Exhibit 10.4
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN
AGREEMENT (this “ Amendment ”) is entered into
as of October 16, 2009, among Vitesse Semiconductor
Corporation, a Delaware corporation (the “ Borrower
”), the other Loan Parties (as defined below), and Whitebox
VSC Ltd., a British Virgin Islands business company (the “
Agent ”). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to such terms in
the Loan Agreement dated as of August 23, 2007, as amended
hereby, by and among the lenders from time to time signatory
thereto (collectively the “ Lenders ” and
individually each a “ Lender ”), the Borrower,
and the Agent, as one of the Lenders and as agent for the Lenders
(the “ Loan Agreement ”).
RECITALS
WHEREAS, the Borrower desires to
make certain amendments to the Loan Agreement as set forth herein,
and pursuant to Section 9.1 of the Loan Agreement such
amendments may only be made with the written consent of the
Required Lenders.
WHEREAS, the Required Lenders hereby
consent to such amendments as set forth herein.
AGREEMENT
NOW, THEREFORE, for good and
valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as
follows:
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Acknowledgement and
Reaffirmation .
(a)
The Borrower hereby acknowledges and
agrees that:
(i)
The Borrower is indebted and liable
to the Lenders in the aggregate principal amount of $30,000,000 in
respect of the Term Loans, plus interest, fees, expenses (including
but not limited to attorneys’, advisors’ and
consultants’ fees that are reimbursable under the Loan
Agreement), charges and all other obligations incurred in
connection therewith as provided in the Loan Agreement.
(ii)
The amounts outstanding and the
obligations of the Borrower to the Lenders under the Loan Agreement
and hereunder constitute valid and subsisting obligations of the
Borrower to the Agent and the Lenders that are not subject to any
credits, offsets, defenses, claims, counterclaims or adjustments of
any kind.
(iii)
The Loan Specified Defaults (as
defined below) have not previously been waived by the
Lenders.
(b)
The Borrower and the Guarantors
other than Vitesse International, Inc. (“VII”)
(collectively, the “Loan Parties”) hereby
(i) acknowledge and affirm their obligations under the
respective Loan Documents to which they are party;
(ii) acknowledge and affirm the liens created and granted by
the Loan Parties in the Loan Documents; and (iii) agree that
this Agreement shall in no manner adversely affect or impair such
obligations and/or liens.
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Amendments to the Loan
Agreement .
(a)
Section 1.1 of the Loan
Agreement is hereby amended by adding the following definitions in
alphabetical order:
“ Cash Pool ”: As
defined in Section 2.6(c) herein.
“ Conversion Agreement
”: That certain Debt Conversion Agreement to be entered into
among the Borrower and the holders of
the Borrower’s 1.50% convertible
subordinated debentures due 2024.
“ Exchange Documents
”: The Conversion Agreement and related agreements to be
entered into among the Borrower, the Trustee, and certain
noteholders of notes of the Borrower, all in connection with the
exchange of such notes for new notes and equity, each of which
documents shall be in form and substance satisfactory to the Agent
in its sole discretion.
“ First Amendment
”: The First Amendment to Loan Agreement dated as of
October 16, 2009.
“ Foreign Subsidiary
”: Any subsidiary organized under the laws of a
jurisdiction other than a State of the United States.
“ Intercreditor
Agreement ”: The intercreditor agreement, dated as of the
October 16, 2009, between the Agent and the Trustee, and any
other intercreditor agreement entered into between the Agent and
the Trustee in connection with New Indenture.
“ Mandatory Prepayment
Fee ”: As defined in
Section 2.6(d) herein.
“ New Indenture
”: That certain Indenture to be entered into between the
Borrower and the Trustee with respect to the Borrower’s 8.00%
convertible second lien debentures due 2014, which Indenture shall
be in form and substance satisfactory to the Agent in its sole
discretion.
“ PIK Interest ”:
Payment-in-kind of interest on the Term Loans, which shall be
payable by adding such interest to the principal amount of the Term
Loans on each interest payment date following the execution of the
Exchange Documents and in the manner set forth in
Section 2.4(a) hereof.
“ Trustee ”: U.S.
Bank National Association.
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(b)
Section 1.1 of the Loan
Agreement is hereby amended by deleting the existing definition of
the following terms and replacing them with the
following:
“ Deposit Account Control
Agreement (Borrower) ”: Any deposit account control
agreements, each in form and substance acceptable to the Agent and
executed by the Borrower, the Agent and a bank that maintains any
type of deposit account on behalf of or in the name of the
Borrower, each as may be amended, restated or otherwise modified
from time to time.
“ Deposit Account Control
Agreements (Guarantor) ”: Any deposit account
control agreements, each in form and substance acceptable to the
Agent and executed by a Guarantor, the Agent and a bank that
maintains a deposit account (as such term is defined in Guarantor
Security Agreement) on behalf of or in the name of such Guarantor,
each as may be amended, restated or otherwise modified from time to
time.
“ Prepayment Event
”: Means:
(a)
any sale, transfer or other
disposition (including pursuant to a sale and leaseback
transaction) of any property or asset of the Borrower or any
Subsidiary, other than licensing of intellectual property in the
ordinary course of business;
(b)
any casualty or other insured damage
to, or any taking under power of eminent domain or by condemnation
or similar proceeding of, any property or asset of the Borrower or
any Subsidiary, but only to the extent that the Net Asset Sale
Proceeds therefrom have not been applied, or committed pursuant to
an agreement (including any purchase orders) to be applied, to
repair, restore or replace such property or asset within 180 days
after such event; or
(c)
the incurrence by the Borrower or
any Subsidiary of any Indebtedness, other than Indebtedness
permitted by Section 6.12.
“ Securities Account
Control Agreement (Borrower) ”: Any securities
account control agreements, in form and substance acceptable to the
Agent and executed by the Borrower, the Agent and a securities
intermediary (as such term is defined in Article 8 of the UCC)
that maintains a securities account (as such term is defined in
Article 8 of the UCC) on behalf of or in the name of the
Borrower, each as may be amended, restated or otherwise modified
from time to time.
“ Securities Account
Control Agreements (Guarantor) ”: Any securities
account control agreements, each in form and substance acceptable
to the Agent and executed by a Guarantor, the Agent and a
securities intermediary (as such term is defined in Article 8
of the UCC) that maintains a securities account (as such term is
defined in Article 8 of the UCC) on behalf of or in the name
of such Guarantor, each as may be amended, restated or otherwise
modified from time to time.
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“ Subordinated Debt
”: (a) the Existing Convertible Debentures,
(b) the Borrower’s 1.50% convertible
subordinated debentures due 2024 issued under the New
Indenture, and (c) any other Indebtedness of the Borrower, now
existing or hereafter created, incurred or arising, which is
subordinated in right of payment to the payment of the Obligations
in a manner and to an extent (i) that Required Lenders have
approved in writing prior to the creation of such Indebtedness, or
(ii) as to any Indebtedness of the Borrower existing on the
date of this Agreement, that Required Lenders have approved as
Subordinated Debt in a writing delivered by Required Lenders to the
Borrower on or prior to the Closing Date.
(c)
Section 2.4 of the Loan
Agreement is hereby amended by adding the following to the end of
subsection (a):
; provided , however ,
that:
(A)
from October 1, 2009, until the
execution of the Exchange Documents, the Term Loans shall accrue
cash interest at the rate of 10.5% per annum; provided
further , that if the Exchange Documents are not executed by
October 16, 2009, the Term Loans shall accrue cash interest at
the rate of 15% per annum from and after October 16, 2009;
and
(B)
from and after the execution of the
Exchange Documents, the Effective Rate shall be 8.5% cash interest
plus 2% PIK Interest, which will be increased by 0.30% additional
PIK Interest for every $1,000,000 (rounded to the nearest
$1,000,000) below $15,000,000 that is not paid down pursuant to the
terms of Section 2.6(c) hereof. (For the avoidance
of doubt, if only $12,000,000 were paid down and the remaining
principal balance of the Term Loans were $18,000,000, the total
Effective Rate would be 11.4% (8.5% cash interest + 2.9% PIK
Interest).) Subsequent to the paydown pursuant to the terms
of Section 2.6(c) hereof, the Borrower may make
additional prepayments of the outstanding Term Loans, which shall
cause the Effective Rate to be reduced by 0.30% additional PIK
Interest for every $1,000,000 (rounded to the nearest $1,000,000)
of such additional prepayments, with such reduction to be effective
as of the next interest payment date, until the remaining principal
balance of the Term Loans reaches $15,000,000, at which time the
Effective Rate shall be 8.5% cash interest plus 2% PIK Interest
provided , however , that in no event shall the
Effective Rate be reduced to less than 8.5% cash interest plus 2%
PIK Interest.
(d)
Section 2.6 of the Loan
Agreement is hereby amended by adding the following as new
subsections (c) and (d):
(c)
Mandatory Prepayment from Cash
Pool . Upon the
consummation of the transactions contemplated by the Exchange
Documents, the Borrower shall establish a cash pool of $15,000,000
(the “ Cash Pool ”). Any amount of the Cash Pool
that is not used to pay down nonparticipating holders of notes
pursuant to the Exchange Documents on the date of the consummation
of the transactions contemplated by the Exchange Documents shall be
immediately applied to prepay the Term Loans; provided ,
however , that at least $5,000,000 of the Cash Pool shall be
used to prepay the Term Loans.
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(d)
Mandatory Prepayment
Fee . The Borrower
shall pay the Lenders a non-refundable prepayment fee on each
mandatory prepayment made pursuant to Section 2.6(b) or
(c) that is equal to one percent (1%) of the aggregate amount
of principal prepaid (the “ Mandatory Prepayment Fee
”). The Mandatory Prepayment Fee shall be paid
concurrently with each prepayment paid pursuant to
Section 2.6(b) or (c).
(e)
Section 6.2 of the Loan
Agreement is hereby amended to read in its entirety as
follows:
Section 6.2
Disposition of Assets
. The Borrower will not, nor
will permit any Subsidiary to, directly or indirectly, sell,
assign, lease, convey, transfer or otherwise dispose of (whether in
one transaction or a series of transactions), including without
limitation any transfer by the Borrower to a Subsidiary (other than
a Guarantor) or a Subsidiary to
