EXHIBIT 10.29
[LOGO OF SILICON VALLEY BANK]
Amendment to Loan Agreement
Borrower: Vitesse Semiconductor Corporation
Address: 000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Date: January 22, 1997
THIS AMENDMENT TO LOAN AGREEMENT is entered into between SILICON VALLEY BANK
("Silicon") and the borrower named above (the "Borrower").
The Parties agree to amend the Loan and Security Agreement between them dated
May 8, 1991, as amended by that Amendment to Loan Agreement dated May 8, 1991,
as amended by that Amendment to Loan Agreement dated August 12, 1992, as amended
by that Amendment to Loan Agreement dated December 28, 1992, as amended by that
Amendment to Loan Agreement dated June 14, 1993, as amended by that Amendment to
Loan Agreement dated December 10, 1993, as amended by that Amendment to Loan
Agreement dated March 23, 1994, as amended by that Amendment to Loan Agreement
dated December 13, 1994, and as amended by that Amendment to Loan Agreement
dated January 2, 1996 (the "Loan Agreement"; unless otherwise defined herein,
terms defined in the Loan Agreement are used herein as therein defined), as
follows, effective as of the date of hereof:
1. Deletion of Sections 1A and 1B. Sections 1A and 1B of the Loan
Agreement are hereby deleted in their entirety.
2. Modification to Section 2.2 of Loan Agreement. Section 2.2 of the Loan
Agreement is hereby deleted and replaced with the following Section 2.2 and
Section 2.2A:
2.2 Termination of Security Interest; Definition of Collateral. The
Borrower's grant of a security interest in the Collateral under the
original Loan Agreement is hereby deemed terminated and of no force
and effect; and all references to the security interest or lien of
Silicon in the Collateral as set forth in the Loan Agreement and
related documents are deemed to be of no further force or effect.
However, for definitional purposes only under this Agreement, the term
"Collateral" as used herein shall mean all of the Borrower's interest
in the types of property described below, whether now owned or
hereafter acquired, and wherever located: (a) All accounts, contract
rights, chattel paper, letters of credit, documents, securities,
money, and instruments, and all other obligations now or in the future
owing to the Borrower; (b) All inventory, goods, merchandise,
materials, raw materials, work in process, finished goods, farm
products, advertising, packaging and shipping materials, supplies, and
all other tangible personal property which is held for sale or lease
or furnished under contracts of service or consumed in the Borrower's
business, and all warehouse receipts and other documents; and (c) All
equipment, including without limitation all machinery, fixtures,
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trade fixtures, vehicles, furnishings, furniture, materials, tools,
machine tools, office equipment, computers and peripheral devices,
appliances, apparatus, parts, dies, and jigs; (d) All general
intangibles including, but not limited to, deposit accounts, goodwill,
names, trade names, trademarks and the goodwill of the business
symbolized thereby, trade secrets, drawings, blueprints, customer
lists, patents, patent applications, copyrights, security deposits,
loan commitment fees, federal, state and local tax refunds and claims,
all rights in all litigation presently or hereafter pending for any
cause or claim (whether in contract, tort or otherwise), and all
judgments now or hereafter arising therefrom, all claims of Borrower
against Silicon, all rights to purchase or sell real or personal
property, all rights as a licensor or licensee of any kind, all
royalties, licenses, processes, telephone numbers, proprietary
information, purchase orders, and all insurance policies and claims
(including without limitation credit, liability, property and other
insurance), and all other rights, privileges and franchises of every
kind; (e) All books and records, whether stored on computers or
otherwise maintained; and (f) All substitutions, additions and
accessions to any of the foregoing, and all products, proceeds and
insurance proceeds of the foregoing, and all guaranties of and
security for the foregoing; and all books and records relating to any
of the foregoing."
3. Schedule to Loan Agreement. The Schedule to Loan and Security
Agreement is hereby deleted and replaced with the Schedule to Loan and Security
Agreement attached hereto.
4. Financial Conditions and Statements. Section 3.7 of the Loan Agreement
is hereby deleted and replaced with the following:
3.7 Financial Condition and Statements. All financial statements now
or in the future delivered to Silicon have been, and will be, prepared in
conformity with generally accepted accounting principles and now and in the
future will completely and accurately reflect the financial condition of
the Borrower, at the times and for the periods therein stated. Since the
last date covered by any such statement, there has been no material adverse
change in the financial condition or business of the Borrower. The Borrower
is now and will continue to be solvent. The Borrower will provide Silicon:
(i) Within 5 days after the earlier of the date Borrower's 10-Q report is
filed or is required to be filed with the Securities Exchange Commission,
such 10-Q report, a quarterly financial statement prepared by the Borrower,
and a Compliance Certificate in such form as Silicon shall reasonably
specify, signed by the Chief Financial Officer of the Borrower, certifying
that at the end of such quarter the Borrower was in full compliance with
all of the terms and conditions of this Agreement, and setting forth
calculations showing compliance with the financial covenants set forth on
the Schedule and such other information as Silicon shall reasonably request
(the "Compliance Certificate") for the quarter then ended; and (ii) within
5 days after the earlier of the date Borrower's 10-K report is filed or is
required to be filed with the Securities Exchange Commission, such 10-K
report, and complete annual financial statements, certified by independent
certified public accountants acceptable to Silicon.
5. Fee. Borrower shall concurrently herewith pay to Silicon a fee in the
amount of [*], which shall be in addition to all interest and to all other
amounts payable hereunder, and which shall not be refundable.
[* Confidential information]
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6. Representations True. The Borrower represents and warrants to Silicon
that all representations and warranties set forth in the Loan Agreement, as
amended hereby, are true and correct.
7. General Provisions. This Amendment, the Loan Agreement, any prior
written amendments to the Loan Agreement signed by Silicon and the Borrower, and
the other written documents and agreements between Silicon and the Borrower set
forth in full all of the representations and agreements of the parties with
respect to the subject matter hereof and supersede all prior discussions,
representations, agreements and understandings between the parties with respect
to the subject hereof. Except as herein expressly amended, all of the terms and
provisions of the Loan Agreement, and all other documents and agreements between
Silicon and the Borrower shall continue in full force and effect and the same
are hereby ratified and confirmed.
Borrower: Silicon:
VITESSE SEMICONDUCTOR SILICON VALLEY BANK
CORPORATION
By /s/ [ILLEGIBLE SIGNATURE] By /s/ [ILLEGIBLE SIGNATURE]
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Vice President Title Vice President
---------------------------
By /s/ [ILLEGIBLE SIGNATURE]
------------------------------
Ass't Secretary
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[LOGO OF SILICON VALLEY BANK]
Schedule to
Loan Agreement
Borrower: Vitesse Semiconductor Corporation
Address: 000 Xxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Date: January 22, 1997
Credit Limit An amount not to exceed $12,500,000.
(Section 1.1):
Letter of Credit Silicon, in its reasonable discretion, will from time to
Sublimit time during the term of this Agreement issue letters of
credit for the account of the Borrower ("Letters of
Credit"), in an aggregate amount at any one time outstanding
not to exceed $1,000,000, upon the request of the Borrower,
provided that, on the date the Letters of Credit are to be
issued, Borrower has available to it Loans in an amount
equal to or greater than the face amount of the Letters of
Credit to be issued. Prior to the issuance of any Letters of
Credit, Borrower shall execute and deliver to Silicon
Applications for Letters of Credit and such other
documentation as Silicon shall specify (the "Letter of
Credit Documentation"). Fees for the Letters of Credit shall
be as provided in the Letter of Credit Documentation.
Letters of Credit may have a maturity date up to twelve
months beyond the Maturity Date in effect from time to time,
provided that if on the Maturity Date, or on any earlier
effective date of termination, there are any outstanding
Letters of Credit issued by Silicon or issued by another
institution based upon an application, guarantee, indemnity
or similar agreement on the part of Silicon, then on such
date, Borrower shall provide to Silicon cash collateral in
an amount equal to the face amount of all such Letters of
Credit plus all interest, fees and costs due or to become
due in connection therewith, to secure all of the
Obligations relating to said Letters of Credit, pursuant to
Silicon's then standard form cash pledge agreement.
The Credit Limit set forth above and the Loans available
under this Agreement at any time shall be reduced by the
face amount of Letters of Credit from time to time
outstanding.
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Foreign Exchange
Contract Sublimit Up to $1,000,000 (the "Contract Limit") may be utilized for
spot and future foreign exchange contracts (the "Exchange
Contracts"). The Credit Limit available at any time shall be
reduced by the following amounts (the "Foreign Exchange
Reserve") on each day (the "Determination Date"): (i) on all
outstanding Exchange Contracts on which delivery is to be
effected or settlement allowed more than two business days
from the Determination Date, 20% of the gross amount of the
Exchange Contracts; plus (ii) on all outstanding Exchange
Contracts on which delivery is to be effected or settlement
allowed within two business days after the Determination
Date, 100% of the gross amount of the Exchange Contracts. In
lieu of the Foreign Exchange Reserve for 100% of the gross
amount of any Exchange Contract, the Borrower may request
that Silicon debit the Borrower's bank account with Silicon
for such amount, provided Borrower has immediately available
funds in such amount in its bank account.
Silicon may, in its discretion, terminate the Exchange
Contracts at any time (a) that an Event of Default occurs or
(b) that there is not sufficient availability under the
Credit Limit and Borrower does not have available funds in
its bank account to satisfy the Foreign Exchange Reserve. If
either Silicon or Borrower terminates the Exchange Contracts,
and without limitation of the FX Indemnity Provisions (as
referred to below), Borrower agrees to reimburse Silicon for
any and all fees, costs and expenses relating thereto or
arising in connection therewith.
Borrower shall not permit the total gross amount of all
Exchange Contracts on which delivery is to be effected and
settlement allowed in any two business day period to be more
than $500,000 (the "Settlement Limit"), nor shall Borrower
permit the total gross amount of all Exchange Contracts to
which Borrower is a party, outstanding at any one time, to
exceed the Contract Limit.
Notwithstanding the above, however, the amount which may be
settled in any two (2) business day period may, in Silicon's
sole discretion, be increased above the Settlement Limit up
to, but in no event to exceed, the amount of the Contract
Limit (the "Discretionary Settlement Amount") under either of
the following circumstances (the "Discretionary Settlement
Circumstances"):
(i) if there is sufficient availability under the Credit
Limit in the amount of the Foreign Exchange Reserve as of
each Determination Date, provided that Silicon in advance
shall reserve the full amount of the Foreign Exchange
Reserve against the Credit Limit; or
(ii) if there is insufficient availability under the Credit
Limit as to settlements within any two (2) business day
period if
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Silicon is able to: (A) verify good funds overseas prior to
crediting Borrower's deposit account with Silicon (in the
case of Borrower's sale of foreign currency); or (B) debit
Borrower's deposit account with Silicon prior to delivering
foreign currency overseas (in the case of Borrower's
purchase of foreign currency);
Provided that it is expressly understood that Silicon's
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willingness to adopt the Discretionary Settlement Amount is a
matter of Silicon's sole discretion and the existence of the
Discretionary Settlement Circumstances in no way means or
implies that Silicon shall be obligated to permit the Borrower
to exceed the Settlement Limit in any two business day period.
In the case of Borrower's purchase of foreign currency,
Borrower in advance shall instruct Silicon upon settlement
either to treat the settlement amount as an advance under the
Credit Limit regarding the Revolving Loan Facility, or to
debit Borrower's account for the amount settled.
The Borrower shall execute all standard form applications and
agreements of Silicon in connection with the Exchange
Contracts, and without limiting any of the terms of such
applications and agreements, the Borrower will pay all
standard fees and charges of Silicon in connection with the
Exchange Contracts.
Without limiting any of the other terms of this Loan Agreement
or any such standard form applications and agreements of
Silicon, Borrower agrees to indemnify Silicon and hold it
harmless, from and against any and all claims, debts,
liabilities, demands, obligations, actions, costs and expenses
(including, without limitation, attorneys' fees of counsel of
Silicon's choice), of every nature and description, which it
may sustain or incur, based upon, arising out of, or in any
way relating to any of the Exchange Contracts or any
transactions relating thereto or contemplated thereby
(collectively referred to as the "FX Indemnity Provisions").
The Exchange Contracts shall have maturity dates no later than
the Maturity Date, provided maturities dates later than the
Maturity Date may be permitted in Silicon's discretion if, on
the Maturity Date, for any Exchange Contracts remaining
outstanding and having maturities after the Maturity Date,
Borrower provides to Silicon cash collateral in an amount
equal to the face amount of all such Exchange Contracts, plus
all interest, fees and costs due or to become due in
connection therewith, to secure all of the Obligations
relating to said Exchange Contracts, pursuant to Silicon's
then standard form cash pledge agreement.
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Interest Rate
(Section 1.2): A rate equal to the "Prime Rate" in effect from time
to time, calculated on the basis of a 360-day year
for the actual number of days elapsed. "Prime Rate"
means the rate announced from time to time by Silicon
as its "prime rate;" it is a base rate upon which
other rates charged by Silicon are based, and it is
not necessarily the best rate available at Silicon.
The interest rate applicable to the Obligations shall
change on each date there is a change in the Prime
Rate.
Loan Fee
(Section 1.3): Per the Amendment to Loan Agreement of even date.
Maturity Date
(Section 5.1): January 5, 1998.
Prior Names of Borrower
(Section 3.2): None
Trade Names of Borrower
(Section 3.2): Vitesse, VSC
Other Locations and
Addresses (Section 3.3): See Exhibit 1 hereto.
Material Adverse
Litigation (Section 3.10): None
Negative Covenants- Without Silicon's prior written consent, Borrower may
Exceptions (Section 4.6): do the following, provided that, after giving effect
thereto, no Event of Default has occurred and no
event has occurred which, with notice or passage of
time or both, would constitute an Event of Default,
and provided that the following are done in
compliance with all applicable laws, rules and
regulations: (i) repurchase shares of Borrower's
stock pursuant to any employee stock purchase or
benefit plan, provided that the total amount paid by
Borrower for such stock does not exceed $500,000 in
any fiscal year or (ii) make loans to, or guarantee
indebtedness of, individuals in the usual and
ordinary course of business, provided that the
aggregate amount of any such loans or guaranties per
individual shall not exceed $200,000.
Financial Covenants Borrower shall at the end of each quarter comply with
(Section 4.1): all of the following covenants:
Quick Ratio: Borrower shall maintain a ratio of Quick Assets to
current liabilities of not less than 2.00 to 1.
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Tangible Net Borrower shall maintain a tangible net worth of not less
Worth: than $70,000,000 plus 50% of all net income (after taxes)
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earned in each fiscal quarter ending after the date of this
Agreement (in no event shall this number be considered to be
less than zero) plus 80% of the net proceeds received by the
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Borrower of all equity offerings and other equity
transactions of the Borrower on and after September 30,
1996.
Debt to Tangible Borrower shall maintain a ratio of total liabilities to
Net Worth Ratio: tangible net worth of not more than .75 to 1.
Definitions: "Current assets" shall have the meaning ascribed to it in
accordance with generally accepted accounting principles
("GAAP").
"Current liabilities" shall have the meaning ascribed to it
in accordance with GAAP, except that deferred revenues shall
not be included as a current liability.
"Tangible net worth" means the excess of total assets over
total liabilities, determined in accordance with generally
accepted accounting principles, excluding however (i)
liabilities which may be converted to equity at the sole
discretion of the Borrower, and (ii) all assets which would
be classified as intangible assets under generally accepted
accounting principles, including without limitation
goodwill, licenses, patents, trademarks, trade names,
copyrights, and franchises.
"Quick Assets" means cash on hand or on deposit in banks,
readily marketable securities issued by the United States,
readily marketable commercial paper rated "A-l" by Standard
& Poor's Corporation (or a similar rating by a similar
rating organization), certificates of deposit and banker's
acceptances, and accounts receivable (net of allowance for
doubtful accounts).
Subordinated Debt: "Liabilities" for purposes of the foregoing covenants do not
include (i) indebtedness which is subordinated to the
indebtedness to Silicon under a subordination agreement in
form specified by Silicon or by language in the instrument
evidencing the indebtedness which is acceptable to Silicon
or (ii) the indebtedness of the Borrower to Vitesse
Electronics Corporation, pursuant to the Asset Purchase
Agreement between Borrower and Vitesse Electronics
Corporation."
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Other Covenants Borrower shall at all times comply with all of the following
(Section 4.1): additional covenants:
1. Banking Relationship. Borrower shall at all times
maintain its primary banking relationship with Silicon.
2. [Reserved]
3. Indebtedness. Without limiting any of the foregoing terms
or provisions of this Agreement, Borrower shall not in the
future incur indebtedness for borrowed money, except for (i)
indebtedness to Silicon, and (ii) financing relating to
purchase money or lease transaction in connection with the
Borrower's capital assets or lease of real estate assets.
4. Negative Pledge. Borrower shall not grant a security
interest in any of its Collateral, whether presently owned
or hereafter acquired, provided, however, Borrower may incur
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liens on capital equipment and leases of real property
assets relating to the indebtedness incurred pursuant to
Paragraph 3 set forth above entitled "Indebtedness".
5. No Material Adverse Change; Event of Default. Without
limiting the Events of Default as set forth in the Loan
Agreement, any material adverse change in the business,
assets or prospects of Borrower after the date hereof shall
constitute an Event of Default hereunder.
Borrower:
VITESSE SEMICONDUCTOR CORPORATION
By /s/ [ILLEGIBLE SIGNATURE]
-------------------------------
Vice President
By /s/ [ILLEGIBLE SIGNATURE]
-------------------------------
Ass't Secretary
Silicon:
SILICON VALLEY BANK
By /s/ [ILLEGIBLE SIGNATURE]
-------------------------------
Vice President
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