May 24, 2006
Via U.S. Mail
Michael Klayko
Chief Executive Officer
Brocade Communications Systems, Inc.
1745 Technology Drive
San Jose, CA 95110
Re: Brocade Communications Systems, Inc.
Schedule TO-I filed May 12, 2006
Amendment No. 1 to Schedule TO-I filed May 19, 2006
SEC File No. 5-56977
Dear Mr. Klayko:
We have reviewed your filing and have the following
comments.
Where indicated, we think you should revise your document in
response
to these comments. If you disagree, we will consider your
explanation as to why our comment is inapplicable or a revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may raise additional comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Schedule TO
Exhibit (a)(1)(a) - Offer to Purchase
1. In an appropriate place in your offering materials, please
advise
holders that the cash consideration to be paid promptly after
January
1, 2007 does not depend upon whether the eligible employee
continues
to be employed by Brocade or one of it`s subsidiaries through the
date of payment.
2. It would appear that your ability to determine the amount of
consideration you will pay to tendering holders of pre-August 13,
2003 options relies upon Lazard Freres & Co (August 11, 1995).
Consistent with this relief, please advise us of the following:
* Advise us as to whether or not you will issue a press release
publicly announcing the Averaged Stock Price prior to the opening
of
trading on the second trading day prior to the expiration of the
offer;
* Advise us as to whether you can ensure that every eligible
holder
of options has access to your Intranet for purposes of accessing
the
calculator or provide them with a toll-free telephone number that
security holders may contact prior to expiration of the offer to
ascertain the exact amount of consideration to be received based
on
then prevailing market prices, and;
* Clarify whether you will be providing an estimated Averaged
Stock
Price for purposes of the calculator you are providing on your
Intranet as if it had been determined on such date.
3. "Q2. Why is Brocade making this offer?" Advise us as to
whether
or not there are any tax, accounting or other consequences to the
company if this offer is not made and the options that were
granted
at a discount remain outstanding. In other words, if the purpose
of
the offer will also avoid any adverse tax, accounting or other
consequences to you, please advise holders of these consequences.
4. "Q7. What will I receive in return for my options?" In your
discussion of the Post-August 14, 2003 Options Example, please
revise
to clarify what happens to the 2,000 shares that were vested on or
before December 31, 2004. If they will continue to be vested and
exercisable pursuant to their original terms, please state this.
5. A tender offer may only be subject to conditions that are
drafted
with sufficient specificity to allow for objective verification
that
the conditions have been satisfied. In this regard, we note the
following:
* the references to "threatened" in the first bullet point; and
* the reference to "extraordinary" in the third bullet point.
Please revise to clarify the conditions in accordance with
this
comment.
As appropriate, please amend your filing and respond to
these
comments within 10 business days or tell us when you will provide
us
with a response. You may wish to provide us with marked copies of
the amendment to expedite our review. Please furnish a cover
letter
with your amendment that keys your responses to our comments and
provides any requested supplemental information. Detailed cover
letters greatly facilitate our review. Please understand that we
may
have additional comments after reviewing your amendment and
responses
to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing reviewed by the staff to
be
certain that they have provided all information investors require
for
an informed decision. Since the filing persons are in possession
of
all facts relating to their disclosure, they are responsible for
the
accuracy and adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from all filing persons acknowledging
that:
* the bidder is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments in the filings reviewed by the staff do not foreclose the
Commission from taking any action with respect to the filing; and
* the bidder may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filing or in
response to our comments on your filing.
If you have any questions regarding our comments, please do
not
hesitate to contact me at (202) 551-3264. You may also reach me
by
facsimile at (202) 772-9203.
Sincerely,
Mara L. Ransom
Special Counsel
Office of Mergers and
Acquisitions
cc via facsimile at (650) 493-6811:
Katharine A. Martin, Esq.
John E. Aguirre, Esq.
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304-1050
Brocade Communications Systems, Inc.
May 24, 2006
Page 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-3628
DIVISION OF
CORPORATION FINANCE