SECOND AMENDMENT TO CREDIT AGREEMENT
THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated
as of September 27, 1999, is made among Cadence Design Systems, Inc., a
Delaware corporation (the "Borrower"), the financial institutions listed on
the signature pages hereof under the heading "BANKS" (each a "Bank" and,
collectively, the "Banks"), Bank of America, N.A. (formerly known as Bank of
America National Trust and Savings Association), Bank of Montreal, Bank One,
NA (formerly known as The First National Bank of Chicago), KeyBank National
Association and UBS AG, Stamford Branch, as co-agents, and ABN AMRO Bank
N.V., as agent for the Banks (in such capacity, the "Agent").
The Borrower, the Banks and the Agent are parties to a Credit
Agreement dated as of September 29, 1998 (as amended by a First Amendment to
Credit Agreement dated as of October 16, 1998, the "Credit Agreement"). The
Borrower has requested that the Banks agree to certain amendments to the
Credit Agreement. The Banks have agreed to such request, subject to the
terms and conditions hereof.
Accordingly, the parties hereto agree as follows:
SECTION 1 DEFINITIONS; INTERPRETATION.
(a) TERMS DEFINED IN CREDIT AGREEMENT. All capitalized terms used
in this Amendment (including in the Recitals hereof) and not otherwise
defined herein shall have the meanings assigned to them in the Credit
Agreement.
(b) INTERPRETATION. The rules of interpretation set forth in
Section 1.03 of the Credit Agreement shall be applicable to this Amendment
and are incorporated herein by this reference.
SECTION 2 AMENDMENTS TO THE CREDIT AGREEMENT.
(a) AMENDMENTS. The Credit Agreement shall be amended as follows,
effective as of the date of satisfaction of the conditions set forth in
Section 3 (the "Effective Date"):
(i) The definition of "364-day Commitment" set forth in
Section 1.01 of the Credit Agreement shall be amended by deleting the dollar
amount of "$177,500,000" in clause (i) of such definition and substituting
therefor the dollar amount "$150,000,000";
(ii) Section 4.01 of the Credit Agreement shall be amended by
deleting the dollar amount "$177,500,000" in subsection (c) thereof and
substituting therefor the dollar amount "$150,000,000";
(iii) The definition of "APPLICABLE FEE AMOUNT" set forth in
Section 1.01 of the Credit Agreement shall be amended by deleting the term
"3-Year Commitment Fee" and substituting therefor the term "2-Year Commitment
Fee".
(iv) The definition of "CONSOLIDATED EBITDA" set forth in
Section 1.01 of the Credit Agreement shall be amended by inserting
immediately after the text "which were deducted in determining Consolidated
Net Income," the following new text:
"PLUS the quarterly increase in product license subscription bookings to
the extent not included or reflected in Consolidated Net Income, in each
case,"
(v) The definition of "FINAL MATURITY DATE" set forth in
Section 1.01 of the Credit Agreement shall be amended by deleting the date
"September 29, 2002" and substituting therefor the date "September 29, 2001".
(vi) The definition of "FUNDED DEBT" set forth in Section
1.01 of the Credit Agreement shall be amended by inserting immediately after
the text "Section 9.02(c)" the following new text: "and Section 9.02(e)".
(vii) Section 9.02(b) of the Credit Agreement (captioned
"Minimum Liquidity") shall be deleted in its entirety the following inserted
in its place: "(b) [Intentionally omitted.]"
(viii) A new Section 9.02(d) shall be inserted into the Credit
Agreement as follows:
"(d) MINIMUM CURRENT RATIO. The Borrower shall maintain as of the
last day of each fiscal quarter a ratio of (i) current assets to (ii)
current liabilities, in each case, of the Borrower and its Subsidiaries on
a consolidated basis, as determined in accordance with GAAP, of not less
than 1.00 to 1.00. For purposes of calculating the Borrower's compliance
with this Section 9.02(d) as of the last day of any fiscal quarter, current
liabilities shall include (A) off-balance sheet Indebtedness having a
maturity of less than one year from such fiscal quarter-end and (B) the
current portion of all Loans then outstanding hereunder."
(ix) A new Section 9.02(e) shall be inserted into the Credit
Agreement as follows:
"(e) MAXIMUM FUNDED DEBT TO EBITDA RATIO. The Borrower shall maintain
as of the last day of each fiscal quarter a ratio of (i) Funded Debt of the
Borrower and its Subsidiaries on a consolidated basis, to (ii) Consolidated
EBITDA for the twelve-month period ended on such date, of not more than
2.00 to 1.00."
(x) Annex I to the Credit Agreement (captioned "Pricing Grid")
shall be amended by (A) deleting the term "3-Year Commitment Fee" in each place
where it appears in Annex I and substituting therefor in each such place the
term "2-Year Commitment Fee" and (B) deleting the pricing grid set forth in
Paragraph I and replacing it with the following pricing grid:
2.
- ------------------------------------------------------------------------------
LEVEL FIXED CHARGE EURODOLLAR 2-YEAR 364-DAY
COVERAGE RATIO RATE SPREAD COMMITMENT FEE COMMITMENT FEE
- ------------------------------------------------------------------------------
Level 1 less than or 1.500% 0.300% 0.175%
equal to 2.00
- ------------------------------------------------------------------------------
Level 2 greater than 1.375% 0.250% 0.175%
2.00 but less
than or equal
to 3.00
- ------------------------------------------------------------------------------
Level 3 greater than 1.250% 0.225% 0.175%
3.00
- ------------------------------------------------------------------------------
(xi) Schedule 1 of the Credit Agreement shall be amended and
restated in its entirety in the form of Schedule 1 attached hereto.
(b) EXTENSION OF CONVERSION DATE. Pursuant to Section 4.01(c) of
the Credit Agreement, the Borrower has requested, and the Agent and the Banks
hereby unanimously consent to, the extension of the Conversion Date for an
additional one-year period. Accordingly, the new scheduled Conversion Date
shall be September 29, 2000.
(c) DOCUMENTATION AGENT. From and after the Effective Date, Bank
of America, N.A. ("BofA"), shall have the additional designation of
"Documentation Agent" under the Credit Agreement (in such capacity, the
"Documentation Agent"). Notwithstanding BofA's designation as "Documentation
Agent," BofA shall not have any right, power, obligation, liability,
responsibility or duty under the Credit Agreement other than those applicable
to all Banks as such. Without limiting the foregoing, the Documentation
Agent shall not have or be deemed to have any fiduciary relationship with any
Bank. Each Bank acknowledges that it has not relied, and will not rely, on
the Documentation Agent in entering into this Amendment or the Credit
Agreement or in taking or not taking action thereunder.
(d) REFERENCES WITHIN CREDIT AGREEMENT. Each reference in the
Credit Agreement to "this Agreement" and the words "hereof," "herein,"
"hereunder," or words of like import, shall mean and be a reference to the
Credit Agreement as amended by this Amendment.
SECTION 3 CONDITIONS OF EFFECTIVENESS. The effectiveness of this
Amendment shall be subject to the satisfaction of each of the following
conditions precedent:
(a) EXECUTED AMENDMENT. The Agent shall have received an executed
counterpart of this Amendment from the Borrower and each Bank.
(b) REPRESENTATIONS AND WARRANTIES; NO DEFAULT. On the Effective
Date, after giving effect to the amendment of the Credit Agreement
contemplated hereby:
3.
(i) the representations and warranties contained in Section
4 hereof shall be true and correct on and as of the Effective Date as though
made on and as of such date; and
(ii) no Default shall have occurred and be continuing.
(c) FEES AND EXPENSES. The Borrower shall have paid (i) all fees
in accordance with Section 5 below and (ii) all invoiced costs and expenses
then due in accordance with Section 6(d).
(d) ADDITIONAL DOCUMENTS. The Agent shall have received, in form
and substance satisfactory to it, such additional approvals, opinions,
documents and other information as the Agent or any Bank (through the Agent)
may reasonably request.
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE BORROWER. To
induce the Banks to enter into this Amendment, the Borrower hereby confirms
and restates, as of the date hereof, the representations and warranties made
by it in Section 8.01 of the Credit Agreement and in the other Loan
Documents. For the purposes of this Section 4, (i) each reference in Section
8.01 of the Credit Agreement to "this Agreement," and the words "hereof,"
"herein," "hereunder," or words of like import in such Section, shall mean
and be a reference to the Credit Agreement as amended by this Amendment, and
each reference in such Section to "the Loan Documents" shall mean and be a
reference to the Loan Documents as amended as contemplated hereby, (ii) the
representation and warranty set forth in Section 8.01(p) of the Credit
Agreement shall be deemed instead to refer to the last day of the most recent
fiscal quarter and fiscal year for which financial statements have then been
delivered, (iii) any representations and warranties which relate solely to an
earlier date shall not be deemed confirmed and restated as of the date hereof
(PROVIDED that such representations and warranties shall be true, correct and
complete as of such earlier date), and (iv) the preceding clause (i) shall
take into account any amendments to the Schedules and other disclosures made
in writing by the Borrower to the Agent and the Banks after the Closing Date
and approved by the Agent and the Majority Banks.
SECTION 5 AMENDMENT FEES. The Borrower shall pay to the Agent (a)
for the account of each of the Banks other than the Departing Banks (as
defined in Section 6(b) below) an amendment fee equal to 0.075% of the
Revolving Commitment of each Bank as in effect immediately prior to giving
effect to this Amendment, and (b) for the account of each of the Increasing
Banks (as defined in Section 6(a) below) an additional amendment fee equal to
0.125% of the amount by which the Revolving Commitment of such Increasing
Bank increases immediately after giving effect to this Amendment.
SECTION 6 CERTAIN TRANSITIONAL MATTERS.
(a) On the Effective Date, the amount of Revolving Loans then
outstanding and held by each Bank shall be adjusted to reflect the changes in
the Banks' Pro Rata Shares of the Revolving Loans, subject to Section 5.02 of
the Credit Agreement. Each Bank having Revolving Loans then outstanding and
whose Pro Rata Share in respect of Revolving Loans has been decreased on the
Effective Date as a result of the amendments contemplated hereby shall be
deemed to have assigned on the Effective Date, without recourse, to each Bank
increasing its Revolving Commitment on the Effective Date (each such Bank, an
"Increasing Bank") such
4.
portion of such Revolving Loans as shall be necessary to effectuate such
adjustment. Each such Bank increasing its Revolving Commitment on the
Effective Date shall (i) be deemed to have assumed such portion of such
Revolving Loans and (ii) fund on the Effective Date such assumed amounts to
the Agent for the account of the assigning Bank in accordance with the
provisions hereof in the amount notified to such Increasing Bank by the
Agent. At the request of any Bank whose Revolving Commitment increases or
decreases as a result of the amendments contemplated hereby, the Borrower
shall promptly provide a replacement Revolving Note to each such requesting
Bank reflecting such Bank's new Revolving Commitment. Each such Bank
requesting a replacement Revolving Note shall, upon its receipt of such
replacement Revolving Note, return its existing Revolving Note, if any, to
the Agent for cancellation.
(b) On the Effective Date, Banque Nationale de Paris, The
Northern Trust Company and Bank of Montreal (the "Departing Banks") shall
cease to be a "Bank" under and for all purposes of the Credit Agreement and
the other Loan Documents, except that each Departing Bank shall retain all of
its rights and benefits under Section 12.04 of the Credit Agreement. For
purposes of the transitional matters described in Section 6(a) above, each
Departing Bank shall be deemed to have a Pro Rata Share of zero percent (0%)
after giving effect to the amendments contemplated hereby.
SECTION 7 MISCELLANEOUS.
(a) NOTICE. The Agent shall notify the Borrower and the Banks of
the occurrence of the Effective Date.
(b) CREDIT AGREEMENT OTHERWISE NOT AFFECTED. Except as expressly
amended pursuant hereto, the Credit Agreement shall remain unchanged and in
full force and effect and is hereby ratified and confirmed in all respects.
The Banks' and the Agent's execution and delivery of, or acceptance of, this
Amendment and any other documents and instruments in connection herewith
(collectively, the "Amendment Documents") shall not be deemed to create a
course of dealing or otherwise create any express or implied duty by any of
them to provide any other or further amendments, consents or waivers in the
future.
(c) NO RELIANCE BY BORROWER. The Borrower hereby acknowledges and
confirms to the Agent and the Banks that the Borrower is executing this
Amendment and the other Amendment Documents on the basis of its own
investigation and for its own reasons without reliance upon any agreement,
representation, understanding or communication by or on behalf of any other
Person.
(d) COSTS AND EXPENSES. The Borrower agrees to pay to the Agent
on demand the reasonable out-of-pocket costs and expenses of the Agent, and
the reasonable fees and disbursements of counsel to the Agent, in connection
with the negotiation, preparation, execution and delivery of this Amendment
and any other documents to be delivered in connection herewith.
(e) BINDING EFFECT. This Amendment shall be binding upon, inure
to the benefit of and be enforceable by the Borrower, the Agent and each Bank
and their respective successors and assigns
5.
(f) GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.
(g) COMPLETE AGREEMENT; AMENDMENTS. This Amendment, together with
the other Amendment Documents and the other Loan Documents, contains the
entire and exclusive agreement of the parties hereto and thereto with
reference to the matters discussed herein and therein. This Amendment
supersedes all prior commitments, drafts, communications, discussion and
understandings, oral or written, with respect thereto. This Amendment may
not be modified, amended or otherwise altered except in accordance with the
terms of Section 12.01 of the Credit Agreement.
(h) SEVERABILITY. Whenever possible, each provision of this
Amendment shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. If, however, any provision of
this Amendment shall be prohibited by or invalid under any such law or
regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed
modified to conform to the minimum requirements of such law or regulation,
or, if for any reason it is not deemed so modified, it shall be ineffective
and invalid only to the extent of such prohibition or invalidity without
affecting the remaining provisions of this Amendment, or the validity or
effectiveness of such provision in any other jurisdiction.
(i) COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute but one and the same agreement.
(j) INTERPRETATION. This Amendment and the other Amendment
Documents are the result of negotiations between and have been reviewed by
counsel to the Agent, the Borrower and other parties, and are the product of
all parties hereto. Accordingly, this Amendment and the other Amendment
Documents shall not be construed against any of the Banks or the Agent merely
because of the Agent's or any Bank's involvement in the preparation thereof.
(k) LOAN DOCUMENTS. This Amendment and the other Amendment
Documents shall constitute Loan Documents.
[SIGNATURE PAGES FOLLOW.]
5A.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Amendment, as of the date first above written.
THE BORROWER
CADENCE DESIGN SYSTEMS, INC.
By -----------------------------------
Name:
Title:
THE AGENT
ABN AMRO BANK N.V., as Administrative and
Syndications Agent
By -----------------------------------
Name:
Title:
By -----------------------------------
Name:
Title:
THE BANKS
ABN AMRO BANK N.V., as a Bank
By -----------------------------------
Name:
Title:
By -----------------------------------
Name:
Title:
BANK OF AMERICA, N.A. (formerly known as Bank
of America National Trust and Savings
Association), as Documentation Agent and as a
Bank
By -----------------------------------
Name:
Title:
6.
BANK ONE, NA (formerly known as The First
National Bank of Chicago)
By -----------------------------------
Name:
Title:
KEYBANK NATIONAL ASSOCIATION
By -----------------------------------
Name:
Title:
UBS AG, STAMFORD BRANCH
By -----------------------------------
Name:
Title:
By -----------------------------------
Name:
Title:
BARCLAYS BANK PLC
By -----------------------------------
Name:
Title:
7.
THE INDUSTRIAL BANK OF JAPAN, LIMITED
By -----------------------------------
Name:
Title:
BANKBOSTON, N.A.
By -----------------------------------
Name:
Title:
8.