
"piggyback" rights, in favor of Lucent. Lucent will have four demand
registration rights, pursuant to the first of which Lucent shall not sell
any Shares thereunder until the earlier of (i) the commencement of
CommScope's contemplated high yield debt offering pursuant to the Financing
and (ii) 120 days after the Closing Date. Any sale of Shares by Lucent
pursuant to the exercise of its first demand registration right shall be
made in a manner that is coordinated with the underwriting arrangements
relating to such high yield debt offering. Such registration rights
agreement will not contain any restrictions on the transferability,
ownership or voting of the Shares other than customary underwriter
lock-ups. The shares of Common Stock issued to Lucent as contemplated by
this agreement shall have the same voting rights as the currently
outstanding Common Stock. Until the fifth anniversary of the Closing,
Lucent will not, without the prior consent of the board of directors of
CommScope, (i) acquire or offer to acquire additional shares of Common
Stock or securities convertible into Common Stock (whether or not any of
the shares of Common Stock issued to Lucent as contemplated by this
agreement have been sold), (ii) solicit proxies in opposition to the board
of directors of CommScope or (iii) make any change in control proposal to
CommScope. Notwithstanding the foregoing, Lucent shall be entitled to
purchase shares, solicit proxies or make a change in control proposal if
CommScope enters into a definitive agreement for a change in control
transaction with a third party.
5. Representations and Warranties of CommScope
-------------------------------------------
CommScope represents and warrants as of the date hereof and as of
the issuance of the Shares to Lucent and Furukawa as follows:
(a) Organization, Standing and Power. CommScope is duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite power and authority to own, lease
and otherwise hold and operate its assets and to carry on its business as
presently conducted.
(b) Authorization; Enforceability. (i) CommScope has full power
and authority to enter into and perform this agreement and to issue the
Shares in accordance with the terms hereof; (ii) the execution and delivery
of this agreement by CommScope and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action; (iii) this agreement has been duly executed and delivered
by CommScope and (iv) this agreement constitutes a valid and binding
obligation of CommScope enforceable against CommScope in accordance with
its terms.
(c) Authorized Shares; Stock Exchange Listing. CommScope will,
prior to the Closing, take all corporate and other action necessary to
authorize and reserve and, subject to the expiration or termination of any
required waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 0000 (xxx "XXX Xxx"), to permit it to issue, and, at all times from
the date of this agreement until its obligation to issue the Shares in the
circumstances described in this agreement terminates, shall have reserved
for issuance, a number of shares of Common Stock at least equal to the
Share Cap. The
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Shares to be issued pursuant to this agreement, upon issuance pursuant
hereto, will be duly and validly issued, fully paid and nonassessable, and
will be delivered free and clear of all liens and other encumbrances (other
than any liens or encumbrances under the arrangements entered into by
Lucent or its subsidiaries), including any preemptive rights of any
stockholder of CommScope. Prior to the Closing Date, the shares of Common
Stock issuable to Lucent as contemplated by this agreement will be approved
for listing on the New York Stock Exchange, subject to official notice of
issuance.
(d) No Conflicts. The execution, delivery and performance of this
agreement and the consummation by CommScope of the transactions
contemplated hereby will not conflict with, or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give rise to any rights of termination, amendment, acceleration
or cancelation of, or result in the creation of a lien or other encumbrance
on any property or asset of CommScope or any of its subsidiaries pursuant
to any agreement, indenture or instrument to which CommScope or any of its
subsidiaries is a party, in each case material to CommScope and its
subsidiaries taken as a whole, or result in a violation of its certificate
of incorporation or by-laws or any law, rule, regulation, order, judgment
or decree applicable to CommScope, any of its subsidiaries or by which any
property or asset of CommScope is bound or affected, in each case material
to CommScope and its subsidiaries taken as a whole, subject to filing a
Certificate of Designation with the Secretary of State of the State of
Delaware relating to the Preferred Stock. Except for such filings as may be
required by the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any filings under the HSR Act, no consent, authorization or
order of, or filing or registration with, any court or governmental agency
is required for the execution, delivery and performance by CommScope of
this agreement or the issuance by CommScope of the Shares.
(e) Section 203 Approval; Rights Agreement Amendment; No Other
Restrictions or Impediments. The Board of Directors of CommScope has
unanimously approved the terms of this agreement and the consummation of
the transactions contemplated hereby, and such approval represents all the
action necessary to render inapplicable to the purchase of Shares by Lucent
pursuant to this agreement and the transactions contemplated hereby (i) the
provisions of Section 203 of the General Corporation Law of the State of
Delaware to the extent, if any, such Section would otherwise be applicable
to this agreement and the transactions contemplated hereby and (ii) the
provisions of the rights agreement between CommScope and its rights agent.
No Delaware law or other takeover statute or similar law and no provision
of the certificate of incorporation or by-laws of CommScope or any
agreement to which CommScope is a party (i) would impose restrictions which
might adversely affect or delay the consummation of the transactions
contemplated by this agreement or (ii) as a result of the consummation of
the transactions contemplated by this agreement, would restrict or impair
the ability of Lucent to vote or otherwise exercise the rights of a
stockholder with respect to Shares.
(f) SEC Documents. CommScope has filed all required reports,
schedules, forms, statements and other documents with the Securities and
Exchange Commission (the "SEC") since January 1, 2000 (any of the foregoing
filed prior to the date hereof are referred to herein as the "SEC
Documents"). As of their respective dates, the SEC Documents complied in
all material respects with the requirements of the Securities Act of 1933,
as amended (the "Securities Act") or the Exchange Act, as the case may be,
and the rules and regulations of the SEC promulgated thereunder applicable
to such SEC Documents, and none of the SEC Documents contained any untrue
statement
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of a material fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
financial statements of CommScope included in the SEC Documents comply as
to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto,
have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto) and fairly present in all
material respects the consolidated financial position of CommScope and its
consolidated subsidiaries as of the dates thereof and the consolidated
results of their operations and cash flows for the periods then ended
(subject, in the case of unaudited statements, to normal and recurring
year-end audit adjustments).
6. Representations and Warranties of Lucent
----------------------------------------
Lucent represents and warrants as of the date hereof and as of
the issuance of the Shares to CommScope and Furukawa as follows:
(a) Organization, Standing and Power. Lucent is duly organized,
validly existing and in good standing under the laws of the State of
Delaware and has all requisite power and authority to own, lease and
otherwise hold and operate its assets and to carry on its business as
presently conducted.
(b) Authorization, Enforceability. (i) Lucent has full power and
authority to enter into and perform this agreement; (ii) the execution and
delivery of this agreement by Lucent and the consummation by it of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action; (iii) this agreement has been duly executed and delivered
by Lucent and (iv) this agreement constitutes a valid and binding
obligation of Lucent enforceable against Lucent in accordance with its
terms.
(c) Securities Act. (i) Any Shares acquired by Lucent pursuant to
this agreement will not be transferred or otherwise disposed of by Lucent
except in a transaction registered, or exempt from registration, under the
Securities Act; (ii) Lucent is acquiring the Shares contemplated to be
issued to it under this agreement for its own account, for investment and
not with a view to the distribution thereof within the meaning of the
Securities Act; (iii) Lucent understands that the Shares have not been, and
(except pursuant to the registration rights agreement contemplated by
paragraph 4 of this agreement) will not be, registered under the Securities
Act or any state securities laws, by reason of their issuance by CommScope
in a transaction exempt from the registration requirements thereof, and
that the Shares may not be sold unless such sale is registered under the
Securities Act and applicable state securities laws or is exempt from
registration thereunder; (iv) Lucent further understands that the exemption
from registration afforded by Rule 144 under the Securities Act (the
provisions of which are known by Lucent) depends on the satisfaction of
various conditions and that, if applicable, Rule 144 may afford the basis
for sales of Shares only in limited amounts; (v) Lucent is an "accredited
investor" (as defined in Rule 501(a) under the Securities Act); and (vi)
Lucent has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of the investment in
the Shares hereunder and is able to bear the economic risk of loss of such
investment.
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7. Representations and Warranties of Furukawa
-------------------------------------------
Furukawa represents and warrants as of the date hereof and as of
the issuance of the Shares to Lucent and CommScope as follows:
(a) Organization, Standing and Power. Furukawa is duly
organized, validly existing and in good standing under the laws of the
Japan and has all requisite power and authority to own, lease and otherwise
hold and operate its assets and to carry on its business as presently
conducted.
(b) Authorization; Enforceability. (i) Furukawa has full power
and authority to enter into and perform this agreement; (ii) the execution
and delivery of this agreement by Furukawa and the consummation by it of
the transactions contemplated hereby have been duly authorized by all
necessary corporate action; (iii) this agreement has been duly executed and
delivered by Furukawa and (iv) this agreement constitutes a valid and
binding obligation of Furukawa enforceable against Furukawa in accordance
with its terms.
8. Access
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Lucent will give, and cause its Affiliates to give, to CommScope
and to its officers, employees, accountants, counsel and other
representatives reasonable access in accordance with the terms of Section
5.1 of the OFS Purchase Agreement as if CommScope was the "Buyer"
thereunder.
9. General Provisions
------------------
(a) Headings. The headings contained in this agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this agreement.
(b) Governing, Law. This agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, regardless
of the laws that might otherwise govern under applicable principles of
conflicts of laws thereof.
(c) Counterparts. This agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed
by each of the parties and delivered to the other parties.
(d) Termination. This agreement shall terminate upon (i) the
termination of the OFS Purchase Agreement or (ii) the payment by or on
behalf of Furukawa to Lucent of the full purchase price under the OFS
Purchase Agreement in cash at the Closing.
(e) Expenses. Each party shall pay its own costs and expenses
incurred in connection with the matters set forth in this agreement, except
as set forth in the registration rights agreement.
(f) Amendments. This agreement may only be amended pursuant to a
written instrument executed on behalf of each party by its duly authorized
officer.
If the foregoing correctly sets forth our agreement, please
indicate your acceptance of the terms hereof by returning to us executed
counterparts hereof, whereupon this agreement will become a binding
agreement between Lucent, Furukawa and CommScope.
Very truly yours,
LUCENT TECHNOLOGIES INC.,
by /s/ Xxxxxx X. XxXxxxxx
--------------------------
Name: Xxxxxx X. XxXxxxxx
Title: Vice President/Law
Accepted and agreed to
as of the date first
written above by:
COMMSCOPE, INC.
by /s/ Xxxxx X. Xxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxx
Title: Chairman & CEO
THE FURUKAWA ELECTRIC CO., LTD.,
by /s/ Jurrosuke Furukawa
-----------------------------
Name: Jurrosuke Furukawa
Title: President & Chief
Executive Officer
