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EXHIBIT 10.2
THIRD AMENDMENT
TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT is entered into as of
January 22, 2001 (this "Amendment") by and between BROCADE COMMUNICATIONS, a
Delaware corporation, with its principal place of business at 0000 Xxxxxxxxxx
Xxxxx, Xxx Xxxx, Xxxxxxxxxx 00000 ("Borrower"), and COMERICA BANK-CALIFORNIA
("Bank"), a California banking corporation, with its principal place of business
at 000 Xxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxxxxxxxxx 00000.
RECITALS
A. Borrower and Bank have previously entered into that certain
Credit Agreement dated as of January 5, 2000, as amended by the First Amendment
to Credit Agreement dated March 21, 2000, as amended by the Second Amendment to
Credit Agreement dated September 20, 2000 (the "Credit Agreement").
B. Pursuant to the terms of the Credit Agreement, Borrower wishes to
obtain an additional standby letter of credit from Bank, and Bank desires to
issue such standby letter of credit.
C. This Amendment sets forth the terms on which Bank will issue the
additional standby letter of credit to Borrower.
AGREEMENT
For good and valuable consideration, receipt of which is hereby
acknowledged, the parties agree as set forth below.
1. Incorporation by Reference; Definitions. The foregoing Recitals
and the Credit Agreement are incorporated herein by this reference as though set
forth in full herein. Any terms not defined herein shall have the meanings given
in the Credit Agreement. As used herein, and unless otherwise defined herein,
the following terms shall have the following respective meanings except as the
context shall otherwise require:
"Letter of Credit" means the standby letter of credit issued by
Bank for the account of Borrower, and for the benefit of Xxxxxxx Properties,
L.P. in the amount of Ten Million Four Hundred Five Thousand Nine Hundred Eighty
Three and 00/100 Dollars ($10,405,983.00), provided, however, that if Bank
approves extensions of the Maturity Date, then the amount of the Letter of
Credit shall be reduced as follows: the amount of the Letter of Credit shall be
reduced to Eight Million Two Hundred Eighty Nine Thousand Four Hundred Eighty
Seven and 00/100 Dollars ($8,289,487.00) commencing on the date forty eight (48)
months from the date hereof and continuing
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until sixty (60) months from the date hereof, which amount shall be reduced
further to Six Million One Hundred Seventy Two Thousand Nine Hundred Ninety Two
and 00/100 Dollars ($6,172,992.00) commencing on the date sixty one (61) months
from the date hereof and continuing until the date seventy two (72) months from
the date hereof, which amount shall be further reduced to Four Million Fifty Six
Thousand Four Hundred Ninety Six and 00/100 Dollars ($4,056,496.00) commencing
on the date seventy three (73) months from the date hereof and continuing until
the date eighty four (84) months from the date hereof, which amount shall be
further reduced to One Million Nine Hundred Forty Thousand and 00/100 Dollars
($1,940,000.00) commencing on the date eighty four (84) months from the date of
this hereof until the final Maturity Date.
"Letter of Credit Agreement" means the Standby Letter of Credit
Application and Agreement dated the date hereof by and between Borrower and
Bank.
"Letter of Credit Documents" means this Amendment, the Letter of
Credit, and the Letter of Credit Agreement.
"Maturity Date" means December 1, 2003, provided however that
the Letter of Credit may be renewed annually, subject to Bank approval, which
annual renewals may be up to a final maturity date of November 30, 2013.
2. Amendment to the Credit Agreement. The parties have agreed to the
amendments to the Credit Agreement set forth in this Section 2.
2.1 Additional Letter of Credit. The Letter of Credit is issued
as an additional letter of credit under the Credit Agreement and is subject to
the terms and conditions of the Credit Agreement. The Letter of Credit Documents
are incorporated herein by this reference.
2.2 Issuance of Letters of Credit. Subject to the terms and
conditions of the Letter of Credit Documents and the Credit Agreement, Bank
shall issue the Letter of Credit.
2.3 Letter of Credit Fees. Borrower shall pay to Bank fees upon
the issuance of the Letter of Credit, and upon the payment by Bank of each draft
under the Letter of Credit, in accordance with Bank's standard fees and charges
in effect at the time the Letter of Credit is issued or amended or any draft is
paid. In addition, Borrower shall prepay to Bank an annual fee with respect to
the Letter of Credit in an amount equal to one-half of one percent (0.50%) per
annum of the original face amount of the Letter of Credit for the time period
equal to the date of issuance of the Letter of Credit to and including the
Maturity Date.
2.4 Reimbursement by Borrower. Borrower shall immediately
reimburse Bank for all sums paid by Bank on account of the Letter of Credit in
accordance with the Letter of Credit Agreement.
2.5 Indemnity. Borrower shall indemnify Bank as set forth in the
Letter of Credit Agreement.
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2.6 Payment of Drafts. Bank shall pay drafts as set forth in the
Letter of Credit Agreement.
2.7 Amendment to Section 8.2 of the Credit Agreement. Section
8.2 of the Credit Agreement is hereby amended by deleting it in its entirety and
replacing it with the following:
8.2 Tangible Effective Net Worth. Borrower shall maintain, as of
the last day of each fiscal quarter, a Tangible Effective Net Worth of
not less than Three Hundred Fifty Two Million and 00/100 Dollars
($352,000,000.00); which sum shall increase, on an annual basis as of
Borrower's fiscal year end, by an amount equal to (a) fifty percent
(50%) of Borrower's net profit; plus (b) ninety percent (90%) of
additional equity raised by Borrower.
8.3 Profitability. Borrower shall have a minimum net profit, on
an operating and after tax basis, greater than Zero and 00/100 Dollars
($0.00) on a rolling two (2) quarter basis, provided however that Bank
shall exclude from its profitability calculation for approved
acquisitions, in process research and development charges and any other
non-cash acquisition related write-offs.
3. Conditions Precedent.
3.1 Issuance of the Letter of Credit. As conditions precedent to
Bank's obligation to issue the Letter of Credit, Borrower shall deliver, or
cause to be delivered, to Bank:
3.1.1 A duly executed copy of this Amendment;
3.1.2 A duly executed copy of the Letter of Credit
Agreement;
3.1.3 All representations and warranties of Borrower to Bank
set forth in the Letter of Credit Documents shall be accurate and complete in
all respects; and
3.1.4 There shall not exist an Event of Default or an event
which with the giving of notice of passage of time, or both, would be an Event
of Default.
4. No Modification of Other Obligations. Except as is otherwise
specifically set forth herein, the Credit Agreement shall remain unmodified and
in full force and effect, and is hereby ratified and confirmed.
5. Conflicts. If a conflict exists between the provisions of the
Credit Agreement and the provisions of this Amendment, the provisions of this
Amendment shall control.
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6. Further Assurances. Borrower agrees to make and execute such
other documents as may be necessary or required to effectuate the terms and
conditions of this Amendment.
7. Future Modifications. This Amendment does not entitle, or imply
any consent or agreement to, any further or future modification of, amendment
to, waiver of, or consent with respect to any provision of the Credit Agreement.
Any amendments hereto shall be in writing and signed by the parties.
8. Integration. This Amendment is an integrated agreement, and
supercedes all negotiations and agreement regarding the subject matter hereof,
and taken together with the Credit Agreement, constitutes the final agreement of
the parties with respect to the subject matter hereof and thereof.
9. Fees and Costs. Borrower shall pay Bank's attorneys' fees and
costs incurred in the preparation of this Amendment.
10. Severability. In the event any one or more of the provisions
contained in this Amendment is held to be invalid, illegal or unenforceable in
any respect, then such provision shall be ineffective only to the extent of such
prohibition or invalidity, and the validity, legality, and enforceability of the
remaining provisions contained herein shall not in any way be affected or
impaired thereby.
11. Interpretation. This Amendment and all agreements relating to
the subject matter hereof are the product of negotiation and preparation by and
among each party and its respective attorneys, and shall be construed
accordingly. The parties waive the provisions of California Civil Code Section
1654.
12. Counterparts. This Amendment may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if all
signatures were upon the same instrument. Delivery of an executed counterpart of
the signature page to this Amendment by telefacsimile shall be effective as
delivery of a manually executed counterpart of this Amendment, and any party
delivering such an executed counterpart of the signature page to this Amendment
by telefacsimile to any other party shall thereafter also promptly deliver a
manually executed counterpart of this Amendment to such other party, provided
that the failure to deliver such manually executed counterpart shall not affect
the validity, enforceability, or binding effect of this Amendment.
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IN WITNESS WHEREOF, the parties have caused this Third Amendment to
be executed as of the day and year first written above.
BROCADE COMMUNICATIONS
By:
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Title:
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COMERICA BANK-CALIFORNIA
By: Xxxxx Xxxxx
Its: Vice President
