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Item 1.01
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Entry into a Material Definitive Agreement.
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Merger Agreement with Ruckus Wireless
On April 3, 2016, Brocade Communications Systems, Inc., a Delaware corporation (“Brocade”), entered into an Agreement and Plan
of Merger (the “Merger Agreement”) with Ruckus Wireless, Inc., a Delaware corporation (“Ruckus”), and Stallion Merger Sub Inc., a Delaware corporation and a wholly-owned subsidiary of Brocade (“Purchaser”).
Pursuant to the terms and subject to the conditions set forth in the Merger Agreement, Purchaser will commence an exchange offer (the
“Offer”) to purchase any and all outstanding shares of common stock of Ruckus (the “Ruckus Shares”), with each Ruckus Share accepted by Purchaser in the Offer to be exchanged for the right to receive (i) $6.45 in cash and
(ii) 0.75 of a validly issued, fully paid and non-assessable share of Brocade common stock, plus cash in lieu of any fractional shares of Brocade common stock, in each case, without interest and subject to any applicable withholding of taxes
((i) and (ii) together, the “Offer Consideration”). The obligation of Brocade and Purchaser to consummate the Offer is subject to, among other conditions, the condition that there be validly tendered and not validly withdrawn prior to
the expiration of the Offer a number of Ruckus Shares that, together with the Ruckus Shares (if any) owned by Brocade and Purchaser or any of their subsidiaries, represent at least a majority of the Ruckus Shares outstanding as of the scheduled
expiration of the Offer (such condition, the “Minimum Condition”). As soon as practicable following the closing of the Offer, on the terms and subject to the conditions set forth in the Merger Agreement, Purchaser will be merged with and
into Ruckus, with Ruckus surviving the merger (the “Merger”) as a wholly-owned subsidiary of Brocade, and each issued and outstanding Ruckus Share, other than Ruckus Shares held in treasury of Ruckus, Ruckus Shares owned by Brocade or any
of its subsidiaries (including Purchaser) or Ruckus Shares owned by stockholders who have validly exercised their appraisal rights under Delaware law, will be converted into the right to receive the Offer Consideration.
In addition to the Minimum Condition, completion of the Offer is subject to the satisfaction or waiver of a number of other customary
conditions, including, without limitation, the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and the effectiveness of a registration statement on Form S-4 registering
the shares of Brocade common stock to be issued as consideration in connection with the Offer and the Merger. The Merger Agreement contemplates that, if the Offer is completed, the Merger will be effected pursuant to Section 251(h) of the
General Corporation Law of the State of Delaware (the “DGCL”). Section 251(h) of the DGCL provides that following the consummation of a successful tender offer for a public corporation, and subject to certain statutory provisions, if
the acquiring corporation owns at least the amount of shares of each class of stock of the target corporation that would otherwise be required to approve a merger involving the target corporation, and the other stockholders receive the same
consideration for their stock in the merger as was payable in the tender offer, the acquiring corporation can effect a merger without the action of the other stockholders of the target corporation. Accordingly, if the Offer is consummated, the
Merger will be effected without a vote of the holders of Ruckus Shares.
Each of Brocade, Ruckus and Purchaser has made customary
representations and warranties and covenants in the Merger Agreement, including covenants to use their respective reasonable best efforts to effect the transaction, including securing required regulatory approvals. In addition, Ruckus has agreed to
other customary covenants, including, among others, covenants to conduct its business in the ordinary course during the interim period between the execution of the Merger Agreement and the closing of the Merger, and not to solicit alternative
transactions or, subject to certain exceptions, not to enter into discussions concerning, or provide confidential information in connection with, an alternative transaction.
The Merger Agreement contains termination rights for each of Brocade and Ruckus, including, among others, if the acceptance time for the Offer
does not occur on or before August 3, 2016, subject to extension for an additional two-month period in certain circumstances. Upon termination of the Merger Agreement under specified circumstances, including (1) a termination by Ruckus to
enter into an agreement for an alternative transaction in connection with a superior proposal that did not result from a breach of the non-solicitation provisions and with
respect to which the board of directors of Ruckus concludes that failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties, or (2) termination by
Brocade following a change of recommendation by the board of directors of Ruckus, Ruckus would be required to pay Brocade a termination fee of $50 million (“Termination Fee”). Under certain additional circumstances described in the Merger
Agreement, Ruckus must also pay Brocade the Termination Fee if the Merger Agreement is terminated, a competing acquisition proposal has previously been made, and within 12 months following such termination, Ruckus enters into an agreement for an
alternative change of control transaction (which fee is payable upon entering into an alternative agreement or, in certain circumstances, upon consummation of an alternative transaction).
The respective boards of directors of Brocade and Ruckus have approved the Merger Agreement, the Offer and the Merger. The board of directors
of Ruckus has also resolved to recommend that holders of Ruckus Shares accept the Offer and tender their Ruckus Shares to Purchaser pursuant to the Offer.
The foregoing summary of certain terms of the Merger Agreement does not purport to be complete and is subject to, and qualified in its
entirety by, the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K and which is incorporated herein by reference. The Merger Agreement has been incorporated herein by reference to provide
information regarding the terms of the Merger Agreement and is not intended to modify or supplement any factual disclosures about Brocade, Ruckus or Purchaser in any public reports filed with the U.S. Securities and Exchange Commission (the
“SEC”) by Brocade or Ruckus. The representations, warranties, covenants and agreements contained in the Merger Agreement were made only for purposes of the Merger Agreement as of specific dates, were solely for the benefit of the parties
to the Merger Agreement and may be subject to limitations agreed upon by the contracting parties, including being qualified by information in confidential disclosure schedules provided by each of Ruckus and Brocade to each other in connection with
the signing of the Merger Agreement. These disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, the representations and warranties
in the Merger Agreement were used for the purpose of allocating risk between the parties thereto, rather than establishing matters of fact. Accordingly, the representations and warranties in the Merger Agreement may not constitute the actual state
of facts with respect to the parties thereto. The representations and warranties set forth in the Merger Agreement may also be subject to a contractual standard of materiality different from that generally applicable to investors under federal
securities laws. Moreover, information concerning the subject matter of the representations and warranties may change after the date of the Merger Agreement, which subsequent information may or may not be fully reflected in Brocade’s or
Ruckus’s public disclosures. Therefore, the Merger Agreement is included with this Current Report on Form 8-K only to provide investors with information regarding the terms of the Merger Agreement and not to provide investors with any other
factual information regarding the parties thereto or their respective businesses.
Support Agreement
Concurrently with the execution of the Merger Agreement, Ruckus’s President and Chief Executive Officer Selina Lo entered into a support
agreement with Brocade and Purchaser (the “Support Agreement”), pursuant to which she has agreed, among other things, to tender the Ruckus Shares beneficially owned by her into the Offer. The Support Agreement will terminate upon the
earliest to occur of (i) the effective time of the Merger, (ii) the date that the Merger Agreement is terminated in accordance with its terms, (iii) the termination or withdrawal of the Offer by Brocade or Purchaser, (iv) any
modification, change or amendment of, or any waiver of Ruckus’s rights under or conditions set forth in, the Merger Agreement or the Offer, without the prior written consent of Ms. Lo, that results in any decrease in the amount of the
Offer Consideration, and (v) such other date as the parties to such Support Agreement otherwise mutually agree in writing to terminate the Support Agreement.
The foregoing summary of certain terms of the Support Agreement does not purport to be complete and is qualified in its entirety by the full
text of the Support Agreement, a copy of which is filed as Exhibit 99.1 to this Current Report on Form 8-K and which is incorporated herein by reference.
Commitment Letter
On
April 3, 2016, Brocade entered into a commitment letter (the “Commitment Letter”) with Wells Fargo Bank, National Association, Wells Fargo Securities, LLC, Deutsche Bank AG New York Branch, Deutsche Bank
Securities Inc., SunTrust Bank and SunTrust Robinson Humphrey, Inc. (collectively, the “Commitment Parties”), pursuant to which the Commitment Parties have committed to provide a term
loan facility of $800.0 million and a revolving credit facility of $100.0 million (collectively, the “Financing”). The Commitment Parties’ commitment to provide the Financing is subject to the satisfaction of certain conditions,
including the negotiation of definitive documentation for the Financing and other customary closing conditions. The proceeds of the Financing would be used to (i) finance a portion of the Offer and related Merger pursuant to the Merger
Agreement, (ii) pay fees and expenses related to the Offer, the Merger and the Financing, (iii) finance the repurchase of shares of common stock of Brocade and (iv) finance ongoing working capital requirements and other general
corporate purposes. Brocade will pay customary fees and expenses in connection with obtaining the Commitment Letter and the Financing and has agreed to indemnify the lenders if certain losses are incurred by the lenders in connection therewith.
The foregoing summary of certain terms of the Commitment Letter does not purport to be complete and is qualified in its entirety by the full
text of the Commitment Letter, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and which is incorporated herein by reference.