UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the
Registrant ☒ Filed by a Party other than the
Registrant ☐
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
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Brocade Communications Systems, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)
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Title of each class of securities to which transaction applies:
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(2)
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Aggregate number of securities to which transaction applies:
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(3)
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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing
fee is calculated and state how it was determined):
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(4)
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Proposed maximum aggregate value of transaction:
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(5)
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Total fee paid:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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(1)
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Amount Previously Paid:
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(2)
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Form, Schedule or Registration Statement No.:
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(3)
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Filing Party:
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(4)
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Date Filed:
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This Schedule 14A filing consists of the following communications relating to the proposed acquisition (the
Acquisition) of Brocade Communications Systems, Inc. (Brocade) by Broadcom Limited (Ultimate Parent), a limited liability company organized under the laws of the Republic of Singapore, Broadcom Corporation
(Parent), a California corporation and an indirect subsidiary of Ultimate Parent, and Bobcat Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of Parent (Merger Sub), pursuant to the terms of an
Agreement and Plan of Merger, dated November 2 , 2016 by and among Brocade, Ultimate Parent, Parent and Merger Sub:
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(i)
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Letter to Brocade Employees distributed on December 16, 2016 by Lloyd Carney; and
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(ii)
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Updated Frequently Asked Questions (FAQs) relating to the Acquisition, made available on December 16, 2016.
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The items listed above were first used or made available on December 16, 2016.
Letter to Brocade Employees distributed on December 16, 2016 by Lloyd Carney
Brocadians,
There has been movement on several aspects of the
acquisition. Let me recap key outcomes since last week for you.
Status of IP Networking Business Divestiture.
Conversations with buyers interested
in the IP Networking business (Phase 1) continue in earnest. Barclays Bank and Broadcom are in complex negotiations with both strategic and financial entities. Although in prior updates I had expressed confidence that a single buyer would emerge
before the end of December, the complexity of the transactions are not likely to enable that outcome. Phase 1 negotiations for the entire IP Networking business are continuing, and we are also moving to activate Phase 2 negotiations with buyers who
are interested in the various individual business units. Barclays, Broadcom and Brocade have met with several of these prospective buyers, and will be holding more meetings in the days and weeks ahead. It was my sincere expectation to be able to
announce a different outcome before the US shutdown, but that is simply not how things are evolving. I remain committed to providing these weekly updates, but I want to reset expectations that we are not likely to identify a buyer or buyers of the
IP Networking business until mid- to late January at the earliest. I appreciate your continued patience.
Proxy Statement Update.
We expect to file
the definitive proxy statement with the SEC early next week, and mail a copy of the proxy statement to Brocade shareholders shortly thereafter. The special meeting of shareholders to vote on the merger agreement and related matters will be held
in late January.
SAN and IP Networking Business Resource Alignment.
Leaders across the business continue to evaluate cross-functional
interdependencies to finalize the designation of employees aligned with
SAN
or
IP Networking
businesses. We are approximately 95% complete with SAN identification and plan to notify employees as quickly as possible. We expect to
communicate these outcomes when Broadcom announces the buyer of the IP Networking business.
Board of Directors Engagement.
The regularly scheduled
Q1 Board of Directors meeting was held earlier this week. The leadership team provided updates on various aspects of the acquisition, divestiture and integration planning. We also dedicated time on the agenda to discuss employee reactions,
anxieties, questions and insights. The Board is highly engaged and will be updated on a regular basis.
Acquisition Resources online.
Remember that
FAQs and other resources are refreshed on a regular basis. In fact, based on employee feedback, 58 additional questions, including 7 new items this week, have been posted here since our initial document was released on Nov 2. We recognize that we
may not yet be able to answer all of your questions, but we expect to gain additional insights when we increase our integration planning with Broadcom and are able to initiate conversations with the identified buyer or buyers of the IP Networking
business.
I know that many of you plan on taking additional time off next week to celebrate the holidays with friends and family, so let me wish you a
joyous holiday season and a happy New Year. I will share another update later next week, before the U.S. shutdown.
Lloyd
Additional Information and Where to Find It; Participants in the Solicitation
In connection with the proposed transaction, Brocade intends to file relevant materials with the SEC, including a proxy statement. Brocade filed the
preliminary proxy statement on Schedule 14A with the SEC on December 6, 2016. Promptly after filing its definitive proxy statement, Brocade will mail the proxy statement to each Brocade stockholder entitled to vote at the special meeting
relating to the transaction. SECURITY HOLDERS ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE TRANSACTION THAT BROCADE WILL FILE WITH THE SEC WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The proxy statement and other documents filed by Brocade with the SEC in connection with the transaction (when they become available), may be obtained free of charge at the SECs
website (http://www.sec.gov) or at Brocades website (http://www.brcd.com) or by contacting Brocades Investor Relations at (408) 333-6208 or scoli@brocade.com.
Brocade and its directors and officers may be deemed to be participants in the solicitation of proxies from Brocades stockholders with respect to the
proposed transaction. Information about Brocades directors and officers and their ownership of Brocades common stock is set forth in Brocades proxy statement on Schedule 14A filed with the SEC on February 25, 2016, Brocades
Annual Report on Form 10-K for the fiscal year ended October 29, 2016, filed with the SEC on December 16, 2016, and the preliminary proxy statement on Schedule 14A, which was filed with the SEC on December 6, 2016. Additional information regarding
the identity of the potential participants, and their direct or indirect interests in the transaction, by security holdings or otherwise, will be set forth in the definitive proxy statement on Schedule 14A and other materials to be filed with SEC in
connection with the transaction, when they become available.
Updated Frequently Asked Questions (FAQs) relating to the Acquisition, made available on December 16, 2016
NEW: Latest Updates December 16, 2016
Deal Overview/Key Questions
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How will SAN be integrated into Broadcom? Will it operate as a separate unit, e.g. Brocade a Broadcom company or integrated into existing SAN division?
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After the close of the transaction, we expect that Brocades SAN line of business will become the SAN Business Unit within Broadcom Ltd.s existing organizational structure. We do not expect the
business unit to be referred to as Brocade, a Broadcom company.
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What will happen to the Brocade name will it be used by Broadcom or a buyer of the IP Networking business?
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We do not yet have information as to how product naming will be addressed after the close of the transaction. As mentioned in other FAQs, we expect Brocades SAN line of business will become the SAN Business
Unit within Broadcom Ltds existing organizational structure. We do not expect the business unit to reference Brocade. It is not clear at this time if or how a buyer of the IP Networking business will leverage the Brocade name
and brand.
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Is there a date set yet for the closing of the Broadcom acquisition of Brocade?
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As mentioned when the acquisition was announced, Broadcoms acquisition of Brocade is expected to occur in 2HFY17.
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Can you confirm the order of events of the acquisition of Brocade and the divestiture of the IP Networking business? It has been suggested that the IP Networking business could be divested before the acquisition.
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As previously communicated based on the current merger agreement, Broadcom is acquiring all of Brocade, then divesting the IP Networking business. Simply put, the acquisition must close before any divestiture can occur.
The timing of these events will vary based on the agreement between Broadcom and the buyer of the IP Networking business; it may be nearly immediate or any number of weeks or months.
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People Q&A | Leaving Brocade: Notification & Severance
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If I am offered continued employment by Broadcom and am subsequently involuntarily terminated several months later for reasons other than cause, will Brocades severance policy apply as it would for Brocade
employees who were not offered continued employment?
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Under Brocades agreement with Broadcom, for a period of one year following the close of the acquisition, Broadcom will provide employees who continue as an employee of Broadcom with benefits, including severance,
which are no less favorable that the employee was entitled to receive from Brocade. In other words, severance will follow Brocades guidelines, not Broadcoms, for employees who continue with Broadcom but are terminated for reasons other
than cause within 12 month of the close of the acquisition.
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What does pay in lieu of notice mean? Would an employee be on payroll after being notified or not?
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Pay in lieu of notice describes a scenario when an employee is provided with a lump sum payment equal to their earnings for a specific period of time paid at termination to satisfy a regulatory obligation of
the company. In this case, the date of termination is considered the final day of active employment and no further payroll is provided to the employee.
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We understand this scenario is of particular concern to employees who may hold an H-1B visa. Where possible, Brocade will endeavor to provide Notice where the employee will continue to work and receive payroll
rather than pay in lieu of.
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For H-1B visa holders, if an employee is not performing the work described in his/her H-1B petition, the employee will no longer maintain valid H-1B status. An employees H-1B status is maintained based on his or
her continuing performance of work; being placed on a notice period which does not involve the performance of work will not suffice to maintain H-1B status. After January 17, 2017, employees whose employment has been terminated and who are no longer
working for Brocade, Broadcom or another successor employer will have a 60-day grace period to remain in the United States and, if they wish, to seek new employment.
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Does the Brocade Severance Policy calculation include ones total On Target Earnings to calculate the severance payment? Or, just the salary portion of ones OTE?
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The severance calculation for employees who are on commission or in the Sales Incentive Program (SIP) would be based an employees On Target Earnings. For all other employees the severance calculation is based on
the employees base salary.
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Additional Information and Where to Find It
This communication is being made in respect of the proposed transaction involving Brocade Communications Systems, Inc. (Brocade) and Broadcom
Limited (Broadcom). In connection with the proposed transaction, Brocade intends to file relevant materials with the Securities and Exchange Commission (the SEC). Brocade filed the preliminary proxy statement on
Schedule 14A with the SEC on December 6, 2016. Promptly after filing its definitive proxy statement with the SEC, Brocade will mail the definitive proxy statement and a proxy card to each stockholder of Brocade entitled to vote at the special
meeting relating to the proposed transaction. INVESTORS AND SECURITY HOLDERS OF BROCADE ARE URGED TO READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED TRANSACTION
THAT BROCADE WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT BROCADE AND THE PROPOSED TRANSACTION. The definitive proxy statement, the preliminary proxy statement and other relevant materials
in connection with the proposed transaction (when they become available), and any other documents filed by Brocade with the SEC, may be obtained free of charge at the SECs website (http://www.sec.gov) or at Brocades website
(http://www.brcd.com) or by contacting Brocades Investor Relations at (408) 333-6208 or scoli@brocade.com.
Participants in the Solicitation
Brocade and its directors and executive officers may be deemed to be participants in the solicitation of proxies from Brocades stockholders with
respect to the proposed transaction. Information about Brocades directors and executive officers and their ownership of Brocades common stock is set forth in Brocades proxy statement on Schedule 14A filed with the SEC on February
25, 2016, Brocades Annual Report on Form 10-K for the fiscal year ended October 29, 2016, which was filed with the SEC on December 16, 2016 and the preliminary proxy statement on Schedule 14A, which was filed with the SEC on December 6, 2016.
Information regarding the identity of the potential participants, and their direct or indirect interests in the proposed transaction, by security holdings or otherwise, will be set forth in the definitive proxy statement on Schedule 14A and other
materials to be filed with SEC in connection with the proposed transaction, when they become available.
Legal Notice Regarding Forward-Looking
Statements
This communication, and any documents to which Brocade refers you in this communication, contains not only historical information, but also
forward-looking statements made pursuant to the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent Brocades current expectations or beliefs concerning future events,
including but not limited to the expected completion and timing of the proposed transaction, expected benefits and costs of the proposed transaction, management plans relating to the proposed transaction, strategies and objectives of Brocade and
Broadcom for future operations and other information relating to the proposed transaction. Without limiting the foregoing, the words believes, anticipates, plans, expects, intends,
forecasts, should, estimates, contemplate, future, goal, potential, predict, project, projection, target,
seek, may, will, could, should, would, assuming and similar expressions are intended to identify forward-looking statements. You should read any such forward-looking
statements carefully, as they involve a number of risks, uncertainties and assumptions that may cause actual results to differ significantly from those projected or contemplated in any such forward-looking statement. Those risks, uncertainties and
assumptions include, (i) the risk that the proposed transaction may not be completed in a timely manner or at all, which may adversely affect Brocades business and the price of the common stock of Brocade, (ii) the failure to satisfy any of
the conditions to the consummation of the proposed transaction, including the adoption of the merger agreement by the stockholders of Brocade and the receipt of certain governmental and regulatory approvals, (iii) the occurrence of any event, change
or other circumstance that could give rise to the termination of the merger agreement, (iv) the effect of the announcement or pendency of the proposed transaction on Brocades business relationships, operating results and business generally,
(v) risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the proposed transaction, (vi) risks related to diverting managements attention from
Brocades ongoing business operations (vii) the outcome of any legal proceedings that may be instituted against us related to the merger agreement or the proposed transaction; (viii) unexpected costs, charges or expenses resulting from the
proposed transaction, (ix) the ability of Broadcom to achieve its plans, forecasts and other expectations with respect to Brocades business after completion of the proposed transaction; and (x) other risks described in Brocades and
Broadcoms filings with the SEC, such as their respective Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. Forward-looking statements speak only as of the date of this communication or the date of any document incorporated by
reference in this document. Except as required by applicable law or regulation, Brocade does not assume any obligation to update any such forward-looking statements whether as the result of new developments or otherwise.
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