BROCADE COMMUNICATIONS
SYSTEMS, INC.
FORM OF PREFERRED STOCK
WARRANT AGREEMENT
BROCADE COMMUNICATIONS
SYSTEMS, INC.
FORM OF PREFERRED STOCK WARRANT
AGREEMENT
Preferred Stock Warrant
Agreement (this “Agreement”), dated as of
between Brocade
Communications Systems, Inc., a Delaware
corporation (the “Company”) and
, a [corporation] [national banking association] organized and
existing under the laws of
and having a corporate trust office in
, as warrant agent (the “Warrant Agent”).
Whereas, the Company proposes
to sell [if Warrants are sold with other securities - [title of
such other securities being offered] (the “Other
Securities”) with] warrant certificates evidencing one or
more warrants (the “Warrants” or, individually, a
“Warrant”) representing the right to purchase [title of
Preferred Stock purchasable through exercise of Warrants] (the
“Warrant Securities”), such warrant certificates and
other warrant certificates issued pursuant to this Agreement being
herein called the “Warrant Certificates”;
and
Whereas, the Company desires
the Warrant Agent to act on behalf of the Company, and the Warrant
Agent is willing so to act, in connection with the issuance,
registration, transfer, exchange, exercise and replacement of the
Warrant Certificates, and in this Agreement wishes to set forth,
among other things, the form and provisions of the Warrant
Certificates and the terms and conditions on which they may be
issued, registered, transferred, exchanged, exercised and
replaced.
Now Therefore, in
consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ISSUANCE OF WARRANTS AND
EXECUTION AND DELIVERY OF WARRANT CERTIFICATES
1.1 Issuance
of Warrants. [If Warrants alone — Upon issuance, each
Warrant Certificate shall evidence one or more Warrants.] [If Other
Securities and Warrants – Warrant Certificates shall be
[initially] issued in connection with the issuance of the Other
Securities [but shall be separately transferable on and after
(the “Detachable Date”)] [and shall not be separately
transferable] and each Warrant Certificate shall evidence one or
more Warrants.] Each Warrant evidenced thereby shall represent the
right, subject to the provisions contained herein and therein, to
purchase one Warrant Security. [If Other Securities and Warrants
— Warrant Certificates shall be initially issued in units
with the Other Securities and each Warrant Certificate included in
such a unit shall evidence
Warrants for each [$
principal amount] [
shares] of Other Securities included in such unit.]
1.2 Execution
And Delivery Of Warrant Certificates. Each Warrant Certificate,
whenever issued, shall be in registered form substantially in the
form set forth in Exhibit A hereto, shall be dated the date of
its countersignature by the Warrant Agent and may have
such
letters,
numbers, or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon
as the officers of the Company executing the same may approve
(execution thereof to be conclusive evidence of such approval) and
as are not inconsistent with the provisions of this Agreement, or
as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of
any securities exchange on which the Warrants may be listed, or to
conform to usage. The Warrant Certificates shall be signed on
behalf of the Company by any of its present or future chief
executive officers, presidents, senior vice presidents, vice
presidents, chief financial officers, chief legal officers,
treasurers, assistant treasurers, controllers, assistant
controllers, secretaries or assistant secretaries under its
corporate seal reproduced thereon. Such signatures may be manual or
facsimile signatures of such authorized officers and may be
imprinted or otherwise reproduced on the Warrant Certificates. The
seal of the Company may be in the form of a facsimile thereof and
may be impressed, affixed, imprinted or otherwise reproduced on the
Warrant Certificates.
No Warrant
Certificate shall be valid for any purpose, and no Warrant
evidenced thereby shall be exercisable, until such Warrant
Certificate has been countersigned by the manual signature of the
Warrant Agent. Such signature by the Warrant Agent upon any Warrant
Certificate executed by the Company shall be conclusive evidence
that the Warrant Certificate so countersigned has been duly issued
hereunder.
In case any
officer of the Company who shall have signed any of the Warrant
Certificates either manually or by facsimile signature shall cease
to be such officer before the Warrant Certificates so signed shall
have been countersigned and delivered by the Warrant Agent, such
Warrant Certificates may be countersigned and delivered
notwithstanding that the person who signed Warrant Certificates
ceased to be such officer of the Company; and any Warrant
Certificate may be signed on behalf of the Company by such persons
as, at the actual date of the execution of such Warrant
Certificate, shall be the proper officers of the Company, although
at the date of the execution of this Agreement any such person was
not such officer.
The term
“holder” or “holder of a Warrant
Certificate” as used herein shall mean any person in whose
name at the time any Warrant Certificate shall be registered upon
the books to be maintained by the Warrant Agent for that purpose
[If Other Securities and Warrants are not immediately
detachable—or upon the registration of the Other Securities
prior to the Detachable Date. Prior to the Detachable Date, the
Company will, or will cause the registrar of the Other Securities
to, make available at all times to the Warrant Agent such
information as to holders of the Other Securities as may be
necessary to keep the Warrant Agent’s records up to
date].
1.3 Issuance
Of Warrant Certificates. Warrant Certificates evidencing the
right to purchase Warrant Securities may be executed by the Company
and delivered to the Warrant Agent upon the execution of this
Warrant Agreement or from time to time thereafter. The Warrant
Agent shall, upon receipt of Warrant Certificates duly executed on
behalf of the Company, countersign such Warrant Certificates and
shall deliver such Warrant Certificates to or upon the order of the
Company.
WARRANT PRICE, DURATION AND
EXERCISE OF WARRANTS
2.1 Warrant
Price. During the period specified in Section 2.2, each
Warrant shall, subject to the terms of this Warrant Agreement and
the applicable Warrant Certificate, entitle the holder thereof to
purchase the number of Warrant Securities specified in the
applicable Warrant Certificate at an exercise price of $
per Warrant Security, subject to adjustment upon the occurrence of
certain events, as hereinafter provided. Such purchase price per
Warrant Security is referred to in this Agreement as the
“Warrant Price.”
2.2 Duration
Of Warrants. Each Warrant may be exercised in whole or in part
at any time, as specified herein, on or after [the date thereof] [
] and at or before [
] p.m., [
] time, on
or such later date as the Company may designate by notice to the
Warrant Agent and the holders of Warrant Certificates mailed to
their addresses as set forth in the record books of the Warrant
Agent (the “Expiration Date”). Each Warrant not
exercised at or before [
] p.m., [
] time, on the Expiration Date shall become void, and all rights of
the holder of the Warrant Certificate evidencing such Warrant under
this Agreement shall cease.
2.3 Exercise
Of Warrants.
(a) During the period specified in Section 2.2,
the Warrants may be exercised to purchase a whole number of Warrant
Securities in registered form by providing certain information as
set forth on the reverse side of the Warrant Certificate and by
paying in full, in lawful money of the United States of America,
[in cash or by certified check or official bank check in New York
Clearing House funds] [by bank wire transfer in immediately
available funds] the Warrant Price for each Warrant Security with
respect to which a Warrant is being exercised to the Warrant Agent
at its corporate trust office, provided that such exercise is
subject to receipt within five business days of such payment by the
Warrant Agent of the Warrant Certificate with the form of election
to purchase Warrant Securities set forth on the reverse side of the
Warrant Certificate properly completed and duly executed. The date
on which payment in full of the Warrant Price is received by the
Warrant Agent shall, subject to receipt of the Warrant Certificate
as aforesaid, be deemed to be the date on which the Warrant is
exercised; provided, however, that if, at the date of receipt of
such Warrant Certificates and payment in full of the Warrant Price,
the transfer books for the Warrant Securities purchasable upon the
exercise of such Warrants shall be closed, no such receipt of such
Warrant Certificates and no such payment of such Warrant Price
shall be effective to constitute the person so designated to be
named as the holder of record of such Warrant Securities on such
date, but shall be effective to constitute such person as the
holder of record of such Warrant Securities for all purposes at the
opening of business on the next succeeding day on which the
transfer books for the Warrant Securities purchasable upon the
exercise of such Warrants shall be opened, and the certificates for
the Warrant Securities in respect of which such Warrants are then
exercised shall be issuable as of the date on such next succeeding
day on which the transfer books shall next be opened, and until
such date the Company shall be under no duty to deliver any
certificate for such Warrant Securities. The Warrant Agent shall
deposit all funds received by it in payment of the Warrant Price in
an account of the Company maintained with it and shall advise the
Company by
telephone at
the end of each day on which a payment for the exercise of Warrants
is received of the amount so deposited to its account. The Warrant
Agent shall promptly confirm such telephone advice to the Company
in writing.
(b) The Warrant Agent shall, from time to time, as
promptly as practicable, advise the Company of (i) the number
of Warrant Securities with respect to which Warrants were
exercised, (ii) the instructions of each holder of the Warrant
Certificates evidencing such Warrants with respect to delivery of
the Warrant Securities to which such holder is entitled upon such
exercise, (iii) delivery of Warrant Certificates evidencing the
balance, if any, of the Warrants for the remaining Warrant
Securities after such exercise, and (iv) such other
information as the Company shall reasonably require.
(c) As soon as practicable after the exercise of any
Warrant, the Company shall issue to or upon the order of the holder
of the Warrant Certificate evidencing such Warrant the Warrant
Securities to which such holder is entitled, in fully registered
form, registered in such name or names as may be directed by such
holder. If fewer than all of the Warrants evidenced by such Warrant
Certificate are exercised, the Company shall execute, and an
authorized officer of the Warrant Agent shall manually countersign
and deliver, a new Warrant Certificate evidencing Warrants for the
number of Warrant Securities remaining unexercised.
(d) The Company shall not be required to pay any stamp
or other tax or other governmental charge required to be paid in
connection with any transfer involved in the issue of the Warrant
Securities, and in the event that any such transfer is involved,
the Company shall not be required to issue or deliver any Warrant
Security until such tax or other charge shall have been paid or it
has been established to the Company’s satisfaction that no
such tax or other charge is due.
(e) Prior to the issuance of any Warrants there shall
have been reserved, and the Company shall at all times through the
Expiration Date keep reserved, out of its authorized but unissued
Warrant Securities, a number of shares sufficient to provide for
the exercise of the Warrants.
OTHER PROVISIONS RELATING TO
RIGHTS OF HOLDERS OF WARRANT CERTIFICATES
3.1 No Rights
As Warrant Securityholder Conferred By Warrants or Warrant
Certificates. No Warrant Certificate or Warrant evidenced
thereby shall entitle the holder thereof to any of the rights of a
holder of Warrant Securities, including, without limitation, the
right to receive the payment of dividends or distributions, if any,
on the Warrant Securities or to exercise any voting rights, except
to the extent expressly set forth in this Agreement or the
applicable Warrant Certificate.
3.2 Lost,
Stolen, Mutilated or Destroyed Warrant Certificates. Upon
receipt by the Warrant Agent of evidence reasonably satisfactory to
it and the Company of the ownership of and the loss, theft,
destruction or mutilation of any Warrant Certificate and/or
indemnity
reasonably
satisfactory to the Warrant Agent and the Company and, in the case
of mutilation, upon surrender of the mutilated Warrant Certificate
to the Warrant Agent for cancellation, then, in the absence of
notice to the Company or the Warrant Agent that such Warrant
Certificate has been acquired by a bona fide purchaser, the Company
shall execute, and an authorized officer of the Warrant Agent shall
manually countersign and deliver, in exchange for or in lieu of the
lost, stolen, destroyed or mutilated Warrant Certificate, a new
Warrant Certificate of the same tenor and evidencing Warrants for a
like number of Warrant Securities. Upon the issuance of any new
Warrant Certificate under this Section 3.2, the Company may
require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any
other expenses (including the fees and expenses of the Warrant
Agent) in connection therewith. Every substitute Warrant
Certificate executed and delivered pursuant to this
Section 3.2 in lieu of any lost, stolen or destroyed Warrant
Certificate shall represent an additional contractual obligation of
the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and shall
be entitled to the benefits of this Agreement equally and
proportionately with any and all other Warrant Certificates duly
executed and delivered hereunder. The provisions of this
Section 3.2 are exclusive and shall preclude (to the extent
lawful) all other rights and remedies with respect to the
replacement of mutilated, lost, stolen or destroyed Warrant
Certificates.
3.3 Holder of
Warrant Certificate May Enforce Rights. Notwithstanding any of
the provisions of this Agreement, any holder of a Warrant
Certificate, without the consent of the Warrant Agent, the holder
of any Warrant Securities or the holder of any other Warrant
Certificate, may, in such holder’s own behalf and for such
holder’s own benefit, enforce, and may institute and maintain
any suit, action or proceeding against the Company suitable to
enforce, or otherwise in respect of, such holder’s right to
exercise the Warrants evidenced by such holder’s Warrant
Certificate in the manner provided in such holder’s Warrant
Certificate and in this Agreement.
(a) In case the Company shall at any time subdivide
its outstanding shares of [title of Preferred Stock purchasable
through exercise of Warrants] into a greater number of shares, the
Warrant Price in effect immediately prior to such subdivision shall
be proportionately reduced and the number of Warrant Securities
purchasable under the Warrants shall be proportionately increased.
Conversely, in case the outstanding shares of [title of Preferred
Stock purchasable through exercise of Warrants] of the Company
shall be combined into a smaller number of shares, the Warrant
Price in effect immediately prior to such combination shall be
proportionately increased and the number of Warrant Securities
purchasable under the Warrants shall be proportionately
decreased.
(b) If at any time or from time to time the holders of
[title of Preferred Stock purchasable through exercise of Warrants]
(or any shares of stock or other securities at the time receivable
upon the exercise of the Warrants) shall have received or become
entitled to receive, without payment therefore,
(i) [title of Preferred Stock purchasable through
exercise of Warrants] or any shares of stock or other securities
which are at any time directly or indirectly convertible
into or
exchangeable for [title of Preferred Stock purchasable through
exercise of Warrants], or any rights or options to subscribe for,
purchase or otherwise acquire any of the foregoing by way of
dividend or other distribution;
(ii) any cash paid or payable otherwise than in
accordance with the terms of [title of Preferred Stock purchasable
through exercise of Warrants] or otherwise than as a cash dividend
paid or payable out of the Company’s current or retained
earnings;
(iii) any evidence of the Company’s indebtedness
or rights to subscribe for or purchase the Company’s
indebtedness; or
(iv) [title of Preferred Stock purchasable through
exercise of Warrants] or additional stock or other securities or
property (including cash) by way of spinoff, split-up,
reclassification, combination of shares or similar corporate
rearrangement (other than shares of [title of Preferred Stock
purchasable through exercise of Warrants] issued as a stock split
or adjustments in respect of which shall be covered by the terms of
Section 3.4(a) above), then and in each such case, the holder
of each Warrant shall, upon the exercise of the Warrant, be
entitled to receive, in addition to the number of Warrant
Securities receivable thereupon, and without payment of any
additional consideration therefore, the amount of stock and other
securities and property (including cash and indebtedness or rights
to subscribe for or purchase indebtedness) which such holder would
hold on the date of such exercise had he been the holder of record
of such Warrant Securities as of the date on which holders of
[title of Preferred Stock purchasable through exercise of Warrants]
received or became entitled to receive such shares or all other
additional stock and other securities and property.
(c) In case of (i) any reclassification, capital
reorganization, or change in the [title of Preferred Stock
purchasable through the exercise of the Warrants] of the Company
(other than as a result of a subdivision, combination or stock
dividend provided for in Section 3.4(a) or Section 3.4(b)
above), (ii) share exchange, merger or similar transaction of
the Company with or into another person or entity (other than a
share exchange, merger or similar transaction in which the Company
is the acquiring or surviving corporation and which does not result
in any change in the [title of Preferred Stock purchasable through
the exercise of the Warrants] other than the issuance of additional
shares of [title of Preferred Stock purchasable through the
exercise of the Warrants]) or (iii) the sale, exchange, lease,
transfer or other disposition of all or substantially all of the
properties and assets of the Company as an entirety (in any such
case, a “Reorganization Event”), then, as a condition
of such Reorganization Event, lawful provisions shall be made, and
duly executed documents evidencing the same from the Company or its
successor shall be delivered to the holders of the Warrants, so
that the holders of the Warrants shall have the right at any time
prior to the expiration of the Warrants to purchase, at a total
price equal to that payable upon the exercise of the Warrants, the
kind and amount of shares of stock and other securities and
property receivable in connection with such Reorganization Event by
a holder of the same number of shares of [title of Preferred Stock
purchasable through the exercise of the Warrants] as were
purchasable by the holders of the Warrants immediately prior to
such Reorganization Event. In any such case appropriate provisions
shall be made with respect to the rights and interests of the
holders of the Warrants so that the provisions hereof shall
thereafter be applicable with respect to any shares of stock or
other securities and property deliverable upon exercise the
Warrants, and appropriate adjustments shall be made to the Warrant
Price payable
hereunder
provided the aggregate purchase price shall remain the same. In the
case of any transaction described in clauses (ii) and
(iii) above, the Company shall thereupon be relieved of any
further obligation hereunder or under the Warrants, and the Company
as the predecessor corporation may thereupon or at any time
thereafter be dissolved, wound up or liquidated. Such successor or
assuming entity thereupon may cause to be signed, and may issue
either in its own name or in the name of the Company, any or all of
the Warrants issuable hereunder which heretofore shall not have
been signed by the Company, and may execute and deliver securities
in its own name, in fulfillment of its obligations to deliver
Warrant Securities upon exercise of the Warrants. All the Warrants
so issued shall in all respects have the same legal rank and
benefit under this Agreement as the Warrants theretofore or
thereafter issued in accordance with the terms of this Agreement as
though all of such Warrants had been issued at the date of the
execution hereof. In any case of any such Reorganization Event,
such changes in phraseology and form (but not in substance) may be
made in the Warrants thereafter to be issued as may be
appropriate.
(d) The Company may, at its option, at any time until
the Expiration Date, reduce the then current Warrant Price to any
amount deemed appropriate by the Board of Directors of the Company
for any period not exceeding twenty consecutive days (as evidenced
in a resolution adopted by such Board of Directors), but only upon
giving the notices required by Section 3.5 at least ten days
prior to taking such action.
(e) Except as herein otherwise expressly provided, no
adjustment in the Warrant Price shall be made by reason of the
issuance of any securities of the Company or for any other reason
whatsoever.
(f) No fractional Warrant Securities shall be issued
upon the exercise of Warrants. If more than one Warrant shall be
exercised at one time by the same holder, the number of full
Warrant Securities which shall be issuable upon such exercise shall
be computed on the basis of the aggregate number of Warrant
Securities purchased pursuant to the Warrants so exercised. Instead
of any fractional Warrant Security which would otherwise be
issuable upon exercise of any Warrant, the Company shall pay a cash
adjustment in respect of such fraction in an amount equal to the
same fraction of the last sales price (or bid price if there were
no sales) per Warrant Security, in either case as reported on the
New York Stock Exchange Composite Tape on the business day which
next precedes the day of exercise or, if the Warrant Securities are
not then listed or admitted to trading on the New York Stock
Exchange, on the principal national securities exchange on which
the Warrant Securities are listed or admitted to trading or, if not
listed or admitted to trading on any national securities exchange,
the average of the closing high bid and low asked prices in the
over-the-coun
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