Exhibit 10.2
$500,000,000
BROCADE COMMUNICATIONS SYSTEMS, INC.
2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2007
PURCHASE AGREEMENT
December 18, 2001
December 18, 2001
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Xxxxx, Xxxxxx Xxxxxx and Xxxxx Incorporated
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Brocade Communications Systems, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several purchasers named in
Schedule I hereto (the "Initial Purchasers") $500,000,000.00 principal amount
of its 2% Convertible Subordinated Debentures due 2007 (the "Firm Securities")
to be issued pursuant to the provisions of an Indenture dated as of December
21, 2001 (the "Indenture") between the Company and State Street Bank & Trust
Company of California, N.A., as Trustee (the "Trustee"). The Company also
proposes to issue and sell to the Initial Purchasers not more than an
additional $50,000,000.00 principal amount of its 2% Convertible Subordinated
Debentures due 2007 (the "Additional Securities") if and to the extent that
you, as Managers of the offering, shall have determined to exercise, on behalf
of the Initial Purchasers, the right to purchase such 2% Convertible
Subordinated Debentures due 2007 granted to the Initial Purchasers in Section 2
hereof. The Firm Securities and the Additional Securities are hereinafter
collectively referred to as the "Securities". The Securities will be
convertible into shares of Common Stock, par value $0.001 (the "Underlying
Securities").
The Securities and the Underlying Securities will be offered without
being registered under the Securities Act of 1933, as amended (the "Securities
Act"), to qualified institutional buyers in compliance with the exemption from
registration provided by Rule 144A under the Securities Act.
The Initial Purchasers and their direct and indirect transferees will
be entitled to the benefits of a Registration Rights Agreement dated as of the
date of the Indenture between the Company and the Initial Purchasers (the
"Registration Rights Agreement").
In connection with the sale of the Securities, the Company will
prepare a final offering memorandum (the "Memorandum") including or
incorporating by reference a description of the terms of the Securities and the
Underlying Securities, the terms of the offering and a description of the
Company. As used herein, the term "Memorandum" shall include in each case the
documents incorporated by reference therein. The terms "supplement",
"amendment" and "amend" as used herein with respect to the Memorandum shall
include all documents deemed to be incorporated by reference in the Memorandum
that are filed subsequent to the date of the Memorandum with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
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1. Representations and Warranties. The Company represents and
warrants to, and agrees with, you that:
(a) (i) Each document, if any, filed or to be filed
pursuant to the Exchange Act and incorporated by reference
in either Memorandum complied or will comply when so filed in all
material respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder and (ii) the Memorandum, in
the form used by the Initial Purchasers to confirm sales and on the
Closing Date (as defined in Section 4), will not contain any untrue
statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, except that
the representations and warranties set forth in this paragraph do not
apply to statements or omissions in the Memorandum based upon
information relating to any Initial Purchaser furnished to the
Company in writing by such Initial Purchaser through you expressly
for use therein.
(b) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and
authority to own its property and to conduct its business as
described in the Memorandum and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to
be so qualified or be in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole.
(c) Each Significant Subsidiary (as defined below) of the
Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of
its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Memorandum
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole; all of the issued shares of
capital stock of each Significant Subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company
(except for nominal ownership required for compliance with applicable
local laws), free and clear of all liens, encumbrances, equities or
claims. Other than Brocade Communications Switzerland Sarl, the
Company has no subsidiaries that are "significant subsidiaries" as
defined in Rule 1-02(w) of Regulation S-X of the Securities Act (a
"Significant Subsidiary").
(d) This Agreement has been duly authorized, executed and
delivered by the Company.
(e) The authorized capital stock of the Company conforms in
all material respects as to legal matters to the description thereof
contained in the Memorandum.
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(f) The shares of common stock outstanding on the date hereof
have been duly authorized and are validly issued, fully paid and
non-assessable.
(g) The Securities have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of this Agreement, will be valid and
binding obligations of the Company, enforceable in accordance with
their terms, subject to the effects of applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and
general principles of equity, and, subject to Section 1(i) below,
will be entitled to the benefits of the Indenture and the
Registration Rights Agreement.
(h) The Underlying Securities issuable upon conversion of the
Securities have been duly authorized and reserved and, when issued
upon conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and non-assessable,
and the issuance of the Underlying Securities will not be subject to
any preemptive or similar rights.
(i) Each of the Indenture and Registration Rights Agreement
has been duly authorized, and when executed and delivered by the
Company and the counterparties thereto, is a valid and binding
agreement of, the Company, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of
equity and except as rights to indemnification and contribution under
the Registration Rights Agreement may be limited under applicable law.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture, the Registration Rights Agreement and the Securities do
not and will not contravene (i) any provision of applicable law, (ii)
the certificate of incorporation or by-laws of the Company, (iii) any
agreement or other instrument binding upon the Company or (iv) any of
its subsidiaries that is material to the Company and its
subsidiaries, taken as a whole, or any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the
Company or any subsidiary, except in the case of clauses (iii) and
(iv), for any such contraventions that would not have a material
adverse effect on the Company and its subsidiaries taken as a whole.
No consent, approval, authorization or order of, or qualification
with, any governmental body or agency is required for the performance
by the Company of its obligations under this Agreement, the
Indenture, the Registration Rights Agreement or the Securities,
except (i) such as may be required by the securities or Blue Sky laws
of the various states in connection with the offer and sale of the
Securities, (ii) such as may be required by Federal and state
securities laws with respect to the Company's obligations under the
Registration Rights Agreement, (iii) such consents, approvals,
authorizations, orders and decrees or qualifications which if not
obtained would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole, and (iv) for qualification of the
Indenture under the Trust Indenture Act of 1939, as amended (the
"1939 Act").
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(k) Since July 28, 2001, there has not occurred any event
or condition that has had, or is reasonably likely to have, a material
adverse change in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and its subsidiaries,
taken as a whole, other than as set forth in the Memorandum.
(l) There are no legal or governmental proceedings pending
or threatened to which the Company or any of its Significant
Subsidiaries is a party or to which any of the properties of the
Company or any of its Significant Subsidiaries is subject other than
proceedings accurately described in all material respects in the
Memorandum and proceedings that would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole, or on
the power or ability of the Company to perform its obligations under
this Agreement, the Indenture, the Registration Rights Agreement or
the Securities or to consummate the transactions contemplated by the
Memorandum.
(m) The Company and its subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and
safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("Environmental Laws"), (ii) have received
all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses
and (iii) are in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
other approvals or failure to comply with the terms and conditions of
such permits, licenses or approvals would not, singly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(n) Neither the Company nor any of its Significant
Subsidiaries is liable for any costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any
potential liabilities to third parties) which could reasonably be
expected to, singly or in the aggregate, have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(o) The Company has good and marketable title in fee
simple to all real property and good and marketable title to all
personal property owned by it which is material to the business of the
Company free and clear of all liens, encumbrances and defects except
such liens, encumbrances and defects that do not materially affect the
value of such property and do not interfere with the use made and
proposed to be made of such property by the Company; and any real
property and buildings held under lease by the Company are held by
them under valid, subsisting and enforceable leases with such
exceptions as are not material and do not materially interfere with
the use made and proposed to be made of such property and buildings
by the Company, except as described in the Memorandum.
(p) The Company and its subsidiaries own or possess
adequate licenses or other rights to use all material patents,
copyrights, trademarks, service marks, trade
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names, technology and know-how (the "Intellectual Property")
necessary to conduct their respective businesses in the manner
described in the Memorandum or could obtain such licenses or rights
on terms that would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole, and, except as disclosed in
the Memorandum, neither of the Company nor any of its subsidiaries
has received any notice of infringement of or conflict with asserted
rights of others with respect to any Intellectual Property which
could reasonably be expected to have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(q) No material labor dispute with the employees of the
Company exists, except as described in the Memorandum, or, to the
knowledge of the Company, is imminent; and without conducting any
independent investigation, the Company is not aware of any existing
or overtly threatened labor disturbance by the employees of any of
its principal suppliers, manufacturers or contractors that could
reasonably be expected to have a material adverse effect on the
Company.
(r) The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which it is
engaged; the Company has not been refused any insurance coverage
sought or applied for; and the Company does not have any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a material adverse effect on
the Company, except as described in the Memorandum.
(s) The Company possesses all certificates, authorizations
and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business, except as
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole and the Company has not received any
notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company, except
as described in the Memorandum.
(t) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain asset
accountability; and (iii) access to financial assets is permitted
only in accordance with management's general or specific
authorization.
(u) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to
file would not have a material adverse effect on the Company) and has
paid all taxes required to be paid by it and any other assessment,
fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such
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assessment, fine or penalty that is currently being contested in good
faith or as could not reasonably be expected to have a material adverse
effect on the Company.
(v) The Company has fulfilled its obligations, if any,
under the minimum funding standards of Xxxxxxx 000 xx xxx Xxxxxx
Xxxxxx Employee Retirement Income Security Act of 1974 ("ERISA") and
the regulations and published interpretations thereunder with respect
to each "plan" (as defined in Section 3(3) of ERISA and such
regulations and published interpretations) in which employees of the
Company are eligible to participate. Each such plan is in compliance
in all respects with the presently applicable provisions of ERISA and
such regulations and published interpretations, except where the
failure to so comply could not reasonably be expected, individually
or in the aggregate, to have a material adverse effect on the
Company. The Company has not incurred any unpaid liability to the
Pension Benefit Guaranty Corporation (other than for the payment of
premiums in the ordinary course) or to any such plan under Title IV
of ERISA.
(w) The Company and each of its subsidiaries possess all
consents, approvals, orders, certificates, authorizations and permits
issued by, and have made all declarations and filings with, all
appropriate federal, state or foreign governmental or self regulatory
authorities and all courts and other tribunals necessary to conduct
their respective businesses and to own, lease, license and use its
properties in the manner described in the Memorandum, except to the
extent that the failure to obtain or file would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole,
and neither the Company nor any of its subsidiaries has received any
notice of proceedings relating to the revocation or modification of
any such consent, approval, order, certificate, authorization or
permit that, singly or in the aggregate, if the subject of any
unfavorable decision, ruling or finding, or failure to obtain or
file, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
(x) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Memorandum will not be, required
to register as an "investment company" as such term are defined in
the Investment Company Act of 1940, as amended.
(y) Neither the Company nor any affiliate (as defined in
Rule 501(b) of Regulation D under the Securities Act, an "Affiliate")
of the Company has directly, or through any agent (other than the
Initial Purchasers), (i) sold, offered for sale, solicited offers to
buy or otherwise negotiated in respect of, any security (as defined
in the Securities Act) which is or will be integrated with the sale
of the Securities in a manner that would require the registration
under the Securities Act of the Securities or (ii) offered, solicited
offers to buy or sold the Securities by any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.
(z) It is not necessary in connection with the offer, sale
and delivery of the Securities to the Initial Purchasers in the
manner contemplated by this Agreement to
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register the Securities under the Securities Act or to qualify the
Indenture under the 1939 Act.
(aa) The Securities satisfy the requirements set forth in
Rule 144A(d)(3) under the Securities Act.
(bb) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to include such securities with the Securities
registered pursuant to the Registration Rights Agreement, which rights
have not been waived.
(cc) Neither the Company nor any of its subsidiaries has
taken, directly or indirectly, any action which was intentionally
designed to, or which might reasonably be expected to cause, or result
in stabilization or manipulation of the prices of any security of the
Company to facilitate the sale or resale of the Securities.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell
to the several Initial Purchasers, and each Initial Purchaser, upon the basis
of the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Company the respective principal amount of Firm Securities set forth
in Schedule I hereto opposite its name at a purchase price of 97.75 % of the
principal amount at maturity thereof (the "Purchase Price") plus accrued
interest, if any, to the Closing Date. Promptly following the Closing Date,
you, on behalf of the Initial Purchasers, shall reimburse the Company of all
reasonable expenses paid by the Company in connection with the offering of
securities and transactions contemplated by this Purchase Agreement, including
pursuant to Section 6(e) hereof.
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchasers the Additional Securities, and the Initial Purchasers
shall have a one-time right to purchase, severally and not jointly, up to $
50,000,000.00 principal amount of Additional Securities at the Purchase Price
plus accrued interest, if any, to the date of payment and delivery. If you, on
behalf of the Initial Purchasers, elect to exercise such option, you shall so
notify the Company in writing not later than 30 days after the date of this
Agreement, which notice shall specify the principal amount of Additional
Securities to be purchased by the Initial Purchasers and the date on which such
Additional Securities are to be purchased. Such date may be the same as the
Closing Date but not earlier than the Closing Date nor later than ten business
days after the date of such notice. Additional Securities may be purchased as
provided in Section 4 solely for the purpose of covering exercises of the
option made in connection with the offering of the Firm Securities. If any
Additional Securities are to be purchased, each Initial Purchaser agrees,
severally and not jointly, to purchase the principal amount of Additional
Securities (subject to such adjustments to eliminate fractional Securities as
you may determine) that bears the same proportion to the total principal amount
of Additional Securities to be purchased as the principal amount of Firm
Securities set forth in Schedule I opposite the name of such Initial Purchaser
bears to the total principal amount of Firm Securities.
The Company hereby agrees that, without the prior written consent of
Xxxxxx Xxxxxxx &
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Co. Incorporated on behalf of the Initial Purchasers, it will not, during the
period beginning on the date hereof and ending February 15, 2002 (the
"Expiration Date") (i) offer, pledge, sell, contract to sell, sell any option
or contract to purchase, purchase any option or contract to sell, grant any
option, right or warrant to purchase, lend, or otherwise transfer or dispose
of, directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock or (ii) enter
into any swap or other arrangement that transfers to another, in whole or in
part, any of the economic consequences of ownership of the common stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of common stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the issuance and sale
of the Firm Securities, (B) the issuance of the Underlying Securities, (C) the
issuance by the Company of shares of common stock upon the exercise of an
option or a warrant or the conversion of a security, (D) the granting of
additional options or restricted stock under the Company's existing employee
benefit plans, (E) the issuance of shares of common stock by the Company in
connection with the acquisitions of other companies or businesses by the
Company, (F) the issuance of shares of common stock or warrants to acquire
common stock in connection with strategic transactions or financing
arrangements by the Company, (G) sales or other transfers by the Company's
executive officers and directors collectively in an amount not to exceed
1,000,000 shares of the Company's common stock, (H) transactions by the
Company's executive officers and directors relating to shares of the Company's
common stock or other securities acquired in open market transactions after the
completion of the transactions described in the Memorandum, (I) the exercise of
stock options granted by the Company, (J) transfers by gift, will or intestacy
and transfers to related parties and (K) transactions relating to shares of
common stock or other securities acquired in open market transactions after the
completion of the offering of the Securities; provided, however, with respect
to clauses (E), (F) and (J) that if any common stock is issued prior to the
Expiration Date or if any securities convertible into common stock are issued
that are convertible into common stock prior to the Expiration Date, the
recipient thereof shall agree, until February 15, 2002, to comply with
subsections (i) and (ii) above, subject to the same exceptions granted to the
Company's directors and executive officers as set forth in the Lock Up Letter
attached hereto as Exhibit C.
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3. Terms of Offering. You have advised the Company that the Initial
Purchasers will make an offering of the Securities purchased by the Initial
Purchasers hereunder on the terms to be set forth in the Memorandum, as soon as
practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Firm Securities shall be made
to the Company in Federal or other funds immediately available by wire transfer
to an account specified in advance by the Company against delivery of such Firm
Securities for the respective accounts of the several Initial Purchasers at a
closing to be held at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, a
Professional Corporation, in Palo Alto, California at 7:00 a.m., Palo Alto
time, on December 21, 2001, or at such other time on the same or such other
date, not later than December 24, 2001, as shall be mutually designated in
writing by you and the Company. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for any Additional Securities shall be made to the Company in
Federal or other funds immediately available by wire transfer to an account
specified in advance by the Company
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against delivery of such Additional Securities for the respective accounts of
the several Initial Purchasers at 7:00 a.m., Palo Alto time, on the date
specified in the notice described in Section 2 or at such other time on the
same or on such other date, in any event not later than January 17, 2002, as
shall be mutually designated in writing by you and the Company. The time and
date of such payment are hereinafter referred to as the "Option Closing Date."
Certificates for the Securities shall be in definitive form or global
form, as specified by you, and registered in such names and in such
denominations as you shall request in writing not later than one full business
day prior to the Closing Date or the Option Closing Date, as the case may be.
The certificates evidencing the Securities shall be delivered to you on the
Closing Date or the Option Closing Date, as the case may be, for the respective
accounts of the several Initial Purchasers, with any transfer taxes payable in
connection with the transfer of the Securities to the Initial Purchasers duly
paid, against payment of the Purchase Price therefore plus accrued interest, if
any, to the date of payment and delivery.
5. Conditions to the Initial Purchasers' Obligations. The several
obligations of the Initial Purchasers to purchase and pay for the Firm
Securities on the Closing Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this
Agreement and prior to the Closing Date, there shall not have
occurred any change, or any development involving a prospective
change, in the condition, financial or otherwise, or in the earnings,
business or operations of the Company and its subsidiaries, taken as
a whole, from that set forth in the Memorandum that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Securities on the terms and in
the manner contemplated in the Memorandum.
(b) The Initial Purchasers shall have received on the
Closing Date a certificate, dated the Closing Date and signed by an
executive officer of the Company, to the effect set forth in Section
5(a) and to the effect that the representations and warranties of the
Company contained in this Agreement are true and correct as of the
Closing Date and that the Company has complied with all of the
agreements and satisfied all of the conditions on its part to be
performed or satisfied hereunder on or before the Closing Date. The
officer signing and delivering such certificate may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Initial Purchasers shall have received on the
Closing Date an opinion of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx,
Professional Corporation, outside counsel for the Company and the
Geneva office of Xxxxx & XxXxxxxx, dated the Closing Date, to the
effect set forth in Exhibit A-1 and Exhibit A-2, respectively. Such
opinions shall be rendered to the Initial Purchasers at the request
of the Company and shall so state therein.
(d) The Initial Purchasers shall have received on the
Closing Date an opinion of Xxxx Xxxx Xxxx & Freidenrich LLP, counsel
for the Initial Purchasers, dated the Closing Date, to the effect set
forth in Exhibit B.
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(e) The Initial Purchasers shall have received on each of
the date hereof and the Closing Date a letter, dated the date hereof
or the Closing Date, as the case may be, in form and substance
reasonably satisfactory to the Initial Purchasers, from Xxxxxx
Xxxxxxxx, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
certain financial information contained in or incorporated by
reference into the Memorandum; provided that the letter delivered on
the Closing Date shall use a "cut-off date" not earlier than the date
hereof.
(f) The "lock-up" agreements, each substantially in the
form of Exhibit C hereto, between you and certain executive
shareholders, officers and directors of the Company relating to sales
and certain other dispositions of shares of common stock or certain
other securities, delivered to you on or before the date hereof,
shall be in full force and effect on the Closing Date.
The several obligations of the Initial Purchasers to purchase
Additional Securities hereunder are subject to the delivery to you on the
Option Closing Date of such documents as you may reasonably request with
respect to the good standing of the Company, the due authorization, execution
and authentication and issuance of the Additional Securities and other matters
related to the execution and authentication and issuance of the Additional
Securities.
6. Covenants of the Company. In further consideration of the
agreements of the Initial Purchasers contained in this Agreement, the Company
covenants with each Initial Purchaser as follows:
(a) To furnish to you in New York City, without charge,
prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned
in Section 6(c), as many copies of the Memorandum, any documents
incorporated by reference therein and any supplements and amendments
thereto as you may reasonably request.
(b) Before amending or supplementing the Memorandum, to
furnish to you a copy of each such proposed amendment or supplement
and not to use any such proposed amendment or supplement to which you
reasonably object.
(c) If, during such period after the date hereof and prior
to the date on which all of the Securities shall have been sold by
the Initial Purchasers, any event shall occur or condition exist as a
result of which it is necessary to amend or supplement the Memorandum
in order to make the statements therein, in the light of the
circumstances when the Memorandum is delivered to a purchaser, not
misleading, or if, in the reasonable opinion of counsel for the
Initial Purchasers or counsel for the Company, it is necessary to
amend or supplement the Memorandum to comply with applicable law,
forthwith to prepare and furnish, at its own expense, to the Initial
Purchasers, either amendments or supplements to the Memorandum so
that the statements in the Memorandum as so amended or supplemented
will not, in the light of the circumstances when the Memorandum is
delivered to a purchaser, be misleading or so that the Memorandum, as
amended or supplemented, will comply with applicable law.
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(d) To endeavor to qualify the Securities for offer and
sale under the securities or Blue Sky laws of such jurisdictions as
you shall reasonably request; provided that in connection therewith
the Company shall not be required to qualify to conduct business as a
foreign corporation or to execute a general consent to service of
process, other than as to matters and transactions relating to the
Memorandum, in any jurisdictions.
(e) Subject to Section 2 hereof, whether or not the
transactions contemplated in this Agreement are consummated or this
Agreement is terminated, to pay or cause to be paid all expenses
incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's
counsel and the Company's accountants in connection with the issuance
and sale of the Securities and all other fees or expenses in
connection with the preparation of the Memorandum and all amendments
and supplements thereto, including all printing costs associated
therewith, and the delivering of copies thereof to the Initial
Purchasers, in the quantities herein above specified, (ii) all costs
and expenses related to the transfer and delivery of the Securities
to the Initial Purchasers, including any transfer or other taxes
payable thereon, (iii) the cost of printing or producing any Blue Sky
or legal investment memorandum in connection with the offer and sale
of the Securities under state securities laws and all expenses in
connection with the qualification of the Securities for offer and
sale under state securities laws as provided in Section 6(d) hereof,
including filing fees and the reasonable fees and disbursements of
counsel for the Initial Purchasers in connection with such
qualification and in connection with the Blue Sky or legal investment
memorandum, (iv) any fees charged by rating agencies for the rating
of the Securities, (v) the fees and expenses, if any, incurred in
connection with the admission of the Securities for trading in Portal
or any appropriate market system, (vi) the costs and charges of the
Trustee and any transfer agent, registrar or depositary, (vii) the
cost of the preparation, issuance and delivery of the Securities, and
(viii) all other cost and expenses incident to the performance of the
obligations of the Company hereunder for which provision is not
otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 8, and the last paragraph
of Section 10, the Initial Purchasers will pay all of their costs and
expenses, including fees and disbursements of their counsel, transfer
taxes payable on resale of any of the Securities by them and any
advertising expenses connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in the Securities Act) which could
reasonably be integrated under applicable law with the sale of the
Securities in a manner which would require the registration under the
Securities Act of the Securities.
(g) Neither the Company nor any Affiliate will solicit any
offer to buy or offer or sell the Securities or the Underlying
Securities by means of any form of general solicitation or general
advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act.
11
(h) While any of the Securities or the Underlying
Securities remain "restricted securities" within the meaning of the
Securities Act, to make available, upon request, to any seller of
such Securities the information specified in Rule 144A(d)(4) under
the Securities Act, unless the Company is then subject to Section 13
or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit
the Securities to be designated Portal securities in accordance with
the rules and regulations adopted by the National Association of
Securities Dealers, Inc. relating to trading in the Portal Market.
(j) During the period of two years after the Closing Date
or the Option Closing Date, if later, the Company will not, and will
not permit any of its affiliates (as defined in Rule 144 under the
Securities Act) to, resell any of the Securities or the Underlying
Securities which constitute "restricted securities" under Rule 144
that have been reacquired by any of them.
(k) Not to take any action prohibited by Regulation M
under the Exchange Act in connection with the distribution of the
Securities contemplated hereby.
7. Offering of Securities; Restrictions on Transfer. (a) Each Initial
Purchaser, severally and not jointly, represents and warrants that such Initial
Purchaser is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Initial Purchaser, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Securities only
from, and will offer such Securities only to, persons that it reasonably
believes to be QIBs.
8. Indemnity and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Initial Purchaser and each person, if any, who controls any Initial
Purchaser within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim)
caused by any untrue statement or alleged untrue statement of a
material fact contained in the Memorandum (as amended or supplemented
if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state
therein a material fact necessary to make the statements therein in
the light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission based upon information relating
to any Initial Purchaser furnished to the Company in writing by such
Initial Purchaser through you expressly for use therein.
12
(b) Each Initial Purchaser agrees, severally and not
jointly, to indemnify and hold harmless the Company, its directors,
its officers and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity
from the Company to such Initial Purchaser, but only with reference
to information relating to such Initial Purchaser furnished to the
Company in writing by such Initial Purchaser through you expressly
for use in the Memorandum or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to Section 8(a) or 8(b), such
person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party")
in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to
the indemnified party to represent the indemnified party and any
others the indemnifying party may designate in such proceeding and
shall pay the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have
the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless
(i) the indemnifying party and the indemnified party shall have
mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm
(in addition to any local counsel) for all such indemnified parties
and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by Xxxxxx Xxxxxxx
& Co. Incorporated, in the case of parties indemnified pursuant to
Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The indemnifying party shall not be liable
for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall
have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected
without its written consent if (i) such settlement is entered into
more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened proceeding in respect of
which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
13
(d) To the extent the indemnification provided for in
Section 8(a) or 8(b) is unavailable to an indemnified party or
insufficient in respect of any losses, claims, damages or liabilities
referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (i)
in such proportion as is appropriate to reflect the relative benefits
received by the Company on the one hand and the Initial Purchasers on
the other hand from the offering of the Securities or (ii) if the
allocation provided by clause (i) of this subsection is not permitted
by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) of this
subsection but also the relative fault of the Company on the one hand
and of the Initial Purchasers on the other hand in connection with
the statements or omissions that resulted in such losses, claims,
damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Initial Purchasers on the other hand in connection
with the offering of the Securities shall be deemed to be in the same
respective proportions as the net proceeds from the offering of the
Securities (before deducting expenses) received by the Company and
the total discounts and commissions received by the Initial
Purchasers, in each case as set forth in the Memorandum, bear to the
aggregate offering price of the Securities. The relative fault of the
Company on the one hand and of the Initial Purchasers on the other
hand shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchasers and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Initial Purchasers' respective obligations to contribute pursuant to
this Section 8 are several in proportion to the respective principal
amount of Securities they have purchased hereunder, and not joint.
(e) The Company and the Initial Purchasers agree that it
would not be just or equitable if contribution pursuant to this
Section 8 were determined by pro rata allocation (even if the Initial
Purchasers were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the
equitable considerations referred to in Section 8(d). The amount paid
or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in Section 8(d) shall be deemed
to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, no Initial
Purchaser shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities resold by it
in the initial placement of such Securities were offered to investors
exceeds the amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit
any rights or remedies which may otherwise be available to any
indemnified party at law or in equity.
14
(f) The indemnity and contribution provisions contained in
this Section 8 and the representations, warranties and other
statements of the Company contained in this Agreement shall remain
operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on
behalf of any Initial Purchaser or any person controlling any Initial
Purchaser or by or on behalf of the Company, its officers or
directors or any person controlling the Company and (iii) acceptance
of and payment for any of the Securities.
9. Termination. This Agreement shall be subject to termination by
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable
to market the Securities on the terms and in the manner contemplated in the
Memorandum.
10. Effectiveness; Defaulting Initial Purchasers. This Agreement shall
become effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, or the Option Closing Date, as the case may
be, any one or more of the Initial Purchasers shall fail or refuse to purchase
Securities that it or they have agreed to purchase hereunder on such date, and
the aggregate principal amount of Securities which such defaulting Initial
Purchaser or Initial Purchasers agreed but failed or refused to purchase is not
more than one-tenth of the aggregate principal amount of Securities to be
purchased on such date, the other Initial Purchasers shall be obligated
severally in the proportions that the principal amount of Firm Securities set
forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Firm Securities set forth opposite the names of all such
non-defaulting Initial Purchasers, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Initial Purchaser or
Initial Purchasers agreed but failed or refused to purchase on such date;
provided that in no event shall the principal amount of Securities that any
Initial Purchaser has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such principal amount of Securities without the written consent of such Initial
Purchaser. If, on the Closing Date any Initial Purchaser or Initial Purchasers
shall fail or refuse to purchase Securities which it or they have agreed to
purchase hereunder on such date and the aggregate principal amount of
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Firm Securities to be purchased on such date,
and arrangements satisfactory to you and the Company for the purchase of such
Firm Securities are not made within 36 hours after such default, this Agreement
shall terminate without liability on the part of any non-defaulting Initial
Purchaser or of the Company. In any such case either you or the Company
15
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Memorandum
or in any other documents or arrangements may be effected. If, on the Option
Closing Date, any Initial Purchaser or Initial Purchasers shall fail or refuse
to purchase Additional Securities and the aggregate principal amount of
Additional Securities with respect to which such default occurs is more than
one-tenth of the aggregate principal amount of Additional Securities to be
purchased, the non-defaulting Initial Purchasers shall have the option to (a)
terminate their obligation hereunder to purchase Additional Securities or (b)
purchase not less than the principal amount of Additional Securities that such
non-defaulting Initial Purchasers would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.
If this Agreement shall be properly terminated by the Initial
Purchasers, or any of them, because of any failure or refusal on the part of the
Company to comply with the terms or to fulfill any of the conditions of this
Agreement required to be performed or fulfilled by the Company pursuant to this
Agreement, or if for any reason the Company shall be unable to perform its
obligations under this Agreement, the Company will reimburse the Initial
Purchasers or such Initial Purchasers as have so terminated this Agreement with
respect to themselves, severally, for all out-of-pocket expenses (including the
fees and disbursements of their counsel) reasonably incurred by such Initial
Purchasers in connection with this Agreement or the offering contemplated
hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
16
Very truly yours,
BROCADE COMMUNICATIONS
SYSTEMS, INC.
By: /s/ Xxxxxxx Xxxxxx
---------------------------
Name: Xxxxxxx Xxxxxx
Title: Chief Financial officer
Accepted as of the date hereof
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Xxxxx Xxxxxx Inc.
Xxxxxxx Xxxxx, Xxxxxx Xxxxxx and Xxxxx Incorporated
Acting severally on behalf of themselves and
the several Initial Purchasers named in
Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ Xxxxx Xxxxxxxxxxx
--------------------------
Name: Xxxxx Xxxxxxxxxxx
Title: Vice President
[Signature Page to Purchase Agreement]
SCHEDULE I
Number of Firm Securities
Initial Purchaser to be Purchased
Xxxxxx Xxxxxxx & Co. Incorporated.................... $200,000,000.00
Xxxxxxx Sachs & Co................................... $200,000,000.00
Xxxxxxx Xxxxx Xxxxxx Inc. ........................... $50,000,000.00
Xxxxxxx Lynch, Pierce, Xxxxxx and Xxxxx
Incorporated ........................................ $50,000,000.00
Total........................................... $500,000,000.00
EXHIBIT A-1
OPINION OF COUNSEL FOR THE COMPANY
The opinion of the counsel for the Company, to be delivered pursuant to
Section 5(c) of the Purchase Agreement shall be to the effect that:
1. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of Delaware, has the
corporate power and authority to own its property and to conduct
its business as described in the Memorandum and is duly qualified
to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing
of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would
not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
2. The Purchase Agreement has been duly authorized, executed and
delivered by the Company.
3. The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained in the Memorandum.
4. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Initial
Purchasers in accordance with the terms of the Purchase
Agreement, will be valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms,
and will be entitled to the benefits of the Indenture and the
Registration Rights Agreement.
5. The Underlying Securities to be issued upon conversion of the
Securities have been duly authorized and reserved and, when
issued upon conversion of the Securities in accordance with the
terms of the Securities and the Indenture, will be validly
issued, fully paid and non-assessable, and the issuance of the
Underlying Securities will not be subject to any preemptive or,
to our knowledge, similar rights under the Reviewed Agreements.
6. Each of the Indenture and the Registration Rights Agreement has
been duly authorized, executed and delivered by, and is a valid
and binding agreement of, the Company, enforceable against the
Company in accordance with its terms.
7. The execution and delivery by the Company of, and the performance
by the Company of its obligations under, the Purchase Agreement,
the Indenture, the Registration Rights Agreement and the
Securities do not and will not
A-1-1
contravene (i) any provision of applicable law or, (ii) the
Certificate of Incorporation or Bylaws of the Company, or, (iii)
to our knowledge, any, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any
Significant Subsidiary, and no consent, approval, authorization
or order of, or qualification or filing with, any governmental
body or agency is required for the performance by the Company of
its obligations under the Purchase Agreement, the Indenture, the
Registration Rights Agreement or the Securities, except such as
may be required by the securities or Blue Sky laws of the various
states in connection with the offer and sale of the Securities
and by Federal and state securities laws with respect to the
Company's obligations under the Registration Rights Agreement
expressly contemplated by the provisions thereof, and except
where such consent, authorization, approval, order or
qualification, if not obtained, would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
8. The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds
thereof as described in the Memorandum, will not be required to
register as an "investment company" as such term is defined in
the Investment Company Act of 1940, as amended.
9. The statements in the Memorandum under the captions "Description
of Notes," "Description of Capital Stock," "Plan of Distribution"
and "Transfer Restrictions," insofar as such statements
constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly summarize the matters
referred to therein in all material respects.
10. The statements in the Memorandum under the caption "Certain
Federal Income Tax Considerations," insofar as such statements
constitute a summary of the United States federal tax laws
referred to therein, are accurate and fairly summarize the
matters referred to therein in all material respects.
11. It is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchasers under the
Purchase Agreement or in connection with the initial resale of
the Securities by the Initial Purchasers in accordance with
Section 7 of the Purchase Agreement and the Memorandum to
register the Securities under the Securities Act of 1933, as
amended, or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended, it being understood that no opinion is
expressed as to any subsequent resale of any of the Securities or
the Underlying Securities issuable upon conversion of any of the
Securities.
12. Such counsel does not know of any legal or governmental
proceedings pending or threatened to which the Company or any of
its Significant Subsidiaries is a party or to which any of the
properties of the Company or any of its Significant Subsidiaries
is subject other than proceedings which
A-1-2
such counsel believes are not likely to have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
13. Each document of the Company incorporated by reference in the
Memorandum (except for financial statements and schedules and
other financial and statistical data included or incorporated by
reference therein as to which we disclaim any opinion), complied
as to form when filed with the Commission in all material
respects with the Exchange Act and the applicable rules and
regulations of the Commission thereunder.
A-1-3
EXHIBIT A-2
OPINION OF FOREIGN COUNSEL FOR THE COMPANY
The opinion of the Geneva office of Xxxxx & XxXxxxxx, to be
delivered pursuant to Section 5(c) of the Purchase Agreement, shall be to the
effect that:
1. The Swiss Company is a limited liability company ("societe a
responsabilite limitee", "Gesellschaft mit beschrankter Haftung")
duly incorporated and validly existing under the laws of
Switzerland and has the corporate power and authority to own its
property and assets and to conduct its business as currently
conducted and is duly qualified to conduct its business as
currently conducted, except to the extent that that the failure
to be so qualified or in good standing would have no material
effect on the Swiss Company. There is no notice of appointment in
respect of a liquidator, receiver, administrator or examiner with
respect thereto.
2. All the stated capital of the Swiss Company, which amounts to CHF
300,000.- has been validly and fully paid-in. The Swiss Company's
capital is divided in two, non issued quotas: one quota of CHF
299,000.- owned by Brocade Communications Luxembourg Sarl and one
quota of CHF 1,000.- owned by Brocade Communications Systems,
Inc.
3. To such counsel's knowledge, they have not worked on an
assignment for the Swiss Company where they were informed that
its quotas have been pledged or subjected to a lien.
A-2-1
EXHIBIT B
OPINION OF XXXX XXXX XXXX & FREIDENRICH
The opinion of Xxxx Xxxx Xxxx & Freidenrich to be delivered pursuant to
Section 5(d) of the Purchase Agreement shall be to the effect that:
1. The Purchase Agreement has been duly authorized, executed and delivered
by the Company.
2. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchasers in
accordance with the terms of the Purchase Agreement, will be valid and
binding obligations of the Company, enforceable in accordance with
their terms subject to applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture and the
Registration Rights Agreement pursuant to which such Securities are to
be issued.
3. The Underlying Securities reserved for issuance upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and non-assessable, and
the issuance of the Underlying Securities will not be subject to any
preemptive or, to such counsel's knowledge, similar rights.
4. Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable against the Company in
accordance with its terms subject to applicable bankruptcy, insolvency
or similar laws affecting a creditors' rights generally and general
principles of equity and except as to rights to indemnification and
contribution under the Registration Rights Agreement may be limited
under applicable law.
5. The statements in the Memorandum under the captions "Description of
Notes," "Description of Capital Stock," "Plan of Distribution" and
"Transfer Restrictions," insofar as such statements constitute
summaries of the legal matters, documents or proceedings referred to
therein, fairly summarize the matters referred to therein.
6. Such counsel has no reason to believe that (except for financial
statements and schedules and other financial and statistical data as to
which such counsel need not express any belief) the Memorandum when
issued contained, or as of the date such opinion is delivered contains,
any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
B-1
With respect to the matters referred to in the paragraph above, such
counsel's opinion and belief are based upon such counsel's
participation in the preparation of the Memorandum (and any amendments
or supplements thereto) and review and discussions of the contents
thereof (including the review of, but not participation in the
preparations of, the incorporated documents) but are without
independent check or verification except as specified.
7. Based upon the representations, warranties and agreements with the
agreements of the Company in Sections 1(y), 1(aa), 6(f) and 6(g) of
the Purchase Agreement and of the Initial Purchasers in Section 7 of
the Purchase Agreement, it is not necessary in connection with the
offer, sale and delivery of the Securities to the Initial Purchasers
under the Purchase Agreement or in connection with the initial resale
of the Securities by the Initial Purchasers in accordance with
Section 7 of the Purchase Agreement to register the Securities under
the Securities Act of 1933, as amended, or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended, it being understood
that no opinion is expressed as to any subsequent resale of any of the
Security or the Underlying Security.
B-2
EXHIBIT C
FORM OF LOCK-UP LETTER
December 17, 2001
Xxxxxx Xxxxxxx & Co. Incorporated
Xxxxxxx, Sachs & Co.
Xxxxxxx Xxxxx & Co.
Xxxxxxx Xxxxx Xxxxxx Inc.
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Dear Sirs and Mesdames:
The undersigned understands that Xxxxxx Xxxxxxx & Co. Incorporated
("Xxxxxx Xxxxxxx") proposes to enter into a Purchase Agreement (the "Purchase
Agreement") with Brocade Communications Systems, Inc., a Delaware corporation
(the "Company"), providing for the offering (the "Offering") by the several
Initial Purchasers, including Xxxxxx Xxxxxxx (the "Initial Purchasers"), of up
to $550,000,000.00 principal amount of 2 % Convertible Subordinated Notes Due
2007 (the "Securities"). The Securities will be convertible into shares of the
Common Stock, $.001 par value per share, of the Company (the "Common Stock").
To induce the Initial Purchasers that may participate in the Offering
to continue their efforts in connection with the Offering, the undersigned
hereby agrees that, without the prior written consent of Xxxxxx Xxxxxxx on
behalf of the Initial Purchasers, it will not, during the period commencing on
the date hereof and ending February 15, 2002, (1) offer, pledge, sell, contract
to sell, sell any option or contract to purchase, purchase any option or
contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (2) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or such other securities, in cash
or otherwise. The foregoing sentence shall not apply to (a) sales or other
dispositions of up to an aggregate of 1,000,000 shares of the Company's Common
Stock by the undersigned and all other officers and directors of the Company
that have signed this form of Lock-Up Agreement; (b) transactions relating to
shares of Common Stock or other securities acquired in open market transactions
after the completion of the Offering; (c) exercises of stock options or other
stock purchase rights granted by the company, (d) bona fide gifts, transfers by
will or intestacy, provided that the donees agree in writing to be bound by the
terms hereof; or (e) transfer to members, partners, affiliates, or immediate
family, or transfers to a trust for the benefit of the undersigned or the
undersigned's immediate family, provided that the transferee or trustee of the
trust, on behalf of the trust, as the
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case may be, agrees in writing to be bound by the terms hereof; provided that in
the case of any transfer or distribution pursuant to clause (d) or (e), each
donee or distributee shall execute and deliver to Xxxxxx Xxxxxxx a duplicate
form of this Lock-Up Agreement. In addition, the undersigned agrees that,
without the prior written consent of Xxxxxx Xxxxxxx on behalf of the Initial
Purchasers, it will not, during the period commencing on the date hereof and
ending February 20, 2002, make any demand for or exercise any right with respect
to, the registration of any shares of Common Stock or any security convertible
into or exercisable or exchangeable for Common Stock. The undersigned also
agrees and consents to the entry of stop transfer instructions with the
Company's transfer agent and registrar against the transfer of the undersigned's
shares of Common Stock except in compliance with the foregoing restrictions.
The undersigned understands that the Company and the Initial Purchasers
are relying upon this Lock-Up Agreement in proceeding toward consummation of the
Offering. The undersigned further understands that this Lock-Up Agreement is
irrevocable and shall be binding upon the undersigned's heirs, legal
representatives, successors and assigns.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
the Purchase Agreement, the terms of which are subject to negotiation between
the Company and the Initial Purchasers. If the Purchase Agreement is executed
and subsequent to the execution of the Purchase Agreement, the Purchase
Agreement is terminated, this Lock-Up Agreement shall terminate on the date that
the parties terminate the Purchase Agreement. If the Purchase Agreement has not
been executed by 5:00 P.M. New York time on January 30, 2002, this Lock-Up
Agreement shall automatically terminate at such time.
Very truly yours,
_________________________________
(Name)
_________________________________
(Address)
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