FOURTH AMENDMENT TO CREDIT AGREEMENT
Exhibit 10.2
FOURTH AMENDMENT
TO CREDIT AGREEMENT
TO CREDIT AGREEMENT
This
FOURTH AMENDMENT TO CREDIT AGREEMENT is entered into as of July 27, 2005 (this
“Amendment”) by and between BROCADE COMMUNICATIONS SYSTEMS, INC. (“Borrower”), and COMERICA BANK,
successor by merger to Comerica Bank -California (“Bank”).
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 as of March 21, 2000,
as amended by the Second Amendment to Credit Agreement dated as of September 20, 2000, as amended
by the Third Amendment to Credit Agreement dated as of January 22, 2001 (the “Credit Agreement”).
B. Borrower and Bank desire to amend the Credit Agreement on the terms and conditions set
forth herein.
NOW, THEREFORE, Borrower and Bank hereby amend and supplement the Credit Agreement as
follows:
1. DEFINITIONS. All initially capitalized terms used in this Amendment shall have
the meanings given to them in the Credit Agreement unless specifically defined herein.
2. AMENDMENTS.
1.1. The following definitions in Section 1.2 of the Credit Agreement are
hereby alphabetically added or amended and restated to read as follows:
“Letter(s) of Credit” means any standby letter of credit issued by Bank at
Borrower’s request in accordance with Sections 2 and 3 of the Credit Agreement.
“Letter of Credit Agreement(s)” means any Standby Letter of Credit Application
and Agreement between Borrower and Bank, including without limitation those certain
Letters of Credit in the aggregate amount of $8,342,661.00.
“Letter of Credit Documents” means this Amendment, the Credit Agreement, any
future amendments to the Credit Agreement, the Letters of Credit and the Letter of
Credit Agreements.
“Permitted Investment” means: (a) Investments existing on the Statement Date;
(b) marketable direct obligations issued or unconditionally guaranteed by the
United States of America or any agency or any State thereof maturing within three
(3) years from the date of acquisition thereof; (c) commercial paper maturing no
more than three (3) years from the date of creation thereof and currently having
the highest rating obtainable from either Standard & Poor’s Corporation or Xxxxx’x
Investors Service, Inc.; (d) certificates of deposit
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maturing no more than three (3) years from the date of investment therein issued by
Bank; and (e) an Investment with an aggregate value of not more than One Hundred
Million Dollars ($100,000,000) in any Person.
“Quick Assets” means, at any date as of which the amount thereof shall be
determined, the unrestricted cash and
cash-equivalents, net accounts receivable,
and investments with maturities not to exceed one year, of Borrower, determined in
accordance with GAAP.
“Quick
Ratio” means Quick Assets to Current Liabilities.
1.2 Section 6.6 “Litigation” of the Credit Agreement is hereby amended in full to read
as follows:
“6.6 Litigation. Except as disclosed by Borrower in its quarterly reports on
Forms 10-Q and annual reports on Forms 10-K filed with the Securities and
Exchange Commission pursuant to the Exchange Act or otherwise disclosed by
Borrower in writing, there are no actions or proceedings (whether or not
purportedly on behalf of Borrower) pending, or to the knowledge of Borrower
threatened, against or affecting Borrower at law or in equity or before or
by any Person, which, if adversely determined, could have a material adverse
effect on the business, properties, or financial condition of Borrower.
Borrower is not in default with respect to any applicable laws or
regulations which affect the operations or financial condition of Borrower,
nor is it in default with respect to any other writ, injunction, demand, or
decree of any court or any Person or in default under any indenture,
agreement, or other instrument to which Borrower is a party or by which
Borrower is bound.”
1.3 Section 8.2 “Tangible Effective Net Worth” of the Credit Agreement is hereby deleted and
not replaced, effective December 6, 2004.
1.4 Section 8.3 “Profitability” of the Credit Agreement is hereby deleted and not replaced,
effective as of January 24, 2004.
1.5 A new Section 13 is hereby added to the Credit Agreement to read as follows:
“13. REFERENCE PROVISION.
If and only if the jury trial waiver set forth in Section 11 of this
Agreement is invalidated for any reason by a court of law, statute or
otherwise, the reference provisions set forth below shall be substituted
in place of the jury trial waiver. So long as the jury trial waiver
remains valid, the reference provisions set forth in this Section shall be
inapplicable.
13.1 Mechanics. Each controversy, dispute or claim (each, a
“Claim”) between the parties arising out of or relating to this Agreement,
any security agreement executed by Borrower in favor of Bank, any note
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executed by Borrower in favor of Bank or any other document, instrument or agreement
executed by Borrower with or in favor of Bank (collectively in this Section, the
“Loan Documents”), other than (i) all matters in connection with nonjudicial
foreclosure of security interests in real or personal property; or (ii) the
appointment of a receiver or the exercise of other provisional remedies (any of which
may be initiated pursuant to applicable law) that are not settled in writing within
fifteen (30) days after the date on which a party subject to the Loan Documents gives
written notice to all other parties that a Claim exists (the “Claim Date”) shall be
resolved by a reference proceeding in California in accordance with the provisions of
Section 638 et seq. of the California Code of Civil Procedure, or their successor
sections (“CCP”), which shall constitute the exclusive remedy for the resolution of
any Claim concerning the Loan Documents, including whether such Claim is subject to
the reference proceeding. Except as set forth in this section, the parties waive the
right to initiate legal proceedings against each other concerning each such Claim.
Venue for these proceedings shall be in the Superior Court in the County where the
real property, if any, is located or in a County where venue is otherwise appropriate
under state law (the “Court”). By mutual agreement, the parties shall select a
retired Judge of the Court to serve as referee, and if they cannot so agree within
fifteen (1.5) days after the Claim Date, the Presiding Judge of the Court (or his or
her representative) shall promptly select the referee. A request for appointment of a
referee may be heard on an ex parte or expedited basis. The referee shall be
appointed to sit as a temporary judge, with all the powers for a temporary judge, as
authorized by law, and upon selection should take and subscribe to the oath of office
as provided for in Rule 244 of the California Rules of Court
(or any subsequently enacted Rule). Each party shall have one peremptory
challenge pursuant to CCP §170.6. Upon being selected, the referee shall (a) be requested
to set the matter for a status and trial-setting conference within fifteen (15) days
after the date of selection and (b) if practicable, try any and all issues of law or
fact and report a statement of decision upon them within ninety (90) days of the date of
selection. The referee will have power to expand or limit the amount of discovery a
party may employ. Any decision rendered by the referee will be final, binding and
conclusive, and judgment shall be entered pursuant to CCP §644 in any court in the State
of California having jurisdiction. The parties shall complete all discovery no later
than fifteen (15) days before the first trial date established by the referee. The
referee may extend such period in the event of a party’s refusal to provide requested
discovery for any reason whatsoever, including, without limitation, legal objections
raised to such discovery or unavailability of a witness due to absence or illness. No
party shall be entitled to “priority” in conducting discovery. Either party may take
depositions upon seven (7) days written notice, and shall respond to requests for
production or inspection of documents within ten (10) days after service. All disputes
relating to discovery which cannot be resolved by the parties shall be submitted to the
referee whose decision shall be final and binding upon the parties. Pending
appointment of the referee as
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provided herein, the Superior Court is empowered to issue temporary and/or provisional remedies,
as appropriate.
13.2 Procedures. Except as expressly set forth herein, the referee shall determine the
manner in which the reference proceeding is conducted including the time and place of all
hearings, the order of presentation of evidence, and all other questions that arise with respect
to the course of the reference proceeding. Except for trial, all proceedings and hearings
conducted before the referee shall be conducted without a court reporter unless a party requests a
court reporter. The party making such a request shall have the obligation to arrange for and pay
for the court reporter. Subject to the referee’s power to award costs to the prevailing party, the
parties shall equally bear the costs of the court reporter at the trial and the referee’s expenses
13.3 Application of Law. The referee shall determine all issues in accordance with existing
California case and statutory law. California rules of evidence applicable to proceedings at law
will apply to the reference proceeding. The referee shall be empowered to enter equitable as well
as legal relief, to. provide all temporary and/or provisional
remedies and to enter equitable
orders that shall be binding upon the parties. At the close of the reference proceeding, the
referee shall issue a single judgment at disposing of all the claims of the parties that are the
subject of the reference. The parties reserve the right (i) to contest or appeal from the final
judgment or any appealable order or appealable judgment entered by the referee and (ii) to obtain
findings of fact, conclusions of laws, a written statement of decision, and (iii) to move for a new
trial or a different judgment, which new trial, if granted, shall be a reference proceeding under
this provision.
13.4 Repeal. If the enabling legislation which provides for appointment of a referee is
repealed (and no successor statute is enacted), any dispute between the parties that would
otherwise be determined by the reference procedure herein described will be resolved and determined
by arbitration conducted by a retired judge of the Court, in accordance with the California
Arbitration Act §1280 through §1294.2 of the CCP as amended from time to time. The limitations with
respect to discovery as set forth in this Section shall apply to any such arbitration proceeding.
THE PARTIES RECOGNIZE AND AGREE THAT ALL DISPUTES RESOLVED UNDER THIS REFERENCE PROVISION WILL
BE DECIDED BY A REFEREE AND NOT BY A JURY, AND THAT THEY ARE IN EFFECT WAIVING. THEIR RIGHT TO
TRIAL BY JURY IN AGREEING TO THIS REFERENCE PROVISION. AFTER CONSULTING (OR HAVING HAD THE
OPPORTUNITY TO CONSULT) WITH COUNSEL OF THEIR OWN CHOICE, EACH PARTY KNOWINGLY AND VOLUNTARILY
AND FOR THEIR MUTUAL BENEFIT AGREES THAT THIS REFERENCE PROVISION WILL APPLY TO ANY DISPUTE
BETWEEN THEM WHICH ARISES
OUT OF OR IS RELATED TO THIS AGREEMENT OR THE LOAN DOCUMENTS.”
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3. EXTENSION. Bank hereby extends the due date for Borrower’s delivery of its Form
10-Q for the fiscal quarter ending April 30, 2005 to September 15, 2005.
4. REPRESENTATIONS AND WARRANTIES. Borrower hereby affirms to Bank that all of
Borrower’s representations and warranties set forth in the Credit Agreement are materially true,
complete and accurate in all material respects as of the date hereof.
5. NO DEFAULTS. Borrower hereby affirms to Bank that no Event of Default has occurred
and is continuing as of the date hereof.
6. CONDITION PRECEDENT. The effectiveness of this Amendment is expressly conditioned
upon the receipt by Bank of an executed copy of this Amendment.
7. COSTS AND EXPENSES. Borrower shall pay to Bank all of Bank’s out-of- pocket costs
and expenses (including, without limitation, the reasonable fees and expenses of its counsel, which
may include search fees, filing and recording fees, and documentation fees) arising in connection
with the preparation, execution, and delivery of this Amendment and all related documents.
8. LIMITED EFFECT. In the event of a conflict between the terms and provisions of this
Amendment and the terms and provisions of the Credit Agreement, the terms and provisions of this
Amendment shall govern. In all other respects, the Credit Agreement, as amended and supplemented
hereby, shall remain in full force and effect.
9. COUNTERPARTS; EFFECTIVENESS. This Amendment may be executed in any number of
counterparts and by different parties on separate counterparts, each of which when so executed and
delivered shall be deemed to be an original. All such counterparts, taken together, shall
constitute but one and the same Amendment. This Amendment shall become effective upon (a) the
payment of any amounts due and payable pursuant to Section 7, (b) execution by Borrower and
delivery to Bank of a counterpart of this Amendment, and (c) execution by Bank of a counterpart of
this Amendment.
[ Remainder of Page Intentionally Left Blank ]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first set
forth above.
| COMERICA BANK | ||||||
| By: | /s/ Xxxxxxx X. Le Deit |
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| Title: | FVP-TLS Division | |||||
| BROCADE COMMUNICATIONS SYSTEMS, INC. | ||||||
| By: | /s/ Xxxxxxx Xxxxxx
|
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| Title: | CFO, VP Administration | |||||
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COMPLIANCE CERTIFICATE
TO:
|
COMERICA BANK | |
FROM:
|
BROCADE COMMUNICATIONS SYSTEMS, INC. |
The undersigned authorized officer of BROCADE COMMUNICATIONS SYSTEMS, INC. hereby certifies
that in accordance with the terms and conditions of the Credit Agreement between Borrower
and Bank (the “Agreement”), (i) Borrower is in complete compliance for the
period ending with all required covenants, except as noted below and (ii) all
representations and warranties of Borrower stated in the Agreement are true and correct in
all material respects as of the date hereof. Attached herewith are the required documents
supporting the above certification. The Officer further certifies that these are prepared in
accordance with Generally Accepted Accounting Principles (GAAP) and are consistently applied
from one period to the next except as explained in an accompanying
letter or footnotes.
Please indicate compliance status by circling Yes/No under “Complies” column.
| Reporting Covenant | Required | Complies | ||||
Quarterly Financial Statements (10Q)
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Quarterly within 45 days | Yes | No | |||
Annual (CPA Audited, 10K)
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FYE within 90 days | Yes | No |
| Financial Covenant | Required | Actual | Complies | |||||
Maintain on a Monthly Basis: |
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Minimum Quick Ratio
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2.00:1.00 | :1.00 | Yes | No |
Comments Regarding Exceptions: See
|
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Attached. |
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Sincerely, |
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SIGNATURE |
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TITLE |
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DATE |
BANK USE ONLY
Received by: |
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AUTHORIZED SIGNER
Date: |
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Verified: |
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AUTHORIZED SIGNER
Date: |
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Compliance Status Yes No
