Item 1.01.
|
Entry into a Material Definitive Agreement.
|
On March 29, 2017, Extreme Networks,
Inc., a Delaware corporation (the
Company
), entered into an Asset Purchase Agreement (the
Purchase Agreement
) with LSI Corporation, a Delaware corporation (
LSI
), and, solely for the purposes
set forth in the Purchase Agreement, Broadcom Corporation, a California Corporation (
Broadcom
), to purchase the data center technology business (the
Business
) of Brocade Communication Systems, Inc.
(
Brocade
) and its subsidiaries. Upon the terms and subject to the conditions of the Purchase Agreement, the Company will acquire customers, employees, technology and other assets of the Business, as well as assume certain
contracts and other liabilities of the Business, for an upfront cash closing payment equal to $35 million, plus a deferred payment equal to $20 million to be paid $1 million per quarter for 20 quarters following the closing date of
the transaction (the
Closing
, and such date, the
Closing Date
), plus quarterly earnout payments equal to 50% of profits of the Business for the five-year period commencing at the end of the first full
fiscal quarter of the Company following the Closing Date. Pursuant to certain ancillary agreements, LSI will also provide the Company with access to certain technology related to the Business, as well as transition services for a period of time
following the Closing. The acquisition will include the rights to have manufactured and sold Brocades current SLX based solutions product portfolio, which launched earlier this month.
The Closing is subject to the consummation of the merger of Bobcat Merger Sub, Inc. (
Merger Sub
), a direct wholly owned
subsidiary of LSI, with and into Brocade, upon the terms and subject to the conditions set forth in the Agreement and Plan of Merger, dated as of November 2, 2016, by and among Broadcom Limited, Broadcom, Brocade and Merger Sub (the
Broadcom-Brocade Merger Agreement
and such merger, the
Broadcom-Brocade Merger
), and the satisfaction of customary closing conditions, including, among other matters, (i) the absence of any law or
governmental order prohibiting or preventing the consummation of the transactions contemplated by the Purchase Agreement, (ii) the receipt of certain needed governmental approvals and authorizations, (iii) the accuracy of the
representations and warranties and compliance with the covenants set forth in the Purchase Agreement, each in all material respects, and (iv) the absence of any material adverse effect on the Business.
The Purchase Agreement includes customary representations, warranties and covenants. Certain covenants require each of the parties to use
commercially reasonable efforts to cause the Closing to be consummated, including with regard to receiving any required regulatory approvals. Subject to certain exceptions and limitations, each party has agreed to indemnify the other for breaches of
representations, warranties, covenants and other specified matters.
The representations and warranties in the Purchase Agreement are the
product of negotiations among the parties to the Purchase Agreement and are made to, and solely for the benefit of, the party to whom such representations and warranties are made. Such representations and warranties may have been made for the
purpose of allocating contractual risk between the parties to the Purchase Agreement instead of establishing these matters as facts, may be subject to standards of materiality applicable to the contracting parties that differ from those applicable
to investors, and may not be relied upon by any other person.
Either party may terminate the Purchase Agreement if (a) the Closing
has not occurred by September 29, 2017, subject to certain exceptions and limitations, or (b) the Broadcom-Brocade Merger Agreement has been validly terminated in accordance with the terms thereof. In no event will the Closing Date be
prior July 1, 2017, unless agreed to by the parties. The Purchase Agreement is subject to certain other customary provisions permitting termination by the parties. There is no financing condition to the Closing.
The foregoing description of the Purchase Agreement does not purport to be complete and is qualified in its entirety by reference to the full
text of the Purchase Agreement, a copy of which is attached hereto as Exhibit 2.1 and is incorporated by reference herein.
Forward-Looking Statements
Certain statements in this communication that are not historical are forward-looking statements within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon managements current beliefs and expectations and are subject to uncertainty and changes in circumstances and contain words such as:
believe, intended, expect, and anticipate and include statements about expectations for future results. Examples of forward-looking statements include, among others, statements regarding the
Companys belief that the Broadcom-Brocade Merger will successfully close and that all other customary closing conditions necessary for closing the transaction will be satisfied. Such forward-looking statements are subject to risks,
uncertainties, and other factors, including a downturn in the economy, the risk that the acquisition may not be completed, the risk that the Company may not realize the anticipated benefits of the acquisition, the risk that the Company may not
retain customer relationships and other risks associated with the transaction, such as the ability to successfully integrate the acquired technologies or operations, the potential for unexpected liabilities, the Companys ability to retain key
employees, the inability of the Broadcom-Brocade Merger to successfully close, or failure to meet other closing terms and conditions for the transaction, the reaction to the transaction of customers, employees and counterparties, or difficulties
related to the transition of services, as well as additional risks and uncertainties contained in the Risk Factors and forward-looking statements disclosure contained in our most recent Annual
Report on Form
10-K
and Quarterly Reports on Form
10-Q,
any or all of which could cause actual results to differ
materially from future results expressed or implied by such forward-looking statements. Although the Company believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate.
Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by the Company or any person
that future events, plans, or expectations contemplated by the Company will be achieved. The Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information or future developments.