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EXHIBIT 4.5
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
UNDER THE SECURITIES LAWS OF ANY STATES. THESE SECURITIES ARE SUBJECT TO
RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD
EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS, PURSUANT
TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY
BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL
IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED
TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE
SECURITIES LAWS.
WARRANT TO PURCHASE PREFERRED STOCK
OF
BROCADE COMMUNICATIONS SYSTEMS, INC.
THIS CERTIFIES THAT in consideration of certain leasehold improvements
provided to Brocade Communications Systems, Inc., a California corporation (the
"COMPANY"), receipt of which is hereby acknowledged, Mason Calle De Xxxx X.X., a
California limited partnership, or its permitted registered assigns ("REGISTERED
HOLDER"), is entitled, subject to the terms and conditions of this Warrant, to
purchase from the Company at any time after the Commencement Date (as defined in
Section 2) of this Warrant and prior to 5:00 p.m. Pacific Time on August 31,
1999, unless terminated earlier under Section 12 hereof (the "EXPIRATION DATE"),
up to Three Thousand (3,000) shares of Warrant Stock (as defined below) at a
price per share equal to the Warrant Price (as defined below), upon surrender of
this Warrant at the principal office of the Company, together with a duly
executed subscription form in the form attached hereto as Exhibit 1 and
simultaneous payment of the full Warrant Price for the shares of Warrant Stock
so purchased in lawful money of the United States. The Warrant Price is subject
to adjustment as provided herein.
1. CERTAIN DEFINITIONS. The following definitions shall apply for purposes
of this Warrant:
(a) "CONVERSION STOCK" shall mean Common Stock of the Company or other
securities issuable upon conversion of the Warrant Stock.
(b) "FINANCING" shall mean the Closing (or first closing if multiple
closings) of the Company's next sale of its Preferred Stock in one transaction
or series of related transactions occurring on or before August 31, 1997 for
aggregate gross proceeds (calculated
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before the payment of any discounts or commissions to brokers or underwriters)
of no less than One Million Dollars ($1,000,000.00) paid to the Company on or
before August 31, 1997.
(c) "ISSUE DATE" shall mean the date of this Warrant.
(d) "MAXIMUM NUMBER OF PURCHASABLE SHARES" shall be Three Thousand
(3,000) shares, subject to adjustment as provided herein.
(e) "WARRANT PRICE" shall mean: (i) if the Warrant Stock is Preferred
Stock of the Company sold in the Financing, an amount equal to the per share
selling price of shares of Warrant Stock issued in the Financing, or (ii) if the
Warrant Stock is Series B Preferred Stock of the Company, Four Dollars ($4.00)
per share. The Warrant Price is subject to adjustment as provided herein.
(f) "WARRANT" shall mean this Warrant and any warrant(s) delivered in
substitution or exchange therefor, as provided herein.
(g) "WARRANT STOCK" shall mean the Company's class or series of
Preferred Stock that is sold in the Financing, but if the Financing has not
occurred by the earlier of August 31, 1997 or immediately prior to the
effectiveness of a Terminating Transaction under Section 12, "Warrant Stock"
shall instead mean Series B Preferred Stock of the Company.
2. EXERCISE. Subject to compliance with all applicable securities laws,
this Warrant may be exercised in whole or in part, at any time or from time to
time, on any business day commencing on the earlier of (i) the closing (or first
closing if multiple closings) of the Financing, (ii) August 31, 1997, or (iii)
immediately prior to a Terminating Transaction under Section 12 (such date being
herein referred to as "Commencement Date") and before the Expiration Date, for
up to the Maximum Number of Purchasable Shares by surrendering this Warrant at
the principal office of the Company at 000 Xxxx Xxxxxx Xxxxxx, Xxxxx X,
Xxxxxxxxx, Xxxxxxxxxx 00000, with the subscription form attached hereto duly
executed by the Registered Holder, and payment, in cash and/or cancellation of
bona fide indebtedness of the Company to the Registered Holder, of an amount
equal to the product obtained by multiplying (i) the number of shares of Warrant
Stock to be purchased by the Registered Holder by (ii) the Warrant Price or
adjusted Warrant Price therefor, if applicable, as determined in accordance with
the terms hereof. Upon a partial exercise of this Warrant: (i) the Maximum
Purchasable Number of Shares immediately prior to such partial exercise shall be
reduced by the number of shares of Warrant Stock purchased upon such exercise of
this Warrant, and (ii) this Warrant shall be surrendered by the Registered
Holder and replaced with a new Warrant of like tenor with respect to which the
new Maximum Purchasable Number of Shares Amount is the former Maximum
Purchasable Number of Shares Amount as so reduced. This Warrant shall be deemed
to have been exercised immediately prior to the close of business on the date of
its surrender for exercise as provided above, and the person entitled to receive
the shares of Warrant Stock issuable upon such exercise shall be treated for all
purposes as the holder of record of such shares as of the close of business on
such date. As soon as practicable on or after such date, the Company shall issue
and deliver to the person or persons entitled to receive the same a certificate
or certificates for the number of whole shares of Warrant Stock issuable upon
such exercise.
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3. FULLY PAID SHARES. All shares of Warrant Stock issued upon the exercise
of this Warrant shall be validly issued, fully paid and nonassessable.
4. TRANSFER AND EXCHANGE. Subject to the foregoing and terms and conditions
of this Warrant and compliance with all applicable securities laws, this Warrant
and all rights hereunder are transferable, in whole or in part, on the books of
the Company maintained for such purpose at the principal office of the Company
referred to above, by the Registered Holder hereof in person, or by duly
authorized attorney, upon surrender of this Warrant properly endorsed, the
Registered Holder's written instructions as to what quantity of the Maximum
Number of Purchasable Shares is being transferred to each transferee's Warrant
and upon payment of any necessary transfer tax or other governmental charge
imposed upon such transfer. Upon any partial transfer, the Company will issue
and deliver to the Registered Holder and its transferee(s), respectively, a new
Warrant or Warrants (of like tenor entitling the Registered Holder and its
transferees to purchase shares of Warrant Stock equal in the aggregate to the
Maximum Number of Purchasable Shares as determined immediately prior to such
transfer, with the portions of the Maximum Number of Purchasable Shares
allocated to each such Warrant to be determined by the Registered Holder's
written instructions to the Company regarding such transfer not so transferred.
Until a transfer of this Warrant is registered on the books of the Company, the
Company may treat the Registered Holder hereof as the owner for all purposes.
Notwithstanding the foregoing, this Warrant and the rights hereunder may not be
transferred unless such transfer complies with all applicable securities laws
and the provisions of Section 10 hereof.
5. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES. The Maximum Number of
Purchasable Shares, and the number and character of shares of Warrant Stock
issuable upon exercise of this Warrant (or any shares of stock or other
securities or property at the time receivable or issuable upon exercise of this
Warrant) and the Warrant Price therefor, are subject to adjustment upon the
occurrence of the following events:
5.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations,
etc. The Maximum Number of Purchasable Shares, the Warrant Price of this Warrant
and the number of shares of Warrant Stock issuable upon exercise of this Warrant
shall each be proportionally adjusted to reflect any stock dividend, stock
split, reverse stock split, combination of shares, reclassification,
recapitalization or other similar event affecting the number of outstanding
shares of Warrant Stock that occurs after the date of the Warrant.
5.2 Adjustment for Other Dividends and Distributions. In case the
Company shall make or issue, or shall fix a record date for the determination of
eligible holders entitled to receive, a dividend or other distribution payable
respect to the Warrant Stock payable in securities of the Company (other than
issuances with respect to which adjustment is made under Section 5.1), then, and
in each such case, the Registered Holder of this Warrant, upon exercise of this
Warrant at any time after the consummation, effective date or record date of
such event, shall receive, in addition to the shares of Warrant Stock issuable
upon such exercise prior to such date, the securities or such other assets of
the Company to which such Registered Holder would have been entitled upon such
date if such Registered Holder had exercised this Warrant immediately prior
thereto (all subject to further adjustment as provided in this Warrant).
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5.3 Adjustment for Reorganization, Consolidation, Merger. Except in
the event this Warrant is terminated pursuant to Section 12 hereof, in case of
any reorganization of the Company (or of any other corporation, the stock or
other securities of which are at the time receivable on the exercise of this
Warrant) after the date of this Warrant, or in case, after such date, the
Company (or any such corporation) shall consolidate with or merge into another
corporation or convey all or substantially all of its assets to another
corporation, then, and in each such case, the Registered Holder of this Warrant,
upon the exercise of this Warrant (as provided in Section 2), at any time after
the consummation of such reorganization, consolidation, merger, or conveyance,
shall be entitled to receive, in lieu of the stock or other securities and
property receivable upon the exercise of this Warrant prior to such
consummation, the stock or other securities or property to which such Registered
Holder would have been entitled upon the consummation of such reorganization,
consolidation, merger or conveyance if such Registered Holder had exercised this
Warrant immediately prior thereto, all subject to further adjustment as provided
in this Section 5, and the successor or purchasing corporation in such
reorganization, consolidation, merger or conveyance (if other than the Company)
shall duly execute and deliver to the Registered Holder a supplement hereto
acknowledging such corporation's obligations under this Warrant; and in each
such case, the terms of this Warrant shall be applicable to the shares of stock
or other securities or property receivable upon the exercise of this Warrant
after the consummation of such reorganization, consolidation, merger or
conveyance.
5.4 Conversion of Warrant Stock. In case all the authorized class or
series constituting the Warrant Stock of the Company is converted, pursuant to
the Company's Articles of Incorporation, into Common Stock or other securities
or property (the "PRIOR WARRANT STOCK CONVERSION PROCEEDS"), or the Warrant
Stock otherwise ceases to exist, then, in such case, the Registered Holder of
this Warrant, upon exercise of this Warrant at any time after the date on which
the Warrant Stock is so converted or ceases to exist (the "WARRANT STOCK
TERMINATION DATE"), shall receive, in lieu of the number of shares of Warrant
Stock that would have been issuable upon such exercise immediately prior to the
Warrant Stock Termination Date (the "FORMER WARRANT STOCK"), the Prior Warrant
Stock Conversion Proceeds to which such Registered Holder would have been
entitled to receive upon the Warrant Stock Termination Date if such Registered
Holder had exercised this Warrant with respect to the Former Warrant Stock
immediately prior to the Warrant Stock Termination Date (all subject to further
adjustment as provided in this Warrant).
6. NO IMPAIRMENT. The Company will not, by amendment of its Articles of
Incorporation or Bylaws, or through reorganization, consolidation, merger,
dissolution, issue or sale of securities, sale or assets or any other voluntary
action, willfully avoid or seek to avoid the observance or performance of any of
the terms of this Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such action as may be
necessary or appropriate in order to protect the rights of the Registered Holder
under this Warrant against wrongful impairment. Without limiting the generality
of the foregoing, the Company: (i) will not set nor increase the par value of
any shares of stock issuable upon the exercise of this Warrant above the amount
payable therefor upon such exercise, and (ii) will take all such action as may
be necessary or appropriate in order that the Company may validly and legally
issue fully paid and non-assessable shares of Warrant Stock upon the exercise of
this Warrant.
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7. CERTIFICATE AS TO ADJUSTMENTS. In each case of any adjustment in either
the Maximum Number of Purchasable Shares, the Warrant Price or in the number of
shares of Warrant Stock, or other stock, securities or property receivable upon
the exercise of this Warrant, the Chief Financial Officer of the Company shall
compute such adjustment in accordance with the terms of this Warrant and prepare
a certificate setting forth such adjustment and showing in detail the facts upon
which such adjustment is based, including a statement of the adjusted Maximum
Number of Purchasable Shares and the adjusted Warrant Price. The Company will
cause copies of such certificate to be mailed (by first class mail, postage
prepaid) to the Registered Holder.
8. LOSS OR MUTILATION. Upon receipt by the Company of evidence reasonably
satisfactory to it of the ownership, and the loss, theft, destruction or
mutilation, of this Warrant, and of indemnity reasonably satisfactory to it, and
(in the case of mutilation) upon surrender and cancellation of this Warrant, the
Company will execute and deliver in lieu thereof a new Warrant of like tenor.
9. RESERVATION OF WARRANT STOCK. If at any time the number of authorized
but unissued shares of the Company's class or series of Warrant Stock (or Prior
Warrant Stock Conversion Proceeds) or other securities of the Company shall not
be sufficient to effect the exercise of this Warrant, the Company will take such
corporate action as may, in the opinion of its counsel, be necessary to increase
its authorized but unissued shares of such class or series of Warrant Stock or
other securities to such number of shares of such class or series of Warrant
Stock or other securities as shall be sufficient for such purpose.
10. RESTRICTIONS ON TRANSFER.
10.1 The Registered Holder understands that neither this Warrant nor
the shares of Warrant Stock or Conversion Stock have been registered under the
Securities Act of 1933, as amended (the "ACT"), or any state securities laws. As
a condition to the issuance of this Warrant and to its exercise the Registered
Holder hereby represents and warrants to the Company that:
(a) The Warrant and, if applicable, the shares of Warrant Stock
and Conversion Stock (collectively, the "SECURITIES") have been acquired by the
Registered Holder for investment and not with a view to the sale or other
distribution thereof within the meaning of the Act and the Registered Holder has
no present intention of selling or otherwise disposing of all or any portion of
the Securities.
(b) The Registered Holder has acquired (and will acquire) the
Securities for the Registered Holder's own account only and no one else has any
beneficial ownership in the Securities.
(c) The Registered Holder is capable of evaluating the merits and
risks of any investment in the Securities, is financially capable of bearing a
total loss of this investment and has either: (i) a preexisting personal or
business relationship with the Company or its principals; (ii) by reason of the
Registered Holder's business or financial experience, has the capacity to
protect his or its own interests in connection with this investment; or (iii) is
an
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"accredited investor" within the meaning of Regulation D promulgated under the
Act, as amended.
(d) The Registered Holder has had access to all information
regarding the Company, its present and prospective business, assets, liabilities
and financial condition that the Registered Holder considers important to making
the decision to acquire the Securities and has had ample opportunity to ask
questions of and receive answers from the Company's representatives concerning
an investment in the Securities and to obtain any and all documents requested in
order to supplement or verify any of the information supplied.
(e) The Registered Holder understands that the Securities shall
be deemed restricted securities under the Act and may not be resold unless they
are registered under the Act and any applicable State securities law, or in the
opinion of counsel in form and substance satisfactory to the Company, an
exemption from such registration is available.
(f) The Registered Holder is aware of Rule 144 promulgated under
the Act, which rule provides, in substance, that: (i) after two years from the
date restricted securities have been purchased and fully paid for, a holder may
transfer restricted securities provided certain conditions are met (e.g.,
certain public information is available about the Company), and specific
limitations on the amount of shares which can be sold within certain periods and
the manner in which such shares must be sold are complied with; and (ii) after
three years from the date the securities have been purchased and fully paid for,
holders who are not "affiliates" of the Company may sell restricted securities
without satisfying such conditions.
(g) The Registered Holder further understands that if the
requirements of Rule 144 are not met, registration under the Act, compliance
with Regulation A, or some other registration exemption will be required for any
disposition of the Securities; and that, although Rule 144 is not exclusive, the
Securities and Exchange Commission ("SEC") has expressed its opinion that
persons proposing to sell restricted securities other than in a registered
offering or other than pursuant to Rule 144 will have a substantial burden of
proof in establishing that an exemption from registration is available for such
offers or sales and such persons and the brokers who participate in the
transactions do so at their own risk.
10.2 The Registered Holder of this Warrant, by acceptance hereof,
agrees that, absent an effective registration statement filed with the SEC under
the Act, covering the disposition or sale of this Warrant or the Warrant Stock
(or Conversion Stock) issued or issuable upon exercise hereof, such Registered
Holder will not sell or transfer any or all of such Warrant Stock or Conversion
Stock, as the case may be, without first providing the Company with an opinion
of counsel satisfactory to the Company to the effect that such sale or transfer
will be exempt from the registration and prospectus delivery requirements of the
Act, and such Registered Holder consents to the Company making a notation on its
records, or giving instructions to any transfer agent of this Warrant, or such
Warrant Stock (or Conversion Stock), in order to implement such restriction on
transfer. The shares issued upon exercise of this Warrant shall bear legends
referring to the restrictions or transfer set forth in this Section 10. As a
condition to the transfer of this Warrant or transfer of the shares issuable on
exercise hereof, any permitted transferee must execute and deliver to the
Company representations and warranties
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similar to these set forth in this Section 10 and agree in writing to accept and
be bound by all the terms and conditions of this Warrant.
11. NO RIGHTS OR LIABILITIES AS SHAREHOLDER. This Warrant does not by
itself entitle the Registered Holder to any voting rights or other rights as a
shareholder of the Company. In the absence of affirmative action by Registered
Holder to purchase Warrant Stock by exercise of this Warrant, no provisions of
this Warrant, and no enumeration herein of the rights or privileges of the
Registered Holder shall cause such Registered Holder to be a shareholder of the
Company for any purpose.
12. TERMINATION. The right to exercise this Warrant shall terminate upon
the effective date of a merger or consolidation of the Company into or with
another corporation, or the sale of all or substantially all of the Company's
assets to another corporation or person, if, immediately after any such merger,
consolidation or sale of assets, at least fifty percent (50%) of the voting
power of the surviving corporation or such other person, as the case may be, is
owned by persons who are not shareholders of the Company immediately prior to
such merger, consolidation or sale (the "TERMINATING TRANSACTION"). In such
event, the Company shall, at least fifteen (15) days prior to the effective date
of the Terminating Transaction, give written notice pursuant to Section 14
hereof of the imminence of such Terminating Transaction.
13. LOCK-UP AGREEMENT. The Registered Holder agrees, upon request of the
Company or the underwriters managing any firmly underwritten public offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any shares of the Warrant
Stock or Common Stock issuable upon conversion of the Warrant Stock acquired
pursuant to the exercise of this Warrant (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed 180
days) from the effective date of such registration as the Company or
underwriters may specify.
14. AMENDMENT; WAIVER. Any term of this Warrant may be amended, and the
observance of any term of this Warrant may be waived (either generally or in a
particular instance and either retroactively or prospectively) by the written
consent of the Company and the Registered Holder.
15. NOTICES. All notices and other communications from the Company to the
Registered Holder shall be deemed given when mailed by first-class registered or
certified mail, postage prepaid, to the address furnished to the Company in
writing by the last Registered Holder who shall have furnished an address to the
Company in writing.
16. ATTORNEYS' FEES. In the event any party is required to engage the
services of any attorneys for the purpose of enforcing this Warrant, or any
provision thereof, the prevailing party shall be entitled to recover its
reasonable attorneys' fees and any other related cost or expenses.
17. HEADINGS. The headings in this Warrant are for purposes of convenience
in reference only, and shall not be deemed to constitute a part hereof.
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18. LAW GOVERNING. This Warrant shall be construed and enforced in
accordance with, and governed by, the internal laws of the State of California,
excluding that body of law applicable to conflicts of laws.
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19. TERMS BINDING. By acceptance of this Warrant, the Registered Holder of
this Warrant (and each subsequent assignee, transferee or Registered Holder of
this Warrant) accepts and agrees to be bound by all the terms and conditions of
this Warrant.
Dated: August 26, 1996
BROCADE COMMUNICATIONS ACKNOWLEDGED AND ACCEPTED
SYSTEMS, INC. BY REGISTERED HOLDER:
By: /s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxx
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Name: Name: The Xxxxx Property Co.
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Title: President & CEO Title: President
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EXHIBIT 1
FORM OF SUBSCRIPTION
(To be signed only upon exercise of Warrant)
To: Brocade Communications Systems, Inc.
000 Xxxx Xxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxx, XX 00000
(1) The undersigned hereby elects to purchase _________ shares of that
class or series of Warrant Stock of Brocade Communications Systems, Inc. (or, if
applicable, such Prior Warrant Stock Conversion Proceeds, pursuant to the terms
of the attached Warrant) and tenders herewith payment of the purchase price for
such shares in full.
(2) In exercising this Warrant, the undersigned hereby confirms and
acknowledges that the representations and warranties of the undersigned set
forth in Section 10 of the Warrant are true and correct as of this date.
(3) Please issue a certificate or certificates representing such
shares of that class or series of Warrant Stock of Brocade Communications
Systems, Inc. (or, if applicable, such Prior Warrant Stock Conversion Proceeds,
pursuant to the terms of the attached Warrant) in the name or names specified
below:
_______________________________ ________________________________
(Name) (Name)
_______________________________ ________________________________
(Address) (Address)
_______________________________ ________________________________
(City, State, Zip Code) (City, State, Zip Code)
(4) Please issue a new Warrant for the unexercised portion of the
attached Warrant in the name of the undersigned or in such other name as is
specified below:
_______________________________
(Name)
_______________________________ ________________________________
(Date) (Signature of Registered Holder)
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FORM OF ASSIGNMENT
FOR VALUE RECEIVED the undersigned Registered Holder of this Warrant
hereby sells, assigns and transfers unto the Assignee named below all of the
rights of the undersigned under the within Warrant, with respect to the number
of shares of Warrant Stock set forth below:
Name of Assignee Address Number of Shares of Warrant Stock Transferred
---------------- ------- ---------------------------------------------
and does hereby irrevocably constitute and
appoint_________________________ Attorney to make such transfer on the
books of _____________________________, maintained for the purpose, with
full power of substitution in the premises.
Dated: ______________
REGISTERED HOLDER
By:_________________________________
Name:_______________________________
Title:______________________________
