<PAGE> 1
-------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/x/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 30, 1996
-------------------------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
------------------------------------------------
Commission file number 1-10606
CADENCE DESIGN SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0148231
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
555 River Oaks Parkway, San Jose, California 95134
(Address of principal executive offices) (Zip Code)
(408) 943-1234
Registrant's telephone number, including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
At April 30, 1996 there were 77,909,685 shares of the registrant's Common Stock,
$0.01 par value outstanding.
<PAGE> 2
CADENCE DESIGN SYSTEMS, INC.
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets:
March 30, 1996 and December 30, 1995 3
Condensed Consolidated Statements of Income:
Three Months Ended March 30, 1996 and April 1, 1995 4
Condensed Consolidated Statements of Cash Flows:
Three Months Ended March 30, 1996 and April 1, 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 14
Signatures
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
March 30, December 30,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash investments $ 73,436 $ 84,867
Short-term investments 9,722 11,774
Accounts receivable, net 90,908 88,503
Inventories 6,620 8,203
Prepaid expenses and other 17,698 13,576
--------- ---------
Total current assets 198,384 206,923
Property, Plant and Equipment, net 133,004 124,103
Software Development Costs, net 25,644 25,793
Purchased Software and Intangibles, net 11,221 8,268
Other Assets 10,607 8,948
--------- ---------
Total assets $ 378,860 $ 374,035
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Current portion of capital lease obligations $ 1,420 $ 1,497
Accounts payable 17,527 17,592
Accrued liabilities 68,527 74,407
Income taxes payable 9,547 14,524
Deferred revenue 114,460 92,407
--------- ---------
Total current liabilities 211,481 200,427
--------- ---------
Long-Term Liabilities:
Long-term portion of capital lease obligations 1,651 1,619
Deferred income taxes 4,701 7,307
Minority interest liability 13,075 12,167
Other long-term liabilities 18,400 18,434
--------- ---------
Total long-term liabilities 37,827 39,527
--------- ---------
Stockholders' Equity:
Common stock and capital in excess of par value 318,122 299,544
Treasury stock at cost (37,679 and 35,231 shares, respectively) (338,534) (290,884)
Retained earnings 150,050 124,471
Accumulated translation adjustment (86) 950
--------- ---------
Total stockholders' equity 129,552 134,081
--------- ---------
Total liabilities and stockholders' equity $ 378,860 $ 374,035
========= =========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 4
CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------------
March 30, April 1,
1996 1995
--------- --------
(Unaudited)
<S> <C> <C>
REVENUE:
Product $ 90,182 $ 62,110
Service 23,098 10,477
Maintenance 50,150 43,446
-------- --------
Total revenue 163,430 116,033
-------- --------
COSTS AND EXPENSES:
Cost of product 10,887 11,853
Cost of service 17,597 9,213
Cost of maintenance 5,155 3,897
Marketing and sales 52,193 42,220
Research and development 26,013 20,863
General and administrative 13,012 9,498
-------- --------
Total costs and expenses 124,857 97,544
-------- --------
INCOME FROM OPERATIONS 38,573 18,489
Other expense, net 395 423
-------- --------
Income before provision for income taxes 38,178 18,066
Provision for income taxes 12,599 4,516
-------- --------
NET INCOME $ 25,579 $ 13,550
======== ========
NET INCOME PER SHARE $ .28 $ .14
======== ========
Weighted average common and common
equivalent shares outstanding 91,272 94,733
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 5
CADENCE DESIGN SYSTEMS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
March 30, April 1,
1996 1995
--------- --------
(Unaudited)
<S> <C> <C>
CASH AND CASH INVESTMENTS AT
BEGINNING OF PERIOD $ 84,867 $ 75,011
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income 25,579 13,550
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 12,365 11,496
Deferred income taxes, noncurrent (2,606) 476
Write-offs of equipment and other long-term assets 6 241
Increase in other long-term liabilities and minority
interest expense 895 582
Changes in current assets and liabilities:
Accounts receivable (2,876) 18,277
Inventories (270) (730)
Prepaid expenses and other (4,258) (1,501)
Accrued liabilities and payables 4,324 (5,861)
Deferred revenue 22,496 17,436
-------- --------
Net cash provided by operating activities 55,655 53,966
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of short-term investments 4,072 17,074
Purchases of short-term investments (2,020) (8,484)
Purchases of property and equipment (13,616) (8,150)
Capitalization of software development costs (3,222) (2,968)
Purchased software and intangibles
and other assets (6,804) (4,328)
-------- --------
Net cash used for investing activities (21,590) (6,856)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments on capital lease obligations (546) (1,028)
Sale of common stock 6,450 8,712
Purchases of treasury stock (50,294) (21,376)
Purchase of warrant -- (12,125)
-------- --------
Net cash used for financing activities (44,390) (25,817)
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,106) 1,616
-------- --------
(DECREASE) INCREASE IN CASH AND CASH
INVESTMENTS (11,431) 22,909
-------- --------
CASH AND CASH INVESTMENTS AT END OF PERIOD $ 73,436 $ 97,920
======== ========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE> 6
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
BASIS OF PRESENTATION
The condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and regulations of
the Securities and Exchange Commission. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations. However, the Company believes that the
disclosures are adequate to make the information presented not misleading. These
condensed consolidated financial statements should be read in conjunction with
the financial statements and the notes thereto included in the Company's annual
report on Form 10-K for the fiscal year ended December 30, 1995.
The unaudited condensed consolidated financial statements included herein
reflect all adjustments (which include only normal, recurring adjustments) that
are, in the opinion of management, necessary to state fairly the results for the
periods presented. The results for such periods are not necessarily indicative
of the results to be expected for the full fiscal year.
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
The Company's fiscal year is determined based upon the 52 - 53 week period
ending on the Saturday closest to December 31.
NEW ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock Based
Compensation" which was adopted by the Company this year. SFAS No. 123 allows
companies that have stock-based compensation arrangements with employees to
adopt a new fair-value basis of accounting for stock options and other equity
instruments, or to continue to apply the existing rules under Accounting
Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to
Employees" but with additional financial statement disclosure. The Company
continues to account for employee stock-based compensation arrangements under
APB Opinion No. 25, and therefore SFAS No. 123 did not have a material impact on
its financial position, results of operations or cash flows.
NET INCOME PER SHARE
Net income per share for each period is calculated by dividing net income by the
weighted average shares of common stock and common stock equivalents outstanding
during the period (calculated using the modified treasury stock method). Common
stock equivalents consist of dilutive shares issuable upon the exercise of
outstanding common stock options and warrants. Fully diluted net income per
share is substantially the same as primary net income per share. Net income per
share has been adjusted to retroactively reflect the three-for-two stock split
discussed in the Subsequent Events note to the Notes to Condensed Consolidated
Financial Statements.
6
<PAGE> 7
INVENTORIES
Inventories, which consist primarily of test equipment, are stated at the lower
of cost (first-in, first-out method) or market. Cost includes labor, material
and manufacturing overhead. Inventories consisted of the following (in
thousands):
<TABLE>
<CAPTION>
March 30, December 30,
1996 1995
----------- ------------
(Unaudited)
<S> <C> <C>
Raw materials and supplies $2,312 $2,335
Work-in-process 3,363 3,825
Finished goods 945 2,043
------ ------
Total $6,620 $8,203
====== ======
</TABLE>
COMMITMENTS AND CONTINGENCIES
The Company is involved in various disputes and litigation matters which have
arisen in the ordinary course of business. These include disputes and lawsuits
related to intellectual property, contract law and employee relations matters.
The Company filed a complaint in the United States District Court for the
Northern District of California on December 6, 1995 against Avant! Corporation
(formerly known as ArcSys, Inc., "Avant!") and certain of its employees for
misappropriation of trade secrets, copyright infringement, conspiracy and other
illegalities.
On January 16, 1996, Avant! filed various counterclaims against the Company and
the Company's President and CEO, alleging, inter alia, that the Company and its
President and CEO had cooperated with the Santa Clara County District Attorney
and initiated and pursued its complaint against Avant! for anticompetitive
reasons, engaged in wrongful activity in an attempt to manipulate Avant!'s stock
price and utilized certain pricing policies and other acts to unfairly compete
against Avant! in the marketplace. The counterclaim also alleges that certain
unspecified Company insiders engaged in illegal insider trading with respect to
Avant!'s stock. On April 12, 1996, Avant! filed a First Amended Counterclaim
against the Company and its President and CEO. The Company and its President and
CEO continue to believe that each has meritorious defenses to Avant!'s amended
counterclaims, and each intends to defend such action vigorously.
On April 19, 1996, the Company filed a motion seeking a preliminary injunction
to prevent Avant! from continuing to market ArcCell and ArcCell XO, two software
lines which the Company alleges were misappropriated. A hearing on the motion is
anticipated to take place in the third quarter of 1996.
Management believes that the ultimate resolution of the disputes and litigation
matters discussed above will not have a material adverse impact on the Company's
financial position or results of operations.
PUT WARRANTS AND CALL OPTIONS
The Company has an authorized stock repurchase program. In total, as of March
30, 1996, the Company had authorized the repurchase of 55.6 million shares of
which approximately 43.0 million shares had been repurchased. The Company
repurchases common stock in part to satisfy estimated requirements for shares to
be issued under its employee stock option and stock purchase plans as well as in
connection with acquisitions.
Since 1994, as part of its authorized stock repurchase program, the Company sold
15.1 million put warrants through private placement. As of March 30, 1996, 14.4
million of these warrants had expired out of the money. The remaining
outstanding .7 million warrants entitle the holder to sell one share of common
stock to the Company on a specified date at a specified price ranging from
$22.00 to $22.02 per share. Additionally, during this same period, the Company
purchased approximately 11.4 million call options that entitled the Company to
buy on a specified date one share of common stock, at a specified price. As of
March 30, 1996, the Company had repurchased 10.8 million common shares pursuant
to the exercise of call options for $112.7 million. The remaining .6 million
outstanding call options range in price from $22.22 to $22.24 per share.
7
<PAGE> 8
The Company has the right to settle the put warrants with stock, cash or a
combination of stock and cash equal to the difference between the exercise price
and the fair value at the date of exercise. Settlement of the put warrants with
stock could cause the Company to issue a substantial number of shares, depending
on the amounts of the repurchase obligations and the per share fair value of the
Company's common stock at the time of exercise. In addition, settlement of put
warrants in stock or cash could lead to the disposition by put warrant holders
of shares of the Company's common stock that such holders may have accumulated
in anticipation of the exercise of the put warrants or call options, which may
impact the trading price of the Company's common stock. At March 30, 1996, the
Company had both the unconditional right and the intent to settle these put
warrants with stock, and therefore, no amount was classified out of
stockholders' equity in the accompanying balance sheet. The effect of the
exercise of these put warrants and call options is reported in stockholders'
equity.
SUBSEQUENT EVENTS
In April 1996, the Company entered into a senior secured revolving credit
facility (the "Facility") which allows the Company to borrow up to $120 million
through April 1999. The security for the Facility includes the majority of the
Company's property, plant and equipment, cash, investments, intangibles, and
certain other assets. The Company has the option to pay interest based upon
LIBOR (London Interbank Offering Rate) plus 1.5% or the higher of the federal
funds effective rate plus .5% or prime. The Company must comply with certain
covenants and conditions as defined in the Facility. As of May 10, 1996, the
Company had no outstanding borrowings under the Facility.
On May 3, 1996, the Company's Board of Directors declared a three-for-two stock
split, payable May 31, 1996, in the form of a dividend of one additional share
of the Company's common stock for every two shares owned by stockholders as of
the record date, May 16, 1996. Par value remained at $0.01 per share. The stock
split will result in the issuance of approximately 26.0 million additional
shares of common stock from authorized but unissued shares. Accordingly, all
share and per share data have been adjusted to retroactively reflect the stock
split.
8
<PAGE> 9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the historical information contained herein, the following
discussion contains forward looking statements that involve risks and
uncertainties. The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed below in Factors That May
Affect Future Results.
RESULTS OF OPERATIONS
REVENUE
<TABLE>
<CAPTION>
March 30, 1996 April 1, 1995 % Change
-------------- ------------- --------
(In millions)
<S> <C> <C> <C>
Product $ 90.2 $ 62.1 45%
Service 23.1 10.5 120%
Maintenance 50.1 43.4 15%
------ ------
Total revenue $163.4 $116.0 41%
====== ======
Sources of Revenue as a Percent of Total Revenue
Product 55% 54%
Service 14% 9%
Maintenance 31% 37%
</TABLE>
Revenue from international sources was approximately $74.9 million and $63.1
million or 46% and 54% of total revenue for the three months ended March 30,
1996 and April 1, 1995, respectively. The increase in domestic revenue as a
percentage of total revenue was attributable to increased sales volume in the
product and service areas. During the quarter ended March 30, 1996, there was a
negative impact of $2.5 million on revenue as the result of the weakening of
certain foreign currencies, primarily the Japanese yen, in relation to the U.S.
dollar as compared to the quarter ended April 1, 1995.
Product revenue for the first quarter ended March 30, 1996 increased 45%
compared with the same period of the prior year. The increase in product revenue
was primarily the result of increased demand for the Company's products which
enable customers to meet complex design challenges, including deep sub-micron IC
design. This was exemplified by increased sales volume of its custom layout,
automatic place and route and verification products.
Service revenue increased significantly in the first quarter of 1996 when
compared to the first quarter of 1995. The increase in service revenue was the
result of increased demand for the Company's Spectrum Services offerings.
Additionally, revenue for the quarter ended March 30, 1996 included a full
quarter of revenue related to the March 1995 outsourcing agreement with Unisys
Corporation ("Unisys") to assume substantial portions of Unisys' internal
silicon design operation.
The increase in maintenance revenue for the quarter ended March 30, 1996 as
compared to the quarter ended April 1, 1995, was attributable to an increase in
the Company's installed base of products as well as the Company's continued
effort toward obtaining customer renewals of maintenance.
9
<PAGE> 10
COST OF REVENUE
<TABLE>
<CAPTION>
March 30, 1996 April 1, 1995 % Change
-------------- ------------- --------
(In millions)
<S> <C> <C> <C>
Product $10.9 $11.9 (8)%
Service $17.6 $ 9.2 91%
Maintenance $ 5.2 $ 3.9 32%
Cost of Revenue as a Percent of Related Revenue
Product 12% 19%
Service 76% 88%
Maintenance 10% 9%
</TABLE>
Cost of product revenue includes costs of production personnel, packaging and
documentation, amortization of capitalized software development costs and costs
of the Company's automated test equipment ("ATE") hardware business. The
decrease in cost of product in absolute dollars and as a percentage of product
revenue for the quarter ended March 30, 1996 as compared to the quarter ended
April 1, 1995 was primarily due to consolidation of the software release and
production process, partly offset by increased cost of revenue associated with
its ATE products resulting from higher product demand.
Cost of service revenue includes personnel and related costs associated with
providing services to customers and the infrastructure to manage a services
organization, as well as costs to recruit, develop and retain services
professionals. Cost of service increased in total dollars due to the development
of this line of business. Additionally, the costs for the quarter ended March
30, 1996 included a full quarter of expenses related to the March 1995
outsourcing agreement with Unisys Corporation to assume substantial portions of
Unisys' internal silicon design operation. As part of this agreement, the
Company retained approximately 180 hardware and software designers and acquired
fixed assets and certain intangibles. While primarily focused on serving the
needs of Unisys, the design and service resources acquired by Cadence are also
intended to be used to support other customers' design needs. In the first
quarter of 1996, as the Company utilized more of its design and service
resources to generate revenue, cost of service as a percentage of service
revenue decreased as compared to the prior year. However, until these design and
service resources are utilized through additional revenue contracts or until
further operating efficiencies are obtained, service gross margins could
continue to be adversely affected. Additionally, the cost of integrating new
services professionals performing a growing number of service offerings will
also put pressure on service gross margins until operating efficiencies are
obtained.
Cost of maintenance revenue includes the cost of customer services such as
hot-line and on-site support and the production cost of the maintenance renewal
process. Cost of maintenance increased in total dollars due to additional costs
necessary to support a larger installed base.
10
<PAGE> 11
OPERATING EXPENSES
<TABLE>
<CAPTION>
March 30, 1996 April 1, 1995 % Change
-------------- ------------- --------
(In millions)
<S> <C> <C> <C>
Marketing and sales $52.2 $42.2 24%
Research and development $26.0 $20.9 25%
General and administrative $13.0 $ 9.5 37%
Expenses as a Percent of Total Revenue
Marketing and sales 32% 36%
Research and development 16% 18%
General and administrative 8% 8%
</TABLE>
The increase in marketing and sales expenses was primarily the result of a $9.6
million increase in employee related expenses attributable to increased
headcount and increased commissions and sales incentives due to higher bookings.
Marketing and sales expenses were favorably impacted by $.7 million in the
quarter ended March 30, 1996 as compared to the quarter ended April 1, 1995 as
the result of the weakening of certain foreign currencies in relation to the U.S
dollar.
The Company's investment in research and development, prior to the reduction for
capitalization of software development costs, was $29.2 and $23.8 million for
the quarters ended March 30, 1996 and April 1, 1995, respectively, representing
18% and 21% of total revenue. The increase of $5.4 million was driven by an
increase of $3.0 million of salary related costs due to increased headcount and
an increase of $1.3 million in consulting and other outside services costs.
Capitalization of software development costs for the quarters ended March 30,
1996 and April 1, 1995 was $3.2 million and $2.9 million, respectively, which
represented 11% and 12% of total research and development expenditures made in
each of those periods. In any given period, the amount of capitalized software
development costs may vary depending on the exact nature of the development
performed.
General and administrative expenses increased in the quarter ended March 30,
1996 as compared to the same period of the prior year primarily as a result of
higher legal costs of $1.9 million. In addition, the Company incurred higher
outside service and consulting costs of $.5 million and increased headcount
related expenses.
As compared to the quarter ended April 1, 1995, net other expense was relatively
constant at $.4 million for the first quarter ended March 30, 1996.
The Company's estimated annual effective tax rate for fiscal 1996 is 33% as
compared to an annual effective tax rate of 28% for fiscal 1995. This estimated
increase in the tax rate is based on the limited availability of net operating
losses and tax credits and the potential effect of earnings generated in
countries which have a tax rate greater than the U.S. tax rate.
LIQUIDITY AND CAPITAL RESOURCES
At March 30, 1996, the Company's principal sources of liquidity consisted of
$83.2 million of cash and short-term investments as compared to $111.2 million
at April 1, 1995. In addition, subsequent to March 30, 1996, the Company entered
into a three year, $120 million secured revolving line of credit agreement. As
of May 10, 1996, the Company had no borrowings under the revolving line of
credit.
Cash generated from operating activities increased $1.7 million for the quarter
ended March 30, 1996, as compared to the quarter ended April 1, 1995. The
increase was due to higher net income and an increase in accrued liabilities and
payables; offset by an increase in accounts receivable.
At March 30, 1996, the Company had a working capital deficit of $13.1 million
compared with a working capital surplus of $6.5 million at December 30, 1995.
The primary reasons for the deficit were increases in deferred revenue of $22.1
million and a decrease in cash and short-term investments of $13.5 million,
partly offset by a decrease in accrued liabilities and income taxes payable of
$10.9 million. The increase in deferred revenue was attributable to increased
maintenance renewals and an increase in deferred product revenue in accordance
with the
11
<PAGE> 12
American Institute of Certified Public Accountants Statement of Position 91-1
entitled "Software Revenue Recognition." The decrease in cash was primarily due
to the Company's stock repurchase activity in the quarter ended March 30, 1996.
The decrease in accrued liabilities and income taxes payable was due to
commissions and incentive bonus payments during the quarter and payment of
income taxes.
In addition to its short-term investments, the Company's primary investing
activities were purchases of property and equipment, purchases of software and
intangibles and the capitalization of software development costs, which
combined, represented $23.6 million and $15.4 million of cash used for investing
activities in the quarters ended March 30, 1996, and April 1, 1995,
respectively.
The Company has an authorized stock repurchase program. In total, as of March
30, 1996, the Company had authorized the repurchase of 55.6 million shares, of
which approximately 43.0 million shares had been repurchased. The Company
repurchases common stock in part to satisfy estimated requirements for shares to
be issued under the Company's employee stock option and stock purchase plans as
well as in connection with acquisitions. Past repurchase activity should not be
considered an indicator of future repurchases.
Since 1994, as part of its authorized stock repurchase program, the Company has
sold 15.1 million put warrants and purchased 11.4 million call options through
private placements. The Company had a maximum potential obligation related to
the put warrants at March 30, 1996 to buy back .7 million shares of its common
stock at an aggregate price of approximately $16.3 million. The put warrants
expired out of the money in April 1996.
Anticipated cash requirements for fiscal 1996 include the purchase of treasury
stock through the exercise of the Company's call options and in the open market.
The Company repurchased .6 million shares through the exercise of call options
during April 1996 at a cost of approximately $12.4 million. Other cash
requirements for the remainder of fiscal 1996 include contemplated additions of
property, plant and equipment of approximately $45 million.
As part of its overall investment strategy, the Company has committed to
participating in a venture capital partnership as a limited partner. The
Company's total committed investment of at least $25 million will be made over
the next three to four years. As of March 30, 1996, the Company had contributed
approximately $2.0 million, which is reflected in other assets in the
accompanying balance sheet.
The Company anticipates that current cash and short-term investment balances,
cash flows from operations, and the $120 million revolving line of credit will
be sufficient to meet its working capital and capital expenditure requirements
on a short and long-term basis.
FACTORS THAT MAY AFFECT FUTURE RESULTS
The Company competes in the highly competitive EDA market which continues to be
characterized by aggressive pricing practices, rapid technological change and
new market entrants. The Company's success is dependent upon its ability to
develop innovative, cost-competitive EDA software products and services, and to
bring them to market in a timely manner.
The Company's future operating results are dependent on the Company's ability to
successfully implement its strategy to help its customers meet their business
objectives by developing custom solutions that leverage and improve the people,
process and technology they use for product development. The Company
accomplishes this through a combination of technology and services. Inherent in
implementing this strategy are a number of risks that the Company must manage
and that could affect its future operating results. These risks include the
ability to successfully recruit, train and retain its skilled services
professionals and the ability to profitably deliver solutions to increasingly
complex customer design challenges. Growth of the services business is
constrained by the Company's ability to hire and train services professionals to
keep pace with demand. The Company's profitability could be adversely affected
if it is unable to develop its services business as expected.
It is anticipated that international revenue will continue to constitute a
significant portion of total revenue. International revenues are subject to
certain additional risks normally associated with international operations,
including, among others, adoption and expansion of government trade
restrictions, volatile foreign exchange
12
<PAGE> 13
rates, currency conversion risks, limitations on repatriation of earnings and
reduced protection of intellectual property rights.
The Company enters into foreign currency forward contracts to hedge the impact
of foreign currency fluctuations. Though the Company attempts to reduce the
impact of foreign currency fluctuations, significant exchange rate movements may
have a material adverse impact on the Company's results of operations.
The Company's operating expenses are partially based on its expectations of
future revenue. The Company's results of operations may be adversely affected if
revenue does not materialize in a quarter as expected. Since expense levels are
usually committed in advance of revenues and because only a small portion of
expenses vary with revenue, the Company's operating results may be impacted
significantly by lower revenue. Based on the Company's operating history and
factors that may cause fluctuations in the quarterly results, quarter to quarter
comparisons should not be relied upon as indicators of future performance.
Due to the foregoing, as well as other factors, past financial performance
should not be considered an indicator of future performance. In addition, the
Company's participation in a highly dynamic industry often results in
significant volatility of the Company's common stock price. Any change in
revenues or operating results below levels expected by securities analysts for
the Company or its competitors, and the timing of the announcement of such
shortfalls, could have an immediate and significant adverse effect on the
trading price of the Company's common stock in any given period.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is involved in various disputes and litigation matters which have
arisen in the ordinary course of business. These include disputes and lawsuits
related to intellectual property, contract law and employee relations matters.
The Company filed a complaint in the United States District Court for the
Northern District of California on December 6, 1995 against Avant! Corporation
(formerly known as ArcSys, Inc., "Avant!") and certain of its employees for
misappropriation of trade secrets, copyright infringement, conspiracy and other
illegalities.
On January 16, 1996, Avant! filed various counterclaims against the Company and
the Company's President and CEO, alleging, inter alia, that the Company and its
President and CEO had cooperated with the Santa Clara County District Attorney
and initiated and pursued its complaint against Avant! for anticompetitive
reasons, engaged in wrongful activity in an attempt to manipulate Avant!'s stock
price and utilized certain pricing policies and other acts to unfairly compete
against Avant! in the marketplace. The counterclaim also alleges that certain
unspecified Company insiders engaged in illegal insider trading with respect to
Avant!'s stock. On April 12, 1996, Avant! filed a First Amended Counterclaim
against the Company and its President and CEO. The Company and its President and
CEO continue to believe that each has meritorious defenses to Avant!'s amended
counterclaims, and each intends to defend such action vigorously.
On April 19, 1996, the Company filed a motion seeking a preliminary injunction
to prevent Avant! from continuing to market ArcCell and ArcCell XO, two software
lines which the Company alleges were misappropriated. A hearing on the motion is
anticipated to take place in the third quarter of 1996.
Management believes that the ultimate resolution of the disputes and litigation
matters discussed above will not have a material adverse impact on the Company's
financial position or results of operations.
ITEM 5. OTHER INFORMATION
On May 3, 1996, the Company's Board of Directors effected a three-for-two stock
split, payable May 31, 1996, in the form of a dividend of one additional share
of the Company's common stock for every two shares owned by stockholders as of
the record date, May 16, 1996. Par value remained at $0.01 per share. The stock
split will result in the issuance of approximately 26.0 million additional
shares of common stock from authorized but
13
<PAGE> 14
unissued shares. Accordingly, all share and per share data have been adjusted to
retroactively reflect the stock split.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed herewith:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE LOCATION
- ------- ------------- --------
<S> <C> <C>
10.29 The Registrant's amended and restated 401(k) Plan. 16
10.30 Amendment dated May 3, 1996, to Registrant's 1993 Non Statutory Stock
Option Plan (incorporated by reference to the Registrant's Form 10-Q for
the third quarter ended September 30, 1994). 72
10.31 Revolving line of credit dated April 1996, by and between Credit Lyonnais
and the Registrant. 77
27.1 Financial data schedule for the period ended March 30, 1996.
(b) Reports on Form 8-K
On February 16, 1996, Registrant filed a Current Report on Form 8-K,
reporting that its Board of Directors had approved a Stockholder Rights
Plan and canceled its previous Stockholder Rights Plan established in
1989.
</TABLE>
14
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CADENCE DESIGN SYSTEMS, INC.
(REGISTRANT)
DATE: May 10, 1996 By: /s/ Joseph B. Costello
----------------------- ----------------------
JOSEPH B. COSTELLO
President and Chief Executive Officer
DATE: May 10, 1996 By: /s/ H. Raymond Bingham
----------------------- ----------------------
H. RAYMOND BINGHAM
Executive Vice President
and Chief Financial Officer
15
<PAGE> 1
Exhibit 10.29
CADENCE DESIGN SYSTEMS, INC.
401(k) PLAN
Amended and Restated Effective July 1, 1995
16
<PAGE> 2
CADENCE DESIGN SYSTEMS, INC. 401(k) PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE 1 DEFINITIONS AND CONSTRUCTION............................................................ 3
ARTICLE 2 ELIGIBILITY AND PARTICIPATION........................................................... 13
ARTICLE 3 401(k) CONTRIBUTIONS.................................................................... 14
ARTICLE 4 ROLLOVER CONTRIBUTIONS AND VOLUNTARY
CONTRIBUTIONS........................................................................... 21
ARTICLE 5 COMPANY AND PROFIT SHARING CONTRIBUTIONS................................................ 21
ARTICLE 6 MATCHING CONTRIBUTIONS.................................................................. 22
ARTICLE 7 INVESTMENT OPTIONS...................................................................... 28
ARTICLE 8 PARTICIPANTS' ACCOUNTS AND ALLOCATION
OF TRUST INCOME OR LOSS................................................................. 28
ARTICLE 9 ALLOCATION OF CONTRIBUTIONS............................................................. 30
ARTICLE 10 VESTING................................................................................. 31
ARTICLE 11 SERVICE................................................................................. 33
ARTICLE 12 DISTRIBUTION OF BENEFITS UPON TERMINATION............................................... 36
ARTICLE 13 LOANS................................................................................... 44
ARTICLE 14 IN-SERVICE WITHDRAWALS BY PARTICIPANTS.................................................. 46
ARTICLE 15 BENEFICIARIES........................................................................... 48
ARTICLE 16 DESIGNATION OF NAMED FIDUCIARY.......................................................... 49
ARTICLE 17 TRUST FUND AND TRUSTEE.................................................................. 52
ARTICLE 18 AMENDMENT AND TERMINATION............................................................... 52
ARTICLE 19 ASSIGNMENTS............................................................................. 54
ARTICLE 20 CLAIMS PROCEDURE........................................................................ 54
ARTICLE 21 TOP HEAVY PROVISIONS.................................................................... 56
ARTICLE 22 MISCELLANEOUS........................................................................... 59
</TABLE>
17
<PAGE> 3
CADENCE DESIGN SYSTEMS, INC.
401(k) PLAN
The ECAD, Inc. Cash or Deferred Profit Sharing Plan was originally
established effective January 1, 1984 and was revised effective January 1, 1985.
Effective June 1, 1988, as a result of the merger of ECAD, Inc. and SDA Systems,
Inc. and the subsequent renaming of the corporation, the name of the ECAD, Inc.
Cash or Deferred Profit Sharing Plan was changed to the Cadence Design Systems,
Inc. Cash or Deferred Profit Sharing Plan (the "Prior Plan"). Effective as of
January 1, 1989, Cadence Design Systems, Inc., a Delaware corporation (the
"Employer"), renamed, amended and restated the Prior Plan as the Cadence Design
Systems, Inc. 401(k) Plan (the "Plan"). Since this last amendment and
restatement, the Plan has been further amended several times. Effective as of
July 1, 1995, unless specifically provided otherwise, the Employer hereby again
amends and restates the Plan in its entirety. The Plan is established for the
purpose of (a) providing the employees with an opportunity to accumulate funds
for their retirement, or (b) for the payment of death benefits for their
dependents and beneficiaries. The Plan is a profit sharing plan which is
intended to qualify under section 401(a) of the Internal Revenue Code of 1986,
as amended (the "Code"), and has a tax-deferred retirement savings feature which
is intended to satisfy the requirements of section 401(k) of the Code.
18
<PAGE> 4
ARTICLE I
DEFINITIONS AND CONSTRUCTION
1.1 Definitions. The following words and phrases as used in this Plan shall
have the following meanings unless a different meaning is clearly required by
the context:
(a) "Account(s)" shall mean a Participant's 401(k) Account, Rollover
Account, Profit Sharing Account and Company Contribution Account, Matching
Account, and Voluntary Account or any one of such Accounts as the context may
require.
(b) "Adjustment Factor" shall mean the cost of living adjustment
prescribed by the Secretary of the Treasury under section 415(d) of the Code, as
applied to such items and in such manner as the Secretary shall provide.
(c) "Beneficiary" shall mean the person or persons entitled under the
provisions of this Plan to receive benefits after the death of a Participant.
(d) "Board" shall mean the Board of Directors of the Company.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.
(f) "Company" shall mean Cadence Design Systems, Inc., a Delaware
corporation.
(g) "Committee" shall mean the Plan's administrative committee
referred to in Article 16.
(h) "Company Contribution Account" shall mean that Account of a
Participant to which Company Contributions and Top Heavy Contributions made on
behalf of such Participant shall be allocated.
(i) "Company Contributions" shall mean the contributions made by the
Company pursuant to Article 5 hereof.
(j) "Compensation" shall mean for any Plan Year:
(1) (A) For purposes of making 401(k) contributions and matching
contributions made by a Participant under the Plan, Compensation shall have the
meaning set forth in paragraph 3.1 (c).
(B) For purposes of making all other contributions permitted
or required under the Plan, Compensation shall have the meaning set forth in
subparagraph (A), (B), (C), (D) or (E) of paragraph 1.1(j)(2), as the Committee
shall elect. The Committee may elect to include a Participant's 401(k)
Contributions and/or salary reduction contributions made to any plan maintained
by the Company or a Related Company which is a cafeteria plan as defined by
section 125 of the Code in any definition of Compensation which may be used each
Plan Year.
(2) For all other purposes under the Plan, and except as
otherwise expressly provided in the Plan, Compensation shall have the meaning
set forth in paragraphs (A), (B), (C), (D) or (E) as the Committee shall elect
each year.
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<PAGE> 5
(A) (1) Compensation as defined in section 415(c)(3) of the
Code, which shall include all of the following:
(a) The Employee's wages, salaries, fees for
professional service and other amounts received (without regard to whether or
not an amount is paid in cash) for personal services actually rendered in the
course of employment with the Employer maintaining the Plan to the extent that
the amounts are includable in gross income (including, but not limited to,
commissions paid salesmen, compensation for services on the basis of a
percentage of profits, commissions on insurance premiums, tips, bonuses, fringe
benefits, reimbursements or other expense allowances under a non-accountable
plan as described in Regulation 1.162-2(c)).
(b) In the case of an Employee who is an employee
within the meaning of section 401(c)(1) of the Code and the regulations
thereunder, the Participant's earned income (as described in section 401(c)(2)
of the Code and the regulations thereunder).
(c) Amounts described in section 104(a)(3), 105(a) and
105(h) of the Code, but only to the extent that these amounts are includable in
the gross income of the Employee.
(d) Amounts paid or reimbursed by the Employer for
moving expenses incurred by an Employee, but only to the extent that at the time
of payment it is reasonable to believe that these amounts are not deductible by
the Employee under section 217 of the Code.
(e) The value of a non-qualified stock option granted
to an Employee by the Employer, but only to the extent that the value of the
option is includable in the gross income of the Employee for the taxable year in
which granted; and
(f) The amount includable in the gross income of an
Employee upon making the election described in section 83(b) of the Code.
Items (a) and (b) above shall include foreign earned
income (as defined in section 911(b) of the Code), whether or not excludable
from gross income under section 911(b) of the Code. Compensation in items (a)
and (b) above shall be determined without regard to the exclusions from income
under sections 931 and 933 of the Code.
(2) For the purposes of subparagraph (a)(i) above,
"Compensation" shall exclude the following:
(a) Contributions made by the Employer to a plan of
deferred compensation to the extent that, before the application of the Code's
section 415 limitations to that plan, the contributions are not includable in
the gross income of the Employee for the taxable year in which contributed. In
addition, Employer contributions made on behalf of an Employee to a simplified
employee pension plan described in section 408(k) of the Code are not considered
as Compensation for the taxable year in which contributed. Additionally, any
distributions from a plan of deferred compensation are not considered as
Compensation for
20
<PAGE> 6
purposes of section 415 of the Code, regardless of whether such amounts are
includable in the gross income of the Employee when distributed. However, any
amounts received by an Employee pursuant to an unfunded non-qualified plan may
be considered as Compensation for, purposes of section 415 of the Code in the
Plan Year such amounts are includable in the gross income of the Employee.
(b) Amounts realized from the exercise of a
nonqualified stock option, or when restricted stock (or property) held by an
Employee either becomes freely transferable or is no longer subject to a
substantial risk of forfeiture (see section 83 of the Code and the Regulations
thereunder).
(c) Amounts realized from the sale, exchange or other
disposition of stock acquired under a qualified stock option.
(d) Other amounts which receive special tax benefits,
such as premiums for group term life insurance (but only to the extent that the
premiums are not includable in the gross income of the Employee), or
contributions made by an Employer (whether or not under a salary reduction
agreement) towards the purchase of an annuity contract described in section
403(b) of the Code (whether or not the contributions are excludable from the
gross income of the employee).
(3) Compensation (as defined in subparagraph (A)(1)
above) shall be Compensation actually paid or made available to an Employee
within the Plan Year.
(B) Compensation as defined in section 415(c)(3) of the Code
and Treasury Regulation section 1.415-2(d)(10), which shall include Compensation
as defined in paragraph (A) above except that the items of Compensation listed
in items (b) through (f) of subparagraph (A)(1) shall be excluded.
(C) Compensation for reporting purposes under sections 6041,
6051 and 6052 of the Code, which shall include all wages within the meaning of
section 3401(a) of the Code and all other payments of compensation to an
Employee by his Employer (in the course of the Employer's trade or business) for
which the Employer is required to furnish the Employee a written statement under
sections 6041(d), 6051(a)(3) and 6052 of the Code. At the discretion of the
Committee, this definition of Compensation may be modified to exclude amounts
paid or reimbursed by the Employer for moving expenses incurred by an Employee,
but only to the extent that at the time of the payment it is reasonable to
believe that these amounts are deductible by the Employee under section 217 of
the Code. Compensation under this subparagraph must be determined without regard
to any rules under section 3401(a) of the Code that limit the remuneration
included in wages based on the nature or location of the employment or the
services performed (such as the exception for agricultural labor in section
3401(a)(2) of the Code).
(D) Compensation for tax withholding under section 3401(a)
of the Code, which shall include wages as defined in section 3401(a) of the Code
for purposes of income tax withholding at the source but determined without
regard to any rules that limit the remuneration included in wages based on the
21
<PAGE> 7
nature or location of the employment or the services performed (such as the
exception for agricultural labor in section 3401(a)(2) of the Code).
(E) Safe harbor alternative definition of Compensation under
section 414(s). Compensation shall mean Compensation as defined in subparagraphs
(A), (B), (C) or (D) above, reduced by all of the following items (even if
includable in gross income): reimbursements or other expense allowances, fringe
benefits (cash and noncash), moving expenses, deferred compensation and welfare
benefits.
(3) For purposes of this paragraph 1.1(j), the following special
rules shall apply:
(A) For all purposes under the Plan:
(1) "Compensation" shall include Compensation paid to
any Employee prior to the time the Employee becomes a Participant in the Plan.
(2) For Plan Years beginning on or after January 1,
1989, and before January 1, 1994, the annual Compensation of each Participant
taken into account for determining all benefits provided under the Plan for any
Plan Year shall not exceed $200,000. This limitation shall be adjusted by the
Secretary of the Treasury at the same time and in the same manner as under Code
section 415(d), except that the dollar increase in effect on January 1 of any
calendar year is effective for Plan Years beginning in such calendar year and
the first adjustment to the $200,000 limitation is effective on January 1, 1990.
For Plan Years beginning on or after January 1, 1994, the annual Compensation of
each Participant taken into account for any Plan Year shall not exceed $150,000
or, if greater, the maximum dollar amount specified in Code section 401(a)(17),
as adjusted for increases in the cost-of-living in accordance with Code section
401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year
applies to any determination period beginning in such calendar year. If a
determination period consists of fewer than 12 months, the annual Compensation
limit is an amount equal to the otherwise applicable annual Compensation limit
multiplied by a fraction, the numerator of which is the number of months in the
short determination period, and the denominator of which is 12.
In determining the Compensation of a Participant for
purposes of this limitation, the rules of Code section 414(q)(6) shall apply,
except in applying such rules, the term "family" shall include only the spouse
of the Participant and any lineal descendants of the Participant who have not
attained age 19 before the close of the Plan Year. If, as a result of the
application of such rules the adjusted annual Compensation limitation is
exceeded, then the limitation shall be prorated among the affected individuals
in proportion to each such individual's Compensation as determined prior to the
application of this limitation.
(B) At the discretion of the Committee, "Compensation" of
all Employees under section 1.1(j)(2) may be modified to include all of the
following types of contributions and all of the following types of deferred
compensation:
22
<PAGE> 8
Employer on behalf of its Employees that are not includable in gross income
under section 125, section 402(e)(3), section 402(h) and section 403(b) of the
Code;
(2) Compensation deferred under an eligible deferred
compensation plan within the meaning of section 457(b) (deferred compensation
plans of state and local governments and tax-exempt organizations); and
(3) Employee contributions (under governmental plans)
described in section 414(h)(2) that are picked up by the employing unit and thus
are treated as Employer contributions.
(C) At the discretion of the Committee, Compensation under
section 1.1 (h)(2) for all Highly Compensated Employees may be modified to
exclude any portion of the Compensation of some or all of such Highly
Compensated Employees.
(D) "Compensation" shall include all amounts paid by a
Related Company which has adopted the Plan.
(k) "Effective Date" of the Plan, as amended and restated herein,
shall mean January 1, 1989.
(l) "Eligible Employee" shall mean every Employee except any
Employee (1) who is not a non-resident alien, and who receives no earned income
(within the meaning of the Code) from the Employer which constitutes income from
sources within the United States (within the meaning of section 861(a)(3) of the
Code), (2) who is a member of a collective bargaining unit and who is covered by
a collective bargaining agreement, which agreement does not specifically provide
for coverage of such Employee under the Plan, (3) who is a leased employee as
defined in section 414(n)(2) of the Code, or, (4) who performs services for any
division of the Company that maintains its own plan.
(m) "Employee" shall mean a person currently employed by the
Employer, any portion of whose income is subject to withholding of income tax
and/or for whom Social Security contributions are made by the Employer, as well
as any other person qualifying as a common law employee of the Employer.
Notwithstanding any other provision of the Plan, for purposes of the
requirements listed in section 414(n)(3) of the Code, the term "Employee" shall
include leased employees within the meaning of section 414(n)(2) of the Code;
provided, however, that if such leased employees constitute less than 20% of the
Employer's Non-Highly compensated workforce within the meaning of section
414(n)(5)(C)(ii) of the Code, the term "Employee" shall not include those leased
employees covered by a plan described in section 414(n)(5) of the Code.
(n) "Employer" shall mean the Company and any Related Company
which adopts the Plan with the consent of the Company.
23
<PAGE> 9
(o) "Entry Dates" shall mean January 1, April 1, July 1, and
October 1 of each Plan Year and effective January 1, 1995, the first day of the
first full calendar month on or after the Eligible Employee's commencement of
service as an Employee.
(p) "ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
(q) "Family Members" shall mean a Participant's spouse, lineal
ascendants or descendants, and the spouses of such lineal ascendants or
descendants.
(r) "401(k) Account" shall mean that Account of a Participant to
which 401(k) Contributions made on behalf of such Participant shall be credited.
(s) "401(k) Contributions" shall mean the contribution made by
the Employer on behalf of a Participant pursuant to Article 3 hereof.
(t) "Highly Compensated Employee" shall mean:
(1) Any Employee who, during the current Plan Year or the
12-month period immediately preceding the current Plan Year:
(A) Was at any time a 5% owner, as defined in section
416(i)(1)(A)(iii) of the Code;
(B) Received compensation in excess of $75,000
(adjusted for the Adjustment Factor);
(C) Received compensation in excess of $50,000
(adjusted for the Adjustment Factor) and was in the top twenty percent (20%) of
Employees, ranked on the basis of compensation for such Plan Year; or
(D) Was at any time an officer, within the meaning of
section 416(i) of the Code, and received compensation greater than fifty percent
(50%) of the dollar limitation in effect under section 415(b)(1)(A) of the Code
for such Plan Year.
(2) Notwithstanding any other provision in the Plan,
subparagraphs (1)(B), (1)(C) or (1)(D) above shall not apply to an Employee for
the current Plan Year unless:
(A) Such Employee was a Highly Compensated Employee for
the preceding 12-month period by application of subparagraphs (1)(B), (1)(C) or
(1)(D) above; or
(B) Such Employee is a member of the group of the 100
Employees paid the greatest compensation for the current Plan Year.
(3) For purposes of subparagraph (1)(D) above, no more than
50 Employees (or, if lesser, the greater of three Employees or ten percent (10%)
of Employees) shall be treated as officers. If, for any Plan Year, no officer is
described in subparagraph (1)(D), the highest paid officer of the Employer for
such Plan Year shall be treated as described in subparagraph (1)(D).
24
<PAGE> 10
(4) For purposes of this paragraph 1.1(t), a former Employee
shall be treated as a Highly Compensated Employee if:
(A) Such Employee was a Highly Compensated Employee
when such Employee separated from service; or
(B) Such Employee was a Highly Compensated Employee at
any time after attaining age 55.
(5) For purposes of determining Highly Compensated Employees
under subparagraphs (1)(C) and (1)(D), the Employees described in section
414(q)(8) of the Code shall be excluded.
(6) For purposes of this paragraph 1.1(t), compensation
shall be defined as in paragraph 1.1(j), except that compensation shall include
any amount which is contributed by the Employer pursuant to a salary reduction
agreement and which is not includable in the Employee's gross income under
section 125, 402(a)(8), 402(h)(1)(B) or 403(b) of the Code.
(7) If the Employer is eligible under section 414(q)(12)(B)
of the Code to elect to determine Highly Compensated Employees pursuant to the
method described in section 414(q)(12)(A) of the Code, then for purposes of
determining the Highly Compensated Employees of such Employer, subparagraph
(1)(B) above shall be applied by substituting "$50,000" for "75,000," and
subparagraph (1)(C) above shall not apply.
(8) For purposes of this paragraph 1.1(t), the Employer and
any Related Company shall be treated as a single Employer of an Employee.
(9) Notwithstanding any other provision in the Plan, the
Employer may elect to determine Highly Compensated Employees on the basis of the
"calendar year calculation election" set forth in the regulations promulgated
under the Internal Revenue Code.
(10) Notwithstanding any other provision in the Plan, the
determination of Highly Compensated Employees shall be made in accordance with
section 414(q) of the Code and the regulations promulgated thereunder.
(u) "Investment Manager" means (1) any fiduciary (other than a
Trustee or named fiduciary as specified in Article 16) who has the power to
manage, acquire, or dispose of any assets of the Plan; (2) who is (i) registered
as an investment adviser under the Investment Advisers Act of 1940; (ii) is a
bank, as defined in that Act; or (iii) is an insurance company qualified to
perform services described in subparagraph (1) of this paragraph 1.1(u) under
the laws of more than one State; and (3) who has acknowledged in writing that he
is a fiduciary with respect to the Plan.
(v) "Matching Account" shall mean that Account of the Participant
to which Matching Contributions made on behalf of such Participant shall be
credited.
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<PAGE> 11
(w) "Matching Contributions" shall mean the contributions made by
the Employer on behalf of a Participant pursuant to Article 6 hereof.
(x) "Non-Highly Compensated Employee" shall mean an Employee who
is neither a Highly Compensated Employee nor a Family Member.
(y) "Normal Retirement Date" shall mean the date the Participant
attains his sixty-fifth (65th) birthday.
(z) "Participant" shall mean any Eligible Employee who has become
a participant in this Plan in accordance with the provisions of Article 2 and
whose participation has not terminated.
(aa) "Plan" shall mean the Cadence Design Systems, Inc. 401(k)
Plan as set forth herein and any amendments hereto.
(bb) "Plan Year" shall mean a twelve-month period beginning on
January 1 and ending on December 31. A "limitation year," as that term is used
in section 415 of the Code and the Treasury regulations issued thereunder, shall
have the same meaning as "Plan Year."
(cc) "Profit Sharing Account" shall mean that Account of a
Participant to which Profit Sharing Contributions allocated to such Participant
shall be credited.
(dd) "Profit Sharing Contributions" shall mean the contributions
made by the Employer pursuant to Article 5 hereof.
(ee) "Related Company" shall mean any organization which is
either (i) a member of a controlled group of corporations (as determined for
purposes of section 414(b) of the Code) of which the Employer is a member, (ii)
a member of a group of trades or businesses (whether or not incorporated) which
are under common control with the Employer (as determined for purposes of
section 414(c) of the Code), or (iii) is a member of an affiliated service group
within the meaning of section 414(m) of the Code, of which the Employer is also
a member.
(ff) "Rollover Account" shall mean that Account of the
Participant to which Rollover Contributions made by such Participant shall be
credited.
(gg) "Rollover Contributions" shall mean contributions made by a
Participant pursuant to Article 4 hereof.
(hh) "Service" shall have the meaning set forth in Article 11
hereof.
(ii) "Top-Heavy Contributions" shall mean the contributions made
by the Employer pursuant to Article 21.4 hereof.
(jj) "Top-Heavy Plan" shall have the meaning set forth in Article
21.1 hereof.
(kk) "Total Disability" shall mean a physical or mental condition
resulting from a bodily injury or disease or mental disorder which renders the
Participant incapable of continuing in the employment of the Employer and which
has continued for at least six (6) months. The total and permanent disability of
any
26
<PAGE> 12
Participant shall be determined by the Employer in accordance with uniform
principles consistently applied and upon the basis of such evidence as the
Employer deems necessary and desirable but which shall always include medical
evidence from at least one licensed physician.
(ll) "Trust" shall mean the legal entity created by the Trust
Agreement as part of the Plan.
(mm) "Trust Agreement" shall mean that trust agreement entered
into between the Employer and Trustee effective as of January 1, 1989 (Amended
effective 1/1/90, First Amendment), as such may be amended from time to time.
(nn) "Trust Fund" shall mean all property and income held by the
Trustee under the Trust Agreement.
(oo) "Trustee" shall mean the original Trustees named in the
Trust Agreement, and any duly appointed successor.
(pp) "Valuation Date" shall mean March 31, June 30, September 30,
and December 31 of each Plan Year and such other date as may be designated as
provided in Article 8.7 for the revaluation of Participants' Accounts.
(qq) "Voluntary Account" shall mean that account of a Participant
to which nondeductible employee contributions made by a Participant prior to
January 1, 1990, under the terms of the Gateway Design Automation Corporation
401(k) Profit Sharing Plan shall be credited.
1.2 Construction. All matters respecting the validity, effect,
interpretation and administration of the Plan shall be determined in accordance
with ERISA, and to the extent allowed by ERISA, in accordance with the laws of
the State of California; provided, however, that if any provision is susceptible
of more than one interpretation, such interpretation shall be given thereto as
is consistent with the Plan being a qualified employees' profit sharing plan
which incorporates a qualified cash or deferred arrangement within the meaning
of the Code (including section 401(k) of the Code) and ERISA, or corresponding
provisions of subsequent federal revenue laws.
1.3 Gender and Number. As used in the Plan, the masculine, feminine or
neuter gender and the singular or plural number shall each be allowed to include
the others whenever the context so indicates.
1.4 Headings. All headings used in the Plan are inserted for convenience of
reference only and do not constitute part of the Plan.
ARTICLE 2
ELIGIBILITY AND PARTICIPATION
2.1 Commencement of Participation.
27
<PAGE> 13
(a) Each participant of the Prior Plan shall become a Participant of
this Plan.
(b) Effective as of April 1, 1989, each Employee shall become a
Participant on the first Entry Date occurring on or after the date he first
begins employment or on the date occurring on or after the date on which the
Employee becomes an Eligible Employee, whichever is later.
(c) Notwithstanding anything in this paragraph 2.1 to the contrary, an
Employee shall not become an Eligible Employee with respect to Company
Contributions and Profit Sharing Contributions if such Employee is not receiving
base compensation or wages from a domestic Employer.
2.2 Termination of Participation. Participation in the Plan continues until
a Participant terminates his employment by reason of retirement, death, Total
Disability, or for any other reason.
2.3 Participation Upon Re-employment. Any Employee who was previously a
Participant in the Plan and whose participation has terminated for any reason
and who is subsequently rehired shall become a Participant on the first day on
which the Employee resumes employment or on which the Employee becomes an
Eligible Employee, whichever occurs later. Upon becoming a Participant, the
rehired Employee shall be entitled to designate that 401(k) Contributions be
made to the Plan beginning as of the next following Entry Date.
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<PAGE> 14
ARTICLE 3
401(k) CONTRIBUTIONS
3.1 Deferral Authorization.
(a) Each Participant may designate a whole percentage of his
compensation which is not less than one percent (1%) nor more than twenty
percent (20%) for each Plan Year, which amount shall not be paid to the
Participant but shall, for each pay period during which the authorization is in
effect, be withheld from the Participant's compensation and contributed to his
401(k) Account as provided herein.
(b) A Participant may initially authorize 401(k) Contributions by
filing such enrollment form or otherwise providing such authorization as the
Committee may specify at least fifteen (15) days prior to the Entry Date on
which such authorization is to be effective. A Participant's 401(k)
Contributions designation shall remain in effect until suspended or modified as
provided in Articles 3.5 and 3.6.
(c) A participant's compensation shall include salary, bonuses,
overtime, commissions, 401(k) Contributions, and car allowances, but shall not
include salary reduction contributions to any plan maintained by the Company or
a Related Company which is a cafeteria plan as defined by Section 125 of the
Code, or any other payments not specifically included above.
3.2 Annual Limitation on Deferrals. Notwithstanding any other provision of
the Plan, no Participant shall be permitted to have 401(k) Contributions made to
the Plan on his behalf during any calendar year in excess of $7,000, multiplied
by the Adjustment Factor, or such other amount as may be permitted by law.
3.3 Distribution of Excess Deferrals.
(a) Notwithstanding any other provision of the Plan, Excess Deferrals
and income allocable thereto shall be distributed no later than each April 15 to
Participants who claim such Excess Deferrals for the preceding calendar year.
For purposes of this Article 3.3, "Excess Deferrals" shall mean the amount of
401(k) Contributions for a calendar year that the Participant allocates to the
Plan pursuant to the claim procedure set forth in subsection (b) below.
(b) A Participant's claim for Excess Deferrals shall be in writing;
shall specify the amount of the Participant's Excess Deferrals for the
applicable calendar year; shall be submitted to the Committee no later than
March 1 immediately following the close of the applicable calendar year; and
shall be accompanied by the Participant's written statement that if such amounts
are not distributed, such Excess Deferrals, when added to amounts deferred under
other plans or arrangements described in sections 401(k), 408(k) or 403(b) of
the Code, shall exceed the limit imposed on the Participant by section 402(g) of
the Code for the applicable calendar year.
(c) A Participant's Excess Deferrals shall be adjusted for income or
loss, which shall be determined by multiplying the total amount of income or
loss allocable to the Participant's 401(k) Account for the
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<PAGE> 15
applicable calendar year by a fraction, the numerator of which shall be the
Participant's Excess Deferrals and the denominator of which shall be the balance
in the Participant's 401(k) Account on the last day of the applicable calendar
year.
(d) The Excess Deferrals which would otherwise be distributed to a
Participant pursuant to this Article 3.3 shall be reduced by the amount of
Excess Contributions previously distributed to such Participant for the Plan
Year, in accordance with regulations promulgated by the Secretary of the
Treasury.
3.4 All Contributions Deemed Employer Contributions. Except as applicable
law may otherwise require, contributions made pursuant to the Participant's
designation under Article 3.1 shall be deemed to be Employer contributions to
the Plan.
3.5 Cessation and Resumption of 401(k) Contributions.
(a) A Participant may cease 401(k) Contributions at any time by filing
with the Committee an Enrollment Form or by communicating with the Committee in
such other manner as the Committee may authorize, which shall be effective as
soon thereafter as may be administratively feasible. A Participant who has
ceased making 401(k) Contributions may resume making 401(k) Contributions as of
any Entry Date thereafter upon filing a new Enrollment Form which complies with
the provisions of Article 3.1(b), provided the Participant is otherwise eligible
to participate in the Plan on that date.
(b) If the Participant ceases to be an Eligible Employee, all 401(k)
Contributions made on his behalf shall be suspended immediately, but he shall be
eligible to have 401(k) Contributions made on his behalf resumed on the first
Entry Date occurring on or after the date on which he again becomes an Eligible
Employee.
3.6 Change in 401(k) Contributions. A Participant may change the percentage
of 401(k) Contributions effective as of any Entry Date by filing an Enrollment
Form with the Committee or by communicating with the Committee in such other
manner as the Committee may authorize, prior to the date such change is to be
effective, which form shall specify the increase or decrease in 401(k)
Contributions desired.
3.7 Actual Deferral Percentage Limitation.
(a) In order that the Plan comply with the requirements of section
401(k) of the Code, the 401(k) Contributions made for each Plan Year must
satisfy one of the following tests:
(1) The Actual Deferral Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Actual
Deferral Percentage for Participants who are Non-Highly Compensated Employees
for the Plan Year multiplied by 1.25; or
(2) The Actual Deferral Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Actual
Deferral Percentage for Participants who are Non-Highly
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<PAGE> 16
Compensated Employees for the Plan Year multiplied by 2, provided that the
Actual Deferral Percentage for Participants who are Highly Compensated Employees
does not exceed the Actual Deferral Percentage for Participants who are
Non-Highly Compensated Employees by more than 2 percentage points, or such
lesser amount as the Secretary of the Treasury shall prescribe to prevent the
multiple use of this alternative test with respect to any Highly Compensated
Employee.
(b) For purposes of this Article 3.7, the following definitions shall
apply:
(1) "Actual Deferral Percentage" shall mean the average
(expressed as a percentage) of the Deferral Percentages of the Participants in a
group.
(2) "Deferral Percentage" shall mean the ratio (expressed as a
percentage) that a Participant's 401(k) Contributions made during a Plan Year
bears to the Participant's compensation for such Plan Year.
(c) For purposes of this Article 3.7, the following special rules
shall apply:
(1) The Deferral Percentage for any Participant who is a Highly
Compensated Employee for the Plan Year and who is eligible to have elective
deferral contributions allocated to his account under two or more plans or
arrangements described in section 401(k) of the Code that are maintained by the
Company shall be determined as if all such elective deferrals were made under a
single arrangement.
(2) The Deferral Percentages of any Participant under two or more
arrangements described in section 401(k) of the Code that are maintained by the
Company or a Related Company shall be determined as if all elective deferrals
made by any Participant were made under a single arrangement, if the
arrangements are treated as a single plan for purposes of meeting the
requirements of sections 401(a)(4) and 410(b) (other than section
410(b)(2)(A)(ii)) of the Code.
(3) For purposes of determining the Deferral Percentage of a
Participant who is a Highly Compensated Employee and is either a 5% owner as
defined in Article 21.5(3)(a) or one of the ten most Highly Compensated
Employees of the Employer, the 401(k) Contributions and compensation of such
Participant shall include the 401(k) Contributions and compensation of Family
Members, and such Family Members shall be disregarded in determining the
Deferral Percentages for Participants who are Non-Highly Compensated Employees.
(4) As provided in and in accordance with the regulations
promulgated by the Secretary of the Treasury, the Committee may, in its sole
discretion, elect to take into account Matching Contributions and qualified
non-elective contributions, as described in section 401(m) of the Code, made on
behalf of a Participant under the Plan or any other plan of the Company, for
purposes of determining such Participant's Deferral Percentage only if such
contributions are nonforfeitable when made and distributable only under the
following circumstances:
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<PAGE> 17
(A) The Employee's retirement, death, Total Disability or
separation from service:
(B) The termination of the Plan without the establishment of
a successor plan;
(C) The Employee's attainment of age 59-1/2 or, for Plan
Years beginning before 1989, the Employee's hardship:
(D) The sale or other disposition by the Company or a
Related Company to an unrelated corporation, which does not maintain the Plan,
of substantially all of the assets used in a trade or business, but only with
respect to employees who continue employment with the acquiring corporation;
(E) The sale or other disposition by the Company or a
Related Company of its interest in a subsidiary to an unrelated entity which
does not maintain the Plan, but only with respect to employees who continue
employment with the subsidiary. Non-elective contributions which may be treated
as 401(k) Contributions must satisfy these requirements without regard to
whether they are actually taken into account as 401(k) Contributions; and
(F) Any distribution pursuant to subparagraph 4(b), (d) or
(e) of this section 32.7(c) must be a lump sum distribution (as defined in
section 401(k)(10)(B)) of the Participant's vested interest within one taxable
year.
(5) The Committee shall maintain such records as are necessary to
demonstrate compliance with the requirements of section 3.7(a), including the
extent to which Matching Contributions and qualified non-elective contributions
are taken into account for purposes of determining a Participant's Deferral
Percentage.
(6) The determination and treatment of the 401(k) Contributions
and Deferral Percentage of any Participant shall satisfy such other requirements
as may be prescribed by the Secretary of the Treasury.
(7) 401(k) Contributions shall relate to a Participant's
Compensation that either would have been received by the Participant during the
Plan Year but for the Participant's election to make 401(k) Contributions or is
attributable to services performed by the Participant during the Plan Year and,
but for the Participant's election to make 401(k) Contributions, would have been
received by the Participant within two and one-half months after the close of
the Plan Year.
3.8 Avoidance and Distribution of Excess Contributions.
(a) In order that the Plan shall comply with the requirements of
section 401(k) of the Code and the regulations thereunder, at any time in a Plan
Year the Committee (in its sole discretion) may reduce for the remainder of that
Plan Year the rate of 401(k) Contributions authorized by any Participant who is
a Highly Compensated Employee, or the Committee may require that any Highly
Compensated Employee
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<PAGE> 18
Participant discontinue all 401(k) Contributions for the remainder of that Plan
Year. Such a reduction or discontinuance may be applied selectively to
individual Highly Compensated Employee Participants or to a particular class of
Highly Compensated Employee Participants, as the Committee may determine. Upon
the close of the Plan Year, or on such earlier date as the Committee may
determine, this Article 3.8 shall automatically cease to apply until the
Committee again determines that a reduction or discontinuance of 401(k)
Contributions is required for any Highly Compensated Employee Participant.
(b) Notwithstanding any other provision of the Plan, Excess
Contributions and income allocable thereto shall be distributed to Participants
no later than the end of the Plan Year following the Plan Year in which such
Excess Contributions were made. To the extent the Committee shall elect to do
so, such Excess Contributions and income allowable thereto may be distributed
within the first 2-1/2 months of a Plan Year to Participants on whose behalf
such Excess Contributions were made during the preceding Plan Year.
(i) For purposes of this Article 3.8(b), and Article 3.8(c),
"Excess Contributions" shall mean the excess of:
(A) The aggregate amount of 401(k) Contributions contributed
on behalf of Highly Compensated Employees who were Participants during a Plan
Year, over
(B) The maximum amount of 401(k) Contributions permitted
under Article 3.7 for such Plan Year, which shall be determined by reducing the
amount of 401(k) Contributions contributed on behalf of Participants who were
Highly Compensated Employees during such Plan Year in order of their Deferral
Percentages, beginning with the highest of such Deferral Percentages.
(ii) The income allocable to Excess Contributions shall be equal
to the sum of the allocable gain or loss for the Plan Year for which the Excess
Contributions were made, and the allocable gain or loss for the period between
the end of such Plan Year and the date of distribution, as determined as
follows:
(A) The income allocable to a Participant's Excess
Contributions for a Plan Year shall be determined by multiplying the total
income for the Plan Year allocable to the Participant's 401(k) Contributions
(including amounts treated as 401(k) Contributions) by a fraction, the numerator
of which shall be the Participant's Excess Contributions, and the denominator of
which shall be the total balance of the Participant's 401(k) Account (including
amounts treated as 401(k) Contributions) as of the end of the Plan Year, reduced
by the gain allocable to such Account for the Plan Year, and increased by the
loss allocable to such Account for the Plan Year.
(B) The allocable income shall include income for the period
between the end of the Plan Year for which the Excess Contributions were made,
and the date on which the corrective distribution is made to the Participant.
For purposes of calculating the allocable income for this period, the Committee,
in its sole
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<PAGE> 19
discretion, shall select one of the two following methods, provided that the
method selected shall be applied on a uniform and nondiscriminatory basis for
all Participants with Excess Contributions:
(1) The "fractional method," under which the income for
the period between the end of the Plan Year and the last day of the month
preceding the distribution date shall be multiplied by a fraction determined
under the method described in Article 3.8(b)(ii)(A) above, or
(2) The " 10% method," under which 10% of the allocable
income determined pursuant to Article 3.8(b)(ii)(A) above shall be multiplied by
the number of calendar months that have elapsed between the end of the Plan Year
and the distribution date. For purposes of determining the number of calendar
months under the 10% method, a distribution made on or before the fifteenth day
of a month shall be treated as having been made on the last day of the preceding
month and a distribution occurring after the fifteenth day of a month shall be
treated as having been made on the first day of the following month.
(iii) For purposes of this Article 3.8(b), if the Highly
Compensated Employee's Deferral Percentage is determined by combining the 401(k)
Contributions and compensation of all Family Members pursuant to Article
3.7(c)(2), then the maximum amount of 401(k) Contributions permitted is
determined in accordance with the leveling method set forth above in Article
3.8(b)(i)(B), and the Excess Contributions for the Family Members are allocated
among the Family Members in proportion to their 401(k) Contributions.
(iv) The Excess Contributions which would otherwise be
distributed to a Participant pursuant to this Article 3.8 shall be reduced by
the amount of Excess Deferrals distributed to such Participant, in accordance
with regulations promulgated by the Secretary of the Treasury. (Redesignated
effective 1/1/89, Third Amendment)
(v) If Excess Contributions and allocable income for a Plan
Year are not corrected by distribution before the close of the first 2-1/2
months of the following Plan Year, the Employer shall be subject to a 10% excise
tax on the amount of such Excess Contributions, pursuant to section 4979 of the
Code. Such excise tax shall be due at the same time as the Employer's income tax
for its taxable year with or within which the Plan Year ends.
3.9 Contributions Held in Trust. The amount of 401(k) Contributions
contributed by the Employer on the Participant's behalf shall be transferred to
the Trustee, or such other depository as the Committee may designate, as soon as
it is reasonable to do so and in no event later than thirty (30) days following
the close of the month in which such 401(k) Contributions were deducted from a
Participant's Compensation.
ARTICLE 4
ROLLOVER CONTRIBUTIONS AND VOLUNTARY CONTRIBUTIONS
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4.1 Rollovers. Notwithstanding any other provision hereof, subject to the
consent of the Committee, the Trustee shall be authorized to accept assets from
a person who is an Eligible Employee provided the transfer of such assets to
this Plan was initiated by such Eligible Employee and qualifies as a rollover
contribution within the meaning of sections 402(c) and 408(d)(3) of the Code.
Any assets so transferred on behalf of an Eligible Employee shall be deposited
in the Trust and allocated to the Eligible Employee's Rollover Account.
4.2 Voluntary Contributions. Effective January 1, 1990, Voluntary
Contributions made by a Participant prior to January 1, 1990 under the terms of
the Gateway Design Automation Corporation 401(k) Profit Sharing Plan shall be
held in the Participant's Voluntary Account separate from any other
contributions under the Plan and any allocable forfeitures. No additional
Voluntary Contributions shall be made to such Account or the Plan.
ARTICLE 5
COMPANY AND PROFIT SHARING CONTRIBUTIONS
5.1 Authorization of Company Contributions and Profit Sharing
Contributions. For each Plan Year, the Employer may contribute to the Plan as a
Company Contribution or a Profit Sharing Contribution on behalf of each
Participant described in Article 2.1 (a) and (b) such amount as shall be
determined by the Board in its sole discretion; provided, however, that in no
event shall the Employer contribute for any Plan Year an amount which, when
added to the total amount of 401 (k) Contributions and Matching Contributions,
if any, made for such Plan Year, is in excess of the amount which the Employer
will be permitted to deduct on its federal income tax return for such Plan Year
as a contribution to the Plan, in accordance with the provisions of section 404
of the Code. If the Board determines to make a Company Contribution or a Profit
Sharing Contribution for only a portion of a Plan Year. then only the
Participant's Compensation for such portion of such Plan Year shall be taken
into account.
5.2 Payment of Contributions.
(a) A Company Contribution, if any, for any Plan Year shall be paid in
cash by the Employer to the Trustee or such other depository as the Committee
may designate, on a quarterly basis. In such case. only the Compensation
received by the Participant during the preceding calendar quarter shall be taken
into account.
(b) A Profit Sharing Contribution, if any, for any Plan Year may be
paid in cash by the Employer to the Trustee or such other depository as the
Committee may designate in one or more installments as the Board, it its sole
discretion, shall determine.
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ARTICLE 6
MATCHING CONTRIBUTIONS
6.1 Authorization of Matching Contributions. If authorized by the
Board, for each matching period specified by the Board, the Employer shall
contribute an amount specified by the Board on behalf of each Participant who
has made 401(k) Contributions during such matching period and who is employed on
the last day of the matching period to each Participant's Matching Account.
The Matching Contributions required to be made by the Employer under
this Article 6 for any Plan Year shall be reduced by the amount of forfeitures
which occurred during such Plan Year or prior Plan Years and which are not
otherwise required to be restored pursuant to Article 10.
6.2 Actual Contribution Percentage Limitation.
(a) In order that the Plan comply with the requirements of section
401(m) of the Code, the Matching Contributions made for each Plan Year must
satisfy one of the following tests:
(1) The Actual Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Actual
Contribution Percentage for Participants who are Non-Highly Compensated
Employees for the Fiscal Year multiplied by 1.25; or
(2) The Actual Contribution Percentage for Participants who are
Highly Compensated Employees for the Plan Year shall not exceed the Actual
Contribution Percentage for Participants who are Non-Highly Compensated
Employees multiplied by 2, provided that the Actual Contribution Percentage for
Participants who are Highly Compensated Employees does not exceed the Actual
Contribution Percentage for Participants who are Non-Highly Compensated
Employees by more than 2 percentage points, or such lesser amount as the
Secretary of the Treasury shall prescribe to prevent the multiple use of this
alternate test with respect to any Highly Compensated Employee.
(b) For purposes of this Article 6.2, the following definitions shall
apply:
(1) "Actual Contribution Percentage" shall mean the average
(expressed as a percentage) of the Contribution Percentages of the Participants
in a group.
(2) "Contribution Percentage" shall mean the ratio (expressed as
a percentage) that the Matching Contributions made on behalf of a Participant
during the Plan Year bears to the Participant's Compensation for such Plan Year.
(c) For purposes of this Article 6.2, the following special rules
shall apply:
(1) The Contribution Percentage for any Participant who is a
Highly Compensated Employee for the Plan Year and who is eligible to have
matching contributions or elective deferral contributions
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<PAGE> 22
allocated to his account under two or more plans described in section 401(a) of
the Code or arrangements described in Section 401(k) of the Code that are
maintained by the Company or a Related Company shall be determined as if all
such contributions were made under a single plan or arrangement.
(2) For purposes of determining the Contribution Percentage of a
Participant who is a Highly Compensated Employee and is either a 5% owner as
defined in 1.1(t) or one of the ten most Highly Compensated Employees of the
Company, the Matching Contributions and the Compensation of such Participant
shall include the Matching Contributions and Compensation of Family Members, and
such Family Members shall be disregarded in determining the Contribution
Percentages for Participants who are Non-Highly Compensated Employees.
(3) A Participant's compensation shall be as defined in 1.1(j)
except that compensation shall include 401(k) Contributions to the Plan and
salary reduction contributions to any plan maintained by the Company or a
Related Company which is a cafeteria plan as defined by section 125 of the Code.
(4) The Contribution Percentages of any Participant under two or
more arrangements described in section 401(m) of the Code that are maintained by
the Company or a Related Company shall be determined as if all Matching
Contributions were made under a single arrangement, if the arrangements are
treated as a single plan for purposes of meeting the requirements of sections
401(a)(4) and 410(b) (other than section 410(b)(2)(A)(ii)) of the Code.
(5) As provided in, and in accordance with, the regulations
promulgated by the Secretary of the Treasury, the Committee may, in its sole
discretion, elect to take into account elective deferrals and qualified
non-elective contributions made on behalf of a Participant under the Plan or any
other plan of the Company for purposes of determining such Participant's
Contribution Percentage only if such contributions are nonforfeitable when made
and distributable only under the following circumstances:
(a) The Employee's retirement, death, Total Disability or
separation from service;
(b) The termination of the Plan without establishment of a
successor plan:
(c) The Employee's attainment of age 59-1/2 or, for Plan
Years beginning before 1989, the Employee's hardship:
(d) The sale or other disposition by the Company or a
Related Company to an unrelated corporation, which does not maintain the Plan,
of substantially all of the assets used in a trade or business, but only with
respect to employees who continue employment with the acquiring corporation; and
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<PAGE> 23
(e) The sale or other disposition by the Company or a
Related Company of its interest in a subsidiary to an unrelated entity which
does not maintain the Plan, but only with respect to Employees who continue
employment with the subsidiary. Non-elective contributions which may be treated
as Matching Contributions must satisfy these requirements without regard to
whether they are actually taken into account as Matching Contributions.
(f) Any distribution pursuant to subparagraphs (5)(b), (d)
or (e) of this Section 6.2(c)(5) must be a lump sum distribution (within the
meaning of section 401(k)(10)(B)) of the Participant's vested interest within
one taxable year.
(6) The Committee shall maintain such records as are necessary to
demonstrate compliance with the requirements of Section 6.2(a) including the
extent to which elective contributions and qualified non-elective contributions
are taken into account for purposes of determining a Participant's Contribution
Percentage
(7) The determination and treatment of the Matching Contributions
and Contribution Percentage of any Participant shall satisfy such other
requirements as may be prescribed by the Secretary of the Treasury.
6.3 Distribution or Forfeiture of Excess Matching Contributions
(a) Notwithstanding any other provision of the Plan, in the event
neither of the special tests described in Section 6.2 can be satisfied, then the
Excess Aggregate Contributions of certain Highly Compensated Employees for a
Plan Year shall be corrected by distribution of such Excess Aggregate
Contributions and allocable income to any Participant with Excess Aggregate
Contributions for such Plan Year. Distribution must be made, if administratively
feasible, within the first 2-1/2 months of the Plan Year following the Plan Year
for which the Excess Aggregate Contributions were made; provided, however, that
in no event shall distribution occur later than the end of the Plan Year
following the Plan Year for which the Excess Aggregate Contributions were made.
Notwithstanding any other provision in the Plan, the consent of a Participant or
his or her spouse shall not be required for a distribution of Excess Aggregate
Contributions and allocable income. Such distributions shall be in compliance
with Section 401(a)(4) of the Code.
(b) In order to correct the Excess Aggregate Contributions of
Participants who are Highly Compensated Employees, the methods of correction
described in Section 6.3(a) must be accomplished on an Employee-by-Employee
basis. The Excess Aggregate Contributions for certain Participants who are
Highly Compensated Employees shall be reduced as follows: the first such
reduction shall be made by reducing the Contribution Percentage of the Highly
Compensated Employee with the highest Contribution Percentage to the
Contribution Percentage of the Highly Compensated Employee with the second
highest Contribution Percentage. If the requirements of Section 6.2 are not
satisfied by this first reduction. then the Contribution Percentages of the two
Highly Compensated Employees with the highest Contribution Percentages
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<PAGE> 24
shall be reduced to the Contribution Percentage of the Highly Compensated
Employee with the third highest Contribution Percentage. The reduction in
Contribution Percentage shall be repeated in the same manner until the
requirements of Section 6.2 are satisfied for such Plan Year.
(c) For purposes of this Article 6.3 and Article 22.3 hereof, "Excess
Matching Contributions" shall mean the excess of:
(1) The aggregate amount of the Matching Contributions made on
behalf of Participants who are Highly Compensated Employees during a Plan Year,
over
(2) The maximum amount of the Matching Contributions permitted
for such Plan Year under Article 6.2 hereof, which maximum amount shall be
determined by reducing the Matching Contributions made on behalf of Participants
who are Highly Compensated Employees during such Plan Year in order of their
Contribution Percentages, beginning with the highest of such Contribution
Percentages.
(d) The income allocable to Excess Matching Contributions shall be
equal to the sum of the allocable gain or loss for the Plan Year for which the
Excess Matching Contributions were made, and the allocable gain or loss for the
period between the end of such Plan Year and the date of distribution or
forfeiture, determined in accordance with the method set forth in Article
3.8(b)(ii), except that "Excess Matching Contributions," "Matching
Contributions," and "Matching Contributions Account" shall be substituted for
"Excess Contributions," "401(k) Contributions," and "401(k) Account,"
respectively.
(e) Notwithstanding any other provision of the Plan, no forfeitures
arising under this Article 6.3 shall be reallocated to the Account of any Highly
Compensated Employee.
(f) For purposes of this Article 6.3, if the Highly Compensated
Employee's Contribution Percentage is determined by combining the Matching
Contributions and compensation of all Family Members pursuant to Article
6.2(c)(2), then the maximum amount of Matching Contributions permitted is
determined in accordance with the leveling method set forth above in Article
6.3(b)(2), and the Excess Matching Contributions for the Family Members are
allocated among the Family Members in proportion to their Matching
Contributions.
6.4 Payment of Contributions. Matching Contributions shall be paid in cash
by the Employer to the Trustee. Matching Contributions shall be made within a
reasonable amount of time after the end of the matching period to which they
relate.
6.5 Multiple Use of Alternative Limitation.
(a) In order for the Plan to comply with the requirements of sections
401(k) and 401(m) of the Code, the Plan must satisfy the tests set forth in
Articles 3.7(a) and 6.2(a). However, the Employer must avoid the multiple use of
the alternative limitation as set forth in Articles 3.7(a)(2) and 6.2(a)(2) with
respect to Highly Compensated Employees.
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(b) For purposes of this Article 6.5, a multiple use of the
alternative limitation is present when all of the following conditions occur:
(1) One or more Highly Compensated Employees of the Employer are
eligible to participate in a cash or deferred arrangement subject to section
401(k) of the Code, and in the plan maintained by the Employer subject to
section 401(m) of the Code;
(2) The sum of the Actual Deferral Percentage of the entire group
of eligible Highly Compensated Employees under such arrangement subject to
section 401(k) of the Code and Actual Contribution Percentage of the entire
group of eligible Highly Compensated Employees under such plan subject to
section 401(m) of the Code exceeds the Aggregate Limit;
(3) The Actual Deferral Percentage of the entire group of
eligible Highly Compensated Employees under the arrangement subject to section
401(k) of the Code exceeds 125 percent of the Actual Deferral Percentage of the
entire group of eligible Non-Highly Compensated Employees; and
(4) The Actual Contribution Percentage of the entire group of
eligible Highly Compensated Employees under such plan subject to section 401 (m)
of the Code exceeds 125 percent of the Actual Contribution Percentage of the
entire group of eligible Non-Highly Compensated Employees.
(c) For purposes of the this Article 6.5, the Aggregate Limit is
defined as the greater of:
(1) The sum of:
(A) 125 percent of the greater of the Relevant Actual
Deferral Percentage or the Relevant Actual Contribution Percentage, and
(B) Two (2) percentage points plus the lesser of the
Relevant Actual Deferral Percentage or the Relevant Actual Contribution
Percentage. In no event, however, shall this amount exceed twice the lesser of
the Relevant Actual Deferral Percentage or the Relevant Actual Contribution
Percentage; or
(2) The sum of:
(A) 125 percent of the lesser of the Relevant Actual
Deferral Percentage or the Relevant Actual Contribution Percentage, and
(B) Two (2) percentage points plus the greater of the
Relevant Actual Deferral Percentage or the Relevant Actual Contribution
Percentage. In no event, however, shall this amount exceed twice the greater of
the Relevant Actual Deferral Percentage or the Relevant Actual Contribution
Percentage.
(d) For purposes of this Article 6.5, the term "Relevant" Actual
Deferral Percentage and term "Relevant" Actual Contribution Percentage mean the
Actual Deferral Percentage or the Actual Contribution Percentage of the eligible
group of Non-Highly Compensated Employees.
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<PAGE> 26
(e) In the event a multiple use of the alternative limitation as
described in Article 6.5(b) is present, such multiple use shall be corrected by
reducing the Actual Contribution Percentage of the Highly Compensated Employees
so that the combined Actual Deferral Percentage and the Actual Contribution
Percentage does not exceed the Aggregate Limit. The required reduction shall be
treated as an Excess Matching Contribution as described in Article 6.3(b). The
method of correct to be used to reduce the Actual Contribution Percentage shall
be the method as set forth in Article 6.3(b)(2).
ARTICLE 7
INVESTMENT OPTIONS
7.1 Investment Election. Each Participant may elect in writing to have
amounts credited to such Participant's Accounts invested in such investment
funds as the Committee shall from time to time determine. The Committee shall
establish such rules and procedures for making and changing investment elections
as it shall deem appropriate; provided, however, that such rules and procedures
shall be communicated to Participants and shall be applied in a uniform and
nondiscriminatory manner. Unless an effective investment direction is made by
the Participant, all such contributions shall be invested in a fixed
interest-type account as determined by the Committee or such other account as
determined by the Committee.
ARTICLE 8
PARTICIPANTS' ACCOUNTS AND ALLOCATION
OF TRUST INCOME OR LOSS
8.1 401(k) Accounts. A separate 401(k) Account shall be established and
maintained for each Participant who has authorized 401(k) Contributions. Such
401(k) Account shall be credited with the Participant's 401(k) Contributions and
Trust income allocable thereto, and shall be charged with distributions
therefrom and any Trust losses allocable thereto.
8.2 Rollover Account. A separate Rollover Account shall be established and
maintained for each Eligible Employee making a Rollover Contribution to the Plan
pursuant to Article 4 which shall be credited with such Rollover Contribution
and the Trust Income allocable thereto and shall be charged with distributions
therefrom and Trust losses allocable thereto.
8.3 Company Contribution Account. A separate Company Contribution Account
shall be established and maintained for each Participant who is entitled to an
allocation of Company Contributions pursuant to Article 9.2 hereof. Such Company
Contribution Account shall be credited with Company Contributions, and any Trust
income allocable thereto, and shall be charged with distributions therefrom and
any Trust losses allocable thereto.
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<PAGE> 27
8.4 Profit Sharing Account. A separate Profit Sharing Account shall be
established and maintained for each Participant who is entitled to an allocation
of Profit Sharing Contributions pursuant to Article 9.2 hereof. Such Profit
Sharing Account shall be credited with Profit Sharing Contributions, and any
Trust income allocable thereto, and shall be charged with distributions
therefrom and any Trust losses allocable thereto.
8.5 Matching Account. A separate Matching Account shall be established and
maintained for each Participant on whose behalf the Employer has made Matching
Contributions. Such Matching Account shall be credited with Matching
Contributions and any Trust income allocable thereto, and shall be charged with
distributions therefrom and any Trust losses allocable thereto.
8.6 Voluntary Account. A separate Voluntary Account shall be established
and maintained for each Participant who has made Voluntary Contributions,
pursuant to Article 4.2 which shall be credited with such Voluntary
Contributions and the Trust income allocable thereto and shall be charged with
distributions therefrom and Trust losses allocable thereto.
8.7 Valuation Dates. Within sixty (60) days after the end of each calendar
quarter and within sixty (60) days after the removal or resignation of the
Trustee, the Trustee shall value the assets of the Trust on the basis of fair
market value as of the close of such calendar quarter of the Plan Year (or the
close of the shorter period ending with such resignation or removal) and such
date shall be a Valuation Date. The Committee may also direct the Trustee to
value the assets of the Trust or any portion thereof on the basis of fair market
value as of any other date and such day shall also be deemed a Valuation Date
with respect to the assets so revalued.
8.8 Allocation of Trust Income or Loss. As of any Valuation Date, the net
Trust income or loss (including appreciation or depreciation of the Trust Fund,
whether realized or unrealized), shall be allocated to the Accounts of
Participants in proportion to the balances of such Accounts as of the most
recent Valuation Date, after making such adjustments as may be appropriate to
reflect contributions or distributions which were made subsequent to the
preceding Valuation Date. In making such allocation, the income and loss of the
portion of the Trust Fund invested in any separate fund designated authorized by
the Committee under Article 7, shall be valued separately on each Valuation Date
and the net Trust income or loss attributable to each fund shall be allocated
among Participants' Accounts on a segregated basis. Income on any Participant
loan made pursuant to Article 13 shall be credited to the Account(s) of the
Participant who has obtained such a loan.
ARTICLE 9
ALLOCATION OF CONTRIBUTIONS
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<PAGE> 28
9.1 Allocation of 401(k) Contributions. Any 401(k) Contributions made by
the Employer on behalf of a Participant shall be allocated to that Participant's
401(k) Account as of a date no later than the last day of the Plan Year for
which such 401(k) Contributions were made.
9.2 Allocation of Company Contributions and Profit Sharing Contributions.
Any Company Contributions made by the Employer shall be allocated to the Company
Contribution Accounts of Participants who are Eligible Employees on the date
such Company Contributions were made. Any Profit Sharing Contributions made by
the Employer shall be allocated to the Profit Sharing Accounts of Participants
who are Eligible Employees on the date such Profit Sharing Contributions were
made. Notwithstanding the foregoing, (i) any Company Contributions for any
quarter in the Plan Year shall only be made with respect to an Eligible Employee
on the first day of such quarter and (ii) Company Contributions with respect to
the last quarter in any Plan Year and Profit Sharing Contribution shall be
allocated to the Company Contribution Accounts and Profit Sharing Contribution
Accounts of Participants who are Eligible Employees on the last day of such Plan
Year. Such allocations shall be made in the proportion that each such
Participants Compensation bears to the Compensation of all such Participants for
the quarter or the Plan Year as the case may be.
9.3 Allocation of Matching Contributions. Any Matching Contributions made
by the Employer on behalf of a Participant shall be allocated to that
Participant's Matching Account as of the last day of the period for which such
Matching Contributions are made; provided, however, that the Participant is an
Eligible Employee on the last day of such matching period.
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<PAGE> 29
ARTICLE 10
VESTING
10.1 401(k) Accounts, Rollover Accounts, Voluntary Accounts and Company
Contribution Accounts. The full amount credited to a Participant's 401(k)
Account, Rollover Account, Voluntary Account and Company Contribution Account,
if any, shall be one hundred percent (100%) vested and nonforfeitable at all
times.
10.2 Profit Sharing Accounts and Matching Accounts.
(a) The full amount credited to a Participant's Profit Sharing Account
and MATCHING Account shall be deemed fully vested and nonforfeitable when the
Participant attains his Normal Retirement Date, or when the Participant
terminates employment by reason of death or Total Disability. Any amounts
attributable to a Participant's Matching Contributions and Profit Sharing under
Article 5.2(b) for the Plan Year in which the Participant terminates employment
after his Normal Retirement Date or by reason of death or Total Disability shall
be fully vested at the time of such contribution.
(b) Amounts credited to a Participant's Profit Sharing Account and
Matching Account shall vest and be nonforfeitable in accordance with the
following schedule:
<TABLE>
<CAPTION>
Years of Service Percentage Vested
---------------- -----------------
<S> <C>
less than 1 0%
1 25%
2 50%
3 75%
4 100%
</TABLE>
(c) For the purposes of determining a Participant's Years of Service,
all of the Participant's Service with the Employer shall be taken into account,
except that in the case of a Participant who has five consecutive One Year
Breaks in Service, Years of Service thereafter shall not be taken into account
for purposes of determining the vested portion of a Participant's Profit Sharing
Account or Matching Account which accrued before such five consecutive One Year
Breaks in Service.
10.3 Forfeitures.
(a) In the event a Participant terminates employment when such
Participant is less than 100% vested in his Matching Account or Profit Sharing
Account, the portion of the Participant's Accounts that is not vested shall be
allocated to a suspense account as of the date on which the Participant
terminates employment. If a former Participant is not rehired before he or she
has 5 consecutive One Year Breaks in Service. the balance in the suspense
account shall be applied as follows:
(1) First, to reduce the Employer's Matching Contributions, if
any, for the matching periods during the Plan Year;
(2) Next, if amounts remain in such suspense account after the
application of paragraph (1) above, to reduce the Employer's Profit Sharing
Contributions, if any, for the Plan Year; and
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<PAGE> 30
(3) Next, if amounts remain in such suspense account after the
application of paragraphs (1) and (2) above, to reduce the Employer's Profit
Sharing Contributions, if any, for the Plan Year.
If any amounts remain in such suspense account as of the end of the Plan
Year after the application of paragraphs (1), (2), and (3) above, such amounts
shall be carried forward and applied in the next succeeding Plan Year in
accordance with this subsection (a). Any such amounts remaining upon Plan
termination shall be allocated among Participants as a Profit Sharing
Contribution.
(b) If a former Participant is reemployed before he has 5 consecutive
One Year Breaks in Service, an amount equal to the balance in the suspense
account (unadjusted for income or loss) shall be restored to the Participant's
Accounts, in accordance with the following rules:
(1) In the event a former Participant did not receive a
distribution of the vested portion of his Accounts, the balance in the suspense
account shall be credited to the Participant's Accounts as of his reemployment
date.
(2) In the event a former Participant received a distribution of
the vested portion of his Account(s), the balance in the suspense account shall
be maintained as a separate subaccount of the Participant's Account(s). The
vested amount of such separate subaccount shall be determined by applying the
following formula:
Vested amount = P(AB + (RxD)) - (RxD)
For purposes of applying the formula, P is the vested percentage in
accordance with this Article 10 at the date of determination; AB is the Account
balance at the date of determination; D is the amount of the distribution
previously made; and R is the ratio of the Account balance at the date of
determination to the Account balance immediately following the prior
distribution. The date of determination is any date on which the Participant's
vested amount in such separate subaccount is determined.
(c) If a former Participant is not rehired before he has 5 consecutive
One Year Breaks in Service, the balance in the suspense account shall be
forfeited permanently and applied as discussed in paragraph (a).
(d) Such amounts as may be required under this Article 10.3 to restore
any Participant's Accounts shall be restored first from the suspense account
established pursuant to subsection (a) above, and next, to the extent necessary,
from additional contributions of the Employer for such Plan Year.
(e) If the Plan is terminated, all rights to forfeiture restoration
shall lapse as to any former Participant who has not resumed employment before
such Plan termination unless (1) the Participant has elected pursuant to Article
12 to retain his vested interest in the Plan, and (2) the Participant has not
incurred 5 consecutive One Year Breaks in Service prior to termination.
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<PAGE> 31
ARTICLE 11
SERVICE
11.1 Year of Service. A Participant shall be credited for each Year of
Service determined in accordance with the provisions of Articles 11.2 and 11.3.
11.2 Service Definitions. The following words and phrases as used in
Articles 10 and 11 shall have the following meanings, unless a different meaning
is clearly required by the context:
(a) "Hours of Service" shall mean:
(1) Each hour for which an Employee is directly or indirectly
paid or entitled to payment by the Company or a Related Company for the
performance of duties during the applicable computation period. These hours
shall be credited to the Employee for the Plan Year or computation period in
which the duties are performed.
(2) Each hour for which an Employee is directly or indirectly
paid or entitled to payment by the Company or a Related Company on account of a
period of time during which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation, holiday, sickness,
incapacity (including disability), leaves of absence, layoff, jury duty, or
military service. Payments made or due under a plan maintained by the Company or
a Related Company solely for the purpose of complying with applicable worker's
compensation, unemployment compensation or disability insurance laws, or to
reimburse the Employee for medical or medically related expenses shall not be
considered as payments by the Company or Related Company for purposes of this
Article 11.2. Notwithstanding the foregoing, however, no more than 501 Hours of
Service shall be credited to an Employee on account of any single continuous
period in which the Employee performs no duties. The number of Hours of Service
for which no duties are performed and the computation period to which they
relate shall be determined in accordance with the Department of Labor
Regulations section 2530.200b-2(b) and (c) or similar superseding regulations.
(3) Each hour for which back pay, irrespective of mitigation of
damages, has been either awarded or agreed to by the Company or a Related
Company. The number of hours for which back pay is attributable shall be
determined in accordance with Department of Labor Regulations section
2530.200b-2(b). These hours shall be credited to the Employee for the Plan Year
or computation period in which the award, agreement, or payment pertains, rather
than the Plan Year or computation period in which the award, agreement, or
payment is made. No hours shall be credited under this subparagraph (3) if the
same hours have been credited under subparagraphs (I) or (2) above.
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<PAGE> 32
(4) Except as otherwise provided in this Article 11.2, for all
purposes of determining Hours of Service under the Plan, each Employee shall be
credited with actual Hours of Service.
(b) "One Year Break in Service" shall mean a Plan Year during which a
Participant is credited with 500 Hours of Service or less. For all purposes
hereunder, a One Year Break in Service shall be deemed to have occurred as of
the last day of the Plan Year in which such One Year Break in Service occurred.
If an Employee is absent from work for any period by reason of (A) pregnancy of
the Employee, (B) the birth of a child of the Employee, (C) the placement of a
child with the Employee, in connection with the adoption of such child by such
Employee, or (D) care provided for such child by the Employee for a period
beginning immediately following such birth or placement, the Employee shall not
be treated as having incurred a One Year Break in Service in the Plan Year in
which such absence begins. However, if the Employee would not otherwise have
suffered a One Year Break in Service during the Plan Year in which the absence
begins, the Employee shall not be treated as having incurred a One Year Break in
Service in the immediately following Plan Year. The Administrative Committee may
require, as a condition of receiving such maternity or paternity leave credit,
that such Employee furnish timely information to establish that the absence from
work is for reasons referred to above and to establish the number of days for
which there was such an absence.
(c) "Year of Service" shall mean a Plan Year during which an Employee
is credited with not less than 1,000 Hours of Service.
11.3 Notwithstanding any other provision in this Article 11, any Employee
who was employed by Tangent Systems Corporation ("Tangent") prior to the merger
of Tangent and the Company shall be credited with all service with Tangent prior
to the merger in accordance with Article 11.2.
11.4 Effective January 1, 1990, notwithstanding any other provisions in
this Article 11, any Employee who was employed by Gateway Design Automation
Corporation ("Gateway") prior to the merger of Gateway and the Company shall be
credited with all service with Gateway prior to the merger in accordance with
Article 11.2.
11.5 Effective July 1, 1992, notwithstanding any other provisions in this
Article 11, any Employee who was employed by Valid Logic Systems ("Valid") prior
to the merger of Valid and the Company shall be credited with all service with
Valid prior to the merger in accordance with Article 11.2.
11.6 Effective July 1, 1992, notwithstanding any other provisions in this
Article 11, any Plan participant who was employed by Valid prior to the merger
of Valid and the Company, which merger was effective December 31, 1991, shall
hold a vested account balance in the Plan no less than the balance held in the
Valid Logic Systems Savings and Retirement Plan at the time of the merger of the
two Plans.
11.7 Effective October 1, 1994, notwithstanding any other provisions in
this Article 11, any Employee who was employed by Redwood Design Automation,
Inc. ("Redwood") prior to the acquisition of Redwood as a
47
<PAGE> 33
wholly-owned subsidiary of the Employer will be credited with all service with
Redwood prior to the acquisition in accordance with Article 11.2.
11.8 Effective March 1, 1995, notwithstanding any other provisions in this
Article 11. any Employee who was employed by the Rancho Bernardo division of
Unisys ("Unisys") prior to the purchase of assets of Unisys will be credited
with all service with Unisys prior to the purchase in accordance with Article
11.2.
11.9 Effective September 1, 1994, notwithstanding any other provisions in
this Article 11, any Employee who was employed by Comdisco Systems, Inc.
("Comdisco") prior to the purchase of assets of Comdisco will be credited with
all service with Comdisco prior to the purchase in accordance with Article 11.2.
ARTICLE 12
DISTRIBUTION OF BENEFITS UPON TERMINATION
12.1 Methods of Payment of Distributions.
(a) When a Participant terminates employment, the balance in the
Participant's Accounts shall be distributed in one of the following methods, as
selected by the Participant:
(1) In cash in a single distribution of the entire balance then
standing in the Participant's Accounts; or
(2) Payments in installments as nearly equal as possible over a
period of 5, 10 or 15 years, but in no event over a period exceeding the
Participant's life expectancy or the joint life expectancy of the Participant
and his or her designated Beneficiary. In no event shall the present value of
any installment payments to be paid to the Participant be less than fifty
percent (50%) of the present value of the payments to be made to the Participant
and his Beneficiaries.
(3) Effective January 1, 1990, with respect only to Participants
who were participants in the Gateway Design Automation Corporation 401(k) Plan
which was merged into this Plan, in an annuity form of benefit. If a Participant
elects such annuity form of benefit pursuant to this subparagraph, his
distribution shall be made pursuant to Article 12.6. The annuity form of benefit
shall not be available if the value of the Participant's vested Accounts is not
in excess of $3,500 (and at the time of any prior distribution had not exceeded
$3,500).
If the Participant does not select a method of payment pursuant to this
Article 12.1, payment shall be made in one lump sum.
If a Participant has elected to receive benefit payments in installments,
such Participant may thereafter elect to receive the remaining balance of his
Accounts in a single distribution.
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<PAGE> 34
(b) If distribution of a Participant's benefit commences and the
Participant dies before his entire benefit has been distributed to him, the
remaining portion of his benefit shall be distributed in accordance with the
distribution method being utilized on the date of his death. If a Participant
dies before benefit payments commence, then the Employer shall distribute such
Participant's Accounts to the Participant's Beneficiary in cash in a single lump
sum as soon as is administratively feasible, provided such distribution shall be
made within five (5) years after the date of death of such Participant.
Notwithstanding the foregoing, however, if the Participant has in effect a
distribution election providing for payment of benefits to a Beneficiary in
installments not exceeding the life expectancy of the Beneficiary, and further
providing that distributions are to commence not later than one (1) year after
the date of the Participant's death, the benefits shall be distributed as
provided in such election.
12.2 Amounts Available for Distribution. The value of the Participant's
Accounts shall be determined based on the Valuation Date coincident with or next
following the Participant's termination of employment.
12.3 Timing of Payment of Distributions.
(a) Distribution of the balance then standing in the Participant's
Accounts shall be made or commenced as soon as administratively feasible after
the value of such Participant's Accounts is determined pursuant to Article 12.2,
except that if the value of the Participant's Account exceeds $3,500 (or at the
time of any prior distribution exceeded $3,500) no distribution shall be made
prior to the Participant's Normal Retirement Date without the prior written
consent of the Participant and, when applicable, the Participant's spouse.
(b) Notwithstanding any other provision of the Plan, distribution of
the vested amount credited to a Participant's Account shall be made or commenced
no later than the 60th day after the close of the Plan Year in which the latest
of the following events occur:
(1) The Participant's Normal Retirement Date;
(2) The 10th anniversary of Participant's commencement of
participation in the plan; or
(3) The Participant's termination of employment with the Company.
(c) Notwithstanding any other provision herein to the contrary,
benefit payments shall begin by the April 1 immediately following the end of the
calendar year in which the Participant attains age 70-1/2 years, whether or not
he or she is an Employee. Any distribution made or commenced under this Section
12.3(c) shall, beginning with the year in which the Participant attains age
70-1/2, be not less than the quotient obtained by dividing (1) the Participant's
vested Account balance as of the last Valuation Date of the preceding year by
(2) the applicable divisor as determined under the incidental benefit
requirement of Code section 401(a)(9).
(d) The Participant's payment election must be consistent with the
requirement of Code section 401(a)(9) that all payments are to be completed
within a period not to exceed the lives or the joint and last survivor life
expectancy of the Participant and his or her Beneficiary. The life expectancies
of a Participant and his or her
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<PAGE> 35
Beneficiary may not be recomputed manually.
(e) Payment to a Beneficiary must either:
(1) be completed by the end of the calendar year that contains
the fifth anniversary of the Participant's death or
(2) begin by the end of the calendar year that contains the first
anniversary of the Participant's death and be completed within the period of the
Beneficiary's life or life expectancy, except that:
(i) If the Participant dies after the April 1 immediately
following the end of the calendar year in which he or she attains age 70-1/2,
payment to his or her beneficiary must be made at least as rapidly as provided
in the Participant's distribution election:
(ii) If the surviving spouse is the Beneficiary, payments
need not begin until the end of the calendar year in which the Participant would
have attained age 70-1/2 and must be completed within the spouse's life or life
expectancy; and
(iii) If the Participant and the surviving spouse who is the
Beneficiary die (A) before the April 1 immediately following the end of the
calendar year in which the Participant would have attained age 70-1/2 and (B)
before payments have begun to the spouse, the spouse shall be treated as the
Participant in applying these rules.
(f) If the amount of a required distribution cannot be ascertained by
the date the distribution is to be made, or it is not possible to make such
distribution because the Committee has been unable to locate the Participant
after making reasonable efforts to do so, a distribution retroactive to the
required commencement date may be made no later than 60 days after the earliest
date on which the amount of such distribution can be ascertained under the Plan
or the date on which the Participant is located, whichever is applicable.
12.4 Deferred Distributions. When the distribution to a terminated
Participant is deferred because such terminated Participant does not consent to
an early distribution as required by Article 12.3, then such terminated
Participant's Accounts shall be invested in accordance with the Participant's
investment option under the Plan. Except as provided in Article 13.1, no
terminated Participant shall be eligible for a loan pursuant to Article 13 or a
financial hardship withdrawal in accordance with Article 14.1.
12.5 No Liability. Any payment to a Participant, or to his legal
representative or Beneficiary, in accordance with the provisions of the Plan,
shall be in full satisfaction of all claims hereunder against the Trustee, the
Committee and the Employer, any of whom may require such Participant, legal
representative or Beneficiary as a condition precedent to such payment to
execute a receipt therefor in such form as shall be determined by the Trustee,
the Committee or the Employer, as the case may be. The Employer does not
guarantee the Trust, the Participants, or their legal representatives or
Beneficiaries against loss of or depreciation in value of any right or benefit
that any of them may
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<PAGE> 36
acquire under the terms of this Plan. All of the benefits payable hereunder
shall be paid or provided for solely from the Trust, and the Employer assumes no
liability or responsibility therefor.
12.6 Payment of Benefit in the Form of Annuities. Effective January 1,
1990, if a Participant elects an annuity form of benefit pursuant to Article
12.1 (a)(3), the benefits provided by the Plan shall be distributed as follows:
(a) (1) Married Participants. The benefits under the Plan for a
Participant who is married on the date the benefit payments commence, shall be
in the form of a qualified joint and survivor annuity, payable in equal monthly
installments, commencing on the Participant's Normal Retirement Date, or such
earlier date as the Participant may elect which is after such Participants'
termination of employment, for the life of the Participant with a survivor
annuity for the life of the spouse which is fifty percent (50%) of the amount of
the annuity payable during the joint lives of the Participant and the
Participant's spouse. This qualified joint and survivor annuity shall be the
Actuarial Equivalent of the value of the Participant's vested Accounts
determined as of the Valuation Date coinciding with or next following the
Participant's termination of employment. For purposes of this Section 12.6, any
marriage requirement for the Participant and his or her spouse is limited to the
one-year period ending on the date the benefit payments commence. The Plan will
treat a Participant and his or her spouse who are married on the date benefit
payments commence as having been married during the one-year period ending on
that date provided they remain married for one year. Notwithstanding, if the
Participant and his or her spouse do not remain married for one year, the spouse
loses any survivor benefit rights and any amount paid to the Participant will
not be retroactively corrected. For purposes of this Section 12.6, "Actuarial
Equivalent" shall mean a payment or series of payments mathematically equivalent
to another amount based on consistently applied reasonable actuarial assumptions
selected by the Employer, if such assumptions do not result in discrimination in
favor of Employees who are Highly Compensated Employees.
(2) Unmarried Participants. If a Participant has not been married
for at least one year on the date benefit payments commence, and does not have a
former spouse or spouses who is/are entitled to survivor annuity benefits under
a qualified domestic relations order as provided in Article 22.4 the benefits
under the Plan for such Participant shall be in the form of a life annuity,
payable in equal monthly installments, commencing on the Participants' Normal
Retirement Date, or such earlier date after termination of employment as the
Participant may elect, for the life of the Participant. This life annuity shall
be the Actuarial Equivalent of the value of the Participants' vested Accounts
determined as of the Valuation Date coinciding with or next following the
Participants' termination of employment. Any Participant who has elected an
annuity form of benefit, may at any time prior to the annuity starting date,
revoke such election and elect to have benefits paid in one of the options set
forth in Article 12.1(a), subject, however, to the provisions of Article
12.6(c).
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(b) Death Benefits. Upon the death of a Participant who has elected an
annuity form of benefit pursuant to Article 12.1(a)(1), his or her Beneficiary
shall be entitled to receive a death benefit determined as follows:
(1) The death benefits, if any, payable upon the death of any
Participant who is receiving (or has received) retirement benefits under the
Plan will depend upon whether the particular form of annuity which such
Participant is receiving (e.g., life annuity or joint and survivor annuity)
provides for any survivor or other death benefits and shall be paid in
accordance with the form of benefit which such Participant had been receiving.
(2) If a Participant who has not begun to receive payments under
the Plan either dies while in active service of the Employer, or separates from
service with vested benefits and thereafter dies before the annuity starting
date, the surviving spouse, if any, and the Beneficiary of the Participant shall
be entitled to a death benefit determined as follows:
(A) If the Participant has been married for at least one (1)
year at the time of his death, the Participant's surviving spouse shall be
entitled to a qualified preretirement survivor annuity for the life of such
surviving spouse which annuity shall be the Actuarial Equivalent of the amount
equal to the value of fifty percent (50%) of the deceased Participant's vested
Accounts as of the date of such Participant's death. Notwithstanding the
foregoing however, the surviving spouse of a deceased Participant may elect, in
lieu of receiving the qualified preretirement survivor annuity, to have fifty
percent (50%) of the Participant's vested Accounts paid in one of the options as
set forth in Article 12.1 (a). Any such election shall comply with the
requirements of Article 12.6(c).
(B) A death benefit will be paid to the Participant's
Beneficiary in an amount equal to the Participant's vested benefits at the time
of the Participant's death reduced by any amount payable to a surviving spouse
pursuant to Article 12.6(b)(2)(A), above. The Beneficiary may elect, with
respect to any death benefit paid pursuant to this provision, that the benefit
be paid in one of the options as set forth in Article 12.1 (a).
(c) Revocation of Election. A Participant who has elected an annuity
form of benefit and the spouse or former spouse of a deceased Participant who is
entitled to a qualified preretirement survivor annuity, may elect to have
benefits paid in one of the options set forth in Article 12.1(a), subject to the
provisions of this Article 12.6(c).
(1) The election to waive the qualified joint and survivor
annuity must be made within the 90-day period ending on the annuity starting
date.
(2) The election by the Participant to waive the qualified
preretirement survivor annuity may be made or revoked at any time after the
first day of the Plan Year in which
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the Participant attains age 35 years, but it shall become irrevocable on the
Participant's death.
(3) The election by the Participant's spouse to waive the
qualified preretirement survivor annuity may be made any time prior to the
annuity starting date.
(4) Any waiver of a qualified joint and survivor annuity or a
qualified preretirement survivor annuity shall not be effective unless: (i) the
Participant's spouse consents in writing to the waiver; (ii) the election
designates a specific beneficiary, including any class of beneficiaries or any
contingent beneficiaries, which may not be changed without spousal consent (or
the spouse expressly permits designations by the Participant without any further
spousal consent); (iii) the spouse's consent acknowledges the effect of the
election; and (iv) the spouse's consent is witnessed by a representative of the
Plan or a notary public. Additionally, a Participant's waiver of a qualified
joint and survivor annuity shall not be effective unless the election designates
a form of benefit which may not be changed without spousal consent (or the
spouse expressly permits designations by the Participant without any further
spousal consent). The spousal consent requirement may be waived by the Committee
if there is no spouse or the spouse cannot be located, or for such other reasons
authorized in applicable Treasury Regulations.
(5) Any consent by a spouse obtained under Article 12.6(c)(4) (or
establishment that the consent of a spouse may not be obtained) shall be
effective only with respect to such spouse. A consent that permits designations
by the Participant without any requirement of further consent by such spouse
must acknowledge that the spouse has the right to limit consent to a specific
beneficiary, and a specific form of benefit where applicable, and that the
spouse voluntarily elects to relinquish either or both of such rights.
(6) The Committee shall furnish each Participant with an
explanation of the Plan's qualified joint and survivor annuity provisions, the
Participant's rights to waive such qualified joint and survivor annuity, the
effect of such waiver, a general description of the eligibility conditions and
other material features of the optional forms of benefit and sufficient
additional information to explain the relative values of the optional forms of
benefit available under the Plan, the right of a Participant's spouse to consent
to such waiver, and the right to make, and the effect of a revocation of waiver.
This explanation shall be furnished no less than 30 days and no more than 90
days prior to the annuity starting date and in the manner required under
applicable Treasury Regulations.
(7) The Committee shall furnish each Participant with an
explanation of the qualified preretirement survivor annuity, the Participant's
right to waive such qualified preretirement survivor annuity, the requirement
that the Participant's spouse consent to any such waiver, and the right to make,
and the effect of, a revocation of such waiver. This explanation shall be
furnished to the Participant within the applicable period with respect to a
Participant, whichever of the following periods ends last: (i) the period
beginning on the first day of the Plan Year in which the Participant attains age
32 years and ending on the last day of the Plan Year preceding the Plan Year in
which the Participant attains age 35 years, (ii) a reasonable period after
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the individual becomes a Participant, (iii) a reasonable period ending after the
qualified preretirement survivor annuity is no longer fully subsidized, (iv) a
reasonable period ending after section 401(a)(11) of the Code first applies to
the Participant, and (v) a reasonable period after separation from service in
case of a Participant who separates before attaining age 35. For purposes of
applying (ii), (iii) and (iv), a reasonable period is the one-year period ending
after the date the applicable event occurs and the applicable period of such
events begins one year prior to the occurrence of the enumerated events. For
purposes of applying (v), the applicable period means the period beginning one
year before the separation from service and ending one year after such
separation.
(d) Provision of Annuity Benefits Through Commercial Annuity. The Plan
may provide the annuity and qualified preretirement survivor annuity benefits
provided under this Article 12.6 through the purchase of an annuity contract
which provides such benefits and which is owned by the Plan or distributed to
the Participant, provided that such contract shall provide for the notice,
election and consent provisions applicable to such benefits which are set forth
in this Article 12.6 and Sections 401(a)(11) and 417 of the Code.
12.7 Direct Rollover of Eligible Rollover Distributions.
A. This section 12.7 applies to distributions made on or after January
1, 1993. Notwithstanding any provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this section 12.7, a Distributee
may elect, at the time and in the manner prescribed by the Administrator, to
have any portion of an Eligible Rollover Distribution paid directly to an
Eligible Retirement Plan specified by the Distributee in a Direct Rollover.
B. Definitions.
(1) Eligible Rollover Distribution. An Eligible Rollover
Distribution is any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include: any distribution that is one of a series of substantially equal
periodic payments (not less frequently than annually) made for the life (or life
expectancy) of the Distributee or the joint lives (or joint life expectancies)
of the Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent such
distribution is required under section 401(a)(9) of the Code; and the portion of
any distribution that is not includable in gross income (determined without
regard to the exclusion for net unrealized appreciation with respect to employer
securities).
(2) Eligible Retirement Plan. An Eligible Retirement Plan is an
individual retirement account described in section 408(a) of the Code, an
individual retirement annuity described in section 408(b) of the Code, an
annuity plan described in section 403(a) of the Code, or a qualified trust
described in section 401(a) of the Code, that accepts the Distributors Eligible
Rollover Distribution. However, in the case of an Eligible Rollover Distribution
to the surviving spouse, an Eligible Retirement Plan is an individual retirement
account or retirement annuity.
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(3) Distributed A Distributee includes an Employee or former
Employee. In addition, the Employee's or former Employee's surviving spouse and
the Employee's or former Employee's spouse or former spouse who is the alternate
payee under a qualified domestic relations order, as defined in section 414(p)
of the Code, are Distributees with regard to the interest of the spouse or
former spouse.
(4) Direct Rollover. A Direct Rollover is a payment by the Plan
to the Eligible Retirement Plan specified by the Distributee.
12.8 Waiver of 30-day Notice Requirement. This section 12.8 applies to
distributions made on and after January 1, 1994. Except for section 12.3 of the
Plan, notwithstanding any other provision of the Plan to the contrary that would
otherwise limit a Distributee's election under this section 12.8 A Distributee
may elect to waive the 30 day notice period with respect to any distribution
from the Plan to which sections 401(a)(11) and 417 of the Code do not apply and
such distribution may commence less than 30 days after the notice required under
Regulation 1.411(a)-11(c) is given, provided that:
A. The Administrator clearly informs the Participant that the
Participant has a right to a period of at least 30 days after receiving the
notice to consider the decision of whether to elect a distribution (and, if
applicable, a particular distribution option), and
B. The Participant, after receiving the notice, affirmatively elects a
distribution.
ARTICLE 13
LOANS
13.1 Requirements. Effective as of October 19, 1989, and upon written
application, the Committee may direct the Trustee to make a loan or loans to a
Participant or a former Participant or beneficiary who is a "party in interest"
within the meaning of Section 3(14) of ERISA and who has not received the entire
amount of his or her vested benefit, in accordance with the following rules:
(a) The principal amount of a loan shall not exceed the lesser of
either paragraph (1) or (2) below:
(1) $50,000, reduced by the Participant's highest outstanding
loan balance during the one (1) year period ending on the day before the day on
which the current loan is made. For purposes of determining the Participant's
highest outstanding loan balance, all loans made to the Participant from the
Plan and any other qualified plan maintained by the Company or a Related Company
shall be aggregated.
(2) 50% of the Participant's vested interest in his Accounts,
reduced in either case by the current outstanding balance of all other loans to
the Participant from the Plan and any other qualified plan maintained by the
Company or a Related Company.
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(b) Loans shall be made available to all Participants on a reasonably
equivalent basis.
(c) Loans must be secured by the Participant's vested interest in his
Accounts.
(d) Loans must be evidenced by the borrowing Participant's promissory
note for a fixed term not to exceed five (5) years unless the proceeds of the
loan are used to acquire any dwelling unit which within a reasonable time is to
be used (determined at the time the loan is made) as a principal residence of
the Participant, in which case such loan must be required to be repaid within
ten (10) years (thirty (30) years for principal residence loans made prior to
June 1, 1990). Loans for the acquisition of the Participant's principal
residence are referred to herein as Residence Loans and all other loans are to
be referred to as General Loans.
(e) A loan shall bear a reasonable rate of interest and require
regular, periodic repayment through substantially level amortization and
payments not less frequently than quarterly over the life of the loan.
(f) A loan shall not be made if such loan would constitute a
prohibited transaction under the applicable sections of ERISA and the Code, and
the regulations promulgated thereunder.
(g) Effective September 1, 1991, a Participant may not have more than
two loans outstanding from the Plan at any time.
(h) Loans shall be for the minimum amount of Five Hundred Dollars
($500.00).
(i) Loans may be prepaid in full without penalty. No partial payment
is permitted.
(j) Repayment of all loans shall be through payroll deduction, unless
the Participant is on an unpaid leave of absence or on disability leave or has
terminated employment with the Employer, in which case repayment of the loan may
be made by personal check. A Participant may not terminate his payroll deduction
authorization. All loans made on or after June 15, 1995 shall be due and payable
in full upon termination of employment. Loans prior to June 15, 1995 may
continue to be repaid in accordance with the terms of such loans.
(k) Loans may be immediately due and payable, in the sole discretion
of the Committee, if the Participant fails to make any installment payment when
due.
(l) In the event of default by a Participant, such Participant's
Accounts may be offset by the outstanding loan balance at the time the
Participant becomes entitled to a distribution from the Plan.
(m) Loans shall not be made available to Highly Compensated Employees
in an amount greater than the amount made available to other Employees.
(n) Loans must be made in accordance with such other guidelines and
policies as shall be adopted from time to time by the Committee which, upon
adoption, shall constitute part of the Plan and which shall include such
provisions as may be required by final regulations promulgated by the Department
of Labor.
13.2 Source of Funds. Application of Payments. The principal borrowed by
the Participant shall be funded first from the Participant's Voluntary Account,
then from the Participant's Rollover Account, then from the Participant's
Company Contribution Account, then from the Participant's Profit Sharing
Account, then from the
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Participant's Matching Account, and then from the Participant's 401 (k) Account.
No loans may be funded from a Participant's Profit Sharing Account or Matching
Account, unless the total amounts credited to such Accounts are one hundred
percent (100%) vested. Such loan shall be withdrawn pro rata from the investment
funds in which the Participant has invested his Accounts, and all interest and
principal payments on such loans shall be deposited in the investment funds in
which the Participant is investing his or her 401(k) in effect at the time of
such deposit, or in such other investment fund as the Committee may specify from
time to time. All outstanding loans shall be considered a directed investment of
the Participant and any interest shall be credited only to the Participant's
Account.
ARTICLE 14
IN-SERVICE WITHDRAWALS BY PARTICIPANTS
14.1 Withdrawals for Financial Hardship.
(a) Upon written consent of the Committee, a Participant may withdraw
an amount up to one hundred percent (100%) of the vested account balance
credited to his Accounts (as of the last Valuation Date for which valuation is
available at the time of such financial hardship withdrawal, less subsequent
distributions and outstanding loans) as may be required to meet urgent and heavy
financial needs of the Participant, provided that the entire amount requested by
the Participant is not reasonably available from other resources of the
Participant. Notwithstanding the foregoing:
(i) No earnings credited to the Participant's 401(k) Account
after December 31, 1988, may be withdrawn; and
(ii) No terminated Participant shall be eligible for a financial
hardship withdrawal.
(b) A financial hardship distribution will be made only for one of the
following reasons:
(i) Expenses for medical care described in section 213(d) of the
Code previously incurred by the Participant, the Participant's spouse, or
dependents of the Participant (as defined in section 152 of the Code) or
necessary for such persons to obtain medical care described in section 213(d) of
the Code;
(ii) Costs directly related to the purchase (excluding mortgage
payments) of a principal residence for the Participant;
(iii) Payment of tuition and related educational fees for the
next twelve (12) months of post-secondary education of the Participant, his
spouse, children or dependents (as defined in section 152 of the Code);
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(iv) Payments necessary to prevent the Participant's eviction
from his principal residence or foreclosure on mortgage of the Participant's
principal residence; or
(v) Such other reason as the Secretary of the Treasury may
prescribe.
(c) The amount of the withdrawal must not exceed the amount required
to relieve the financial need created by the hardship (including any amounts
necessary to pay any income taxes or penalties reasonably anticipated to result
from the withdrawal) after taking into account other resources that are
reasonably available to the Participant for this purpose.
(d) Amounts attributable to Matching Contributions and qualified
non-elective contributions that are used pursuant to Section 3.7(c)(4) of the
Plan to determine the Participant's Deferral Percentage for any Plan Year may
not be withdrawn on account of financial hardship.
(e) No earnings credited to a Participant's 401(k) Account after
December 31, 1988, may be withdrawn.
(f) If the Plan permits an annuity form of benefit subject to section
12.1(a)(3), the Participant must waive the option of receiving the portion of
his vested benefits being distributed as an in-service withdrawal in the form of
an annuity and his or her spouse (if applicable) must consent to the waiver and
the election to receive the in-service withdrawal in the form of a lump sum
payment.
(g) The Participant must certify that the financial need cannot be
relieved:
(i) Through reimbursement or compensation by insurance or
otherwise;
(ii) By reasonable liquidation of the Participant's assets, to
the extent such liquidation would not itself cause an immediate and heavy
financial need;
(iii) By discontinuing the Participant's 401(k) Contributions to
the Plan; or
(iv) By other distributions or non-taxable (at the time of the
loan) loans from plans maintained by the Employer or any other Employer, or by
borrowing from commercial sources on reasonable commercial terms.
(h) Financial hardship withdrawals shall first be made from a
Participant's Voluntary Account, then from the Participant's Rollover Account,
then from the Participant's Company Contribution Account, then from the
Participant's Profit Sharing Account, then from the Participant's Matching
Account, and then from the Participant's 401(k) Account. No financial hardship
withdrawals may be made from a Participant's Profit Sharing Account or Matching
Account, unless the total amounts credited to such Accounts are one hundred
percent (100%) vested. The amount of the financial hardship withdrawal shall be
withdrawn pro rata from the investment funds in which the Participant has
invested his Accounts as directed by the Participant.
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14.2 Withdrawal After Age 59-1/2. After attaining age 59-1/2 years, a
Participant may withdraw such amount, up to the vested account balance credited
to his Accounts, as the Participant may request. No Participant shall be
permitted to make more than one withdrawal in any Plan Year pursuant to this
Article 14.2.
ARTICLE 15
BENEFICIARIES
15.1 Beneficiary Designation. Subject to the provisions of Articles 15.1
and 15.3, each Participant shall have the right to designate on forms provided
by the Employer a Beneficiary or Beneficiaries to receive the benefits herein
provided in the event of his death, and shall have the right at any time to
revoke such designation or to substitute another such Beneficiary or
Beneficiaries. If a Participant has been married at the date of his death and
has designated a Beneficiary or Beneficiaries other than the Participant's
spouse to receive any portion of the benefits herein provided in the event of
his death, such designation shall be invalid unless and until (a) the
Participant's spouse consents in writing to such designation, (b) such consent
acknowledges the effect of such designation, and (c) such consent is witnessed
by a Notary Public or a Plan representative. Once such consent is given, it may
not be revoked and the Participant may not change his beneficiary designation
(except to name his spouse as the sole Beneficiary) without a new consent by the
Participant's spouse, which new consent must also meet the above requirements.
15.2 Absence of Valid Designation. If, upon the death of a Participant,
former Participant or Beneficiary, there is no valid designation of Beneficiary
on file with the Employer, the Committee shall designate as the Beneficiary, in
order of priority: (a) The surviving spouse; (b) Surviving children, including
adopted children; (c) Surviving parents; or (d) The Participant's estate;
provided, however, that at all times the Committee shall have the right to
designate as Beneficiary the Participant's estate irrespective of said order of
priority. The determination of the Committee as to which persons, if any,
qualify within the aforementioned categories shall be final and conclusive upon
all persons.
15.3 Surviving Spouse Beneficiary. Notwithstanding any other provision in
the Plan, if a Participant or former Participant dies leaving a surviving
spouse, and if such spouse had been married to the Participant throughout the
three-month period ending on the date of the Participant's death, such surviving
spouse shall be the Beneficiary for all purposes under the Plan unless the
Participant previously designated another or an additional Beneficiary, and such
surviving spouse consented to such designation in accordance with the provisions
of Article 15.1, above.
ARTICLE 16
DESIGNATION OF NAMED FIDUCIARY
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16.1 Plan Administrator. An administrative committee (the "Committee")
which is appointed by, and hold office at the pleasure of the Board, is the
named fiduciary and administrator of the Plan as provided for by ERISA and shall
have the authority to manage and control the operation and administration of the
Plan and to control and manage the Plan assets. The Committee shall have the
authority to interpret the provisions of the Plan in its sole discretion and the
Committee's interpretations shall be binding upon all persons having an interest
in the Plan. The Committee shall consist of not fewer than four (4) persons,
with the specific number to be as specified by the Board from time to time.
16.2 Powers of Plan Administrator. The Committee shall have complete
control of the administration of the Plan herein set forth with all powers
necessary to enable it properly to carry out its duties in that respect. Not in
limitation, but in amplification of the foregoing, the Committee shall have the
power to construe the Plan and to determine all questions that shall arise
hereunder, including determination of eligibility of Employees, amounts of
credits, allocation of assets, method of payment, whether distributions from the
Trust shall be made in cash or in kind and the assets to be distributed, and
participation and benefits under the terms of this Plan. The Committee shall
also establish reasonable rules and procedures which shall be applied in a
uniform and nondiscriminatory manner for enrollment in the Plan and to changes
by Participants on their rules of contribution and investment options. The
Committee shall establish the rules and procedures by which the Committee will
operate. Decisions of the Committee made in good faith upon any matter within
the scope of its authority shall be final, conclusive and binding upon all
persons, including Participants and their legal representatives or
Beneficiaries; but the Committee shall at all times, in giving effect to its
decisions, act without discrimination in favor of or against any Participant,
legal representative or Beneficiary.
16.3 Investment Managers. The Committee may appoint one or more Investment
Managers to direct the investment and management of all or part of the assets of
the Trust. Each Investment Manager shall have the power to manage, acquire. and
dispose of the part of the assets of the Trust designated by the Committee. The
Committee may revoke the appointment of any Investment Manager by giving written
notice to such Investment Manager.
16.4 Other Agents. The Committee may employ such persons or organizations
to render service or perform services with respect to the responsibilities of
the Committee under the Plan as the Committee determines to be necessary and
appropriate. Such persons or organizations may include, without limitation,
actuaries, attorneys, accountants and benefit, financial and administrative
consultants.
16.5 Fiduciaries. Any person or group of persons may serve in more than one
fiduciary capacity with respect to the Plan.
16.6 Indemnification. The Company shall indemnify and hold harmless the
members of the Board, the Committee and any other Employees to whom any
fiduciary responsibility with respect to the Plan is allocated or
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delegated, from and against any and all liabilities, costs and expenses,
including attorneys' fees, incurred by such persons as a result of any act, or
omission to act, in connection with the performance of their duties,
responsibilities and obligations under the Plan and under ERISA, other than such
liabilities, costs and expenses as may result from the bad faith or criminal
acts of such persons or to the extent such indemnification is specifically
prohibited by ERISA. The Company shall have the obligation to conduct the
defense of such persons in any proceeding to which this Article 16.6 applies. If
any member of the Board, the Committee or any Employee covered by this
indemnification clause of this Article 16.6 determines that the defense of the
Company is inadequate, that member shall be entitled to retain separate legal
counsel for his or her defense and the Company shall be obligated to pay for all
reasonable legal fees and other court costs incurred in the course of such
defense unless a court of competent jurisdiction finds such person has acted in
bad faith or engaged in criminal acts. The Company may satisfy its obligation
under this Article 16.6 in whole or in part, through the purchase of a policy or
policies of insurance, but no insurer shall have any rights against the Company
arising out of this Article 16.6.
16.7 Costs. Effective April 1, 1994, all quarterly fees associated with the
administration of the Plan and the Trust may be borne by the Plan itself, except
the following:
(a) Any new loan set-up fee, loan prepayment fee or special loan
processing fee that is charged to the Plan in association with processing a
loan. These fees will be charged to the individual Participant for which this
service is being performed; and
(b) A maintenance fee of $100 shall be charged to any former
Participants having an Account under the Plan on the July 1 following the
anniversary of the Participant's termination.
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ARTICLE 17
TRUST FUND AND TRUSTEE
Contributions made by the Employer and all other assets of the Plan shall
be held in Trust in accordance with the provisions of the Trust Agreement. All
benefits payable under the Plan shall be paid as provided for solely from the
Trust, and the Employer assumes no liability or responsibility therefor.
ARTICLE 18
AMENDMENT AND TERMINATION
18.1 Amendment. The Employer reserves the right at any time or times to
amend the Plan by action of the Board to any extent and in any manner that the
Employer may deem advisable. Upon adoption of the resolution of the Board, the
Plan and Trust Agreement shall be deemed to have been amended in the manner set
forth therein, and the Employer, the Trustee, and all Participants, their
Beneficiaries and all other persons having any interest hereunder shall be bound
thereby. By action of the Board, the Employer may delegate to the Committee the
right to amend the Plan in such respects as the Employer shall deem advisable.
The Employer or Committee shall notify the Trustee of any such amendment to the
Plan. Such power includes the right, without limitation, to make retroactive
amendments referred to in section 401(b) of the Code (as amended by section 1023
of ERISA). However, except as provided in Article 18.3, no amendment:
(a) Shall cause or permit any part of the principal or income of the
Trust to revert to the Employer or to be used for, or to be diverted to, any
purpose other than the exclusive benefit of Participants and their
Beneficiaries, except that
(i) A 401(k) Contribution, made by the Employer by a mistake of
fact, shall be returned to the Employer within one year after the payment of
such contribution to the extent permitted by section 403(c) of ERISA. A 401(k)
Contribution, or a portion thereof, returned to the Employer pursuant to this
Article 18.1 (a)(i) shall be returned to the Employee from whose Compensation
the amount was withheld, as soon as administratively feasible, but in no event
later than thirty (30) days after the return of such contribution to the
Employer.
(ii) If an Employer contribution is conditioned upon the
deductibility of the contribution under Section 404 of the Code or any successor
provision thereto, then to the extent such contribution is disallowed, this
paragraph shall not prohibit the return to the Employer of such contribution (to
the extent disallowed) within one (1) year after such disallowance of the
deduction. A 401(k) Contribution, or a portion thereof, returned to the Employer
pursuant to this Article 18.1(a)(ii) shall be returned to the Employee from
whose
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Compensation the amount was withheld, as soon as administratively feasible, but
in no event later than thirty (30) days after the return of such contribution to
the Employer.
(b) Shall change the duties or liabilities of the Trustee, or an
Investment Manager appointed pursuant to Article 16.3 of the Plan, without its
written assent to such amendment.
(c) Shall retroactively reduce the benefits of any Participant or his
Beneficiary accrued under the Plan by reason of contributions made by the
Employer prior to the amendment except to the extent that such reduction is
permitted by ERISA.
18.2 Termination. The Employer has established the Plan with the bona fide
intention and expectation that the Plan will continue indefinitely and that it
will be able to make its contributions indefinitely, but the Employer shall be
under no obligation to continue its contributions or to maintain the Plan for
any given length of time and may, in its sole and absolute discretion,
discontinue its contributions or terminate the Plan in whole or in part at any
time without any liability whatsoever. Notwithstanding any other provisions of
the Plan, in the event of the complete or partial termination of the Plan or
complete discontinuance of further contributions hereunder, the full value of
the Accounts of all Participants shall become fully vested and nonforfeitable.
18.3 Employer Contributions Contingent. Notwithstanding any other provision
of the Plan or Trust to the contrary, it is specifically understood that the
Employer's obligation to make contributions hereunder are conditioned upon the
Employer receiving an initial notification from the United States Treasury
Department, Internal Revenue Service that this Plan is considered as being a
qualified plan under section 401(a) of the Code and that this Trust is
considered exempt from taxation under section 501(a) of the Code. If such
initial notification is not received, the Employer shall, at the Employer's
request, be entitled to recover from the Trustee the full amount of the then
value of such respective contributions. Prior to receipt of such notification,
no Participant hereunder or his legal representative or Beneficiary shall have
any vested interest in or be entitled to any benefit payments based on Employer
contributions made hereunder; provided, however, that upon receipt of such
notification, such vested interests or entitlements shall be retroactive to the
date of their occurrence in accordance with the other provisions of this Plan,
and this Article 18.3 shall be of no further force or effect.
ARTICLE 19
ASSIGNMENTS
The interest herein, whether vested or not, of any Participant, or
Beneficiary, shall not be subject to alienation, assignment, encumbrance,
attachment, garnishment, execution, sequestration or other legal or equitable
process, or transferability by operation of law in event of bankruptcy,
insolvency or otherwise, except security interests taken in a Participant's
Account(s) for loans made to Participants pursuant to Article 13 of the Plan and
qualified domestic relations orders as determined pursuant to Article 22.4
hereof.
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ARTICLE 20
CLAIMS PROCEDURE
20.1 General Procedure. The Plan shall pay benefits to a Participant or the
Participant's Beneficiary in accordance with the Participant's election, as
provided in Article 12.1. If the Participant or Beneficiary believes that his
benefits have been incorrectly determined, he may make a written application for
benefits requesting a review of the determination previously made by the
Committee.
All such applications for review shall be submitted to the Committee at the
offices of the Employer currently located at 555 River Oaks Parkway, San Jose,
CA 95134 in writing on the forms prescribed by the Committee and must be signed
by the Participant, or in the case of a death benefit, by the Beneficiary or
legal representative of the deceased Participant. Each application shall be
acted upon and approved or disapproved within ninety (90) days following its
receipt by the Committee. In the event any application for benefits is denied,
in whole or in part, the Committee shall notify the applicant in writing of such
denial and of his right to a review by the Employer. Said denial shall set forth
in a manner calculated to be understood by the applicant specific reasons for
such denial, specific references to pertinent Plan provisions on which the
denial is based, a description of any additional material or information
necessary for the applicant to perfect his application, an explanation of why
such material or information is necessary and an explanation of the Plan's
review procedure.
20.2 Appeal. Any person, or his duly authorized representative, whose
application for benefits is denied in whole or in part, or who believes that his
benefits have been incorrectly determined, may appeal from such denial to the
Employer for a review of the decision by submitting to the Employer within sixty
(60) days after receiving written notice from the Committee of the denial of his
claims a written statement:
(a) Requesting a review of his application for benefits by the
Employer;
(b) Setting forth all of the grounds upon which his request for review
is based and any facts in support thereof; and
(c) Setting forth any issues or comments which the applicant deems
pertinent to this application.
20.3 Appointment of Review Committee. Upon receipt of an application for
review submitted in accordance with Article 20.2, the Employer shall appoint an
independent review committee composed of not fewer than 3 individuals who did
not participate in the Committee's original determination. The review committee
shall act upon such application within 60 days after the receipt by the Employer
of the applicant's request for review.
20.4 Procedure of Review Committee to Review Appeals.
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(a) The review committee shall make a full and fair review of each
such application and any written materials submitted by the applicant in
connection therewith and may require the Committee or the applicant to submit
such additional facts, documents or other evidence as the review committee, in
its sole discretion, deems necessary or advisable in making such a review. On
the basis of its review, the review committee shall make a determination of the
applicant's eligibility for benefits under the Plan. The decision of the review
committee on any application for benefits shall be final and conclusive upon all
persons if supported by substantial evidence in the record.
(b) In the event the review committee denies an application in whole
or in part, the review committee shall give written notice of its decision to
the applicant setting forth in a manner calculated to be understood by the
applicant the specific reasons for such denial and the specific references to
the pertinent Plan provisions on which the review committee decision was based.
ARTICLE 21
TOP HEAVY PROVISIONS
21.1 Top Heavy Determination. The Plan will be considered a Top Heavy Plan
for the Plan Year if as of the last day of the preceding Plan Year, (or in the
case of the first Plan Year of the Plan, the last day of such Plan Year) (1) the
value of the sum of the Accounts of Key Employees (as defined in Article 21.5)
exceeds 60% of the value of the sum of the Accounts of all Participants and
certain former participants in the Plan (the "60% Test") or (2) the Plan is part
of a Required Aggregation Group (within the meaning of section 416(g) of the
Internal Revenue Code) and the Required Aggregation Group is a Top Heavy Group.
In determining the value of Accounts of the Participants for purposes of
the 60% Test, any distributions made with respect to an Employee under the Plan
during the five year period ending on the determination date or any
distributions under a terminated plan which if it had not been terminated would
have been part of a Required Aggregation Group, shall be taken into account. In
determining the value of Accounts of Participants for purposes of the 60% Test,
any contributions to the Plan made pursuant to Article 4 initiated by an
Employee and not made from a plan maintained by the Employer shall not, except
to the extent provided by Treasury Regulations promulgated under section
416(g)(4)(A) of the Code, be taken into account. (Amended effective 1/1/89,
Third Amendment) A Participant's Accounts for purposes of applying the 60% Test
shall be measured as of the most recent Valuation Date occurring within a
12-month period ending on the determination date, and an adjustment in the
amount of any contributions actually made after the Valuation Date but on or
before the determination date. In the first Plan Year, such adjustment shall
also include the amount of any contributions made after the determination date
that are allocated as of a date in the first Plan Year. An individual's Accounts
shall not be taken into consideration for the purposes of
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applying the 60% Test if either (i) that individual was a Non-Key Employee with
respect to the Plan for any Plan Year, but such individual was a Key Employee
with respect to the Plan prior to a Plan Year in which the individual was a
Non-Key Employee, or (ii) that individual has not performed any services for the
Employer at any time during the 5-year period ending on the determination date.
Notwithstanding the results of the 60% Test, the Plan shall not be considered a
Top Heavy Plan for any Plan Year in which the Plan is a part of a Required
Aggregation Group or permissive aggregation group (within the meaning of section
416(g) of the Internal Revenue Code) which is not a Top Heavy Group.
21.2 Required Aggregation Group. "Required Aggregation Group" shall mean
each plan of the Employer which has a Key Employee as a Participant and any
other Employer plan (including a terminated plan of the Employer to the extent
required by validly issued Treasury regulations) which enables a plan of the
Employer in which a Key Employee is a participant to meet the requirements of
section 401(a)(4) or 410 of the Code. In applying the 60% Test to two or more
plans, the 60% Test is applied to each plan and then the plans are aggregated by
adding together the results as of each plan's determination date which falls
within the same calendar year.
21.3 Top Heavy Group. "Top Heavy Group" shall mean any aggregation group
whether or not a Required Aggregation Group, which meets the 60% Test. In
applying the 60% Test to two or more plans, the 60% Test is applied to each plan
and then the plans are aggregated by adding together the results as of each
plan's determination date which falls within the same calendar year.
21.4 Minimum Contribution for Top Heavy Plan. For any Plan Year in which
the Plan is a Top Heavy Plan, an amount shall be credited to the 401(k) Account
of each Employee who is not a Key Employee and who is eligible to share in this
special minimum contribution for a Top Heavy Plan pursuant to paragraph (c)
below which is equal to:
(a) the lesser of:
(i) the amount of the 401 (k) Contributions expressed as a
percentage of Compensation which is credited to the Accounts with respect to
such Plan Year of the Key Employee having the highest such percentage, or
(ii) 3% of Compensation,
(b) reduced by the amount of the 401 (k) Contributions, Company
Contributions. Profit Sharing Contributions, and Matching Contributions, if any,
otherwise credited to the Accounts of each Employee who is not a Key Employee
for such Plan Year.
(c) All Participants who are not Key Employees and who have not
separated from service prior to the last day of the Plan Year are eligible to
share in this special minimum contribution for a Top Heavy Plan described in
this Article 21.4.
21.5 Key Employees.
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(a) The term "Key Employee" shall mean an Employee who, at any time
during the Plan Year or any of the four (4) preceding Plan Years, is:
(1) an officer of the Company having an annual compensation
greater than fifty percent (50%) of the maximum dollar amount as set forth in
Code section 415(b)(1)(A) (or such greater amount as may be permitted pursuant
to regulations issued under Code section 415(d)(1)) for any such Plan Year;
(2) one of ten Employees having annual compensation from the
Company of more than the maximum dollar amount set forth in Code section
415(b)(1)(A) and owning (or considered as owning within the meaning of Code
section 318), the largest interests in the Company;
(3) a five percent (5%) owner of the Company; or
(4) a one percent (1%) owner of the Company, having an annual
compensation from the Company of more than $150,000.
(b) For purposes of (a)(1) above, no more than fifty (50) Employees
(or, if fewer, the greater of three (3) Employees or ten percent (10%) of the
Employees) shall be treated as officers. For purposes of paragraph a)(2) above,
if two Employees have the same interest in the Company, the Employee having the
greater Compensation from the Company shall be treated as having a larger
interest.
(c) For purposes of this definition:
(1) "5% owner" shall mean, in the case of a corporation, any
person who owns (or who is considered as owning within the meaning of Code
section 318) more than 5% of the outstanding stock of the corporation or stock
possessing more than 5% of the total combined voting power of all stock of the
corporation and in case the Company is not a corporation, any person who owns
more than 5% of the capital or profits interest in the Company; and
(2) a "1% owner" is any person who would be described in
subparagraph (c)(1), above, if "1%" were substituted for "5%" each place it
appears therein.
(d) For purposes of paragraphs (a)(2) and (c) above, the rules of Code
section 318 shall be modified as set forth in Code section 416(i)(1)(B)(iii).
(e) A Key Employee shall also include the Beneficiary of a Key
Employee.
(f) A Key Employee shall include an individual who is either currently
or was formerly employed by the Company who meets the definition set forth in
paragraph (a) above.
21.6 Non-Key Employee. "Non-Key Employee" shall mean any Employee who is
not a Key Employee.
21.7 Top Heavy Vesting.
(a) In any Plan Year in which the Plan is a Top Heavy Plan, the
Accounts of a Participant shall vest in accordance with the following Top Heavy
Vesting Schedule, except to the extent the regular vesting schedule set forth in
Article 10 provides for a rate of vesting which is as rapid as or more rapid
than the Top Heavy Vesting Schedule selected in this Article 21.7.
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<PAGE> 53
<TABLE>
<CAPTION>
Year of Service for Percentage
Vesting Purposes Vested
------------------- ----------
<S> <C>
less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 100%
</TABLE>
(b) For the purposes of determining a Participant's Years of Service
applicable to the Top Heavy Vesting Schedule set forth in Article 21.7(a), all
of the Participant's service with the Employer shall be taken into account.
(c) If the Plan becomes a Top Heavy Plan and subsequently ceases to be
such, the Top Heavy Vesting Schedule set forth in Article 21.7(a) shall continue
to apply in determining the vested percentage of the Matching Account for any
Participant who had at least three Years of Service as of the last Plan Year in
which the Plan was a Top Heavy Plan.
ARTICLE 22
MISCELLANEOUS
22.1 No Employment Relationship Established by Plan. The adoption and
maintenance of the Plan and Trust shall not be deemed to be a contract between
the Employer and any Employee. Nothing herein contained shall be deemed to give
any Employee the right to be retained in the employ of the Employer or to
interfere with the right of the Employer to discharge any Employee in its employ
at any time, nor shall it be deemed to give the Employer the right to require
any Employee to remain in its employ, nor shall it interfere with the Employee's
right to terminate his employment at any time.
22.2 Trustee to Trustee Transfer. Plan Merger or Consolidation.
(a) Effective October 1, 1994, the Committee may direct the Trustee to
effect a trustee-to-trustee transfer of the assets and liabilities attributable
to a Participant's Account, including any promissory note evidencing an
outstanding loan made to the participant pursuant to the terms of the Plan, to
another plan provided such transfer is requested by the Participant. No such
transfer shall be made unless immediately after such transfer, the Participant's
benefits, if such other plan were then to terminate, are at least equal to or
greater than the benefits which the participant would have been entitled to had
this Plan been terminated immediately before such transfer. The Committee may
also request appropriate indemnification from the employer or employers
maintaining the transferee plan before making such a transfer.
(b) In no event shall this Plan be merged or consolidated with any
other plan, nor shall there be any transfer of assets or liabilities from this
Plan to any other plan, unless immediately after such merger, consolidation or
transfer, each Participant's benefits, if such other plan were then to
terminate, are at least equal to
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<PAGE> 54
or greater than the benefits which the participant would have been entitled to
had this Plan been terminated immediately before such merger, consolidation, or
transfer.
(c) If the Employer merges or consolidates with or into a corporation,
or if substantially all of the assets of the Employer shall be transferred to a
corporation, the Plan hereby created shall terminate on the effective date of
such merger, consolidation or transfer. However, if the surviving corporation
resulting from such merger or consolidation, or the corporation to which the
assets have been transferred, adopts this Plan, the Plan shall continue and said
corporation shall succeed to all rights, powers and duties of the Employer
hereunder. The employment of any Employee who is continued in the employ of such
successor corporation shall not be deemed to have been terminated for any
purpose hereunder.
22.3 Section 415 Limits on Allocations.
(a) Notwithstanding anything in this Plan to the contrary, in
accordance with the requirements of section 415 of the Code, no contribution to
the Plan shall knowingly be made and no amount allocated to the Participant's
401 (k) Account, Matching Account or Company Contribution Account and Profit
Sharing Account if such contribution or allocation would cause the Annual
Addition to the Participant's Accounts for a Plan Year to exceed the lesser of:
(1) 25% of the Participant's Compensation from the Employer for such Plan Year,
or (2) the Defined Contribution Dollar Limitation.
(b) For purposes of this Article 22.3, the following definitions and
rules shall apply:
(1) "Annual Addition" shall mean for any Plan Year the sum of:
(A) Employer contributions (including 401(k) Contributions)
allocated to a Participant's Accounts, (B) forfeitures allocated to a
Participant's Account, and (C) Employee contributions (not including Rollover
Contributions), and (D) amounts described in section 415(1)(1) and 419A(d)(2) of
the Code.
(2) "Defined Contribution Dollar Limitation" shall mean $30,000
or, if greater, one-fourth of the defined benefit limitation set forth in
section 415(b)(i) of the Code in effect for such Plan Year.
(3) If the Employer is contributing to another defined
contribution plan, as defined in section 414(i) of the Code, for Employees of
the Employer, some or all of whom may be Participants of this Plan, then any
such Participant's Annual Addition in such other plan shall be aggregated with
such Participant's Annual Addition derived from this Plan for purposes of the
limitation in this Article 22.3(a).
(c) If a Participant in this Plan is also a participant in a defined
benefit plan, as defined in section 414(j) of the Code, to which contributions
are made by the Employer, then in addition to the limitation contained in
Article 22.3(a), for any Plan Year the sum of his defined benefit plan fraction
(as defined by section 415(e)(2) of the Code) for all such plans and his defined
contribution plan fraction (as defined by section 415(e)(3) of the Code) for all
such plans
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<PAGE> 55
for such Plan Year shall not exceed 1.0.
(d) In order to implement the limitations set forth in Articles
22.3(a) and 22.3(b), the aggregate of the Annual Additions to this Plan and the
Annual Addition to any other defined contribution plan shall be limited or
reduced until the applicable limitation is satisfied, by limiting or reducing
the aggregate amount as follows:
(1) Refund of any voluntary contributions made by the Participant
to any other defined contribution plan which would be aggregated with the Annual
Additions to the Plan;
(2) To the extent permitted by regulations promulgated by the
Secretary of the Treasury, refund of the Participant's 401(k) Contributions and
earnings thereon.
(3) Reduction in the Participant's 401(k) Contributions and
earnings thereon for the Plan Year in which the excess arises. Such reduction
shall be held in a separate suspense account, which shall be unadjusted for
income or loss, and shall serve to reduce 401(k) Contributions to the
Participant's 401(k) Account in the next Plan Year and in succeeding Plan Years
until the suspense account is exhausted.
(4) Reduction in the Participant's allocation of Company
Contributions and Profit Sharing Contributions, if any, for the Plan Year in
which the excess arises. Such reduction shall be credited to a separate suspense
account, which shall be unadjusted for income or loss, and shall serve to reduce
Company Contributions and Profit Sharing Contributions to the Plan in the next
Plan Year and in succeeding Plan Years, as necessary, until the suspense account
is exhausted. The Employer shall make no further Company Contributions and
Profit Sharing Contributions under the Plan until such suspense account is
exhausted. Upon the termination of the Plan, the balance credited to such
suspense account shall be repaid to the Employer.
(5) Reduction in the Participant's allocation of Matching
Contributions for the Plan Year in which the excess arises. Such reduction shall
be held in a separate suspense account, which shall be unadjusted for income or
loss, and shall serve to reduce Matching Contributions to the Plan in the next
Plan Year and succeeding Plan Years until the suspense account is exhausted. The
Employer shall make no further Matching Contributions under the Plan until such
suspense account is exhausted. Upon the termination of the Plan, the balance
credited to such suspense account shall be repaid to the Employer.
22.4 Qualified Domestic Relations Orders.
(a) In accordance with section 414(p) of the Code, section 206(d)(3)
of ERISA, and any regulations promulgated thereunder, the Committee shall
establish reasonable written procedures to determine the qualified status of
domestic relations orders received with respect to Participants and to
administer distributions to alternate payees under such qualified domestic
relations orders.
(b) Notwithstanding any provision in the Plan to the contrary, and in
accordance with reasonable procedures applied in a uniform and nondiscriminatory
manner, the Committee shall direct the Trustee
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<PAGE> 56
to make a payment as soon as administratively feasible to an alternate payee
pursuant to the terms of a qualified domestic relations order received with
respect to a Participant, regardless of whether such Participant has terminated
employment with the Company; provided, however, that if the amount of such
payment exceeds $3,500 (and at the time of any prior distribution had not
exceeded $3.500), the payment shall not be made without the written consent of
the alternate payee.
(c) Any payment to an alternate payee, or to his legal representative
or beneficiary, pursuant to the terms of a qualified domestic relations order
shall be in full satisfaction of all claims under such order against the
Employer, the Committee, or the Trustee, as the case may be, any of whom may
require such alternate payee, or his legal representative or beneficiary, to
execute a receipt therefor in such form as shall be determined by the Employer,
the Committee, or the Trustee, as the case may be.
22.5 Notices. All notices, statements and other communications from the
Trustee, the Employer or the Committee to an Employee, Participant, legal
representative or designated Beneficiary required or permitted hereunder shall
be deemed to have been duly given, furnished, delivered or transmitted, as the
case may be, when delivered to (or when mailed by first-class mail, postage
prepaid and addressed to) the Employee, Participant or Beneficiary at his
address last appearing on the books of the Employer.
22.6 Severability. If any provision of this Plan shall be held by a court
of competent Jurisdiction to be invalid or unenforceable, the remaining
provisions of the Plan shall continue to be fully effective.
IN WITNESS WHEREOF, Cadence Design Systems, Inc. adopts this Plan effective
as of the date set forth above.
CADENCE DESIGN SYSTEMS, INC.
Dated: ________________________________ By: ______________________________
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<PAGE> 1
Exhibit 10.30
CADENCE DESIGN SYSTEMS, INC.
1993 NON-STATUTORY STOCK OPTION PLAN
AS ADOPTED SEPTEMBER 17, 1993
AS AMENDED MAY 3, 1996
1. PURPOSES OF THE PLAN. The purposes of this Stock Option Plan are to
attract and retain the best available personnel for positions of substantial
responsibility, to provide additional incentive to the Company's Employees and
Consultants (as such terms are defined below) and to promote the success of the
Company's business.
Only "non-statutory stock options" may be granted hereunder.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "BOARD" shall mean the Committee, if one has been appointed, or
the Board of Directors of the Company, if no Committee is appointed.
(b) "COMMON STOCK" shall mean the Common Stock of the Company.
(c) "COMPANY" shall mean CADENCE DESIGN SYSTEMS, INC., a Delaware
corporation.
(d) "COMMITTEE" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.
(e) "CONSULTANT" shall mean any consultants, independent contractors
or advisers to the Company (provided that such persons render bona fide services
not in connection with the offering and sale of securities in capital raising
transactions) excluding officers and directors of the Company and shareholders
beneficially owning 10% or more of the Company's Common Stock.
(f) "CONTINUOUS STATUS AS AN EMPLOYEE OR CONSULTANT" shall mean the
absence of any interruption or termination of service as an Employee or
Consultant. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of sick leave, military leave, or any other
leave of absence.
(g) "EMPLOYEE" shall mean any person employed by the Company or by any
parent or subsidiary of the Company, excluding officers and directors of the
Company and shareholders beneficially owning 10% or more of the Company's Common
Stock.
(h) "OPTION" shall mean a non-statutory stock option granted pursuant
to the Plan.
(i) "OPTIONED STOCK" shall mean the Common Stock subject to an Option.
(j) "OPTIONEE" shall mean an Employee or Consultant who receives an
Option.
(k) "PARENT" shall mean a "parent corporation", whether now or
hereafter existing, as defined in Section 424(e) of the Internal Revenue Code of
1986, as amended.
(l) "PLAN" shall mean this 1993 Non-Statutory Stock Option Plan.
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<PAGE> 2
(m) "SHARE" shall mean a share of Common Stock, as adjusted in
accordance with Section 11 of the Plan.
(n) "SUBSIDIARY" shall mean (i) any corporation (other than the
employer corporation) in an unbroken chain of corporations beginning with the
employer corporation if, at the time of the granting of the option, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing fifty percent (50%) or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain; or (ii) any
other subsidiary corporation as the Board may designate from time to time, in
its sole and absolute discretion.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 2,500,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock. If an Option should expire
or become unexercisable for any reason without having been exercised in full,
the unpurchased Shares which were subject thereto shall, unless the Plan shall
have been terminated, become available for future grant under the Plan.
4. ADMINISTRATION OF THE PLAN.
(a) Procedure. The Plan shall be administered by the Board of
Directors of the Company. The Board of Directors may appoint a Committee
consisting of not less than two members of the Board of Directors to administer
the Plan on behalf of the Board of Directors, subject to such terms and
conditions as the Board of Directors may prescribe. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors. From time to time the Board of Directors may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause), and appoint new members in substitution therefor, fill vacancies
however caused and remove all members of the Committee, and thereafter directly
administer the Plan.
(b) Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant options under
the Plan, provided, however, that only non-statutory options may be granted
under the Plan, (ii) to determine, upon review of relevant information and in
accordance with Section 8(b) of the Plan, the fair market value of the Common
Stock; (iii) to determine the exercise price per share of Options to be granted,
which exercise price shall be determined in accordance with Section 8(a) of the
Plan; (iv) to determine the Employees or Consultants to whom, and the time or
times at which, Options shall be granted and the number of shares to be
represented by each Option provided that no Options may be granted to persons
who are neither employees or consultants; (v) to interpret the Plan; (vi) to
prescribe, amend and rescind rules and regulations relating to the Plan; (vii)
to determine the terms and provisions of each Option granted (which need not be
identical) and, with the consent of the holder thereof, modify or amend each
option; (viii) to accelerate or defer (with the consent of the Optionee) the
exercise date of any Option; (ix) to authorize any person to execute on behalf
of the Company any instrument required to effectuate the grant of an Option
previously granted by the Board; and (x) to make all other determinations deemed
necessary or advisable for the administration of the Plan.
(c) Effect of Board's Decision. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.
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<PAGE> 3
5. ELIGIBILITY. Options may be granted only to Employees or Consultants as
defined in Section 2 hereof. An Employee or Consultant who has been granted an
Option may, if he is otherwise eligible, be granted an additional Option or
Options.
The Plan shall not confer upon any Optionee any right with respect to
continuation of employment or consultancy by the Company, nor shall it interfere
in any way with his right or the Company's right to terminate his employment or
consultancy at any time.
6. TERM OF THE PLAN. The Plan shall become effective upon its adoption by
the Board of Directors. It shall continue in effect for a term of ten (10) years
unless sooner terminated under Section 13 of the Plan.
7. TERM OF OPTION. The term of each Option shall be ten (10) years from the
date of grant thereof or such shorter term may be provided in the Stock Option
Agreement.
8. EXERCISE PRICE AND CONSIDERATION.
(a) The per Share exercise price for the Shares to be issued pursuant
to exercise of an Option shall be no less than 100% of the fair market value per
Share on the date of grant.
(b) The fair market value shall be determined by the Board in its
discretion; provided however, that where there is a public market for the Common
Stock, the fair market value per Share shall be the average of the high and low
prices of the Common Stock on the date of grant, as reported on the New York
Stock Exchange.
(c) The consideration to be paid for the Shares to be issued upon
exercise of an Option, including the method of payment, shall be determined by
the Board and may consist entirely of cash, check, promissory note, other Shares
of Common Stock having a fair market value on the date of surrender equal to the
aggregate exercise price of the Shares as to which said option shall be
exercised, or any combination of such methods of payment, or such other
consideration and method of payment for the issuance of Shares to the extent
permitted under applicable law. In making its determination as to the type of
consideration to accept, the Board shall consider if acceptance of such
consideration may be reasonably expected to benefit the Company.
9. EXERCISE OF OPTION.
(a) Procedure for Exercise; Rights as a Shareholder. Any Option
granted hereunder, shall be exercisable at such times and under such conditions
as determined by the Board, including performance criteria with respect to the
Company and/or the Optionee, and as shall be permissible under the terms of the
Plan.
An Option may not be exercised for a fraction of a Share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a shareholder shall exist with respect to the Optioned Stock,
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan.
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<PAGE> 4
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) Termination of Status as an Employee or Consultant. If an employee
ceases to serve as an Employee or Consultant, he may, but only within thirty
(30) days (or such other period of time not exceeding three (3) months as is
determined by the Board) after the date he ceases to be an Employee or
Consultant of the Company, exercise his Option to the extent that he was
entitled to exercise it at the date of such termination. To the extent that he
was not entitled to exercise the Option at the date of such termination, or if
he does not exercise such Option (which he was entitled to exercise) within the
time specified herein, the Option shall terminate.
(c) Death of Optionee. In the event of the death of an Optionee:
(i) during the term of the Option who is at the time of his death
an Employee or Consultant of the Company and who shall have been in Continuous
Status as an Employee or Consultant since the date of grant of the Option, the
Option may be exercised at any time within three (3) months following the date
of death, by the Optionee's estate or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that would have accrued had the Optionee continued living
three (3) months after the date of death; or
(ii) within one (1) month after the termination of Continuous
Status as an Employee or Consultant, the Option may be exercised, at any time
within three (3) months following the date of death, by the Optionee's estate or
by a person who acquired the right to exercise the Option by bequest or
inheritance, but only to the extent of the right to exercise that had accrued at
the date of termination.
10. NON-TRANSFERABILITY OF OPTIONS. The Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee.
11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. The number of
shares of Common Stock covered by each outstanding Option, and the number of
shares of Common Stock which have been authorized for issuance under the Plan
but as to which no Options have yet been granted or which have been returned to
the Plan upon cancellation or expiration of an Option, as well as the price per
share of Common Stock covered by each such outstanding Option, shall be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a stock split or the payment of a stock
dividend with respect to the Common Stock or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration". Such adjustments shall be made by the Board,
whose determination in that respect shall be final, binding and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares of Common Stock subject to an Option.
In the event of the proposed dissolution or liquidation of the
Company, or in the event of a proposed sale of all or substantially all of the
assets of the Company, or the merger of the Company with or into another
corporation, the Option will terminate immediately prior to the consummation of
such proposed action, unless otherwise provided by the Board. The Board may, in
the exercise of its sole discretion in such instances, declare that any Option
shall terminate as of a date fixed by the Board and give each Optionee the right
to exercise
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his Option as to all or any part of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each Employee or
Consultant to whom an Option is so granted within a reasonable time after the
date of such grant.
13. AMENDMENT AND TERMINATION OF THE PLAN.
(a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable. The
Board amended the Plan in May 1996 to expand the definition of Subsidiary.
(b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.
14. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such Shares pursuant thereto shall comply with all relevant
provisions of the law, including without limitation, the Securities Act of 1933,
as amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require
the person exercising such Option to represent and warrant at time of any such
exercise that the Shares are being purchased only for investment and without any
present intention to sell or distribute such Shares if, in the opinion of
counsel for the Company, such a representation is required by any of the
aforementioned relevant provisions of law.
15. RESERVATION OF SHARES. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.
Inability of the Company to obtain authority from any regulatory body
having jurisdiction, which authority is deemed by the Company's counsel to be
necessary to the lawful issuance and sale of any Shares hereunder, shall relieve
the Company of any liability in respect of the failure to issue or sell such
Shares as to which such requisite authority shall not have been obtained.
16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
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Exhibit 10.31
$120,000,0003
REVOLVING CREDIT AGREEMENT
Dated as of April 11, 1996
Among
CADENCE DESIGN SYSTEMS, INC.,
a Delaware corporation,
AS BORROWER,
The Lenders from time to time party hereto,
and
CREDIT LYONNAIS,
NEW YORK BRANCH,
AS AGENT
and
ABN-AMRO BANK N.V.
and
THE FIRST NATIONAL BANK OF BOSTON,
AS CO-AGENTS
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<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS.................................................................... 1
SECTION 1.1. Certain Defined Terms.............................................................. 1
SECTION 1.2. Accounting Terms................................................................... 16
SECTION 1.3. Other Definitional Provisions...................................................... 17
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES.................................................................. 17
SECTION 2.1. Revolving Credit Facility.......................................................... 17
(a) Advances.................................................................................. 17
(b) Borrowings................................................................................ 18
(c) Notice of Borrowing....................................................................... 18
(d) Telephonic Notice......................................................................... 18
(e) Funding of Advances....................................................................... 18
(f) Notice of Borrowing Irrevocable........................................................... 18
(g) Assumption of Funding..................................................................... 18
(h) Failure of Lender to Fund................................................................. 19
(i) Facility Reserve; Mandatory Facility Reduction............................................ 19
SECTION 2.2. Extension of Maturity Date......................................................... 20
(a) Request for Extension..................................................................... 20
(b) No Duty................................................................................... 21
(c) Procedure................................................................................. 21
(d) Termination and Repayment as to Other Lenders............................................. 21
SECTION 2.3. Evidence of Debt................................................................... 21
(a) Promise to Repay.......................................................................... 21
(b) Loan Account.............................................................................. 21
SECTION 2.4. Fees............................................................................... 22
(a) Closing Fees.............................................................................. 22
(b) Commitment Fees........................................................................... 22
(c) Agent's Fees.............................................................................. 22
SECTION 2.5. Voluntary Facility Reductions...................................................... 22
</TABLE>
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<TABLE>
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SECTION 2.6. Facility Reductions; Repayment..................................................... 22
(a) Scheduled Facility Reductions Prior to the Maturity Date.................................. 22
(b) Termination or Reduction on Maturity Date................................................. 22
(c) Termination on Extended Maturity Date..................................................... 23
(d) Nonscheduled Mandatory Facility Reductions................................................ 23
(e) Application of Nonscheduled Facility Reductions........................................... 23
(f) Excess Revolving Credit Exposure.......................................................... 24
(g) Change of Control......................................................................... 24
SECTION 2.7. Interest........................................................................... 24
(a) Base Rate Advances........................................................................ 24
(b) Eurodollar Rate Advances.................................................................. 24
(c) Default Interest.......................................................................... 24
SECTION 2.8. Additional Interest on Eurodollar Rate Advances.................................... 25
SECTION 2.9. Interest Rate Determination and Protection......................................... 25
(a) Determination of Eurodollar Rate.......................................................... 25
(b) Notice of Eurodollar Rate................................................................. 25
(c) Failure to Provide Information............................................................ 25
(d) Suspension of Eurodollar Rate Advances.................................................... 25
(e) Failure to Specify Duration............................................................... 26
(f) Minimum Amounts........................................................................... 26
(g) Agent's Determination Conclusive.......................................................... 26
SECTION 2.10. Voluntary Conversion of Advances................................................... 26
(a) Notice of Conversion/Continuation......................................................... 26
(b) Telephonic Notice......................................................................... 26
(c) Requirements.............................................................................. 27
(d) Base Rate Advances........................................................................ 27
SECTION 2.11. Prepayments........................................................................ 27
SECTION 2.12. Funding Losses..................................................................... 27
SECTION 2.13. Increased Costs.................................................................... 28
(a) Increase in Cost.......................................................................... 28
(b) Increase in Capital Requirements.......................................................... 28
(c) Replacement Lenders and Participants...................................................... 29
SECTION 2.14. Illegality......................................................................... 30
</TABLE>
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<TABLE>
<S> <C>
SECTION 2.15. Payments and Computations.......................................................... 30
(a) Payments.................................................................................. 30
(b) Computations.............................................................................. 30
(c) Payment on Business Day................................................................... 30
(d) Presumption of Payment.................................................................... 30
SECTION 2.16. Taxes.............................................................................. 31
(a) Net Payments.............................................................................. 31
(b) Payment of Other Taxes.................................................................... 31
(c) Indemnification........................................................................... 31
(d) Evidence of Payments...................................................................... 32
(e) Withholding Tax Exemption................................................................. 32
(f) Withholding Taxes......................................................................... 32
(g) Indemnification........................................................................... 32
(h) Subsequent Lenders........................................................................ 33
SECTION 2.17. Sharing of Payments................................................................ 33
ARTICLE III CONDITIONS OF LENDING............................................................................. 34
SECTION 3.1. Conditions Precedent on the Closing Date........................................... 34
(a) Loan Documents............................................................................ 34
(b) Corporate Documents....................................................................... 35
(c) Governmental Consents..................................................................... 36
(d) No Injunction............................................................................. 36
(e) Other Deliveries.......................................................................... 36
(f) Legal Opinions............................................................................ 37
(g) Payment of Existing Debt.................................................................. 37
(h) Payment of Fees and Expenses.............................................................. 37
(i) No Material Adverse Change................................................................ 37
SECTION 3.2. Conditions Precedent to Each Extension of Credit................................... 37
(a) Notice.................................................................................... 37
(b) Certification............................................................................. 37
ARTICLE IV REPRESENTATIONS AND WARRANTIES..................................................................... 38
SECTION 4.1. Representations and Warranties of the Borrower..................................... 38
(a) Organization.............................................................................. 38
(b) Power and Authority....................................................................... 38
(c) Due Authorization......................................................................... 38
(d) Subsidiaries and Ownership of Capital Stock............................................... 38
(e) Governmental Approval..................................................................... 39
</TABLE>
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<TABLE>
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(f) Binding and Enforceable................................................................... 39
(g) Financial Information..................................................................... 39
(h) Material Adverse Change................................................................... 39
(i) Compliance................................................................................ 39
(j) Litigation................................................................................ 39
(k) No Conflict............................................................................... 40
(l) No Default................................................................................ 40
(m) Payment of Taxes.......................................................................... 40
(n) Margin Regulations........................................................................ 40
(o) Conduct of Business....................................................................... 40
(p) Environmental Matters..................................................................... 40
(q) ERISA Compliance.......................................................................... 41
(r) Title to Assets; No Infringement.......................................................... 42
(s) Perfection................................................................................ 42
(t) Undisclosed Liabilities................................................................... 42
(u) License Agreements........................................................................ 42
ARTICLE V COVENANTS OF THE BORROWER........................................................................... 42
SECTION 5.1. Financial Covenants................................................................ 43
(a) Minimum Adjusted EBITDA................................................................... 43
(b) Maximum Total Debt/Adjusted EBITDA Ratio.................................................. 43
(c) Minimum Fixed Charge Coverage Ratio....................................................... 44
(d) Minimum Liquidity......................................................................... 44
SECTION 5.2. Affirmative Covenants.............................................................. 44
(a) Compliance with Laws...................................................................... 44
(b) Inspection of Property and Books and Records.............................................. 44
(c) Reporting Requirements.................................................................... 44
(d) Preservation of Corporate Existence, Etc.................................................. 45
(e) New Subsidiaries.......................................................................... 46
(f) Maintenance of Property................................................................... 46
(g) Insurance................................................................................. 46
(h) Payment of Taxes and Lienable Items....................................................... 46
(i) Use of Proceeds........................................................................... 47
(j) Permitted Cash Investments................................................................ 47
(k) Further Assurances........................................................................ 47
(l) Licenses.................................................................................. 48
SECTION 5.3. Negative Covenants................................................................. 48
(a) Liens..................................................................................... 48
(b) Disposition of Assets..................................................................... 50
(c) Investments............................................................................... 51
</TABLE>
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<TABLE>
<S> <C>
(d) Limitation on Debt and Accommodation Obligations.......................................... 52
(e) Transactions with Affiliates.............................................................. 54
(f) Restricted Junior Payments................................................................ 54
(g) Mergers, Etc.............................................................................. 55
(h) Conduct of Business....................................................................... 55
(i) Compliance with ERISA..................................................................... 56
(j) Payment Restrictions Affecting Subsidiaries............................................... 56
(k) Transactions with IMS..................................................................... 56
(l) Licenses.................................................................................. 56
ARTICLE VI EVENTS OF DEFAULT.................................................................................. 57
SECTION 6.1. Events of Default.................................................................. 57
(a) Non-Payment of Principal.................................................................. 57
(b) Non-Payment of Interest................................................................... 57
(c) Non-Payment of Other Obligations.......................................................... 57
(d) Representations and Warranties............................................................ 57
(e) Financial and Negative Covenants.......................................................... 57
(f) Reporting and Collateral Covenants........................................................ 57
(g) Other Agreements.......................................................................... 57
(h) Default as to Other Debt.................................................................. 57
(i) Bankruptcy................................................................................ 58
(j) Judgments................................................................................. 58
(k) Material Adverse Change................................................................... 59
(l) Loan Documents............................................................................ 59
(m) Collateral Documents...................................................................... 59
(n) ERISA..................................................................................... 59
SECTION 6.2. Rights Not Exclusive............................................................... 60
ARTICLE VII THE AGENT......................................................................................... 60
SECTION 7.1. Authorization and Action........................................................... 60
SECTION 7.2. Agent not Liable................................................................... 60
SECTION 7.3. Rights as Lender................................................................... 61
SECTION 7.4. Lender Credit Decision............................................................. 61
SECTION 7.5. Indemnification.................................................................... 61
SECTION 7.6. Successor Agent.................................................................... 62
</TABLE>
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<TABLE>
<S> <C>
SECTION 7.7. Release of Collateral.............................................................. 62
SECTION 7.8. Release of Guarantor upon Sale of Stock............................................ 63
ARTICLE VIII MISCELLANEOUS.................................................................................... 63
SECTION 8.1. Amendments......................................................................... 63
SECTION 8.2. Notices............................................................................ 64
SECTION 8.3. No Waiver; Remedies................................................................ 65
SECTION 8.4. Costs and Expenses................................................................. 65
SECTION 8.5. Right of Set-off................................................................... 65
SECTION 8.6. General Indemnity.................................................................. 65
(a) Excluded Claims........................................................................... 66
(b) Notice.................................................................................... 66
(c) Selection of Counsel...................................................................... 66
(d) Separate Counsel.......................................................................... 66
(e) Settlement................................................................................ 67
SECTION 8.7. Assignments and Participations..................................................... 67
(a) Permitted Assignment...................................................................... 67
(b) Borrower Consent; Confidentiality......................................................... 68
(c) Effect of Assignment...................................................................... 68
(d) Maintenance of Agreements................................................................. 69
(e) Procedure................................................................................. 69
(f) Participations............................................................................ 69
(g) Additional Information.................................................................... 69
(h) Permitted Assignments..................................................................... 70
SECTION 8.8. Binding Effect..................................................................... 70
SECTION 8.9. Governing Law...................................................................... 70
SECTION 8.10. Waiver of Jury Trial............................................................... 70
SECTION 8.11. Limitation of Liability............................................................ 70
SECTION 8.12. Confidentiality.................................................................... 71
</TABLE>
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<TABLE>
<S> <C>
SECTION 8.13. Entire Agreement................................................................... 71
SECTION 8.14. Survival........................................................................... 71
SECTION 8.15. Execution in Counterparts.......................................................... 71
EXHIBITS
Exhibit A [Reserved]
FORM OF LOAN ADMINISTRATION DOCUMENTS:
Exhibit B-1 Notice of Borrowing
Exhibit B-2 Notice of Continuance/Conversion
FORM OF CERTAIN LOAN DOCUMENTS:
Exhibit C-1 Form of Subsidiary Guaranty
Exhibit C-2 Form of Pledge and Security Agreement
Exhibit C-3 Form of Intellectual Property Assignment
Exhibit C-4 Form of Notice of Security Interest in Deposit Accounts
Exhibit C-5 Form of Notice of Security Interest in Financial
Intermediary
Accounts
Exhibit C-6 Form of Deed of Trust, Assignment of Leases and Rents,
Security Agreement and Fixture Filing
Exhibit C-7 Form of Unsecured Environmental Indemnity Agreement
FORM OF OPINION OF COUNSEL:
Exhibit D-1 Form of Opinion of Counsel for the Borrower and the
Guarantors
Exhibit D-2 Form of Opinion of Counsel Regarding Pledge of Foreign Stock
OTHER FORMS:
Exhibit E-1 Form of Compliance Certificate
Exhibit E-2 Form of Assignment and Acceptance
SCHEDULES
AGENT SCHEDULES:
Schedule I List of Lenders, Commitments and Pro Rata Shares
BORROWER SCHEDULES:
Schedule 4.1(d) List of Subsidiaries
Schedule 4.1(e) List of Governmental Approvals
Schedule 4.1(j) List of Litigation
Schedule 4.1(o) List of Business Lines
</TABLE>
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Schedule 4.1(p) List of Environmental Matters
Schedule 4.1(q) List of ERISA Matters
Schedule 4.1(t) List of Undisclosed Liabilities
Schedule 5.2(h) List of Taxes and Lienable Items
Schedule 5.3(c) List of Investments
Schedule 5.3(d) List of Liens and Debts
REVOLVING CREDIT AGREEMENT
This REVOLVING CREDIT AGREEMENT, dated as of April 11, 1996,
is made by and among CADENCE DESIGN SYSTEMS, INC., a Delaware corporation, the
financial institutions signatory hereto as Lenders, and CREDIT LYONNAIS, a bank
organized under the laws of the Republic of France, acting through its New York
Branch, as Agent for the Lenders.
In consideration of the mutual agreements set forth herein,
the parties hereto hereby agree as follows:
I
DEFINITIONS AND ACCOUNTING TERMS
I.1. CERTAIN DEFINED TERMS. As used in this Agreement:
ACCOMMODATION OBLIGATION means, as applied to any Person, any
direct or indirect guaranty, endorsement or other liability of that Person with
respect to any Debt, lease, dividend, letter of credit or other obligation (the
"primary obligation") of another Person (the "primary obligor"), including any
obligation of that Person, whether or not contingent, (i) to purchase,
repurchase or otherwise acquire any such primary obligation or any property
constituting direct or indirect security therefor, or (ii) to advance or
provide funds (A) for the payment or discharge of any such primary obligation,
or (B) to maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency or any balance sheet item,
level of income or financial condition of the primary obligor, or (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof. The amount of any Accommodation Obligation shall be deemed to be an
amount equal to the maximum stated or determinable amount of the primary
obligation in respect of which such Accommodation Obligation is made or, if not
stated or if indeterminable, the maximum reasonably estimated potential
liability in respect thereof. Endorsements of checks for collection or deposit
in the ordinary course of business are not Accommodation Obligations.
ADJUSTED EBITDA means, for any period, an amount determined as
(i) consolidated net income of the Borrower and its Subsidiaries for such
period, less (ii) any NonCash Revenues counted in determining such net income,
plus (iii) to the extent counted in determining such net income and without
duplication, all charges for Interest Expense, taxes, depreciation and
amortization, less (iv) all research and development expenditures
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and similar costs capitalized in such period and plus (v) any noncash,
non-recurring charges or asset writedowns recorded in such period that have no
effect on cash of the Borrower of any Subsidiary of the Borrower in such period
or any future period.
ADVANCE means a loan by a Lender to the Borrower pursuant to
Article II.
AFFILIATE of a specified Person means any other Person that
directly or indirectly through one or more intermediaries controls, is
controlled by or is under common control with the Person specified. For this
purpose, "control," "controlled by" and "under common control with" with
respect to any Person mean the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities or by contract or otherwise.
AGENT means Credit Lyonnais, in its capacity as agent for the
Lenders hereunder, and any successor appointed pursuant to Section 7.6.
AGREEMENT means this Revolving Credit Agreement.
APPLICABLE LENDING OFFICE means, with respect to each Lender,
such Lender's Domestic Lending Office in the case of a Base Rate Advance and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
ASSET SALE means the sale, license, transfer or other
disposition of any asset, business or property of the Borrower or any of its
Subsidiaries, or the issuance or sale of any capital stock of or other equity,
ownership or profit interest in any Subsidiary of the Borrower (except a
dividend on any such stock or interest declared and payable solely in
additional shares of such stock or interest and except for the issuance of
directors' qualifying shares and the issuance of shares pursuant to local
ownership requirements of foreign countries), to any Person other than the
Borrower or a wholly-owned Subsidiary of the Borrower.
ASSIGNMENT AND ACCEPTANCE means an assignment and acceptance
entered into by a Lender and an Eligible Assignee, in substantially the form of
Exhibit E-2, and accepted by the Agent.
AUTHORIZED OFFICER means the principal financial officer, the
chief accounting officer, the controller or the treasurer of the Borrower.
BANKRUPTCY, INSOLVENCY OR LIQUIDATION PROCEEDING means (i) any
case commenced by or against the Borrower under any chapter of the United
States Bankruptcy Code, any other proceeding for the reorganization,
recapitalization or adjustment or marshalling of the assets or liabilities of
the Borrower, any receivership or assignment for the benefit of creditors
relating to the Borrower or any similar case or proceeding relative to the
Borrower or its creditors, as such, in each case whether or not voluntary, (ii)
any liquidation, dissolution, marshalling of assets or liabilities or other
winding up of or relating to the Borrower, in each case whether or not
voluntary and whether or not involving bankruptcy or insolvency, and (iii) any
other proceeding of any type or nature in which claims against the Borrower
generally are determined, proven or paid.
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BASE RATE means, for any day, a fluctuating interest rate per
annum equal to the higher of (i) the then effective rate of interest announced
publicly by Credit Lyonnais in New York, New York, from time to time, as Credit
Lyonnais' prime commercial lending rate (it being understood that such rate is
merely a reference rate and is not Credit Lyonnais' best, lowest or most
favorable rate), or (ii) the then effective Federal Funds Rate plus one-half
percent (0.50%) per annum.
BASE RATE ADVANCE means an Advance which bears interest by
reference to the Base Rate as provided in Section 2.7(a).
BORROWER means Cadence Design Systems, Inc., a Delaware
corporation.
BORROWING means a Base Rate Advance or Eurodollar Rate Advance
made by the Lenders on a Borrowing Date.
BORROWING DATE means the Closing Date or any subsequent
Business Day occurring prior to the Maturity Date (or, in the case of each
Lender that becomes bound by a written agreement to maintain its commitment to
make Advances during the Extension Period as set forth in Section 2.2(c), the
Extended Maturity Date) on which a Borrowing is requested.
BREAKAGE COSTS is defined in Section 2.12.
BUSINESS DAY means any day except a Saturday or Sunday or a
day when commercial banks are authorized or required by law to be closed in New
York, New York or San Francisco, California and, where used in reference to any
Eurodollar Rate Advance, means such a day on which dealings are carried on in
the London interbank market.
CAPITAL EXPENDITURES means all expenditures for property,
plant, equipment or other fixed assets, whether paid in cash or accrued as a
liability, made by the Borrower or any of its Subsidiaries.
CAPITAL LEASE means, with respect to any Person, any lease of
any property by that Person as lessee which, in accordance with GAAP, is
required to be accounted for as a capital lease on the balance sheet of that
Person.
CASH PROCEEDS OF SALE means all cash and cash equivalents
received by the Borrower or any of its Subsidiaries as the cash consideration
in any Asset Sale or from any payment or distribution on, or sale or
liquidation of, any promissory note or other property received as noncash
consideration in any Asset Sale.
CHANGE OF CONTROL means (i) a transaction or series of
transactions by which any Person or group (within the meaning of Section
13(d)(3) of the 1934 Act) acquires beneficial ownership (within the meaning of
Rule 13d-3 of the 1934 Act), directly or indirectly, of securities of the
Borrower (or other securities convertible into such securities) representing
25% or more of the combined voting power of all securities of the
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Borrower entitled to vote in the election of directors or (ii) a majority of the
Borrower's directors are persons who were not in office on January 25, 1996 and
were not initially nominated by directors who were in office on January 25, 1996
or by successor directors elected or appointed upon the initial nomination of
such directors or successor directors.
CLAIMS is defined in Section 8.6.
CLOSING DATE means the date on which all of the conditions
precedent set forth in Section 3.1 are satisfied or waived in writing by the
Lenders.
CODE means the Internal Revenue Code of 1986.
COLLATERAL means all property which at any time is subject or
is to become subject to any Lien granted or created under any of the Collateral
Documents.
COLLATERAL DOCUMENTS means the Pledge and Security Agreement,
the Intellectual Property Assignment, the Real Estate Collateral Documents and
all other security agreements, collateral assignments, mortgages, deeds of
trust and other instruments, documents and agreements at any time delivered to
the Agent to create or evidence Liens to secure the Obligations.
COMMITMENT FEE RATE means 0.375% per annum.
COMMITMENT LETTER means the letter from Credit Lyonnais to the
Borrower, relating to the financing contemplated hereby, dated February 8,
1996.
CREDIT LYONNAIS means Credit Lyonnais, a bank organized under
the laws of the Republic of France, acting through its New York Branch.
DEBT means, as applied to any Person, (i) all indebtedness of
such Person for borrowed money (whether by loan or the issuance of debt
securities or otherwise); (ii) all obligations of such Person issued,
undertaken or assumed as the deferred purchase price of property or services or
interest thereon, except accounts and accrued expenses currently payable; (iii)
all reimbursement obligations of such Person with respect to surety bonds,
letters of credit, bankers' acceptances and similar instruments, whether or not
contingent; (iv) all monetary obligations of such Person under any Capital
Lease; (v) all obligations of such Person (contingent or otherwise) to
purchase, retire or redeem any capital stock or other equity interest in such
Person or any Affiliate of such Person, other than Permitted Stock
Transactions; (vi) all monetary obligations of such Person measured by, or
determined on the basis of, the value of any capital stock of such Person or
any Affiliate of such Person, other than Permitted Stock Transactions; (vii)
all Accommodation Obligations of such Person; and (viii) all liabilities and
obligations secured by (or as to which the holder of the liability or
obligation has an existing right, contingent or otherwise, to be secured by)
any Lien, except a Non-Consensual Lien, upon any property of such Person or any
property of any Subsidiary of such Person.
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DISALLOWED POST-PETITION INTEREST/EXPENSE CLAIMS means any
claim for interest on Advances accrued or computed for or as to any period of
time at any time after the commencement of any Bankruptcy, Insolvency or
Liquidation Proceeding at the rate (including any applicable post-default rate)
set forth in this Agreement or other applicable Loan Document or for fees,
expense reimbursements, indemnification or other similar Obligations accrued or
determined for or as to any such period of time in accordance with the
provisions of this Agreement or any such Loan Document, if such claim is not
allowed, allowable or enforceable in such Bankruptcy, Insolvency or Liquidation
Proceeding.
DOLLARS AND $ mean United States dollars or such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts in the United States
of America.
DOMESTIC LENDING OFFICE means, with respect to any Lender, the
office of such Lender specified as its "Domestic Lending Office" opposite its
name on Schedule I hereto or in the Assignment and Acceptance by which it
became a Lender or such other office of such Lender as such Lender may from
time to time specify to the Borrower and the Agent.
ELIGIBLE ASSIGNEE means (i) a commercial bank organized under
the laws of the United States, or any State thereof, and having total assets in
excess of $5,000,000,000; (ii) a savings and loan association or savings bank
organized under the laws of the United States, or any State thereof, and having
total assets in excess of $3,000,000,000; (iii) a commercial bank organized
under the laws of any other country which is a member of the OECD, or a
political subdivision of any such country, and having total assets in excess of
$5,000,000,000, if such bank is acting through a branch or agency located in
the United States; (iv) the central bank of any country which is a member of
the OECD; (v) an Affiliate of any existing Lender; and (vi) any other Person
approved by the Borrower.
ENVIRONMENTAL CLAIMS means any and all administrative,
regulatory or judicial claims, demands, directives, proceedings, orders,
decrees and judgments relating in any way to any Environmental Law or any
Environmental Permit.
ENVIRONMENTAL LAWS means all federal, state and local laws,
statutes, rules, regulations, ordinances and codes, and any binding judicial or
administrative interpretation thereof or requirement thereunder, including any
judicial or administrative order, by any Governmental Authority, relating to
the regulation or protection of human health, safety, the environment and
natural resources.
ENVIRONMENTAL PERMIT means any license, permit, authorization,
registration or approval issued or required under any Environmental Law.
ERISA means the Employee Retirement Income Security Act of
1974.
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ERISA AFFILIATE means any entity which is (or at any relevant
time was) a member of a "controlled group of corporations," under "common
control" or a member of an "affiliated service group" with the Borrower as
defined in Section 414(b), (c) or (m) of the Code.
ERISA EVENT means (i) any of the events set forth in Section
4043(b) of ERISA with respect to a Pension Plan; (ii) a withdrawal by the
Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in
Section 4001(a)(2) of ERISA); (iii) a complete or partial withdrawal by the
Borrower or any ERISA Affiliate from a Multiemployer Plan; (iv) the filing of a
notice of intent to terminate, the treatment of a plan amendment as a
termination under Section 4041 or 4041A of ERISA or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan
subject to Title IV of ERISA; (v) a failure to make required contributions to a
Pension Plan or Multiemployer Plan; (vi) the imposition of any liability under
Title VI of ERISA, other than PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate; (vii) an
application for a funding waiver or an extension of any amortization period
pursuant to Section 412 of the Code with respect to any Pension Plan;
(viii) the Borrower or ERISA Affiliate engages in a nonexempt prohibited
transaction or otherwise becomes liable with respect to a nonexempt prohibited
transaction, the consequences of which, in the aggregate, constitute or could
reasonably be expected to result in a Material Adverse Change; or (ix) a
violation of the applicable requirements of Section 404 or 405 of ERISA or the
exclusive benefit rule under Section 401(a) of the Code by the Borrower or any
ERISA Affiliate with respect to any Pension Plan for which the Borrower or any
of its Subsidiaries may be liable, the consequences of which, in the aggregate,
constitute or could reasonably be expect to result in a Material Adverse
Change.
EUROCURRENCY LIABILITIES has the meaning assigned to that term
in Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
EURODOLLAR LENDING OFFICE means, with respect to any Lender,
the office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance by which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office) or such other office of such Lender as such Lender may from time to
time specify to the Borrower and the Agent as its Eurodollar Lending Office.
EURODOLLAR RATE means, for any Interest Period for each
Eurodollar Rate Advance comprising part of the same Borrowing, an interest rate
per annum equal to the average (rounded upward to the nearest whole multiple of
1/16 of 1% per annum, if such average is not such a multiple) of the rate per
annum at which deposits in U.S. dollars are offered by the principal office of
each of the Reference Banks in London to prime banks in the interbank market
for U.S. dollar deposits at 11:00 a.m. (London time) two Business Days before
the first day of such Interest Period in an amount substantially equal to such
Reference Bank's Eurodollar Rate Advance comprising part of such Borrowing (or,
if such Reference Bank is not a Lender, 10% of such Borrowing) and for a period
equal to such Interest Period.
EURODOLLAR RATE ADVANCE means an Advance which bears interest
by reference to the Eurodollar Rate as provided in Section 2.7(b).
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EURODOLLAR RATE MARGIN means 1.50% per annum.
EURODOLLAR RATE RESERVE PERCENTAGE means, as to any day in any
Interest Period for any Eurodollar Rate Advance, the reserve percentage
applicable for such day under regulations issued from time to time by the Board
of Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including any emergency, supplemental or other
marginal reserve requirement) with respect to Eurocurrency Liabilities having a
term equal to such Interest Period.
EVENT OF DEFAULT is defined in Section 6.1.
EXCESS CASH FLOW means, for any fiscal year, an amount
computed as (i) Adjusted EBITDA for such year, less (ii) Capital Expenditures in
such year, but only to the extent paid in cash in such year, less (iii) taxes
paid in cash in such year by the Borrower or any of its Subsidiaries, less (iv)
reductions in the Facility Amount (whether or not voluntary) that became
effective in such year, less (v) mandatory (but not voluntary) principal
payments made in cash in such year on other Debt of the Borrower or any of its
Subsidiaries, less (vi) the difference between (x) Investments in the Venture
Fund made and funded in cash by the Borrower or any of its Subsidiaries in such
year and (y) distributions from the Venture Fund (whether constituting income,
recovery of investment or otherwise) received in cash by the Borrower or any of
its Subsidiaries in such year, and less any increase (and plus any decrease)
(vii) in NonCash Working Capital in such year. Proceeds from any permitted new
financings shall not be included in the computation of Excess Cash Flow.
EXCLUDED PROCEEDS means (i) proceeds from any Asset Sale made
in the ordinary course of business, (ii) proceeds from the sale by the Borrower
of shares of IMS' capital stock held by the Borrower on February 8, 1996, (iii)
proceeds from any Asset Sale that are, within six months after such Asset Sale,
reinvested in any fixed assets used in the business of the Borrower or any of
its Subsidiaries, and (iv) up to $10,000,000 in Cash Proceeds of Sale received
in any one calendar year from other Asset Sales.
EXTENDED MATURITY DATE means March 31, 2000, if any Lender
agrees in writing to maintain its commitment to make Advances during the
Extension Period pursuant to Section 2.2(c).
EXTENSION PERIOD means April 1, 1999 through the Business Day
immediately preceding March 31, 2000.
FACILITY AMOUNT means, on any date of determination,
$120,000,000 less all Facility Reductions which have become and then remain
effective.
FACILITY REDUCTION means each permanent reduction of the
credit available to the Borrower under this Agreement, whether voluntarily made
pursuant to Section 2.5 or required to be made pursuant to Section 2.6, Section
6.1 or any other provision of this Agreement or otherwise becoming effective in
accordance with this Agreement.
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FACILITY RESERVE means the amount established pursuant to
Section 2.1(i)(A).
FEDERAL FUNDS RATE means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the weighted
average of the rates on overnight federal funds transactions with members of
the Federal Reserve System arranged by federal funds brokers, as published for
such day (or, if such day is not a Business Day, for the next preceding
Business Day) by the Federal Reserve Bank of New York, or, if such rate is not
so published for any day which is a Business Day, the average of the quotations
for such day on such transactions received by Credit Lyonnais from three
federal funds brokers of recognized standing selected by it.
FEE LETTER means the letter from Credit Lyonnais to the
Borrower, relating to fees, dated February 8, 1996.
FISCAL QUARTER means a fiscal quarter of the Borrower.
FISCAL QUARTER END DATE means the last day of a Fiscal
Quarter.
FIXED CHARGE COVERAGE RATIO means an amount computed, as of
any Fiscal Quarter End Date, by dividing (i) Adjusted EBITDA for the four
Fiscal Quarters then ended (taken as a single period) less Capital Expenditures
made in such Fiscal Quarters, whether or not financed, less taxes paid in cash
by the Borrower or any of its Subsidiaries in such Fiscal Quarters, and less
any increase (and plus any decrease) in NonCash Working Capital in such Fiscal
Quarters (provided that any noncash non-recurring charges added back in
computing Adjusted EBITDA during such Fiscal Quarters shall not be counted for
purposes hereof), by (ii) Interest Expense for such Fiscal Quarters plus
scheduled mandatory reductions in the commitments under the Facility Amount
that are to become effective in the next four Fiscal Quarters plus mandatory
principal payments that are to become due and payable in cash in such next four
Fiscal Quarters on such other Debt of the Borrower or any of its Subsidiaries
which must, according to GAAP, be reported on the balance sheet plus Lease
Expense for the four Fiscal Quarters then ended.
FOREIGN SUBSIDIARIES means initially the Persons listed on
Schedule 4.1(d) below the heading "Foreign" and hereafter shall mean such
Persons who are or may become Subsidiaries of the Borrower whose assets and
business are then located primarily outside of the United States.
GAAP means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board and the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the accounting
profession), or in such other statements by such entity as may be in general
use by significant segments of the U.S. accounting profession, which are
applicable to the facts and circumstances on the date of determination.
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GOVERNMENTAL AUTHORITY means any nation, state, sovereign or
government, any political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
GUARANTOR means each Subsidiary of the Borrower that executes,
or joins in, the Guaranty.
GUARANTY means the guaranty by the Borrower's Subsidiaries,
except Inactive Subsidiaries and Foreign Subsidiaries, delivered pursuant to
Section 3.1(a) and each joinder therein by any other Subsidiary of the Borrower
and all guaranties, instruments and agreements at any time delivered by any
Subsidiary of the Borrower in respect of or in exchange or substitution for or
in replacement of such guaranty or to evidence its guaranty of payment of any
of the Obligations.
HAZARDOUS MATERIALS means (i) flammable explosives,
radioactive materials, friable asbestos, urea formaldehyde foam insulation,
transformers or other equipment that contain dielectric fluid containing
regulated levels of polychlorinated biphenyls and petroleum products, and
(ii) chemicals, materials, substances or wastes which are now or hereafter
become defined as or included in the definition, listing or identification of
"hazardous substances," "hazardous wastes," hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," "medical waste," "infectious waste," "biomedical waste,"
"biohazardous waste," or words of similar import, under any applicable
Environmental Law.
IMS means Integrated Measurement Systems, Inc., an Oregon
corporation.
INACTIVE SUBSIDIARY means a Subsidiary of the Borrower that
carries on no business operations or other activities and owns assets with a
fair market value of $100,000 or less.
INDEMNIFIED PERSON is defined in Section 8.6.
INTELLECTUAL PROPERTY ASSIGNMENT means the assignments of
patents, copyrights and trademarks, and applications therefor, executed by the
Borrower and each Guarantor and delivered pursuant to Section 3.1(a) and each
other security agreement at any time delivered by the Borrower or any
Subsidiary of the Borrower to create a Lien securing any of the Obligations
upon any property of the type described in such assignments.
INTEREST EXPENSE means, for any period, all charges for
interest expense for such period in accordance with GAAP, except that (i)
facility fees, syndication fees, closing fees, underwriting fees and discounts,
legal and documentation costs and other closing expenses incurred in respect of
any Debt shall in any event be excluded, whether or not amortized, and (ii)
interest charges not currently payable in cash shall in any event be excluded.
INTEREST PERIOD means, for each Eurodollar Rate Advance
comprising part of the same Borrowing, the period commencing on the date of
such Advance or the date of the conversion of any Advance into such an Advance
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below and, thereafter, each subsequent period commencing on the
last day of the immediately preceding Interest Period
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<PAGE> 18
and ending on the last day of the period selected by the Borrower pursuant to
the provisions below. The duration of each such Interest Period shall be one,
two, three or six months, as the Borrower may select by notice received by the
Agent not later than 11:00 a.m. (New York City time) three Business Days prior
to the first day of such Interest Period; PROVIDED, HOWEVER, that:
(a) the Borrower may not select any Interest Period which
ends after the Maturity Date;
(b) the Borrower may not select any Interest Period which
ends after any date on which any payment on any Advances is due unless,
after giving effect to such selection, the aggregate unpaid principal
amount of Base Rate Advances and Eurodollar Rate Advances having
Interest Periods which end on or prior to such date is at least equal
to the principal amount of Advances due and payable on and prior to
such date;
(c) Interest Periods commencing on the same date for
Advances comprising part of the same Borrowing shall be of the same
duration;
(d) whenever the last day of any Interest Period would
otherwise occur on a day that is not a Business Day, the last day of
such Interest Period shall be extended to the next succeeding Business
Day, except that if such extension would cause the last day of such
Interest Period to occur in the next following calendar month, the last
day of such Interest Period shall be the next preceding Business Day;
and
(e) the Borrower may not have more than ten Interest
Periods in effect at any one time.
INVESTMENT means (i) the acquisition of any interest in any
property, assets or business from any Person, whether by sale, lease or
otherwise, (ii) the funding of any loan, extension of credit, accommodation or
capital contribution to or for the benefit of any Person, and (iii) the
acquisition of any debt or equity securities of or claim against or interest in
any Person, whether upon original issuance, by purchase or otherwise.
LEASE EXPENSE means, for any period on a consolidated basis,
all payments accrued, whether for rent, common area or maintenance charges or
other expenses, under any lease, other than a capital lease, under which the
Borrower or any of its Subsidiaries is the lessee.
LENDER means each financial institution signatory hereto and
any other Eligible Assignee that pursuant to Section 8.7 becomes a party to
this Agreement.
LIEN means any mortgage, deed of trust, lien, pledge, charge,
security interest, hypothecation, assignment, deposit arrangement or
encumbrance of any kind in respect of any asset, whether or not filed, recorded
or otherwise perfected or effective under applicable law, as well as the
interest of a vendor or lessor under any conditional sale agreement, capital or
finance lease or other title retention agreement relating to such asset.
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<PAGE> 19
LOAN AVAILABILITY means the difference, as of any date of
determination, between (i) the then Facility Amount, less any Facility Reserve
then in effect, and (ii) the Advances then outstanding.
LOAN DOCUMENTS means this Agreement, the Guaranty, the
Collateral Documents and all other guaranties and other agreements, instruments
and written indicia of the Obligations delivered to the Agent or any Lender by
or on behalf of the Borrower or any other Loan Party pursuant to or in
connection with the transactions contemplated hereby.
LOAN PARTIES means the Borrower and each Subsidiary of the
Borrower that is a party to any Loan Document.
MATERIAL ADVERSE CHANGE means any materially adverse change in
the financial condition, assets, nature of the assets, liabilities, operations
or prospects of the Borrower and its Subsidiaries, taken as a whole.
MATERIAL ENVIRONMENTAL CLAIM means any Environmental Claim,
regardless of merit, which does or can reasonably be expected to (i) result in
the Borrower or any of its Subsidiaries expending in the aggregate an amount in
excess of $10,000,000 to defend against, settle or satisfy, or (ii) prevent or
enjoin the Borrower or any of its Subsidiaries from carrying on business on any
property on which it conducts operations if the inability to carry on business
on any such property does or can reasonably be expected to cause a Material
Adverse Change.
MATERIAL FOREIGN SUBSIDIARY means (i) Cadence Design Systems
K.K., Cadence Design Systems Ltd., Valid Europe S.A., Cadence Design Systems
GmbH, Cadence Design Systems S.A., Cadence Korea, Ltd., Cadence Design Systems
(Canada), Cadence Design Systems A.B., Cadence Taiwan, Inc., Cadence Design
Systems S.r.l. and Cadence Design Systems Hong Kong Asia and (ii) any other
present or future Foreign Subsidiaries to whom Section 956(d) of the Code then
applies whose consolidated revenues shall equal or exceed 1% of the
consolidated revenues of the Borrower and its Subsidiaries, as measured during
the most recent Fiscal Quarter.
MATERIAL SUBSIDIARY means each Subsidiary of the Borrower
which has (i) as of the end of the most recent Fiscal Quarter, total assets
representing 10% or more of the consolidated total assets of the Borrower and
its Subsidiaries, (ii) for the most recent four Fiscal Quarters, total revenues
representing 10% or more of the consolidated revenues of the Borrower and its
Subsidiaries, or (iii) for the most recent four Fiscal Quarters, net income
representing 10% or more of the consolidated net income of the Borrower and its
Subsidiaries.
MATURITY DATE means March 31, 1999.
MULTIEMPLOYER PLAN means any Plan which is "multiemployer
plan," as defined in Section 4001(a)(3) of ERISA.
1934 ACT means the Securities Exchange Act of 1934.
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<PAGE> 20
NONCASH REVENUES means revenues that are not received in the
form of cash or in the form of accounts receivable currently payable in cash.
NONCASH WORKING CAPITAL means, at any time of determination,
the difference between (i) the consolidated current assets of the Borrower and
its Subsidiaries determined in accordance with GAAP, excluding cash and
Permitted Cash Investments, and (ii) the consolidated current liabilities of
the Borrower and its Subsidiaries determined in accordance with GAAP, excluding
current maturities of long-term Debt.
NON-CONSENSUAL LIEN means a Lien permitted under Section
5.3(a)(iii), (iv), (v), (vi), (vii), (viii) or (ix).
NOTICE OF BORROWING means a notice substantially in the form
of Exhibit B-1.
NOTICE OF CONTINUANCE/CONVERSION means a notice substantially
in the form of Exhibit B-2.
OBLIGATIONS means all present and future debts, obligations
and liabilities of every type and description of the Borrower or any other Loan
Party at any time arising under or in connection with this Agreement, any other
Loan Document or any Rate Contract, due or to become due to the Agent, any
Lender, any Indemnified Person or any other Person and includes, without
limitation, (i) all liability for principal of and interest on any Advances,
and (ii) all liability under the Loan Documents for any additional interest,
fees, taxes, compensation, costs, losses, expense reimbursements and
indemnification.
OECD means the Organization for Economic Cooperation and
Development.
OTHER TAXES is defined in Section 2.16(b).
PBGC means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its functions under ERISA.
PENSION PLAN means any Plan which is (i) an "employee pension
benefit plan" as defined in Section 3(2) of ERISA and (ii) not a Multiemployer
Plan.
PERMITTED CASH INVESTMENTS means short-term investment grade
debt securities of any type authorized from time to time under the investment
policy for short-term cash investments approved by the Borrower's board of
directors.
PERMITTED STOCK TRANSACTION means a purchase by the Borrower
of its common stock or any forward purchase agreements, synthetic forward
purchase agreements, options, calls, puts, collars and other derivative
transactions with respect to the Borrower's common stock entered into or
performed by the Borrower.
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PERSON means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture or other entity, or a government or any political
subdivision or agency thereof.
PLAN means any "employee benefit plan" as defined in Section
3(3) of ERISA (i) which the Borrower or any ERISA Affiliate maintains,
administers, contributes to or is required to contribute to, or, within the six
years prior to the Closing Date, maintained, administered, contributed to or
was required to contribute to, or under which the Borrower or any ERISA
Affiliate may incur any liability and (ii) which covers any employee or former
employee of the Borrower or any ERISA Affiliate (with respect to their
relationship with such entities).
PLEDGE AND SECURITY AGREEMENT means the pledge and security
agreement executed by the Borrower and certain of the Borrower's Subsidiaries
and delivered pursuant to Section 3.1(a) and each joinder therein by any other
Subsidiary of the Borrower and each other security agreement at any time
delivered by the Borrower or any Subsidiary of the Borrower to create a Lien
that secures any of the Obligations.
POTENTIAL DEFAULT means any event or condition described in
Section 6.1 which, with any notice or passage of time (or both) expressly
described in Section 6.1, would constitute an Event of Default.
PRO RATA SHARE means, at any time of determination and in
respect to any Lender, the ratio of (x) such Lender's then commitment to make
Advances hereunder (as set forth in Schedule I or, if such Lender has entered
into one or more Assignments and Acceptances, in the Register) to (y) the then
aggregate amount of all such commitments, and after termination or expiration
of such commitments shall be determined based on the Pro Rata Shares as in
effect on the last day on which any such commitments were outstanding.
QUALIFIED PLAN means a pension plan (as defined in Section
3(2) of ERISA) intended to be tax-qualified under Section 401(a) of the Code
and which the Borrower or any ERISA Affiliate sponsors, maintains, or to which
it makes or is obligated to make contributions, or in the case of a multiple
employer plan (as described in Section 4064(a) of ERISA) has made contributions
at any time during the immediately preceding period covering at least five plan
years, but excluding any Multiemployer Plan.
QUARTER means a calendar quarter.
RATE CONTRACT means any interest rate and currency swap
agreement, cap, floor or collar agreement, interest rate insurance, currency
spot or forward contract or other agreement or arrangement designed to provide
protection against fluctuations in interest or currency exchange rates entered
into by the Borrower and any Person which is, or at the time such contract,
agreement or arrangement was entered into, the Agent or any Lender or an
Affiliate of the Agent or any Lender.
REAL ESTATE COLLATERAL DOCUMENTS means (i) the Deed of Trust,
Assignment of Leases and Rents, Security Agreement and Fixture Filing and (ii)
the Unsecured Environmental Indemnity Agreement, each executed by the Borrower
and delivered pursuant to Section 3.1(a).
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REFERENCE BANKS means Credit Lyonnais, ABN-AMRO N.V. and The
First National Bank of Boston.
REGISTER is defined in Section 8.7(d).
REPORTABLE EVENT means any of the events set forth in Section
4043(b) of ERISA, a withdrawal from a plan described in Section 4063 of ERISA
or a cessation of operations described in Section 4062(e) of ERISA.
REQUISITE LENDERS means Lenders at the time holding, in the
aggregate, at least 51% in Pro Rata Shares.
ROPA FACILITY means the real property and improvements thereon
located at 535, 545, 555 and 575 River Oaks Parkway, San Jose, CA.
SEELY CAMPUS means the real property and improvements thereon
located at 2655 Seely Avenue, San Jose, CA.
SEELY CAMPUS VACANT LAND means the real property that is part
of the Seely Campus and identified as parcels 3 and 4 on Exhibit A to the Deed
of Trust, Assignment of Leases and Rents, Security Agreement and Fixture Filing
to be delivered under Section 3.1(a).
SUBORDINATED DEBT means any Debt of Borrower or any of its
Subsidiaries, which pursuant to its terms is subordinate to the Obligations.
SUBSIDIARY means, with respect to any Person, any corporation,
association, partnership, joint venture or other business entity of which more
than 50% of the voting stock or other equity interests is owned or controlled
directly or indirectly by such Person or one or more Subsidiaries of such
Person or a combination thereof; PROVIDED that IMS shall not be considered a
Subsidiary of the Borrower for purposes of the Loan Documents so long as (i)
the majority of the persons serving on IMS' board of directors are not
directors, officers or employees of the Borrower or any of its Subsidiaries,
(ii) IMS is not otherwise an Affiliate of the Borrower in any respect other
than by virtue of Borrower's right to vote its shares of stock of IMS and (iii)
the Borrower complies with Section 5.3(k).
TAXES is defined in Section 2.16(a).
TOTAL DEBT means, as of any date of determination, all
outstanding Debt of the Borrower and its Subsidiaries which must, according to
GAAP, be reported on the Borrower's consolidated balance sheet and all
outstanding Accommodation Obligations of the Borrower and its Subsidiaries as
to any Debt of any other Person which must, according to GAAP, be set forth in
the footnotes to the Borrower's consolidated balance sheet.
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TRANSFER AND PERFECTION NOTICE means an instrument in the form
of Exhibit C-4 or Exhibit C-5 (if such instrument is then sufficient under
applicable law, when duly signed by the parties indicated thereon, to perfect a
security interest in the account or investments described therein) or any other
instrument by which a Lien upon Permitted Cash Investments, as security for the
Obligations, is lawfully and enforceably created and perfected without any
consent, acknowledgment or other act of any Person other than the Agent. No
Transfer and Perfection Notice shall limit or restrict the control and dominion
of the Borrower and Guarantors over their cash, cash equivalents or Permitted
Cash Investments or any account to which cash, cash equivalents or Permitted
Cash Investments may be deposited or give the Agent or any Lender any control
or dominion over any such cash, cash equivalent, Permitted Cash Investment or
account.
UNFUNDED PENSION LIABILITY means, with respect to any Pension
Plan that is subject to Title IV of ERISA, the excess of such Pension Plan's
accrued benefits, as defined in Section 3(23) of ERISA, over the current value
of such Pension Plan's assets, as defined in Section 3(26) of ERISA (but
excluding from the definition of "current value" of "assets" of such Pension
Plan, accrued but unpaid contributions).
UNITED STATES AND U.S. mean the United States of America.
VENTURE FUND means Telos Venture Partners, L.P., a California
limited partnership.
WELFARE PLAN means any Plan which is an "employee welfare
benefit plan" as defined in Section 3(1) of ERISA.
WITHDRAWAL LIABILITIES means the aggregate amount of the
liabilities, if any, pursuant to Section 4201 of ERISA if the Borrower and each
ERISA Affiliate made a complete withdrawal from all Multiemployer Plans and any
increase in contributions pursuant to Section 4243 of ERISA.
I.2. ACCOUNTING TERMS. All accounting terms not expressly
defined herein shall be construed, except where the context otherwise requires,
and all financial computations required under this Agreement shall be made in
accordance with GAAP applied on a consistent basis. If GAAP changes during the
term of this Agreement so as to affect the calculation of any term defined
herein or any measure of financial performance or financial condition employed
or referred to herein, the Borrower and the Lenders agree to negotiate in good
faith toward an amendment of this Agreement which shall approximate, to the
extent possible, the economic effect of the original provisions hereof after
taking into account such change in GAAP, but until the parties are able to
agree upon such amendment (i) the Borrower shall be deemed in compliance with
the provisions hereof only if and to the extent it would have been in
compliance if such change in GAAP had not occurred and (ii) the Borrower shall
deliver to the Agent, with each financial report delivered by the Borrower
hereunder, information sufficient to confirm such compliance as if such change
in GAAP had not occurred.
I.3. OTHER DEFINITIONAL PROVISIONSERROR! Bookmark not
defined.
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(a) Unless otherwise specified herein or therein, all
terms defined in this Agreement shall have the defined meanings when
used in any other Loan Document or in any certificate or other document
made or delivered pursuant hereto.
(b) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement refer to this Agreement
as a whole and not to any particular provision of this Agreement, and
section, schedule and exhibit references are to this Agreement unless
otherwise specified. The meaning of defined terms shall be equally
applicable to the singular and plural forms of the defined terms. The
term "including" is not limiting and means "including without
limitation."
(c) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and
including"; the words "to" and "until" each mean "to but excluding";
and the word "through" means "to and including."
(d) References to agreements and other documents shall be
deemed to include all subsequent amendments and other modifications
thereto, but only to the extent such amendments and other modifications
are not prohibited by the terms of any Loan Document.
(e) References to statutes shall include all regulations
promulgated thereunder and references to statutes or regulations shall
be construed as including all statutory and regulatory provisions
consolidating, amending or replacing the statute or regulation.
(f) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the construction of
this Agreement.
(g) Unless the context otherwise requires, all terms used
in this Agreement and defined in the Uniform Commercial Code, as
enacted in the State of California, shall have the meanings assigned
therein.
II
AMOUNTS AND TERMS OF THE ADVANCES
II.1. REVOLVING CREDIT FACILITY.
(a) ADVANCES. Subject to the terms and conditions herein,
each Lender severally agrees to lend to the Borrower, from time to time
on any Borrowing Date, an amount in Dollars equal to such Lender's Pro
Rata Share of a Borrowing that (i) is requested by the Borrower for
such Borrowing Date and (ii) does not exceed the Loan Availability as
of such Borrowing Date.
(b) BORROWINGS. Each Borrowing shall be in an aggregate
amount not less than $1,000,000 or an integral multiple of $100,000 in
excess thereof, if it is a Borrowing of Base Rate Advances, and not
less than $5,000,000 or an integral multiple of $250,000 in excess
thereof, if it is a Borrowing of
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Eurodollar Rate Advances. Until the Maturity Date, the Borrower may
reborrow under Section 2.1(a) any Advances that it has voluntarily
prepaid pursuant to Section 2.11.
(c) NOTICE OF BORROWING. To request a Borrowing, the
Borrower shall deliver a Notice of Borrowing to the Agent not later
than 2:00 p.m. New York City time (i) three Business Days prior to the
requested Borrowing Date, in the case of Eurodollar Rate Advances, and
(ii) one Business Day prior to the requested Borrowing Date, in the
case of Base Rate Advances. The Agent shall give each Lender prompt
notice thereof by telecopier, telex or cable. The Notice of Borrowing
shall specify (i) the requested Borrowing Date, (ii) the amount of the
Borrowing and whether it will consist of Base Rate Advances or
Eurodollar Rate Advances, and (iii) in the case of a Borrowing
comprised of Eurodollar Rate Advances, the initial Interest Period for
such Eurodollar Rate Advances.
(d) TELEPHONIC NOTICE. In lieu of delivering a Notice of
Borrowing, the Borrower may give the Agent telephonic notice of any
proposed Borrowing by the time required under Section 2.1(c) and in
such event shall promptly (but in no event later than the Borrowing
Date for the requested Borrowing) deliver a confirmatory Notice of
Borrowing to the Agent. If the telephonic request differs in any
respect from the written Notice of Borrowing subsequently delivered,
the telephonic request shall govern as to the terms of all Advances
made in accordance with such telephonic request. The Agent's
determination of the contents of any telephonic request shall, absent
manifest error, be conclusive and binding on all parties hereto.
(e) FUNDING OF ADVANCES. Upon fulfillment of the
applicable conditions set forth in Article III, each Lender shall,
before 12:00 noon New York City time on the Borrowing Date, make
available for the account of its Applicable Lending Office to the Agent
at its address referred to in Section 8.2, in same day funds, such
Lender's Pro Rata Share of a Borrowing. After the Agent receives such
funds, the Agent will, not later than 3:00 p.m. New York City time on
the Borrowing Date, make such funds available to the Borrower as the
Borrower may direct.
(f) NOTICE OF BORROWING IRREVOCABLE. Each Notice of
Borrowing and telephonic request shall be irrevocable and binding on
the Borrower.
(g) ASSUMPTION OF FUNDING. Unless the Agent receives
notice from a Lender prior to any Borrowing Date that such Lender will
not make available to the Agent such Lender's Pro Rata Share of the
Borrowing to be made on such Borrowing Date, the Agent may assume that
such Lender has made its Pro Rata Share available to the Agent on such
Borrowing Date in accordance with Section 2.1(e), and the Agent may, in
reliance upon such assumption, make available to the Borrower on such
Borrowing Date a corresponding amount. If and to the extent that such
Lender fails to make its Pro Rata Share available to the Agent, such
Lender and the Borrower severally agree to repay to the Agent forthwith
on demand such corresponding amount together with interest thereon, for
each day from the date such amount is made available to the Borrower
until the date such amount is repaid to the Agent, at (i) in the case
of the Borrower, the interest rate applicable at the time to Base Rate
Advances and (ii) in the case of such Lender, the Federal Funds Rate
until the third Business Day after demand by the Agent to such Lender
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for such repayment and thereafter at the rate applicable to Base Rate
Advances. If such Lender shall repay to the Agent such corresponding
amount, such amount so repaid shall constitute such Lender's Advance as
part of such Borrowing for purposes of this Agreement and the Borrower
shall thereupon be excused from making the repayment described in the
preceding sentence.
(h) FAILURE OF LENDER TO FUND. All obligations of the
Lenders hereunder shall be several, and not joint. The failure of any
Lender to make the Advance to be made by it as part of any Borrowing
shall not relieve any other Lender of its obligation, if any, hereunder
to make its Advance as part of such Borrowing. No Lender shall be
responsible for the failure of any other Lender to make an Advance on
any Borrowing Date.
(i) FACILITY RESERVE; MANDATORY FACILITY REDUCTION. The
credit otherwise available under this Agreement shall be subject to
temporary and permanent reduction as follows:
(A) FACILITY RESERVE. The credit available under
this Agreement shall be temporarily reduced by $20,000,000 (the
"Facility Reserve"), from and after the Closing Date and until the date
on which the Borrower delivers the following documents, if such
documents are delivered no later than the 90th day after the Closing
Date:
(i) A legal opinion addressed to the Agent
by a reputable attorney authorized to practice law in Japan,
substantially confirming (in conformity with local practice for legal
opinions of this type), as to the Agent's security interest in the
shares of capital stock of Cadence Design Systems K.K. identified as
Pledged Shares in Schedule A to the Pledge and Security Agreement, each
and all of the matters contemplated in the form of legal opinion
attached hereto as Exhibit D-2; and
(ii) The original stock certificates
representing such shares accompanied by all necessary or appropriate
instruments of transfer and all related documents, acts and deeds
necessary in the opinion of such counsel to transfer such Pledged
Shares to the Agent, in pledge, free from the interest of any
subsequent bona fide purchaser.
(B) MANDATORY FACILITY REDUCTION. The credit
available under this Agreement shall be permanently reduced by
$20,000,000 on the 90th day after the Closing Date if:
(i) The Facility Reserve remains in effect
on such day; or
(ii) The Borrower has not delivered to the
Agent, on or before such day:
a. A legal opinion addressed to
the Agent by one or more reputable attorneys
authorized to practice law in France, the United
Kingdom and Belgium (or, if Cadence Design Systems
GmbH is then a direct subsidiary of the Borrower,
Germany), substantially confirming (in conformity with
local practice for legal opinions of this
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type), as to the Agent's security interest in the
shares of capital stock of Cadence Design Systems
S.A., Cadence Design Systems Ltd. and Valid Europe
S.A. (or Cadence Design Systems GmbH if it is then a
direct subsidiary of the Borrower), respectively,
identified as Pledged Shares in Schedule A to the
Pledge and Security Agreement (or, if Cadence Design
Systems GmbH is then a direct subsidiary of the
Borrower, shares representing 65% of its outstanding
capital stock), each and all of the matters
contemplated in the form of legal opinion attached
hereto as Exhibit D-2; and
b. The original stock certificates
representing such shares accompanied by all necessary
or appropriate instruments of transfer and all related
documents, acts and deeds necessary in the opinion of
such attorneys to transfer such Pledged Shares to the
Agent, in pledge, free from the interest of any
subsequent bona fide purchaser.
II.2. EXTENSION OF MATURITY DATE.
(a) REQUEST FOR EXTENSION. No earlier than January 1, 1998
and no later than March 31, 1998, the Borrower may, by written notice
to the Agent and each Lender, request each Lender to determine whether
such Lender wishes, at its sole option and election, to agree to
maintain its commitment to make Advances hereunder during the Extension
Period.
(b) NO DUTY. No Lender shall be in any respect obligated
to agree to any such request or bound by any restriction, limitation or
duty in any manner related thereto. Each Lender may freely decline any
such request and shall be deemed to have declined it unless it
expressly agrees in writing to maintain its commitment as set forth in
Section 2.2(c).
(c) PROCEDURE. Any Lender that wishes to agree to any such
request for a one-year extension may so notify the Agent within 30 days
after receipt of the Borrower's request for extension (such notice
being preliminary and subject to such Lender's final agreement upon its
approval of the aggregate number and commitment amounts of the Lenders
so agreeing). The Agent thereupon shall promptly advise the Borrower
and the Lenders of any and all notices so received. Thereafter, any
Lenders willing to agree to maintain their commitments to make Advances
hereunder during the Extension Period may do so by an agreement in
writing signed by all such Lenders.
(d) TERMINATION AND REPAYMENT AS TO OTHER LENDERS. On the
Business Day immediately preceding the Maturity Date, the commitment of
each Lender, except a Lender which has entered into an agreement in
writing as set forth in Section 2.2(c), shall be terminated, and on the
Maturity Date, the Borrower shall repay, in full and in cash, all
Advances and other Obligations outstanding to each Lender whose
commitment is so terminated.
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II.3. EVIDENCE OF DEBT.
(a) PROMISE TO REPAY. Borrower hereby agrees to pay when
due the principal amount of each Advance, and further agrees to pay all
unpaid interest accrued thereon, in accordance with the terms of this
Agreement. Borrower further agrees that if, in the opinion of any
Lender, a promissory note or other evidence of debt is required or
appropriate to reflect or enforce any Advances owing to, or to be made
by, such Lender, then Borrower shall promptly execute and deliver to
such Lender a promissory note or other evidence of debt (in form and
substance satisfactory to such Lender) payable to such Lender in an
amount equal to the Advances owing to such Lender under this Agreement
from time to time.
(b) LOAN ACCOUNT. Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the Debt of
Borrower to such Lender resulting from each Advance owing to such
Lender from time to time, including the amount of principal and
interest payable and paid to such Lender from time to time hereunder.
The entries made in each such loan account or accounts shall be
conclusive and binding for all purposes, absent manifest error.
II.4. FEES.
(a) CLOSING FEES. [Intentionally Omitted.]
(b) COMMITMENT FEES. On the first day of each Quarter,
commencing July 1, 1996 and continuing thereafter until the Facility
Amount is permanently reduced to zero, the Borrower shall pay a
commitment fee to the Agent, for the account of the Lenders in
accordance with their Pro Rata Shares at the time the fee accrued, in
an amount computed by applying the Commitment Fee Rate to the Loan
Availability, day to day in the prior Quarter.
(c) AGENT'S FEES. The Borrower shall pay when due all
fees payable under the Fee Letter.
II.5. VOLUNTARY FACILITY REDUCTIONS. The Borrower at any
time may terminate in whole, and from time to time may reduce ratably in part,
the unused portions of the commitments of the Lenders to extend credit
hereunder, by giving the Agent at least three Business Days' prior written
notice that, effective as of a Business Day set forth in the notice, the
Facility Amount shall be reduced by an amount that (i) does not exceed the Loan
Availability as of such Business Day and (ii) is equal to either (A) the then
Facility Amount or (B) an integral multiple of $1,000,000. Such notice, once
given, shall be irrevocable, and the Facility Amount, once reduced, may not be
increased under any circumstances.
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II.6. FACILITY REDUCTIONS; REPAYMENT. The Borrower agrees
to repay the Advances and reduce the Facility Amount as follows:
(a) SCHEDULED FACILITY REDUCTIONS PRIOR TO THE MATURITY
DATE. On each date set forth below, the Facility Amount shall be
automatically and permanently reduced by the amount set forth next to
such date below:
Date Amount of Reduction
---- -------------------
March 31, 1997 $10,000,000
September 30, 1997 10,000,000
March 31, 1998 10,000,000
September 30, 1998 15,000,000
(b) TERMINATION OR REDUCTION ON MATURITY DATE. On the
Business Day immediately preceding the Maturity Date, the Facility
Amount shall be automatically and permanently reduced to zero, except
that if any Lender has agreed to maintain its commitment to make
Advances hereunder during the Extension Period as set forth in Section
2.2(c), then the Facility Amount shall be automatically and permanently
reduced on such Business Day to the difference between (i) the
aggregate amount of all such commitments of all Lenders so agreeing
less (ii) all Facility Reductions that became effective after the date
of such agreement.
(c) TERMINATION ON EXTENDED MATURITY DATE. On the
Extended Maturity Date, if the Facility Amount was not previously
reduced to zero, the Facility Amount shall be automatically and
permanently reduced to zero.
(d) NONSCHEDULED MANDATORY FACILITY REDUCTIONS. In
addition to the foregoing Facility Reductions, the Facility Amount
shall be automatically and permanently reduced:
(i) ASSET SALE PROCEEDS. Whenever the Borrower or
any of the Guarantors receives any Cash Proceeds of Sale,
except Excluded Proceeds, by an amount equal to 100% of such
Cash Proceeds of Sale less all costs of sale paid in cash by
the Borrower or any of its Subsidiaries in connection with the
Asset Sale from which such Cash Proceeds of Sale arose;
PROVIDED, HOWEVER that to the extent necessary to avoid the
payment of Breakage Costs, the Borrower may elect to defer such
reduction until the last day of the next maturing Interest
Periods then in effect in their order of maturity, but only if
cash in the amount equal to such reduction has been deposited
in a cash collateral account maintained with the Agent and
governed by terms acceptable to the Agent;
(ii) SUBORDINATED DEBT PROCEEDS. Whenever the
Borrower or any of its Subsidiaries receives any proceeds from
any issuance and sale of Subordinated Debt that is permitted to
be issued and sold upon any waiver of the provisions of Section
5.3(d) by the Requisite Lenders (other than proceeds from
Subordinated Debt permitted to be issued and sold as described
in
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Section 5.3(d)(x) in connection with an acquisition), by an
amount equal to 75% of all proceeds so received, net of
placement fees and underwriting expenses paid in cash by the
Borrower or such Subsidiary in connection with the sale;
(iii) EXCESS CASH FLOW. On the 90th day after the end
of each fiscal year, commencing with the fiscal year ending on
or about December 31, 1997 (i.e., on or about March 31, 1998),
in an amount equal to the lesser of (i) $25,000,000, and (ii)
50% of the Excess Cash Flow for such fiscal year; and
(iv) FOREIGN COLLATERAL DOCUMENTS. On the 90th day
after the Closing Date, if the conditions set forth in Section
2.1(i)(B) are then met, in the amount set forth in said
Section.
(e) APPLICATION OF NONSCHEDULED FACILITY REDUCTIONS. All
Facility Reductions, whether voluntary or mandatory, other than the
Facility Reductions scheduled to occur on certain dates pursuant to
Sections 2.6(a), (b) and (c), shall be credited to each such future
scheduled Facility Reduction on a ratable basis, proportionately to the
ratio of such future scheduled Facility Reduction to all such future
scheduled Facility Reductions.
(f) EXCESS REVOLVING CREDIT EXPOSURE. If at any time, by
reason of any voluntary or mandatory Facility Reduction or for any
other reason, the aggregate outstanding Advances are greater than the
then Facility Amount less any Facility Reserve then in effect, the
Borrower shall immediately, without notice or demand, repay Advances in
an amount equal to such excess.
(g) CHANGE OF CONTROL. If, within the period commencing on
the date of a Change of Control and ending 30 Business Days after the
Borrower gives the Agent and the Lenders written notice of such Change
of Control, the Requisite Lenders shall notify the Agent and the
Borrower in writing that the credit facility established under this
Agreement shall be terminated, then on the 30th day following the
giving of such notice (i) all Advances then outstanding shall be due
and payable in full, and (ii) the Facility Amount shall be
automatically and permanently reduced to zero.
II.7. INTEREST. The Borrower agrees to pay interest on the
unpaid principal amount of each Advance made by each Lender from the date of
such Advance until such principal amount shall be repaid in full, at the
following rates per annum:
(a) BASE RATE ADVANCES. Whenever such Advance is a Base
Rate Advance, a rate per annum equal on each day to the Base Rate as in
effect on such day, with all such interest accrued in any one Quarter
payable quarterly on the first day of the next following Quarter and in
any case on the date the Facility Amount is reduced to zero and all
Advances are repaid, or required to be repaid, in full.
(b) EURODOLLAR RATE ADVANCES. Whenever such Advance is a
Eurodollar Rate Advance, a rate per annum equal on each day during the
Interest Period for such Eurodollar Rate Advance to the sum of the
Eurodollar Rate for such Interest Period determined for such day plus
the Eurodollar Rate Margin,
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with all interest so accrued payable on the last day of such Interest
Period and, if such Interest Period has a duration of more than three
months, on the day which occurs three months after the first day of
such Interest Period.
(c) DEFAULT INTEREST. Overdue principal and, to the extent
permitted by law, overdue interest in respect of any Advance will bear
interest equal to the greater of (i) the rate applicable to Base Rate
Advances plus 2% per annum or (ii) the rate otherwise payable on such
Advance (without giving effect to this provision) plus 2% per annum.
II.8. ADDITIONAL INTEREST ON EURODOLLAR RATE ADVANCES. The
Borrower shall pay each Lender additional interest on the unpaid principal
amount of each Advance of such Lender for each day that such Advance is
outstanding as a Eurodollar Rate Advance, at a rate per annum equal to the
remainder obtained by subtracting (i) the Eurodollar Rate for the Interest
Period for such Eurodollar Rate Advance from (ii) the rate determined by
dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar
Rate Reserve Percentage of such Lender for such day. Such additional interest
shall be determined by such Lender, notified to the Borrower through the Agent
and payable when and as interest is payable on such Eurodollar Rate Advance or,
if later, five Business Days after the Borrower receives notice thereof. If the
Borrower so requests, such Lender shall provide the Borrower through the Agent a
certificate setting forth the calculation and supporting information for such
additional interest, which shall be conclusive and binding for all purposes,
absent manifest error.
II.9. INTEREST RATE DETERMINATION AND PROTECTION.
(a) DETERMINATION OF EURODOLLAR RATE. The Eurodollar Rate
for each Interest Period for Eurodollar Rate Advances comprising part
of the same Borrowing shall be determined by the Agent on the basis of
applicable rates furnished to and received by the Agent from the
Reference Banks two Business Days before the first day of such Interest
Period.
(b) NOTICE OF EURODOLLAR RATE. The Agent shall give
prompt notice to the Borrower and the Lenders of the Eurodollar Rate
for any Interest Period when determined by the Agent.
(c) FAILURE TO PROVIDE INFORMATION. If any one of the
Reference Banks does not furnish to the Agent timely information
sufficient to enable the Agent to determine a Eurodollar Rate, the
Agent shall determine such interest rate on the basis of timely
information furnished by the remaining Reference Banks. If fewer than
two Reference Banks furnish timely information to the Agent for
determining the Eurodollar Rate for any Eurodollar Rate Advances, the
Agent shall determine the Eurodollar Rate based on information
furnished by Credit Lyonnais. If Credit Lyonnais is unable to obtain
timely information for determining the Eurodollar Rate for any
Eurodollar Rate Advances, the Agent shall forthwith notify the Borrower
and the Lenders that the interest rate cannot be determined for such
Eurodollar Rate Advances and the obligation of the Lenders to make or
continue, or to convert Advances into, Eurodollar Rate Advances shall
be suspended until the Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no longer exist.
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(d) SUSPENSION OF EURODOLLAR RATE ADVANCES. If, with
respect to any Eurodollar Rate Advances, the Requisite Lenders notify
the Agent that either (i) the Eurodollar Rate for any Interest Period
for such Eurodollar Rate Advances is at least two basis points less
than the cost to such Lenders of obtaining funds in Dollars in the
London interbank market in the amounts substantially equal to such
Lenders' Eurodollar Rate Advances and for a period equal to such
Interest Period or (ii) funding is not available to such Lenders in
such market in Dollars, then the Agent shall forthwith so notify the
Borrower and the Lenders and thereupon (A) each Eurodollar Rate Advance
will automatically, on the last day of the then existing Interest
Period therefor, convert into a Base Rate Advance, and (B) the
obligation of the Lenders to make or continue, or to convert Advances
into, Eurodollar Rate Advances shall be suspended until the Agent shall
notify the Borrower and the Lenders that the circumstances causing such
suspension no longer exist.
(e) FAILURE TO SPECIFY DURATION. If the Borrower fails,
prior to the date the Eurodollar Rate for any Interest Period is
determined by the Agent, to specify the duration of any Interest Period
for any Eurodollar Rate Advances, the Interest Period shall be one
month.
(f) MINIMUM AMOUNTS. No Borrowing of less than $5,000,000
may
be made or continued as, or converted into, Eurodollar Rate Advances.
If at any time the aggregate outstanding principal amount of all
Eurodollar Rate Advances having the same Interest Period is reduced to
less than $5,000,000, such Advances shall automatically and
immediately convert into Base Rate Advances.
(g) AGENT'S DETERMINATION CONCLUSIVE. Each determination
by the Agent of an interest rate hereunder shall be conclusive and
binding for all purposes, absent manifest error.
II.10. VOLUNTARY CONVERSION OF ADVANCES.
(a) NOTICE OF CONVERSION/CONTINUATION. Subject to the
provisions of Sections 2.9 and 2.14, the Borrower may on any Business
Day, by giving the Agent a Notice of Continuance/Conversion not later
than 2:00 p.m. (New York City time) on the third preceding Business
Day, (i) convert Base Rate Advances comprising the same Borrowing into
Eurodollar Rate Advances, (ii) convert Eurodollar Rate Advances
comprising the same Borrowing into Base Rate Advances or (iii) continue
Eurodollar Rate Advances as Eurodollar Rate Advances, but (A) the
Borrower may convert a Eurodollar Rate Advance into a Base Rate Advance
only on the last day of an Interest Period for such Eurodollar Rate
Advance, (B) the Borrower may continue a Eurodollar Rate Advance as a
Eurodollar Rate Advance only as of the last day of an Interest Period
for such Eurodollar Rate Advance, and (C) no Advance may be converted
into or continued as a Eurodollar Rate Advance at any time when an
Event of Default or Potential Default has occurred and is continuing.
(b) TELEPHONIC NOTICE. In lieu of delivering a Notice of
Continuance/Conversion, the Borrower may give the Agent telephonic
notice of any proposed conversion or continuance by the time required
under Section 2.10(a) and in such event shall promptly (but in no event
later than the date of the
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requested conversion or continuance) deliver a confirmatory Notice of
Continuance/Conversion to the Agent. If the telephonic request differs
in any respect from the written Notice of Continuance/Conversion
subsequently furnished, the telephonic request shall govern as to the
terms of such notice. The Agent's determination of the contents of any
telephonic request shall, absent manifest error, be conclusive and
binding on all parties hereto.
(c) REQUIREMENTS. Each Notice of Continuance/Conversion or
telephonic request shall specify (i) the date of the continuance or
conversion, (ii) the Advances to be converted or continued and (iii)
when Advances are converted into or continued as Eurodollar Rate
Advances, the duration of the Interest Period for such Advances.
(d) BASE RATE ADVANCES. Unless a Eurodollar Rate has been
determined for a particular Advance and applies to such Advance on a
particular day in accordance with the provisions hereof, such Advance
shall be a Base Rate Advance and shall accrue interest at the rate then
applicable to Base Rate Advances.
II.11. PREPAYMENTS. The Borrower from time to time may
prepay, without premium or penalty, the outstanding principal amounts of
Advances comprising part of the same Borrowing, in whole or ratably in part, so
long as (i) the Borrower gives one Business Day's prior written notice to the
Agent stating the proposed date and aggregate principal amount of the
prepayment, (ii) each partial prepayment is made in an aggregate principal
amount of $1,000,000 or an integral multiple of $500,000 in excess thereof,
(iii) if any Eurodollar Rate Advance is paid prior to the last day of the
Interest Period for such Advances, all unpaid interest accrued to the date of
prepayment on the principal amount prepaid and all Breakage Costs incurred as a
result of the prepayment are also paid, and (iv) all unpaid interest accrued to
the date of prepayment is paid concurrently with any prepayment in full. Notice
of prepayment, once given, shall be irrevocable, and the amount of the
prepayment specified in the notice shall accordingly be due and payable on the
prepayment date specified therein.
II.12. FUNDING LOSSES. If (i) any Eurodollar Rate Advance is
repaid or converted to a Base Rate Advance on any day other than the last day of
an Interest Period for such Eurodollar Rate Advance (whether as a result of any
optional prepayment, mandatory prepayment, payment upon acceleration, mandatory
conversion or otherwise), (ii) the Borrower fails to borrow any Eurodollar Rate
Advance in accordance with a Notice of Borrowing or a telephonic request
delivered to the Agent (whether as a result of the failure to satisfy any
applicable conditions or otherwise), (iii) any Base Rate Advance is not
converted into a Eurodollar Rate Advance or any Eurodollar Rate Advance is not
continued as a Eurodollar Rate Advance in accordance with a Notice of
Continuance/Conversion or telephonic request delivered to the Agent (whether as
a result of the failure to satisfy any applicable conditions or otherwise), or
(iv) the Borrower fails to make any prepayment in accordance with any notice of
prepayment delivered to the Agent, the Borrower shall, upon demand by any
Lender, reimburse such Lender for all reasonable costs and losses incurred by
such Lender as a result of such repayment, prepayment or failure ("Breakage
Costs"), including reasonable costs and losses incurred by a Lender as a result
of funding arrangements or contracts entered into by such Lender to fund
Eurodollar Rate Advances. Breakage Costs shall be payable only if demanded
within 90 days after the end of the applicable
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Interest Period and shall be due 30 days after demand. Demand shall be made by
delivery to the Borrower and the Agent of a certificate of the Lender making the
demand, setting forth in reasonable detail the calculation of the Breakage Costs
for which demand is made. Such certificate shall, in the absence of manifest
error, be conclusive and binding on the Borrower.
II.13. INCREASED COSTS.
(a) INCREASE IN COST. If, due to either (i) the
introduction of or any change (other than any change by way of
imposition or increase of reserve requirements, in the case of
Eurodollar Rate Advances, included in the Eurodollar Rate Reserve
Percentage) in or in the interpretation of any law or regulation after
January 1, 1996 or (ii) the compliance with any guideline or request
from any central bank or other Governmental Authority (whether or not
having the force of law) made after January 1, 1996, there shall be any
increase in the cost to any Lender or any participant under
Section 8.7(f) of agreeing to make or making, funding or maintaining
Eurodollar Rate Advances, then the Borrower shall from time to time pay
to the Agent for the account of such Lender or participant additional
amounts sufficient to compensate such Lender or participant for such
increased cost. Such costs shall be payable only if demanded within six
months after they were incurred and shall be due 30 days after demand.
Demand shall be made by delivery to the Borrower and the Agent of a
certificate of the Lender or participant making the demand, setting
forth in reasonable detail the calculation of the costs for which
demand is made. Such certificate shall, in the absence of manifest
error, be conclusive and binding on the Borrower.
(b) INCREASE IN CAPITAL REQUIREMENTS. If any Lender
determines that compliance with any change in law or regulation or any
guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), in each case after
January 1, 1996, affects or would affect the amount of capital required
or expected to be maintained by such Lender or any corporation
controlling such Lender and that the amount of such capital is
increased by or based upon the existence of such Lender's commitment to
lend or funding hereunder and other commitments or funding of this
type, then, upon demand by such Lender, the Borrower shall, within 30
days after demand from time to time by such Lender, pay to the Agent
for the account of such Lender additional amounts sufficient to
compensate such Lender or such corporation in the light of such
circumstances, to the extent that such Lender determines in good faith
that such increase in capital to be allocable to the existence of such
Lender's commitment to lend or funding hereunder. No such compensation
may be demanded as to increased capital maintained by a Lender more
than six months before compensation was first demanded by such Lender
under this Section 2.13(b). Demand for such compensation shall be made
by delivery to the Borrower and the Agent of a certificate of the
Lender making the demand, setting forth the amount demanded. Such
certificate shall, in the absence of manifest error, be conclusive and
binding on the Borrower.
(c) REPLACEMENT LENDERS AND PARTICIPANTS. If, and on each
occasion that, (i) a Lender fails to make its Advance as part of any
Borrowing within three days after any Borrowing Date as required by
Section 2.1(a), 2.1(e) and 2.1(g), or (ii) a Lender or a participant
under Section 8.7(f) makes a demand for
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compensation pursuant to Sections 2.8, 2.13(a) or 2.13(b) with respect
to Eurodollar Rate Advances, or (iii) a Lender is excused from funding
Eurodollar Rate Advances pursuant to Sections 2.9(c), 2.9(d) or 2.14 or
(iv) Taxes are required, pursuant to Section 2.16(a), to be deducted
from or with respect to any amount payable to any Lender or the Agent,
the Borrower may in whole permanently replace such Lender or
participant, as the case may be, with an Eligible Assignee willing to
become a Lender hereunder, on the following terms:
(A) The replacement Lender must be satisfactory to
the Agent in its reasonable discretion;
(B) The Borrower shall give the Agent and the
Lender or participant being replaced at least five Business Days' prior
written notice of the replacement. The notice must be given within 180
days after the date of such failure to fund or such demand was made or
excuse was invoked by such Lender or participant and must state the day
(which must be a Business Day not more than ten days after the notice
is given) on which the replacement will be effective;
(C) On the effective date of the replacement, (i)
the replacement Lender shall purchase the Advances owed to such
replaced Lender or participant for a purchase price equal to the
principal amount thereof and all interest accrued thereon as of such
effective date, payable in immediately available funds on such
effective date, (ii) the replacement Lender shall assume the Pro Rata
Share of the commitment to make Advances of such replaced Lender or
participant, (iii) an Assignment and Acceptance covering such Advances
and Pro Rata Share shall be delivered to the replacement Lender by the
Lender being replaced or by the participant being replaced and the
Lender from which it holds its participation, and (iv) the Borrower
shall pay to the Agent for the account of the replaced Lender or
participant all Breakage Costs resulting from the replacement and all
additional interest, fees, compensation, costs, losses, taxes, expense
reimbursements, indemnities and other Obligations due to the Lender or
participant being replaced; and
(D) The Borrower will remain liable to each
replaced Lender or participant for all Obligations that survive the
repayment of the Advances.
II.14. ILLEGALITY. Notwithstanding any other provision of this
Agreement, if any Lender shall notify the Agent that the introduction of or any
change in or in the interpretation of any law or regulation makes it unlawful,
or any central bank or other Governmental Authority asserts that it is unlawful,
for any Lender or its Eurodollar Lending Office to perform its obligations
hereunder to make Eurodollar Rate Advances or to fund or maintain Eurodollar
Rate Advances hereunder, then (i) the obligation of such Lender to make or
continue, or to convert Advances into, Eurodollar Rate Advances shall be
suspended until the Agent shall notify the Borrower and the Lenders that the
circumstances causing such suspension no longer exist, and (ii) the Borrower
shall forthwith either (A) prepay in full all Eurodollar Rate Advances of such
Lender then outstanding, together with interest accrued thereon and Breakage
Costs related thereto, or (B) convert all Eurodollar Rate Advances of such
Lender then outstanding into Base Rate Advances and pay all interest accrued
thereon to the date of conversion and all Breakage Costs related thereto.
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II.15. PAYMENTS AND COMPUTATIONS.
(a) PAYMENTS. The Borrower shall make each payment due
hereunder not later than 2:00 p.m. (New York City time) on the day
payment is due, in Dollars received by the Agent at its address
referred to in Section 8.2 in same day funds. Any payment due to a
Lender shall be paid to the Agent for account of such Lender. When the
Agent receives a payment for account of a Lender, the Agent will
promptly cause like funds to be distributed to such Lender for account
of its Applicable Lending Office.
(b) COMPUTATIONS. All computations of interest, additional
interest and fees accruing at a per annum rate shall be made on the
basis of the actual number of days (including the first day but
excluding the last day) occurring in the period for which such
interest, additional interest or commitment fees are payable and a year
of 360 days, except that interest at the Base Rate shall be computed on
a year of 365 days or, in a leap year, 366 days.
(c) PAYMENT ON BUSINESS DAY. Whenever any payment
hereunder is due on a day other than a Business Day, such payment shall
be made on the next succeeding Business Day, and such extension of time
shall be included in the computation of interest or fees. If, however,
such extension would cause payment of interest on or principal of
Eurodollar Rate Advances to be made in the next following calendar
month, such payment shall be made on the next preceding Business Day.
(d) PRESUMPTION OF PAYMENT. Unless the Agent receives
notice from the Borrower prior to the date on which any payment is due
to the Agent for the benefit of the Lenders hereunder that the Borrower
will not make such payment in full, the Agent may assume that the
Borrower has made such payment in full to the Agent on such date and
the Agent may, in reliance upon such assumption, cause to be
distributed to each Lender on such due date an amount equal to the
amount then due such Lender. If and to the extent the Borrower does not
make such payment to the Agent in full when due, each Lender shall
repay to the Agent forthwith on demand such amount distributed to such
Lender, together with interest thereon for each day from the date such
amount was distributed to such Lender until the Business Day such
Lender repays such amount to the Agent, at the Federal Funds Rate until
the third Business Day after such demand and thereafter at the rate
applicable to Base Rate Advances.
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II.16. TAXES.
(a) NET PAYMENTS. Any and all payments by the Borrower
hereunder shall be made free and clear of and without deduction for any
and all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto, excluding,
in the case of each Lender and the Agent, taxes imposed on its net
income, and franchise taxes imposed on it, by the jurisdiction under
the laws of which such Lender or the Agent (as the case may be) is
organized or any municipal subdivision thereof and, in the case of each
Lender, taxes imposed on its net income, and franchise taxes imposed on
it, by the jurisdiction of such Lender's Applicable Lending Office or
any political subdivision thereof (all such non-excluded taxes, levies,
imposts, deductions, charges, withholdings and liabilities,
collectively, are "Taxes"). If the Borrower is required by law to
deduct any Taxes from or in respect of any sum payable hereunder to any
Lender or the Agent, (i) the sum payable shall be increased as may be
necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section
2.16) such Lender or the Agent (as the case may be) receives an amount
equal to the sum it would have received if no such deductions had been
made, (ii) the Borrower shall make such deductions, and (iii) the
Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(b) PAYMENT OF OTHER TAXES. In addition, the Borrower
agrees to pay any present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or under or from the execution,
delivery or registration of, or otherwise with respect to, this
Agreement or any other Loan Document ("Other Taxes").
(c) INDEMNIFICATION. The Borrower will indemnify each
Lender and the Agent for the full amount of Taxes or Other Taxes
(including any Taxes or Other Taxes imposed by any jurisdiction on
amounts payable under this Section 2.16) paid by such Lender or the
Agent (as the case may be) and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto.
Payment under this indemnity shall be due 30 days after written demand
therefor.
(d) EVIDENCE OF PAYMENTS. Within 30 days after the date of
any payment of Taxes, the Borrower will furnish to the Agent, at its
address referred to in Section 8.2, the original or a certified copy of
a receipt evidencing payment thereof. If no Taxes are payable in
respect of any payment hereunder, the Borrower will furnish to the
Agent, at such address, a certificate from each appropriate taxing
authority, or an opinion of counsel acceptable to the Agent, in either
case stating that such payment is exempt from or not subject to Taxes.
(e) WITHHOLDING TAX EXEMPTION. If any Lender is a
"foreign corporation" within the meaning of the Code, such Lender shall
deliver to the Agent (i) either (A) if such Lender qualifies for an
exemption from, or a reduction of, United States withholding tax under
a tax treaty, a properly completed and executed Internal Revenue
Service form 1001 before the payment of any interest in the first
calendar year and in each third succeeding calendar year during which
interest may be paid under this Agreement, or (B) if such Lender
qualifies for an exemption for interest paid under this Agreement
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from United States withholding tax because it is effectively connected
with a United States trade or business of such Lender, two properly
completed and executed copies of Internal Revenue Service form 4224
before the payment of any interest is due in the first taxable year of
such Lender, and in each succeeding taxable year of such Lender, during
which interest may be paid under this Agreement, and (ii) such other
form or forms as may be required or reasonably requested by the Agent
to establish or substantiate exemption from, or reduction of, United
States withholding tax under the Code or other laws of the United
States. Each Lender agrees to notify the Agent of any change in
circumstances which would modify or render invalid any claimed
exemption or reduction.
(f) WITHHOLDING TAXES. Where any Lender which is a
"foreign corporation" is entitled to a reduction in the applicable
withholding tax, the Agent may withhold from any interest payment to
Lender an amount equivalent to the applicable withholding tax after
taking into account such reduction. If the forms or other documentation
required by Section 2.16(e) are not delivered to the Agent, then the
Agent may withhold from any interest payment to any Lender not
providing such forms or other documentation, an amount equivalent to
the applicable withholding tax.
(g) INDEMNIFICATION. If the Internal Revenue Service or
any authority of the United States or other jurisdiction asserts a
claim that the Agent did not properly withhold tax from amounts paid to
or for the account of any Lender which is a "foreign corporation"
(because the appropriate form was not delivered, was not properly
executed, or because such Lender failed to notify the Agent of a change
in circumstances which rendered the exemption from, or reduction of,
withholding tax ineffective, or for any other reason) such Lender shall
indemnify the Agent fully for all amounts paid, directly or indirectly,
by the Agent as tax or otherwise, including penalties and interest,
together with all reasonable expenses incurred, including reasonable
legal expenses and allocated staff costs and any other reasonable
out-of-pocket expenses.
(h) SUBSEQUENT LENDERS. If any Lender grants
participations in or otherwise transfers its rights under this
Agreement, the participant or transferee shall be bound by the terms of
Sections 2.16(e), (f) and (g) as though it were such Lender.
II.17. SHARING OF PAYMENTS.
(a) Except as set forth in Section 2.17(b) below, all
payments received by the Agent on account of any outstanding
Obligations shall be applied by the Agent to the payment of Obligations
that are then due as directed by the Borrower or as determined in good
faith by the Agent.
(b) All payments and distributions received on account of
any Obligations after the Advances have become due and payable (whether
at maturity, by acceleration or otherwise) shall be applied to the
payment of the Obligations in the following order:
First, to pay Obligations in respect of fees, expense
reimbursements or indemnities then due to the Agent,
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Second, to the ratable payment, based on the Pro Rata
Shares, of the principal of and interest on the Advances
(including any and all Disallowed Post-Petition
Interest/Expense Claims in any Bankruptcy, Insolvency or
Liquidation Proceeding),
Third, to the ratable payment, based on the total
amounts due, of all other Obligations (including any and all
Disallowed Post-Petition Interest/Expense Claims in any
Bankruptcy, Insolvency or Liquidation Proceeding), except
Obligations in respect of Rate Contracts, and
Fourth, to the ratable payment, based on the total
amounts due, of all Obligations in respect of Rate Contracts.
(c) If, at any time after the Advances have become due and
payable (whether at maturity, by acceleration or otherwise), any holder
of Obligations obtains or receives any payment (whether voluntary,
involuntary, through the exercise of any right of set-off, or
otherwise) on account of any Obligations owed to it in excess of the
amount which it was entitled to receive pursuant to the provisions of
Section 2.17(b) above, such holder of Obligations shall forthwith
purchase from the other holders of Obligations such participations in
the Obligations outstanding to them as shall be necessary to cause such
purchasing holder to share the excess payment with the other holders of
Obligations, to the end that all payments and distributions in any
manner obtained or received after the Advances have become due and
payable are applied and shared as set forth in Section 2.17(b) above.
If all or any portion of such excess payment is thereafter recovered
from such purchasing holder, such purchase from the other holders shall
be rescinded and each such other holder shall repay to the purchasing
holder the purchase price to the extent of its fairly allocable share
of the recovery, but without interest.
(d) The Borrower agrees that any holder of Obligations
purchasing a participation from another holder pursuant to Section
2.17(c) above may, to the fullest extent permitted by law, exercise
collection rights (including the right of set-off) with respect to such
participation as fully as if such holder were the direct creditor of
the Borrower in the amount of such participation.
III
CONDITIONS OF LENDING
III.1. CONDITIONS PRECEDENT ON THE CLOSING DATE. This
Agreement shall become effective and binding upon the parties hereto only if
each of the following conditions precedent is satisfied or waived by each Lender
no later than April 30, 1996:
(a) LOAN DOCUMENTS. The Agent must have received, with
sufficient copies for each Lender:
(i) this Agreement, including all exhibits and
schedules hereto, duly executed by the Borrower, the Agent and
each of the Lenders;
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(ii) a Guaranty, in substantially the form of
Exhibit C-1, duly executed by each Subsidiary of the Borrower
that is not, on the Closing Date, an Inactive Subsidiary or a
Foreign Subsidiary;
(iii) a Pledge and Security Agreement in
substantially the form of Exhibit C-2, duly executed and
delivered by the Borrower and each Guarantor, together with (A)
certificates representing the Pledged Shares referred to in
Schedule A to such Pledge and Security Agreement, accompanied
by undated stock powers executed in blank, and (B) evidence
satisfactory to the Lenders that all other actions necessary
or, in the opinion of the Lenders, desirable to perfect and
protect the security interests created by the Pledge and
Security Agreement have been taken, including delivery to the
Agent of (x) all instruments constituting Collateral, duly
endorsed, (y) UCC-1 financing statements duly executed by the
Borrower and each Guarantor in form sufficient for filing in
all offices in which the Agent or any Lender may consider
filing to be appropriate in order to perfect the Agent's
security interest, and (z) opinions of recognized counsel from
the applicable jurisdiction of formation of each Material
Foreign Subsidiary in substantially the form of Exhibit D-2,
except as permitted by Section 2.1(i), 5.2(e) or 5.2(k);
(iv) an Intellectual Property Assignment in
substantially the form of Exhibit C-3, duly executed,
acknowledged and delivered by the Borrower and each Guarantor,
if applicable, in form sufficient for recording in the United
States Patent and Trademark Office and the United States
Copyright Office;
(v) Transfer and Perfection Notices as to
Permitted Cash Investments of the Borrower and the Guarantors,
to the extent required under Section 5.2(j);
(vi) the Deed of Trust, Assignment of Leases and
Rents, Security Agreement and Fixture Filing in substantially
the form of Exhibit C-6 and the Unsecured Environmental
Indemnity Agreement in substantially the form of Exhibit C-7,
each duly executed, acknowledged and delivered by the Borrower,
together with recording instructions and evidence satisfactory
to the Lenders that all other actions necessary or, in the
opinion of the Lenders, desirable to perfect and protect the
security interests created by the Real Estate Collateral
Documents have been taken, including delivery to the Agent of
(A) UCC-1 fixture filing financing statements duly executed by
the Borrower in form sufficient for filing in Santa Clara
County and (B) a title insurance policy and ALTA survey
satisfactory to the Agent and its counsel; and
(vii) a letter evidencing delivery to the Agent of
an opinion letter from Ernst & Young LLP stating that the value
of the Borrower's intellectual property assets is at least
$250,000,000, and otherwise in form and substance satisfactory
to the Agent.
(b) CORPORATE DOCUMENTS. The Agent must have received,
with sufficient copies for each Lender:
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(i) copies of the articles or certificate of
incorporation and by-laws or other governing documents of each
Loan Party as in effect on the Closing Date, certified as of
the Closing Date by the Secretary of State of the state in
which such Loan Party is incorporated or formed or the
Secretary or an Assistant Secretary of such Loan Party, as
applicable;
(ii) copies of resolutions of the Board of
Directors of each Loan Party approving the transactions
contemplated hereby and authorizing the execution, delivery and
performance of each Loan Document to which it is a party,
certified as of the Closing Date by a Secretary or an Assistant
Secretary of such Loan Party;
(iii) a certificate of the Secretary or an
Assistant Secretary of each Loan Party certifying the names and
true signatures of the officers of such Loan Party authorized
to sign each Loan Document to which it is a party and, in the
case of the Borrower, to request an extension of credit
hereunder; and
(iv) a good standing certificate for each Loan
Party, issued as of a recent date by the Secretary of State of
(A) the state in which such Loan Party is incorporated or
formed and (B) each state in which it owns material assets and
conducts material operations.
(c) GOVERNMENTAL CONSENTS. Each Loan Party must have
obtained all consents, approvals and authorizations required from any
Governmental Authority in connection with the execution, delivery and
performance of its obligations under the Loan Documents.
(d) NO INJUNCTION. No law or regulation shall prohibit,
and no order, judgment or decree of any Governmental Authority shall
enjoin, prohibit or restrain, and no litigation shall be pending or
threatened which in the reasonable judgment of the Agent or Requisite
Lenders would enjoin, prohibit or restrain (i) the making of the
Advances, or (ii) the consummation of the transactions contemplated by
the Loan Documents.
(e) OTHER DELIVERIES. The Agent must have received, with
sufficient copies for each Lender:
(i) a copy of the Borrower's Annual Report on Form
10-K for the year ended December 30, 1995;
(ii) a certificate dated as of the Closing Date and
signed by the Chairman, Chief Executive Officer or Authorized
Officer of the Borrower, certifying that, as of the Closing
Date, (A) the representations and warranties contained in
Article IV of this Agreement are true and correct on and as of
the Closing Date, as though made on and as of such date, (B) no
Event of Default or Potential Default has occurred and is
continuing, (C) since December 30, 1995, there has been no
Material Adverse Change, and (D) each of the other conditions
precedent set forth in this Article III has been satisfied;
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(iii) all documents evidencing other necessary
corporate action and governmental approvals, if any, with
respect to this Agreement or any other Loan Document; and
(iv) such other certificates, agreements, documents
or instruments as the Agent or the Requisite Lenders may
reasonably request in writing.
(f) LEGAL OPINIONS. The Agent must have received, with
sufficient copies for each Lender, an opinion of Gray Cary Ware &
Freidenrich, counsel for the Borrower and the Guarantors, substantially
in the form of Exhibit D-1 and as to such other matters as any Lender
through the Agent may reasonably request.
(g) PAYMENT OF EXISTING DEBT. The Agent must have received
evidence satisfactory to the Requisite Lenders that all Debt of the
Borrower and its Subsidiaries, except Debt permitted to be outstanding
pursuant to Section 5.3(d), has been repaid in full and all related
financing commitments have been terminated.
(h) PAYMENT OF FEES AND EXPENSES. All fees and expense
reimbursements due to the Agent and the Lenders under this Agreement,
the Commitment Letter and the Fee Letter must have been paid.
(i) NO MATERIAL ADVERSE CHANGE. Since December 30, 1995,
there must not have been any Material Adverse Change.
III.2. CONDITIONS PRECEDENT TO EACH EXTENSION OF CREDIT. No
Lender shall be obligated to make any Advance on any Borrowing Date (including
the Closing Date, if such date is also a Borrowing Date) unless each of the
following conditions precedent is then satisfied or waived by the Requisite
Lenders:
(a) NOTICE. The Borrower shall have delivered a fully
completed Notice of Borrowing, dated such Borrowing Date.
(b) CERTIFICATION. Each of the following statements shall
be true and correct, and the Agent shall have received for the account
of each Lender a certificate dated such date and signed by an
Authorized Officer, certifying that:
(i) the representations and warranties contained in
Article IV of this Agreement, in Article III of the Pledge and
Security Agreement, and in Article III of the Intellectual
Property Assignment are true and correct in all material
respects on and as of such Borrowing Date, both before and
after giving effect to the extension of credit to be made
hereunder on such Borrowing Date and the application of the
proceeds therefrom, as though made on and as of such date; and
(ii) no event has occurred and is continuing, or
would result from such extension of credit or from the
application of the proceeds therefrom, which constitutes an
Event of Default
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or a Potential Default.
The delivery of a Notice of Borrowing and the acceptance by the Borrower of the
proceeds of a Borrowing shall constitute a representation and warranty by the
Borrower that, on the date such Borrowing is made, the foregoing statements are
true.
IV
REPRESENTATIONS AND WARRANTIES
IV.1. REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants as follows:
(a) ORGANIZATION. Each Loan Party is a corporation,
limited liability company or partnership duly organized, validly
existing and in good standing under the laws of the jurisdiction in
which it is organized and is duly qualified to do business and in good
standing in each jurisdiction where its material assets are located or
its material operations are conducted, except where the failure to be
so qualified could not reasonably be expected to cause a Material
Adverse Change.
(b) POWER AND AUTHORITY. Each Loan Party has the corporate
or partnership power (i) to carry on its business as now being
conducted and as proposed to be conducted by it, (ii) to execute,
deliver and perform each Loan Document to which it is a party, and
(iii) to take all action necessary to consummate the transactions
contemplated under each Loan Document to which it is a party.
(c) DUE AUTHORIZATION. The execution, delivery and
performance by each Loan Party of each Loan Document to which it is or
will be a party have been duly authorized by all necessary action of
its board of directors (or, in case of a Loan Party that is not a
corporation, its governing authority) and neither contravene its
certificate or articles of incorporation or by-laws (or, in case of a
Loan Party that is not a corporation, its governing agreements) nor
result in or require the creation of any Lien (other than pursuant to
the Collateral Documents) upon any of its property or assets.
(d) SUBSIDIARIES AND OWNERSHIP OF CAPITAL STOCK. Set forth
in Schedule 4.1(d) or in Schedule A to the Pledge and Security
Agreement, as such Schedule may be amended pursuant to Section 5.2(e),
is a complete list of all direct and indirect Subsidiaries of the
Borrower. Such Schedules also set forth the number of issued and
authorized shares of each class of capital stock of and other equity,
ownership or profit interests in such Subsidiary and the identity of
the holders of all such shares. Except as set forth in such Schedules,
no capital stock of or other equity, ownership or profit interest in
any such Subsidiary is subject to issuance or sale under any warrant,
option or purchase right, conversion or exchange right, call,
commitment or claim of any right, title or interest therein or thereto.
The outstanding capital stock of each such Subsidiary is duly
authorized, validly issued, fully paid and nonassessable and, other
than the stock of IMS, is not "margin stock," as that term is defined
in Regulations G, T, U and X of the Board of Governors of the Federal
Reserve System.
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(e) GOVERNMENTAL APPROVAL. No authorization or approval or
other action by, and no notice to or filing with, any Governmental
Authority is required for the due execution, delivery and performance
by each of the Loan Parties of any Loan Document to which it is or will
be a party, except for those listed on Schedule 4.1(e) and any filings
or recordings required under the Loan Documents to perfect the security
interest in favor of the Agent, each of which has been duly obtained or
made and is in full force and effect.
(f) BINDING AND ENFORCEABLE. This Agreement is, and each
other Loan Document to which any Loan Party will be a party is or when
delivered will be, legal, valid and binding obligations of the Loan
Parties enforceable against the Loan Parties in accordance with their
respective terms, subject to laws generally affecting the enforcement
of creditors' rights.
(g) FINANCIAL INFORMATION. The consolidated balance sheets of
the Borrower and its Subsidiaries as at December 31, 1994 and December
30, 1995 and the related income and cash flow statements for the
periods then ended, each other financial statement of the Borrower and
its Subsidiaries delivered to the Agent or Lenders on or prior to the
Closing Date (excluding any forecasts or financial projections which
may have been delivered to the Agent or any Lender), and each financial
statement delivered to the Lenders pursuant to Section 5.2(c), as and
when delivered to the Agent or Lenders, fairly present the consolidated
financial condition of the Borrower and its Subsidiaries as at the date
thereof and the consolidated results of their operations for the period
then ended, all in accordance with GAAP consistently applied but
subject, in the case of unaudited financial statements, to normal
year-end adjustments and the absence of footnotes.
(h) MATERIAL ADVERSE CHANGE. Since December 30, 1995, there
has been no Material Adverse Change.
(i) COMPLIANCE. The execution, delivery and performance by
each Loan Party of each Loan Document to which it is or will be a party
complies with all applicable laws. Each Loan Party is in compliance in
all material respects with all material applicable laws, rules,
regulations and orders.
(j) LITIGATION. Set forth on Schedule 4.1(j) is a list of all
pending or overtly threatened actions or proceedings affecting any Loan
Party before any court, governmental agency or arbitrator, and all loss
contingencies within the meaning of GAAP, other than any action or
proceeding that would not subject the Loan Parties to liability in
excess of $10,000,000 individually or $20,000,000 in the aggregate.
Except as identified on Schedule 4.1(j), there is no pending or overtly
threatened action or proceeding affecting any Loan Party before any
court, governmental agency or arbitrator, which would, if adversely
determined, result in a Material Adverse Change or which relates to or
could reasonably be expected to affect the legality, validity or
enforceability of any Loan Document.
(k) NO CONFLICT. The execution, delivery and performance by
each Loan Party of each of the Loan Documents to which it is a party do
not and will not (i) to its best knowledge, conflict with, result
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in a breach of, or constitute (with or without notice or the lapse of
time or both) a default under, any instrument, lease, indenture,
agreement or other contractual obligation issued by any Loan Party or
enforceable against it or any of its property or assets if (A) such
agreement is required to be filed with the Securities and Exchange
Commission in accordance with the 1934 Act, (B) such Agreement is not
readily replaceable without any material adverse effect on such Loan
Party or its business or (C) any such conflict, breach or default would
have a material adverse effect on the business of such Loan Party or
(ii) require any approval of its stockholders or partners that has not
been obtained.
(l) NO DEFAULT. No event has occurred and is continuing
which constitutes an Event of Default or a Potential Default.
(m) PAYMENT OF TAXES. Each Loan Party has filed all
federal income tax returns and all other tax returns required to be
filed by it or has timely filed extensions relating thereto and has
paid all taxes and assessments payable by it which have become due
except to the extent being contested in accordance with the provisions
of Section 5.2(h).
(n) MARGIN REGULATIONS. No proceeds of any Advance will be
used for any purpose that requires any Lender to deliver or obtain any
certification under, or to comply with any margin requirement or other
provision of, Regulations G, T, U or X of the Board of Governors of the
Federal Reserve System.
(o) CONDUCT OF BUSINESS. The Borrower and its
Subsidiaries are engaged in the lines of business described in Schedule
4.1(o) and activities reasonably incidental thereto.
(p) ENVIRONMENTAL MATTERS. Except as set forth in Schedule
4.1(p), as it may from time to time be amended by the Borrower, no
Material Environmental Claim is pending or, to the knowledge of the
Borrower, overtly threatened against the Borrower or any of its
Subsidiaries or any of their past or present property or assets. Except
as set forth in Schedule 4.1(p), and except in respect of matters that,
in the aggregate, are not and cannot reasonably be expected to result
in a Material Environmental Claim or a Material Adverse Change, the
operations of the Borrower and its Subsidiaries comply and have
complied in all material respects with all applicable Environmental
Laws.
(q) ERISA COMPLIANCE.
(i) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and
other applicable federal or state law.
(ii) Each Pension Plan which is intended to be
tax-qualified under Section 401(a) of the Code has been
determined by the Internal Revenue Service to qualify under
Section 401 of the Code, and the trusts created thereunder have
been determined to be exempt from tax under the provisions of
Section 501 of the Code, and to the best knowledge of the
Borrower nothing has occurred which would cause the loss of
such qualification or tax-exempt status.
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(iii) Except as set forth in Schedule 4.1(q),
(i) none of the Pension Plans which is subject to Title IV of
ERISA has any material Unfunded Pension Liability as to which
the Borrower or any ERISA Affiliate is or may be liable;
(ii) neither the Borrower nor any ERISA Affiliate has nor
reasonably expects to incur any material liability (and no
event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such material liability)
under Section 4201 or 4243 of ERISA with respect to any
Multiemployer Plan; (iii) no ERISA Event has occurred or, to
the best knowledge of the Borrower, is reasonably expected to
occur; and (iv) neither the Borrower nor any ERISA Affiliate
has maintained any Welfare Plan which provides, or requires the
Borrower or any ERISA Affiliate to provide, medical or other
welfare benefits to any participant after the termination of
such participant's employment with the Borrower or such ERISA
Affiliate (except to the extent required by the provisions of
Part 6 of Title I, Subtitle B of ERISA or Sections 162(k) and
4980B of the Code).
(iv) Each Welfare Plan which is a "group health
plan," as defined in Section 607(1) of ERISA, has been operated
in compliance with provisions of Part 6 of Title I of ERISA and
Sections 162(k) and 4980B of the Code at all times.
(v) Neither the Borrower nor any ERISA Affiliate
has engaged, directly or indirectly, in a prohibited
transaction (as defined in Section 4975 of the Code or Section
406 of ERISA) for which no statutory or administrative
exemption is applicable in connection with any Plan the
consequences of which, in the aggregate, constitute or can
reasonably be expected to result in a Material Adverse Change.
(r) TITLE TO ASSETS; NO INFRINGEMENT. Each Loan Party has
good and merchantable title, as of the date of each of its financial
statements delivered hereunder, to all of its material assets reflected
therein, free and clear of all Liens except Liens permitted under
Section 5.3(a), and such assets do not in any material respect infringe
upon any patent, trademark, copyright or other legally protected
interest of any other Person.
(s) Perfection. On and after the Closing Date and, with
respect to perfection upon the filing, recording or delivery of the
financing statements, Intellectual Property Assignment, Transfer and
Perfection Notices and the Real Estate Collateral Documents delivered
pursuant to Section 3.1(a) or Section 5.2(e), the provisions of each
Collateral Document are effective to create in favor of the Agent, for
the benefit of the Lenders, legal, valid and perfected security
interests in all right, title and interest in the Collateral described
therein (to the extent that a security interest in such Collateral can
be perfected by the filing, recording or delivery of such financing
statements, Intellectual Property Assignment, Transfer and Perfection
Notices and Real Estate Collateral Documents) enforceable against each
Loan Party that owns an interest in such Collateral, subject to laws
generally affecting the enforcement of creditors' rights. The Loan
Parties have delivered to the Agent the instruments constituting
Collateral as to which (i) delivery to the Agent is required under
Section 3.1(a) or Section 5.2(e) and (ii) possession by the Agent is
required to perfect the security interest in favor of the Agent in such
Collateral.
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(t) Undisclosed Liabilities. Except as set forth on
Schedule 4.1(t), neither the Borrower nor any of its Subsidiaries has
any liabilities, contingent or otherwise, which, if fixed or enforced
or rendered non-contingent, would or could constitute a Material
Adverse Change.
(u) License Agreements. The standard form of license
agreements setting forth the customary terms on which any Loan Party
sells or licenses substantially all (with only immaterial exceptions)
of the products or services sold, licensed or offered by it in the
ordinary course of its business do not in any manner restrict the
creation of any security interest in any right of such Loan Party
thereunder. As of the date hereof, no license agreement under which any
Loan Party is the licensee and which is material to the conduct of its
business prohibits or restricts the creation of a security interest in
any right of the Loan Party thereunder.
V
COVENANTS OF THE BORROWER
V.1. Financial Covenants. So long as any Obligation
remains unpaid or any Lender is obligated to extend credit hereunder, unless
the Requisite Lenders otherwise consent in writing:
(a) Minimum Adjusted EBITDA. The Borrower will not cause,
permit or suffer Adjusted EBITDA, determined as of each Fiscal Quarter
End Date set forth below for the four Fiscal Quarters then ended (taken
as a single period), to be less than the amount set forth as to such
day below:
<TABLE>
<CAPTION>
Minimum Four-Fiscal Quarter
Approximate Fiscal Quarter End Date Adjusted EBITDA
<S> <C>
Dec. 31, 1995 through March 31, 1996 $100,000,000
June 30, 1996 102,000,000
Sept. 30, 1996 104,000,000
Dec. 31, 1996 106,000,000
March 31, 1997 108,000,000
Thereafter 110,000,000
</TABLE>
V(nnnn) Maximum Total Debt/Adjusted EBITDA Ratio. The Borrower
will not cause, permit or suffer the ratio of (i) Total Debt determined
as of each Fiscal Quarter End Date set forth below plus the net
aggregate maximum contingent liability of the Borrower in respect of
Permitted Stock Transactions (except any liability which the Borrower
has the unconditional right or option to discharge by delivery of its
common stock) determined as of such day by marking each such Permitted
Stock Transaction to market, to (ii) Adjusted EBITDA for the four
Fiscal Quarters then ended (taken as a single period) to be greater
than the amount set forth as to such day below:
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<TABLE>
<CAPTION>
Maximum Total Debt/Adjusted
Approximate Fiscal Quarter End Date EBITDA Ratio
<S> <C>
Dec. 31, 1995 through June 30, 1996 1.50
Sept. 30, 1996 through Dec. 31, 1996 1.45
Mar. 31, 1997 1.40
June 30, 1997 1.35
Sept. 30, 1997 through Dec. 31, 1997 1.25
Thereafter 1.10
</TABLE>
(b) Minimum Fixed Charge Coverage Ratio. The Borrower will
not cause, permit or suffer the Fixed Charge Coverage Ratio, determined
as of any Fiscal Quarter End Date, to be less than 1.25.
(c) Minimum Liquidity. The Borrower will not, on any day,
cause, permit or suffer the sum of cash, Permitted Cash Investments and
Loan Availability (which may only be counted so long as no Event of
Default or Potential Default is then continuing) to be less than
$50,000,000.
V.2. Affirmative Covenants. So long as any Obligation remains
unpaid or any Lender is obligated to extend credit hereunder, unless the
Requisite Lenders otherwise consent in writing the Borrower will, and will cause
its Subsidiaries to:
(a) Compliance with Laws. Comply in all material respects
with all applicable laws, rules, regulations and orders.
(b) Inspection of Property and Books and Records. Except in
the case of Inactive Subsidiaries, (i) maintain proper books of record
and account, in which full, true and correct entries in conformity with
GAAP consistently applied shall be made of all financial transactions
and matters involving its assets and business, and (ii) permit
representatives of the Agent or any Lender to visit and inspect any of
its properties, to examine its corporate, financial and operating
records and make copies thereof or abstracts therefrom, and to discuss
its affairs, finances and accounts with its officers, employees and
independent public accountants, all at the expense of the Borrower and
at such reasonable times during normal business hours and as often as
may be reasonably requested (which in the case of any Lender other than
Agent shall not exceed two times per year), upon reasonable advance
notice to the Borrower, except that when an Event of Default exists the
Agent or any Lender may take any such action at any time during
business hours and on same-day notice.
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(c) Reporting Requirements. Furnish to the Lenders:
(i) as soon as available and in any event within 45
days after the end of each of the first three Fiscal Quarters
in each year, the consolidated balance sheet of the Borrower
and its Subsidiaries (and IMS, if required by GAAP) as at the
end of such Fiscal Quarter and their consolidated income and
cash flow statements for such Fiscal Quarter and for the fiscal
year to date, certified by an Authorized Officer;
(ii) as soon as available and in any event within 90
days after the end of each fiscal year of the Borrower, a copy
of the Annual Report on Form 10-K for such year for the
Borrower and its Subsidiaries (and IMS, if required by GAAP),
containing consolidated financial statements for such year
certified without any qualification by a firm of certified
public accountants of nationally recognized standing;
(iii) as soon as available, a copy of each management
letter delivered to the Borrower by any outside auditing firm,
if such management letter identifies a material weakness;
(iv) as soon as possible and in any event within five
Business Days after becoming aware of any Event of Default or
Potential Default, any pending or overtly threatened material
litigation, any Material Environmental Claim, any ERISA Event
or any Material Adverse Change, a statement of an Authorized
Officer setting forth details of such Event of Default or
Potential Default, litigation, claim, event or change and the
action which the Borrower has taken and proposes to take with
respect thereto;
(v) promptly after the filing thereof, copies of all
reports and all registration statements filed by or on behalf
of the Borrower with the Securities and Exchange Commission or
any national securities exchange, excluding filings on Form S-8
(or any successor form) and any other filing solely in respect
of stock option plans of the Borrower;
(vi) promptly after delivery, copies of each report to
any holder of Debt of the Borrower or any Subsidiary in excess
of $2,000,000, if such report relates to any default or event
of default with respect to such Debt;
(vii) concurrently with the delivery of the financial
statements referred to in clause (i) and (ii) above, a
compliance certificate of an Authorized Officer in
substantially the form of Exhibit E-1 and setting forth the
information requested therein;
(viii) such other information respecting the current or
past assets, liabilities, condition or operations, financial or
otherwise, of the Borrower or any of its Subsidiaries as the
Agent or any Lender through the Agent from time to time may
reasonably request.
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(d) Preservation of Corporate Existence, Etc. Subject to
Section 5.3(h) and in the case of each Loan Party and each Material
Subsidiary, (i) preserve and maintain in full force and effect its
corporate or partnership existence and good standing under the laws of
the jurisdiction in which it was incorporated or organized and all
rights, privileges, qualifications, permits, licenses and franchises
material to the normal conduct of its business, (ii) use its reasonable
efforts, in the ordinary course and consistent with past practice, to
preserve its business organization and preserve the goodwill and
business of the customers, suppliers and others doing business with it,
and (iii) preserve or renew all of its patent, copyrights, trademarks
and licenses therefor and other intellectual property, the
non-preservation of which constitutes or could reasonably be expected
to result in a Material Adverse Change.
(e) New Subsidiaries. Promptly, and in any event within ten
Business Days, after the date on which a new Subsidiary of the Borrower
(other than an Inactive Subsidiary) is formed or acquired or the date a
Subsidiary ceases to be an Inactive Subsidiary or a Foreign Subsidiary,
(i) notify the Agent of such event; and (ii) in the case of each
Subsidiary that is not a Foreign Subsidiary and each Material Foreign
Subsidiary, deliver to the Agent all stock certificates and other
instruments added to the Collateral thereby, accompanied by an undated
stock power or transfer document executed in blank (except that 35% of
the outstanding stock of each Material Foreign Subsidiary need not be
delivered, and stock of a Material Foreign Subsidiary which is held and
owned solely by another Material Foreign Subsidiary need not be
delivered); and promptly, and in any event within 20 Business Days,
after such formation, acquisition or change, (A) amend Schedule 4.1(d)
and Schedule A of the Pledge and Security Agreement in light of such
event; (B) cause such Subsidiary (unless it is a Foreign Subsidiary) to
execute and deliver the Guaranty in substantially the form of Exhibit
C-1, a Pledge and Security Agreement in substantially the form of
Exhibit C-2 and an Intellectual Property Assignment in substantially
the form of Exhibit C-3 and all financing statements and other
documents required thereunder or appropriate to perfect the security
interest created thereby; and (C) deliver to the Agent in respect of
the new Subsidiary an opinion of counsel confirming as to the new
Subsidiary the matters required to be confirmed under Section
3.1(a)(iii) and 3.1(f), as applicable.
(f) Maintenance of Property. Maintain and preserve all its
property which is necessary for use in its business in good working
order and condition, except for ordinary wear and tear and except as
permitted under Section 5.3(b).
(g) Insurance. Maintain insurance with financially sound and
reputable insurers with respect to its properties and business against
loss or damage of the kinds consistent with industry practice of
Persons engaged in the same or similar business and operating in the
same geographic area, of such types and in such amounts as are carried
under similar circumstances by such other Persons.
(h) Payment of Taxes and Lienable Items. Except as set forth
on Schedule 5.2(h), pay and discharge, as they become due and payable,
all claims for tax liabilities, assessments and governmental charges or
levies against it or upon its properties or assets and all lawful
claims which, if unpaid, would, with the passage of time or notice or
both, by law become a Lien upon its property, unless (i) such claim
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<PAGE> 51
is contested in good faith, (ii) adequate reserves have been
established for such claim to the extent required by GAAP and other
adequate provision for the payment thereof has been made, (iii)
enforcement of such claim is effectively stayed for the entire duration
of such contest, and (iv) if such claim is determined to be due, it is
paid, with all interest or penalties thereon, promptly and in any event
within the time period prescribed by applicable law, after resolution
of such contest; provided, however that in the case of each of clauses
(ii) and (iii), an aggregate of up to $100,000 of such claims at any
one time outstanding shall be permitted.
(i) Use of Proceeds. Use the proceeds of the Advances solely
for lawful and permitted corporate purposes of the Borrower and its
Subsidiaries and not in contravention of this Agreement or any other
agreement or obligation binding upon it and in strict compliance with
all applicable laws, regulations and orders.
(j) Permitted Cash Investments. To the extent it has cash,
keep its cash (other than cash in collection or disbursement) invested
in such accounts and through such intermediaries that the Agent's
security interest under the Pledge and Security Agreement can lawfully
be created and perfected by the provisions of the Pledge and Security
Agreement and a Transfer and Perfection Notice to the depositary or
intermediary, except that such investment shall not be required as to
any cash of the Borrower or any of its Subsidiaries in amounts in
excess of the difference between (i) $50,000,000 less (ii) the then
Loan Availability (or, if the statements in clause (i) and (ii) in
Section 3.2(b) are not then true and correct, zero).
(k) Further Assurances.
(i) Promptly and in no event later than five Business
Days after becoming aware thereof, notify the Lenders if any
written information, exhibits and reports furnished to the
Lenders contained any untrue statement of a material fact or
omitted to state any material fact or any fact necessary to
make the statements contained therein not misleading in light
of the circumstances in which made, and correct any defect or
error that may be discovered therein or in the execution,
acknowledgment or recordation of any Loan Document.
(ii) Promptly upon request by the Agent or the Requisite
Lenders, execute, deliver, acknowledge, file, re-file, register
and re-register any and all such further acts, security
agreements, assignments, estoppel certificates, financing
statements and continuations thereof, termination statements,
notices of assignment, transfers, certificates, assurances and
other instruments as the Agent or the Requisite Lenders may
reasonably require from time to time in order (A) to carry out
more effectively the purposes of this Agreement or any other
Loan Document, (B) to subject to the Liens created by any of
the Collateral Documents any of the properties, rights or
interests described in or intended to be covered by any
Collateral Document, (C) to establish and maintain the
validity, effectiveness, perfection and priority of any
Collateral Document or any Liens intended to be created
thereby, (D) to maintain the pledge to the Agent of 100% and
65%, respectively, of the outstanding equity interests of each
Subsidiary which is
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<PAGE> 52
not a Foreign Subsidiary and each Material Foreign Subsidiary
as required by Sections 3.1(a) and 5.2(e) (subject to Clause
(iv) below) or (E) to better assure, convey, grant, assign,
transfer, preserve, protect and confirm to the Agent and the
Lenders the rights granted or now or hereafter intended to be
granted to the Lenders under any Loan Document or under any
other instrument executed in connection therewith.
(iii) Notwithstanding the foregoing Clause (ii)
above, the Borrower shall not be required to deliver to the
Agent notes or other instruments evidencing loans and advances
to employees of the Borrower or any of its Subsidiaries or any
equity securities so long as the unrecovered initial cost of
such notes, other instruments and equity securities does not
exceed $3,000,000.
(iv) Use its reasonable best efforts to deliver to
the Agent as soon as reasonably practicable and in no event
later than the 90th day after the Closing Date: (A) a legal
opinion addressed to the Agent by a reputable attorney
authorized to practice in the jurisdiction in which each
Material Foreign Subsidiary has been organized, substantially
confirming (in conformity with local practice for legal
opinions of this type), as to the Agent's security interest in
the shares of capital stock of such Material Foreign Subsidiary
identified as Pledged Shares in Schedule A to the Pledge and
Security Agreement, each and all of the matters contemplated in
the form of legal opinion attached hereto as Exhibit D-2; and
(B) the original stock certificates representing such shares
accompanied by all necessary or appropriate instruments of
transfer and all related documents, acts and deeds necessary in
the opinion of such counsel to transfer such Pledged Shares to
the Agent, in pledge, free from the interest of any subsequent
bona fide purchaser.
(l) Licenses. Maintain standard forms of license agreements
that conform with the representations contained in the first sentence
of Section 4.1(u).
V.3. Negative Covenants. So long as any Obligation remains
unpaid or any Lender is obligated to extend credit hereunder, without the
written consent of the Requisite Lenders the Borrower will not, and will not
cause or permit any Subsidiary of the Borrower to:
(a) Liens. Directly or indirectly make, create, incur, assume
or suffer to exist any Lien upon or with respect to any part of its
property or assets, whether now owned or hereafter acquired, or become
or remain bound by any agreement to do so, except:
(i) any Lien (other than a Lien on the Collateral) (A)
existing on the Closing Date and described in Schedule 5.3(d),
securing Debt permitted under Section 5.3(d)(i), or (B) granted
to secure any extension, renewal, refinancing or replacement of
any such Debt if (x) the principal amount secured thereby is
not increased and (y) the property subject to the Lien so
granted is limited to the property that was subject to the
original Lien and any accessions, fixtures, improvements or
equipment added thereto in the ordinary course of business;
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(ii) any Lien created under any Loan Document;
(iii) any Lien for taxes, fees, assessments or other
governmental charges which are not delinquent and remain
payable without penalty or which are being contested as
permitted under Section 5.2(h);
(iv) any carriers', warehousemen's, mechanics',
landlords', materialmen's, repairmen's or other similar Lien
created by operation of law and arising in the ordinary course
of business which is not delinquent or remains payable without
penalty or which is being contested as permitted under Section
5.2(h);
(v) any Lien (other than a Lien imposed by
Environmental Laws or by ERISA) on the property of the Borrower
or any of its Subsidiaries imposed by law, or pledges or
deposits required by law pursuant to worker's compensation,
unemployment insurance and other social security legislation,
or made to secure the performance of tenders, statutory
obligations, surety and appeal bonds, bids, leases (including
landlords' Liens), government contracts, performance and
return-of-money bonds and other similar obligations incurred in
the ordinary course of business (exclusive of obligations in
respect of the payment for borrowed money), in an aggregate
amount not exceeding $2,000,000 at any one time outstanding;
(vi) any easement, right-of-way, restriction and other
similar encumbrance incurred in the ordinary course of business
if, in the aggregate, such items are not substantial in amount
and do not constitute and cannot reasonably be expected to
result in a Material Adverse Change;
(vii) any Lien arising out of any judgment or award
against it, if (A) such Lien is being contested as permitted
under Section 5.2(h), (B) there is no material likelihood of
the sale, forfeiture or loss of any part of its properties, (C)
such Lien does not materially interfere with the use of any
material part of its properties, and (D) the existence of such
Lien is not an Event of Default under Section 6.1(j);
(viii) any Lien on property of a Person which becomes a
Subsidiary after the date of this Agreement if such Lien
existed at the time such Person became a Subsidiary of the
Borrower and was not created in anticipation thereof;
(ix) Leases or subleases and licenses and sublicenses
granted to others not interfering in any material respect with
the business of the Borrower and its Subsidiaries taken as a
whole, and any interest or title of a lessor or licensor or
under any lease or license;
(x) Liens which constitute rights of set-off of a
customary nature or bankers' Liens with respect to amounts on
deposit, whether arising by operation of law or by contract, in
connection with arrangements entered into with banks in the
ordinary course of business;
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(xi) any of the Liens described in Section
5.3(d)(iii), (iv), (v) or (vii), securing only the Debt
permitted and described as secured by such Lien thereunder; and
(xii) any Lien upon any capital stock of IMS owned by
the Borrower on February 8, 1996, if and to the extent that the
provisions of this Section 5.3(a) would otherwise cause any of
the Obligations to be "indirectly secured" by such capital
stock, within the meaning of Regulations G and U of the Board
of Governors of the Federal Reserve System,
or become or remain bound by any agreement restricting its ability to
grant, create, incur, assume or suffer to exist any Lien upon or with
respect to any part of its property or assets, whether now owned or
hereafter acquired, as security for the payment of the Obligations or
any refinancing or replacement thereof, except (A) restrictions set
forth in the Loan Documents, (B) restrictions on junior Liens on
property secured by a Lien permitted under clauses (i) or (xi) of this
Section 5.3(a), if such restrictions are enforceable solely by the
holder of the Lien so permitted, and (C) restrictions on the creation
of a Lien on the lessee's interest under a lease, if such restrictions
are enforceable solely by the lessor under such lease.
(b) Disposition of Assets. Engage in any Asset Sale or
otherwise directly or indirectly sell, assign, lease, convey, transfer
or otherwise dispose of all or any portion of its assets, business or
property, or agree to do any of the foregoing, except:
(i) dispositions of inventory or used, worn-out or
surplus property or equipment or Permitted Cash Investments, in
each case in the ordinary course of business;
(ii) the sale of any capital stock of IMS owned by the
Borrower on February 8, 1996;
(iii) the sale or liquidation of assets of the type
described in Section 5.3(c)(ii), (v), (vi) or (viii);
(iv) any other sale or disposition so long as (x)
after giving effect to such sale or disposition and all other
such sales and dispositions made in the same fiscal year, the
aggregate gross revenues generated by or attributable to the
assets sold or disposed of in all such sales or dispositions in
such fiscal year did not in the prior fiscal year exceed 15% of
the consolidated gross revenues of the Borrower and its
Subsidiaries for such prior fiscal year and (y) the sale or
disposition is made for cash or for other assets the fair value
of which, when added to the then unrecovered investment in all
such other assets so received, does not exceed $5,000,000;
(v) receivable factoring arrangements of Foreign
Subsidiaries permitted under Section 5.3(d)(xi); and
(vi) a transfer of the Seely Campus to a wholly-owned
Subsidiary of the Borrower if such Subsidiary executes a
Guaranty and Pledge and Security Agreement prior to or
concurrently
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with such transfer.
provided, however, that neither Borrower nor any Subsidiary shall
dispose of any asset to effect a leaseback of such asset.
Notwithstanding the foregoing, Borrower may transfer the Seely Campus
to a wholly-owned Subsidiary of the Borrower without complying with
either Clause (vi) above or the foregoing proviso subsequent to a
release of the Agent's Lien on the Seely Campus pursuant to Section
7.7(v).
(c) Investments. Directly or indirectly make, acquire, carry
or maintain any Investment, or become or remain bound by any agreement
to make, acquire, carry or maintain any Investment, except:
(i) Investments held on the Closing Date and
described in Schedule 5.3(c);
(ii) Permitted Cash Investments;
(iii) loans by the Borrower to any Subsidiary of the
Borrower or by any such Subsidiary to the Borrower, so long as
each promissory note or other instrument, if any, evidencing
such loan has been delivered to the Agent in pledge;
(iv) loans and advances to employees of the Borrower
or any of its Subsidiaries, in an aggregate amount not
exceeding $3,000,000 at any one time outstanding;
(v) Investments in the Venture Fund, so long as the
aggregate unrecovered investment made therein (not counting
recoveries fairly characterized as income) does not exceed
$60,000,000;
(vi) Investments acquired in an Asset Sale permitted
under Section 5.3(b)(iv);
(vii) acquisitions permitted under Section 5.3(g)(i)
or (iv); and
(viii) other Investments so long as the aggregate
unrecovered investment made by the Borrower and its
Subsidiaries therein (counted at cost and not counting
recoveries fairly characterized as income) does not exceed
$20,000,000.
(d) Limitation on Debt and Accommodation Obligations.
Directly or indirectly create, incur, assume, guarantee or suffer to
exist, or otherwise become or remain directly or indirectly liable with
respect to, any Debt or any Accommodation Obligation, except:
(i) Debt existing on the Closing Date and described
in Schedule 5.3(d) and any extension, renewal or refinancing of
such Debt so long as either (A) the principal amount of such
Debt is not increased or (B) any increase in the principal
amount of such Debt is permitted pursuant to another clause of
this Section 5.3(d);
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(ii) the Obligations;
(iii) up to $20,000,000 in principal amount of Debt
secured by the ROPA Facility and by the Borrower's obligations
under a lease thereof;
(iv) not less than $20,000,000 or more than
$25,000,000 in principal amount of Debt secured by the Seely
Campus, but only if on the date such Debt is incurred the
Borrower concurrently makes a Facility Reduction pursuant to
Section 2.5 in an amount equal to the principal amount of the
Debt so incurred;
(v) up to $30,000,000 in principal amount of Debt
incurred for construction and permanent financing of one or
more buildings and improvements on the Seely Campus Vacant
Land;
(vi) bank credit incurred by Foreign Subsidiaries,
not exceeding $15,000,000 in the aggregate at any one time
outstanding;
(vii) Capital Leases, conditional sales agreements and
other purchase money Debt for property, plant or equipment, not
exceeding $10,000,000 in the aggregate at any one time
outstanding;
(viii) Debt under interest rate or currency hedging
agreements;
(ix) Debt, in an aggregate amount not exceeding
$3,000,000 at any one time outstanding, consisting of
obligations of the Borrower or a Subsidiary to purchase capital
stock, warrants, options or other equity interests from an
officer, employee or consultant of such Person pursuant to an
employment contract or consulting agreement entered into with
such officer, employee or consultant on reasonable and
customary business terms;
(x) Debt incurred to finance an acquisition
permitted under Section 5.3(g)(iv), or outstanding against a
Person acquired in any such acquisition before it was acquired,
but only if (A) such Debt is unsecured and constitutes a
liability solely of the Borrower, (B) such Debt matures after
the Maturity Date or any Extended Maturity Date, (C) such Debt
is not subject to any cross-default to any obligation, breach,
Event of Default or Potential Default hereunder or to covenant
terms substantially as favorable to the lender as those set
forth herein or is subordinated to all Obligations and any
refinancing or replacement thereof on terms satisfactory to the
Requisite Lenders, and (D) on a pro forma basis (as though the
acquisition had been made and the Debt had been incurred on the
first day of the most recent 12-month financial covenant
reporting period prior to the date of the acquisition) the
Borrower would have been in compliance with the ratio of Total
Debt to Adjusted EBITDA covenant set at a level that is 0.10
lower than the level then required under Section 5.1(b) and
would have been in compliance with Fixed Charge
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Coverage Ratio covenant set at a level that is 0.10 higher than
the level then required under Section 5.1(c);
(xi) liabilities of a Foreign Subsidiary to the
purchaser of the accounts receivable of such Foreign Subsidiary
under an off-balance sheet receivables factoring arrangement
entered into by such Foreign Subsidiary in the ordinary course
of its business, so long as the aggregate unrecovered
investments of the purchasers under such arrangements do not at
any one time exceed 30% of the net accounts receivable of all
the Foreign Subsidiaries, taken as a whole;
(xii) Debt in the nature of surety bonds issued at
the request of the Borrower or any Subsidiary to secure
contingent obligations of such Person in connection with
litigation which is listed on Schedule 4.1(j) to the extent
permitted under Section 5.3(a)(v);
(xiii) Debt permitted under Section 5.3(c)(iii); and
(xiv) other Debt not exceeding $5,000,000 at any one
time outstanding.
(e) Transactions with Affiliates. Enter or agree to enter
into any transaction with any Affiliate of the Borrower or of any
Subsidiary of the Borrower except (i) under the Loan Documents or (ii)
subject to Section 5.3(k), in the ordinary course of business and
pursuant to the reasonable requirements of the business of the Borrower
or such Subsidiary and upon fair and reasonable terms no less favorable
to the Borrower or such Subsidiary than those readily available to the
Borrower or such Subsidiary in a comparable arm's-length transaction
with a Person not an Affiliate of the Borrower or such Subsidiary.
(f) Restricted Junior Payments. Directly or indirectly (v)
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities on account of any
shares of any class of its capital stock or any other equity, ownership
or profit interests, (w) purchase, redeem or otherwise acquire for
value any shares of any class of capital stock of, or other equity,
ownership or profit interests in, the Borrower or any of its
Subsidiaries or any warrants, rights or options to acquire any such
shares or interests, now or hereafter outstanding, (x) enter into any
agreement restricting the ability of any Subsidiary of the Borrower to
declare or make any dividend payment or other distribution of assets,
properties, cash, rights, obligations or securities to its
stockholders, (y) agree to or permit any amendment or modification of,
or change in, any of the terms of agreements governing Subordinated
Debt, or (z) pay, prepay, redeem, or purchase or otherwise acquire any
Subordinated Debt, or make any deposit to provide for the payment of
any Subordinated Debt when due, or exchange any Subordinated Debt, or
give any notice in respect thereof, except that:
(i) the Borrower may declare and make any dividend
payments or other distributions payable solely by the Borrower
in common stock of the Borrower;
(ii) any Subsidiary of the Borrower may declare and
make dividends and distributions
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made solely to the Borrower or to a wholly-owned Subsidiary of
the Borrower;
(iii) when and as authorized by Borrower's board of
directors, Borrower may purchase its common stock from an
officer or employee of the Borrower or any of its Subsidiaries
when contractually required upon termination of employment and
the Borrower may enter into Permitted Stock Transactions, in
each instance in compliance with all applicable laws and
regulations, if on the date of such purchase or the date such
Permitted Stock Transaction is entered into (A) no Event of
Default or Potential Default is continuing or would result from
such purchase or Permitted Stock Transaction and (B) Adjusted
EBITDA determined as of the Fiscal Quarter End Date for which a
compliance certificate was then most recently due and
determined for the two Fiscal Quarters ending on such day was
not less than the amount set forth below as to such day:
Approximate
Fiscal Quarter End Date: Minimum Six-Month Adjusted EBITDA:
Dec. 30, 1995 through
March 31, 1998 $60,000,000
June 30, 1998 through
September 30, 1998 65,000,000
Thereafter 70,000,000
(iv) the Borrower may implement the provisions of
that certain Rights Agreement, dated as of February 9, 1996
between the Borrower and Harris Trust and Savings Bank as in
effect on the date hereof.
(g) Mergers, Etc. Merge or consolidate with or into or
enter into any agreement to merge or consolidate with or into any
Person, or acquire any ownership interest in any assets, business or
Person, except:
(i) acquisitions of property, plant and equipment
in the ordinary course of business;
(ii) mergers or consolidations between wholly-owned
Subsidiaries of the Borrower or between Borrower and any of its
wholly-owned Subsidiaries;
(iii) investments permitted under Section 5.3(c);
(iv) an acquisition of the entire ownership
interest in any assets used for, or any business or Person
engaged in, any of the lines of business currently conducted by
Borrower and its Subsidiaries and activities reasonably
incidental thereto, so long as (A) the acquisition is made
solely in exchange for cash or for Borrower's common stock, (B)
no more than $50,000,000 in
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cash is expended for any one acquisition, (C) no Debt is
assumed or incurred in connection with the acquisition, except
as permitted under Section 5.3(d)(x), (D) if the acquisition is
accomplished by merger or consolidation, either the Borrower or
a wholly-owned domestic Subsidiary of the Borrower is the
surviving corporation and (E) no Event of Default or Potential
Default is continuing or would result from such acquisition.
(h) Conduct of Business. Engage in any business or
activity other than the businesses described in Section 4.1(o) and any
activity reasonably incidental thereto.
(i) Compliance with ERISA. Directly or indirectly (or
permit any ERISA Affiliate directly or indirectly to) (i) terminate any
Plan subject to Title IV of ERISA so as to result in liability to the
Borrower or any ERISA Affiliate in excess of $10,000,000; (ii) permit
any ERISA Event to exist; (iii) make a complete or partial withdrawal
(within the meaning of ERISA Section 4201) from any Multiemployer Plan
so as to result in liability to the Borrower or any ERISA Affiliate in
excess of $10,000,000; or (iv) permit the total Unfunded Pension
Liabilities (using the actuarial assumptions utilized by the PBGC) for
all Pension Plans (other than Pension Plans which have no Unfunded
Pension Liabilities) to exceed $10,000,000.
(j) Payment Restrictions Affecting Subsidiaries. Cause,
permit or suffer any Subsidiary to become or remain subject to any
contractual obligation that in any manner limits or restricts its right
to pay dividends or make distributions, whether in cash or in property,
to its stockholders or to make loans or sell assets to the Borrower or
any of its Subsidiaries or to enter into any other lawful transaction
with the Borrower or any of its Subsidiaries, except limitations and
restrictions set forth in the Loan Documents.
(k) Transactions with IMS. Make or suffer to exist any
Investment in IMS (other than the shares of IMS' capital stock held by
the Borrower on February 8, 1996 and any shares of stock issued in
respect of stock dividends thereon or stock splits thereof), purchase
or hold any Debt of IMS or issue or maintain any Accommodation
Obligation of a Debt of IMS or, unless effected in accordance with
Section 5.3(e), sell any asset to IMS or enter into or suffer to exist
any other agreement or transaction with IMS (other than (i) the
Stockholder Agreement dated as of May 10, 1995, (ii) the Shareholder
Agreement dated as of May 17, 1995, (iii) the Asset Transfer Agreement
dated as of June 30, 1994, (iv) the Connections Partner Membership
Agreement dated as of June 30, 1994, (v) the Corporate Services
Agreement dated as of May 1, 1995, (vi) the Tax Sharing Agreement dated
as of April 1, 1995 and (vii) the Joint Sales Agency Agreement as
referred to in an internal memorandum of the Borrower dated October 3,
1995, each between IMS and the Borrower, and the performance of the
Borrower's obligations and exercise of its rights under such
agreements).
(l) Licenses. In respect of any license agreement under
which any Loan Party is the licensee and which is material to the
conduct of such Loan Party's business, agree to any prohibition of or
restriction on the creation of a security interest in any right of such
Loan Party thereunder, other than, in the case only of any such license
agreement that relates to any intellectual property not previously
licensed to the Borrower or any of its Subsidiaries, such restrictions
on the creation of a security interest as such Loan Party is required,
in its commercially reasonable judgment, to accept.
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VI
EVENTS OF DEFAULT
VI.1. Events of Default. If any of the following events
(each, an "Event of Default") shall occur and be continuing:
(a) Non-Payment of Principal. The Borrower fails to pay
when due any principal of any Advance; or
(b) Non-Payment of Interest. The Borrower fails to pay
when due any interest payable under Section 2.7 and such failure
continues for three days; or
(c) Non-Payment of Other Obligations. The Borrower fails
to pay any additional interest payable under Section 2.8 or any fee
payable under Section 2.4 or any other Obligation, and such failure
continues for ten Business Days after either (A) it is acknowledged in
writing by the Borrower or (B) written notice thereof is given to the
Borrower by the Agent or any Lender; or
(d) Representations and Warranties. Any representation
or warranty made by any Loan Party under or in connection with any
Loan Document proves to have been incorrect in any material respect
when made; or
(e) Financial and Negative Covenants. The Borrower fails
to perform or observe any term, covenant or agreement set forth in
Section 5.1 or Section 5.3; or
(f) Reporting and Collateral Covenants. The Borrower fails
to perform or observe any term, covenant or agreement set forth in
Sections 5.2(c), (e), (j) or (k), and such failure continues for ten
Business Days after either (A) it is acknowledged in writing by the
Borrower or (B) written notice thereof is given to the Borrower by the
Agent or any Lender; or
(g) Other Agreements. The Borrower or any Loan Party fails
to perform or observe any term, covenant or agreement contained in this
Agreement or any other Loan Document (other than those specifically
referred to in any of the preceding paragraphs of this Section 6.1) and
such failure continues for 30 days after either (A) it is acknowledged
in writing by the Borrower or (B) written notice thereof is given to
the Borrower by the Agent or any Lender; or
(h) Default as to Other Debt. The Borrower or any of its
Subsidiaries (i) fails to pay, when due and payable (whether at the
scheduled maturity or upon any required prepayment, acceleration,
demand or otherwise), any principal of or premium or interest on any
Debt (except any Borrowings) outstanding in a principal amount of at
least $2,000,000, and such failure continues for longer than the period
of grace, if any, specified for such failure in the indenture or
agreement governing such Debt, or
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(ii) commits, permits or suffers a breach, default or event of default
to occur under any indenture or agreement governing any Debt (except
any Borrowings) outstanding in a principal amount of at least
$2,000,000 and such breach, default or event of default continues for
longer than the period of grace, if any, specified for such failure in
such indenture or agreement; or any such Debt of at least $2,000,000 is
declared to be due and payable or is required to be prepaid prior to
the stated maturity thereof; provided, however, that no such failure,
breach, default, event of default, declaration or requirement as to any
Debt (x) which is the liability solely of a Foreign Subsidiary shall be
an Event of Default hereunder until either (A) it is acknowledged in
writing by the Borrower or (B) it continues for 10 Business Days after
written notice thereof is given to the Borrower by the Agent or any
Lender and (y) no such failure, breach, default, event of default,
declaration or requirement as to any Debt shall be an Event of Default
hereunder if, in the case of a wholly-owned Subsidiary, such Debt is
held entirely by the Borrower, or, in the case of the Borrower, such
Debt is held entirely by one or more of its wholly-owned Subsidiaries;
or
(i) Bankruptcy. (x) The Borrower or any Material Subsidiary is
generally not paying its debts as they become due or admits in writing
its inability to pay its debts generally or makes a general assignment
for the benefit of creditors; (y) or any proceeding is instituted by
or against any Loan Party or any Subsidiary of a Loan Party seeking an
order for relief under the United States Bankruptcy Code or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief, or composition of it or its debts or the
appointment of a receiver, trustee, custodian or other similar
official for it or for any substantial part of its property under any
law relating to bankruptcy, insolvency, liquidation or reorganization
or relief of debtors and either (i) any such relief in any such
proceeding is sought or consented to by it or an order for any such
relief is entered against it, or (ii) any such proceeding instituted
against it remains undismissed and unstayed for a period of 60 days;
or (z) any Loan Party or any Material Subsidiary takes any corporate
action to authorize any of the actions set forth above in this Section
6.1(i); provided, however, that the occurrence of any action referred
to in clause (y) with respect to any Inactive Subsidiary or the
authorization of any such action as referred to in clause (z), shall
not constitute an Event of Default if the Agent receives an opinion of
recognized counsel in form and substance acceptable to the Requisite
Lenders prior to such event or authorization stating that the
bankruptcy or other dissolution of the Inactive Subsidiary should not
result in the imposition of any Debts or other liabilities of such
Inactive Subsidiary upon the Borrower or any of its other
Subsidiaries, with reasonable qualifications depending upon local
practice and law; or
(j) Judgments. Any judgment or order for the payment of money
is rendered against any of the Loan Parties or any of their
Subsidiaries in an amount in excess of $2,000,000 individually or in
the aggregate and either (i) enforcement proceedings are commenced by
any creditor upon such judgment or order and not stayed, or (ii) there
is any period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal
or otherwise, is not in effect; or
(k) Material Adverse Change. There is any Material
Adverse Change; or
(l) Loan Documents. Any provision of any Loan Document after
delivery thereof for any reason ceases to be valid and binding on each
Loan Party party thereto, or any Loan Party shall
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repudiate or purport to revoke or terminate any of its obligations
under any Loan Document to which it is party, and such event continues
for 10 Business Days after written notice thereof is given to the
Borrower; or
(m) Collateral Documents. The Collateral Documents, after
delivery thereof pursuant to Section 3.1, for any reason (other than
pursuant to the terms thereof) cease to create a valid and perfected
first priority security interest in any collateral purported to be
covered thereby, and such event continues for 10 Business Days after
written notice thereof is given to the Borrower; or
(n) ERISA. (i) The Borrower or any ERISA Affiliate fails to
satisfy its contribution requirements under Section 412(c)(11) of the
Code, whether or not it has sought a waiver under Section 412(d) of
the Code; or (ii) in the case of an ERISA Event involving the
withdrawal from a Pension Plan of a "substantial employer" (as defined
in Section 4001(a)(2) or Section 4062(e) of ERISA), the withdrawing
employer's proportionate share of that Pension Plan's Unfunded Pension
Liabilities is more than $2,000,000; or (iii) in the case of an ERISA
Event involving the complete or partial withdrawal from a
Multiemployer Plan, the withdrawing employer incurs a withdrawal
liability in an aggregate amount exceeding $2,000,000; or (iv) a Plan
that is intended to be qualified under Section 401(a) of the Code
loses its qualification, and with respect to such loss of
qualification, the Borrower or any ERISA Affiliate can reasonably be
expected to be required to pay (for additional taxes, payments to or
on behalf of Plan participants, or otherwise) an aggregate amount
exceeding $2,000,000; or (vi) any combination of events listed in
clauses (ii) through (iv) occurs that involves a net increase in
aggregate Unfunded Pension Liabilities and unfunded liabilities in
excess of $5,000,000;
then, and in any such event, the Agent (x) shall at the request, or may with
the consent, of the Requisite Lenders, by notice to the Borrower, declare the
obligation of each Lender to make Advances to be terminated, whereupon the same
shall forthwith terminate and the Facility Amount shall be automatically and
permanently reduced to zero, and (y) shall at the request, or may with the
consent, of the Requisite Lenders, by notice to the Borrower, declare the
Advances, together with all interest thereon and all other Obligations, to be
immediately due and payable, and thereupon the Advances and such interest and
all other Obligations, shall be immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by the Borrower; provided, however, that if an order
for relief under the United States Bankruptcy Code is entered at the request or
upon the consent of the Borrower or involuntarily against the Borrower (A) the
obligation of each Lender to make Advances shall automatically be terminated
and the Facility Amount shall be immediately, automatically and permanently
reduced to zero, and (B) the Advances and all such interest and other
Obligations shall automatically become and be immediately due and payable,
without presentment, demand, protest or any notice of any kind, all of which
are hereby expressly waived by the Borrower.
VI.2. Rights Not Exclusive. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers or privileges or remedies provided by law or in
equity, or under any other instrument, document or agreement.
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VII
THE AGENT
VII.1. Authorization and Action. Each Lender hereby appoints
and authorizes the Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated to the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto. As
to any matters not expressly provided for by this Agreement (including
enforcement or collection of the Borrower's obligation to repay the Advances),
the Agent shall not be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of
Requisite Lenders, and such instructions shall be binding upon all Lenders;
provided, however, that the Agent shall not be required to take any action which
exposes the Agent to personal liability or which is contrary to this Agreement
or applicable law. The Agent shall not be liable to any Lender if, in accordance
with the terms of this Agreement, it takes or omits to take any action pursuant
to the instructions of the Requisite Lenders. The Agent agrees to give to each
Lender prompt notice of each notice given to it by the Borrower pursuant to the
terms of this Agreement. The Agent agrees to perform and discharge the duties
and powers delegated to it under this Agreement and the other Loan Documents in
accordance with the terms hereof and thereof.
VII.2. Agent not Liable. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or any of them under or in connection with this
Agreement, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent (i) may treat the
Lender making an Advance as the Lender of such Advance until the Agent receives
written notice of the assignment or transfer thereof signed by such Lender and
including the agreement of the assignee or transferee to be bound hereby as it
would have been if it had been an original Lender party hereto, in form
satisfactory to the Agent; (ii) may consult with legal counsel (including
counsel for the Borrower), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken in good faith by it in accordance with the advice of such counsel,
accountants or experts; (iii) makes no warranty or representation to any Lender
and shall not be responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of the Borrower or to inspect the property (including the
books and records) of the Borrower; (v) shall not be responsible to any Lender
for the due execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement or any other Loan Document or any other
instrument or document furnished pursuant to any Loan Document or for the
creation, validity, enforceability, sufficiency, value, perfection or priority
of any Lien purported to be granted to the Agent, whether pursuant to any of the
Collateral Documents or otherwise; and (vi) shall incur no liability under or in
respect of this Agreement by acting upon any notice, consent, certificate or
other instrument or writing (which may be by telecopier, telegram, cable or
telex) believed by it in good faith to be genuine and signed or sent by the
proper party or parties.
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VII.3. Rights as Lender. With respect to its commitment and Pro
Rata Share hereunder, the Advances and all other rights, claims and interests
accorded it as Lender, Credit Lyonnais shall have the same rights and powers
under this Agreement as any other Lender and may exercise the same as though it
were not the Agent; and the term "Lender" or "Lenders" shall include Credit
Lyonnais in its individual capacity. Credit Lyonnais and its Affiliates may
accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrower, any of its
Subsidiaries and any Person who may do business with or own securities of the
Borrower or any such Subsidiary, all as if Credit Lyonnais were not the Agent
and without any duty to account therefor to the Lenders. Any Lender and its
respective Affiliates may accept deposits from, lend money to, act as trustee
under indentures of, and generally engage in any kind of business with, the
Borrower, any of its Subsidiaries and any Person who may do business with or own
securities of the Borrower or any such Subsidiary, all as if such Lender were
not a Lender hereunder and without any duty to account therefor to the other
Lenders.
VII.4. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements referred to in Section 4.1(g) and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the Agent or
any other Lender and based on such documents and information as it deems
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement.
VII.5. Indemnification. The Lenders agree to indemnify the
Agent (to the extent not reimbursed by the Borrower) severally and ratably
according to their Pro Rata Shares from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever which may be imposed
on, incurred by, or asserted against the Agent in any way relating to or arising
out of this Agreement or the other Loan Documents or any action taken or omitted
by the Agent under this Agreement or the other Loan Documents, except that no
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. Without
limiting the foregoing, each Lender agrees to reimburse the Agent promptly upon
demand for its ratable share of any reasonable out-of-pocket expenses (including
reasonable fees and expenses of counsel) incurred by the Agent in connection
with the preparation, execution, delivery, modification, amendment, protection
or enforcement (whether through negotiations, by legal proceedings, in
bankruptcy or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement or the other Loan Documents, to the
extent that the Agent is not reimbursed for such expenses by the Borrower.
VII.6. Successor Agent. The Agent may resign at any time by
giving written notice thereof to the Lenders and the Borrower and may be removed
at any time with or without cause (i) by the Borrower, if at any time the
aggregate commitment for Advances then held by the institution acting as Agent
and its Affiliates is less than $15,000,000 and (ii) by the Requisite Lenders.
Upon any such resignation or removal, the Borrower may, upon the written consent
of the Requisite Lenders (which consent shall not be unreasonably withheld or
delayed), appoint a successor Agent from among the Lenders, except that the
Requisite Lenders shall have the
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sole right to appoint a successor Agent from among the Lenders whenever any
Event of Default is continuing. If no successor Agent shall have been so
appointed by the Requisite Lenders, and shall have accepted such appointment,
within 30 days after the retiring Agent's giving of notice of resignation or the
Borrower's or Requisite Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent, which
shall be a commercial bank organized under the laws of the United States of
America or of any state and having total assets of at least $20,000,000,000.
Upon the acceptance of any appointment as Agent hereunder by a successor Agent,
such successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent, and the retiring
Agent shall be discharged from its duties and obligations under this Agreement.
After any retiring Agent's resignation or removal hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
VII.7. Release of Collateral. The Agent is hereby irrevocably
authorized to release any Lien granted to or held by the Agent upon (i) any and
all Collateral when the Facility Amount has been permanently reduced to
$25,000,000 or less, if no Event of Default or Potential Default is then
continuing, (ii) any and all Collateral, when the Facility Amount has been
permanently reduced to zero, all outstanding Advances have been repaid, and all
other Obligations that are then due and payable and of which the Agent then has
written notice demanding payment prior to release of Collateral have been paid,
(iii) any Collateral constituting property that is or is to be sold, licensed
or disposed of as part of or in connection with any Asset Sale permitted under
this Agreement or upon any waiver hereunder by the Requisite Lenders, (iv) any
Collateral consisting of an instrument evidencing Debt or other debt
instrument, if the indebtedness evidenced thereby has been paid in full, (v)
the Collateral granted under the Real Estate Collateral Documents if Debt
permitted under Section 5.3(d)(iv) is incurred, (vi) the Collateral granted
under the Real Estate Collateral Documents if the aggregate amount of all
Facility Reductions voluntarily made by the Borrower pursuant to Section 2.5,
cumulatively, is at least $25,000,000 and (vii) the Seely Campus Vacant Land if
Debt permitted under Section 5.3(d)(v) is incurred. Upon request by the Agent
or the Borrower at any time, each Lender shall confirm in writing the Agent's
authority to release Collateral, or particular types or items of Collateral, as
set forth in this Section 7.7. Subject to Section 8.1(h), the Agent shall not
otherwise be obligated to release any Collateral unless it receives such
written confirmation from the Requisite Lenders.
VII.8. Release of Guarantor upon Sale of Stock. If at any time
(i) all of the outstanding shares of capital stock and other equity, ownership
and profit interests in any Guarantor are sold to a Person not an Affiliate of
the Borrower in a permitted Asset Sale and (ii) no Event of Default or
Potential Default is then continuing, then (x) upon request by the Agent or the
Borrower each Lender shall confirm in writing that the liability of such
Guarantor under the Guaranty is released and discharged effective when such
transaction is consummated, as set forth in Section 2.12 of the Guaranty and
(y) all Liens in favor of Agent in respect of the property and assets of such
Guarantor shall be released in accordance with Section 7.7(iii). Such
confirmation from the Requisite Lenders (A) shall establish conclusively that
the liability of such Guarantor under the Guaranty is released and discharged
as set forth in Section 2.12 of the Guaranty and (B) may be relied on, without
further inquiry, by the purchaser in such transaction and each of its
transferees.
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VIII
MISCELLANEOUS
VIII.1. Amendments. No amendment or waiver of any provision of
this Agreement, nor consent to any departure by the Borrower therefrom, shall be
effective unless it is in writing and signed by the Requisite Lenders (and any
such waiver or consent shall in any case be effective only in the specific
instance and for the specific purpose for which given), but no amendment, waiver
or consent shall, unless in writing and signed by the Lender to be bound
thereby, do any of the following:
(a) increase the obligation of such Lender to extend
credit hereunder or subject such Lender to any additional obligations;
(b) reduce the principal of or interest on the Advances
or any fees or other amounts payable to such Lender hereunder or under
any other Loan Document;
(c) postpone any date fixed for any payment (including any
mandatory prepayment) of principal of or interest on any Advances held
by such Lender or any fees or other amounts payable to such Lender
under any Loan Document;
(d) reduce the amount payable to such Lender under Section
2.12;
(e) waive, reduce or postpone any Facility Reduction
required hereunder, other than any Facility Reduction described in
Section 2.1(i)(B), which may be waived, reduced or postponed by the
Requisite Lenders;
(f) amend the definition of "Facility Amount," "Pro Rata
Share" or "Requisite Lenders";
(g) waive any Event of Default that is continuing under
Section 6.1(a), 6.1(b) or 6.1(c) in respect of a payment due to such
Lender;
(h) release any substantial portion of the Collateral
other than in accordance with the terms of this Agreement;
(i) release or limit the liability of any Guarantor under
the Guaranty other than in accordance with the terms of the Guaranty;
(j) amend Section 2.13, Section 2.17 or Section 6.1(a);
or
(k) amend this Section 8.1;
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and no amendment, waiver or consent shall, unless in writing and signed by the
Agent (and by the Lenders required above to take such action), affect the rights
or duties of the Agent under this Agreement or any Loan Document. Copies of each
such amendment, waiver or consent shall be delivered by the Borrower to each
Lender.
VIII.2. Notices. All notices and other communications provided
for hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at Cadence Design Systems, Inc., 2655 Seely
Road, San Jose, CA 95134, Attention: Treasurer, with a copy to the General
Counsel, at the same address; if to any Lender, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; and if to the Agent, at
Credit Lyonnais, 1301 Avenue of the Americas, New York, New York 10019,
Attention: Syndications Group, with a copy to Latham & Watkins, 633 West Fifth
Street, Suite 4000, Los Angeles, CA 90071, Attention: Hendrik de Jong; or, as
to each party, at such other address as shall be designated by such party in a
written notice to the other parties. All such notices and communications shall
be effective when received.
VIII.3. No Waiver; Remedies. No failure on the part of any
Lender or the Agent to exercise, and no delay in exercising, any right under
any Loan Document shall operate as a waiver thereof; nor shall any single or
partial exercise of any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
VIII.4. Costs and Expenses. The Borrower agrees to pay on
demand all reasonable costs and expenses incurred by Credit Lyonnais or any
Person hereafter appointed as successor Agent (whether incurred in its
individual capacity or as Agent) in connection with the preparation,
negotiation, execution, delivery, modification and amendment of the Loan
Documents and the other documents to be delivered under the Loan Documents,
including the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities under the Loan Documents in connection with actions
or inactions of the Loan Parties. The Borrower further agrees to pay on demand
all reasonable costs and expenses, including reasonable fees and expenses of
attorneys (including allocable costs of in-house counsel), accountants,
advisors and other experts, incurred by the Agent or the Lenders in respect of
any Event of Default or while any Event of Default is continuing or in
connection with the protection, resolution or enforcement (whether through
negotiations, by legal proceedings, in bankruptcy or otherwise) of the
Obligations or the Collateral or any right, remedy, power, interest or claim of
the Agent or any Lender under any Loan Document.
VIII.5. Right of Set-off. Whenever any Event of Default is
continuing, each Lender may at any time or from time to time, with the express
written consent of the Requisite Lenders but without any prior notice to the
Borrower or any other Person, set off and apply any and all deposits (general
or special, time or demand, provisional or final) at any time held and other
debt at any time owing by such Lender to or for the credit or the account of
the Borrower, whether or not then due, against any and all Advances and other
Obligations then owing to such Lender, whether or not then due. After any such
set-off and application is made, the Lender that made it shall promptly notify
the Borrower thereof, but the failure to do so shall not affect the validity of
the set-off and application and shall not expose such Lender to any liability.
The Lenders'
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right of set-off under this Section 8.5 is cumulative with and additional to all
other rights and remedies (including other rights of set-off) of the Lenders.
VIII.6. General Indemnity. The Borrower agrees to indemnify
and hold harmless Credit Lyonnais, each other Lender and each of their
Affiliates and each director, officer, employee, attorney or agent of any of
the foregoing persons (each such Person, an "Indemnified Person") from any
losses, claims, costs, damages, expenses or liabilities (or actions, suits or
proceedings, including any inquiry or investigation, with respect thereto)
(collectively, "Claims") to which any Indemnified Person may become subject,
insofar as such Claims arise out of, in any way relate to, or result from, this
Agreement or any other Loan Document or any of the transactions contemplated
hereby and thereby and to reimburse upon demand each Indemnified Person for any
and all reasonable legal and other expenses incurred in connection with
investigating, preparing to defend or defending any such Claim; provided,
however, that:
(a) Excluded Claims. The Borrower shall not have any
obligation (i) to any Indemnified Person for any Claim made or
prosecuted against such Indemnified Person by the Borrower, (ii) to
any Lender or any of its Affiliates, directors, officers, employees,
attorneys or agents, except Credit Lyonnais and its Affiliates,
directors, officers, employees, attorneys or agents, for any Claim
made or prosecuted against such Lender by another Lender, unless such
Claim is based on or arises from a Claim asserted against such other
Lender by any Person that is not a Lender (and Credit Lyonnais and its
Affiliates, directors, officers, employees, attorneys or agents shall
be and remain fully indemnified hereunder as to any and all Claims
made or prosecuted against Credit Lyonnais or any of them, in any
capacity, by any other Lender or Person), or (iii) to any Indemnified
Person for any Claim based on or arising from the gross negligence or
willful misconduct of such Indemnified Person;
(b) Notice. The Borrower shall be given prompt notice of the
commencement of any action or proceeding on any Claim and of any overt
written threat of litigation on any Claim, but the failure to receive
such notice shall not relieve the Borrower from any of its obligations
under this Section 8.6 or under Section 8.4, except to the extent the
Borrower has been actually damaged thereby;
(c) Selection of Counsel. The Borrower shall have the right,
with the consent of the Indemnified Person (which shall not
unreasonably be withheld), to select a firm of attorneys as legal
counsel to defend any Claim, and the Borrower shall pay the fees,
expenses and disbursements of such counsel and any special or local
counsel; and if the Indemnified Person or such legal counsel
determines in good faith that representing such Indemnified Person
would or could result in a conflict of interest, or that a defense,
crossclaim or counterclaim is available to such Indemnified Person
that is not available to any other Person represented by such legal
counsel in the same proceeding, then to the extent reasonably
necessary to avoid such a conflict of interest or to permit
unqualified assertion of such a defense, crossclaim or counterclaim,
such Indemnified Person shall be entitled to separate representation,
at the Borrower's expense, by legal counsel selected by such
Indemnified Person and reasonably acceptable to the Borrower, with all
such legal counsel using reasonable efforts to avoid unnecessary
duplication of effort by counsel;
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<PAGE> 69
(d) Separate Counsel. Each Indemnified Person shall have the
right to be represented by counsel of its own choosing (i) at the
Borrower's expense whenever any Event of Default is continuing, except
that the Borrower shall be obligated under this Section 8.6(d) only to
pay the reasonable fees and expenses of one firm of attorneys chosen by
Credit Lyonnais to represent its interests and the other Indemnified
Persons as a group, or (ii) when such Indemnified Person is entitled to
separate representation at the Borrower's expense as set forth in
Section 8.6(c), and (iii) at any time and under any circumstances at
such Indemnified Person's expense; and the Borrower and the attorneys
selected by the Borrower shall cooperate in all reasonable respects
with such counsel; and
(e) Settlement. The Borrower shall be entitled to settle any
Claim, at the Borrower's sole cost and expense, without the consent of
the Indemnified Person if (i) no Event of Default under the Facility is
continuing, (ii) the settlement does not and will not, under any
circumstances, impose any present or future payment or performance
obligation upon the Indemnified Person, and (iii) the settlement
includes the giving by the claimant to the Indemnified Person of an
unconditional and irrevocable release from all liability in respect of
such Claim; and otherwise only upon the prior written consent of the
Indemnified Person, which shall not unreasonably be withheld.
VIII.7. Assignments and Participations.
(a) Permitted Assignment. Each Lender may assign to one or more
Eligible Assignees all or a portion of its rights and obligations under
this Agreement, but (i) each such assignment shall be of a constant,
and not a varying, percentage of all of the assigning Lender's rights
and obligations under this Agreement, unless otherwise consented to by
the Borrower and the Agent; (ii) the amount of the commitment and
outstanding Advances of the assigning Lender being assigned pursuant to
each such assignment (determined as of the date of the Assignment and
Acceptance with respect to such assignment) shall not be less than
$5,000,000 or the total amount of the remaining commitment and
outstanding Advances of such Lender, except that an assignment to an
existing Lender may be in an amount less than $5,000,000, (iii) each
such assignment shall be to an Eligible Assignee, and (iv) the parties
to each such assignment shall execute and deliver to the Agent, for its
acceptance and recording in the Register, an Assignment and Acceptance
and a processing and recordation fee payable to the Agent of $2,500.
Upon such execution, delivery, acceptance and recording, from and after
the effective date specified in each Assignment and Acceptance, (x) the
assignee thereunder shall be a party hereto and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to
such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder, (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its rights and
be released from its obligations under this Agreement (and, in the case
of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto) and (z) Schedule I hereto
shall be replaced with Schedule I in the form attached to the
Assignment and Acceptance. Each Lender consents to the substitution of
Schedule I as set forth in the preceding sentence, provided that such
replacement Schedule I does not change the Pro Rata Share of any Lender
other than the assignor and assignee.
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(b) Borrower Consent; Confidentiality. The Borrower shall have
the right to consent to each proposed new Lender, with such consent not
to be unreasonably withheld or delayed, except that the Borrower's
consent to any shall not be required (i) if such consent has been
unreasonably withheld or delayed by the Borrower, (ii) whenever any
assignment or transfer is made to any person which then is a Lender or
an Affiliate of a Lender, or (iii) as to any assignment or transfer
made or agreed to while any Event of Default is continuing. Unless the
Borrower's consent to a particular assignment or transfer is not
required, the assigning Lender shall obtain the Borrower's consent to
each proposed Eligible Assignee to which such Lender proposes to make
an assignment or transfer and will obtain from such Eligible Assignee a
written agreement to be bound by the provisions in Section 8.12, prior
to providing any of the Borrower's confidential information to such
Eligible Assignee.
(c) Effect of Assignment. By executing and delivering an
Assignment and Acceptance, the Lender assignor thereunder and the
assignee thereunder confirm to and agree with each other and the other
parties hereto that (i) other than as provided in such Assignment and
Acceptance, such assigning Lender makes no representation or warranty
and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this
Agreement or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto or as to the
Collateral or the validity, enforceability, perfection or priority of
any Lien upon the Collateral; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this
Agreement or any other instrument or document furnished pursuant
hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements
referred to in Section 4.1(g) and such other documents and information
as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such
assignee will, independently and without reliance upon the Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make
its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee;
(vi) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Agent by the terms hereof, together
with such powers as are reasonably incidental thereto; and (vii) such
assignee agrees that it will perform in accordance with their terms all
of the obligations which by the terms of this Agreement are required to
be performed by it as a Lender.
(d) Maintenance of Agreements. The Agent shall maintain at its
address referred to in Section 8.2 a copy of each Assignment and
Acceptance delivered to and accepted by it and a register for the
recordation of the names and addresses of the Lenders and the
commitments and Pro Rata Shares of, and principal amount of the
Advances owing to, each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Borrower, the Agent and the
Lenders may treat each Person whose name is recorded in the Register as
a
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Lender hereunder for all purposes of this Agreement. The Register shall
be available for inspection by the Borrower or any Lender at any
reasonable time and from time to time upon reasonable prior notice.
(e) Procedure. Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an assignee Lender representing
that it is an Eligible Assignee, the Agent shall, if such Assignment
and Acceptance has been completed and is in substantially the form of
Exhibit E-2 hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register and (iii) give
prompt notice thereof to the Borrower.
(f) Participations. Each Lender may sell participations to one
or more banks or other entities in all or a portion of its rights and
obligations under this Agreement, but (i) such Lender's obligations
under this Agreement (including its commitment to the Borrower
hereunder) shall remain unchanged, (ii) such Lender shall remain
solely responsible to the other parties hereto for the performance of
such obligations, and (iii) the Borrower, the Agent and the other
Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this
Agreement. The grant of a participation interest shall be on such
terms as the granting Lender determines are appropriate, provided only
that (A) the holder of such a participation interest shall not have
any of the rights of a Lender under this Agreement, except, if the
participation agreement so provides, rights to demand the payment of
costs of the type described in Section 2.13 and (B) the consent of the
holder of such a participation interest shall not be required for
amendments or waivers of provisions of the Loan Documents other than
those described in Section 8.1(a) through (k).
(g) Additional Information. Any Lender may, in connection with
any assignment or participation or proposed assignment or
participation pursuant to this Section 8.7, disclose to the assignee
or participant or proposed assignee or participant, any information
relating to the Borrower furnished to such Lender by or on behalf of
the Borrower, but only if the assignee or participant or proposed
assignee or participant is obligated to preserve the confidentiality
of any confidential information relating to the Borrower received by
it from such Lender.
(h) Permitted Assignments. Any Lender may assign any of its
rights and obligations under this Agreement to any other Lender or to
any Affiliate of any Lender, without notice to or consent of the
Borrower or the Agent, and each Lender or any of its Affiliates may
assign any of its rights under this Agreement to any Federal Reserve
Bank without notice to or consent of the Borrower or the Agent.
VIII.8. Binding Effect. This Agreement shall become effective
when it has been executed by the parties hereto and the conditions set forth in
Section 3.1 have been satisfied and thereafter shall be binding upon and inure
to the benefit of the Borrower, the Agent and each Lender and their respective
successors and assigns, except that the Borrower shall not have the right to
assign its rights hereunder or any interest herein without the prior written
consent of each of the Lenders and the Agent.
VIII.9. Governing Law. This Agreement and the other Loan
Documents shall be governed by, and construed in accordance with, the laws of
the State of California. Any legal action or proceeding with
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respect to any Loan Document may be brought in the courts of the State of
California or of the United States for the Northern District or the Central
District of California, and by execution and delivery of this Agreement, each of
the Borrower, the Agent and the Lenders consents, for itself and in respect of
its property, to the jurisdiction of those courts. Each of the Borrower, the
Agent and the Lenders irrevocably waives any objection, including any objection
to the laying of venue or based on the grounds of forum non conveniens, which it
may now or hereafter have to the bringing of any action or proceeding in such
jurisdiction in respect of any Loan Document. The Borrower, the Agent and the
Lenders each waive personal service of any summons, complaint or other process,
which may be made by any other means permitted by California law.
VIII.10. Waiver of Jury Trial. The Borrower, the Lenders and
the Agent WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY of any claim or
cause of action based upon or arising out of or related to this Agreement or
any other Loan Document or the transactions contemplated hereby or thereby in
any action, proceeding or other litigation of any type brought by any of the
parties against any other party or parties, whether based on contract, tort,
statutory liability or otherwise. The Borrower, the Lenders and the Agent agree
that any such claim or cause of action shall be tried by the court WITHOUT A
JURY. This waiver shall apply to each future amendment, renewal, supplement or
modification of any Loan Document and to each future Loan Document.
VIII.11. Limitation of Liability. No claim may be made by the
Borrower, any Subsidiary of the Borrower, any Lender, the Agent or any other
Person against the Agent or any other Lender or the Affiliates, directors,
officers, employees, attorneys or agents of any of them for any special,
indirect or consequential damages or, to the fullest extent permitted by law,
for any punitive damages in respect of any claim or cause of action (whether
based on contract, tort, statutory liability, or any other ground) based on,
arising out of or related to any Loan Document or the transactions contemplated
hereby or any act, omission or event occurring in connection therewith, and the
Borrower (for itself and on behalf of each of its Subsidiaries), the Agent and
each Lender hereby waive, release and agree never to sue upon any claim for any
such damages, whether such claim now exists or hereafter arises and whether or
not it is now known or suspected to exist in its favor.
VIII.12. Confidentiality. The Agent and each Lender agree that
they will not, without the prior consent of the Borrower, disclose any
information with respect to the Borrower which is furnished to the Agent or
such Lender pursuant to this Agreement and which the Borrower has notified the
Agent or such Lender, in writing, constitutes confidential information, except
(i) to the Agent's or such Lender's directors, officers, employees, agents and
financial and legal advisors under instructions to maintain confidentiality,
(ii) to any actual or prospective assignee or participant under Section 8.7, so
long as such assignee or participant agrees to be bound by the provisions of
this Section 8.12, (iii) information that is known to the Agent or such Lender
or its directors, officers, employees or advisors prior to its disclosure by
the Borrower, (iv) information that has become publicly available other than by
the Agent's or such Lender's improper disclosure, (v) information that is
obtained from any source other than the Borrower or its Affiliates, unless the
Agent or such Lender has actual knowledge that such source disclosed such
information to it in breach of an obligation of confidentiality, and (vi) as
may be required or appropriate in any proceeding to collect the Obligations or
protect or enforce any right or remedy of the Agent or such Lender under the
Loan Documents or in defense of any claim asserted against the
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Agent or such Lender or in any other litigation or for compliance with any
applicable law or any subpoena, discovery request or other legal process, so
long as the Agent or such Lender (if not prohibited from doing so) gives the
Borrower at least three Business Days' prior notice thereof.
VIII.13. Entire Agreement. This Agreement, together with the
other Loan Documents, embodies the entire Agreement and understanding among the
Borrower, the Lenders and the Agent and supersedes all prior or contemporaneous
agreements and understandings of such Persons, verbal or written, relating to
the subject matter hereof and thereof, except for the rights of Credit Lyonnais
under the Commitment Letter and the Fee Letter.
VIII.14. Survival. The Borrower's liability for any and all
additional interest, fees, taxes, compensation, costs, losses, expense
reimbursements, indemnification and other similar Obligations arising under any
Loan Document shall survive the expiration or termination of the commitments of
the Lenders to extend credit hereunder and the repayment and retirement of all
Advances at any time outstanding hereunder.
VIII.15. Execution in Counterparts. This Agreement 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 one and the same
agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this
Revolving Credit Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above written.
CADENCE DESIGN SYSTEMS, INC.
By:
_____________________________________
Name:
Title:
CREDIT LYONNAIS,
New York Branch,
as Agent and as a Lender
By:
_____________________________________
Name:
Title:
ABN-AMRO BANK N.V.
San Francisco International Branch,
as a Lender
By: ABN AMRO North America, Inc. as agent
By: ____________________________ By: _____________________________________
Name: Name:
Title: Title:
THE FIRST NATIONAL BANK OF BOSTON,
as a Lender
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By:
_____________________________________
Name:
Title:
UNION BANK, a Division of
Union Bank of California, N.A.,
as a Lender
By:
_____________________________________
Name:
Title:
By:
_____________________________________
Name:
Title:
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EXHIBIT B-1
FORM OF
NOTICE OF BORROWING
[DATE]
Credit Lyonnais, New York Branch, as Agent
c/o 515 South Flower Street, Ste. 2200
Los Angeles, California 90071
Attention: Mr. Pierre Bury
Re: Notice of Borrowing
Ladies and Gentlemen:
The undersigned, Cadence Design Systems, Inc., a Delaware
corporation ("Cadence"), refers to the Revolving Credit Agreement, dated as of
April 11, 1996, among Cadence, the financial institutions signatory thereto as
Lenders, and Credit Lyonnais, a bank organized under the laws of the Republic of
France, acting through its New York Branch, as Agent for the Lenders (as
amended, modified and supplemented to date, the "Credit Agreement," the terms
defined therein being used herein as therein defined), and pursuant to Section
3.2 of the Credit Agreement hereby gives you irrevocable notice that the
undersigned requests a Borrowing under the Credit Agreement, and in connection
therewith sets forth below the information relating to such Borrowing as
required by Section 2.1(c) of the Credit Agreement:
(i) The Business Day of such Borrowing is ,
(the "Borrowing Date").
(ii) The Advances comprising such Borrowing will be [Base
Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of such Borrowing is $ .
[(iv) The initial Interest Period for each Eurodollar Rate
Advance made as part of such Borrowing is [one/two/three/six months].]
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The undersigned hereby certifies that the following statements
are true on the date hereof, and will be true on the Borrowing Date (before and
after giving effect to the proceeds of such Borrowing and the application of
the proceeds therefrom):
(A) the representations and warranties contained in Article
IV of the Credit Agreement, Article III of the Pledge and Security
Agreement and Article III of the Intellectual Property Assignment are
correct in all material respects;
(B) no event has occurred and is continuing which constitutes
an Event of Default or a Potential Default;
(C) since December 30, 1995 or, if later, the date of the
most recent financial statements delivered pursuant to clauses (i) or
(ii) of Section 5.2(c) of the Credit Agreement, there has been no
Material Adverse Change.
Very truly yours,
CADENCE DESIGN SYSTEMS, INC.,
a Delaware corporation
By:
Name:
Title:
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EXHIBIT B-2
FORM OF
NOTICE OF CONTINUANCE/CONVERSION
[DATE]
Credit Lyonnais, New York Branch, as Agent
c/o 515 South Flower Street, Ste. 2200
Los Angeles, California 90071
Attention: Mr. Pierre Bury
Re: Notice of Continuance/Conversion
Ladies and Gentlemen:
The undersigned, Cadence Design Systems, Inc., a Delaware
corporation ("Cadence"), refers to the Revolving Credit Agreement, dated as of
April 11, 1996, among Cadence, the financial institutions signatory thereto as
Lenders, and Credit Lyonnais, a bank organized under the laws of the Republic
of France, acting through its New York Branch, as Agent for the Lenders (as
amended, modified and supplemented to date, the "Credit Agreement," the terms
defined therein being used herein as therein defined). Pursuant to Section 2.10
of the Credit Agreement, this represents a Notice of Continuance/Conversion,
and in that connection sets forth below the information relating to such
[continuance] [conversion] as required by Section 2.10(a) of the Credit
Agreement:
1. $______________ of Advances shall be [converted from]
[Base Rate] [Eurodollar Rate] Advances to [Base Rate] [Eurodollar Rate]
[continued as Eurodollar Rate] Advances;
2. The effective date of the [continuance] [conversion] shall
be ________________, _____ (which shall be the last day of an Interest Period
if continuing Advances as Eurodollar Rate Advances or converting Advances from
Eurodollar Rate Advances to Base Rate Advances);
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[3. The final day of the initial Interest Period shall be
____________, _____.](1)
4. The Borrower hereby certifies to the Agent and each
Lender that, on the date of this Notice of Continuance/Conversion:
a. the representations and warranties contained
in Article IV of the Credit Agreement, Article III of the Pledge and
Security Agreement and Article III of the Intellectual Property
Assignment are correct in all material respects as of the effective
date of the [continuance] [conversion];
b. no event has occurred and is continuing, or
would result from the [continuance] [conversion], which constitutes an
Event of Default or a Potential Default; and
c. since December 31, 1995 or, if later, the date
of the most recent financial statements delivered pursuant to clauses
(i) or (ii) of Section 5.2(c) of the Credit Agreement, there has been
no Material Adverse Change.
5. This Notice of Continuance/Conversion shall only be
effective if delivered to the Agent at the above address at least three Business
Days before the date of the requested [continuance] [conversion].
IN WITNESS WHEREOF, the Borrower has executed this Notice of
Continuance/Conversion on the date set forth above.
CADENCE DESIGN SYSTEMS, INC.,
a Delaware corporation
By:
Name:
Title:
__________________________________
(1) Include if continuing Advances as Eurodollar Rate Advances or
converting Base Rate Advances to Eurodollar Rate Advances.
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EXHIBIT C-1
FORM OF SUBSIDIARY GUARANTY
This SUBSIDIARY GUARANTY, dated as of April 11, 1996, is made
by each entity that is identified on the signature pages hereof or that
hereafter executes and delivers a Subsidiary Joinder in substantially the form
set forth as Annex 1 hereto (each such entity, a "Guarantor") in favor of the
lenders (the "Lenders") from time to time party to the Credit Agreement (as
defined below) and Credit Lyonnais, as agent for the Lenders (Credit Lyonnais
and any successor thereto in such capacity, the "Agent") and in favor of all
other present and future Holders (as defined below) of any of the Guaranteed
Obligations described herein.
RECITALS
A. The Lenders and the Agent have entered into that
certain Revolving Credit Agreement, dated as of the date hereof (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among Cadence Design Systems, Inc., a Delaware corporation (the "Borrower"), the
Lenders and the Agent.
B. Each Guarantor is a direct or indirect subsidiary of
the Borrower and expects to derive substantial direct and indirect benefit from
the transactions contemplated by the Credit Agreement.
C. It is a condition precedent to the extension of credit
under the Credit Agreement that each Guarantor shall have guaranteed payment of
each and all the Obligations (as that term is defined in the Credit Agreement)
and all other debts, liabilities and obligations of the Borrower and each other
Subsidiary of the Borrower under the Loan Documents, on the terms set forth
herein.
D. The Borrower has agreed, in the Credit Agreement, to
cause all future subsidiaries of the Borrower (except Inactive Subsidiaries and
Foreign Subsidiaries) to become party to this Guaranty, as a Guarantor
hereunder.
NOW, THEREFORE, in consideration of the foregoing and in order
to induce the Lenders to extend credit to the Borrower under the Credit
Agreement, each Guarantor hereby agrees as follows:
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DEFINITIONS AND ACCOUNTING TERMS
General Definitions. Except as otherwise specifically provided
herein, the terms which are defined in Section 1.1 of the Credit Agreement
shall have the same meanings when used in this Guaranty and the provisions of
Sections 1.2 and 1.3 of the Credit Agreement shall apply to this Guaranty.
Certain Defined Terms. As used in this Guaranty, the following
terms shall have the following meanings:
"Bankruptcy Code" means Title 11 of the United States Code, as
from time to time amended.
"Disallowed Post-Commencement Interest and Expenses" means
interest computed at the rate provided in the Credit Agreement and claims for
reimbursements, costs, expenses or indemnities under the terms of the Credit
Agreement or any other Loan Document, accruing or claimed at any time after
commencement of any Insolvency or Liquidation Proceeding, if the claim for such
interest, reimbursement, cost, expense or indemnity is not allowable, allowed
or enforceable against the Borrower or any Subsidiary of the Borrower in such
Insolvency or Liquidation Proceeding.
"Guaranteed Obligations" is defined in Section 2.1(a).
"Guaranty" means this Subsidiary Guaranty, dated as of the
date set forth above, made by the Guarantors for the benefit of the Lenders,
the Agent and other Holders of Guaranteed Obligations.
"Guaranty Taxes" is defined in Section 3.8(a).
"Holder" means, in respect of any Guaranteed Obligation, the
Person entitled to enforce payment thereof and specifically includes the Agent
and each Lender.
"Insolvency or Liquidation Proceeding" means (i) any case
under the Bankruptcy Code, any other insolvency or bankruptcy case or
proceeding, or any receivership, liquidation, reorganization or other similar
case or proceeding, relative to the Borrower or any Guarantor or to any of
their respective creditors, as such, or to a substantial part of any of their
respective assets, or (ii) any proceeding for the liquidation, dissolution or
other winding up of the Borrower or any Guarantor, whether voluntary or
involuntary and whether or not involving insolvency or bankruptcy, or (iii) any
assignment for the benefit of creditors or any other marshaling of assets and
liabilities of the Borrower or any Guarantor.
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"Subordinated Liabilities" is defined in Section 2.8(a).
"Subsidiary Joinder" means an instrument substantially in the
form of Annex 1 hereto.
GUARANTY AND RELATED PROVISIONS
Guaranty. Each Guarantor hereby unconditionally:
guarantees the punctual payment when due, whether at
stated maturity, by acceleration or otherwise, of (i) all Obligations
now outstanding or hereafter arising under or in connection with the
Credit Agreement or any other Loan Document, whether for principal,
interest, fees, taxes, additional compensation, expense reimbursements,
indemnification or otherwise, and (ii) all liabilities of each
Guarantor now outstanding or hereafter arising under the Guaranty and
any Subsidiary Joinder, and (iii) each other debt, liability or
obligation of the Borrower or any Subsidiary of the Borrower now
outstanding or hereafter arising under any of the Loan Documents (such
Obligations, liabilities and other debts, liabilities and obligations,
collectively, are the "Guaranteed Obligations"), and
agrees to pay on demand (i) all Disallowed
Post-Commencement Interest and Expenses, to the Person entitled to
payment thereof if the claim therefor had been allowed in any
Insolvency or Liquidation Proceeding, and (ii) all reasonable costs and
expenses (including, without limitation, reasonable attorneys' fees and
legal expenses) incurred by any Holder of Guaranteed Obligations in
enforcing this Guaranty.
Acceleration of Payment. If (i) the Advances become
immediately due and payable pursuant to Section 6.1 of the Credit Agreement,
(ii) any Insolvency or Liquidation Proceeding is commenced voluntarily by any
Guarantor, or (iii) any Insolvency or Liquidation Proceeding is commenced
involuntarily against any Guarantor and either (x) remains pending for more
than 60 days or (y) an order for relief is granted or consented to by the
Borrower or by the debtor therein, then all liability of each Guarantor under
this Guaranty in respect of any Guaranteed Obligation that is not then due and
payable shall thereupon become and be immediately due and payable, without
notice or demand.
Guaranty Absolute and Unconditional. Each Guarantor
guarantees that the Guaranteed Obligations will be paid in accordance with the
terms of the Credit Agreement and the other Loan Documents, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights and claims of any Holder of
Guaranteed Obligations against the Borrower or any Subsidiary of the Borrower
with respect thereto and even if any such rights or claims are modified,
reduced or discharged in an Insolvency or
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Liquidation Proceeding or otherwise. The obligations of each Guarantor under
this Guaranty are independent of the Guaranteed Obligations, and a separate
action or actions may be brought and prosecuted against each Guarantor to
enforce this Guaranty, whether or not any action is brought against the Borrower
or any other Guarantor and whether or not the Borrower or any other Guarantor is
joined in any such action or actions. The liability of each Guarantor under this
Guaranty shall be absolute and unconditional irrespective of: (i) any lack of
validity or enforceability of the Credit Agreement or any other Loan Document or
any other agreement or instrument relating thereto; (ii) any change in the time,
manner or place of payment of, or in any other term of, any of the Guaranteed
Obligations, or any other amendment or waiver of or any consent to departure
from the Credit Agreement or any other Loan Document, including, without
limitation, any increase in the Guaranteed Obligations resulting from the
extension of additional credit to the Borrower or any of its Subsidiaries or
otherwise; (iii) any taking, exchange, release or non-perfection of any Lien
securing, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty of, any of the Guaranteed Obligations; (iv)
any manner or order of sale or other enforcement of any Lien securing any or all
of the Guaranteed Obligations or any manner or order of application of the
proceeds of any such Lien to the payment of the Guaranteed Obligations or any
failure to enforce any Lien or to apply any proceeds thereof; (v) any change,
restructuring or termination of the corporate structure or existence of the
Borrower or any of its Subsidiaries; or (vi) any other circumstance which might
otherwise constitute a defense (except the defense of payment) available to, or
a discharge of, a surety or guarantor.
Guaranty Irrevocable and Continuing. This Guaranty is an
irrevocable and continuing offer and agreement guaranteeing payment of any and
all Guaranteed Obligations and shall extend to all Guaranteed Obligations now
outstanding or created or incurred at any future time, whether or not created or
incurred pursuant to any agreement presently in effect or hereafter made, until
all obligations of the Lenders to extend credit to the Borrower have expired or
been terminated and all Guaranteed Obligations have been fully, finally and
indefeasibly paid. To the extent any contingent Obligation survives the
expiration or termination of the Credit Agreement and the repayment of the
Advances, each Guarantor's liability under this Guaranty shall likewise survive.
This Guaranty may be released only in writing except, with respect to a given
Guarantor, as provided for in Section 2.12.
Reinstatement. If at any time any payment on any Guaranteed
Obligation is set aside, avoided or rescinded or must otherwise be restored or
returned, this Guaranty and the liability of each Guarantor under this Guaranty
shall remain in full force and effect and, if previously released or
terminated, shall be automatically and fully reinstated, without any necessity
for any act, consent or agreement of any Guarantor, as fully as if such payment
had never been made and as fully as if any such release or termination had
never become effective.
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Waiver. Guarantor hereby waives and relinquishes all rights,
remedies and defenses accorded by applicable law to sureties or guarantors and
agrees not to assert or take advantage of any such rights, remedies or defenses,
including without limitation:
(a) any right to require any Holder of Guaranteed
Obligations to proceed against Borrower or any other Person or to
proceed against or exhaust any security held by any Holder of
Guaranteed Obligations at any time or to pursue any other remedy in the
power of any Holder of Guaranteed Obligations before proceeding against
Guarantor;
(b) the defense of the statute of limitations in any
action hereunder or in any action for the collection or performance of
any Guaranteed Obligations;
(c) any defense that may arise by reason of the
incapacity, lack of authority, death or disability of any other Person
or the failure of any Holder of Guaranteed Obligations to file or
enforce a claim against the estate (in administration, bankruptcy or
any other proceeding) of any other Person;
(d) demand, presentment, protest and notice of any kind,
including without limitation notice of the existence, creation or
incurring of any new or additional indebtedness or obligation or of any
action or non-action on the part of Borrower, any Holder of Guaranteed
Obligations, any endorser or creditor of Borrower or Guarantor or on
the part of any other Person under this or any other instrument in
connection with any obligation or evidence of indebtedness held by any
Holder of Guaranteed Obligations as Collateral or in connection with
any Guaranteed Obligations;
(e) all rights and defenses arising out of an election of
remedies by any Holder of Guaranteed Obligations, even though that
election of remedies, such as a nonjudicial foreclosure with respect to
security for a Guaranteed Obligation, has destroyed the Guarantor's
rights of subrogation and reimbursement against the principal by the
operation of Section 580d of the California Code of Civil Procedure or
otherwise;
(f) any defense based upon any statute or rule of law
which provides that the obligation of a surety must be neither larger
in amount nor in other respects more burdensome than that of the
principal;
(g) any duty on the part of any Holder of Guaranteed
Obligations to disclose to Guarantor any facts such Holder may now or
hereafter know about Borrower, regardless of whether such Holder has
reason to believe that any such facts materially increase the risk
beyond that which Guarantor intends to assume, or has reason to believe
that such facts are unknown to Guarantor, or has a reasonable
opportunity to communicate such facts to Guarantor, since Guarantor
acknowledges that Guarantor is
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fully responsible for being and keeping informed of the financial
condition of Borrower and of all circumstances bearing on the risk of
non-payment of any Guaranteed Obligations;
(h) any rights to a fair value hearing under California
Code of Civil Procedure Section 580a to determine the size of a
deficiency judgment following any foreclosure sale on any encumbered
property;
(i) any defense arising because of the election by any
Holder of Guaranteed Obligations, in any proceeding instituted under
the Bankruptcy Code, of the application of Section 1111(b)(2) of the
Bankruptcy Code; and
(j) any defense based upon any borrowing or grant of a
security interest under Section 364 of the Federal Bankruptcy Code.
Without limiting the generality of the foregoing, Guarantor
hereby expressly waives any and all benefits which might otherwise be available
to Guarantor under California Civil Code Sections 2809, 2810, 2819, 2839, 2845
through 2850, 2899 and 3433, California Code of Civil Procedure Sections 580a,
580b, 580d and 726, and California Commercial Code Section 3605.
Subrogation. Each Guarantor hereby represents, warrants and
agrees, in respect of any and all present and future rights of subrogation,
recourse, reimbursement, indemnity, exoneration, contribution and other claims
that such Guarantor at any time may have against the Borrower, any other
Guarantor or any other Person liable for the payment of any of the Guaranteed
Obligations (including, without limitation, the owner of any interest in
collateral subject to a Lien securing any of the Guaranteed Obligations) as a
result of or in connection with this Guaranty or any payment hereunder, that:
No Agreement. Such Guarantor has not entered into, and
agrees that it will not enter into, any agreement providing, directly
or indirectly, for any such right or claim against the Borrower or,
except as set forth in Section 2.10, against any other Subsidiary of
the Borrower, and each such agreement now existing or hereafter entered
into (except Section 2.10) is and shall be void;
Release. Such Guarantor waives and releases any such
right or claim against the Borrower, any other Guarantor or any other
such Person until the Guaranteed Obligations have been paid in full;
Capital Contribution. Neither the execution and
delivery of this Guaranty by such Guarantor nor any payment by such
Guarantor under this Guaranty shall give
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rise to any claim (as that term is defined in the Bankruptcy Code) in
favor of such Guarantor against the Borrower until the Guaranteed
Obligations have been paid in full; and
Subordination of Contribution Rights. Such Guarantor
reserves, as against each other Guarantor, its right of contribution
under Section 2.10 but agrees that all such contribution rights shall
be included among the Subordinated Liabilities.
Subordination Provisions.
Subordination. Any and all present and future debts,
liabilities and obligations of every type and description (whether for
money borrowed, on intercompany accounts, for provision of goods or
services, under tax sharing or contribution agreements or on account
of any other transaction, agreement, occurrence or event and whether
absolute or contingent, direct or indirect, matured or unmatured,
liquidated or unliquidated, created directly or acquired from another,
or sole, joint, several or joint and several) of the Borrower or any
Subsidiary of the Borrower now outstanding or hereafter incurred or
owed to any Guarantor (the "Subordinated Liabilities") shall be, and
hereby are, subordinated to full and final payment of the Guaranteed
Obligations.
Prohibited Payments. If any Event of Default or
Potential Default occurs, then for so long as such Event of Default or
Potential Default may be continuing, no Guarantor will demand, sue
for, accept or receive, or cause or permit any other Person to make,
any payment on or transfer of property on account of any Subordinated
Liabilities.
No Liens or Transfers. Each Guarantor agrees that (i)
it will not demand, accept or hold any Lien upon any real or personal
property of the Borrower or any of its Subsidiaries as security for
any of the Subordinated Liabilities and (ii) any such Lien shall be
void.
Insolvency Proceedings. In any Insolvency or
Liquidation Proceeding, the Holders of Guaranteed Obligations shall be
entitled to receive payment in full of all amounts due or to become
due on or in respect of the Guaranteed Obligations, or provision shall
be made for such payment in money or money's worth, before any
Guarantor is entitled to receive any payment or distribution of any
kind or character, whether in cash, property or securities, on account
of any of the Subordinated Liabilities, and to that end the Holders of
Guaranteed Obligations shall be entitled to receive, for application
to the payment thereof, all payments and distributions of any kind or
character, whether in cash, property or securities (including any such
payment or distribution which may be payable or deliverable by reason
of the payment of any other debt or liability of the Borrower or any
Subsidiary of the Borrower being subordinated to
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the payment of the Subordinated Liabilities), which may be payable or
deliverable in respect of the Subordinated Liabilities in any such
Insolvency or Liquidation Proceeding.
Disallowed Post-Commencement Interest and Expenses. If
in any Insolvency or Liquidation Proceeding (i) any payment or
distribution of any kind or character, whether in cash, property or
securities (including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other debt or
liability of the Borrower or any Subsidiary of the Borrower being
subordinated to the payment of the Subordinated Liabilities) is payable
or deliverable in respect of the Subordinated Liabilities, and (ii) the
Holders of Guaranteed Obligations are not otherwise entitled to receive
such payment or distribution pursuant to Section 2.8(d), and (iii) any
amount remains unpaid to any Holder of Guaranteed Obligations on
account of any Disallowed Post-Commencement Interest and Expenses, then
the Holders of Guaranteed Obligations shall be entitled to receive
payment of all such unpaid Disallowed Post-Commencement Interest and
Expenses from and out of any and all such payments and distributions in
respect of the Subordinated Liabilities.
Held in Trust. If any payment, transfer or
distribution is made to any Guarantor upon any Subordinated
Liabilities that is not permitted to be made under this Section 2.8 or
that the Holders of Guaranteed Obligations are entitled to receive
under this Section 2.8, such Guarantor shall receive and hold the same
in trust, as trustee for the benefit of the Holders of Guaranteed
Obligations, and shall forthwith transfer and deliver the same to the
Agent, in precisely the form received (except for any required
endorsement), for application to the payment of Guaranteed Obligations
or any unpaid Disallowed Post-Commencement Interest and Expenses.
Claims in Bankruptcy. Each Guarantor will file all
claims against the Borrower or any Subsidiary of the Borrower in any
Insolvency or Liquidation Proceeding in which the filing of claims is
required or permitted by law upon any of the Subordinated Liabilities
and will assign to the Agent, for the benefit of the Holders of
Guaranteed Obligations, all rights of such Guarantor thereunder. If
any Guarantor does not file any such claim at least 30 days prior to
any applicable claims bar date, the Agent or any Lender is hereby
authorized (but shall not be obligated), as attorney-in-fact for such
Guarantor with full power of substitution, either to file such claim
or proof thereof in the name of such Guarantor or, at the option of
the Agent or such Lender, to assign the claim and cause the claim or
proof thereof to be filed by an agent or nominee. The Agent and
Lenders and their agents and nominees shall have the sole right, but
no obligation, to accept or reject any plan proposed in such
Insolvency or Liquidation Proceeding and to cast any votes and to take
any other action with respect to all claims upon any of the
Subordinated Liabilities.
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Subordination Effective and not Impaired. This
Section 2.8 shall remain effective for so long as this Guaranty is
continuing and thereafter for so long as any Guaranteed Obligation is
outstanding. Each Guarantor's obligations under this Section 2.8: (i)
shall be absolute and unconditional as set forth in Section 2.3,
irrevocable and continuing as set forth in Section 2.4, subject to
reinstatement as set forth in Section 2.5 and not affected or impaired
by any of the matters waived in Section 2.6; (ii) shall be subject to
the provisions of Article III; and (iii) shall otherwise be as equally
enduring and free from defenses as such Guarantor's liability under
this Guaranty.
Fraudulent Transfer Limitation. If, in any action to enforce
this Guaranty or any proceeding to allow or adjudicate a claim under this
Guaranty, a court of competent jurisdiction determines that enforcement of this
Guaranty against any Guarantor for the full amount of the Guaranteed
Obligations is not lawful under, or would be subject to avoidance under,
Section 548 of the Bankruptcy Code or any applicable provision of comparable
state law, the liability of such Guarantor under this Guaranty shall be limited
to the maximum amount lawful and not subject to avoidance under such law.
Contribution among Guarantors. The Guarantors desire to
allocate among themselves, in a fair and equitable manner, their rights of
contribution from each other when any payment is made by one of the Guarantors
under this Guaranty. Accordingly, if any payment is made by a Guarantor under
this Guaranty (a "Funding Guarantor") that exceeds its Fair Share, the Funding
Guarantor shall be entitled to a contribution from each other Guarantor in the
amount of such other Guarantor's Fair Share Shortfall, so that all such
contributions shall cause each Guarantor's Aggregate Payments to equal its Fair
Share. For these purposes:
"Fair Share" means, with respect to a Guarantor as of any
date of determination, an amount equal to (i) the ratio of (x) the
Adjusted Maximum Amount of such Guarantor to (y) the aggregate
Adjusted Maximum Amounts of all Guarantors, multiplied by (ii) the
aggregate amount paid on or before such date by all Funding Guarantors
under this Guaranty.
"Fair Share Shortfall" means, with respect to a Guarantor as
of any date of determination, the excess, if any, of the Fair Share of
such Guarantor over the Aggregate Payments of such Guarantor.
"Adjusted Maximum Amount" means, with respect to a Guarantor
as of any date of determination, the maximum aggregate amount of the
liability of such Guarantor under this Guaranty, limited to the extent
required under Section 2.9 (except that, for purposes solely of this
calculation, any assets or liabilities arising by virtue of any rights
to or obligations of contribution under this Section 2.10 shall not be
counted as assets or liabilities of such Guarantor).
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"Aggregate Payments" means, with respect to a Guarantor as
of any date of determination, the aggregate net amount of all payments
made on or before such date by such Guarantor under this Guaranty
(including, without limitation, under this Section 2.10).
The amounts payable as contributions hereunder shall be determined by the
Funding Guarantor as of the date on which the related payment or distribution
is made by the Funding Guarantor, and such determination shall be binding on
the other Guarantors absent manifest error. The allocation and right of
contribution among the Guarantors set forth in this Section 2.10 shall not be
construed to limit in any way the liability of any Guarantor under this
Guaranty to the Holders of the Guaranteed Obligations.
Joint and Several Obligation. This Guaranty and all
liabilities of each Guarantor hereunder shall be the joint and several
obligation of each Guarantor and may be freely enforced against each Guarantor,
for the full amount of the Guaranteed Obligations (subject to Section 2.9),
without regard to whether enforcement is sought or available against any other
Guarantor.
Release of Guarantor. If (i) all of the outstanding shares
of capital stock and other equity, ownership and profit interests in any
Guarantor are sold to a Person not an Affiliate of the Borrower in a
transaction which is permitted under Section 5.3(b)(iv) of the Credit Agreement
and (ii) the conditions set forth in Section 5.3(b)(iv) of the Credit Agreement
are met in respect of such transaction, then the liability of such Guarantor
under this Guaranty shall be automatically and permanently released and
discharged, effective when such transaction is consummated and such
requirements are met.
MISCELLANEOUS PROVISIONS
Condition of the Borrower. Each Guarantor is fully aware of
the financial condition of the Borrower and its Subsidiaries and is executing
and delivering this Guaranty based solely upon such Guarantor's own independent
investigation of all matters pertinent hereto and is not relying in any manner
upon any representation or statement by any Holder of Guaranteed Obligations.
Each Guarantor represents and warrants that it is in a position to obtain, and
each Guarantor hereby assumes full responsibility for obtaining, any additional
information concerning the financial condition of the Borrower and each of its
Subsidiaries and any other matter pertinent hereto as such Guarantor may
desire, and such Guarantor is not relying upon or expecting any Holder of
Guaranteed Obligations to furnish to such Guarantor any information now or
hereafter in the possession of any Holder of Guaranteed Obligations concerning
the same or any other matter. By executing this Guaranty, each Guarantor
knowingly accepts the full range of risks encompassed within a contract of this
type, which risks each Guarantor acknowledges. No
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Guarantor shall have the right to require any Holder of Guaranteed Obligations
to obtain or disclose any information with respect to the Guaranteed
Obligations, the financial condition or prospects of the Borrower or any
Subsidiary of the Borrower, the ability of the Borrower or any Subsidiary of the
Borrower to pay or perform the Guaranteed Obligations, the existence,
perfection, priority or enforceability of any collateral security for any or all
of the Guaranteed Obligations, the existence or enforceability of any other
guaranties of all or any part of the Guaranteed Obligations, any action or
non-action on the part of any Holder of Guaranteed Obligations, the Borrower,
any Subsidiary of the Borrower or any other Person, or any other event,
occurrence, condition or circumstance whatsoever.
Amendments.
Amendment to Guaranty. No amendment or waiver of any
provision of this Guaranty, no consent to any departure by any
Guarantor herefrom, shall in any event be effective unless the same
shall be in writing and signed by the Agent and the Requisite Lenders,
and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given, except
that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, (i) reduce or discharge the liability of
any Guarantor hereunder, (ii) postpone any date fixed for payment
hereunder, or (iii) change the number of Lenders required to take any
action hereunder.
Amendment or Modification of Other Loan Documents.
The other Loan Documents may be amended, modified or supplemented in
accordance with their terms without notice to or consent or agreement
by any Guarantor, including, without limitation, so as to (i) alter,
compromise, modify, accelerate, extend, renew, refinance or change the
time or manner for making of Advances, provision of other financial
accommodations, or the payment or performance of all or any portion of
the Guaranteed Obligations, (ii) increase or reduce the rate of
interest or amount of principal payable on the Obligations, (iii)
release or discharge the Borrower, any other Loan Party or any other
Person as to all or any portion of the Guaranteed Obligations, or (iv)
release, substitute or add any one or more guarantors or endorsers,
accept additional or substituted security for payment or performance
of the Guaranteed Obligations, or release or subordinate any security
therefor.
Notices. All notices and other communications provided for
hereunder shall be in writing (including telecopier, telegraphic, telex or
cable communication) and mailed, telecopied, telegraphed, telexed, cabled or
delivered, if to the Borrower, at Cadence Design Systems, Inc., 2655 Seely
Road, San Jose, CA 95134, Attention: Treasurer, with a copy to the General
Counsel, at the same address; if to any Lender, at its Domestic Lending Office
specified opposite its name on Schedule I to the Credit Agreement; and if to
the Agent, at Credit Lyonnais, 1301 Avenue of the Americas, New York, New York
10019, Attention: Syndications Group, with a
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copy to Latham & Watkins, 633 West Fifth Street, Suite 4000, Los Angeles, CA
90071, Attention: Hendrik de Jong; or, as to each party, at such other address
as shall be designated by such party in a written notice to the other parties.
All such notices and communications shall be effective when received.
Right of Set-off. If the Requisite Lenders give their
express written consent pursuant to Section 8.5 of the Credit Agreement, each
Lender shall have the right at any time or from time to time thereafter, to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other liability at any time owing by such Lender to or for the credit or the
account of any Guarantor against any and all liability of such Guarantor under
this Guaranty, whether or not such Lender shall have made any demand under this
Guaranty and even though such deposit or liability may then be unmatured. Each
Lender agrees promptly to notify the affected Guarantor after any such set-off
and application made by such Lender, but the failure to give such notice shall
not affect the validity of such set-off and application and shall not expose
such Lender to any liabilities. The rights of each Lender under this Section
3.4 are in addition to other rights and remedies (including, without
limitation, other rights of set-off) which such Lender may have.
Successors and Assigns. This Guaranty is binding upon and
enforceable against each Guarantor, its successors and assigns, and shall inure
to the benefit of, and be enforceable by, each Holder of any of the Guaranteed
Obligations and such Holder's heirs, representatives, successors and assigns.
No Inquiry. Each Holder of Guaranteed Obligations may rely,
without further inquiry, on the power and authority of each Guarantor, the
Borrower and each of its Subsidiaries and on the authority of all officers,
directors and agents acting or purporting to act on their behalf.
Involuntary Proceedings. So long as any Lender is obligated
to extend credit under the Credit Agreement or any Guaranteed Obligations are
outstanding, no Guarantor will, without the prior written consent of the Agent
and the Requisite Lenders, commence or join with any other Person in commencing
any Insolvency or Liquidation Proceeding against the Borrower or any of its
Subsidiaries.
Payments Free and Clear of Taxes.
Payment. Each Guarantor agrees to pay any and all
present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto which arise
from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Guaranty,
excluding, with respect to any
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Holder of Guaranteed Obligations, taxes imposed on its net income
(collectively, the "Guaranty Taxes").
Indemnity. Each Guarantor hereby indemnifies each
Holder of Guaranteed Obligations for the full amount of Guaranty Taxes
(including, without limitation, any Guaranty Taxes imposed by any
jurisdiction on amounts payable under this Section 3.8) paid by such
Holder and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto (plus interest on any
amounts not paid within thirty days from the date written demand is
made therefor at a rate equal to the rate payable under the Credit
Agreement on Base Rate Advances during the continuance of a default in
the repayment of Advances), whether or not such Guaranty Taxes were
correctly or legally asserted; provided, however, that if any such
Holder subsequently recoups all or any part of such amount from the
relevant taxation authority or other authority, then such Holder shall
identify and remit the amount of the recoupment to such Guarantor
within five Business Days after it receives the recoupment.
Survival. Without prejudice to the survival of any
other agreement of any Guarantor hereunder, the agreements and
obligations of each Guarantor contained in this Section 3.8 shall
survive the full and final payment and performance of the Guaranteed
Obligations.
Receipt. Within 30 days after the date of any payment
of Guaranty Taxes by any Guarantor, such Guarantor shall furnish to
the Agent a receipt for any Guaranty Taxes paid by such Guarantor
pursuant to this Section 3.8.
No Waiver; Remedies. No failure on the part of any Holder of
Guaranteed Obligations to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof, and no single or partial exercise
of any right hereunder shall preclude any other or further exercise of any
other right or of the same right as to any other matter or on a subsequent
occasion.
Remedies Cumulative. All rights, powers and remedies of
each Holder of Guaranteed Obligations under this Guaranty, under any other
agreement now or at any time hereafter in effect between any such Holder and
any Guarantor (whether relating to the Guaranteed Obligations or otherwise) or
now or hereafter existing at law or in equity or by statute or otherwise, shall
be cumulative and concurrent and not alternative and each such right, power and
remedy may be exercised independently of, and in addition to, each other such
right, power or remedy.
Severally Enforceable. This Guaranty may be enforced
severally and successively by any one or more of the Holders of Guaranteed
Obligations in one or more
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actions, whether independent, concurrent, joint, successive or otherwise. The
claims, rights and remedies of any Holder of Guaranteed Obligations (i) may not
be modified or waived by any other Holder, except as set forth in Section
3.2(a), and (ii) shall not be reduced, discharged, affected or impaired by any
deed, act or omission, whether or not wrongful, of any other Holder.
Counterparts. This Guaranty may be executed in counterparts,
and each such counterpart for all purposes shall be deemed an original and all
such counterparts together shall constitute but one and the same agreement.
Severability. If any provision hereof or the application
thereof in any particular circumstance is held to be unlawful or unenforceable
in any respect, all other provisions hereof and such provision in all other
applications shall nevertheless remain effective and enforceable to the maximum
extent lawful.
Integration. This Guaranty and the other Loan Documents to
which any Guarantor is party are intended as an integrated and final expression
of the entire agreement of such Guarantor with respect to the subject matter
hereof and thereof. No representation, understanding, promise or condition
concerning the subject matter hereof and thereof shall be binding upon any
Holder of Guaranteed Obligations unless expressed herein or therein, and no
course of prior dealing or usage of trade, and no parol or extrinsic evidence
of any nature, shall be admissible to supplement, modify or vary any of the
terms hereof or thereof. Acceptance of or acquiescence in a course of
performance rendered under this Guaranty or any other dealings between any
Guarantor and any Holder of Guaranteed Obligations shall not be relevant to
determine the meaning of this Guaranty even though the accepting or acquiescing
party had knowledge of the nature of the performance and opportunity for
objection.
Counsel. Each Guarantor acknowledges and agrees that the
Lenders have encouraged Guarantor to obtain the counsel of Guarantor's own
qualified attorney, duly licensed to practice in the State of California,
before Guarantor executes this Guaranty. By executing this Guaranty, Guarantor
represents and warrants that either: (a) Guarantor has obtained such counsel;
or (b) Guarantor has determined, on its own, to execute and deliver this
Guaranty without first obtaining such counsel, notwithstanding the Lenders'
encouragement to the contrary.
GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
GOVERNING LAW. THIS GUARANTY SHALL BE GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF CALIFORNIA.
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SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS GUARANTY, EACH PARTY HERETO CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH
PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS GUARANTY OR ANY
DOCUMENT RELATED HERETO. SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS MAY BE MADE BY ANY MEANS PERMITTED BY CALIFORNIA LAW.
WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ALL
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF OR RELATED TO THIS GUARANTY, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT
TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND AGREES THAT ANY
SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT
A JURY. WITHOUT LIMITING THE FOREGOING, EACH PARTY FURTHER AGREES THAT
ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS GUARANTY OR ANY OTHER
LOAN DOCUMENT OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS GUARANTY AND THE OTHER LOAN DOCUMENTS.
LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY ANY
GUARANTOR AGAINST THE AGENT OR ANY LENDER OR THE AFFILIATES,
DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF ANY OF THEM FOR
ANY SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF
ANY CLAIM (WHETHER BASED UPON ANY BREACH OF CONTRACT, TORT, BREACH OF
STATUTORY DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT OF OR
RELATED TO THE
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TRANSACTIONS CONTEMPLATED BY THIS GUARANTY, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH GUARANTOR HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
Acceptance and Notice. Each Guarantor acknowledges
acceptance hereof and reliance hereon by each Holder of any of the Guaranteed
Obligations and waives, irrevocably and forever, all notice thereof.
IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be duly executed and delivered by its officer thereunto duly authorized as of
the date first above written.
SEELEY PROPERTIES, INC.
By:
Name:
Title:
RIVER OAKS PLACE ASSOCIATES, L.P.
By: Seeley Properties, Inc., its general partner
By:
Name:
Title:
Annex 1
Form of Subsidiary Joinder
AGREEMENT TO BE BOUND BY GUARANTY
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This Agreement to be Bound by Guaranty (this "Agreement") is
executed as of the _____ day of _________, ____, by [NAME OF NEW SUBSIDIARY] ,
a ____________ [corporation] [partnership] [etc.] (the "New Subsidiary").
RECITALS
On or about April 11, 1996, Cadence Design Systems,
Inc., a Delaware corporation (the "Borrower") executed that certain Revolving
Credit Agreement, dated as of April 11, 1996 (as amended to date, the "Credit
Agreement"), by and among the Borrower, Credit Lyonnais, as Administrative
Agent, and the financial institutions party thereto. Terms not defined herein
are used as defined in the Credit Agreement.
As a condition to the execution of the Credit
Agreement by the Agent and the Lenders, all of the Subsidiaries of the Borrower
(other than the Inactive Subsidiaries and Foreign Subsidiaries) executed that
certain Subsidiary Guaranty, dated as of April 11, 1996 (as amended to date,
the "Guaranty"), by and among the entities listed in the signature pages
thereof in favor of the Agent, the Lenders and all other Holders (as defined in
the Guaranty).
Section 5.2(e) of the Credit Agreement provides that
when the Borrower acquires or forms a new Subsidiary (other than an Inactive
Subsidiary or a Foreign Subsidiary) or when an Inactive Subsidiary ceases to be
an Inactive Subsidiary or a Foreign Subsidiary ceases to be a Foreign
Subsidiary, the Borrower will cause such Subsidiary to deliver an executed
counterpart to the Guaranty and such Subsidiary shall become a party to the
Guaranty.
On [Insert Date] , the New Subsidiary
[Describe acquisition/formation of New Subsidiary, or "activation" of Inactive
or Foreign Subsidiary] . The New Subsidiary will benefit from the funds
available to the Borrower under the Credit Agreement, and in recognition of
this benefit and in order to comply with the Credit Agreement, the New
Subsidiary is willing to enter into this Agreement.
AGREEMENT
NOW, THEREFORE, the New Subsidiary agrees as follows:
Representations and Warranties. On and as of the
date of this Agreement (the "Effective Date") and for the benefit of the Agent,
the Lenders and all other Holders (as defined in the Guaranty), the New
Subsidiary hereby makes each of the representations and warranties contained in
the Guaranty.
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Agreement to be Bound. The New Subsidiary agrees
that, on and as of the Effective Date, it shall become a Guarantor under the
Guaranty and shall be bound by all the provisions of the Guaranty the same as
if the New Subsidiary had executed the Guaranty on the Closing Date.
Waiver. Without limiting the generality of the
waivers in the Guaranty, the New Subsidiary specifically agrees to be bound by
the Guaranty and waives any right to notice of acceptance of its execution of
this Agreement and of its agreement to be bound by the Guaranty.
Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of California.
IN WITNESS WHEREOF, the New Subsidiary has caused this
Agreement to be Bound by Guaranty to be executed by its duly authorized
officer.
[NAME OF NEW SUBSIDIARY]
By: ___________________________
Name:
Title:
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EXHIBIT C-2
FORM OF PLEDGE AND SECURITY AGREEMENT
This PLEDGE AND SECURITY AGREEMENT, dated as of April 11, 1996,
is made by CADENCE DESIGN SYSTEMS, INC., a Delaware corporation ("Cadence"),
SEELEY PROPERTIES, INC., a California corporation, and RIVER OAKS PLACE
ASSOCIATES, L.P., a California limited partnership (collectively, the
"Grantors"), in favor of CREDIT LYONNAIS, a bank organized under the laws of the
Republic of France, acting through its New York Branch, as Agent for the Lenders
under the Credit Agreement described below ("Secured Party").
RECITALS
A. Cadence has entered into that certain Revolving Credit
Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among Cadence, the
financial institutions party thereto as Lenders, and Credit Lyonnais, as Agent.
B. It is a condition precedent to the extension of credit under
the Credit Agreement that the Grantors shall have granted the security interests
described herein as security for each and all the Obligations (as that term is
defined in the Credit Agreement) and as security for the other debts,
liabilities and obligations secured hereunder.
NOW, THEREFORE, in consideration of the foregoing and in order
to induce the Lenders to extend credit under the Credit Agreement, the Grantors
hereby agree as follows:
DEFINITIONS AND ACCOUNTING TERMS
General Definitions. Except as otherwise specifically provided
herein, the terms which are defined in Section 1.1 of the Credit Agreement shall
have the same meanings when used in this Agreement and the provisions of
Sections 1.2 and 1.3 of the Credit Agreement shall apply to this Agreement.
U.C.C. Definitions. Where applicable and except as otherwise
expressly provided herein, terms used herein (whether or not capitalized) shall
have the respective meanings assigned to them in the Uniform Commercial Code as
enacted in the State of California (the "UCC").
Certain Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
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"Agreement" means this Pledge and Security Agreement, dated as
of the date set forth above, made by the Grantors for the benefit of Secured
Party.
"Claims" is defined in Section 2.1(g).
"Collateral" is defined in Section 2.1.
"Pledged Shares" is defined in Section 2.1(a).
"Proceeds" includes (i) all payments, dividends, cash, options,
warrants, rights, instruments and other property of any type or nature at any
time received, receivable or otherwise distributed, voluntarily or
involuntarily, (x) on account of, in respect of or in exchange for any item of
Collateral or (y) upon the collection, sale or other disposition of any item of
Collateral; (ii) any insurance or payments under any indemnity, warranty or
guaranty now or hereafter payable in respect of any item of Collateral or any
proceeds thereof or any loss relating thereto; (iii) all proceeds of any
Collateral; and (iv) any property or interest in property acquired with or in
exchange for any of the foregoing.
"Secured Obligations" is defined in Section 2.2.
"Secured Party" means Credit Lyonnais, as Agent for the Lenders
under the Credit Agreement.
"UCC" is defined in Section 1.2.
SECURITY INTEREST AND COLLATERAL
Creation of Security Interest. As security for the due and
punctual payment and performance of all Secured Obligations, each Grantor hereby
grants Secured Party a security interest in all right, title and interest of the
Grantor in, to, under or derived from the following property (collectively, the
"Collateral"), in each case whether now owned or hereafter acquired by the
Grantor and wherever located:
The shares of stock listed on Schedule A hereto (the
"Pledged Shares");
All other shares of stock or equity securities of, or
ownership interests in, any issuer of the Pledged Shares or any other Person, in
each case whether or not represented by a certificated security or other
instrument, except, as to Cadence, (i) the
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outstanding capital stock of IMS held by Cadence on February 8, 1996,
(ii) the outstanding capital stock of any Foreign Subsidiary other than
65% of the outstanding capital stock of each Material Foreign
Subsidiary and (iii) notes or other instruments evidencing loans and
advances to employees of Cadence or any of its Subsidiaries or any
equity securities so long as the aggregate unrecovered initial cost of
such notes, other instruments and equity securities does not exceed
$3,000,000;
Except as may be provided in Section 2.1(b), all
options, warrants and rights to subscribe for or purchase voting or
nonvoting capital stock or equity securities of, or ownership interests
in, any issuer of the Pledged Shares or any other Person, in each case
whether or not represented by a certificated security or other
instrument;
All inventory, including, without limitation, (i) all
raw materials, work in process and finished goods held for sale or
lease or leased or furnished or to be furnished under contracts of
service, (ii) all goods returned to or stopped in transit by the
Grantor and (iii) all supplies and materials used or consumed in any
business of the Grantor; and all documents of title;
All equipment, including, without limitation,
manufacturing, distribution and sales equipment, office equipment,
supplies, appliances, data processing and communications equipment,
furniture, furnishings, tools, fixtures, trade fixtures, automobiles,
trucks, trailers, other motor vehicles and aircraft and all other goods
(other than inventory) used or bought for use for any business;
All accounts and accounts receivable, including,
without limitation, all rights to payment for goods sold or leased or
for services rendered which are not evidenced by an instrument or
chattel paper, and all liens and security interests at any time
securing the same;
All money, notes, bonds, debentures, evidences of
indebtedness and all other debt instruments and debt securities, all
chattel paper, all loans receivable, all tax refunds, all deposits and
deposit accounts, all brokerage, investment and securities accounts and
interests in, and entitlements to, the financial assets from time to
time held therein, all royalties, guaranties, and indemnities, all
claims and causes of action of every type and description, and all
other rights and claims for the payment of money (in each case whether
due or to become due, whether arising by contract or founded in tort or
arising by law or otherwise, and whether or not earned by performance,
and specifically including all "claims," as such term is defined in
Section 101 of the United States Bankruptcy Code, as in effect on the
date hereof (hereinafter, "Claims")), and all liens and security
interests at any time securing the same;
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All other general intangibles, including, without
limitation, permits, licenses, franchises, contracts, patents, patent
applications, copyrights, copyright applications, rights and interests
in copyrights and works protectable by copyright, trademarks, trademark
applications, trade names, service marks and service mark applications
and other indicia of origin, technical knowledge and processes, formal
or informal licensing arrangements, blueprints, technical
specifications, computer software, know-how, trade secrets, customer
lists, supplier lists, corporate books and records, business plan and
other corporate information, and all embodiments thereof, and rights
thereto, together with the goodwill of the business symbolized by or
connected with the Grantor's trademarks, licenses and other rights
described in this subsection;
All replacements, additions, parts, appurtenances,
accessions, substitutions, repairs, products, offspring, issues, rents
and profits of, to or from any of the foregoing; and
All Proceeds of any of the foregoing,
provided, nevertheless, that the Collateral shall not include any interest in
real property (or any estate for years therein), and the foregoing grant of a
security interest shall not require Secured Party to provide any goods or
services or assume any other duties or obligations under the documents or
agreements set forth in Section 2.1(h) above.
Notwithstanding the foregoing provisions of this Section 2.1:
A. Such grant of a security interest shall not extend to, and
the term "Collateral" shall not include, any right (other than a right
to the payment of money) of any Grantor under any license agreement,
whether the Grantor is the licensor or the licensee, if, to the extent
that and for as long as the license agreement prohibits the creation of
a security interest in such right or requires any consent for the
assignment or grant of a security interest therein that has not been
given; provided, however, that, whether or not any agreement purports
to restrict the assignment of any account or the creation of any
security interest in any account, chattel paper or general intangible
for money due or to become due or in any proceeds of such agreement or
purports to require any consent thereto, such grant of a security
interest shall in any event extend to, and the term "Collateral" shall
include, (i) all present and future accounts, chattel paper and general
intangibles for money due or to become due, (ii) all proceeds thereof,
(iii) all proceeds of or from the exercise, collection or enforcement
of any right which is excluded under this Clause A, and (iv) any right
which is excluded under this Clause A, automatically and without need
of any further confirmation, act or deed, if, as and when the
prohibition or consent requirement giving rise to such exclusion is
eliminated or waived or the required consent is given.
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B. If any license agreement permits the creation of a security
interest in any right (other than a right to the payment of money) of
any Grantor thereunder but prohibits or restricts the foreclosure or
other enforcement of such security interest, then such grant of a
security interest shall extend to, and the term "Collateral" shall
include, such right but the foreclosure or enforcement of such security
interest shall be limited as necessary to comply with such prohibition
or restriction.
C. Such grant of a security interest shall not extend to, and
the term "Collateral" shall not include, any governmental license or
permit in which it is unlawful to grant a security interest.
Secured Obligations. The Collateral secures (i) the payment
of all present and future Obligations and all other debts and liabilities of any
one or more of the Grantors now outstanding or hereafter arising under the
Credit Agreement, this Agreement or any other Loan Document, whether for
principal, interest, fees, cost and expense reimbursements, indemnification or
otherwise and whether outstanding to the Agent, a Lender or any other Person,
(ii) the performance by the Grantors of all of their other obligations of every
kind and character arising under the Credit Agreement, this Agreement or any
other Loan Document and (iii) all costs and expenses incurred by Secured Party
in asserting, enforcing or protecting a Claim in respect of any such debts,
liabilities and obligations or the Collateral in any bankruptcy case or
insolvency proceeding to which any of the Grantors or any other Loan Party may
be party and all collection costs and enforcement expenses incurred by Secured
Party in collecting any such Claim or in retaking, holding, preparing for sale,
selling or otherwise disposing of or realizing on any Collateral or otherwise
exercising or enforcing any of its rights or remedies hereunder, together (in
each case) with Secured Party's reasonable attorneys' fees and disbursements and
court costs related thereto (collectively, the "Secured Obligations").
Delivery of Instruments. All stock certificates, notes,
bonds, debentures and other instruments constituting the Collateral (except
checks received and collected in the ordinary course of business) shall be
delivered to and held by Secured Party on the date hereof or, if hereafter
acquired, immediately upon acquisition thereof by the Grantors and without any
notice from or demand by Secured Party, in each case in suitable form for
transfer by delivery or accompanied by duly executed instruments of transfer or
assignments in blank or with appropriate endorsements, in form and substance
satisfactory to Secured Party, except as provided in Sections 5.2(e), 5.2(j) and
5.2(k) of the Credit Agreement.
Further Assurances. Subject to Sections 5.2(e), 5.2(j) and
5.2(k)(iii) of the Credit Agreement, the Grantors will promptly (and in no event
later than five days after request by Secured Party) execute and deliver, and
use their reasonable and diligent best efforts to obtain from other Persons, all
instruments and documents (including, without limitation, assignments,
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transfer documents and transfer notices, financing statements and other lien
notices), in form and substance satisfactory to Secured Party, and take all
other actions which are necessary or, in the good faith judgment of Secured
Party, desirable or appropriate to create, perfect, protect or enforce Secured
Party's security interests in the Collateral, to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral, to protect the Collateral against the rights, Claims or interests of
third Persons or to effect or to assure further the purposes and provisions of
this Agreement and the Credit Agreement, including Section 5.2(k)(ii) thereof,
and the Grantors will pay all costs related thereto and all reasonable expenses
incurred by Secured Party in connection therewith. Notwithstanding the
foregoing, no Grantor shall be obligated to file any application for the
registration of any Intellectual Property Collateral (as defined in the
Intellectual Property Assignment) which it would not otherwise file in the
exercise of its ordinary business practices or to take any actions to perfect
any security interest with respect to any Intellectual Property Collateral
outside the U.S.
SECTION 2.5 Survival of Security Interest. Except as otherwise
required by law, the security interest granted hereby shall, unless released in
writing by Secured Party pursuant to the Credit Agreement, (i) remain
enforceable as security for all Secured Obligations now outstanding or created
or incurred at any future time (whether or not created or incurred pursuant to
any agreement presently in effect or hereafter made and notwithstanding any
subsequent repayment of any of the Secured Obligations or any other act,
occurrence or event), until all obligations of the Lenders to extend credit to
Cadence have expired or been terminated and all Secured Obligations have been
fully and finally paid and (ii) survive any sale, exchange or other disposition
of the Grantors' interest in any Collateral and remain enforceable against each
transferee and subsequent owner of such interest, even if such sale, exchange or
other disposition is permitted at the time under the Credit Agreement.
SECTION 2.6 Reinstatement. If at any time any payment on any
Secured Obligation is set aside, avoided, or rescinded or must otherwise be
restored or returned, this Agreement and the security interest created hereby
shall remain in full force and effect and, if previously released or terminated,
shall be automatically and fully reinstated, without any necessity for any act,
consent or agreement of the Grantors, as fully as if such payment had never been
made and as fully as if any such release or termination had never become
effective.
REPRESENTATIONS AND WARRANTIES
Representations and Warranties of Grantors. Each Grantor
represents and warrants that:
Schedule A completely and accurately sets forth all
requested information regarding the Pledged Shares. The Pledged Shares
have been duly authorized and validly
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issued, are fully paid and non-assessable and were not issued in breach
or derogation of preemptive rights of any Person.
The Grantor's chief executive office is located at the
address shown as the chief executive office on Schedule B hereto. The
Grantor has no places of business other than its chief executive office
and the other locations set forth on Schedule B. All tangible
Collateral, except instruments delivered to Secured Party in pledge and
financial intermediary accounts, and all of the Grantor's records
relating to any Claims owned by it are kept solely at the Grantor's
chief executive office, except for certain office equipment and other
tangible Collateral that is kept at other offices as set forth in
Schedule B hereto.
The Grantor does not do business, and for the previous
five years has not done business, under any fictitious business names
or trade names other than those listed on Schedule C hereto.
The Grantor at all times is (or, as to any item of
Collateral acquired after the date hereof, will be) the sole legal and
beneficial owner of all Collateral reflected on its books and records
as belonging solely to it and has exclusive possession and control
thereof (except as otherwise occurring in the ordinary course of
business) free and clear of any Liens except those created by this
Agreement or permitted under Section 5.3(a) of the Credit Agreement. No
financing statement, notice of lien, mortgage, deed of trust or
instrument similar in effect covering the Collateral or any portion
thereof or any proceeds thereof exists or is on file in any public
office, except as may have been filed in favor of Secured Party, as set
forth on Schedule 5.3(d) to the Credit Agreement and as otherwise
permitted under Section 5.3(a) of the Credit Agreement.
The Collateral has not been and will not be used or
bought by the Grantor for personal, family or household purposes.
All originals of all stock certificates, notes, bonds,
debentures and other instruments constituting Collateral (except checks
received and collected by the Grantor in the ordinary course of
business) have been delivered to Secured Party with all necessary or
appropriate endorsements or instruments of transfer executed in blank,
except as otherwise permitted by Sections 5.2(e), 5.2(j) and 5.2(k) of
the Credit Agreement.
Except (i) as set forth in Schedule D, (ii) as to laws
generally applicable to the creation, perfection or enforcement of
security interests in personal property and (iii) as to such
contractual consents as have been obtained by the Grantor, neither the
Grantor nor any of the Collateral purported to be granted by it is
subject to any requirement of law or contractual obligation which
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prohibits, restricts or limits the execution, delivery or performance
of this Agreement or the creation, perfection or enforcement of the
security interest purported to be created hereby.
None of the Collateral constitutes "margin stock," as
defined in Regulation U of the Board of Governors of the Federal
Reserve System.
The proper taxpayer identification number for the
Grantor is accurately set forth on Schedule E.
COVENANTS
Covenants of Grantors. Each Grantor covenants and agrees
that so long as the security interest created hereby remains outstanding:
The Grantor will deliver to Secured Party each
instrument included in the Collateral as set forth in Section 2.3.
The Grantor will not (i) cause, permit or suffer any
voluntary or involuntary change in its name, identity or corporate
structure, or in the location of its chief executive office, and (ii)
keep any tangible Collateral or any records relating to any Claim owned
by it, or permit or suffer any such Collateral or records to be moved,
to any other location unless (in each case) (x) Schedule B has first
been appropriately supplemented with respect thereto, and (y) an
appropriate financing statement has been filed in the proper office and
in the proper form, and all other requisite actions have been taken, to
perfect or continue the perfection (without loss of priority) of
Secured Party's security interest in the Collateral, except as
otherwise provided in Sections 5.2(e), 5.2(j) or 5.2(k) of the Credit
Agreement.
The Grantor will defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any
interest therein, to the extent such Collateral is material to the
conduct of its business.
The Grantor will not encumber, sell, exchange or
otherwise dispose of any item of Collateral or any interest therein, or
permit or suffer any such item to be encumbered, sold, exchanged or
otherwise disposed of, unless (i) such action is permitted at the time
under the Credit Agreement and (ii) the Grantor makes all payments on
account of the Obligations required to be made therefrom, if any, and
the Grantor and each other Loan Party takes all other actions required
to be taken in connection therewith, under the Credit Agreement, this
Agreement or any other
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Loan Document.
Secured Party is hereby authorized to file one or more
financing statements, and continuations thereof and amendments thereto,
relative to all or any part of the Collateral, without the signature of
the Grantor where permitted by law.
The Grantor will maintain insurance as required in
Section 5.2(g) of the Credit Agreement.
Secured Party may at any time (but shall not be
obligated to) (i) perform any of the obligations of the Grantor under
this Agreement if the Grantor fails to perform such obligation within
30 days (or, in the case of insurance, within 10 days) after written
demand by Secured Party and (ii) make any payments and do any other
acts it may deem necessary or desirable to protect its security
interest in the Collateral, including, without limitation, the right to
pay, purchase, contest or compromise any Lien that attaches or is
asserted against any Collateral, to procure insurance, and to appear in
and defend any action or proceeding relating to the Collateral, and the
Grantor will promptly reimburse Secured Party for all payments made by
Secured Party in doing so, together with interest thereon at the rate
then applicable under the Credit Agreement to the Advances, and all
reasonable costs and expenses related thereto as set forth in Section
8.11 hereof.
VOTING RIGHTS, DIVIDENDS AND DISTRIBUTIONS
Voting Rights. So long as no Event of Default has occurred
and is continuing or would result from any exercise thereof, each Grantor shall
have and may exercise all voting rights with respect to any and all shares of
stock, equity securities and other equity, ownership or profit interests
constituting Collateral, except that:
the Grantor may not and will not act or vote in favor
of any action that would be or cause a breach of any obligations of the
Grantor or any other Loan Party under the Credit Agreement or under any
other Loan Document;
the Grantor may not and will not act or vote in favor
of (i) the authorization or issuance of any options, warrants, voting
rights, or preference shares or additional shares, or (ii) any
reclassification, readjustment, reorganization, merger, consolidation,
sale or disposition of assets, or dissolution, without giving Secured
Party at least 15 days' prior written notice thereof, except as
permitted under Sections 5.3(b) and 5.3(g) of the Credit Agreement and
except in compliance with Section 5.2(k)(ii) of the Credit Agreement;
and
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the Grantor may not and will not act or vote in favor
of any action that does or is reasonably likely to have a material
adverse effect on the value of the Collateral.
Upon the occurrence and during the continuance of an Event of Default, Secured
Party may (but shall not be obligated to) terminate the Grantors' rights to
exercise voting rights with respect to any or all such shares of stock, equity
securities and ownership interests, either by giving written notice of such
termination to the Grantors or by transferring such shares, securities or
interests into Secured Party's name, and Secured Party shall thereupon have the
sole right and power to exercise such voting rights.
Dividends, Distributions and Payments. So long as no Event of
Default has occurred and is continuing or would result, the Grantors shall be
entitled to receive all dividends and distributions on all shares of stock,
equity securities and other equity, ownership and profit interests constituting
Collateral and all payments on any notes, bonds, debentures and other
instruments constituting Collateral, so long as the Grantors make all payments
on account of the Obligations required to be made therefrom, if any, and the
Grantors and each other Loan Party take all other actions required to be taken
in connection therewith, under the Credit Agreement, this Agreement or any other
Loan Document.
DEFAULTS AND REMEDIES
Remedies. Upon and at any time after the occurrence and
during the continuance of any Event of Default, Secured Party may exercise and
enforce, in any order, (i) each and all of the rights and remedies available to
a secured party upon default under the UCC or other applicable law, (ii) each
and all of the rights and remedies available to it, as Agent or as Secured
Party, under the Credit Agreement or any other Loan Document and (iii) each and
all of the following rights and remedies:
Secured Party may notify any or all account debtors
and obligors on any Collateral to make payment directly to Secured
Party.
Secured Party may take possession of all items of
Collateral that are not then in its possession and require the Grantors
or the Person in possession thereof to deliver such Collateral to
Secured Party at one or more locations designated by Secured Party and
reasonably convenient to it and the Grantors.
Secured Party may sell, lease, license or otherwise
dispose of any or all of the Collateral or any part thereof in one or
more parcels at a public sale or in a private sale or transaction, on
any exchange or market or at Secured Party's
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offices or on the Grantors' premises or at any other location, for
cash, on credit or for future delivery, and may enter into all
contracts necessary or appropriate in connection therewith, without any
notice whatsoever unless required by law. The Grantors agree that at
least ten calendar days' written notice to the Grantors of the time and
place of any public sale or the time after which any private sale is to
be made shall be commercially reasonable. The giving of notice of any
such sale or other disposition shall not obligate Secured Party to
proceed with the sale or disposition, and any such sale or disposition
may be postponed or adjourned from time to time, without further
notice.
(d) Secured Party may, on a royalty-free basis, use and license
use of any trademark, trade name, trade style, copyright, patent or
technical knowledge or process owned, held or used by the Grantors in
respect of any Collateral as to which any right or remedy of Secured
Party is exercised or enforced.
In addition, each holder of any Secured Obligation may exercise and enforce such
rights and remedies for the collection of such Secured Obligation as may be
available to it by law or agreement.
Remedies Cumulative. Secured Party may exercise and enforce
each right and remedy available to it upon the occurrence and during the
continuance of an Event of Default either before or concurrently with or after,
and independently of, any exercise or enforcement of any other right or remedy
of Secured Party or any holder of any Secured Obligation against any Person or
property. All such rights and remedies shall be cumulative, and no one of them
shall exclude or preclude any other.
Surplus; Deficiency. Any surplus proceeds of any sale or
other disposition of Collateral by Secured Party remaining after all the Secured
Obligations are paid in full shall be paid over to the Grantors or to whomever
may be lawfully entitled to receive such surplus or as a court of competent
jurisdiction may direct, but if any obligation to make Advances then remains
outstanding or if any contingent, unliquidated or unmatured Secured Obligation
then remains outstanding, such surplus proceeds may be retained by Secured Party
and held as Collateral until such time as all such obligations have expired or
been terminated and all outstanding Secured Obligations have been determined,
liquidated, paid in full and discharged. The Grantors shall be and remain liable
for any deficiency.
Information Related to Collateral. During the continuance of
an Event of Default, if Secured Party determines to sell or otherwise dispose of
any Collateral, the Grantors shall, and shall cause any Person controlled by
them to, furnish to Secured Party all information Secured Party may request that
pertains or could pertain to the value or condition of such Collateral or would
or might facilitate its sale.
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Sale Exempt from Registration. During the continuance of an
Event of Default, Secured Party shall be entitled at any sale or other
disposition of Collateral, if it deems it advisable to do so, to restrict the
prospective bidders or purchasers to persons who will provide assurances
satisfactory to Secured Party that they may be offered and sold the Collateral
to be sold without registration under the Securities Act of 1933, as amended
(the "Securities Act"), or any other applicable state or federal statute, and
upon the consummation of any such sale, Secured Party shall have the right to
assign, transfer and deliver to the purchaser or purchasers thereof the
Collateral so sold. Secured Party may solicit offers to buy the Collateral, or
any part of it, from a limited number of investors deemed by Secured Party, in
its commercially reasonable judgment, to meet the requirements to purchase
securities under Regulation D promulgated under the Securities Act as then in
effect (or any other regulation of similar import). If Secured Party solicits
such offers from such investors, then the acceptance by Secured Party of the
highest offer obtained therefrom shall be deemed to be a commercially reasonable
method of disposition of such Collateral.
Registration Rights. During the continuance of an Event of
Default, if Secured Party determines that registration of any securities
constituting Collateral under the Securities Act or other applicable law is
required or desirable in connection with any sale, the Grantors will use their
best efforts to cause such registration to be effectively made, at no expense to
Secured Party, and to continue any such registration effective for such time as
may be reasonably necessary in the opinion of the Secured Party.
THE SECURED PARTY
Credit Agreement Provisions. Secured Party is executing and
delivering this Agreement, and accepting the security interests, rights,
remedies, powers and benefits conferred upon Secured Party hereby, as Agent
under the Credit Agreement. The provisions of Article VII of the Credit
Agreement and all rights, powers, immunities and indemnities granted to the
Agent under the Credit Agreement and other Loan Documents shall apply in respect
of such execution, delivery and acceptance and in respect of any and all actions
taken or omitted by Secured Party under, in connection with or with respect to
this Agreement.
No Liability. Secured Party makes no statement, promise,
representation or warranty whatsoever, and shall have no liability whatsoever,
to any holder of any Secured Obligations as to the authorization, execution,
delivery, legality, enforceability or sufficiency of this Agreement or as to the
creation, perfection, priority or enforceability of any security interest
granted hereunder or as to existence, ownership, quality, condition, value or
sufficiency of any Collateral or as to any other matter whatsoever.
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Holders Bound. Except where the consent of others may be
required pursuant to the express provisions of Section 8.1 of the Credit
Agreement, any modification, amendment, waiver, termination or discharge of any
security interest, right, remedy, power or benefit conferred upon Secured Party
hereby that is effectuated in a writing signed by Secured Party shall be binding
upon all holders of Secured Obligations if it is (i) authorized pursuant to any
provision of the Credit Agreement or any other Loan Document, (ii) required by
law or (iii) authorized or ratified by the Requisite Lenders.
Duty of Care. Neither Secured Party nor any director,
officer, employee, attorney or agent of Secured Party shall be obligated to care
for the Collateral hereunder or to collect, enforce, vote or protect the
Collateral or any rights or interests of the Grantors related thereto or to
preserve or enforce any rights which the Grantors or any other Person may have
against any third party, except only that Secured Party shall exercise
reasonable care in physically safekeeping any item of Collateral that was
delivered into Secured Party's possession. Secured Party shall be deemed to have
exercised such reasonable care if the Collateral is accorded treatment
substantially equal to that which Secured Party accords to its own property or
if it selects, with reasonable care, a custodian or agent to hold such
collateral for Secured Party's account.
MISCELLANEOUS PROVISIONS
Incorporation of Guaranty Provision. The respective
obligations of Seeley Properties, Inc. and River Oaks Place Associates, L.P.
under this Agreement: (i) shall be absolute and unconditional as set forth in
Section 2.3 of its respective Guaranty, irrevocable and continuing as set forth
in Section 2.4 of such Guaranty, subject to reinstatement as set forth in
Section 2.5 of such Guaranty and not affected or impaired by any of the matters
waived in Section 2.6 of such Guaranty; (ii) shall be subject to the provisions
of Article III of such Guaranty; and (iii) shall otherwise be as equally
enduring and free from defenses as such Grantor's respective liability under
such Guaranty.
Notices. All notices, requests, approvals, consents and other
communications required or permitted to be made hereunder shall, except as
otherwise provided, be given in the manner specified and to the addresses set
forth in Section 8.2 of the Credit Agreement.
Headings. The various headings in this Agreement are inserted
for convenience only and shall not affect the meaning or interpretation of this
Agreement or any provision hereof.
Changes. This Agreement or any provision hereof may be
changed, waived or terminated only by a statement in writing signed by the party
against which such change, waiver or termination is sought to be enforced or
otherwise in accordance with Section 7.7 of the Credit
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Agreement. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
Grantors Remain Liable. The Grantors shall remain liable
under all contracts and agreements included in the Collateral to the extent set
forth therein to perform all of its duties and obligations thereunder to the
same extent as if this Agreement had not been executed. The exercise or
enforcement by Secured Party of any of its rights and remedies under this
Agreement or in respect of the Collateral shall not release the Grantors from
any of their duties or obligations under any such contracts or agreements.
Secured Party shall not be obligated to perform any such duties or obligations
and shall not be liable for any breach thereof.
No Waiver. No failure by Secured Party to exercise, or delay
by Secured Party in exercising, any power, right or remedy under this Agreement
shall operate as a waiver thereof. No waiver by Secured Party shall be effective
unless given in a writing signed by it. No waiver so given shall operate as a
waiver in respect of any other matter or in respect of the same matter on a
future occasion. Acceptance of or acquiescence in a course of performance in
respect of this Agreement shall not waive or affect the construction or
interpretation of the terms of this Agreement even if the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
Entire Agreement. This Agreement and the other Loan Documents
are intended by the parties as a final expression of their agreement and a
complete and exclusive statement of the terms and conditions thereof.
Severability. If any provision of this Agreement is invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and
enforceability of the remaining provisions hereof, or of such provision in any
other application, shall not be in any way affected or impaired thereby and such
other provisions and applications shall enforceable to the full extent lawful.
Power of Attorney. Each Grantor hereby appoints and
constitutes Secured Party or any delegate, nominee or agent acting for Secured
Party as the Grantor's attorney-in-fact with the power and authority (but not
the duty), in the name of the Grantor or in the name of Secured Party or such
delegate, nominee or agent, to (i) execute, deliver and file such financing
statements, agreements, deeds and writings as the Grantor is required to
execute, deliver or file hereunder, (ii) during the continuance of an Event of
Default endorse, collect or transfer any item of Collateral which the Grantor is
required to endorse, collect or transfer hereunder or which Secured Party is
permitted to endorse, collect or transfer hereunder, (iii) make any payments or
take any action under Section 2.4 or Section 4.1(g) hereof, (iv) take any other
action required of the Grantor or permitted to Secured Party hereunder, and (v)
take any action reasonably necessary or incidental to any of the foregoing. This
power of attorney is coupled with an
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interest and is irrevocable as to each Grantor. Secured Party shall have no duty
whatsoever to exercise any power herein granted it.
Counterparts. This Agreement and any amendments, waivers,
consents or supplements may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which shall together constitute one and the same agreement.
Costs and Expenses. Each Grantor hereby agrees to pay or
reimburse Secured Party for all reasonable costs and expenses (including,
without limitation, reasonable attorneys' fees and disbursements and court
costs) incurred in connection with or as a result of the exercise or enforcement
by Secured Party of any right or remedy available to it or the protection or
enforcement of its interest in the Collateral in any bankruptcy case or
insolvency proceeding.
GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; LIMITATION OF LIABILITY; WAIVER OF BOND.
GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED UNDER THE LAWS OF THE STATE OF CALIFORNIA, EXCEPT TO THE
EXTENT THAT THE PERFECTION OF THE SECURITY INTERESTS HEREUNDER IN
RESPECT OF ANY PARTICULAR COLLATERAL IS GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS
OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN
DISTRICT OR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO CONSENTS, FOR ITSELF AND
IN RESPECT OF ITS PROPERTY, TO THE JURISDICTION OF THOSE COURTS. EACH
PARTY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY
DOCUMENT RELATED HERETO. SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER
PROCESS MAY BE MADE BY ANY MEANS PERMITTED BY CALIFORNIA LAW.
WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ALL
RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED
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UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY IN ANY
ACTION, PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF
THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE, AND AGREES THAT ANY SUCH
CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, EACH PARTY FURTHER AGREES THAT
ITS RIGHT TO A TRIAL BY JURY IS HEREBY WAIVED AS TO ANY ACTION,
COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER
LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
LIMITATION OF LIABILITY. NO CLAIM MAY BE MADE BY THE
GRANTORS AGAINST THE AGENT OR ANY LENDER OR THE AFFILIATES, DIRECTORS,
OFFICERS, EMPLOYEES, ATTORNEYS OR AGENTS OF ANY OF THEM FOR ANY
SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES IN RESPECT OF ANY
CLAIM (WHETHER BASED UPON BREACH OF CONTRACT, TORT, BREACH OF STATUTORY
DUTY OR ANY OTHER THEORY OF LIABILITY) ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, AND EACH GRANTOR HEREBY
WAIVES, RELEASES AND AGREES NOT TO SUE UPON ANY CLAIM FOR ANY SUCH
DAMAGES, WHETHER OR NOT NOW ACCRUED AND WHETHER OR NOT KNOWN OR
SUSPECTED TO EXIST IN ITS FAVOR.
WAIVER OF BOND. EACH GRANTOR WAIVES THE POSTING OF ANY
BOND OTHERWISE REQUIRED OF SECURED PARTY IN CONNECTION WITH THE
ENFORCEMENT OF ANY OF ITS REMEDIES HEREUNDER, INCLUDING, WITHOUT
LIMITATION, ANY ORDER OR WRIT FOR REPLEVIN OR DELIVERY OF POSSESSION OF
ANY COLLATERAL.
SECTION 8.12 Successors and Assigns. This Agreement is binding
upon and enforceable against the Grantors and their successors and assigns. It
shall inure to the benefit of and may be enforced by Secured Party and its
successors and assigns, for its and their own benefit and for the benefit of
each and every present and future Lender or other Person entitled to
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enforce any of the Secured Obligations and each of their respective heirs,
representatives, successors and assigns.
IN WITNESS WHEREOF, the parties have caused this Pledge and
Security Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above written.
CADENCE DESIGN SYSTEMS, INC.,
By:
Name:
Title:
SEELEY PROPERTIES, INC.
By:
Name:
Title:
RIVER OAKS PLACE ASSOCIATES, L.P.
By: Seeley Properties, Inc., its general partner
By:
Name:
Title:
CREDIT LYONNAIS
By:
Name:
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Title:
SCHEDULE A
PLEDGED SHARES
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EXHIBIT C-3
FORM OF INTELLECTUAL PROPERTY ASSIGNMENT
This INTELLECTUAL PROPERTY ASSIGNMENT, dated as of April 11, 1996, is
made by Cadence Design Systems, Inc., a Delaware corporation (the "Assignor"),
in favor of and for the benefit of Credit Lyonnais, a bank organized under the
laws of the Republic of France, acting through its New York Branch, as Agent for
the Lenders under the Credit Agreement described below ("Secured Party").
RECITALS
A. Pursuant to the Pledge and Security Agreement dated as of the
date hereof, made in favor of Secured Party by the Assignor (the "Pledge and
Security Agreement"), the Assignor has granted to Secured Party a Lien upon
certain of its assets, including the Intellectual Property Collateral (as
defined herein), in order to secure the prompt and complete payment and
performance of the obligations under that certain Revolving Credit Agreement
(the "Credit Agreement"), dated as of the date hereof, among the Assignor, the
Secured Party and the financial institutions signatory thereto as Lenders.
B. The Assignor owns the patents, trademarks and copyrights, and
has rights under the patent licenses, trademark licenses and copyright licenses,
as listed in Schedule I, and may hereafter own various patents, trademarks and
copyrights, file various patent, trademark or copyright applications, or be a
party to, or an assignee of a party to, various patent, trademark or copyright
licenses. Any references to "Schedule I" in this Assignment shall refer to
Schedule I attached hereto, which schedule is incorporated by reference into
this Assignment.
C. It is a condition precedent to the extension of credit under
the Credit Agreement that the Assignor shall have granted the intellectual
property assignments described herein.
NOW, THEREFORE, in consideration of the foregoing and in order
to induce the Lenders to extend credit under the Credit Agreement, the Assignor
hereby agrees as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 General Definitions. Except as otherwise
specifically provided herein, the terms which are defined in Section 1.1 of the
Credit Agreement shall have the same meanings when used in this Assignment and
the provisions of Sections 1.2 and 1.3 of the Credit Agreement shall apply to
this Assignment.
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SECTION 1.2 U.C.C. Definitions. Where applicable and except
as otherwise expressly provided herein, terms used herein (whether or not
capitalized) shall have the respective meanings assigned to them in the Uniform
Commercial Code as enacted in the State of California.
SECTION 1.3 Certain Defined Terms. As used in this
Assignment, the following terms shall have the following meanings:
"Assignment" means this Intellectual Property Assignment, dated
as of the date set forth above, made by the Assignor for the benefit of the
Secured Party.
"Copyright Licenses" means all rights acquired by the Assignor
under any present or future written agreement granting any right with respect to
any Copyrights/Copyright Applications, including the copyright licenses listed
in Schedule I.
"Copyrights/Copyright Applications" means all of the following:
(1) all present and future copyrights, including the
copyrights listed in Schedule I, in any original work of
authorship fixed in any tangible medium of expression and all
registrations and applications for registration of any such
copyrights in the United States or any other country, including
registrations, recordings and applications, and supplemental
registrations, recordings and applications in the United States
Copyright Office or in any similar office or agency of the
United States or any state or territory thereof, or any other
country; and
(2) all proceeds of the foregoing, including license
royalties and proceeds of infringement suits, the right to sue
for past, present and future infringements, all rights
corresponding thereto throughout the world and all renewals and
extensions thereof.
"Goodwill" means all present and future goodwill, trade
secrets, proprietary or confidential information, technical information,
procedures, formulae, quality control standards, designs, operating and training
manuals, customer lists, distribution agreements and general intangibles owned
by the Assignor and arising out of the Intellectual Property Collateral.
"Intellectual Property Collateral" is defined in Section 2.1.
"License" means any Patent License, Trademark License,
Copyright License, or other present or future license of any right or interest
acquired by the Assignor.
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"Patent Licenses" means all rights acquired by the Assignor
under any present or future written agreement granting any right with respect to
any Patents/Patent Applications, including the patent licenses listed in
Schedule I.
"Patents/Patent Applications" means all of the following:
(1) all present and future letters patent of the
United States or any other country, all registrations and
recordings thereof, and all applications in the United States
Patent and Trademark Office or in any similar office or agency
of the United States or any state or territory thereof, or any
other country, including the patents listed in Schedule I; and
(2) all proceeds of the foregoing, including license
royalties and proceeds of infringement suits, the right to sue
for past, present and future infringements, all rights
corresponding thereto throughout the world and all reissues,
divisions, continuations, renewals, extensions and
continuations-in-part thereof.
"Secured Obligations" is defined in Section 2.2 of the Pledge
and Security Agreement.
"Trademark Licenses" means all rights of the Assignor under any
present or future written agreement granting any right with respect to any
Trademarks/Trademark Applications, including the trademark licenses listed in
Schedule I.
"Trademarks/Trademark Applications" means all of the following:
(1) all present and future trademarks, trade names,
corporate names, business names, trade styles, service marks,
logos, other source or business identifiers, proprietary
product names or descriptions, prints and labels on which any
of the foregoing may appear, designs and general intangibles of
like nature, all registrations and recordings thereof, and all
applications in connection therewith, including registrations,
recordings and applications in the United States Patent and
Trademark Office or in any similar office or agency of the
United States, any state or territory thereof, or any other
country, or any political subdivision thereof, including the
trademarks listed in Schedule I; and
(2) all proceeds of the foregoing, including
license royalties and proceeds of infringement suits, the right
to sue for past, present and future
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infringements, all rights corresponding thereto throughout the
world and all reissues, extensions and renewals thereof.
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ARTICLE II
SECURITY INTEREST AND COLLATERAL
SECTION 2.1 Grant of Security Interest. As security for the due and
punctual payment and performance of all Secured Obligations, the Assignor hereby
grants Secured Party a security interest in all right, title and interest of the
Assignor in, to, under or derived from the following property (collectively, the
"Intellectual Property Collateral"), in each case whether now owned or hereafter
acquired by the Assignor and wherever located:
b. Each Patent/Patent Application;
c. Each Patent License;
d. Each Trademark/Trademark Application;
e. Each Trademark License;
f. Each Copyright/Copyright Application;
g. Each Copyright License;
h. The Goodwill associated with: (i) each Patent/Patent
Application, Trademark/Trademark Application and Copyright/Copyright
Application; and (ii) each Patent/Patent Application licensed under any Patent
License, each Trademark/Trademark Application licensed under any Trademark
License and each Copyright/Copyright Application licensed under any Copyright
License; and
i. All products and proceeds of the foregoing, including
any claim of the Assignor against third parties for any (i) past, present or
future infringement or dilution of any Patent/Patent Application,
Trademark/Trademark Application or Copyright/Copyright Application or of any
Patent License, Trademark License or Copyright License and (ii) injury to the
Goodwill associated with the foregoing.
Notwithstanding the foregoing provisions of this Section 2.1:
A. Such grant of a security interest shall not extend to,
and the term "Intellectual Property Collateral" shall not include, any right
(other than a right to the payment of money) of the Assignor under any license
agreement, whether the Assignor is the licensor or the licensee, if, to the
extent that and for as long as the license agreement prohibits the creation of a
security interest in such right or requires any consent for the assignment or
grant of a security interest therein that has not been given; provided, however,
that, whether or not any agreement
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purports to restrict the assignment of any account or the creation of any
security interest in any account, chattel paper or general intangible for money
due or to become due or in any proceeds of such agreement or purports to require
any consent thereto, such grant of a security interest shall in any event extend
to, and the term "Intellectual Property Collateral" shall include, (i) all
present and future accounts, chattel paper and general intangibles for money due
or to become due, (ii) all proceeds thereof, (iii) all proceeds of or from the
exercise, collection or enforcement of any right which is excluded under this
Clause A, and (iv) any right which is excluded under this Clause A,
automatically and without need of any further confirmation, act or deed, if, as
and when the prohibition or consent requirement giving rise to such exclusion is
eliminated or waived or the required consent is given.
B. If any license agreement permits the creation of a
security interest in any right (other than a right to the payment of money) of
the Assignor thereunder but prohibits or restricts the foreclosure or other
enforcement of such security interest, then such grant of a security interest
shall extend to, and the term "Intellectual Property Collateral" shall include,
such right but the foreclosure or enforcement of such security interest shall be
limited as necessary to comply with such prohibition or restriction.
C. Such grant of a security interest shall not extend to,
and the term "Intellectual Property Collateral" shall not include, any
governmental license or permit in which it is unlawful to grant a security
interest.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1 Representations and Warranties. The Assignor hereby
represents and warrants that:
j. It does not own any Patents/Patent Applications,
Trademarks/Trademark Applications or Copyrights/Copyright Applications that are
registered with the United States Patent and Trademark Office or the United
States Copyright Office other than the Patents/Patent Applications,
Trademarks/Trademark Applications and Copyrights/Copyright Applications listed
in Schedule I;
k. It is not a party to, or an assignee of a party to,
any Patent License, Trademark License or Copyright License which is material to
the conduct of its business other than each of the Patent Licenses, Trademark
Licenses and Copyright Licenses listed in Schedule I and such other Licenses
granted to the Assignor in connection with joint venturing arrangements entered
into with other Persons, in each case in the ordinary course of its business;
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l It has not granted any license, rights or privileges
in or to the Intellectual Property Collateral which is material to the conduct
of its business to any party, except to Secured Party and as otherwise set forth
in Schedule I and such other Licenses granted by the Assignor to its customers
and joint venturing arrangements entered into with other Persons, in each case
in the ordinary course of its business;
m. The registrations of all Intellectual Property
Collateral listed in Schedule I have been duly and properly issued and are valid
and enforceable;
n. None of the registrations of the Intellectual Property
Collateral listed in Schedule I have been adjudged invalid or unenforceable, in
whole or in part;
o. It has the right to practice the inventions described
and claimed in the Patents/Patent Applications listed in Schedule I, free and
clear of the infringement of or interference with the rights of others;
p. Except as otherwise disclosed in the schedules to the
Credit Agreement or the Assignor's documents filed with the United States
Securities and Exchange Commission, it has not received any written threats of
action which if successful would materially adversely affect the business of the
Assignor and has not commenced and is not about to commence any suit or action
against others in connection with the violation or enforcement of its rights in
any of the Intellectual Property Collateral;
q. Except for Licenses granted by the Assignor to its
customers and joint venturing arrangements entered into with other Persons, in
each case in the ordinary course of the Assignor's business, it at all times is
(or, as to any item of Intellectual Property Collateral acquired after the date
hereof, will be (other than as otherwise required in its commercially reasonable
judgment) the sole legal and beneficial owner of each of the Patents/Patent
Applications, Trademark/Trademark Applications and Copyright/Copyright
Applications listed in Schedule I and has exclusive possession and control
thereof, free and clear of any Liens except those created by this Assignment or
permitted under Section 5.3(a) of the Credit Agreement; and
r. It has the right and power to enter into this
Assignment and perform its terms.
s. To the best of the Assignor's knowledge, all
information supplied to Secured Party by or on behalf of the Assignor with
respect to the Intellectual Property Collateral is accurate and complete in all
material respects.
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ARTICLE IV
COVENANTS
Section 4.1 Covenants. The Assignor covenants and agrees as follows:
t. In no event shall the Assignor, either by itself or
through any agent, employee, licensee or designee, file an application for the
registration of any Intellectual Property Collateral with the United States
Patent and Trademark Office or the United States Copyright Office unless it
concurrently files with any such office or agency, (i) an amendment to this
Assignment adding a description of such Intellectual Property Collateral to
Schedule I and (ii) any other agreements, instruments, documents and papers as
Secured Party may reasonably request to evidence Secured Party's Lien on such
Intellectual Property Collateral.
u. Subject to Section 4.1(a) hereof, and except to the
extent that (i) Secured Party may otherwise agree or (ii) the Assignor
reasonably determines that certain of the Intellectual Property Collateral is no
longer of material value to the Assignor's business, the Assignor shall take all
necessary actions to maintain and pursue each application, to obtain the
relevant registration, and to maintain the registration of all of the
Intellectual Property Collateral with the United States Patent and Trademark
Office, the United States Copyright Office, or other appropriate filing office
or agency in which registration is necessary to protect its rights therein,
including the filing of applications for renewal, affidavits of use, affidavits
of noncontestability and opposition and interference and cancellation
proceedings; provided, however, that neither this Section 4.1(b) nor any other
provision of this Assignment or any other Loan Document shall obligate Assignor
to file any application for the registration or to obtain or maintain the
registration of any Intellectual Property Collateral which it would not
otherwise file, obtain or maintain in the exercise of its ordinary business
practices or to take any actions to perfect any security interest with respect
to any Intellectual Property Collateral outside the U.S..
v. In the event that any of the Assignor's rights under
any Intellectual Property Collateral that is material to the conduct of its
business are infringed, misappropriated or diluted by a third party, the
Assignor (i) shall notify Secured Party promptly after it learns thereof and
(ii) shall take such actions as the Assignor shall reasonably deem appropriate
under the circumstances to protect such Intellectual Property Collateral.
w. The Assignor shall promptly notify Secured Party, in
writing, of any suit, action or proceeding brought against it relating to,
concerned with or affecting the Intellectual Property Collateral that is
material to the conduct of its business or infringement of or interference with
another patent, trademark or copyright which, if determined adversely, is likely
to cause a Material Adverse Change and shall, upon request by Secured Party,
deliver to Secured Party a copy of all pleadings, papers, orders or decrees
theretofore or thereafter filed in any such
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suit, action or proceeding, and upon request by Secured Party shall keep Secured
Party fully advised and informed of the progress of any such suit, action or
proceeding.
x. The Assignor shall promptly notify Secured Party if it
knows (i) that any application or registration relating to any Intellectual
Property Collateral that is material to the conduct of its business may become
abandoned or dedicated, (ii) that there has been or likely may be an adverse
determination or development (including the institution or any adverse
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court) regarding (A)
its ownership of any Intellectual Property Collateral that is material to the
conduct of its business, (B) its right to register such Intellectual Property
Collateral that is material to the conduct of its business or (C) its right to
keep and maintain such Intellectual Property Collateral that is material to the
conduct of its business or (iii) of any other event that materially adversely
affects the value of any Intellectual Property Collateral that is material to
the conduct of its business.
y. Subject to Section 4.1(b), upon the written request of
Secured Party, the Assignor shall promptly and duly execute and deliver any and
all additional documents, including UCC-1 financing statements, and take such
further action as Secured Party may deem necessary to obtain the full benefit of
this Assignment, all at the sole expense of the Assignor.
z. Without Secured Party's prior written consent, which
consent shall not be unreasonably withheld, the Assignor shall neither (i) enter
into any agreement that would materially impair or conflict with the Assignor's
obligations hereunder nor (ii) permit the inclusion in any material contract to
which it becomes a party of any provisions that could or might in any way
prevent the creation of a security interest in the Assignor's rights and
interests in any property included within the definition of Intellectual
Property Collateral that is material to the conduct of its business acquired
under such contracts, except as otherwise provided under Section 5.3(1) of the
Credit Agreement.
ARTICLE V
POWER OF ATTORNEY
SECTION 5.1 Power of Attorney. Upon the occurrence and during the
continuation of an Event of Default, the Assignor hereby authorizes and empowers
Secured Party to make, constitute and appoint any officer or agent of Secured
Party, as Secured Party may select in its exclusive discretion, as the
Assignor's true and lawful attorney-in-fact, with the power to endorse its name
on all applications, documents, papers and instruments necessary for Secured
Party (a) to use the Intellectual Property Collateral, (b) to grant or issue to
any, third party a license or, to the extent permitted by an applicable License,
a sublicense, whether general, specific or otherwise and whether on an exclusive
or non-exclusive basis, of any Intellectual Property Collateral throughout the
world on such terms and conditions and in such manner as Secured Party shall, in
its sole discretion, determine, or (c) to assign, pledge, convey or otherwise
transfer title in or dispose of the Intellectual Property Collateral to any
third person. The Assignor hereby ratifies
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all that such attorney-in-fact shall lawfully do or cause to be done by virtue
hereof. This power of attorney shall be irrevocable for the term of this
Assignment.
ARTICLE VI
INTELLECTUAL PROPERTY COLLATERAL
SECTION 6.1 Grant of License to Use Intellectual Property Collateral.
For the purpose of enabling Secured Party to exercise rights and remedies
hereunder or under Article VI of the Pledge and Security Agreement (including in
order to take possession of, hold, preserve, process, assemble, prepare for
sale, market for sale, sell or otherwise dispose of any Intellectual Property
Collateral) during the continuance of an Event of Default, the Assignor hereby
grants to Secured Party an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to the Assignor) (a) to use,
license or sublicense any of the Intellectual Property Collateral now owned or
hereafter acquired by the Assignor and wherever the same may be located and (b)
to have access to all media in which any of the licensed items may be recorded
or stored and all computer and automatic machinery software and programs used
for the compilation or printout thereof
SECTION 6.2 Use and Protection of Intellectual Property Collateral.
Notwithstanding anything to the contrary contained herein, unless an Event of
Default has occurred and is continuing, the Assignor may continue to use,
exploit, license, enjoy and protect the Intellectual Property Collateral in the
ordinary course of its business, and Secured Party shall from time to time,
execute and deliver, upon the reasonable written request of the Assignor, any
and all instruments, certificates or other documents, in the form so requested,
that in the reasonable judgment of any the Assignor are necessary or appropriate
to permit the Assignor to continue to do so.
ARTICLE VII
MISCELLANEOUS PROVISIONS
SECTION 7.1 Termination and Release. On the date on which all
Obligations shall have been indefeasibly paid in full (other than inchoate
Obligations in the nature of indemnities and additional payments) or upon
release of the Collateral as provided in the Credit Agreement, the rights of
Secured Party hereunder shall terminate and Secured Party shall execute and
deliver to the Assignor all releases, powers of attorney and other instruments
as may be necessary or proper to terminate the Lien granted to Secured Party
hereunder and to revest in the Assignor full title to the Intellectual Property
Collateral, subject to any disposition thereof which may have been made pursuant
hereto.
SECTION 7.2 Incorporation of Pledge and Security Agreement. The parties
hereto incorporate herein, as if fully set forth herein, the provisions set
forth in Article VIII of the Pledge and Security Agreement. The Assignor hereby
acknowledges and affirms that the rights and remedies of Secured Party with
respect to the Lien upon the Intellectual Property Collateral
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made and granted hereby are further described in the Pledge and Security
Agreement, the terms and provisions of which are incorporated herein by this
reference as if fully set forth herein. Upon and at any time after the
occurrence and during the continuance of any Event of Default, Secured Party may
exercise and enforce, in any order, each and all of the rights and remedies
described in or available to it under Article VI of the Pledge and Security
Agreement.
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IN WITNESS WHEREOF, the Assignor has executed this Intellectual
Property Assignment as of the date first set forth above.
CADENCE DESIGN SYSTEMS, INC.,
By:
---------------------------------
Name:
Title:
Agreed and consented to as of
the date first above written:
CREDIT LYONNAIS
By:
-------------------------------
Name:
Title:
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ACKNOWLEDGMENT OF INSTRUMENTS
COUNTY OF )
)
STATE OF CALIFORNIA )
On before me, a Notary Public in and
for said State, personally appeared
, personally known to me (or
proved to me on the basis of satisfactory evidence) to be the person(s) whose
name(s) is/are subscribed to the within instrument and acknowledged to me that
he/she/they executed the same in his/her/their authorized capacity(ies), and
that by his/her/their signatures(s) on the instrument the person(s), or the
entity upon behalf of which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
-------------------------------------------
(Signature)
[Affix Notary Seal]
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SCHEDULE I
SCHEDULE OF COPYRIGHTS, PATENTS,
TRADEMARKS AND RELATED LICENSES
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EXHIBIT C-4
FORM OF
NOTICE OF SECURITY INTEREST IN DEPOSIT ACCOUNTS
[Credit Lyonnais Letterhead]
[Date]
[Name of Bank]
[Address]
Attention:
Re: Cadence Design Systems, Inc.
Dear :
This notice is delivered pursuant to Section 9302(1)(g)(ii) of
the California Commercial Code. You are hereby notified that Credit Lyonnais,
acting through its New York Branch, as agent for a group of lenders, has been
granted a security interest in the following deposit accounts (the "Deposit
Accounts") of Cadence Design Systems, Inc. maintained at [Bank], and all funds
and investments in such accounts and any interest accruing thereon:
A/N
A/N
A/N
CREDIT LYONNAIS CADENCE DESIGN SYSTEMS, INC.
By: By:
------------------------------- --------------------------------
Name: Name:
Title: Title:
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Receipt of the foregoing Notice of Security Interest in Deposit
Accounts (the "Notice") is hereby acknowledged. The undersigned has not received
any notice from any other person with respect to the Deposit Accounts (as
defined in the Notice).
Dated as of: [Name of Bank]
By:
---------------------------------
Name:
Title:
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EXHIBIT C-5
FORM OF NOTICE OF SECURITY INTEREST IN
FINANCIAL INTERMEDIARY ACCOUNT
[Credit Lyonnais Letterhead]
[Date]
[Name of Financial Intermediary]
[Address]
Attention:
Re: Cadence Design Systems, Inc.
Ladies and Gentlemen:
In accordance with Section 8313(1)(h) of the California Commercial
Code, Cadence Design Systems, Inc., a Delaware corporation (the "Company"),
hereby notifies you that it has granted a security interest to Credit Lyonnais,
acting through its New York Branch, as agent for a group of lenders
(collectively, the "Secured Party"), in and to all of the Company's right, title
and interest of, in and to each of the securities accounts listed on Exhibit A
hereto (the "Accounts") and all investments, securities, cash, money and other
property now or hereafter credited thereto or deposited therein (collectively,
the "Investments"), including but not limited to the property identified on
Exhibit A as presently credited to or deposited in the Accounts, pursuant to
that certain Pledge and Security Agreement among the Secured Party, the Company
and certain of its subsidiaries dated as of April 11, 1996 (the "Security
Agreement"), a copy of which is attached hereto as Exhibit B.
CREDIT LYONNAIS CADENCE DESIGN SYSTEMS, INC.
By: By:
------------------------------- ---------------------------------
Name: Name:
Title: Title:
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it is a bank, broker or clearing corporation which in the ordinary
course of its business maintains securities accounts for its customers, and that
it is acting in that capacity with respect to the Company and the Accounts; (2)
each Account is identified in the books of the undersigned in the name of
"Cadence Design Systems, Inc., for the benefit of Credit Lyonnais, as secured
party"; (3) Exhibit A to the Notice accurately describes all present Investments
in the Accounts, and the undersigned (or another clearing corporation or
custodian bank acting on its behalf) (a) has custody of all such Investments
constituting certificated securities, and (b) is the registered owner of all
such Investments constituting uncertificated securities; and (4) except for the
interests of the Company as owner and of the Secured Party under the Security
Agreement, the undersigned is not aware of any other interests or adverse claims
in the Accounts or the Investments.
Dated as of: [Name of Financial Intermediary]
By:
---------------------------
Name:
Title:
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EXHIBIT A
Investments in the Accounts
as of , 1996
[To be completed by the Company, each Account to be listed, with all investments
in each Account identified.]
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EXHIBIT B
Copy of Security Agreement
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EXHIBIT C-6
RECORDING REQUESTED BY
AND
WHEN RECORDED, MAIL TO:
LATHAM & WATKINS
633 West Fifth Street
Suite 4000
Los Angeles, California 90071-2007
Attention: Edith R. Perez, Esq.
DEED OF TRUST, ASSIGNMENT,
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
Dated as of April 11, 1996
from
CADENCE DESIGN SYSTEMS, INC., a Delaware corporation,
the Trustor
to
FIRST AMERICAN TITLE INSURANCE COMPANY,
the Trustee
and
CREDIT LYONNAIS, New York Branch,
the Beneficiary
Property:
San Jose, Santa Clara County, State of California
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DEED OF TRUST, ASSIGNMENT,
ASSIGNMENT OF LEASES AND RENTS, SECURITY AGREEMENT
AND FIXTURE FILING
This DEED OF TRUST, ASSIGNMENT, ASSIGNMENT OF LEASES AND RENTS,
SECURITY AGREEMENT AND FIXTURE FILING (this "Deed of Trust"), dated as of April
11, 1996, is made by CADENCE DESIGN SYSTEMS, INC., a Delaware corporation,
having its principal office at 2655 Seely Road, San Jose, California 95134, as
trustor (the "Trustor"), to FIRST AMERICAN TITLE INSURANCE COMPANY, a California
corporation, having an address at 114 East Fifth Street, Santa Ana, California
92701, as trustee (the "Trustee"), for the benefit of CREDIT LYONNAIS, New York
Branch, having an address at 1301 Avenue of the Americas, New York, New York
10019 (the "Beneficiary"). Unless the context requires otherwise, capitalized
terms are defined in, or by reference in, Section 1.01 hereof.
RECITALS
A. The Trustor is the owner of, and holds certain other
interests in, the real property, as more particularly described in Exhibit A
hereto.
B. Concurrently herewith, a certain Revolving Credit
Agreement of even date herewith (the "Credit Agreement") will be executed and
delivered by Trustor, the financial institutions from time to time party thereto
as Lenders, and the Beneficiary, as a Lender and as Agent for the Lenders.
C. In order to induce the Lenders to enter into the
Credit Agreement and to make the Advances, the Trustor has agreed to, among
other things, execute and deliver this Deed of Trust.
D. The Trustor has agreed that the obligations secured by
this Deed of Trust are and subject to the proviso in this Recital D, shall be
comprised of (i) all the obligations of the Trustor under the Credit Agreement,
including repayment of the maximum aggregate principal amount of the Advances
available under the Credit Agreement, which, as of the date hereof, is One
Hundred Twenty Million Dollars ($120,000,000), (ii) all of the obligations of
the Trustor under this Deed of Trust and the other Loan Documents, (iii) the
Trustor's obligations in the nature of fees, charges, costs, expenses and other
amounts, including indemnification and reimbursement obligations, and advances
made to protect the Collateral and the Liens created by the Collateral
Documents, and (iv) all amendments, supplements, consolidations, replacements,
restatements, extensions, renewals and other modifications, in whole or in part,
of all of the obligations identified in clauses (i), (ii) and (iii) of this
Recital D, provided, however, that in no event shall the obligations of the
Trustor with respect to the separate Unsecured Environmental
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Indemnity Agreement be secured by this Deed of Trust (clauses (i) through (iv),
subject to the proviso in this Recital D, are collectively referred to as the
"Secured Obligations").
E. This Deed of Trust is one of the Real Estate
Collateral Documents described in the Credit Agreement.
F. The Trustor has agreed that the payment and
performance of the Secured Obligations shall be secured by this Deed of Trust,
all as further set forth below.
GRANTING CLAUSES
NOW, THEREFORE, in consideration of the premises, the Advances
to be made to the Trustor under the Credit Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, for
the purpose of securing the due and punctual payment, performance and observance
of the Secured Obligations, and intending to be bound hereby, the Trustor does
hereby GRANT, BARGAIN, SELL, CONVEY, MORTGAGE, ASSIGN, TRANSFER and WARRANT to
the Trustee and its successors as Trustee hereunder IN TRUST for the benefit of
the "Beneficiary" (not in its individual capacity but in its limited capacity as
the Agent for its benefit and for the benefit of the other Lenders) and
Beneficiary's successors as Agent and the other Lenders pursuant to the Credit
Agreement, upon the provisions of this Deed of Trust, WITH POWER OF SALE and
right of entry as hereinafter provided, and GRANT to the Beneficiary and its
successors as Agent and the other Lenders A CONTINUING SECURITY INTEREST IN, all
of the property and rights described in the following Granting Clauses (all of
which property and rights are collectively referred to herein as the "Trust
Property"), to wit:
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GRANTING CLAUSE I
Land. All estate, right, title and interest of the Trustor in,
to, under or derived from the tracts or parcels of land located in Santa Clara
County, California, more particularly described in Exhibit A hereto (the
"Land").
GRANTING CLAUSE II.
Improvements. All estate, right, title and interest of the
Trustor in, to, under or derived from all buildings, structures and other
improvements of every kind and description now or hereafter located on the Land,
including all parking areas, roads, driveways, walks, fences, walls, docks,
berms, landscaping, drainage facilities, lighting facilities and other site
improvements, all water, sanitary and storm sewer, drainage, electricity, steam,
gas, telephone and other utility equipment and facilities, all plumbing,
lighting, heating, ventilating, air-conditioning, refrigerating, incinerating,
compacting, fire protection and sprinkler, surveillance and security, vacuum
cleaning, public address and communications equipment and systems, all kitchen
and laundry appliances, screens, awnings, floor coverings, partitions,
elevators, escalators, motors, machinery, pipes, fittings and other items of
equipment and personal property of every kind and description (excluding any and
all personal property constituting Collateral under the Pledge and Security
Agreement), now or hereafter located on the Land or attached to any of the
improvements which by the nature of their location thereon or attachment thereto
are real property under applicable law; and including all materials intended for
the construction, reconstruction, repair, replacement, alteration, addition or
improvement of or to such buildings, equipment, fixtures, structures and
improvements, all of which materials shall be deemed to be part of the Trust
Property immediately upon delivery thereof on the Land and to be part of the
improvements immediately upon their incorporation therein (the foregoing being
collectively the "Improvements"); the Land and the Improvements now or hereafter
located thereon are sometimes hereinafter collectively referred to as the
"Property."
GRANTING CLAUSE III.
Appurtenant Rights. All estate, right, title and interest of
the Trustor in, to, under or derived from all tenements, hereditaments and
appurtenances relating to the Land and the Improvements now or hereafter located
thereon; the streets, roads, sidewalks and alleys abutting the Land; all strips
and gores within or adjoining the Land; all land in the bed of any body of water
adjacent to the Land; all land adjoining the Land created by artificial means or
by accretion; all air space and rights to use said air space above the Land; all
development or similar rights appurtenant to the Land; all rights of ingress and
egress now or hereafter appertaining to the Property; all easements now or
hereafter appertaining to the Property; and all royalties and other rights
appertaining to the use and enjoyment of the Property, including alley,
drainage, oil, gas and other mineral, riparian and other water rights.
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GRANTING CLAUSE IV.
Agreements. All estate, right, title and interest of the
Trustor in, to, under or derived from all contracts and agreements (other than
the Assigned Leases) now or hereafter relating to the Property, including all
insurance policies (including all unearned premiums and dividends thereunder),
guarantees and warranties, management agreements, agreements relating to the
development, construction, reconstruction, repair, replacement, alteration,
addition or improvement of or to the Property, and all supply and service
contracts for water, sanitary and storm sewer, drainage, electricity, steam,
gas, telephone and other utilities, including any and all deposits for the same
(all of the foregoing contracts, agreements and deposits, if and to the extent
assignable as collateral, are hereinafter collectively referred to as the
"Agreements").
GRANTING CLAUSE V.
Rents, Issues and Profits. Subject to the rights of the
Beneficiary in Section 6.01, all estate, right, title and interest of the
Trustor in, to, under or derived from all rents, royalties, issues, profits,
receipts, revenue, income and other benefits now or hereafter, including during
any period of redemption, accruing with respect to the Property; all rents and
other sums now or hereafter, including during any period of redemption, payable
pursuant to any of the Assigned Leases or with respect to the management,
operation or control of the Property or any portion thereof; and all other
claims, rights and remedies now or hereafter, including during any period of
redemption, belonging to or accruing with respect to the Property, including
fixed, additional and percentage rents, occupancy charges, security deposits,
parking, maintenance, common area, tax, insurance, utility and service charges
and contributions (whether collected under any of the Assigned Leases or
otherwise), proceeds of sale of electricity, gas, heating, air-conditioning and
other utilities and services (whether collected under any of the Assigned Leases
or otherwise), deficiency rents and liquidated damages following default or
cancellation (the foregoing rents and other sums described in this Granting
Clause being collectively the "Rents"), all of which the Trustor hereby
irrevocably directs be paid to the Beneficiary to be held, applied and disbursed
as provided in this Deed of Trust and the Credit Agreement.
GRANTING CLAUSE VI.
Assigned Leases. Subject to the rights of the Beneficiary in
Section 6.01, all estate, right, title and interest of the Trustor in, to, under
or derived from all Leases now or hereafter in effect, whether or not of record,
for the use or occupancy of all or any part of the Property, together with all
amendments, supplements, consolidations, replacements, restatements, extensions,
renewals and other modifications of any thereof; and together with all
guarantees of any of the obligations of the tenants under any of such Leases;
and together with all Security Deposits given by any tenants under any of such
Leases (the foregoing being collectively the "Assigned Leases").
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GRANTING CLAUSE VII.
Permits. All estate, right, title and interest of the Trustor
in, to, under or derived from all licenses, authorizations, certificates,
variances, consents, approvals and permits now or hereafter appertaining to the
Property (the foregoing being collectively the "Permits"), excluding from the
grant under this Granting Clause (but not from the definition of the term
"Permits" for the other purposes hereof) such Permits which cannot be
transferred or encumbered by the Trustor without causing a default thereunder, a
termination thereof, or a violation of any Legal Requirements.
GRANTING CLAUSE VIII.
Deposits. All estate, right, title and interest of the Trustor
in, to, under or derived from all amounts deposited with the Beneficiary
hereunder, including all Insurance Proceeds and Awards and including all notes,
certificates of deposit, securities and other investments relating thereto and
all interest, dividends and other income thereon, proceeds thereof and rights
relating thereto (the foregoing being collectively the "Deposits").
GRANTING CLAUSE IX.
Proceeds and Awards. Subject to Section 5.3(b)(iv) of the
Credit Agreement, all estate, right, title and interest of the Trustor in, to,
under or derived from all proceeds of any sale, transfer, financing, refinancing
or conversion into cash or liquidated claims, whether voluntary or involuntary,
of any of the Trust Property, including all Insurance Proceeds, all Awards, all
title insurance proceeds under any title insurance policy now or hereafter held
by the Trustor, and all rights, dividends and other claims of any kind
whatsoever (including damage, secured, unsecured, priority and bankruptcy
claims) now or hereafter relating to any of the Trust Property, all of which the
Trustor hereby irrevocably directs be paid to the Beneficiary, to be held,
applied and disbursed as provided in this Deed of Trust and the Credit
Agreement.
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GRANTING CLAUSE X.
Further Property. All greater estate, right, title and interest
of the Trustor in, to, under or derived from the Trust Property hereafter
acquired by the Trustor, and all right, title and interest of the Trustor in,
to, under or derived from all extensions, improvements, betterments, renewals,
substitutions and replacements of, and additions and appurtenances to, any of
the Trust Property hereafter acquired by or released to the Trustor or
constructed or located on, or attached to, the Property, in each case,
immediately upon such acquisition, release, construction, location or
attachment, without any further conveyance, mortgage, assignment or other act by
the Trustor; and all estate, right, title and interest of the Trustor in, to,
under or derived from any other property and rights which are, by the provisions
of the Loan Documents, required to be subjected to the Lien hereof; and all
right, title and interest of the Trustor in, to, under or derived from all other
property and rights which are by any instrument or otherwise subjected to the
Lien hereof by the Trustor or by anyone acting on its behalf.
TO HAVE AND TO HOLD the Trust Property, together with all
estate, right, title and interest of the Trustor and anyone claiming by, through
or under the Trustor in, to, under or derived from the Trust Property and all
rights and appurtenances relating thereto, to the Trustee and its successors as
Trustee hereunder for the benefit of the Beneficiary and its successors as Agent
and the other Lenders pursuant to the Credit Agreement, forever, subject to the
Permitted Property Liens (excluding item 4 on Exhibit C hereto);
PROVIDED ALWAYS that this Deed of Trust is upon the express
condition that the Trust Property shall be released from the Lien of this Deed
of Trust in full in the manner and at the time provided in Section 7.04 hereof
if, at such time, all of the Secured Obligations shall have been paid, performed
and satisfied in full in accordance with the Credit Agreement and other Loan
Documents.
THE TRUSTOR ADDITIONALLY COVENANTS AND AGREES WITH THE TRUSTEE
AND THE BENEFICIARY AS FOLLOWS:
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.01. Definitions. (a) Capitalized terms used in
this Deed of Trust, but not defined herein, are defined in, or by reference in,
the Credit Agreement and have the same meanings herein as therein.
(b) In addition, in this Deed of Trust, unless otherwise
specified, the following terms have the following meanings:
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"Advances" is defined in the Credit Agreement.
"Affiliate" is defined in the Credit Agreement.
"Agent" is defined in the Credit Agreement.
"Agreements" is defined in Granting Clause IV.
"Alteration" means the construction of any new Improvement on
the Property or the alteration of, addition to or improvement of the
Property, and "Alter" means to construct any new Improvement on the
Property or to alter, add to or improve the Property, in each case
including the demolition of any Improvement.
"Assigned Leases" is defined in Granting Clause VI.
"Award" means, at any time, any award or payment paid or
payable by reason of any Condemnation, including all amounts paid or
payable with respect to any Transfer in lieu or in anticipation of
Condemnation or any agreement with any condemning authority which has
been made in settlement of any proceeding relating to a Condemnation.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.) as amended from time to time, or any
successor statute.
"Beneficiary" is defined in the Preamble, the paragraph
immediately preceding Granting Clause I, and Section 7.07.
"Business Day" is defined in the Credit Agreement.
"Casualty" means any damage to, or destruction of, the
Property.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, 42 U.S.C. Sections 9601 et
seq., as heretofore or hereafter amended.
"Certificate" or "Certified" means a written certificate in
which the Person signing the same shall certify to the correctness of
the statements contained therein and, upon the request of the Person to
whom the certificate is rendered, (i) specify the provision hereof to
which such certificate relates; (ii) state that it is made to induce
the Person to whom it is addressed or delivered to rely thereon and (if
applicable) take action in reliance thereon; and (iii) (A) as to an
original or copy of any document, state that such document is the
original document or that such copy is a true copy of the original, as
the case may be; and (B) as to other matters, (1) state briefly the
nature and scope of the examination or investigation upon which the
statements contained in the certificate are based; (2) state
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that it is the opinion of such individual that he has made such
examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such provision has been
complied with; (3) state whether or not it is the opinion of such
individual that such provision has been complied with; and (4) cover
such other matters as the Person to whom the certificate is addressed
may reasonably request. If a Certificate is required to be delivered by
a corporation, unless otherwise provided herein, it shall be signed by
a vice-president or higher ranking officer who shall also certify his
authority to sign such Certificate. If a Certificate is required to be
delivered by a partnership, unless otherwise provided herein, it shall
be signed by a general partner thereof who shall also certify as to his
authority to sign such Certificate.
"Closing Date" is defined in the Credit Agreement.
"Collateral" is defined in the Credit Agreement.
"Collateral Documents" is defined in the Credit Agreement.
"Condemnation" means any condemnation or other taking or
temporary or permanent requisition of the Property, any interest
therein or right appurtenant thereto, or any change of grade affecting
the Property, as the result of the exercise of any right of
condemnation or eminent domain. A Transfer in lieu or in anticipation
of Condemnation shall be deemed to be a Condemnation.
"Conditions" is defined in Section 2.07(a)(v)(1).
"Credit Agreement" is defined in the Recitals.
"Deed of Trust" is defined in the Preamble.
"Default" means any failure on the part of the Trustor to
comply with any provision hereof or of any other Loan Document or any
other event or condition which, with the giving of notice or the
passage of time or both would, unless waived or cured, become an Event
of Default.
"Default Interest Rate" means the fluctuating interest rate per
annum described in Section 2.7(c) of the Credit Agreement.
"Deposits" is defined in Granting Clause VIII.
"Environmental Laws" is defined in the Credit Agreement.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (i) any liability under any Environmental Law, or (ii)
damages arising from or costs
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incurred by such Governmental Authority in response to a release or
threatened release of a Hazardous Material into the environment.
"Environmental Noncompliance" means with respect to the Trust
Property (1) the release or threatened release of any Hazardous
Materials into the environment, any storm drain, sewer, septic system
or publicly owned treatment works, in violation of any effluent or
emission limitations, standards or other criteria or guidelines
established by any federal, state or local law, regulation, rule,
ordinance, plan or order; (2) any noncompliance of any physical
structure, equipment, process or facility with the requirements of
building or fire codes, zoning or land use regulations or ordinances,
conditional use permits and the like so as to constitute a violation
thereof or of such codes, regulations, ordinances or permits; (3) any
violation of federal, state or local requirements governing
occupational safety and health; (4) any facility operations,
procedures, designs, or other matters which violate the statutory or
regulatory requirements of any Environmental Law; (5) the failure to
have obtained permits, variances or other authorizations necessary for
the legal operation of any equipment, process, facility or any other
activity; or (6) the operation of any facility or equipment in
violation of any permit condition, schedule of compliance,
administrative or court order and the like.
"Event of Default" is defined in Section 5.01.
"Governmental Authority" is defined in the Credit Agreement.
"Hazardous Materials" is defined in the Credit Agreement.
"Impositions" means all taxes (including real estate taxes and
sales and use taxes), assessments (including all assessments for public
improvements or benefits, whether or not commenced or completed prior
to the date hereof), water, sewer or other rents, rates and charges,
excises, levies, license fees, permit fees, inspection fees and other
authorization fees and other charges, in each case whether general or
special, ordinary or extraordinary, foreseen or unforeseen, of every
character (including all interest and penalties thereon), which at any
time may be assessed, levied, confirmed or imposed on or in respect of,
or be a Lien upon, (i) the Property, any other Trust Property or any
interest therein, (ii) any occupancy, use or possession of, or activity
conducted on, the Property, (iii) the Rents, revenues or receipts from
the Property or the use or occupancy thereof, or (iv) the Secured
Obligations or the Loan Documents, but excluding income, excess
profits, franchise, capital stock, estate, inheritance, succession,
gift or similar taxes of any of the Lenders, except to the extent that
such taxes of any of the Lenders are imposed in whole or in part in
lieu of, or as a substitute for, any taxes which are or would otherwise
be Impositions.
"Improvements" is defined in Granting Clause II.
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"Indemnified Matters" is defined in Section 2.07(i)(B).
"Indemnified Persons" is defined in the Credit Agreement.
"Insurance Policies" means the insurance policies and coverages
required to be maintained by the Trustor pursuant to Sections 3.01(a)
and (e).
"Insurance Premiums" means all premiums for the Insurance
Policies.
"Insurance Proceeds" means, at any time, all insurance proceeds
or payments to which the Trustor may be or become entitled by reason of
any Casualty under the Insurance Policies maintained by the Trustor
pursuant to Section 3.01(a) (for property insurance) and pursuant to
Section 3.01(e) (for property insurance), plus, (i) the amounts of any
deductibles under such Insurance Policies; (ii) if the Trustor fails to
maintain any of such Insurance Policies, the amount which would have
been available with respect to such Casualty had the Trustor maintained
such Insurance Policy; and (iii) all insurance proceeds and payments to
which the Trustor may be or become entitled by reason of any Casualty
under any other insurance policies or coverages maintained by the
Trustor with respect to the Property.
"Insurance Requirements" means all provisions of the Insurance
Policies, all requirements of the issuer of any of the Insurance
Policies and all orders, rules, regulations and any other requirements
of the National Board of Fire Underwriters (or any other body
exercising similar functions) binding upon the Trustor or applicable to
the Property, any adjoining vaults, sidewalks, parking areas or
driveways or any use or condition thereof.
"Land" is defined in Granting Clause I.
"Lease" means any lease, tenancy, subtenancy, license,
franchise, concession or other occupancy agreement relating to the
Property, together with any guarantee of the obligations of the
landlord or the tenant thereunder, or any occupancy or right to
possession under Section 365 of the Bankruptcy Code in the event of the
rejection of any lease by the landlord or its trustee pursuant to said
Section; "landlord" means the landlord, sublandlord, lessor, sublessor,
franchisor or other grantor of a right of occupancy under a Lease and
any guarantor of its obligations thereunder; and "tenant" means the
tenant, subtenant, lessee, sublessee, licensee, franchisee,
concessionaire or other occupant under a Lease and any guarantor of its
obligations thereunder.
"Legal Requirements" means all provisions of the Permitted
Property Liens, all provisions of the Permits and all applicable laws
(including all Environmental Laws), statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules,
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regulations, directions and requirements of, and agreements with,
governmental bodies, agencies or officials, now or hereafter applicable
to the Property, any adjoining vaults, sidewalks, parking areas,
driveways, streets or ways or any use or condition thereof.
"Lender" is defined in the Credit Agreement.
"Lien" means, with respect to any property or asset, (i) any
mortgage, deed of trust, deed to secure debt, lien, pledge, charge,
security interest, assignment of rents, or other encumbrance of any
kind with respect to such property or asset (including any installment
sale, conditional sale or other title retention agreement); and (ii)
any easement, right of way, servitude, reservation, covenant,
condition, restriction, possibility of reverter, occupancy, tenancy,
lease, sublease, license, agreement, option, cloud, claim, defect or
other title exception with respect to such property or asset.
"Loan Documents" is defined in the Credit Agreement.
"Major Alteration" or "Major Restoration" means, respectively,
any Alteration or Restoration which (i) involves the construction of a
new building, (ii) costs One Million Dollars ($1,000,000) or more (with
respect to any item of work or series of, or related, items or work
constituting a single project), or (iii) occurs while an Event of
Default is continuing.
"Material Adverse Change" is defined in the Credit Agreement.
"New Seely Buildings" means one or more buildings and
improvements, which the Trustor plans to develop and construct on the
vacant land of the Property and as contemplated in Section 5.3(d)(v) of
the Credit Agreement.
"Non-Major Alteration" or "Non-Major Restoration" means,
respectively, any Alteration or Restoration which is not a Major
Alteration or Major Restoration.
"Permits" is defined in Granting Clause VII.
"Permitted Property Liens" means the Liens being contested as
permitted under Section 2.13 and the other Liens described in Exhibit C
hereto.
"Person" is defined in the Credit Agreement.
"Pledge and Security Agreement" is defined in the Credit
Agreement.
"Proceeds" is defined in Section 3.06.
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"Proforma Title Policy" means with respect to the Property that
certain proforma title insurance policy, number 511035, issued by First
American Title Guaranty Company.
"Property" is defined in Granting Clause II.
"Real Estate Collateral Documents" is defined in the Credit
Agreement.
"Receiver" is defined in Section 5.05.
"Remedial Work" means any investigation, site monitoring,
containment, clean-up, removal, disposal, restoration, closure
activities or other remedial work of any kind or nature relating to
Hazardous Materials.
"Rents" is defined in Granting Clause V.
"Restoration" means the restoration, repair, replacement or
rebuilding of the Property after a Casualty or Condemnation, and
"Restore" means to restore, repair, replace or rebuild the Property
after a Casualty or Condemnation, in each case as nearly as reasonably
possible to its value immediately prior to such Casualty or
Condemnation.
"Secured Obligations" is defined in the Recitals.
"Security Deposit" means any payment, note or other security or
deposit made or given by or on behalf of a tenant under an Assigned
Lease as security for the performance of its obligations thereunder.
"Transfer" means, when used as a noun, any sale, conveyance,
assignment or other transfer and, when used as a verb, to sell, convey,
assign or otherwise transfer, in each case (i) whether voluntary or
involuntary, (ii) whether direct or indirect and (iii) including any
agreement providing for a Transfer or granting any right or option
providing for a Transfer.
"Trust Property" is defined in the first paragraph of the
Granting Clauses.
"Trustee" is defined in the Preamble and Section 7.07 hereof.
"Trustor" is defined in the Preamble and Section 7.07 hereof.
"Unsecured Environmental Indemnity Agreement" means that
certain Unsecured Environmental Indemnity Agreement, of even date
herewith, executed by the Trustor in favor of the Beneficiary.
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SECTION 1.02. Interpretation. (a) In this Deed of Trust, unless
otherwise specified, (i) singular words include the plural and plural words
include the singular; (ii) words which include a number of constituent parts,
things or elements, including the terms Improvements, Secured Obligations and
Trust Property, shall be construed as referring separately to each constituent
part, thing or element thereof, as well as to all of such constituent parts,
things or elements as a whole; (iii) words importing any gender include the
other genders; (iv) references to any Person include such Person's successors
and assigns and in the case of an individual, the word "successors" includes
such Person's heirs, devisees, legatees, executors, administrators and personal
representatives; (v) references to any statute or other law include all
applicable rules, regulations and orders adopted or made thereunder and all
statutes or other laws amending, supplementing, consolidating, replacing or
otherwise modifying the statute or law referred to; (vi) references to any
agreement or other document include all subsequent amendments, supplements,
consolidations, replacements, extensions, renewals or other modifications
thereof to the extent that such amendments, supplements, consolidations,
replacements, extensions, renewals and modifications are not prohibited by the
terms of any Loan Documents; (vii) the words "include" and "including," and
words of similar import, shall be deemed to be followed by the words "without
limitation"; (viii) the words "hereto," "herein," "hereof" and "hereunder," and
words of similar import, refer to this Deed of Trust in its entirety; (ix)
references to Articles, Sections, Schedules, Exhibits, subsections, paragraphs
and clauses are to the Articles, Sections, Schedules, Exhibits, subsections,
paragraphs and clauses of this Deed of Trust; (x) the Schedules and Exhibits to
this Deed of Trust are incorporated herein by reference; (xi) the titles and
headings of Articles, Sections, Schedules, Exhibits, subsections, paragraphs and
clauses are inserted as a matter of convenience and shall not affect the
construction of this Deed of Trust; (xii) no inference in favor of or against
any Person shall be drawn from the fact that such Person or its attorneys
drafted any portion hereof; (xiii) all obligations of the Trustor hereunder
shall be satisfied by the Trustor at the Trustor's sole cost and expense; and
(xiv) all rights and powers granted to the Beneficiary or the Trustee hereunder
shall be deemed to be coupled with an interest and be irrevocable.
(b) In this Deed of Trust, unless otherwise specified, (i) the
words "consent," "approve" and "agree," and derivations thereof or words of
similar import, mean the prior written consent, approval or agreement of the
Person in question in such Person's discretion; (ii) the words "satisfy,"
"require" and "judgment," and derivations thereof or words of similar import,
mean the satisfaction, judgment or requirement in the discretion of the Person
in question; (iii) whenever it is specified that a consent, approval or
agreement shall not be unreasonably withheld, or that the satisfaction, judgment
or requirement shall be in the reasonable discretion of such Person in question,
such action shall also not be unreasonably delayed; and (iv) whenever it is
alleged that such action has been unreasonable, unreasonably withheld or
unreasonably delayed, the sole remedy with respect to such allegation shall be a
suit, action or proceeding for specific performance against the Person in
question, and such Person shall not be subject to damages or other liability
with respect thereto.
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ARTICLE II
CERTAIN WARRANTIES AND COVENANTS OF THE TRUSTOR
SECTION 2.01. Authority and Effectiveness. (a) The Trustor
represents and warrants that (i) the Trustor is a corporation duly formed,
validly existing and in good standing under the laws of the State of California,
and has all material governmental licenses, authorizations, consents, approvals
and other qualifications required to carry on its business as now conducted, to
own the Property and to execute, deliver and perform this Deed of Trust; (ii)
the execution, delivery and performance by the Trustor of this Deed of Trust are
within the Trustor's corporate power, have been duly authorized by all necessary
corporate action, require no action by or in respect of, or filing with, any
governmental body, agency or official, do not contravene, or constitute a
Default under, any provision of applicable law, the articles of incorporation or
bylaws of the Trustor or any agreement, judgment, injunction, order, decree or
other instrument binding upon the Trustor or relating to the Property and will
not result in the creation or imposition of any Lien on any asset of the Trustor
(other than the Lien of this Deed of Trust); and (iii) this Deed of Trust
constitutes a legal, valid and binding agreement of the Trustor. The Trustor
shall cause the representations and warranties in this subsection (a) to
continue to be true in each and every respect.
(b) The Trustor further represents and warrants that, except as
set forth in Section 4.1(j) of the Credit Agreement, there are no actions, suits
or proceedings pending or overtly threatened against or affecting the Trustor,
or involving the validity of this Deed of Trust, the priority of the lien
thereof, at law or in equity, or before any Governmental Authority which would,
if adversely determined, result in a Material Adverse Change. The Trustor is not
in default with respect to any order, writ, injunction, decree or demand of any
court or other Governmental Authority.
SECTION 2.02. Title and Further Assurances. (a) The Trustor
represents and warrants that (i) the Trustor is the owner of the fee simple
interest in the Property, free and clear of all Liens other than the Permitted
Property Liens; (ii) the Trustor is the owner of the other items constituting
the Trust Property, in each case free and clear of all Liens other than the
Permitted Property Liens; and (iii) this Deed of Trust constitutes a valid,
binding and enforceable first Lien on the Trust Property, subject only to the
Permitted Property Liens (excluding item 4 on Exhibit C hereto).
(b) The Trustor shall (i) cause the representations and
warranties in subsection (a) of this Section 2.02 to continue to be true and
correct in each and every respect and (ii) forever preserve, protect, warrant
and defend (A) its estate, right, title and interest in and to the Trust
Property, (B) the validity, enforceability and priority of the Lien of this Deed
of Trust on the Trust Property, and (C) the right, title and interest of the
Beneficiary, the Trustee
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and any purchaser at any sale of the Trust Property hereunder or relating
hereto, in each case against all other Liens and claims whatsoever, subject only
to the Permitted Property Liens.
(c) At the request of the Beneficiary, the Trustor shall (i)
promptly correct any defect or error which may be discovered in this Deed of
Trust or any financing statement or other document relating hereto; and (ii)
promptly execute, acknowledge, deliver, record and re-record, register and
re-register, and file and re-file this Deed of Trust and any financing
statements or other documents which the Beneficiary may require from time to
time (all in form and substance reasonably satisfactory to the Beneficiary) in
order (A) to effectuate, complete, perfect, continue or preserve the Lien of
this Deed of Trust as a first Lien on the Trust Property, subject only to the
Permitted Property Liens (excluding item 4 on Exhibit C hereto), or (B) to
effectuate, complete, perfect, continue or preserve any right, power or
privilege granted or intended to be granted to the Beneficiary or the Trustee
hereunder.
SECTION 2.03. Secured Obligations. The Trustor shall duly and
punctually pay, perform and observe the Secured Obligations.
SECTION 2.04. Impositions. The Trustor shall (i) subject to
Section 2.13, duly and punctually pay all Impositions prior to the date on which
any fine, penalty, interest or other charge may be added thereto or discount
thereon be forfeited; (ii) subject to Section 2.13, duly and punctually file all
returns and other statements required to be filed with respect to any
Imposition; (iii) promptly notify the Beneficiary of the receipt by the Trustor
of any notice of Default in the payment of any Imposition or the filing of any
return or other statement relating to any Imposition and simultaneously furnish
to the Beneficiary a Certified copy of such notice of Default; and (iv) upon
request, promptly deliver to the Beneficiary (A) a Certificate of the Trustor
evidencing that the Trustor has complied with the provisions of this Section
2.04, accompanied by Certified copies of official receipts evidencing the
payment of the Impositions, and (B) such other information and documents with
respect to the matters referred to in this Section 2.04 as the Beneficiary shall
reasonably request.
SECTION 2.05. Deposits for Impositions or Insurance Premiums.
(a) At any time after the occurrence of an Event of Default, upon request by the
Beneficiary, the Trustor shall deposit with the Beneficiary (i) on the first day
of each month following such request a sum equal to 1/12 of the annual
Impositions or Insurance Premiums (as required by the Beneficiary) reasonably
estimated by the Beneficiary to become due with respect to the Property for the
ensuing year and (ii) thirty (30) days prior to the next due date of any
Impositions or Insurance Premiums, an additional sum equal to the aggregate of
the payments of such Impositions or Insurance Premiums less the aggregate of the
amounts on deposit and the amounts to be deposited pursuant to clause (i) of
this subsection (a). If the amounts on deposit under this Section 2.05 shall
exceed the amounts required, the excess shall be credited to the subsequent
deposits to be made by the Trustor. If the amounts on deposit under this Section
2.05 shall be insufficient, upon request, the Trustor shall immediately deposit
the deficiency with the Beneficiary. Except as required under applicable law,
the Deposits under this Section 2.05 shall
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be for the exclusive benefit of the Lenders and all right, title and interest in
and to such Deposits shall be subject to the exclusive dominion and control of
the Beneficiary. At any time after the Beneficiary has requested that the
Trustor make Deposits under this Section 2.05, the Beneficiary may notify the
Trustor that it need no longer do so, whereupon the Trustor shall cease making
such Deposits, provided that any such notice shall be without prejudice to the
Beneficiary's right to require thereafter that the Trustor make Deposits under
this Section 2.05.
(b) If Deposits are made under this Section 2.05, the
Beneficiary shall make payments of the Impositions or Insurance Premiums for
which such Deposits are made as the same become due, but only following actual
receipt by the Beneficiary of the bills therefor, which the Trustor shall
furnish to the Beneficiary not later than ten (10) Business Days prior to the
due date thereof, and only to the extent that the amounts on deposit with the
Beneficiary at the time are sufficient to make such payments. Notwithstanding
the foregoing or the fact any amounts deposited under this Section 2.05 may be
deposited with respect to certain Impositions or Insurance Premiums, the
Beneficiary may use any amounts on deposit under this Section 2.05 to pay any
Impositions or Insurance Premiums as the same become due.
(c) If an Event of Default is continuing, the Deposits under
this Section 2.05 shall be applied and disbursed as provided in the Credit
Agreement.
SECTION 2.06. Legal and Insurance Requirements. (a) The Trustor
represents and warrants that (i) as of the date hereof, the Property and the use
and operation thereof comply in all material respects with all Legal
Requirements and Insurance Requirements; (ii) there is no default under any
Legal Requirement or Insurance Requirement; and (iii) the execution, delivery
and performance of this Deed of Trust do not require any consent under, and will
not contravene any provision of or constitute a default under, any Legal
Requirement or Insurance Requirement.
(b) The Trustor shall (i) subject to Section 2.13, duly and
punctually comply with all Legal Requirements and Insurance Requirements; (ii)
procure, maintain and, subject to Section 2.13, duly and punctually comply with
all Permits required for any construction, reconstruction, repair, alteration,
addition, improvement, maintenance, management, use and operation of the
Property; (iii) promptly notify the Beneficiary of the receipt by the Trustor of
any notice of default under any Legal Requirement, Insurance Requirement or
Permit or any threatened or actual termination of any Permit or Insurance Policy
and furnish to the Beneficiary a copy of such notice of default or termination;
(iv) promptly notify the Beneficiary (A) upon learning of any condition which,
with or without the giving of notice or the passage of time or both, would
result in a default under any Legal Requirement, Insurance Requirement or Permit
or a termination of any Permit or Insurance Policy, which Default would have a
Material Adverse Effect, and (B) the action taken to remedy such condition; (v)
upon request by the Beneficiary on a case by case basis, promptly furnish to the
Beneficiary a Certified copy of any Permit (A) obtained by the Trustor with
respect to the Property and (B) the revocation or termination of which would
have a Material Adverse Effect; and (vi) upon request by the Beneficiary,
promptly
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deliver to the Beneficiary (A) a Certificate of the Trustor evidencing that the
Trustor has complied with the provisions of this Section 2.06, and (B) such
other information and documents with respect to the matters referred to in this
Section 2.06 as the Beneficiary shall reasonably request.
SECTION 2.07. Status and Care of the Properties. (a) The
Trustor represents and warrants as follows:
(i) the Property is served by all necessary water, sanitary and
storm sewer, drainage, electric, steam, gas, telephone and other
utilities and utility facilities, which utility facilities have
capacities which are sufficient to serve the current and reasonably
anticipated future use and occupancy of the Property, and such utility
facilities enter the Property over or under properly-dedicated or
granted, perpetual, public or private rights of way or easements
therefor;
(ii) all streets, roads or alleys adjacent to the Property have
been completed and properly dedicated, accepted or otherwise legally
constituted as public streets, roads or alleys by the governmental
entities having jurisdiction;
(iii) the Property has legal access to the adjacent streets,
roads and alleys (including, as appropriate, access over
properly-granted, perpetual, private rights of way or easements)
sufficient to serve the current and reasonably anticipated future use
and operation of the Property;
(iv) the Alterations, and the use and occupancy of the Property
comply in all material respects with all Legal Requirements; Trustor
has complied with all other Legal Requirements related thereto,
including but not limited to the applicable zoning and building code
requirements, and all approvals, licenses, permits, certifications,
including certificates of occupancy, filings and other actions normally
accepted as proof of compliance with all Legal Requirements have been
duly given or taken by the Trustor;
(v) the Property is located in an area designated as "flood
prone" under the National Flood Insurance Act of 1968 or the Flood
Disaster Protection Act of 1973 (42 U.S.C. Section 4001 et seq.); and
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(vi) except as may be disclosed to Trustor in writing:
(1) the Trustor (A) has not received notice or
otherwise learned of any claim, demand, action, event,
condition, information, report, inquiry, proceeding or
investigation (or threat of any of the foregoing)
(collectively, "Conditions") (including, third party claims and
Conditions under CERCLA or any analogous or similar state law)
indicating or concerning any potential or actual liability of
Trustor (including for contribution, damage, cost recovery,
loss, injury, assessment, containment, remediation, response or
removal) arising in connection with: (i) any Environmental
Noncompliance; or (ii) the use, generation, manufacture,
production, storage, discharge, disposal, transport, presence,
handling, release or threatened release of any Hazardous
Materials into the environment, including migration thereof to
or from the Property and including any matter which the Trustor
would have a duty to report to a Governmental Authority under
CERCLA or any analogous state law or any other Environmental
Law and (B) has no threatened or actual liability in connection
with the release or threatened release of any Hazardous
Material into the environment; and (iii) has not received
notice or otherwise learned of any federal, state or other
investigation evaluating whether any remedial action is needed
to respond to any release of any Hazardous Materials into the
environment for which the Trustor may be liable.
(2) the Trustor is not subject to any financial
assurance requirements of any applicable Environmental Laws,
including those contained in 40 C.F.R. Parts 264 and 265,
Subps. H, or any state law equivalents, or those promulgated
pursuant to 42 U.S.C. 6991b(c)(6) or state law equivalents;
(3) the Trustor has not filed any notice under any
Legal Requirements (i) indicating past or present treatment,
storage or disposal of a hazardous waste, as that term is
defined under 40 C.F.R. Part 261 or any state law equivalent
thereof, or (ii) reporting a release of any Hazardous Materials
into the environment; and
(4) the Trustor has not received notice or
otherwise learned of any occurrence or condition on any real
property adjoining or in the vicinity of the Property that is
likely to cause the Property or any part thereof to be subject
to any material restrictions on the ownership, occupancy,
transferability or use of the Property under any applicable
Environmental Law.
(b) The Trustor (i) shall not cause or permit the Property
to be misused, wasted, disfigured or (subject to Section 3.02) damaged or to
deteriorate (except for reasonable wear and tear); (ii) shall use and operate
the Property, or cause the same to be used and operated, for substantially the
same uses and purposes and in substantially the same manner and under the
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same name as it is used and operated or intended to be used or operated as of
the date hereof; (iii) except to the extent permitted under Section 2.08 or as
required under the following clauses (iv) through (vi), shall not construct any
new Improvement on or otherwise Alter the Property or permit any of the
foregoing; (iv) shall operate and maintain the Property, or cause the same to be
operated and maintained, in good order, repair and condition; (v) subject to
compliance with Section 2.08, shall promptly make, or cause to be made, all
repairs, replacements, renewals, Restorations and Alterations of and to the
Property, whether interior or exterior, structural or nonstructural or foreseen
or unforeseen, necessary or appropriate to keep the Property in good order,
repair and condition, all of which repairs, replacements, renewals, Restorations
and Alterations shall be equal in quality to or better than the condition of the
Property as of the date hereof; (vi) shall do or cause others to do all shoring
of the Property or any properties adjacent thereto, including the foundations
and walls of either thereof, and to take all other actions necessary or
appropriate for the preservation and safety thereof by reason of or in
connection with any excavation or other construction-related operation on the
Property or any properties adjacent thereto, whether or not the Trustor or any
adjacent-property owner shall be required by any Legal Requirement to take such
action or be liable for failure to do so; (vii) shall not, without the consent
of the Beneficiary, which consent shall not be unreasonably withheld, initiate,
seek or affirmatively support any material change in the applicable zoning
affecting the Property, seek any material variance or any change in any variance
to the zoning affecting the Property, execute or file any subdivision or other
plat or map affecting the Property or permit or consent to any of the foregoing;
(viii) shall, promptly after receiving notice or obtaining knowledge of any
proposed or threatened change in the zoning affecting the Property which would
result in the current use of the Property being a non-conforming use, notify the
Beneficiary thereof and diligently contest the same by any action or proceeding
deemed appropriate by the Trustor in its reasonable judgment or reasonably
requested by the Beneficiary; (ix) shall not amend or otherwise modify any
Permitted Property Lien, except for amendments to utility easements which do not
adversely affect the value, use or operation of the Property or affect the first
priority of the Lien of this Deed of Trust; and (x) upon request of the
Beneficiary, shall promptly deliver to the Beneficiary (A) a Certificate of the
Trustor evidencing that the Trustor has complied with the provisions of this
Section 2.07 and (B) such other information and documents with respect to the
matters referred to in this Section 2.07 as the Beneficiary shall reasonably
request.
(c) The Trustor will not use, generate, manufacture, produce,
store, discharge, dispose of, place, handle or release (collectively, "manage")
on, under, from or about the Property or transport to or from the Property any
Hazardous Material, or allow or suffer any other Person to do so other than such
Hazardous Materials which are managed in the ordinary course of operating the
business of the Trustor as it is operated on the Closing Date and which are
managed in accordance with applicable Environmental Laws.
(d) The Trustor shall keep and maintain the Property in
compliance with all applicable Environmental Laws, and shall not cause, permit
or suffer the Property to be in violation of any Environmental Laws in any
material respect.
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(e) The Beneficiary shall have the right, but not the
obligation, to join and participate in as a party, if it so elects, any legal
proceeding or action concerning the Property initiated in connection with any
Environmental Law which, in the Beneficiary's reasonable judgment, is likely to
result in an Environmental Noncompliance and have its reasonable attorneys' fees
in connection therewith paid by or be defended by the Trustor from and against
any such proceeding or action with counsel chosen by the Beneficiary, and shall
have the right to make inquiry of and disclose all information to appropriate
Governmental Authorities when advised by counsel with appropriate expertise that
such disclosure may be required under applicable law.
(f) Without the Beneficiary's prior written consent, which
consent shall not be unreasonably withheld, the Trustor shall not undertake any
Remedial Work in response to the presence or release of any Hazardous Material
on, under, from or about the Property, or enter into any settlement, consent or
compromise which, in the Beneficiary's reasonable judgment, individually or in
the aggregate, is likely to result in an Environmental Noncompliance; provided,
however, that the Beneficiary's prior consent shall not be necessary if: (i) the
presence or release of Hazardous Material on, under, from or about the Property
either poses an immediate threat to the health, safety or welfare of any
individual or is of such a nature that an immediate remedial response is
necessary and it is not possible to obtain the Beneficiary's written consent
before taking such action; provided, that in such event the Trustor shall notify
the Beneficiary as soon as practicable of any action so taken; (ii) particular
Remedial Work is ordered by a court or regulatory agency of competent
jurisdiction, or (iii) the Trustor establishes to the reasonable satisfaction of
the Beneficiary that there is no reasonable alternative to such Remedial Work
which would result in less impairment of the Property.
(g) In the event that (i) an Event of Default has occurred
and is continuing, or (ii) the Beneficiary reasonably believes that there may be
a violation or threatened violation by the Trustor of any applicable
Environmental Law regarding the Property or a violation or threatened violation
by the Trustor of any provision of this Section 2.07 which, in the Beneficiary's
reasonable judgment, would individually or in the aggregate likely result in an
Environmental Noncompliance, the Beneficiary is authorized, but not obligated,
by itself, its agents, employees or workmen to enter at any reasonable time,
after reasonable notice to the Trustor, upon any part of the Property for the
purposes of inspecting the same for Hazardous Material and confirming compliance
with this Section 2.07, and such inspections may include soil borings and
groundwater testing; provided, however, that such inspection by the Beneficiary
shall not unreasonably interfere with the Trustor's business operations. The
Trustor agrees to pay to the Beneficiary, upon demand, all reasonable expenses,
costs or other amounts incurred by the Beneficiary in performing any inspection
for the purposes set forth in this Section 2.07.
(h) The Trustor shall notify the Beneficiary, in writing,
promptly upon receipt of a notice or otherwise learning of any Condition which
is likely to result in liability to the Trustor in connection with: (i) any
Environmental Noncompliance; (ii) the use, generation, manufacture, production,
storage, discharge, disposal, transport, presence, handling, release or
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threatened release of any Hazardous Material into the environment, including
migration thereof to or from the Property and including any matter which the
Trustor would have a duty to report to a Governmental Authority under CERCLA or
any analogous state law or any other Environmental Law; or (iii) the existence
of any material Environmental Lien on the Property. The Trustor shall notify the
Beneficiary in writing promptly upon receipt of a notice or otherwise learning
of any occurrence or condition on any real property adjoining or in the vicinity
of the Property that is likely to cause the Property or any part thereof to be
subject to any material restrictions on the ownership, occupancy,
transferability or use of the Property under any Environmental Law.
(i) The Trustor's indemnification and defense obligations
under this Deed of Trust or any other Loan Document with respect to Hazardous
Materials and environmental matters shall be governed solely by this paragraph
(i) of Section 2.07, notwithstanding any other provision in the Deed of Trust
(including Section 4.04 of this Deed of Trust) or in any other Loan Document;
provided, however, that the foregoing limitation shall not have any effect on,
or apply to, the obligations of the Trustor as set forth in Section 8.6 of the
Credit Agreement as applicable to the representation and warranty of the Trustor
set forth in Section 4.1(p) of the Credit Agreement, and provided further that
the foregoing limitation shall not have any effect on, or apply to, the
Unsecured Environmental Indemnity Agreement. The Trustor shall indemnify, defend
(with counsel approved by the Indemnified Persons, which approval shall not be
unreasonably withheld), and hold harmless the Indemnified Persons from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, fines, judgments, suits, demands, investigations, proceedings, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including
the reasonable fees and disbursements of counsel for such Indemnified Persons in
connection with any investigative, administrative or judicial proceeding,
whether or not such Indemnified Persons shall be designated a party thereto),
remedial action requirements and enforcement actions of any kind, imposed on,
incurred by, or asserted against any such Indemnified Persons (whether direct or
indirect and whether based on any federal or state laws or other statutory
regulations, including Environmental Laws, under common law or at equitable
cause, or in contract or otherwise) in any manner relating to or arising out of
the breach of any of the covenants, representations and warranties of this
Section 2.07 relating to environmental matters or the use, generation,
manufacture, production, storage, discharge, disposal, presence, transport,
handling, release or threatened release of any Hazardous Material on, under,
from or about the Property, including any other activity carried on or
undertaken on or off the Property, whether prior to or after the Closing Date,
and whether by the Trustor or any predecessor in title or any employee, agent,
contractor or subcontractor of the Trustor or of any predecessor in title, or
any third Person at any time occupying or present on the Property, in connection
with the use, generation, manufacture, production, discharge, presence, release,
threatened release, handling, storage, decontamination, clean up, transport or
disposal of any Hazardous Material at any time located or present on, under,
from or about the Property, including:
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(A) the costs of any Remedial Work, including costs
incurred by the United States government or the State, or any other
Person, or damages from injury to, destruction of, or loss of natural
resources; and
(B) liability for personal injury or property damage
arising under any statutory or common-law tort theory, including
damages assessed for the maintenance of a public or private nuisance,
response costs or for the carrying on of an abnormally dangerous
activity (collectively, including the other matters described in
subsection (i) of this Section 2.07, the "Indemnified Matters");
provided that the Trustor shall have no obligation to an Indemnified Person
hereunder with respect to Indemnified Matters resulting directly from the gross
negligence or willful misconduct of that Indemnified Person, as finally
determined by a court of competent jurisdiction. To the extent that the
undertaking to indemnify, pay, defend and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, the Trustor shall contribute the maximum portion which it is
permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnified Persons.
This indemnity is intended to be operable under 42 U.S.C. Section 9607(e)(1).
This indemnity shall not survive the reconveyance of the Lien of this Deed of
Trust, the extinguishment of the Lien by foreclosure or action in lieu thereof,
or any Transfer of the Property by the Trustor. The foregoing indemnity shall in
no manner be construed to limit or adversely affect the Beneficiary's rights
under this Section 2.07, including the Beneficiary's rights to approve any
Remedial Work and the contractors and consulting engineers retained in
connection therewith.
(j) If any Remedial Work is reasonably necessary or required
under any applicable local, state or federal law or regulation, any judicial
order, or by any Governmental Authority, because of, or in connection with, the
current or future presence, suspected presence, release or suspected release of
a Hazardous Material in or into the air, soil, groundwater, surface water or
soil vapor at, on, about, under or within the Property (or any portion thereof)
which, in the Beneficiary's reasonable judgment, is likely to result in
liability to the Trustor respecting Hazardous Materials, then the Trustor shall
diligently prosecute to completion such Remedial Work on or before the later of
(i) the date that is ninety (90) days after written demand for performance
thereof by the Beneficiary, or (ii) the date by which completion of such
Remedial Work is required by a Governmental Authority. All such Remedial Work
shall be at the Trustor's sole expense in accordance with the requirements of
any applicable Governmental Authority or Environmental Law. All Remedial Work
shall be performed by one or more contractors, approved in advance in writing by
the Beneficiary, and under the supervision of a consulting engineer approved in
advance in writing by the Beneficiary (which approvals shall not be unreasonably
withheld). While such Remedial Work is continuing, the Trustor shall, at least
once every thirty (30) days, provide the Beneficiary with a written report, in
reasonable detail, of the progress of such Remedial Work. All costs and expenses
of such Remedial Work shall be
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paid by the Trustor, including the charges of such contractor(s) and/or the
consulting engineer, and the Beneficiary's reasonable attorneys' fees and costs
incurred in connection with monitoring or review of such Remedial Work. In the
event that the Trustor shall fail timely to commence, or cause to be commenced,
or fail to complete the Remedial Work expeditiously, the Beneficiary may, but
shall not be required to, cause such Remedial Work to be performed and all
reasonable costs and expenses thereof, or incurred in connection therewith,
shall become part of the obligations secured by this Deed of Trust.
SECTION 2.08. Alterations. (a) If no Event of Default is
continuing, the Trustor may construct any new Improvement, including the New
Seely Buildings, otherwise Alter or Restore the Property and, in connection
therewith, demolish any Improvement which is being replaced by a new
Improvement, provided that
(i) prior to commencing any Alteration or Restoration the
Trustor shall give notice thereof to the Beneficiary, describing in
reasonable detail satisfactory to the Beneficiary the Alteration or
Restoration in question, the work required therefor and the Trustor's
best estimate of the cost thereof;
(ii) any Alteration or Restoration shall not result in a
reduction of the value of the Trust Property below the value thereof
immediately preceding the commencement of such Alteration or
Restoration;
(iii) any Improvement demolished pursuant to this Section 2.08
shall be replaced promptly by a new Improvement of equivalent or
greater value;
(iv) any Alteration or Restoration shall be effected with due
diligence, in a good and workmanlike manner, in compliance with all
applicable Legal Requirements and Insurance Requirements and all
applicable requirements of the Agreements;
(v) any Alteration or Restoration shall be equal in quality
to, or better than, the Improvements located on the Property as of the
Closing Date;
(vi) prior to commencing any phase of any Alteration or
Restoration, the Trustor shall obtain all Permits and other consents or
approvals required therefor and, in the case of any Major Alteration or
Major Restoration, deliver Certified copies thereof to the Beneficiary;
(vii) the Trustor shall promptly and fully pay the cost of any
Alteration or Restoration;
(viii) the Beneficiary shall be named as an additional named
insured on each insurance policy of any contractor, subcontractor or
other Person performing the Alterations or Restorations;
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(ix) any Alteration or Restoration shall be located entirely
on the Land; and, if any Alteration or Restoration encroaches upon any
property adjacent to the Land or interferes with any right of way or
easement affecting the Property, the Trustor shall promptly obtain an
agreement reasonably satisfactory to the Beneficiary permitting such
encroachment or interference, or an affirmative title insurance policy
or endorsement to any title insurance policy insuring Beneficiary in
connection with its Lien of this Deed of Trust reasonably satisfactory
to the Beneficiary insuring against loss by reason thereof; or, if the
Trustor does not obtain such an agreement or such a policy or such an
endorsement within thirty (30) days after discovering such encroachment
or interference, the Trustor shall promptly remove such encroachment or
interference and return the Property to its prior condition and value;
(x) upon completion of any Major Alteration or Major
Restoration the Trustor shall promptly give notice thereof to the
Beneficiary, accompanied by (A) a Certificate of the Trustor evidencing
such completion, that such Alteration or Restoration complies with the
provisions hereof, and that the Trustor has complied with its
obligations hereunder relating thereto, (B) a Certified copy of any
permanent certificate of occupancy required to permit the use and
occupancy thereof, and (C) if reasonably required by the Beneficiary in
the case of any such Alteration or Restoration affecting the exterior
of any Improvement, an as-built survey of the Property reasonably
satisfactory to the Beneficiary showing the existing Improvements and
such Alteration or Restoration; and
(xi) the Trustor shall promptly furnish to the Beneficiary
such other information and documents relating to any Alteration or
Restoration and the matters referred to in this Section 2.08 as the
Beneficiary shall reasonably request.
(b) Without limiting the provisions of subsection (a) of
this Section 2.08, the Trustor shall not commence or construct, or permit the
commencement or construction of, any Major Alteration or Major Restoration
(excluding the New Seely Buildings) without the consent of the Beneficiary,
which consent shall not be unreasonably withheld.
(c) Without limiting the provisions of subsections (a) and
(b) of this Section 2.08, in connection with any Major Alteration or Major
Restoration, (i) any such Alteration or Restoration shall be conducted under the
supervision of a licensed architect or engineer; (ii) prior to commencement of
any such Alteration or Restoration, the Trustor shall submit the plans and
specifications therefor to the Beneficiary (including a plot plan showing the
location thereof on the Land) and obtain the Beneficiary's approval thereof;
(iii) any such Alteration or Restoration shall be constructed substantially in
accordance with such plans and specifications approved by the Beneficiary; and
(iv) upon completion of any such Alteration or Restoration, in addition to the
documents referred to in subsection (a) of this Section 2.08, the Trustor shall
promptly furnish to the Beneficiary (A) Certificates of the Trustor and the
supervising architect or engineer to the effect that (1) such Alteration or
Restoration has been completed substantially in
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accordance with the applicable plans and specifications and with all applicable
Legal Requirements and Insurance Requirements and all applicable requirements of
the Agreements; and (2) all contractors, subcontractors, materialmen and other
persons who could claim Liens in connection with such Alteration or Restoration
have been paid in full or have effectively waived or released their rights to
such Liens or that such Liens are being contested pursuant to Section 2.13; (B)
if required by the Beneficiary, a title insurance policy satisfactory to the
Beneficiary insuring against Liens relating to such Alteration or Restoration;
and (C) such other information and documents as the Beneficiary shall reasonably
request.
SECTION 2.09. Agreements. (a) The Trustor represents and
warrants that, as of the date hereof, (i) there have been no amendments, other
modifications to or assignments of any of the Agreements, except such
amendments, modifications or assignments which would not have a Material Adverse
Effect; (ii) the Agreements are in full force and effect and there is no
material Default under any of the Agreements; (iii) all Agreements with any
Affiliate of the Trustor comply with the applicable requirements of the Credit
Agreement relating to affiliate transactions and on the Closing Date, such
Agreements will be subordinate to this Deed of Trust; and (iv) the execution,
delivery and performance of this Deed of Trust do not require any consent under,
and will not contravene any provision of or cause a Default under, any of the
Agreements or the Permitted Property Liens.
(b) The Trustor (i) shall duly and punctually pay, perform and
observe all of its obligations under the Agreements; (ii) shall do all things
reasonably necessary or appropriate to enforce, preserve and keep unimpaired
each Agreement, the rights of the Trustor thereunder and the obligations of any
other party thereunder; (iii) shall not, without the consent of the Beneficiary,
enter into any Agreement or take any other action amending, terminating or
otherwise materially modifying any Agreement, any right of the Trustor
thereunder or any obligation of any other party thereunder, or consent to any
assignment of the interest of any other party thereunder; (iv) shall notify the
Beneficiary (A) promptly of the receipt or giving by the Trustor, as the case
may be, of any notice of default under any Agreement or any notice of the
threatened or actual termination of any Agreement, any right of the Trustor
thereunder or any obligation of any other party thereunder, accompanied by a
Certified copy of such notice of default or termination; (B) promptly upon
learning of any condition which, with or without the giving of notice or the
passage of time or both, would result in any material default or termination
referred to in the preceding clause (A); and (C) promptly upon learning of any
assignment of the interest of any other party to any Agreement; (v) shall
promptly deliver to the Beneficiary a counterpart original or Certified copy of
any amendment or other modification of any Agreement entered into or consented
to by the Trustor; (vi) shall cause any and all Agreements entered into by the
Trustor with one or more of its Affiliates to comply with the applicable
requirements of the Credit Agreement relating to affiliate transactions; (vii)
shall subordinate any and all Agreements to this Deed of Trust to the extent not
otherwise subordinate; and (viii) upon request, shall promptly deliver to the
Beneficiary (A) a Certificate of the Trustor evidencing that the Trustor has
complied with the provisions of this Section 2.09 and (B) such other information
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and documents with respect to the Agreements and the matters referred to in this
Section 2.09 as the Beneficiary shall reasonably request.
SECTION 2.10. Management and Leasing. (a) The Trustor
represents and warrants that, as of the date hereof, (i) there are no Agreements
in existence relating to the operation or management of the Property, except for
such Agreements that may be terminated upon sixty (60) days' prior written
notice; (ii) the right, power or obligation to operate or manage the Property
has not been delegated to, any Person, except pursuant to an Agreement which may
be terminated upon sixty (60) days' prior written notice; (iii) there are no
agreements in existence relating to the leasing of the Property or any portion
thereof; and (iv) the right or power to lease the Property has not been
delegated to any Person.
(b) Without the consent of the Beneficiary, the Trustor
shall not enter into any Agreement relating to or otherwise delegate to any
Person, or permit such delegation to any Person of, the operation, leasing or
management of the Property; provided, however, that with respect to the leasing
of the Property or any portion thereof, Beneficiary shall not unreasonably
withhold or delay its consent.
(c) The Trustor represents and warrants that, as of the
date hereof there are no Leases in effect.
(d) The Trustor:
(i) shall not grant any Lien upon any Assigned Lease
or the Rents thereunder, other than the Lien of this Deed of
Trust;
(ii) shall include in each Lease entered into after the
date hereof the subordination and nondisturbance provisions
set forth in Exhibit B hereto;
(iii) shall not enter into any Assigned Lease which
grants to the tenant thereunder any right or option to
purchase or otherwise acquire the Property or any interest
therein;
(iv) shall not enter into any Lease or Transfer any
Lease without the consent of the Beneficiary, which consent
shall not be unreasonably withheld;
(v) shall not receive or collect (whether in cash, by
promissory note or otherwise) any Rents for a period of more
than thirty (30) days before the due date thereof, except for
any Security Deposits held by the Trustor;
(vi) shall duly and punctually pay, perform and observe
in all material respects (subject to Section 2.13) all of its
obligations under the Leases;
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(vii) shall do all things reasonably necessary or
appropriate to enforce, preserve and keep unimpaired each
Lease, the rights of the Trustor thereunder and the
obligations of the tenant thereunder, except (subject to the
following clause (ix)) for any default by the tenant
thereunder;
(viii) shall not enter into any agreement or take any
other action terminating, extending or materially modifying
(including consenting to the assignment or subletting of the
tenant's interest under) any Lease, without the consent of the
Beneficiary, which consent shall not be unreasonably withheld;
(ix) may terminate, in the Trustor's reasonable and
good faith exercise of its business judgment, any Assigned
Lease in connection with the bona fide enforcement proceedings
against the tenant thereunder upon the occurrence of a
material default by the tenant thereunder;
(x) shall notify the Beneficiary (A) promptly after
receipt or contemporaneously when given, as the case may be,
of the receipt or giving by the Trustor of any notice of
default under any Lease or any notice of the threatened or
actual termination of any Lease, any right of the Trustor
thereunder or any obligation of the tenant thereunder,
accompanied by a Certified copy of such notice of Default or
termination; (B) promptly upon learning of any condition
which, with or without the giving of notice or the passage of
time or both, would constitute a material Default or cause a
termination referred to in the preceding clause (A); and (C)
promptly upon learning of any assignment or subletting of the
interest of the tenant under any Lease;
(xi) shall promptly deliver to the Beneficiary a
counterpart original or Certified copy of (A) any Lease
entered into after the date hereof; (B) any agreement entered
into after the date hereof terminating, extending or otherwise
materially modifying any Lease; and (C) any notice exercising
any right or option under any Lease; and
(xii) upon request, shall promptly deliver to the
Beneficiary (A) counterpart originals or Certified copies of
any Assigned Lease entered into after the date hereof, any
agreement entered into after the date hereof terminating,
extending or otherwise modifying any Assigned Lease and any
notice exercising any right or option under any Assigned Lease
not theretofore delivered to the Beneficiary pursuant to
clause (xi) of this subsection (d); (B) a Certificate of the
Trustor evidencing that the Trustor has complied with the
provisions of this Section 2.10; and (C) such other
information and comments with respect to the Assigned Leases
and the matters referred to in this Section 2.10 as the
Beneficiary shall reasonably request.
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SECTION 2.11. Transfer. (a) Except items of equipment or
personal property which have been removed pursuant to Section 2.08 and except as
provided in Sections 5.3(b)(iv) and (vi) of the Credit Agreement, the Trustor
shall not, without the consent of the Beneficiary, Transfer the Trust Property
or any interest therein.
(b) The provisions of this Section 2.11 shall apply to each
and every Transfer of the Trust Property or any interest therein, regardless of
whether or not the Beneficiary has consented to or waived its right to consent
to any prior Transfer thereof.
SECTION 2.12. Liens. (a) Without the consent of the
Beneficiary, the Trustor shall not create or permit to be created or to remain,
and shall promptly discharge or cause to be discharged, any Lien on the Trust
Property or any interest therein (except Liens being contested pursuant to
Section 2.13, the other Permitted Property Liens and Liens permitted under the
Credit Agreement), in each case (i) whether voluntarily or involuntarily
created, (ii) whether directly or indirectly a Lien thereon and (iii) whether or
not subordinate hereto.
(b) Nothing herein shall be construed to be a consent by the
Beneficiary or the Trustee to any mechanic's, materialman's, supplier's,
repairman's or similar Lien on the Trust Property or any interest therein.
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SECTION 2.13. Permitted Contests. After prior notice to the
Beneficiary, the Trustor may contest, in good faith by appropriate proceedings
promptly instituted and diligently conducted, any Legal Requirement, Insurance
Requirement, any Imposition or Lien therefor on the Trust Property or any
interest therein or any Lien of any laborer, mechanic, materialman, supplier or
vendor on the Trust Property or any interest therein, or any matter under any
Assigned Lease, Agreement or other Permitted Property Lien, provided that (i) no
Event of Default is continuing; (ii) no Trust Property or any interest therein
is in danger of being sold, forfeited or lost while such proceedings are
pending; (iii) none of the Lenders are in danger of any criminal or material
civil penalty or any other liability for failure to comply with any such Legal
Requirement, and no Trust Property or interest therein is subject to the
imposition of any Lien as a result of such failure which is not properly
contested pursuant to this Section 2.13; (iv) in the case of any Insurance
Requirement, no Insurance Policy or coverage is in danger of being forfeited or
lost while such proceedings are pending; (v) in the case of (A) Liens of
laborers, mechanics, materialmen, suppliers or vendors, or (B) the Impositions
or Liens therefor, such proceedings suspend the foreclosure of any such Lien or
any other collection thereof from the Trust Property and all interests therein;
(vi) the Trustor establishes adequate reserves or other appropriate provisions
required with respect to such contest in accordance with generally accepted
accounting principles; and (vii) if required by the Beneficiary, the Trustor
furnishes to the Beneficiary a bond or other security reasonably satisfactory to
the Beneficiary. Upon request of the Beneficiary, the Trustor shall promptly
deliver to the Beneficiary (x) a Certificate of the Trustor describing in detail
reasonably satisfactory to the Beneficiary the contests pending as of the date
thereof and evidencing that the Trustor has complied with the provisions of this
Section 2.13 with respect thereto and (y) such other information and documents
with respect to the contests conducted pursuant to this Section 2.13 as the
Beneficiary shall reasonably request.
ARTICLE III
INSURANCE, CASUALTY AND CONDEMNATION
SECTION 3.01. Insurance. (a) Policies. Trustor shall maintain
in full force and effect, with financially sound and reputable insurers
reasonably satisfactory to the Beneficiary, insurance with respect to the
Property against loss or damage of the kinds customarily insured against by
companies engaged in the same or similar business as that of, and similarly
situated to the Trustor and of such types and in such amounts as are customarily
carried under similar circumstances by such other companies, and shall otherwise
comply with the insurance coverage requirements of the Credit Agreement.
Notwithstanding the foregoing, such property insurance shall at all times at
least equal the full replacement value of the Improvements. Without limiting the
generality of the foregoing, such insurance policies of Trustor shall provide
the following coverages:
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(i) "All Risk" property insurance, including sprinkler leakage,
flood, earthquake and, when any Alteration or Restoration of any
Property is in progress, builder's risk insurance on a completed value
(non-reporting) form and including soft cost expense coverage, in an
amount sufficient to prevent the Trustor from becoming a co-insurer in
any loss under the policy, but in no event less than the full
replacement value of the Improvements. Such coverage shall include
endorsements for an agreed amount for demolition and increased cost of
construction due to enforcement of laws and ordinances regulating
construction. Further, Trustor shall obtain business interruption or
time element insurance coverage on an actual loss sustained basis in an
amount not less than one year's insurable values and extended to
include a one hundred eighty (180) day extended period of indemnity;
(ii) flood and earthquake insurance covering the Trust Property
in amounts of not less than One Million Dollars ($1,000,000) per
occurrence and in the aggregate for the peril of flood, and for the
peril of earthquake insurance coverage in an amount not less than the
then outstanding balance of Advances or replacement cost of the
Improvements, whichever is less;
(iii) to the extent not covered under clauses (i) and (ii) of
this subsection (a), difference-in-conditions coverage in an amount
satisfactory to the Beneficiary;
(iv) comprehensive steam boiler and machinery insurance covering
all mechanical, electrical and pressure vessels situated at the
Property and endorsed to cover direct damage and business interruption;
(v) commercial General Liability insurance in an amount not
less than One Million Dollars ($1,000,000) per occurrence and Two
Million Dollars ($2,000,000) in the aggregate per location, for bodily
injury and property damage and personal injury resulting from Trustor's
operations or premises liability. Such insurance shall include premises
liability insurance, blanket contractual liability insurance, products
liability insurance and personal injury liability insurance;
(vi) commercial Automobile Liability insurance in an amount not
less than One Million Dollars ($1,000,000) per accident covering all
owned, hired and nonowned automobiles;
(vii) worker's compensation and employer's liability insurance,
or state-approved self-insurance for the same risks, subject to the
statutory limits of the State of California in respect of any work or
other operations on, about, or in connection with the Trust Property;
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(viii) in addition to the liability insurance coverage in
subsections 3.01(a)(v) and (vi), the Trustor shall provide Forty
Million Dollars ($40,000,000) in umbrella liability in excess of
General Liability and Automobile Liability insurance; and
(ix) such other insurance with respect to the Trust Property and
in such amounts as the Beneficiary from time to time may require
against such other insurable hazards which at the time are commonly
insured against in respect of properties similar to the Trust Property.
(b) Blanket Insurance. The Trustor may effect such coverage
under subsection (a) of this Section 3.01 under a blanket insurance policy
satisfactory to the Beneficiary, provided that (i) any such policy of blanket
insurance shall specify therein, or the insurer under such policy shall certify
to the Beneficiary, (A) the maximum amount of the total insurance afforded by
the blanket policy allocated to the Property and (B) any sublimits in such
blanket policy applicable to the Property, which amounts shall not be less than
the amounts required pursuant to this Section 3.01; (ii) any such policy of
blanket insurance shall comply in all respects with the other provisions of this
Section 3.01; and (iii) the protection afforded under any policy of blanket
insurance hereunder shall be no less than that which would have been afforded
under separate policies relating only to the Property.
(c) Policies. (i) The property insurance maintained under
subsection (a) of this Section 3.01 shall (A) bear a standard non-contributory
first mortgagee endorsement in favor of the Beneficiary as Agent for the Lenders
(B) contain an endorsement providing for payment to the Agent of all monies due
or to become due under such property insurance policies, and (C) provide that
the insurers waive any and all rights to be subrogated to the rights of the
Lenders.
(ii) The liability insurance maintained under clauses (v), (vi)
and (viii) of subsection (a) of this Section 3.01 shall name the Beneficiary,
the Trustee, and the Lenders as additional insureds.
(iii) All insurance maintained by the Trustor hereunder shall
provide that (A) no cancellation, material change or reduction thereof shall be
effective until at least thirty (30) days after receipt by the Beneficiary of
written notice thereof, and (B) all losses shall be payable notwithstanding (1)
any act or negligence of the Trustor or its agents or employees which might,
absent such agreement, result in a forfeiture of all or part of such insurance
payment, (2) the occupation or use of the Property for purposes more hazardous
than permitted by the terms of such policy, (3) any foreclosure or the exercise
of any other right or remedy under or with respect to this Deed of Trust, or (4)
any change in the ownership of the Property.
(d) Policies or Certificates. The Trustor shall furnish to the
Beneficiary from time to time, without notice or demand by the Beneficiary, not
later than ten (10) Business Days prior to the expiration date of each Insurance
Policy, (i) either a copy of such Insurance Policy, Certified to be a true copy
by the insurer, or an insurance certificate evidencing the insurance
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maintained under such Insurance Policy, whichever the Beneficiary requests (and
until further notice the Beneficiary hereby requests an insurance certificate
evidencing the insurance maintained under such Insurance Policy), and (ii)
evidence satisfactory to the Beneficiary of payment of the premium therefor.
(e) Additional or Separate Insurance. The Trustor shall not
maintain additional or separate insurance concurrent in form or contributing in
the event of loss with the insurance required under this Section 3.01, unless
(i) the policies providing such additional or separate insurance are submitted
to the Beneficiary for its approval; (ii) the insurers under such policies and
the terms thereof are approved by the Beneficiary; and (iii) the Beneficiary and
the Lenders are included in such policies as loss payees or additional named
insureds in the same manner as provided in subsection (c) of this Section 3.01
for the insurance required to be maintained hereunder and such policies comply
with the other provisions of said subsection. If the Trustor desires to maintain
such additional or separate insurance, not later than ten (10) Business Days
prior to obtaining such additional or separate insurance, the Trustor shall
notify the Beneficiary of the Trustor's intention to do so and furnish to the
Beneficiary a copy of the proposed policy or policies. In the event that the
Trustor maintains any such additional or separate insurance, the Trustor shall
furnish to the Beneficiary Certified copies of the policies providing such
insurance or certificates of insurance with respect thereto, in the same manner
as provided in subsection (d) of this Section 3.01 for Insurance Policies
required to be maintained hereunder.
(f) Payment of Premiums by the Beneficiary. If the Trustor
fails to maintain the Insurance Policies required to be maintained under this
Section 3.01 or fails to deliver evidence thereof to the Beneficiary, the
Beneficiary shall have the right, but not the obligation, to obtain such
Insurance Policies and pay the premiums therefor. If the Beneficiary obtains
such Insurance Policies or pays the premiums therefor, upon demand the Trustor
shall reimburse the Beneficiary for its expenses in connection therewith,
together with interest thereon, pursuant to Section 4.03.
SECTION 3.02. Casualty. (a) The Trustor represents and
warrants that, as of the date hereof, there is no Casualty affecting the
Property.
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(b) In the event of any Casualty, the Trustor shall promptly
provide to the Beneficiary written notification (or telephonic notice promptly
confirmed in writing) containing a description of the Casualty. Within ten (10)
Business Days after any such notification, the Trustor shall provide the
Beneficiary with a written notice specifying whether the Trustor intends to
Restore the Property damaged, and if so, the Trustor shall include a description
of its preliminary plans to Restore the Property. If, in the sole discretion of
the Requisite Lenders, the Restoration of the Property in accordance with the
preliminary plans of the Trustor is reasonably assured through the use of the
Insurance Proceeds and if necessary, any other funds of the Trustor permitted
for such use under the terms of the Credit Agreement, then the Beneficiary shall
release to the Trustor over the course of such Restoration the Insurance
Proceeds held by the Beneficiary in connection with the Casualty, subject to
Section 3.06 hereof. If, however, the Requisite Lenders are not so assured, or
if the Trustor shall state that it does not intend to Restore the Property, then
the Beneficiary will retain all Insurance Proceeds held by it as Trust Property
as security for the Secured Obligations and the Trustor shall deliver to the
Beneficiary all Insurance Proceeds received, if any, by it in connection with
the Casualty. Further, the Trustor shall immediately take such action as may be
necessary or appropriate to preserve the undamaged portion of the Property and
to protect against personal injury or property damage.
SECTION 3.03. Insurance Claims and Proceeds. In the event of
any Casualty, (i) the Trustor shall promptly make proof of loss under the
applicable Insurance Policies and diligently pursue to conclusion its claim for
the Insurance Proceeds payable thereunder and any suit, action or other
proceeding necessary or appropriate to obtain payment of such Insurance
Proceeds, in each case subject to the provisions of Section 5.12; (ii) if an
Event of Default is continuing, the Insurance Proceeds with respect to such
Casualty shall be paid to the Beneficiary to be held, applied and disbursed as
provided in the Credit Agreement; and (iii) if, pursuant to clause (ii) of this
Section 3.03, the Insurance Proceeds are to be paid to the Beneficiary, the
Trustor shall promptly pay all amounts described in clauses (i) through (iii) of
the definition of "Insurance Proceeds" to the Beneficiary pursuant to said
clause (ii).
SECTION 3.04. Condemnation. (a) The Trustor represents and
warrants that, as of the date hereof, (i) there is no Condemnation affecting the
Property, (ii) there are no negotiations or proceedings which might result in
such a Condemnation, and (iii) no Condemnation is proposed or threatened.
(b) In the event of any Condemnation or any proposed or
threatened Condemnation, the Trustor shall promptly provide to the Beneficiary
written notification (or telephonic notice promptly confirmed in writing)
containing a description of the Condemnation. Within ten (10) Business Days of
any such notification, the Trustor shall provide the Beneficiary with a written
notice specifying whether the Trustor intends to Alter or Restore the portion of
the Property not directly affected by the Condemnation. If the Trustor does
intend to Alter or Restore such portion of the Property, such written notice
shall include a description of its
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preliminary plans to Alter or Restore such portion of the Property. If, in the
sole discretion of the Requisite Lenders, the Alteration or Restoration of such
portion of the Property in accordance with the preliminary plans of the Trustor
is reasonably assured through the use of the Award and, if necessary, any other
funds of the Trustor permitted for such use under the terms of the Credit
Agreement, then the Beneficiary shall release to the Trustor over the course of
such Alteration or Restoration the Award held by the Beneficiary in connection
with the Condemnation, subject to Section 3.06 hereof. If, however, the
Requisite Lenders are not so assured, or if the Trustor shall state that it does
not intend to Alter or Restore the Property, then the Beneficiary will retain
the Award held by it as Trust Property as security for the Secured Obligations
and the Trustor shall deliver to the Beneficiary the Award received, if any, by
it in connection with the Condemnation.
SECTION 3.05. Condemnation Proceedings and Awards. In the event
of any commencement of any negotiation or proceeding which might result in a
Condemnation, the Trustor shall, immediately, upon learning of the institution
of any such proceeding for Condemnation, notify the Beneficiary of the pendency
of such proceeding and agrees that the Beneficiary at its discretion may
participate in any such proceeding, and the Trustor from time to time shall
deliver to the Beneficiary all instruments reasonably requested by the
Beneficiary to permit such participation. Further, (i) the Trustor shall,
promptly after receiving notice or obtaining knowledge of any such proceeding,
do all things deemed necessary or appropriate by the Trustor in its reasonable
judgment or reasonably requested by the Beneficiary to preserve the Trustor's
interest in the Property and, in the event of any Condemnation, promptly make
claim for the Awards payable with respect thereto and diligently pursue to
conclusion such claim for such Awards and any suit, action or other proceeding
necessary or appropriate to obtain payment thereof, in each case subject to the
provisions of Section 5.10; (ii) the Trustor shall have no right to settle, and
shall not settle, any claim without the consent of the Beneficiary; and (iii) if
an Event of Default is continuing, the Awards with respect to such Condemnation
shall be paid to the Beneficiary to be held, applied and disbursed as provided
in the Credit Agreement.
SECTION 3.06. Conditions to Using Proceeds. (a) If no Event of
Default or other Default is continuing and Beneficiary has agreed to release the
Insurance Proceeds pursuant to Section 3.02 or the Awards pursuant to Section
3.04 (collectively, the "Proceeds"), such release shall be subject to the
following conditions:
(i) the Trustor shall furnish to the Beneficiary (A) the plans,
specifications and Permits required to be furnished pursuant to Section
2.08 prior to commencement of any Alteration or Restoration that is a
Major Alteration or Major Restoration; and (B) if such Proceeds are
Insurance Proceeds, a waiver reasonably satisfactory to the Beneficiary
by each insurer who paid or will pay such Insurance Proceeds of any and
all rights which such insurer may have to be subrogated to the rights
of the Lenders (and, if this condition is not satisfied, such Insurance
Proceeds shall be retained by the Beneficiary and not made available
for the Alteration or Restoration until the condition is satisfied);
and
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(ii) disbursements of any such Proceeds for the cost of such
Alteration or Restoration shall be made by the Beneficiary to the
Trustor from time to time (not more often than once in any month)
within ten (10) Business Days after receipt by the Beneficiary of (A) a
request of the Trustor for such disbursement; (B) a Certificate of the
Trustor and any supervising architect or engineer that the portion of
the work for which the disbursement is requested has been completed and
is in place in compliance with any approved plans and specifications;
(C) a Certificate of the Trustor that the disbursement is needed to pay
the cost of such work and that such Proceeds remaining after such
disbursement are sufficient to pay all costs of completing such
Alteration or Restoration; (D) waivers of Lien satisfactory to the
Beneficiary covering that part of the work for which the disbursement
is requested (except for Liens being contested pursuant to Section
2.13); (E) if required by the Beneficiary, a title insurance policy or
an endorsement to the Beneficiary's title insurance policy satisfactory
to the Beneficiary insuring against Liens relating to such work; (F)
with respect to the final disbursement of such Proceeds, the documents
and other items required pursuant to Section 2.08; and (G) such other
Certificates, information and documents as the Beneficiary may
reasonably require, provided that no disbursement shall be made unless
the Beneficiary shall be satisfied that the Certificates and other
documents furnished with respect thereto are true and correct.
(b) If any of such Proceeds shall remain after the completion
and payment of the cost of such Alteration or Restoration and the application,
disbursement or transfer of such Proceeds pursuant to subsection (a) of this
Section 3.06, such surplus shall be held, applied and disbursed as provided in
the Credit Agreement.
ARTICLE IV
ADDITIONAL ADVANCES, EXPENSES AND INDEMNIFICATION
SECTION 4.01. Additional Advances. All Advances made by the
Lenders from time to time under the Credit Agreement are obligatory, subject to
the provisions of the Credit Agreement.
SECTION 4.02. Interest After Default. If any Secured Obligation
(including, to the extent permitted under applicable law, any interest
obligation) shall not be paid when due, such Secured Obligation shall bear
interest at the Default Interest Rate from such due date through the date paid.
Such interest shall be part of the Secured Obligations and shall be secured by
this Deed of Trust.
SECTION 4.03. Expenses. The Trustor shall on demand, pay or
reimburse the Beneficiary, the Trustee or any of the other Indemnified Persons
for all reasonable out-of-pocket costs and expenses incurred by the Beneficiary
or the Trustee in accordance with Section 8.4 of the Credit Agreement, which
Section is hereby incorporated by reference. All such funds
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advanced that, in the reasonable judgment of the Beneficiary or other Lender,
are needed to protect their security are to be deemed obligatory advances
hereunder. The obligations of the Trustor under this Section 4.03 shall be part
of the Secured Obligations and shall be secured by this Deed of Trust.
SECTION 4.04. Indemnification. The Trustor shall indemnify and
hold harmless each of the Beneficiary, the Trustee, and the other Indemnified
Persons in accordance with Section 8.6 of the Credit Agreement, which Section is
hereby incorporated by reference. The obligations of the Trustor under this
Section 4.04 shall be part of the Secured Obligations, shall be secured by this
Deed of Trust and shall survive the release of this Deed of Trust or the
foreclosure or transfer in lieu of foreclosure of the Trust Property to the
extent that any Claim (as defined in Section 8.6 of the Credit Agreement)
relates to an act or event which occurred prior to such release, foreclosure or
transfer.
SECTION 4.05. Increased Costs. In the event of the enactment
after the date hereof of any applicable law deducting from the value of the
Property for the purpose of taxation of any Lien thereon or changing in any way
the applicable law for the taxation of mortgages, deeds of trust or other Liens
or obligations secured thereby, or the manner of collection of such taxes, so as
to affect this Deed of Trust, the Secured Obligations, the Beneficiary or any
other Lender, upon demand by the Beneficiary (subject to Section 7.01), to the
extent permitted under applicable law, the Trustor shall pay or reimburse the
Beneficiary or such other Lender for all taxes, assessments or other charges
which the Beneficiary or such other Lender is obligated to pay as a result
thereof.
SECTION 4.06. Notice Limiting Amount. The Trustor shall not,
without the consent of the Beneficiary, record, register or file any notice
limiting the maximum principal amount of the Secured Obligations secured by this
Deed of Trust.
ARTICLE V
DEFAULTS, REMEDIES AND RIGHTS
SECTION 5.01. Event of Default. (a) In this Deed of Trust,
the term "Event of Default" means any event which constitutes an Event of
Default under and as defined in the Credit Agreement.
(b) All notice and cure periods provided in this Deed of Trust,
the Credit Agreement, and the other Loan Documents shall run concurrently with
any notice or cure periods provided under applicable law. Without limiting the
foregoing and notwithstanding anything in this Deed of Trust, the Credit
Agreement, or any other Loan Document to the contrary, if a Default is
continuing, the Beneficiary or the Trustee shall be entitled to cause a notice
of breach,
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or notice of Default, and election to sell to be recorded and mailed,
concurrently with the giving of notice under, the Credit Agreement and the other
Loan Documents.
SECTION 5.02. Remedies. (a) If an Event of Default is
continuing, the Beneficiary (subject to Section 7.01) may with the consent, or
shall at the request, of the Requisite Lenders, or the Trustee (acting at the
direction of the Beneficiary subject to Section 7.02), shall have the right and
power to exercise any of the remedies and rights in this Section 5.02. FOR
PURPOSES OF ARTICLE V AND ALL OTHER PROVISIONS IN THIS DEED OF TRUST GRANTING
THE BENEFICIARY THE RIGHT TO EXERCISE ITS REMEDIES, IT IS UNDERSTOOD AND AGREED
THAT IN EACH SUCH INSTANCE, BENEFICIARY MAY DO SO WITH THE CONSENT, OR SHALL DO
SO AT THE REQUEST, OF THE REQUISITE LENDERS. The Beneficiary may declare all
sums secured hereby, and the same shall thereupon become, immediately due and
payable without any presentment, demand, protest or notice of any kind.
Thereafter, the Beneficiary at its option may:
(i) Terminate the Trustor's right and license to collect the
Rents and either in person or by agent, with or without bringing any
action or proceeding, or by a Receiver appointed by a court, and
without regard to the adequacy of its security, enter upon and take
possession of the Property, or any part thereof, and do any acts which
it deems necessary or desirable to preserve the value, marketability or
rentability of the Trust Property, or any part thereof or interest
therein, make, modify, enforce, cancel or accept the surrender of any
Lease, take actions which may affect the income therefrom or protect
the security hereof, and with or without taking possession of the
Property, sue for or otherwise collect the Rents, including, without
limitation, those past due and unpaid, and apply the same, less costs
and expenses of operation and collection, including reasonable
attorneys' fees and costs, upon any indebtedness secured hereby, all in
such order as the Beneficiary may determine;
(ii) Subject to the provisions and restrictions of any
applicable law, enter upon the Property, and exclude the Trustor and
its agents and servants wholly therefrom, without liability for
trespass, damages or otherwise, and take possession of all books,
records and accounts relating thereto and all other Trust Property, and
the Trustor agrees to surrender possession of the Trust Property and of
such books, records and accounts to the Beneficiary on demand after the
occurrence of any Event of Default; and having and holding the same may
use, operate, manage, preserve, control and otherwise deal therewith
and conduct the business thereof, either personally or by its
superintendents, managers, agents, servants, attorneys or Receivers,
without interference from the Trustor; and upon each such entry and
from time to time thereafter may, at the expense of the Trustor and the
Trust Property, without interference by the Trustor and as the
Beneficiary may deem reasonably advisable, (A) either by purchase,
repair or construction, maintain and restore the Trust Property, (B)
insure or reinsure the same, (C) make all necessary or proper repairs,
renewals, replacements, alterations, additions,
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betterments and improvements thereto and thereon, (D) initiate,
continue or complete, as applicable, the construction of the
Improvements and, in the course of such completion, make such changes
in the contemplated or completed Improvements as it may deem advisable,
(E) in every such case in connection with the foregoing have the right
to exercise all rights and powers of the Trustor with respect to the
Property, including the right to make, terminate, cancel, enforce or
modify Leases, obtain and evict tenants and subtenants on such terms as
the Beneficiary shall deem advisable;
(iii) Commence an action to foreclose this Deed of Trust as a
mortgage, appoint a Receiver, or specifically enforce any of the
covenants of this Deed of Trust;
(iv) Deliver to the Trustee a written declaration of default and
demand for sale, and a written notice of default to cause the Trustor's
interest in the Trust Property or any portion thereof to be sold, which
notice the Trustee or Beneficiary shall cause to be duly filed for
recording in the Official Records of the County in which the Property
is located; and/or
(v) Exercise all other rights and remedies provided herein, in
any other Loan Document, or at law or in equity.
(b) Upon request by the Beneficiary, the Trustor shall assemble
and make available to the Beneficiary at the Property any of the Trust Property
which is not located on the Property or which has been improperly removed
therefrom.
SECTION 5.03. Foreclosure by Power of Sale. Should the
Beneficiary elect to foreclose by exercise of the power of sale contained
herein, the Beneficiary shall notify the Trustee and shall, if required, deposit
with the Trustee the original or a certified copy of this Deed of Trust, and
such other documents, receipts and evidences of expenditures made and secured
hereby as the Trustee may require.
(a) Upon receipt of such notice from the Beneficiary, the
Trustee shall cause to be recorded and delivered to the Trustor such notice as
may then be required by law and by this Deed of Trust. The Trustee shall,
without demand on the Trustor, after lapse of such time as may then be required
by law and after recordation of such notice of default and after notice of sale
has been given as required by law, sell the Trust Property at the time and place
of sale fixed by it in said notice of sale, either as a whole or in separate
lots or parcels or items as the Trustee shall deem expedient, and in such order
as it may determine, at public auction to the highest bidder for cash in lawful
money of the United States payable at the time of sale. The Trustee shall
deliver to the purchaser or purchasers at such sale its good and sufficient deed
or deeds conveying the property so sold, but without any covenant or warranty,
express or implied. The recitals in such deed of any matters or facts shall be
conclusive proof of the truthfulness thereof. Any Person, including the Trustor,
Trustee, Beneficiary or any other Lender, may purchase at such sale.
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(b) After deducting all costs, fees and expenses of the Trustee
and of this Deed of Trust, including, without limitation, costs of evidence of
title and reasonable attorneys' fees of the Trustee or Beneficiary in connection
with a sale as provided in subsection (a) above of this Section 5.03, the
Trustee shall apply the proceeds of such sale (i) first, to the payment of all
sums expended by the Beneficiary under the terms of any of the Loan Documents
and not yet repaid, together with interest on such sums at the Default Interest
Rate, (ii) second, to the payment of all sums expended under the terms hereof
not then repaid, with accrued interest at the rate of interest equal to the rate
then in effect pursuant to the Credit Agreement, or if all Advances thereunder
have been repaid, the rate that would have been in effect under the Credit
Agreement, (iii) third, to the payment of all other sums then secured hereby,
and (iv) fourth, the remainder, if any, to the Person or Persons legally
entitled thereto.
(c) The Trustee may postpone the sale of all or any portion of
the Trust Property by public announcement at the time and place of the scheduled
sale, and from time to time thereafter may postpone such sale by public
announcement at the time fixed by the preceding postponement or subsequent
notice of sale, and without further notice may make such sale at the time fixed
by the last postponement, or may, in its discretion, give a new notice of sale.
(d) To the fullest extent allowed by law, the Trustor hereby
expressly waives any right which it may have to direct the order in which any of
the Trust Property shall be sold in the event of any sale or sales pursuant to
this Deed of Trust.
SECTION 5.04. Rescission of Notice of Default. Unless otherwise
provided by applicable law, the Beneficiary may from time to time rescind any
notice of default or notice of sale before any Trustee's sale as provided above,
by executing and delivering to the Trustee a written notice of such rescission,
which such notice, when recorded, shall also constitute a cancellation of any
prior declaration of default and demand for sale. The exercise by the
Beneficiary of such right of rescission shall not constitute a waiver of any
breach or default then existing or subsequently occurring, or impair the right
of the Beneficiary to execute and deliver to the Trustee, as above provided,
other declarations or notices of default to satisfy the obligations of this Deed
of Trust or secured hereby, nor otherwise affect any provision, covenant or
condition of any Loan Document or any of the rights, obligations or remedies of
the Trustee or Beneficiary hereunder or thereunder.
SECTION 5.05. Appointment of Receiver. If an Event of Default
shall have occurred and be continuing, the Beneficiary, as a matter of right and
without notice to the Trustor or to anyone claiming under the Trustor, and
without regard to the then value of the Trust Property or any other security in
favor of the Beneficiary or the interest of the Trustor therein, shall have the
right to apply to any court having jurisdiction to appoint a receiver or
receivers ("Receivers") of the Trust Property, or any portion thereof. Any such
Receiver or Receivers shall have the usual powers and duties of receivers in
like or similar cases and all the powers and
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duties of the Beneficiary in case of entry as provided in subsection 5.02(a)(ii)
above, and shall continue as such and exercise all such powers until the date of
confirmation of the sale of the Trust Property, unless such receivership is
sooner terminated.
SECTION 5.06. Remedies Not Exclusive; Waiver. The Trustee and
Beneficiary, and each of them as applicable, shall be entitled to enforce the
payment and performance of any indebtedness or obligations secured hereby and to
exercise all rights and powers under this Deed of Trust or under any other Loan
Document or other agreement or any laws now or hereafter in force,
notwithstanding the fact that some or all of the indebtedness and obligations
secured hereby may now or hereafter be otherwise secured, whether by mortgage,
deed of trust, pledge, lien, assignment or otherwise. Neither the acceptance of
this Deed of Trust nor its enforcement, whether by court action or pursuant to
the power of sale or other powers contained herein, shall prejudice or in any
manner affect the Trustee's or Beneficiary's right to realize upon or enforce
any other rights or security now or hereafter held by the Trustee or
Beneficiary. The Trustee and Beneficiary, and each of them, shall be entitled to
enforce this Deed of Trust and any other rights or security now or hereafter
held by the Beneficiary or Trustee in such order and manner as they or either of
them may in their absolute discretion determine. No remedy herein conferred upon
or reserved to the Trustee or Beneficiary is intended to be exclusive of any
other remedy contained herein or by law provided or permitted, but each shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter existing at law or in equity. Every power or remedy given by any of
the Loan Documents to the Trustee or Beneficiary, or to which either of them may
be otherwise entitled, may be exercised, concurrently or independently, from
time to time and as often as may be deemed expedient by the Trustee or
Beneficiary, and either of them may pursue inconsistent remedies. By exercising
or by failing to exercise any right, option or election hereunder, the
Beneficiary shall not be deemed to have waived any provision hereof or to have
released the Trustor from any of the obligations secured hereby unless such
waiver or release is in writing and signed by Beneficiary. The waiver by the
Beneficiary of the Trustor's failure to perform or observe any term, covenant,
or condition referred to or contained herein to be performed or observed by the
Trustor shall not be deemed to be a waiver of such term, covenant or condition
or of any subsequent failure of the Trustor to perform or observe the same or
any other such term, covenant or condition referred to or contained herein, and
no custom or practice which may develop between the Trustor and Beneficiary
during the term hereof shall be deemed a waiver of or in any way affect the
right of the Beneficiary to insist upon the performance by the Trustor of the
obligations secured hereby in strict accordance with the terms hereof or of any
other Loan Document.
SECTION 5.07. Request for Notice. The Trustor hereby requests a
copy of any notice of default and requests that any notice of sale hereunder be
mailed to it at the address set forth in Section 7.03 hereof. Otherwise, neither
the Trustee nor Beneficiary is under any obligation to notify any person or
entity of any action or proceeding of any kind in which the Trustor, Beneficiary
and/or Trustee shall be a party, unless brought by the Trustee, except as may
otherwise be required by law.
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SECTION 5.08. Inspection Fee. If an Event of Default has
occurred and continues to remain uncured for a period of thirty (30) days then,
in addition to all other obligations of the Trustor to the Beneficiary which may
arise in connection therewith, the Trustor shall reimburse the Beneficiary for
the reasonable cost of causing an inspection of the Property to be performed if
the Beneficiary reasonably determines that an inspection should be made of the
Property. The Trustor agrees to cooperate fully in causing any such inspection
to be made by the Beneficiary or its agents.
SECTION 5.09. Rent from the Trustor. Following foreclosure of
the Lien of this Deed of Trust, the Trustor shall pay monthly in advance to the
Beneficiary or to a Receiver appointed pursuant to Section 5.05 the fair and
reasonable rental value for the use and occupancy of the Property, provided that
the Beneficiary has consented to the Trustor's occupancy and possession of the
Property following such foreclosure; and, upon the failure of the Trustor to
make any such payment, upon demand by the Beneficiary or such Receiver, the
Trustor shall vacate and surrender possession of the Property to the Beneficiary
or such Receiver and, upon the failure of the Trustor to do so, the Beneficiary
or such Receiver shall have the right to evict the Trustor by any summary action
or proceeding available under applicable law for the recovery of possession of
premises for non-payment of rent.
SECTION 5.10. Right of Entry. The Beneficiary or the Trustee
(as the case may be, as the Person exercising the rights under this Section
5.10) and the representatives of such Person shall have the right, but not the
obligation, (i) without prior notice if an Event of Default is continuing, or
(ii) after reasonable notice if no Event of Default is continuing, to enter upon
the Property at all reasonable times, as often as such Person may reasonably
require, to inspect the Trust Property, to examine and copy the books, accounts
and other records and files of the Trustor, to make copies thereof, to discuss
the accounts, business and other affairs of the Trustor with the Trustor's
officers, employees and other representatives (whom the Trustor shall make
available for that purpose) or to exercise any right, power or remedy of such
Person hereunder, provided that no such entry on the Property for the purpose of
performing obligations under Section 5.11 or any other purpose shall be
construed to be possession of the Property by such Person or to constitute such
Person as a beneficiary, trustee or mortgagee in possession, (unless such Person
exercises its right to take possession of the Property under Section
5.02(a)(ii)), or to be a cure of any Default or Event of Default or waiver of
any Default, Event of Default or Secured Obligation, and provided further that
such Person shall not interfere with the conduct of Trustor's business at the
Property.
SECTION 5.11. Right to Perform Obligations. If the Trustor
fails to pay or perform any obligation of the Trustor hereunder or under any
other Loan Document, the Beneficiary or the Trustee (as the case may be, as the
Person exercising the rights under this Section 5.11) and the representatives of
such Person shall have the right, but not the obligation, (i) without notice if
an Event of Default is continuing, or (ii) after reasonable notice if no Event
of Default is continuing, to pay or perform such obligation of the Trustor,
provided that no such
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payment or performance shall be construed to be a cure of any Default or Event
of Default or waiver of any Default, Event of Default or Secured Obligation.
SECTION 5.12. Right to Make Claims. (a) In the event that the
Trustor hereafter has (i) any material claim (as described in Section 5.12(b))
or right to make any material claim relating to the Trust Property or the
proceeds thereof against any Person, including any claim for Insurance Proceeds,
for Awards, or against any tenant under any Lease, or (ii) any right to bring
any suit, action or other proceeding (including any arbitration proceeding) to
enforce any other material right, power or remedy relating to the Trust
Property, then (A) the Trustor shall promptly give notice thereof to the
Beneficiary, describing in reasonable detail satisfactory to the Beneficiary the
claim or right in question and the action which the Trustor intends to take with
respect thereto; (B) the Trustor shall promptly do all things reasonably
necessary or appropriate to preserve and enforce such claim or right and shall
promptly commence and diligently prosecute to conclusion any suit, action or
other proceeding reasonably necessary or appropriate to do so; (C) the Trustor
shall keep the Beneficiary informed of the status and progress of such claim,
right or proceeding and, upon request, shall promptly furnish to the Beneficiary
such information and documents relating thereto as the Beneficiary shall
reasonably request; (D) the Trustor shall have no right to waive, compromise or
settle, and shall not waive, compromise or settle, such claim, right or
proceeding without the consent of the Beneficiary, subject to Section 7.01;
(E)(1) if the Trustor fails to commence promptly or to pursue diligently to
completion any such claim, right or proceeding, or if an Event of Default is
continuing, the Beneficiary shall have the right, but not the obligation, (aa)
without notice if an Event of Default is continuing, and (bb) after reasonable
notice to the Trustor if no Event of Default is continuing, to enforce any such
claim or right, to commence or take over any such proceeding, to prosecute any
such proceeding to conclusion and to settle any such claim, right or proceeding,
in each case (AA) without the consent of the Trustor if an Event of Default is
continuing, and (BB) with the consent of the Trustor (which shall not be
unreasonably withheld) if no Event of Default is continuing; and (2) if an Event
of Default is continuing, the Trustor hereby irrevocably appoints the
Beneficiary as the attorney-in-fact of the Trustor (with full power to
substitute any other Person in its place as such attorney-in-fact), to act in
the name of the Trustor or, at the option of the Beneficiary, in the
Beneficiary's own name, to take any action described in the preceding clause
(1), and to execute, acknowledge and deliver any document in connection
therewith or take any other action incidental thereto as the Beneficiary shall
deem appropriate in its discretion; and (3) the Trustor hereby irrevocably
authorizes and directs any Person to act upon the foregoing appointment and a
Certificate of the Beneficiary that the Beneficiary is entitled to act under
this clause (E); and (F) the proceeds of such claim or right shall be paid to
the Beneficiary, to be held, applied and disbursed as provided in this Deed of
Trust and the Credit Agreement.
(b) Under this Section 5.12, a material claim or right shall be
(i) any claim or right involving, individually or in the aggregate with any
related claims or rights, the Trust Property or an amount in controversy having
a value or amounting to One Million Dollars ($1,000,000) or more or (ii) if an
Event of Default is continuing, any claim or right involving the Trust Property
or amount in controversy.
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ARTICLE VI
ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND FIXTURE FILING
SECTION 6.01. Assignment of Rents. (a) To facilitate the
payment and performance of the Secured Obligations, the Trustor hereby
absolutely assigns and transfers to the Beneficiary all right, title and
interest of the Trustor in and to the Assigned Leases and Rents. This assignment
is and shall be a present, absolute and irrevocable assignment by the Trustor to
the Beneficiary and, subject to the license to the Trustor under subsection (b)
of this Section 6.01, the Trustee, the Beneficiary or a Receiver appointed
pursuant to Section 5.05 (as the case may be as the Person exercising the rights
under this Section 6.01) shall have the absolute, immediate and continuing
right, power and authority, but not the obligation, to collect and receive all
Rents now or hereafter, including during any period of redemption, accruing with
respect to the Property, and the absolute, immediate and continuing right, power
and authority, but not the obligation to alter, modify or change the terms of
any and all of the Assigned Leases or to surrender, cancel or terminate the
same. The Trustor irrevocably appoints the Trustee, the Beneficiary or a
Receiver appointed pursuant to Section 5.05 (as the case may be as the Person
exercising the rights under this Section 6.01) as its true and lawful
attorney-in-fact, at the option of the Beneficiary at any time and from time to
time, to demand, receive and enforce payment, to give receipts, releases and
satisfactions, and to sue, in the name of the Trustor, or, at the option of the
Beneficiary, in its own name, for any Rents, and apply the same to the
satisfaction of the Secured Obligations. At the request of the Beneficiary or
such Receiver, the Trustor shall promptly execute, acknowledge, deliver, record,
register and file any additional general assignment of the Assigned Leases or
specific assignment of any Assigned Lease which the Beneficiary or such Receiver
may require from time to time (all in form and substance reasonably satisfactory
to the Beneficiary or such Receiver) to effectuate, complete, perfect, continue
or preserve this assignment of the Rents and Assigned Leases. This assignment of
the Rents and Assigned Leases is, and is intended to be, an absolute and present
assignment from the Trustor to the Beneficiary and not merely the passing of a
security interest.
(b) As long as no Event of Default is continuing, the Trustor
shall have (i) the right under a license granted hereby, subject to subsection
(c) of this Section 6.01, and the obligation to collect all Rents as permitted
under Section 2.10(d)(v) hereof and shall collect the Rents and hold and use the
same in trust to be applied first to the payment of the Secured Obligations, the
Impositions, the Insurance Premiums and the other costs and expenses of
operating the Property, as the same become due and payable, before using any
part thereof for any other purpose; and (ii) the rights under Section 2.10(d)
hereof relating to the Assigned Leases.
(c) If an Event of Default is continuing, the Beneficiary
(subject to Section 7.01) or the Trustee (acting at the direction of the
Beneficiary, subject to Section 7.02) or a
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Receiver appointed pursuant to Section 5.05 (as the case may be as the Person
exercising the rights under this Section 6.01) shall have the right to terminate
the license granted under subsection (b) of this Section 6.01 and exercise the
rights and remedies provided under subsection (a) of this Section 6.01, under
subsections 5.02(a)(i) and (ii) or under applicable law. If an Event of Default
is continuing, upon demand by the Person exercising the rights under this
Section 6.01, the Trustor shall promptly pay to such Person all Security
Deposits under the Assigned Leases and all Rents allocable to any period after
the occurrence of such Event of Default. Subject to subsections 5.02(a)(i) and
(ii) and any applicable requirement of law, any Rents received hereunder by the
Person exercising the rights under this Section 6.01 shall be promptly paid to
the Beneficiary, and any Rents received hereunder by the Beneficiary shall be
held, applied and disbursed as provided in the Credit Agreement; provided that,
subject to subsections 5.02(a)(i) and (ii) and any applicable requirement of
law, any Security Deposits actually received by such Person shall be promptly
paid to the Beneficiary, and any Security Deposits actually received by the
Beneficiary shall be held, applied and disbursed as provided in the applicable
Assigned Leases.
(d) The rights and powers of the Person exercising the rights
under this Section 6.01 shall continue until the expiration of the redemption
period from any foreclosure sale, whether or not any deficiency remains after a
foreclosure sale.
(e) Nothing herein shall be construed to be an assumption by
the Person exercising the rights under this Section 6.01 of, or to otherwise
make such Person liable for the performance of, any of the obligations of the
Trustor under the Assigned Leases, provided that such Person shall be
accountable as provided in subsection (c) of this Section 6.01 for any Rents or
Security Deposits actually received by such Person.
(f) The acceptance by the Beneficiary of the assignment in this
Section 6.01 with all of the rights, powers, privileges and authority created
hereby shall not, prior to entry upon and taking possession of the Property by
the Beneficiary, be deemed or construed to make the Beneficiary a "mortgagee in
possession" nor thereafter or at any time or in any event obligate the
Beneficiary to appear in or defend any action or proceeding relating to the
Assigned Leases, the Rents or the Property, or to take any action hereunder or
to expend any money or to incur any expenses or perform or discharge any
obligation, duty or liability under any Assigned Lease or to assume any
obligation or responsibility for any Security Deposits or other deposits until
actually delivered to the Beneficiary, or make the Beneficiary be liable in any
way for any injury or damage to any Persons or property in or about the
Property.
(g) Neither the collection of the Rents and the application
thereof as provided for herein nor the entry upon or taking of possession of the
Property by the Beneficiary shall be deemed to cure or waive any Default or
waive, modify or affect any notice of Default under any of the Loan Documents or
invalidate any act done pursuant to any such notice, and, notwithstanding the
continuance in possession of the Property or the collection, receipt and
application of the Rents, the Beneficiary shall be entitled to exercise every
right provided for in
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any of the Loan Documents or by law upon the occurrence of any Event of Default,
including, without limitation, the right to exercise the power of sale provided
herein, except to the extent that such collection and application effect a cure
of the Trustor's Default or Event of Default hereunder. The enforcement of any
such right or remedy by the Beneficiary, once exercised, shall continue for so
long as the Beneficiary shall elect. If the Beneficiary shall thereafter elect
to discontinue the exercise of any such right or remedy, the same or any other
right or remedy hereunder may be reasserted at any time and from time to time
following any subsequent Default or Event of Default.
SECTION 6.02. Security Agreement. To the extent that the Trust
Property includes personal property or items of personal property which are or
are to become fixtures under applicable law, this Deed of Trust shall also be
construed as a security agreement under the California Uniform Commercial Code
and the Trustor hereby grants to the Beneficiary a continuing security interest
in such Trust Property; and, if an Event of Default is continuing, the Trustee
and the Beneficiary shall be entitled with respect to such personal property to
all remedies available under such Uniform Commercial Code and all other remedies
available under applicable law. To the extent that the Trust Property includes
items of personal property which are covered by the Security Agreement, the
provisions of the Security Agreement shall govern, and if an Event of Default is
continuing, the Beneficiary shall be entitled with respect to such personal
property to all remedies available under the Security Agreement and available
under applicable law. Without limiting the foregoing, any personal property may,
at Beneficiary's option, (i) be sold hereunder, (ii) be sold pursuant to the
California Uniform Commercial Code, or (iii) be dealt with by the Beneficiary in
any other manner permitted under applicable law. The Beneficiary may require the
Trustor to assemble the personal property and make it available to the
Beneficiary at a place to be designated by the Beneficiary. If an Event of
Default is continuing, the Beneficiary shall be the attorney-in-fact of the
Trustor with respect to any and all matters pertaining to the personal property
with full power and authority to give instructions with respect to the
collection and remittance of payments, to endorse checks, to enforce the rights
and remedies of the Trustor and to execute on behalf of the Trustor and in the
Trustor's name any instruction, agreement or other writing required therefor.
The Beneficiary may, at its option, appoint the Trustee as the agent of the
Beneficiary for the purpose of disposition of the personal property in
accordance with the California Uniform Commercial Code, subject to Section 7.01.
The Trustor acknowledges and agrees that a disposition of the personal property
in accordance with the Beneficiary's rights and remedies in respect to the
Property as heretofore provided is a commercially reasonable disposition
thereof.
SECTION 6.03. Fixture Filing. To the extent that the
Trust Property includes items of personal property which are or are to become
fixtures under applicable law, and to the extent permitted under applicable law,
the filing of this Deed of Trust in the real estate records of the county in
which such Trust Property is located shall also operate from the time of filing
as a fixture filing with respect to such Trust Property, and the following
information is applicable for the purpose of such fixture filing, to wit:
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(a) Name and address of the debtor:
The Trustor:
Cadence Design Systems, Inc.
2655 Seely Road
San Jose, California 95134
(b) Name and address of the secured party:
The Beneficiary:
CREDIT LYONNAIS, New York Branch
1301 Avenue of the Americas
New York, New York 10019
(c) This document covers goods or items of personal
property which are or are to become fixtures upon the Property.
(d) The Trustor is the record owner of the Property on
which such fixtures are or are to be located.
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ARTICLE VII
MISCELLANEOUS
SECTION 7.01. Beneficiary as the Agent. (a) The Agent has been
appointed as the Beneficiary hereunder pursuant to the Credit Agreement and
shall be entitled to the benefits of the Credit Agreement. The Beneficiary shall
have the right hereunder to make demands, to give notices, to exercise or
refrain from exercising any rights, and to take or refrain from taking action
(including the release or substitution of Collateral) in accordance with the
terms of this Deed of Trust and the Credit Agreement; provided that in the event
of a conflict between the provisions of this Deed of Trust and the Credit
Agreement, the Credit Agreement shall control to the extent it resolves such
conflict. The Beneficiary may resign as Agent and a successor to the Beneficiary
may be appointed in the manner provided in the Credit Agreement. Upon the
acceptance of any appointment as Agent by a successor Agent, that successor
Agent shall thereupon become the Beneficiary hereunder and succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Beneficiary under this Deed of Trust, and the retiring Beneficiary shall
thereupon be discharged from its duties and obligations under this Deed of Trust
and shall deliver any Trust Property in its possession to the successor
Beneficiary. After any retiring Beneficiary's resignation, the provisions of
this Deed of Trust shall inure to its benefit as to any actions taken or omitted
to be taken by it under this Deed of Trust while it was the Beneficiary.
(b) Without limiting the generality of subsection (a) of this
Section 7.01, notwithstanding anything herein to the contrary, if an Event of
Default is continuing, (i) the Beneficiary shall not exercise or waive the
exercise of any of its rights, powers or remedies hereunder or otherwise act or
refrain from acting hereunder unless directed to do so pursuant to the Credit
Agreement; and (ii) the Beneficiary shall exercise or waive the exercise of any
of its rights, powers or remedies hereunder and otherwise act or refrain from
acting when and in the manner directed pursuant to the Credit Agreement,
provided that any exercise or waiver by the Beneficiary of any of its rights,
powers or remedies hereunder or any other act by the Beneficiary hereunder shall
be conclusive evidence of the Beneficiary's authority pursuant to the Credit
Agreement against all Persons other than the Agent and the Lenders.
SECTION 7.02. Trustee. (a) The Trustor hereby irrevocably
appoints the Trustee to act in that capacity hereunder and the Trustee hereby
accepts such appointment. The Trustor hereby irrevocably ratifies and confirms
all acts which the Trustee shall lawfully take in accordance with the provisions
hereof.
(b) The Trustee may, at its option, resign as trustee hereunder
by notice given to the Beneficiary, and such resignation shall be effective on
the earlier to occur of (i) the date which is thirty (30) days after the date on
which the Trustee gives such notice to the Beneficiary
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or (ii) the date on which a successor trustee is appointed by the Beneficiary
and accepts such appointment.
(c) Subject to Section 7.01, the Beneficiary may, at its
option, with or without cause or notice, remove the Trustee, appoint a successor
trustee or appoint an additional trustee or trustees hereunder by an instrument
in writing executed and acknowledged by the Beneficiary and executed and
accepted by such successor or additional trustee and recorded, registered or
filed in the real estate records of the jurisdiction in which the Trust Property
is located; and, thereupon, without further act, deed or conveyance, such
substitute or additional trustee shall be fully vested with all estate, right,
title and interest of its predecessor or co-trustee in, to, under or derived
from the Trust Property and all rights, powers, privileges and obligations of
such predecessor or co-trustee, with the same effect as if such successor or
additional trustee had originally been named as trustee or co-trustee hereunder.
The execution, acknowledgement and recording, registration or filing of such an
instrument shall be conclusive evidence against the Trustor and all other
Persons of the proper removal of the Trustee and substitution or addition of the
successor or additional trustee; and, if the Trustee or such successor or
additional trustee is a corporation, the execution and acknowledgement by an
officer of such corporation shall be conclusive evidence against all other
Persons of the due authorization, execution and delivery thereof by such
corporation. By accepting its appointment as successor or additional trustee,
such successor or additional trustee shall be a trustee as of the date of such
acceptance as if it were the Trustee on the date hereof.
(d) Notwithstanding anything herein to the contrary, the
Trustee shall not exercise or waive the exercise of any of its rights, powers or
remedies hereunder or otherwise act or refrain from acting hereunder unless
directed to do so by the Beneficiary, and the Trustee shall exercise or waive
the exercise of any of its rights, powers or remedies hereunder and otherwise
act or refrain from acting when and in the manner directed by the Beneficiary,
provided that the Trustee (i) shall not be required to follow any
direction of the Beneficiary if the Trustee has been advised by counsel that
such action would violate applicable law, (ii) shall not be required to expend
or risk its own funds or otherwise incur any financial liability in connection
with such action if it has reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured to it, and (iii) shall be entitled to exercise its rights
under subsection (e) of this Section 7.02 without such direction by the
Beneficiary.
(e) The Trustee shall be entitled to receive, and the Trustor
shall pay, reasonable compensation to the Trustee for its services rendered
hereunder and reimbursement to the Trustee for its expenses (including
reasonable attorneys' fees and expenses) in connection herewith or the exercise
of any right, power or remedy hereunder.
(f) The Trustee shall not be liable with respect to any act
taken or omitted by it in good faith in accordance with any direction of the
Beneficiary. Except for willful misconduct or gross negligence, the Trustee
shall not be liable (i) in acting upon any direction, demand,
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request, notice, statement or other document reasonably believed by it in good
faith to be genuine and delivered by the Person empowered to do so, (ii) for any
error in judgment or mistake of fact or law in good faith, or (iii) for any
action taken or omitted by it in accordance with the provisions of this Deed of
Trust. No co-trustee hereunder shall be liable for any act or omission of any
other co-trustee.
(g) All monies received by the Trustee hereunder shall be held
by the Trustee in trust for the purposes for which such monies are received;
and, except as provided herein or under mandatory provisions of applicable law,
shall be immediately paid over to the Beneficiary.
SECTION 7.03. Notices. Unless otherwise specifically provided
herein, all notices and other communications provided for hereunder shall be in
writing (including telecopier, telegraphic, telex or cable communication) and
mailed, telecopied, telegraphed, telexed, cabled or delivered, as follows:
(i) To the Trustor at:
Cadence Design Systems, Inc.
2655 Seely Road
San Jose, California 95134
Attention: Treasurer
Telecopy No.: (408) 894-2794
With a copy to:
Gray Cary Ware Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301-1825
Attention: Jeffery A. Trant, Esq.
Telecopy No.: (415) 328-3029
(ii) To the Beneficiary at:
CREDIT LYONNAIS, New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Syndications Group
Telecopy No.: (212) 459-3176
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With a copy to:
Latham & Watkins
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Hendrik de Jong, Esq.
Telecopy No.: (213) 891-8763
(iii) To the Trustee at:
First American Title Insurance Company
114 East Fifth Street
Santa Ana, California 92701
Attention: Legal Department
Telecopy No.: (714) 541-4702
With a copy to the Beneficiary,
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall be effective when received.
SECTION 7.04. Release of Trust Property. The Trust
Property shall be released from the Lien of this Deed of Trust in full subject
to the satisfaction of the conditions in the manner and at the time provided
under Sections 5.3(d)(iv) and 7.7 of the Credit Agreement and, when such release
is effective pursuant thereto, at the request of the Trustor and upon the
payment by the Trustor of the fees and expenses of the Beneficiary, the
Beneficiary shall execute and deliver to the Trustor such documents as shall be
reasonably required to release the Trust Property from the Lien of this Deed of
Trust and to reconvey, or cause the Trustee to reconvey, the same to the Trustor
without warranty; and, at the request of the Beneficiary and upon payment by the
Trustor of the fees and expenses of the Trustee, the Trustee shall reconvey such
Trust Property to the Trustor without warranty. Except as specifically provided
herein and in any such release and reconveyance, this Deed of Trust and the Lien
hereof shall remain in full force and effect.
SECTION 7.05. Modification and Waiver. No provision of
this Deed of Trust shall be modified, waived or terminated, and no consent to
any departure by the Trustor from any provision of this Deed of Trust shall be
effective, unless the same shall be by an instrument in writing, signed by the
party against whom such modification, waiver, termination or consent is to be
enforced. Any such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
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SECTION 7.06. Severability. All rights, powers and remedies
provided in this Deed of Trust may be exercised only to the extent that the
exercise thereof does not violate applicable law, and all the provisions of this
Deed of Trust are intended to be subject to all mandatory provisions of
applicable law and to be limited to the extent necessary so that they will not
render this Deed of Trust illegal, invalid, unenforceable or not entitled to be
recorded, registered or filed under applicable law. If any provision of this
Deed of Trust or the application thereof to any Person or circumstance shall, to
any extent, be illegal, invalid or unenforceable, or cause this Deed of Trust
not to be entitled to be recorded, registered or filed, the remaining provisions
of this Deed of Trust or the application of such provision to other Persons or
circumstances shall not be affected thereby, and each provision of this Deed of
Trust shall be valid and be enforced to the fullest extent permitted under
applicable law.
SECTION 7.07. Binding Effect. (a) The Trustor hereby confirms
the accuracy of the Recitals and their binding effect upon the Trustor. The
provisions of this Deed of Trust shall be binding upon and inure to the benefit
of each of the parties hereto, the successors and assigns of the Trustor, the
successors of the Beneficiary in its capacity as Agent and the successors of the
Trustee in that capacity and shall inure to the benefit of the Lenders and their
respective successors and assigns; and all references herein to the "Trustor,"
the "Beneficiary," the "Trustee" or the "Lenders" shall include the respective
successors and assigns of such parties.
(b) To the fullest extent permitted under applicable law, the
provisions of this Deed of Trust binding upon the Trustor shall be deemed to be
covenants which run with the Land.
(c) Nothing in this Section 7.07 shall be construed to permit
the Trustor to Transfer or grant a Lien upon the Trust Property contrary to the
provisions of Sections 2.11 and 2.12.
SECTION 7.08. Not Assignable. Neither this Deed of Trust nor
any rights of the Trustor to receive any sums, proceeds or disbursements
hereunder or under the Credit Agreement may be assigned, pledged, hypothecated
or otherwise encumbered by the Trustor without the prior written consent of the
Beneficiary or except as may be permitted under the Credit Agreement.
SECTION 7.09. GOVERNING LAW. THIS DEED OF TRUST SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
CALIFORNIA. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS DEED OF TRUST
MAY BE BROUGHT IN THE COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES
FOR THE NORTHERN DISTRICT OR THE CENTRAL DISTRICT OF CALIFORNIA, AND BY
EXECUTION AND DELIVERY OF THIS DEED OF TRUST, THE TRUSTOR CONSENTS, FOR ITSELF
AND IN RESPECT OF THE TRUST PROPERTY, TO THE JURISDICTION OF THOSE COURTS. THE
TRUSTOR, IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION
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TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH
JURISDICTION IN RESPECT OF THE DEED OF TRUST. THE TRUSTOR WAIVES PERSONAL
SERVICE OF ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY
OTHER MEANS PERMITTED BY CALIFORNIA LAW.
SECTION 7.10. Waiver of Jury Trial. The Trustor WAIVES ITS
RIGHTS TO A TRIAL BY JURY of any claim or cause of action based upon or arising
out of or related to this Deed of Trust or the transactions contemplated hereby
in any action, proceeding or other litigation of any type brought by any of the
parties against any other party or parties, whether based on contract, tort,
statutory liability or otherwise. The Trustor agrees that any such claim or
cause of action shall be tried by the court WITHOUT A JURY. This waiver shall
apply to each future amendment, renewal, supplement or modification of this Deed
of Trust.
SECTION 7.11. Inconsistencies; Counterparts. This Deed of Trust
and the Credit Agreement shall be construed to the extent reasonable to be
consistent one with the other, but to the extent that the terms and conditions
of this Deed of Trust are actually inconsistent with the terms and conditions of
the Credit Agreement, the Credit Agreement shall govern. This Deed of Trust may
be executed in any number of counterparts, each of which shall be deemed to be
an original with the same effect as if the signatures hereto and thereto were
upon the same instrument, and it shall not be necessary in making proof hereof
to produce or account for more than one such counterpart.
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IN WITNESS WHEREOF, the Trustor has executed this Deed of Trust
as of the date first set forth above.
TRUSTOR:
CADENCE DESIGN SYSTEMS, INC.,
a Delaware corporation
By:
Name:
Title:
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STATE OF CALIFORNIA )
) ss.:
COUNTY OF )
On , 1996, before me, ,
personally appeared , personally known
to me (or proved to me on the basis of satisfactory evidence) to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s) or the entity upon behalf of which the person(s) acted,
executed the instrument.
WITNESS my hand and official seal.
Signature (seal)
------------------------------------
EXHIBIT A
Legal Description of the Land
REAL PROPERTY in the City of San Jose, County of Santa Clara, State of
California, described as follows:
PARCEL ONE:
Parcel 1, as shown on that Parcel Map filed for record in the Office of the
Recorder of the County of Santa Clara, State of California on June 18, 1991 in
Book 626 of Maps, pages 42, 43, 44 and 45.
PARCEL TWO:
Private Storm Drainage Easements over Parcels 2 and 3, for the benefit of Parcel
1, as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44 and
45.
PARCEL THREE:
A Private Sanitary Sewer Easement over Parcel 4, for the benefit of Parcel 1, as
shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44 and 45.
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PARCEL FOUR:
Private Ingress and Egress Easements over Parcels 2 and 4, for the benefit of
Parcel 1, as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44
and 45.
PARCEL FIVE:
Parcel 2, as shown on that Parcel Map filed in the Office of the Recorder of the
County of Santa Clara, State of California on June 18, 1991 in Book 626 of Maps,
pages 42, 43, 44 and 45.
PARCEL SIX:
Private Storm Drainage Easements over Parcel 1, for the benefit of Parcel 2, as
shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44 and 45.
PARCEL SEVEN:
Private Sanitary Sewer Easements over Parcels 1, 3 and 4, for the benefit of
Parcel 2, as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44
and 45.
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PARCEL EIGHT:
Private Ingress and Egress Easements over Parcel 1, for the benefit of Parcel 2,
as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44 and 45.
PARCEL NINE:
Parcel 3, as shown on that Parcel Map filed for record in the Office of the
Recorder of the County of Santa Clara, State of California on June 18, 1991 in
Book 626 of Maps, pages 42, 43, 44 and 45.
PARCEL TEN:
Private Storm Drainage Easements over Parcels 1 and 2, for the benefit of Parcel
3, as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44 and
45.
PARCEL ELEVEN:
A Private Sanitary Sewer Easement over Parcels 1 and 4, for the benefit of
Parcel 3, as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44
and 45.
PARCEL TWELVE:
Private Ingress and Egress Easements over Parcels 1 and 2, for the benefit of
Parcel 3, as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44
and 45.
PARCEL THIRTEEN:
Parcel 4, as shown on that Parcel Map filed in the Office of the Recorder of the
County of Santa Clara, State of California on June 18, 1991 in Book 626 of Maps,
pages 42, 43, 44 and 45.
PARCEL FOURTEEN:
Private Storm Drainage Easements over Parcels 1, 2 and 3 for the benefit of
Parcel 4, as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44
and 45.
PARCEL FIFTEEN:
Private Ingress and Egress Easement over Parcels 1 and 2, for the benefit of
Parcel 4, as shown on the Parcel Map filed in Book 626 of Maps, pages 42, 43, 44
and 45.
APN: 097-67-001, 002, 003 & 097-66-001
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ARB: 097-15-011.02, 011.03, 011.04, 011.05
EXHIBIT B
Lease Subordination and Nondisturbance Provisions
Subordination and Nondisturbance. This Lease and Tenant's
rights hereunder are and shall be subject and subordinate to any and all deeds
of trust or mortgages affecting the Property in which the demised premises are
located, whether made prior to, on or after the date of this Lease (each a "Deed
of Trust"), including that certain Deed of Trust, Assignment, Assignment of
Leases and Rents, Security Agreement and Fixture Filing, dated as of April 11,
1996, from Cadence Design Systems, Inc., as the Trustor, to First American Title
Insurance Company, as the Trustee, for the benefit of Credit Lyonnais, New York
Branch, as the Beneficiary, recorded ______________________________ [insert
recording data as recorded in the Office of the County Recorder of Santa Clara
County] (the "Existing Deed of Trust"), any and all advances thereunder made
prior to, on or after the date of this Lease, and all amendments, modifications,
supplements, extensions, renewals or replacements of the Existing Deed of Trust
executed and delivered prior to, on or after the date of this Lease.
Notwithstanding the foregoing, the holder of any Deed of Trust (including
without limitation the Beneficiary (as defined in the Existing Deed of Trust))
may at any time elect to make the Deed of Trust held by such holder subordinate
to this Lease by giving Tenant written notice of such subordination and, upon
the giving of such notice to Tenant by such holder, the Deed of Trust held by
such holder shall be deemed to be subordinate to this Lease. The provisions of
this Section shall be self-operative and no further instrument of subordination
under this Section shall be required. In confirmation of any subordination
provided herein, Tenant shall promptly execute, acknowledge and deliver any
instrument that the holder of any Deed of Trust may reasonably request in
writing to evidence such subordination. So long as there is no uncured Event of
Default by Tenant under this Lease, the holder of any Deed of Trust (including,
without limitation, the Beneficiary under the Existing Deed of Trust) shall not
disturb the possession of Tenant and/or its use, occupancy and enjoyment of the
Premises pursuant to and in accordance with the terms and provisions of this
Lease, and if such holder succeeds to the interest of Landlord, such holder
shall be bound by all of the obligations imposed on Landlord by this Lease. At
the request of Tenant, any such holder shall promptly execute, acknowledge and
deliver an instrument that Tenant may reasonably request in writing to evidence
such nondisturbance. Notwithstanding anything herein to the contrary, the
provisions of this Section may not be amended with respect to any Deed of Trust
without the consent in writing of the holder of such Deed of Trust.
EXHIBIT C
Permitted Property Liens
1. The Lien of this Deed of Trust;
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2. The exceptions set forth as items 1 through 12 of Schedule B - Part I
of the Proforma Title Policy;
3. The Liens being contested as permitted under Section 2.13 of this Deed
of Trust; and
4. Any and all Assigned Leases.
TABLE OF CONTENTS
Section Page
RECITALS .............................................................. 1
GRANTING CLAUSES ...................................................... 2
GRANTING CLAUSE I ............................................ 2
Land ................................................. 2
GRANTING CLAUSE II ........................................... 2
Improvements ......................................... 2
GRANTING CLAUSE III .......................................... 3
Appurtenant Rights ................................... 3
GRANTING CLAUSE IV ........................................... 3
Agreements ........................................... 3
GRANTING CLAUSE V ............................................ 3
Rents, Issues and Profits ............................ 3
GRANTING CLAUSE VI ........................................... 4
Assigned Leases ...................................... 4
GRANTING CLAUSE VII .......................................... 4
Permits .............................................. 4
GRANTING CLAUSE VIII ......................................... 4
Deposits ............................................. 4
GRANTING CLAUSE IX ........................................... 5
Proceeds and Awards .................................. 5
GRANTING CLAUSE X ............................................ 5
Further Property ..................................... 5
ARTICLE I DEFINITIONS AND INTERPRETATION ....................... 6
SECTION 1.01. Definitions ................................... 6
SECTION 1.02. Interpretation ................................ 12
ARTICLE II CERTAIN WARRANTIES AND COVENANTS OF THE TRUSTOR ...... 13
SECTION 2.01. Authority and Effectiveness ................... 13
SECTION 2.02. Title and Further Assurances .................. 13
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SECTION 2.03. Secured Obligations ........................... 14
SECTION 2.04. Impositions ................................... 14
SECTION 2.05. Deposits for Impositions or Insurance Premiums 14
SECTION 2.06. Legal and Insurance Requirements .............. 15
SECTION 2.07. Status and Care of the Properties ............. 16
SECTION 2.08. Alterations ................................... 21
SECTION 2.09. Agreements .................................... 23
SECTION 2.10. Management and Leasing ........................ 24
SECTION 2.11. Transfer ...................................... 26
SECTION 2.12. Liens ......................................... 26
SECTION 2.13. Permitted Contests ............................ 27
ARTICLE III INSURANCE, CASUALTY AND CONDEMNATION ................. 27
SECTION 3.01. Insurance ..................................... 27
SECTION 3.02. Casualty ...................................... 30
SECTION 3.03. Insurance Claims and Proceeds ................. 31
SECTION 3.04. Condemnation .................................. 31
SECTION 3.05. Condemnation Proceedings and Awards ........... 31
SECTION 3.06. Conditions to Using Proceeds .................. 32
ARTICLE IV ADDITIONAL ADVANCES, EXPENSES AND INDEMNIFICATION .... 33
SECTION 4.01. Additional Advances ........................... 33
SECTION 4.02. Interest After Default ........................ 33
SECTION 4.03. Expenses ...................................... 33
SECTION 4.04. Indemnification ............................... 33
SECTION 4.05. Increased Costs ............................... 33
SECTION 4.06. Notice Limiting Amount ........................ 34
ARTICLE V DEFAULTS, REMEDIES AND RIGHTS ........................ 34
SECTION 5.01. Event of Default .............................. 34
SECTION 5.02. Remedies ...................................... 34
SECTION 5.03. Foreclosure by Power of Sale .................. 36
SECTION 5.04. Rescission of Notice of Default ............... 37
SECTION 5.05. Appointment of Receiver ....................... 37
SECTION 5.06. Remedies Not Exclusive; Waiver ................ 37
SECTION 5.07. Request for Notice ............................ 38
SECTION 5.08. Inspection Fee ................................ 38
SECTION 5.09. Rent from the Trustor ......................... 38
SECTION 5.10. Right of Entry ................................ 38
SECTION 5.11. Right to Perform Obligations .................. 39
SECTION 5.12. Right to Make Claims .......................... 39
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ARTICLE VI ASSIGNMENT OF RENTS, SECURITY AGREEMENT AND
FIXTURE FILING................................................ 40
SECTION 6.01. Assignment of Rents ........................... 40
SECTION 6.02. Security Agreement ............................ 42
SECTION 6.03. Fixture Filing ................................ 43
ARTICLE VII MISCELLANEOUS ........................................ 44
SECTION 7.01. Beneficiary as the Agent ...................... 44
SECTION 7.02. Trustee ....................................... 44
SECTION 7.03. Notices ....................................... 46
SECTION 7.04. Release of Trust Property ..................... 47
SECTION 7.05. Modification and Waiver ....................... 47
SECTION 7.06. Severability .................................. 48
SECTION 7.07. Binding Effect ................................ 48
SECTION 7.08. Not Assignable ................................ 48
SECTION 7.09. GOVERNING LAW ................................. 48
SECTION 7.10. Waiver of Jury Trial .......................... 49
SECTION 7.11. Inconsistencies; Counterparts ................. 49
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LIST OF EXHIBITS
EXHIBIT A - Description of the Land .................................... A-1
EXHIBIT B - Material Lease Subordination and Nondisturbance Provisions.. B-1
EXHIBIT C - Permitted Property Liens ................................... C-1
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EXHIBIT C-7
UNSECURED ENVIRONMENTAL INDEMNITY AGREEMENT
THIS UNSECURED ENVIRONMENTAL INDEMNITY AGREEMENT ("Agreement")
is made as of April 11, 1996, by CADENCE DESIGN SYSTEMS, INC., a Delaware
corporation (the "Indemnitor"), in favor of CREDIT LYONNAIS, New York Branch
("Credit Lyonnais"), not in its individual capacity but in its limited capacity
as Agent for the benefit of the Lenders. Unless the context requires otherwise,
capitalized terms are defined in, or by reference in, Section 1 hereof.
RECITALS
A. Concurrently herewith, a certain Revolving Credit
Agreement of even date herewith (the "Credit Agreement") will be executed and
delivered by the Indemnitor, the financial institutions from time to time party
thereto as Lenders, and Credit Lyonnais, as a Lender and as Agent for the
Lenders.
B. Pursuant to the Credit Agreement, the Indemnitor has
agreed to, among other things, execute and deliver this Agreement.
C. The Indemnitor and certain of its subsidiaries have
executed certain other Loan Documents in order to evidence and secure the
Advances, including a Deed of Trust, Assignment, Assignment of Leases and Rents,
Security Agreement and Fixture Filing, of even date herewith, executed by the
Indemnitor, as trustor, to First American Title Insurance Company, as trustee,
in favor of Agent, as beneficiary, encumbering all of the Indemnitor's right,
title and interest in and to the Property located in San Jose, Santa Clara
County, California (the "Deed of Trust").
D. The Deed of Trust contains covenants of the Indemnitor
regarding Hazardous Materials affecting the Property and the Other Property on
or before the Lien Termination Date, none of which covenants is effective after
the Lien Termination Date.
E. Except with respect to certain representations and
warranties of the Indemnitor, which shall be effective as of the date hereof as
specified in Section 2 hereof, this Agreement shall become effective on and
after the Lien Termination Date and is not secured by the Deed of Trust or any
other Loan Document.
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AGREEMENT
FOR VALUABLE CONSIDERATION, the receipt and adequacy of which
are hereby acknowledged, the Indemnitor hereby agrees as follows:
1. (a) DEFINITIONS. The following terms have the meanings
ascribed to them below for purposes of this Agreement:
"ADVANCES" is defined in the Credit Agreement.
"AGENT" is defined in the Credit Agreement.
"AGREEMENT" is defined in the Preamble.
"CERCLA" is defined in the Deed of Trust.
"CONDITIONS" is defined in Section 2(a) hereof.
"CREDIT AGREEMENT" is defined in the Recitals.
"DEED OF TRUST" is defined in the Recitals.
"DEFAULT INTEREST RATE" means the fluctuating interest rate per
annum described in Section 2.7(c) of the Credit Agreement.
"ENVIRONMENTAL LAWS" is defined in the Credit Agreement.
"ENVIRONMENTAL LIEN" is defined in the Deed of Trust.
"ENVIRONMENTAL NONCOMPLIANCE" is defined in the Deed of Trust.
"GOVERNMENTAL AUTHORITY" is defined in the Credit Agreement.
"HAZARDOUS MATERIALS" is defined in the Credit Agreement.
"INDEMNIFIED MATTERS" is defined in Section 3(a) hereof.
"INDEMNIFIED PARTIES" means and includes the Lenders and the
Agent, their respective parent, subsidiary and affiliated companies,
assignees of any interest of a Lender in any of the Advances or the
Loan Documents, owners of participation or other interests in the
Advances or the Loan Documents, any purchasers of the Property at any
foreclosure sale or from the Agent, or any Lender or any of their
respective affiliates, and
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the officers, directors, employees, attorneys, advisors, agents,
successors and assigns of each of them.
"INDEMNITOR" is defined in the Preamble.
"LEGAL REQUIREMENTS" is defined in the Deed of Trust.
"LENDER" is defined in the Credit Agreement.
"LIEN TERMINATION DATE" means the date of the earliest to occur
of: (i) the reconveyance of the Deed of Trust; (ii) the acceptance by
the Agent (or its successor in interest) of a deed in lieu of
foreclosure with respect to the Deed of Trust; or (iii) the foreclosure
of the Deed of Trust, whether by judicial or non-judicial foreclosure.
"LOAN DOCUMENTS" is defined in the Credit Agreement.
"OTHER PROPERTY" means any property, other than the Property,
to which Hazardous Materials originating on the Property have migrated.
"PROPERTY" means all real property that is or was at any time
encumbered by the Deed of Trust, which may at a future date include any
and all real property released from the lien of the Deed of Trust.
"REMEDIAL WORK" is defined in the Deed of Trust.
(b) INTERPRETATION. In this Agreement, unless
otherwise specified, (i) singular words include the plural and plural words
include the singular; (ii) words which include a number of constituent parts,
things or elements, such as the terms Indemnified Parties and Property, shall be
construed as referring separately to each constituent part, thing or element
thereof, as well as to all of such constituent parts, things or elements as a
whole; (iii) references to any person or entity include such person's or
entity's successors and assigns; (iv) references to any statute or other law
include all applicable rules, regulations and orders adopted or made thereunder
and all statutes or other laws amending, supplementing, consolidating, replacing
or otherwise modifying the statute or law referred to; (v) references to any
agreement or other document include all subsequent amendments, supplements,
consolidations, replacements, extensions, renewals or other modifications
thereof to the extent that such amendments, supplements, consolidations,
replacements, extensions, renewals and modifications are not prohibited by any
of the Loan Documents; (vi) the words "include" and "including," and words of
similar import, shall be deemed to be followed by the words "without
limitation"; (vii) the words "hereto," "herein," "hereof" and "hereunder," and
words of similar import, refer to this Agreement in its entirety; (viii) the
titles and headings of Sections and paragraphs are inserted as a matter of
convenience and shall not affect the construction of this Agreement; and (ix) no
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inference in favor of or against any person or entity shall be drawn from the
fact that such person or entity, or its attorneys, drafted any portion hereof.
(c) PURPOSE. The purpose of this Agreement is to
protect the Indemnified Parties following the Lien Termination Date from the
costs and obligations related to Hazardous Materials on, under, or about the
Property and/or Other Property (including liability as an "owner or operator"
under CERCLA) to the same extent as the protections provided under the analogous
provisions of the Credit Agreement and Deed of Trust. The obligations of the
Indemnitor hereunder are not related to any principal amount of the credit
facility under the Credit Agreement or to any covenants and obligations set
forth in the Loan Documents but only to the liability and costs of Remedial Work
or other costs related to or arising from Hazardous Materials on, under, about
or affecting the Property and/or Other Property to which the Indemnified Parties
might become subject following the Lien Termination Date.
2. REPRESENTATIONS AND WARRANTIES. The Indemnitor represents,
warrants, acknowledges and agrees that, except as disclosed in the Credit
Agreement, Deed of Trust, and Schedule 1 attached hereto, (x) as of the date
hereof with respect to subsections (a), (b), (c) and (d) of this Section 2, and
(y) as of the Lien Termination Date with respect to subsections (e) and (f) of
this Section 2:
(a) The Indemnitor (i) has not received notice or
otherwise learned of any claim, demand, action, event, condition, information,
report, inquiry, proceeding or investigation (or threat of any of the foregoing)
(collectively, "Conditions") (including third party claims and Conditions under
CERCLA or any analogous or similar state law) indicating or concerning any
potential or actual liability of the Indemnitor (including for contribution,
damage, cost recovery, loss, injury, assessment, containment, remediation,
response or removal) arising in connection with (A) any Environmental
Noncompliance or (B) the use, generation, manufacture, production, storage,
discharge, disposal, transport, presence, handling, release or threatened
release of any Hazardous Materials into the environment, including migration
thereof to or from the Property and including any matter which the Indemnitor
would have a duty to report to a Governmental Authority under CERCLA or any
analogous state law or any other Environmental Law, and (ii) has no threatened
or actual liability in connection with the release or threatened release of any
Hazardous Material into the environment; and (iii) has not received notice or
otherwise learned of any federal, state or other investigation evaluating
whether any remedial action is needed to respond to any release or threatened
release of any Hazardous Material into the environment for which the Indemnitor
may be liable.
(b) The Indemnitor is not subject to any financial
assurance requirements of any applicable Environmental Law, including those
contained in 40 C.F.R. Parts 264 and 265, Subps. H, or any state law equivalents
or those promulgated pursuant to 42 U.S.C. 6991b(c)(6) or any state law
equivalents.
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(c) The Indemnitor has not filed any notice under
any Legal Requirements (i) indicating past or present treatment, storage or
disposal of a hazardous waste, as that term is defined under 40 C.F.R. Part 261
or any state law equivalent thereof, or (ii) reporting a release of any
Hazardous Material into the environment.
(d) The Indemnitor has not received notice or
otherwise learned of any occurrence or condition on any real property adjoining
or in the vicinity of the Property that is likely to cause the Property or any
part thereof to be subject to any material restrictions on the ownership,
occupancy, transferability or use of the Property under any applicable
Environmental Law.
(e) The Indemnitor has not undertaken, permitted
or authorized the use, generation, manufacture, production, storage, release,
discharge, disposal, placement or handling of any Hazardous Material
(collectively, "managed") on, under, from or about the Property or the
transportation to or from the Property of any Hazardous Material, nor allowed or
suffered any other person or entity to do so, other than such Hazardous
Materials which were managed in the ordinary course of operating the
Indemnitor's business and which were managed in accordance with applicable
Environmental Laws.
(f) The Indemnitor has kept and maintained the
Property in compliance with all applicable Environmental Laws, and has not
caused, permitted or suffered the Property to be in Environmental Noncompliance.
3. INDEMNITY. (a) The Indemnitor agrees to indemnify, defend
(with counsel approved by the Indemnified Parties ("Defense Counsel"), which
approval shall not be unreasonably withheld) and hold harmless the Indemnified
Parties from and against any and all liabilities, obligations, losses, damages,
penalties, actions, fines, judgments, suits, demands, investigations,
proceedings, claims, costs, expenses and disbursements of any kind or nature
whatsoever (including the reasonable fees and disbursements of Defense Counsel
for such Indemnified Parties in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnified Parties
shall be designated a party thereto), remedial action requirements and
enforcement actions of any kind (collectively, "Environmental Liabilities"),
imposed on, incurred by, or asserted against any such Indemnified Parties on or
after the Lien Termination Date (whether direct, indirect or consequential and
whether based on any federal or state laws or other statutory regulations, or
arising under common law or at equitable cause, or in contract or otherwise) in
any manner relating to or arising out of the use, generation, manufacture,
production, storage, discharge, treatment, removal, decontamination, clean up,
transport, disposal, release, threatened release, presence or handling of any
Hazardous Material on, under, from or about the Property, any other activity
carried on or undertaken on or off the Property, whether prior to or after the
Lien Termination Date, and whether by the Indemnitor or any predecessor in
title or any employee, agent, contractor or subcontractor of the Indemnitor or
any predecessor in title, or any third person at any time occupying or present
on the Property, in connection with the handling, use, generation, manufacture,
production, discharge, release,
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threatened release, presence, treatment, removal, storage, decontamination,
clean up, transport or disposal of any Hazardous Material at any time located or
present on, under, from or about the Property (collectively, "Hazardous Material
Activities"), including: (i) the costs of any Remedial Work, including costs
incurred by the United States government or any state, or response costs
incurred by any other person or entity, or damages from injury to, destruction
of, or loss of natural resources, and (ii) liability for personal injury or
property damage arising under any statutory or common-law tort theory, including
damages assessed for the maintenance of a public or private nuisance, response
costs or for the carrying on of an abnormally dangerous activity (collectively,
the "Indemnified Matters"); provided that the Indemnitor shall have no
obligation to an Indemnified Party hereunder with respect to Indemnified Matters
resulting directly from the gross negligence or willful misconduct of that
Indemnified Party, as finally determined by a court of competent jurisdiction.
To the extent that the undertaking to indemnify, pay, defend and hold harmless
set forth in the preceding sentence may be unenforceable because it violates any
law or public policy, the Indemnitor shall contribute the maximum portion which
it is permitted to pay and satisfy under applicable law to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnified Parties.
(b) The foregoing indemnity shall further apply to
any residual contamination resulting from Hazardous Materials Activities which
remains on, under, from or about the Property or Other Property, or affecting
any natural resources and irrespective of whether any of such Hazardous
Materials Activities were or will be undertaken in accordance with applicable
Environmental Laws or other applicable laws, regulations, codes and ordinances.
This indemnity is intended to be operable under 42 U.S.C. Section 9607(e)(1).
(c) The foregoing indemnity shall in no manner be
construed to limit or adversely affect the Agent's rights under this Agreement,
including the Agent's right to approve any Remedial Work and the contractors and
consulting engineers retained in connection therewith.
4. OBLIGATIONS OF THE INDEMNITOR. Following the Lien
Termination Date:
(a) The Indemnitor shall notify the Agent, in
writing, promptly upon receiving notice or otherwise learning of any Conditions
(including third party claims and Conditions under CERCLA or any analogous or
similar state law) indicating any potential or actual liability arising in
connection with: (i) any Environmental Noncompliance, (ii) the use, generation,
manufacture, production, storage, discharge, disposal, transport, presence,
handling, release or threatened release of any Hazardous Material into the
environment, including migration thereof to or from the Property and including
any matter which Indemnitor would have a duty to report to a Governmental
Authority under CERCLA or any analogous state law or any other Environmental
Law, or (iii) the existence of any Environmental Lien on the Property. The
Indemnitor shall notify the Agent, in writing, promptly upon receiving notice or
otherwise learning of any occurrence or condition on any real property adjoining
or in the vicinity of the Property that could cause the Property or any part
thereof to be subject to any material
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restrictions on the ownership, occupancy, transferability or use of the Property
under any Environmental Law, or to be otherwise subject to any material
restrictions on the ownership, occupancy, transferability or use of the Property
under any Environmental Law.
(b) In the event that any Remedial Work is
reasonably necessary or required to be performed under any applicable local,
state or federal law or regulation, any judicial order, or by any Governmental
Authority with respect to any of the Indemnified Matters, the Indemnitor shall
diligently prosecute to completion such Remedial Work on or before the later of
(i) the date that is ninety (90) days after written demand for performance
thereof by the Agent, or (ii) the date by which completion of such Remedial Work
is required by a Governmental Authority. All such Remedial Work shall be at the
Indemnitor's sole expense in accordance with the requirements of any applicable
Governmental Authority. All Remedial Work shall be performed by one or more
contractors, approved in advance in writing by the Agent, and under the
supervision of a consulting engineer approved in advance in writing by the Agent
(which approvals shall not be unreasonably withheld). While such Remedial Work
is continuing, the Indemnitor shall, at least once every thirty (30) days (as
applicable), provide the Agent with a written report, in reasonable detail, of
the progress of such Remedial Work. All costs and expenses of such Remedial Work
shall be paid by the Indemnitor, including the charges of such contractor(s)
and/or the consulting engineer and the Agent's reasonable attorneys' fees and
costs incurred in connection with monitoring or the review of such Remedial
Work.
5. AGENT'S RIGHTS
(a) In the event that the Indemnitor does not
perform all of its obligations hereunder in a timely fashion, or in the event
that the Agent reasonably believes that there may have been a violation by the
Indemnitor of any applicable Environmental Law regarding the Property or that
there may be a violation or threatened violation by the Indemnitor of any
provision of this Agreement, which in the Agent's reasonable judgment, would
individually or in the aggregate likely result in an Environmental
Noncompliance, the Agent is authorized, but not obligated, by itself, its
agents, employees or workmen to enter at any reasonable time after reasonable
notice to the Indemnitor upon any part of the Property for the purposes of
inspecting the same for Hazardous Material and confirming the Indemnitor's
compliance with this Agreement, and such inspections may include soil borings
and groundwater testing; provided, however, that such inspection by the Agent
shall not unreasonably interfere with the Indemnitor's business operations. The
Indemnitor agrees to pay to the Agent, upon demand, all reasonable expenses,
costs or other amounts incurred by the Agent in performing any inspection for
the purposes set forth in this Section 5(a).
(b) The Agent shall have the right, but not the
obligation, to join and participate in, as a party if it so elects, any legal
proceeding or action concerning the Property initiated in connection with any
Environmental Law and to have its reasonable attorneys' fees in connection
therewith paid by the Indemnitor or to be defended by the Indemnitor from and
against any such proceeding or action with counsel chosen by it, and shall have
the right to make
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inquiry of and disclose all information to appropriate Governmental Authorities
when advised by counsel with appropriate expertise that such disclosure may be
required under applicable law.
(c) In the event that the Indemnitor shall fail to
timely commence, or cause to be commenced, or fail to complete expeditiously the
Remedial Work described in Section 4 hereof, the Agent may, but shall not be
required to, cause such Remedial Work to be performed. Any action taken by the
Agent pursuant to this subsection (c), and all reasonable costs and expenses
thereof or incurred in connection therewith, shall be covered by the indemnity
given by the Indemnitor to the Agent in Section 3 hereof. The Agent shall have
no liability to the Indemnitor for any actions taken in good faith pursuant to
this subsection (c), except that the Agent shall not be indemnified against and
shall be liable for the Agent's gross negligence or willful misconduct. In the
event that any amount due from the Indemnitor to the Agent pursuant to this
subsection (c) is not paid when due and actually expended by the Agent, provided
the Agent has given Indemnitor reasonable advance notice of the due date and
amount due together with copies of pertinent invoices and supporting
documentation, the Indemnitor shall pay the Agent interest thereon from the date
of demand until paid at the Default Interest Rate.
(d) Prior to commencing any Remedial Work
described in Section 4 hereof, or prior to entering into any settlement, consent
or compromise with regard to any Hazardous Material on, under, from or about the
Property, the Indemnitor shall obtain the Agent's written approval, which shall
not be unreasonably withheld, provided, however, that such prior approval shall
not be necessary if: (i) the presence or release of any Hazardous Material on,
under, from or about the Property either poses an immediate threat to the
health, safety or welfare of any individual or is of such a nature that an
immediate remedial response is necessary and it is not possible to obtain the
Agent's written approval before taking such action, provided, that in such
event, the Indemnitor shall notify the Agent as soon as practicable of any
action so taken; (ii) a particular Remedial Work is ordered by a court or
regulatory agency of competent jurisdiction, or (iii) the Indemnitor establishes
to the reasonable satisfaction of the Agent that there is no reasonable
alternative to such Remedial Work.
(e) In the event that any amount due from the
Indemnitor to the Agent hereunder is not paid when due and actually expended by
the Agent, provided the Agent has given Indemnitor reasonable advance notice of
the due date and amount due together with copies of pertinent invoices and
supporting documentation, the Indemnitor shall pay the Agent interest thereon
from the date of demand until paid at the Default Interest Rate.
(f) Any action taken by the Agent pursuant to
subsections (a), (b) and (c) of this Section 5, and all costs and expenses
thereof or incurred in connection therewith, shall be covered by the indemnity
given by the Indemnitor to the Agent in Section 3 hereof. The Agent shall have
no liability to the Indemnitor for any actions taken in good faith pursuant to
subsections (a), (b) and (c) of this Section 5, except that the Agent shall not
be indemnified against and shall be liable for the Agent's gross negligence or
willful misconduct.
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(g) The rights of the Agent specified in this
Section 5 are intended to be cumulative with all other rights which the Agent
may have at law or in equity. The election of the Agent to pursue a right
granted in this Section 5 shall not be deemed an election to waive or forego any
such rights at law or in equity.
6. MISCELLANEOUS.
(a) This Agreement contains the entire agreement
between the parties with respect to the subject matter hereof and may be amended
solely by an agreement in writing executed by the parties hereto.
(b) THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, EXCLUDING
PRINCIPLES OF CONFLICT OF LAWS.
(c) In the event of any controversy, claim or
dispute arising from this Agreement or the interpretation hereof, the prevailing
party shall be entitled to recover from the non-prevailing party the costs and
expenses of the prevailing party in such controversy, claim or dispute,
including its actual expenses for attorneys, accountants, experts and others.
(d) This Agreement shall be binding upon and inure
to the benefit of the successors and assigns of the parties hereto. No transfer
of an interest in the Property or this Agreement by the Indemnitor shall operate
to relieve the Indemnitor of its obligations hereunder.
(e) This Agreement may be executed in any number
of counterparts, all of which when fully executed shall constitute one and the
same agreement. It shall be necessary to account for only one such fully
executed counterpart in proving this Agreement.
(f) Neither this Agreement nor any of the
provisions hereof may be changed, waived, discharged or terminated except by an
instrument in writing signed by the party against whom enforcement of the
change, waiver, discharge, or termination is sought. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver.
(g) If any term, covenant, condition or provision
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the provisions shall remain in full
force and effect and shall in no way be affected, impaired or invalidated.
(h) Unless otherwise specifically provided herein,
all notices and other communications provided for hereunder shall be in writing
(including telecopier, telegraphic, telex or cable communication) and mailed,
telecopied, telegraphed, telexed, cabled or delivered, as follows:
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(i) To Indemnitor at:
Cadence Design Systems, Inc.
2655 Seely Road
San Jose, California 95134
Attention: Treasurer
Telecopy No.: (408) 894-2794
With a copy to:
Gray Cary Ware Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301-1825
Attention: Lawrence A. Cogan, Esq.
Telecopy No.: (415) 328-3029
(ii) To Agent at:
CREDIT LYONNAIS, New York Branch
1301 Avenue of the Americas
New York, New York 10019
Attention: Syndications Group
Telecopy No.: (212) 459-3176
With a copy to:
LATHAM & WATKINS
633 West Fifth Street, Suite 4000
Los Angeles, California 90071
Attention: Hendrik de Jong, Esq.
Telecopy No.: (213) 891-8763
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall be effective when received.
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IN WITNESS WHEREOF, the Indemnitor has executed this Agreement
as of the date first above written.
INDEMNITOR:
CADENCE DESIGN SYSTEMS, INC.,
a Delaware corporation
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
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SCHEDULE 1
ENVIRONMENTAL MATTERS
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EXHIBIT D-1
April 11, 1996
1030633-900300
Credit Lyonnais, New York Branch, as Lender and as Agent
1301 Avenue of the Americas, 18th Floor
New York, New York 10019
and
Each of the other Lenders listed on Exhibit A hereto
Re: Cadence Design Systems, Inc.
Ladies and Gentlemen:
We have acted as special counsel for Cadence Design Systems, Inc., a
Delaware corporation ("Borrower"), in connection with that certain Revolving
Credit Agreement dated as of even date herewith, including all exhibits and
schedules thereto (the "Credit Agreement") among Borrower, the lenders named
therein ("Lenders") and Credit Lyonnais, a bank organized under the laws of the
Republic of France, acting through its New York Branch as Agent for the Lenders
("Agent"). We have also acted as special counsel to each of Seeley Properties,
Inc., a California corporation ("Seeley") and River Oaks Place Associates, L.P.,
a California limited partnership ("ROPA", and together with Seeley,
"Guarantors"), each of which is a direct wholly-owned Subsidiary of Borrower, in
connection with that certain Guaranty among the Guarantors and the Agent (the
"Guaranty"). We are rendering this opinion pursuant to Section 3.1(f) of the
Credit Agreement. Except as otherwise defined herein, capitalized terms used but
not defined herein shall have the meanings given to them in the Credit
Agreement.
In connection with this opinion, we have examined the following
documents (the items referred to in clauses 1 through 6 below are referenced to
herein as the "Loan Documents"):
1. The Credit Agreement;
2. The Pledge and Security Agreement;
3. The Guaranty;
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4. The Intellectual Property Assignment;
5. The Deed of Trust, Assignment, Assignment of Leases and Rents,
Security Agreement and Fixture Filing naming Borrower as
Trustor and Agent as Beneficiary regarding the Seeley Campus
(the "Deed of Trust");
6. The Unsecured Environmental Indemnity Agreement executed by
Borrower in favor of the Agent (the "Environmental Indemnity");
7. UCC-1 financing statements for filing with the Secretary of
State of California naming Borrower as debtor and Agent as
secured party, and naming each Guarantor as debtor and Agent as
secured party (the "Financing Statements");
8. UCC-1 financing statement for filing with the Santa Clara,
California County Recorder, naming Borrower as debtor and
Agent as secured party regarding the Fixtures (the "Fixture
Filing");
9. Certificate of Incorporation and Bylaws of Borrower, certified
by the secretary of Borrower;
10. Articles of Incorporation and Bylaws of Seeley, certified by
the secretary of Seeley;
11. Agreement of Limited Partnership of ROPA, certified by the
general partner of ROPA;
12. An officer's certificate of Borrower, a copy of which is
attached as Exhibit B hereto (the "Borrower's Certificate"),
and an officer's certificate of the Guarantors, a copy of which
is attached as Exhibit C hereto (the "Guarantors'
Certificate").
In addition, we have examined and relied upon originals or copies
certified to our satisfaction of such records, documents, certificates,
opinions, memoranda and other instruments as in our judgment are necessary or
appropriate to enable us to render the opinions expressed below, including the
Borrower's Certificate and the Guarantors' Certificate.
We are admitted to practice law only in the State of California, and we
express no opinion concerning any law other than the law of the State of
California, the Delaware General Corporation Law, and the law of the United
States of America.
In rendering this opinion, we have assumed the genuineness and
authenticity of all signatures (other than that of Borrower and each Guarantor)
on original documents; that all natural persons who are signatories are legally
competent to execute and deliver such documents; the authenticity and
completeness of all documents submitted to us as originals; the conformity of
originals to all documents submitted to us as copies; the accuracy, completeness
and authenticity of certificates of public officials; the due authorization,
execution and delivery of all documents (except the due authorization, execution
and delivery by Borrower and the Guarantors of the Loan Documents to which they
are respectively parties) where authorization, execution and delivery are
prerequisites to the effectiveness of such documents; the power and authority of
the Agent and the Lenders to enter into and perform their obligations under the
Loan Documents; that each of the Loan Documents has been duly executed by the
Agent and the Lenders and delivered to Borrower and is the legal, valid and
binding obligation of the Agent and the Lenders, enforceable against those
parties in accordance with their terms; that the Agent and the Lenders
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are duly qualified in the State of California to do business of the type
contemplated by the Loan Documents; that each Lender qualifies for an exemption
from the otherwise applicable interest rate limitations of California law for
loans or forbearances contained in Article XV, Section 1 of the California
Constitution; that all loans under the Loan Documents will be made by the
Lenders for their own account or for the account of another person or entity
that qualifies for an exemption from the interest rate limitations of California
law, and there is no present agreement or plan, express or implied, on the part
of any Lender to sell participations or any other interest in the loans to be
made under the Loan Documents to any person or entity other than a person or
entity that also qualifies for an exemption from the interest rate limitations
of California law; that except for the Loan Documents, there are no documents or
agreements between the parties which would expand or otherwise modify the
respective rights and obligations of the parties set forth in the Loan
Documents; and with respect to matters of fact (as distinguished from matters of
law), with your permission and without verification by us, we also have relied
upon and assumed that the representations of Borrower, each Guarantor and the
other parties set forth in the Loan Documents, the Borrower's Certificate, the
Guarantors' Certificate and any other certificates, instruments or agreements
executed in connection therewith or delivered to us are true, correct, complete
and not misleading. We have made no independent investigation of any such facts
stated in any such certificate or representation.
Where we render an opinion "to the best of our knowledge" or concerning
an item "known to us" or our opinion otherwise refers to our knowledge, it is
intended to indicate that during the course of our representation of Borrower
and the Guarantors in connection with the Loan Documents, no information that
would give us current actual knowledge of the inaccuracy of such statement has
come to the attention of those attorneys in this firm who have rendered or are
rendering legal services to Borrower and Guarantors in connection with the Loan
Documents. However, except as otherwise expressly indicated, we have not
undertaken any independent investigation to determine the accuracy of such
statement and any limited inquiry undertaken by us during the preparation of
this opinion letter should not be regarded as such an investigation; no
inference as to our knowledge of any matters bearing on the accuracy of any such
statement should be drawn from the fact of our representation of Borrower and
Guarantors.
With respect to our opinion in paragraph 4 below, we have relied solely
upon copies, supplied to us by Borrower, of those undertakings, contracts,
indentures, mortgages, deeds of trust or other instruments, documents or
agreements which have been identified to us by Borrower in the Borrower's
Certificate as all certificates, instruments, agreements and documents listed on
the Index to Form 10-K Exhibits to the Borrower's Annual Report on Form 10-K for
the fiscal year ending December 31, 1995 (the "Borrower Material Contracts"). We
have not undertaken any independent investigation of such matters, other than
the inquiries we have made of the officers of Borrower and the review we have
made of the corporate records of Borrower described above.
With respect to our opinion in paragraph 5 below, we have relied solely
upon copies, supplied to us by Guarantors, of those undertakings, contracts,
indentures, mortgages, deeds of trust or other instruments, documents or
agreements which have been identified to us by the
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Guarantors in the Guarantors' Certificate as all material undertakings,
contracts, indentures, mortgages, deeds of trust or other instruments, documents
or agreements to which each Guarantor is a party or by which it is bound (the
"Guarantor Material Contracts"). We have not undertaken any independent
investigation of such matters, other than the inquiries we have made of the
officers of the Guarantors and the review we have made of the corporate records
of each Guarantor described above.
In rendering our opinion in the second and last sentences of paragraph
1, we have relied solely on a certificate of good standing from each of the
Secretary of State's office of each of the states specified in that paragraph.
On the basis of the foregoing, and subject to the qualifications stated
below, we are of the opinion that:
1. Borrower is a corporation, duly incorporated and validly existing
under the laws of Delaware and has the requisite corporate power and authority
to own its property and to conduct the business in which it is currently
engaged. Borrower is duly qualified and in good standing as a foreign
corporation authorized to transact business in California and in each of the
states listed below its name on Exhibit D. Seeley is a corporation, duly
incorporated and validly existing under the laws of California and has the
requisite corporate powers and authority to its business and to conduct the
business in which it is currently engaged. ROPA is a limited partnership, duly
organized and validly existing in California. Each Guarantor is duly qualified
and in good standing as a foreign corporation in each of the states listed
below its name on Exhibit D.
2. Borrower and each Guarantor has taken all necessary and appropriate
corporate or partnership action to authorize the execution, delivery and
performance of the Loan Documents to which it is respectively a party and has
the corporate or partnership power and authority to execute, deliver and perform
the Loan Documents to which it is respectively a party.
3. The Credit Agreement, the Pledge and Security Agreement and the
Intellectual Property Assignment have been duly executed and delivered by
Borrower. The Guaranty and the Pledge and Security Agreement have been duly
executed and delivered by each Guarantor. The Credit Agreement, the Pledge and
Security Agreement, and the Intellectual Property Assignment each constitutes a
legal, valid and binding obligation of Borrower, enforceable against Borrower
in accordance with its respective terms. The Guaranty and the Pledge and
Security Agreement each constitute a legal, valid and binding obligation of
each Guarantor, enforceable against each Guarantor in accordance with its
respective terms.
4. The execution, delivery and performance by Borrower of the Loan
Documents to which it is a party do not (a) to the best of our knowledge,
violate or contravene any order of any court or United States or California
governmental agency as presently in effect applicable to Borrower; (b) violate
or contravene any United States or California law presently in effect and
applicable to
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Borrower; (c) conflict with or result in a breach of or constitute a default
under the Certificate of Incorporation or Bylaws of Borrower; (d) to the best of
our knowledge, violate or result in a breach of or constitute any default under
any of the Borrower Material Contracts; and (e) result in or require the
creation or imposition of any lien on any of Borrower's properties pursuant to
any order of any court or United States or California governmental agency as
presently in effect applicable to Borrower or any of the Borrower Material
Contracts, other than the liens created pursuant to the Loan Documents.
5. The execution, delivery and performance by each Guarantor of the
Loan Documents to which it is a party do not (a) to the best of our knowledge,
violate or contravene any order of any court or United States or California
governmental agency as presently in effect applicable to either Guarantor; (b)
violate or contravene any United States or California law presently in effect
and applicable to either Guarantor; (c) conflict with, or result in a breach of,
or constitute a default under (i) the Articles of Incorporation or Bylaws of
Seeley or (ii) Agreement of Limited Partnership of ROPA; (d) to the best of our
knowledge, violate or result in a breach of, or constitute any default under,
any of the Guarantor Material Contracts; and (e) result in, or require the
creation or imposition of, any lien on any of either Guarantor's properties
pursuant to any order of any court or United States or California governmental
agency as presently in effect applicable to either Guarantor or any of the
Guarantor Material Contracts, other than the liens created pursuant to the Loan
Documents.
6. No authorization, consent, approval, license, qualification or
formal exemption from, nor notice to, nor any filing, recordation, declaration
or registration with, any United States or California governmental authority is
necessary or required on the part of Borrower or any Guarantor in connection
with the execution, delivery, or performance by Borrower or any Guarantor of the
Loan Documents to which they respectively are parties, except for such filings
or recordations as may be necessary to perfect the security interests or liens
granted by the Loan Documents.
7. To the best of our knowledge, there is no action, suit or
proceeding at law or in equity by or before any court or governmental agency
now pending against Borrower with respect to the Loan Documents to which it is
a party.
8. To the best of our knowledge, there is no action, suit or
proceeding at law or in equity by or before any court or governmental agency
threatened against any Guarantor with respect to the Loan Documents to which
it is a party.
9. Upon the due execution by Borrower and each Guarantor, and the
proper filing of the Financing Statements in the Office of the Secretary of
State of California (assuming that the representations made by Borrower and by
each Guarantor with respect to the location of the Collateral, its place of
business and chief executive office are and remain true and correct) the
security interests granted by Borrower and by each Guarantor under the Pledge
and Security Agreement in and to such Collateral will constitute perfected
security interests therein to the extent that security interests in such
Collateral may be perfected by filing a financing statement
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under Division 9 of the California Uniform Commercial Code ("CUCC"). Except for
the filing of periodic continuation statements, it is not necessary under the
CUCC to re-record, re-register or refile a UCC-1 financing statement, or to
record, register or file any other or additional documents, instruments or
statements in order to maintain perfection of the security interests in any such
Collateral granted in favor of the Agent, except that additional financing
statements may be required to be filed if Borrower changes its name, identity or
corporate structure so as to make a financing statement seriously misleading
(unless new appropriate financing statements indicating the new name, identity
or corporate structure are duly filed), or if there is any change in the
location of its chief executive office or chief place of business or the state
in which any of the Collateral is located.
10. Neither Borrower nor either Guarantor is an "investment company"
or a company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
11. To the best of our knowledge, neither Borrower nor either
Guarantor is generally engaged in the business of purchasing or selling Margin
Stock (within the meaning of Regulation G of the Board of Governors of the
Federal Reserve System) or extending credit for the purpose of purchasing or
carrying Margin Stock. To the best of our knowledge, no proceeds of any Advance
will be used for any purpose that requires any Lender to deliver or obtain any
certification under, or to comply with any margin requirements or other
provision of, Regulations G, T, V or X of the Board of Governors of the Federal
Reserve System.
12. The Deed of Trust and the Environmental Indemnity have been duly
executed and delivered by Borrower. The Deed of Trust and the Environmental
Indemnity each constitutes the legal, valid and binding obligation of Borrower
and is enforceable against Borrower in accordance with their respective terms
except to the extent certain rights, remedies, and waivers contained in the Deed
of Trust may be limited or rendered ineffective by applicable laws and judicial
decisions governing such provisions. Such laws and decisions do not, however,
subject to the other exceptions and limitations of this opinion letter, render
the Deed of Trust invalid as a whole, and there exist, in the Deed of Trust or
pursuant to applicable law, legally adequate remedies for the realization of the
principal benefits and/or security intended to be provided by the Deed of Trust.
13. The Deed of Trust and the Fixture Filing are in forms sufficient
to create in favor of the Agent a valid security interest in the Fixtures in
favor of the Agent. The proper and timely recording of the Deed of Trust and the
Fixture Filing in the Office of the Recorder of Santa Clara County, California
are sufficient in order to perfect the security interest in the Fixtures in
favor of the Agent to the extent that security interests in such Fixtures may be
perfected by filing a Fixture Filing under division 9 of the CUCC.
The opinions expressed in this letter are subject to the following
qualifications:
a. The effects of bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium, or other similar laws now or hereafter in effect
limiting the validity or enforceability of creditor's rights and remedies
generally.
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b. The effects of general principles of equity, regardless of whether
considered in proceedings in equity or at law.
c. The covenant of good faith and fair dealing implied in every
agreement under common law (and to similar provisions of federal law, where
applicable).
d. The effect of any law or legal principle which provides that a
court may refuse to enforce, or may limit the application of, a contract or
any clause thereof which the court finds as a matter of law to have been
unconscionable at the time it was made, or the enforcement thereof would be
contrary to public policy.
e. The unenforceability of provisions under certain circumstances,
under California or federal law or court decisions (i) releasing or exonerating
a party from liability, or limiting the liability of a party, for wrongful or
negligent acts, or (ii) indemnifying a party to the extent that the events
giving rise to the indemnity arise in whole or in part from the wrongful or
negligent acts of the indemnitee, or (iii) where such release or indemnification
is contrary to public policy, including but not limited to indemnification
and/or release relating to any issues of securities laws.
f. The effect of California Civil Code Section 1717 and other
applicable statutes and judicial decisions which provide, among other things,
that a court may limit the granting of attorneys' fees to those attorneys'
fees which are determined by the court to be reasonable and that attorneys'
fees may be granted only to a prevailing party and that a contractual
provision for attorneys' fees is deemed to extend to both parties
(notwithstanding that such provision by its express terms benefits only one
party).
g. The effect of any California or federal law or court decisions that
requires a lender to enforce its remedies in a commercially reasonable manner.
h. The effect of California court decisions invoking statutes or
principles of equity which have held that certain covenants and provisions of
agreements are unenforceable where (i) the breach of such covenants or
provisions imposes restrictions or burdens upon the debtor, including the
acceleration of indebtedness due under debt instruments, and it cannot be
demonstrated that the enforceability of such restrictions or burdens is
reasonably necessary for the protection of the creditor, or (ii) the creditor's
enforcement of such covenants or provisions under the circumstances would
violate the creditor's implied covenants of good faith and fair dealing.
i. The unenforceability under certain circumstances of contractual
provisions respecting self-help or summary remedies.
j. The enforceability of any provision in the Deed of Trust that
provides for a right of the Agent and the Lenders to enter upon any real
property, or to take rents, or to assert similar rights prior to either the
issuance of a court order pursuant to a receivership or similar proceeding, or
the occurrence of any foreclosure sale respecting the real property in question.
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k. The enforceability of any provision in the Deed of Trust that
provides for the Agent's or the Lenders' right of foreclosure against the real
property secured thereby based upon a portion of the outstanding indebtedness.
l. The enforceability of any provision in the Deed of Trust or the
Loan Documents that provides that (i) the foreclosure against the real property
results in an absolute bar against Borrower in circumstances where a judicial
foreclosure occurs and rights of redemption in favor of Borrower apply, or (ii)
Borrower's rights of redemption are waived.
m. The enforceability of the waiver of Borrower's or any Guarantor
right to assert counterclaims or other claims or defenses in a foreclosure
proceeding or other action.
n. Decisions by California courts admitting evidence extrinsic to a
written agreement between the parties thereto as evidence that the parties
intended a meaning contrary to that expressed by the parties in writing.
o. Provisions in the Loan Documents requiring Borrower or any
Guarantor to execute, in the future, additional instruments and documents may
be unenforceable.
p. Any provision in the Loan Documents that purports to require that
any action or decision of the Agent or any Lender is conclusively binding upon
Borrower or any Guarantor may be unenforceable.
q. Any provision in the Loan Documents that purports to waive, limit
or restrict the right of Borrower or any Guarantor to offset against obligations
owing under the Loan Documents may not be enforceable.
r. Those provisions in the Loan Documents imposing late charges
(interest or otherwise) and/or additional interest in the event of default are
governed by the rules relating to "liquidated damages" as set forth in
California Civil Code Sections 1671 et seq., and relevant case law (see, e.g.,
Garrett v. Coast and Southern Federal Savings & Loan, 9 Cal.3d 731 (1973)). We
express no opinion as to the effect of judicial decisions and statutes limiting
the enforceability of provisions imposing penalties, forfeitures, late payment
charges, an increase in interest rate, or payment of other additional
consideration (i) upon prepayment, late payment, maturity, default or a
lender's election to accelerate a loan, particularly in cases where the
occurrence of a default or waiving the benefit of a statutory right bears no
reasonable relation to the damage suffered by the lender or is otherwise held
to be a penalty, or (ii) as a consequence of costs incurred by the lender. The
enforceability and/or validity of such provisions may be dependent upon the
reasonableness thereof under the circumstances and therefore relate to a
question of fact rather than a question of law.
s. Any provision in the Loan Documents requiring the consent of the
Agent or the Lenders or allowing the Agent or the Lenders to take certain
actions may be interpreted by a court to
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contain an implied covenant of reasonableness and/or fair dealing (see, e.g.,
Kendall v. Pestana, 40 Cal.3d 488 (1985); Cohen v. Ratinoff, 147 Cal.App.3d 321
(1983)).
t. The unenforceability, under certain circumstances, of provisions
waiving broadly or vaguely stated rights or unknown future rights, or rights
which may not be waived on statutory or public policy grounds, or provisions
stating that rights or remedies are not exclusive, that every right or remedy is
cumulative and may be exercised in addition to, or with any other right or
remedy, or that the election of some particular remedy or remedies does not
preclude recourse to one or more others.
u. Limitations on provisions based on public policy on provisions
stating that a borrower's obligations are unaffected by reason of any default
or failure on the part of a lender to perform or comply with the terms of the
subject loan documents.
v. Except as provided in paragraph H, we express no opinion as to
the enforceability of the consent to service, jurisdiction or forum of any
claim, demand, action or cause of action arising under or related to the Loan
Documents or the transactions contemplated therein. We express no opinion as to
any provision providing for the exclusive jurisdiction of a particular court or
purporting to waive rights to trial by jury, service of process or objections
to the laying of venue or to forum on the basis of forum non conveniens in
connection with any litigation arising out of or pertaining to the Loan
Documents.
w. We express no opinion as to the enforceability of those provisions
in the Loan Documents purporting to appoint the Agent or any Lender as
attorney-in-fact for Borrower or any Guarantor or to grant an irrevocable power
of attorney to the Agent or any Lender.
x. We express no opinion as to any securities, anti-trust, tax, land
use, safety, insurance company or banking rules or regulations, or any laws,
rules or regulations applicable to the Agent or any Lender.
aa. We express no opinion as to the effect of California Civil Code
Section 1698 and similar statutes and federal laws and judicial decisions (i)
providing that oral modifications to a contract or waivers of contractual
provisions may be enforceable, if the modification was performed,
notwithstanding any express provision in the agreement that the agreement may
only be modified or an obligation thereunder waived in writing, or (ii) creating
an implied agreement from trade practices or course of conduct.
bb. We express no opinion as to the effect of certain rights,
remedies and waivers contained in the Loan Documents being limited or rendered
ineffective by applicable statutory law or judicial decisions governing such
provisions, but such laws and judicial decisions do not render the Loan
Documents unenforceable as a whole, and there exists, in the Loan Documents and
pursuant to applicable law, legally adequate remedies for realization of the
principal benefits purported to be afforded by the Loan Documents.
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cc. We have not conducted any special investigation of statutes,
laws, rules, or regulations and our opinion is limited to such California and
United States statutes, laws, rules or regulations as in our experience are of
general application to transactions of the sort contemplated by the Loan
Documents.
dd. With respect to our opinion in paragraph 9 and 13, we have
assumed that, as of the relevant times, "value" (as that word is used in Section
9203(1(b) of the CUCC) has been given by the secured party.
ee. We express no opinion as to Borrower's or any Guarantors' rights
in, or title to, the Collateral.
ff. With respect to our opinions expressed in paragraphs 4(a) and
5(a) regarding orders, we have relied solely upon our knowledge and upon a
representation made to us in each of the Borrower's Certificate and the
Guarantors' Certificate to the effect that, there are no orders binding upon
Borrower or the Guarantors.
gg. We express no opinion as to the accuracy or completeness of the
descriptions of the Collateral in any Loan Document or any Financing Statement
on the Fixture Filing.
hh. We advise you that realization of a security interest in
personal property in the event of default will be generally governed by the
provisions and procedures set forth in Divisions 8 and 9 of the CUCC.
ii. We advise you that perfection of a security interest in proceeds
of collateral governed by the CUCC is subject to the provisions of Section 9306
of the CUCC.
jj. We advise you that the effectiveness of the Financing Statements
will lapse five years from the date they are filed unless appropriate
continuation statements are filed within six months prior to the expiration of
that five year period.
kk. We express no opinion as to any provisions of the Loan Documents
that purport to limit the standards imposed upon the Agent or any Lender for the
care of Collateral in the possession of the Agent or any Lender to the extent
such provisions are inconsistent with applicable provisions of the CUCC.
We further advise you that:
a. The enforceability of the Guaranty against a Guarantor may be
subject to California statutory provisions and case law to the effect that a
guarantor may be exonerated if the beneficiary of the guaranty alters the
original obligation of the principal, fails to inform the guarantor of material
information pertinent to the principal or any collateral, elects remedies that
may impair the subrogation rights of the guarantor against the principal or that
may impair the value of the collateral, fails to accord the guarantor the
protections afforded a debtor under the
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Uniform Commercial Code or otherwise takes any action that materially prejudices
the guarantor unless, in any such case, the guarantor validly waives such rights
or the consequences of any such action. See, e.g., California Civil Code Section
2799 through Section 2855; Sumitomo Bank of California v. Iwasaki, 70 Cal. 2d
81, 73 Cal. Rptr. 564 (1968); Union Bank v. Gradsky, 265 Cal. App. 2d 40, 71
Cal. Rptr. 64 (1968); Connolly v. Bank of Sonoma County, 184 Cal. App. 3d 1119,
229 Cal. Rptr. 396 (1986); C.I.T. Corp. v. Anwright Corp., 191 Cal. App. 3d
1420, 237 Cal. Rptr. 108 (1987); American National Bank v. Perma-Tile Roof Co.,
200 Cal. App. 3d 889, 246 Cal. Rptr. 381 (1988); In re Kirkland, 915 F.2d 1236
(9th Cir. 1990); and Cathay Bank v. Lee, 18 Cal. Rptr. 2d 420 (1993). While
express and specific waivers of a guarantor's right to be exonerated, such as
those contained in the Guaranty, are generally enforceable under California law,
we express no opinion as to whether the Guaranty contains an express and
specific waiver of each exoneration defense a guarantor might assert or as to
whether each of the waivers contained in the Guaranty is fully enforceable.
b. It could be contended that the Guaranty has not been given for a
fair or reasonably equivalent consideration, that a Guarantor is, or, by
entering into the Guaranty may become, insolvent, and that the Guaranty may be
voidable by creditors of a Guarantor or by a trustee or receiver of a Subsidiary
in bankruptcy or similar proceedings pursuant to applicable bankruptcy,
fraudulent conveyance or similar laws. Because of these possible contentions,
our opinions are further limited by and subject to the effect of such laws.
With respect to the opinion set forth in paragraph 12 above, you should
be aware of the following provisions of California law:
(i) Section 726 of the California Code of Civil Procedure
provides that any action to recover on a debt or other right secured by a
mortgage or a deed of trust on real property must comply with the provisions of
that section, which provisions relate to and specify the procedures for the sale
of encumbered property, the application of proceeds, the rendition in certain
cases of a deficiency judgment, and other related matters. We advise you that in
such an action or proceeding, the debtor may require the creditor to exhaust all
of its security before a personal judgment may be obtained against the debtor
for a deficiency. We also advise you that failure to comply with the provisions
of section 726 may result in the loss of your liens on the real and personal
property collateral and the loss of your right to a deficiency judgment.
However, in our opinion, the limitations of section 726 do not prevent
enforcement of your rights with respect to the real property described in the
Deed of Trust provided you proceed in accordance with California law, nor do
such limitations prevent enforcement of your rights with respect to any personal
property or fixtures in which you have a perfected security interest provided
you proceed in accordance with the requirements of Division 9 of the Uniform
Commercial Code of the State of California. The decision as to which of the
procedures of foreclosure a lender invokes under said Division 9 in connection
with mixed security will be impacted by the effect of each on the right to a
deficiency judgment and the right to reinstate the loan by curing the default
which exists under certain circumstances when foreclosing on real property in
California. In the context of mixed collateral, the decision by a lender as to
how to
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properly foreclose upon its security requires careful examination and analysis
before taking any action or asserting any remedies.
(ii) Section 580a of the California Code of Civil Procedure
provides certain fair value limitations or obtaining any personal judgment for
any deficiency following foreclosure of a deed of trust under circumstances
where a deficiency is permissible, as well as a procedure for a fair value
hearing to determine the deficiency amount.
(iii) Section 580d of the California Code of Civil Procedure
provides that no deficiency judgment shall be rendered upon a note secured by a
deed of trust or mortgage on real property after sale of the real property under
the power of sale contained in such deed of trust or mortgage.
(iv) Section 2924c of the California Civil Code provides
that whenever the maturity of an obligation secured by a deed of trust or
mortgage on real property is accelerated by reason of a default in the payment
of interest or in the payment of any installment of principal or other sums
secured thereby, or by reason of failure of the trustor or mortgagor to pay
taxes, assessments, or insurance premiums, the trustor or mortgagor and certain
other entitled persons have the right, to be exercised at any time within the
reinstatement period described in such section, to cure such default by paying
the entire amount then due (including certain reasonable costs and expenses
incurred in enforcing such obligations but excluding any principal amount that
would not then be due had no default occurred) and thereby cure the default and
reinstate such deed of trust or mortgage and the obligations secured thereby to
the same effect as if no acceleration had occurred. If the power of sale in the
deed of trust or mortgage is not to be exercised, such reinstatement right may
be exercised at any time prior to entry of the decree of foreclosure. California
Civil Code Section 2924 et seq, in addition, sets forth definitive notice
procedures and rights of borrowers which must be followed as a condition
precedent to foreclosure and we express no opinion on the enforceability of any
provision of the Deed of Trust which may provide for remedies upon default
without the necessity for complying with California Civil Code Section 2924 et
seq regarding notice and cure rights of borrowers.
With respect to the opinion expressed in paragraph 12 above, we draw
your attention to the provisions of Section 726.5 and Section 736 of the
California Code of Civil Procedure which define the limited circumstances under
which a lender may ignore its real property security and elect, instead of
foreclosing on such property, to bring a separate action against Borrower under
the Environmental Indemnity where the real property is environmentally impaired
as defined therein and the amount of damages that may be recoverable thereunder.
We advise you that failure to proceed in accordance with Section 726.5 and 736
of the California Code of Civil Procedure in bringing a separate action against
Borrower under the Environmental Indemnity may result in the loss of the real
property as security under the Deed of Trust because of Section 726 of the
California Code of Civil Procedure. We also advise you that the Environmental
Indemnity will be enforceable under California law only under circumstances
permitted by Section 726.5(b) of the California Code of Civil Procedure.
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This opinion is rendered based on the facts and circumstances, together
with applicable law, existing on the date of this opinion, and we express no
opinion as to the effect on the Loan Documents and the Agent or any Lender's
rights under any statute, rule, regulation or other law enacted, of any court
decision rendered, or of the conduct of any person, which occurs after the date
of this opinion. Moreover, we assume no obligation to advise the Agent or any
Lender or any other person of any change, whether factual or legal, and whether
or not material, that may hereafter arise or be brought to our attention after
the date hereof. This opinion is intended solely for your benefit in connection
with the Loan Documents and for the benefit of any successor-in-interest to you
as Agent or any Lender, and is not to be made available to, or relied upon, by
any other person, firm, or entity, without our prior written consent.
Very truly yours,
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
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Exhibit A
List of Lenders
ABN AMRO BANK, NV
101 California St., Ste. 4550
San Francisco, CA 94111
FIRST NATIONAL BANK OF BOSTON
435 Tasso St., Ste. 250
Palo Alto, CA 94301
UNION BANK
445 S. Figueroa Street, 16th Floor
Los Angeles, CA 90071
299
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Exhibit B
Officer's Certificate of Cadence Design Systems, Inc.
300
<PAGE> 225
Exhibit C
Officer's Certificate of Seeley Properties, Inc. and
River Oaks Place Associates, L.P.
301
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Exhibit D
Good Standing
CADENCE DESIGN SYSTEMS, INC.
Arizona
California
Colorado
Connecticut
Delaware
Florida
Georgia
Illinois(2)
Kansas
Maryland
Massachusetts
Michigan
Minnesota
New Hampshire
New Jersey
New York
North Carolina
Ohio
Oregon
Texas
Virginia
Washington
SEELEY PROPERTIES, INC.
California
- --------------------
(2) Not in good standing as of April 5, 1996, for non-filing of 1996 Annual
Report and failure to pay 1996 Franchise Tax.
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EXHIBIT D-2
FORM OF FOREIGN COUNSEL OPINION
Each opinion letter shall be addressed to the Agent on behalf of the Lenders and
shall contain the following opinions, as applicable, concerning 65% of the
outstanding shares of capital stock of the Material Foreign Subsidiary owned by
the Borrower (the "Shares") and shall be given under the federal and state/local
laws of the jurisdiction in which the Material Foreign Subsidiary is
incorporated (the "State of Incorporation") with reasonable variations based on
local laws and local practices:
1. The Material Foreign Subsidiary is a company duly incorporated, validly
existing and in good standing under the laws of the State of Incorporation.
2. The Shares have been duly authorized for issuance by the Material
Foreign Subsidiary and are owned of record by the Borrower.
3. Under the laws of the State of Incorporation, there are no legal
restrictions on the transferability or transfer of the Shares and no
governmental approvals or authorizations are required for any such transfer. The
charter documents of the Material Foreign Subsidiary do not impose any
restrictions on the transferability or transfer of the Shares and do not require
any approval or other authorization in connection therewith.
4. The delivery of the Shares to the Agent [and other action taken in
connection with the pledge] create(s) a valid pledge of such Shares, enforceable
in the State of Incorporation against any purchaser of such Shares, including
any bona fide purchaser for value.
5. All actions of the Material Foreign Subsidiary and the Borrower
required by the laws of the State of Incorporation to create a valid and
enforceable pledge have been duly taken by each such respective entity.
6. The Material Foreign Subsidiary and/or the Borrower have taken all
necessary and appropriate corporate action to authorize the execution, delivery
and performance of [any agreements required to be executed by the Material
Foreign Subsidiary and/or the Borrower to effect the pledge] (the "Agreements")
and have the corporate power and authority to execute, deliver and perform the
Agreements.
7. The Agreements have been duly executed and delivered by the Material
Foreign Subsidiary and/or the Borrower. Each of the Agreements constitutes a
legal, valid and binding obligation of the Material Foreign Subsidiary and/or
the Borrower, enforceable against it in accordance with its respective terms.
8. The execution, delivery and performance by the Material Foreign
Subsidiary and/or the Borrower of each of the Agreements do not (a) violate or
contravene any order of any court or
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governmental agency as presently in effect applicable to such entity; (b)
conflict with, or result in a breach of, or constitute a default under its
charter documents; or (c) violate or result in a breach of, or constitute any
default under, any of the material contracts to which it is a party.]
9. Neither any of the Lenders nor the Agent will be deemed to be resident,
domiciled or carrying on business in the State of Incorporation by reason only
of their possession of the Shares [and entry into the Agreements, as
applicable,] nor will the pledge result in the imposition upon the Agent or any
of the Lenders of any tax charge, any liability as a shareholder of the Material
Foreign Subsidiary, including any liability for capital contributions or for
funding any unfunded obligations, or any liability of the Material Foreign
Subsidiary.
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EXHIBIT E-1
FORM OF COMPLIANCE CERTIFICATE
(delivered under Section 5.2 of the Credit Agreement)
The undersigned is the duly elected [insert title of Authorized
Officer] of CADENCE DESIGN SYSTEMS, INC., a Delaware corporation (the
"Borrower"). This certificate is delivered pursuant to Section 5.2 of the
Revolving Credit Agreement ("Credit Agreement"), dated as of April 11, 1996
among the Borrower, the financial institutions signatory thereto as Lenders, and
Credit Lyonnais, a bank organized under the laws of the Republic of France,
acting through its New York Branch, as Agent for the Lenders (capitalized terms
having the meanings given in the Credit Agreement). The undersigned hereby
certifies to the Lenders on behalf of the Borrower as follows:
1. I have reviewed the terms of the Credit Agreement, and
have made, or have caused to be made under my supervision, a review in
reasonable detail of the transactions and the condition of the Borrower and the
Subsidiaries during the immediately preceding [QUARTER/YEAR] ended
______________, _____.
2. The review described in paragraph 1 above did not
disclose the existence during or at the end of such [QUARTER/YEAR], and I have
no knowledge of the existence as of the date hereof, of any Event of Default or
Potential Default, any pending or overtly threatened material litigation, any
Material Environmental Claim, any ERISA Event or any Material Adverse Change,
except as set forth in Annex A hereto.
3. Described in Annex A are the exceptions, if any, to
paragraph 2 listing, in detail, the nature of the condition or event, the period
during which it has existed and the action which the Borrower has taken or
proposes to take with respect to such condition or event.
4. Based upon the review described in paragraph 1 above,
the Borrower has complied with all covenants set forth in Section 5.2 of the
Credit Agreement during the immediately preceding [QUARTER/YEAR] ended
______________, _____ and neither the Borrower nor any Subsidiary at any time
during or at the end of such [QUARTER/YEAR], except as specifically described in
Annex A, did any of the following:
(a) Directly or indirectly make, create, incur, assume or
suffer to exist any Lien upon or with respect to any part of its property or
assets, whether now owned or hereafter acquired, or become or remain bound by
any agreement to do so or become or remain bound by any agreement restricting
its ability to grant, create, incur, assume or suffer to exist any Lien upon or
with respect to any part of its property or assets, whether now owned or
hereafter acquired, as security for the payment of the Obligations or any
refinancing or replacement thereof, except as otherwise permitted under the
Credit Agreement.
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(b) Engage in any Asset Sale or otherwise directly or
indirectly sell, assign, lease, convey, transfer or otherwise dispose of all or
any portion of its assets, business or property, or agree to do any of the
foregoing, except as otherwise permitted under the Credit Agreement and in any
event, in compliance with Section 2.6(d)(i) of the Credit Agreement.
(c) Directly or indirectly make, acquire, carry or maintain
any Investment, or become or remain bound by any agreement to make, acquire,
carry or maintain any Investment, except as otherwise permitted under the Credit
Agreement.
(d) Directly or indirectly create, incur, assume, guarantee
or suffer to exist, or otherwise become or remain directly or indirectly liable
with respect to, any Debt or any Accommodation Obligation, except as otherwise
permitted under the Credit Agreement.
(e) Enter or agree to enter into any transaction with any
Affiliate of the Borrower or of any Subsidiary of the Borrower except (i) under
the Loan Documents or (ii) subject to Section 5.3(k) of the Credit Agreement, in
the ordinary course of business and pursuant to the reasonable requirements of
the business of the Borrower or such Subsidiary and upon fair and reasonable
terms no less favorable to the Borrower or such Subsidiary than those readily
available to the Borrower or such Subsidiary in a comparable arm's-length
transaction with a Person not an Affiliate of the Borrower or such Subsidiary.
(f) Directly or indirectly (v) declare or make any dividend
payment or other distribution of assets, properties, cash, rights, obligations
or securities on account of any shares of any class of its capital stock or any
other equity, ownership or profit interests, (w) purchase, redeem or otherwise
acquire for value any shares of any class of capital stock of, or other equity,
ownership or profit interests in, the Borrower or any of its Subsidiaries or any
warrants, rights or options to acquire any such shares or interests, now or
hereafter outstanding, (x) enter into any agreement restricting the ability of
any Subsidiary of the Borrower to declare or make any dividend payment or other
distribution of assets, properties, cash, rights, obligations or securities to
its stockholders, (y) agree to or permit any amendment or modification of, or
change in, any of the terms of agreements governing Subordinated Debt, or (z)
pay, prepay, redeem, or purchase or otherwise acquire any Subordinated Debt, or
make any deposit to provide for the payment of any Subordinated Debt when due,
or exchange any Subordinated Debt, or give any notice in respect thereof, except
as otherwise permitted under the Credit Agreement.
(g) Merge or consolidate with or into or enter into any
agreement to merge or consolidate with or into any Person, or acquire any
ownership interest in any assets, business or Person, except as otherwise
permitted under the Credit Agreement.
(h) Engage in any business or activity other than those
permitted under the Credit Agreement.
(i) Directly or indirectly (or permit any ERISA Affiliate
directly or indirectly to) (i) terminate any Plan subject to Title IV of ERISA
so as to result in liability to the Borrower
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or any ERISA Affiliate in excess of $10,000,000; (ii) permit any ERISA Event to
exist; (iii) make a complete or partial withdrawal (within the meaning of ERISA
Section 4201) from any Multiemployer Plan so as to result in liability to the
Borrower or any ERISA Affiliate in excess of $10,000,000; or (iv) permit the
total Unfunded Pension Liabilities (using the actuarial assumptions utilized by
the PBGC) for all Pension Plans (other than Pension Plans which have no Unfunded
Pension Liabilities) to exceed $10,000,000.
(j) Cause, permit or suffer any Subsidiary to become or
remain subject to any contractual obligation that in any manner limits or
restricts its right to pay dividends or make distributions, whether in cash or
in property, to its stockholders or to make loans or sell assets to the Borrower
or any of its Subsidiaries or to enter into any other lawful transaction with
the Borrower or any of its Subsidiaries, except limitations and restrictions set
forth in the Loan Documents.
(k) Make or suffer to exist any Investment in IMS (other
than the shares of IMS' capital stock held by the Borrower on February 8, 1996
and any shares of stock issued in respect of stock dividends thereon or stock
splits thereof), purchase or hold any Debt of IMS or issue or maintain any
Accommodation Obligation of a Debt of IMS or, unless effected in accordance with
Section 5.3(e) of the Credit Agreement, sell any asset to IMS or enter into or
suffer to exist any other agreement or transaction with IMS (other than (i) the
Stockholder Agreement dated as of May 10, 1995, (ii) the Shareholder Agreement
dated as of May 17, 1995, (iii) the Asset Transfer Agreement dated as of June
30, 1994, (iv) the Connections Partner Membership Agreement dated as of June 30,
1994, (v) the Corporate Services Agreement dated as of May 1, 1995, (vi) the Tax
Sharing Agreement dated as of April 1, 1995 and (vii) the Joint Sales Agency
Agreement as referred to in an internal memorandum of the Borrower dated October
3, 1995, each between IMS and the Borrower, and the performance of the
Borrower's obligations and exercise of its rights under such agreements).
(l) In respect of any license agreement under which any
Loan Party is the licensee and which is material to the conduct of such Loan
Party's business, agree to any prohibition of or restriction on the creation of
a security interest in any right of such Loan Party thereunder, other than, in
the case only of any such license agreement that relates to any intellectual
property not previously licensed to the Borrower or any of its Subsidiaries,
such restrictions on the creation of a security interest as such Loan Party is
required, in its commercially reasonable judgment, to accept.
5. The Borrower's Adjusted EBITDA as of the most recent
Fiscal Quarter End Date for the four Fiscal Quarters then ended is
$______________________, which is in compliance with Section 5.1(a) of the
Credit Agreement. Supporting calculations in reasonable detail are attached
hereto.
6. The Borrower's ratio of (i) Total Debt determined as of
the most recent Fiscal Quarter End Date plus the net aggregate maximum
contingent liability of the Borrower in respect of Permitted Stock Transactions
(except any liability which the Borrower has the
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unconditional right or option to discharge by delivery of its common stock)
determined as of such day by marking each such Permitted Stock Transaction to
market, to (ii) Adjusted EBITDA for the four Fiscal Quarters then ended is
____/1.0, which is in compliance with Section 5.1(b) of the Credit Agreement.
Supporting calculations in reasonable detail are attached hereto.
7. The Borrower's Fixed Charge Coverage Ratio as of the
most recent Fiscal Quarter End Date is ____/1.0, which is in compliance with
Section 5.1(c) of the Credit Agreement. Supporting calculations in reasonable
detail are attached hereto.
8. The sum of Cash, Permitted Cash Investments and Loan
Availability is $__________________, which is in compliance with Section 5.1(d)
of the Credit Agreement. Supporting calculations in reasonable detail are
attached hereto.
The foregoing certifications are made and delivered this ____
day of __________, _____.
Very truly yours,
CADENCE DESIGN SYSTEMS, INC.
By:
-------------------------------------
Name:
Title:
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EXHIBIT E-2
FORM OF
ASSIGNMENT AND ACCEPTANCE AGREEMENT
Dated ,
Reference is made to the Revolving Credit Agreement, dated as
of April 11, 1996, among Cadence Design Systems, Inc., a Delaware corporation,
the financial institutions signatory thereto as Lenders, and Credit Lyonnais, a
bank organized under the laws of the Republic of France, acting through its New
York Branch, as Agent for the Lenders (as amended, modified and supplemented to
date, the "Credit Agreement"). Unless otherwise defined herein, terms defined in
the Credit Agreement are used herein with the same meanings.
(the "Assignor") and
(the "Assignee") agree as follows:
1. Subject to Section 3 below, the Assignor hereby sells
and assigns to the Assignee, and the Assignee hereby purchases and assumes from
the Assignor, WITHOUT RECOURSE, [all] [a portion] of Assignor's Pro Rata Share
as is in effect on the Effective Date (as defined Section 4 below), equal to
% of the Advances owing to the Assignor on the Effective Date.
2. The Assignor: (i) represents and warrants that, as of
the date hereof, its commitment to extend credit under the Credit Agreement
(without giving effect to assignments thereof which have not yet become
effective) is $ ; (ii) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto, or the creation, perfection, priority or enforceability of any Lien or
the existence, nature, value or sufficiency of any Collateral; (iii) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or observance by the
Borrower or any Subsidiary of the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto.
3. The Assignee: (i) confirms that it has received a copy
of the Credit Agreement, together with copies of the financial statements
referred to in Section 4.1(g) of the Credit Agreement and such other documents
and information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assignment and Acceptance; (ii) agrees that it will,
independently and without reliance upon the Agent, the Assignor or any other
Lender, and based on such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in taking or not taking
action under the Credit
309
<PAGE> 234
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints and
authorizes the Agent to take such actions on its behalf and to exercise such
powers under the Credit Agreement as are delegated to the Agent by the terms
thereof, together with such powers as are reasonably incidental thereto; (v)
agrees that it will perform in accordance with their terms all of the
obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; [and] (vi) specifies as its address for notices the
office set forth beneath its name on the signature pages hereof[; and (vii)
attaches (A) in the case of an Assignee as to which, in the reasonable judgment
of such Assignee, payments under the Credit Agreement or the other Loan
Documents are exempt from the United States of America withholding tax, or are
subject to such tax at a reduced rate under an applicable tax treaty, a properly
completed and executed Internal Revenue Service Form 4224 or 1001 or other
applicable form, certificate or document prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's entitlement to such
exemption or reduced rate with respect to all such payments, or (B) in the case
of an Assignee as to which, in the reasonable judgment of such Assignee, such an
exemption or reduced rate of tax is not allowable with respect to payments under
the Credit Agreement and the other Loan Documents, a statement of the Assignee
indicating that no such exemption or reduced rate is allowable with respect to
such payments].1/
4. The effective date of this Assignment and Acceptance
shall be , or the date on which the Agent accepts this
Assignment and Acceptance, whichever is later (the "Effective Date").1/
Following the execution of this Assignment and Acceptance it will be delivered
to the Agent for acceptance and recording by the Agent. Concurrent with such
delivery there shall be delivered to Agent the fee of $2,500 provided for in
Section 8.7(a) of the Credit Agreement. If the Agent shall fail to accept this
Assignment and Acceptance prior to the expiration of ___ days after the date
hereof, this Assignment and Acceptance shall be without force and effect for any
purpose, and the Assignor shall remain the owner of the interest in the
Assignor's rights and obligations under the Credit Agreement and the other Loan
Documents otherwise intended to be sold hereby.
5. Upon acceptance and recording by the Agent and as of
the Effective Date, (i) the Assignee shall be a party to the Credit Agreement
and, to the extent provided in this Assignment and Acceptance, have the rights
and obligations of a Lender thereunder, and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and be
released from its obligations under the Credit Agreement [and cease to be a
party thereto].1/
- -------------------------
3. Insert if the Assignee is organized under the laws of a jurisdiction
outside the United States of America.
2. Such date shall be at least 5 Business Days after the execution of this
Assignment and Acceptance.
3. Insert if Assignment and Acceptance covers all or the remaining portion
of the Assignor's rights and obligations under the Credit Agreement.
310
<PAGE> 235
6. From and after the Effective Date, the Agent shall make
all payments under the Credit Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal, interest and
commitment fees) to the Assignee. The Assignor and the Assignee shall make all
appropriate adjustments in payments under the Credit Agreement for periods prior
to the Effective Date directly between themselves.
7. The assignment by the Assignor hereunder is expressly
conditioned upon payment by the Assignee to the Assignor of $ ,
which equals the principal amount of the Assignee's ratable share of all
Advances which are outstanding on the Effective Date under the Credit Agreement
and which are being assigned hereby; provided, however, that with respect to the
Eurodollar Rate [Advance] [Advances] made by the Lenders on ,
in an aggregate principal amount of Dollars
($ ) and having an interest period ending on , ,
the payment by the Assignee of the Assignee's ratable share of such Advance
shall be made on , (or such earlier date that such Advance
shall be refinanced) [add additional description for other Eurodollar Rate
Advances]. The Assignor shall be entitled to receive and retain all interest
accruing on such Eurodollar Rate Advance[s] up to the [respective] date[s] on
which Assignee makes payment for such Advance[s] (or refinancing thereof).
8. Miscellaneous.
Indemnity. Except to the extent the Assignor
is entitled to and receives indemnification from some other Person, the
Assignee agrees to indemnify and hold harmless the Assignor from and
against any and all losses, costs, expenses (including, without
limitation, reasonable attorneys' fees) and liabilities incurred by the
Assignor in connection with or arising in any manner from the
performance by the Assignee of any obligation assumed by the Assignee
under this Assignment and Acceptance.
Notices. Notices shall be given under this
Assignment and Acceptance in the manner set forth in the Credit
Agreement. The addresses for notice shall be those set forth below the
respective signatures of the Assignor and the Assignee on this
Agreement.
Headings. Headings are for reference only and
are to be ignored in interpreting this Assignment and Acceptance.
GOVERNING LAW. THIS ASSIGNMENT AND ACCEPTANCE
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA.
Entire Agreement. This Assignment and Acceptance
embodies the entire agreement and understanding between the parties
hereto and supersedes all prior agreements and understandings between
the parties relating to the subject matter hereof.
311
<PAGE> 236
Further Assurances. The Assignor and the
Assignee hereby agree to execute and deliver such other instruments,
and take such other action, as either party may reasonably request in
furtherance of the transactions contemplated by this Assignment and
Acceptance.
Counterparts. This Assignment and Acceptance
may be executed in one or more duplicate counterparts, and when
executed and delivered by all the parties listed below shall constitute
a single binding agreement.
9. Retained Fees. Notwithstanding any other provision
of this Assignment and Acceptance or the Credit Agreement, the Assignor shall be
entitled to retain for its own account any fees that may be payable to the
Assignor in a capacity other than as a Lender, including, to the extent
applicable, as Agent.
10. Schedule 1. From and after the Effective Date,
Schedule 1 to the Credit Agreement shall be amended and revised in the form
attached to this Assignment and Acceptance.
312
<PAGE> 237
IN WITNESS WHEREOF, the parties hereto have executed this
Assignment and Acceptance Agreement by their duly authorized officers as of the
date first above written.
[NAME OF ASSIGNOR]
By:
--------------------------------
Name:
Title:
Notice Address:
[NAME OF ASSIGNEE]
By:
--------------------------------
Name:
Title:
Notice Address:
313
<PAGE> 238
Accepted this day of
,
CREDIT LYONNAIS
as Administrative Agent
By:
-------------------------------
Name:
Title:
314
<PAGE> 239
SCHEDULE 1
SCHEDULE A
PLEDGED SHARES
<TABLE>
<CAPTION>
Stock Issuer Jurisdiction Class of Stock Stock Certificate Par Value Number Percentage of
------------ ------------ -------------- No(s). --------- of Shares Outstanding
------- --------- Shares
------
DOMESTIC:
<S> <C> <C> <C> <C> <C> <C>
Seeley Properties, Inc. California Common 100%
FOREIGN
Cadence Design Systems S.A. France Common 100%
Cadence Design Systems AB Sweden Common 100%
Cadence Design Systems S.r.l. Italy Common 100%
Cadence Design Systems GmbH Germany Common 100%
Cadence Design Systems K.K. Japan Common 92.75%
Cadence Taiwan, Inc. Taiwan Common 100%
Cadence Design Systems Asia Ltd. Hong Kong Common 100%
Cadence Korea Ltd. Korea Common 100%
Cadence Design Systems, Ltd. United Kingdom Common 100%
Cadence Design Systems (Canada) Ltd. Canada Common 100%
</TABLE>
315
<PAGE> 240
SCHEDULE B
CHIEF EXECUTIVE OFFICE
AND
OTHER LOCATIONS
CADENCE DESIGN SYSTEMS, INC.
Corporate Headquarters:
555 River Oaks Parkway
San Jose, CA 95134
ALTA GROUP
555 N. Mathilda Avenue
Sunnyvale, CA 94086
R&D CENTERS
San Jose, CA
San Diego, CA
SEELEY PROPERTIES, INC.
Corporate Headquarters:
555 River Oaks Parkway
San Jose, CA 95134
DESIGN FACTORIES
Rancho Bernardo, CA
Chelmsford, MA
Taiwan, R.O.C.
RIVER OAKS PLACE ASSOCIATES, L.P.
Corporate Headquarters:
555 River Oaks Parkway
San Jose, CA 95134
United Kingdom
India
316
<PAGE> 241
DOMESTIC SALES OFFICES
9057 Soquel Drive
Building A. Suite G
Aptos, CA 95003
1919 Addison Street
Suite 303
Berkeley, CA 94704
327 Hillcrest
Encinitas, CA 92024
2601 Main Street
Suite 400
Irvine, CA 92714
5220 Pacific Concourse Drive
Suite 160
Los Angeles, CA 90045
9805 Scranton Road
Suite 250
San Diego, CA 92121-1756
555 River Oaks Parkway
Sales- MS 1A1
San Jose, CA 95134
555 N. Mathilda Avenue
Sunnyvale, CA 94086
23431 Via Alondra
Trabuco Canyon, CA 92673
23931 Capistrano Ct.
Valencia, CA 91355
1155 Kelly Johnson Blvd.
Suite 111
Colorado Springs, CO 80920
13949 West Colfax Avenue
Bldg. 1. Suite 140
Golden, CO 80401
100 Rialto Place
Suite 210
Melbourne, FL 32901
7380 Sandlake Road
Suite 380
Orlando, FL 32819
1881 Calmar Street N.W.
Palm Bay, FL 32907
636 Bremerhaven Street N.W.
Palm Bay, FL 32907
1200 North Federal Highway
Suite 200
Boca Raton, FL 33432
1117 Perimeter Center West
Fifth Floor East
Atlanta GA 30338
8410 West Bryn Mawr Avenue, Suite 400
Chicago, IL 60631
1100 East Woodfield Road
Suite 334
Schaumburg, IL 60173
1310 Wakarusa Drive
Suite A
Lawrence, KS 66049
270 Billerica Road
Chelmsford, MA 01824
2700 Billerica Road
Chelmsford, MA 01824
6760 Alexander Bell Drive
Suite 140
Columbia, MD 21046
17370 North Laurel Park Drive, Suite 400E
Livonia, MI 48152
8 Pine Tree Drive
Suite 280
Arden Hills, MN 55112-2744
2276 Highcrest RD, MS 4241
Roseville, MN 55113
c/o UNISYS Corp. MS 4241
P.O. Box 64942
Saint Paul, MN 55164-0942
117 Edinburgh South
Suite 100
Cary, NC 27511
547 Amherst Street
Nashua, NH 03063
333 Thornall Street
Edison, NJ 08837
140 Iroquois Avenue
Oakland, NJ 07436
Pine West 2
Albany, NY 12205
300 Westage Business Center
Suite 340
Fishkill, NY 12524
212 Sterling Place
Highland, NY 12528
200 Broadhollow Road
Suite 207
Melville, NY 11747
50 Charles Lindbergh Blvd
Suite 400
Uniondale, NY 11553
7979 Victor-Pittsford Road
Victor, NY 14564
25000 Great Northern Corporate Center, Suite 300
North Olmsted, OH 44070
9525 S.W. Gemini Drive
Beaverton, OR 97008
317
<PAGE> 242
107 Hilltop Drive
Downington, PA 19355
336 Minor Street
Emmaus, PA 18049
320 Abbey Lane
Lansdale, PA 19446
One Tower Bridge
100 Front Street, Ste 250
W. Conshohocken, PA 19428
8911 Capital of Texas Hwy
Suite 1200
Austin, TX 787591416 FM-550
Forney, TX 75126
2100 W. Northwest Hwy #1082
Grapevine, TX 76092
5215 N. O'Connor Road
Suite 1000
Irving, TX 75039-3712
11400 S.E. 8th Street
Suite 320
Bellevue, WA 98004
4811 West Parkview Drive
Mequon, WI 53092
318
<PAGE> 243
INTERNATIONAL SALES OFFICES
60 Columbia Way, Ste 300
Markham, Ontario L3R 0C9
Canada
1130 Morrison Drive
Suite 240
Ottawa, Ontario K2H-9N6
Cadence China Limited
Room 999 Ritan Office Bldg
A15 Guang Hua Road
Chaoyang District, Beijing 100020
Batiment Avenir
18 Rue Grange Dame Rose - BP 128
Velizy - CEDEX, Paris 78140
Kirschbaumweg 26a
Cologne, D-50996
Germany
Richard Reitzner Allee 8
Building H2
D-85540 Haar
Munich, Germany
SDF A-1, Noida Export Processing Zone
DSC Road
Noida-201305
Ghaziabad, UP, India
Ackerstein Bldg
103 Medinat Hayehudim St.
P.O.B. 12027
Herzlia, 46766 Israel
Centro Direzionale Colleoni
Palazzo Orione Ingresso 3
Viale Colleoni 17
Agrate Brianza (MI), 20041
Italy
Milanofiori-Strada
7 Palazzo R/2
20089 Rozzano
Milan, 20089 Italy
17 Fl., Yuwha Bldg., 23-7
Yoido-dong,
Yuongdungpo-gu
Seoul, Korea
World Commerce Centre
11 Canton Road Room 1109
Harbor City
Tsimshatsui, Kowloon
Hong Kong
Bruistensingel 380
5232 AE's-Hertogenbosch
Benelux, Netherlands
Shin-Osaka Ueno Toyo-Bldg
7-4-17- Nishi-Nakajima
Yodogawa-ku, Osaka 532
Japan - CKK
Sumitomo Fudosan Shin Yokohama Bldg
2-5-5 Shin Yokohama
Kohoku-ku, Yokohama 222
Japan
C/O Firma Progress
Room 411
Projezd Cherepanovykh 54
Moscow, 125183 Russia
Cadence Design Systems (S) Pte Ltd
77 Science Park Drive,
#03-15/16
CINTECH III, Singapore Science Park
Singapore 0511
Torshamsngatan 39
S-164 40 KISTA
Stockholm, Sweden
Hertistrasse 29/Postfach
Wallisellen Zurich, CH-8304
Switzerland
2F No 7, R&D 2nd Road
Science Based Industrial Park
Hsinchu City
Taiwan, R.O.C.
Bagshot Road
Bracknell, Berkshire RG12 3PH
United Kingdon
Bagshot Road
Bracknell, Berkshire RG12 3PH
United Kingdom
NVision
9 Wemyss Place
Edinburgh, Scotland
EH3 6DH
United Kingdom
Magdalen Centre
The Oxford Science Park
Oxford, OX4 4GA
United Kingdom
319
<PAGE> 244
SCHEDULE C
TRADE NAMES
None.
SCHEDULE D
RESTRICTIONS ON COLLATERAL
None.
320
<PAGE> 245
SCHEDULE E
TAXPAYER ID NUMBER
Cadence Design Systems, Inc.: No. 77-0148231
Seeley Properties, Inc.: Applied For
321
<PAGE> 246
BORROWER SCHEDULES
SCHEDULE 4.1(d)
LIST OF SUBSIDIARIES
<TABLE>
<CAPTION>
Number of Number
Shares of Shares Cadence's Percentage
Authorized Owned by Owned by Ownership of
Issuer Jurisdiction Class of Stock Shares Cadence Others Outstanding Shares
------ ------------ -------------- ------ ------- ------ ------------------
<S> <C> <C> <C> <C> <C> <C>
DOMESTIC CORPORATIONS:
Redwood Design Automation, Inc. California Common TBD TBD 0 100%
(Inactive)
Cadence Puerto Rico, Inc. Delaware Common TBD TBD 0 100%
(Inactive)
Simon Software, Inc. California Common TBD TBD 0 100%
(Inactive)
Seeley Properties, Inc. California Common 75,000 75,000 0 100%
Integrated Measurement Systems,
Inc. Oregon Common 15,000,000 3,709,000 2,990,853 55.366473%
DOMESTIC NON-CORPORATIONS
River Oaks Place Assoc., L.P. California N/A N/A N/A (1) 99%
Telos Venture Partners, L.P. California N/A N/A N/A (1) 82.5%
</TABLE>
- ------------------------
(6) 1% General Partner is Seeley Properties, Inc.; Cadence is 99% Limited
Partner.
(7) 16.5% Limited Partner is Bruce Bourbon; 1% General Partner is Telos
Management LLC; Cadence is 82.5% Limited Partner.
322
<PAGE> 247
<TABLE>
<CAPTION>
Number of Number
Shares of Shares Cadence's Percentage
Authorized Owned by Owned by Ownership of
Issuer Jurisdiction Class of Stock Shares Cadence Others Outstanding Shares
------ ------------ -------------- ------ ------- ------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Telos Management L.L.C. California N/A N/A N/A (1) 99%
FOREIGN
Cadence International Sales
Corp. USVI TBD TBD TBD TBD 100%
Valid Europe S.A. Belgium TBD TBD TBD TBD
Cadence Design Systems AG Switzerland TBD TBD TBD TBD 100%
Cadence Design Systems S.A. France Common TBD 90,162 0 100%
Cadence Design Systems AB Sweden TBD TBD TBD TBD 100%
Cadence Design Systems S.r.l. Italy TBD TBD TBD TBD 100%
Accent S.r.l. Italy TBD TBD TBD TBD 51%
Cadence Design Systems B.V. The
Netherlands TBD TBD TBD TBD 100%
Cadence Design Systems GmbH Germany TBD TBD TBD TBD 100%
Redwood Design Automation, Ltd. United
Kingdom Common TBD TBD TBD 100%
Cadence Design Systems K.K. Japan Common TBD 47,000 7.25% 92.75%
Cadence Taiwan, Inc. Taiwan Common TBD TBD TBD 100%
Cadence Design Systems Asia
Limited Hong Kong Common TBD TBD TBD 100%
Cadence China Limited Hong Kong Common TBD TBD TBD 100%
</TABLE>
- --------------------
(8) Managing Member (with 1% interest) is Bruce Bourbon; Cadence holdings 99%
membership interest.
323
<PAGE> 248
<TABLE>
<CAPTION>
Number of Number
Shares of Shares Cadence's Percentage
Authorized Owned by Owned by Ownership of
Issuer Jurisdiction Class of Stock Shares Cadence Others Outstanding Shares
------ ------------ -------------- ------ ------- ------ ------------------
<S> <C> <C> <C> <C> <C> <C>
Cadence Design Systems (S)
Pte Ltd. Singapore Common TBD TBD TBD 100%
Cadence Korea Ltd. Korea Common TBD TBD TBD 100%
Cadence Design Systems (India)
Private Ltd. India Common TBD TBD TBD 100%
Cadence Design Systems, Ltd. United Common TBD TBD TBD 100%
Kingdom
Cadence Design Systems
(Israel) Ltd. Israel Common TBD TBD TBD 100%
Valid Export Services Ltd. Barbados Common TBD TBD TBD 100%
(Inactive)
UVW, Ltd. United Common TBD TBD TBD 100%
(Inactive) Kingdom
Cadence Design Systems Canada Common TBD TBD TBD 100%
(Canada) Ltd.
Valid Export Services Ltd. Barbados Common TBD TBD TBD 100%
(Inactive)
</TABLE>
324
<PAGE> 249
SCHEDULE 4.1(e)
325
<PAGE> 250
LIST OF GOVERNMENTAL APPROVALS
None.
326
<PAGE> 251
SCHEDULE 4.1(q)
LIST OF ERISA MATTERS
None.
327
<PAGE> 252
SCHEDULE 4.1(j)
LITIGATION
1. Please refer to Part I, Item 3 of the Company's Form 10-K for the
fiscal year ending December 30, 1995 for a description of the pending case
regarding Avant! Corporation and certain other litigation matters.
2. In June 1994, Pragmatic C Software made a demand against Cadence for
royalties allegedly due Pragmatic C in connection with software sublicensing
agreements for three Pragmatic C programs. Cadence attempted to resolve this
dispute; however, Cadence's efforts were unsuccessful. Pragmatic C commenced an
arbitration proceeding at the beginning of 1995. The arbitration hearings are
currently scheduled for April 16-18, 1996. Management believes that this dispute
will be resolved at that time, and that this matter will not have a material
adverse impact on Cadence.
3. In March 1993, Synopsys filed a lawsuit against Cadence, alleging
that two of its employees had used Synopsys trade secrets to develop Cadence's
"Leapfrog" product. Both employees had served as independent contractors to a
third company, Zycad, from whom Synopsys had purchased its competing software
product known as "VSS". Cadence and Synopsys entered into a tentative
confidential settlement agreement in March 1996. Management believes that this
dispute will be resolved in the second quarter of 1996, and that this matter
will not have a material adverse impact on Cadence.
328
<PAGE> 253
SCHEDULE 4.1(o)
LIST OF BUSINESS LINES
1. Please refer to Part I Item 1 of the Company's Form 10-K for the fiscal year
ending December 30, 1995.
329
<PAGE> 254
SCHEDULE 4.1(p)
LIST OF ENVIRONMENTAL MATTERS
1) Company entered into a Voluntary Cleanup Agreement, dated February 23,
1996 ("DTSC Agreement), with the State of California Environmental
Protection Agency, Department of Toxic Substances Control ("DTSC")
concerning property located at 2655 Seely Road, County of Santa Clara,
San Jose, California 95134 (the "Property"). A Phase II Environmental
Assessment performed by Levine-Fricke indicated the soil was
contaminated with certain hazardous substances regarding which certain
response activities were performed. The purpose of the DTSC Agreement
was to obtain DTSC review and approval of such activities and resulting
site conditions. The DTSC has completed its review and approval of
conditions at the site. By letter dated April 1, 1996, the DTSC made
the determination that no further action was necessary with respect to
the investigation and remediation of hazardous substances at the site.
2) Prior to the development of the Property, the following reports were
prepared by Levine-Fricke in connection with investigating, remediating
and evaluating conditions and potential health risks at the Property:
(a) Phase I Environmental Site Assessment, Seely Avenue Site,
dated March 29, 1990.
(b) Work Order Number 3, Work Plan for Phase III Site
Investigation, Tank Removal, Soil Excavation, and Risk
Assessment, dated May 16, 1990.
(c) Report on Removal of Three Underground Fuel Storage Tanks at
the Seely Avenue Site, 691 Montague Expressway, dated July 31,
1990.
(d) Revised Phase II Environmental Site Investigation, Seely
Avenue Site, dated December 6, 1990.
(e) Revised Preliminary Endangerment Assessment, Seely Avenue
Site, dated April 11, 1991.
330
<PAGE> 255
SCHEDULE 4.1(t)
LIST OF UNDISCLOSED LIABILITIES
None.
331
<PAGE> 256
SCHEDULE 5.2(h)
LIST OF TAXES AND LIENABLE ITEMS
Valid Europe S.A. is currently disputing certain taxes asserted by
Administration des Contributions Directes, the taxing authority in Belgium.
332
<PAGE> 257
SCHEDULE 5.3(c)
LIST OF INVESTMENTS
CADENCE DESIGN SYSTEMS, INC.: CONSOLIDATED INVESTMENTS
<TABLE>
INVESTMENTS IN JOINT VENTURES:
<S> <C>
Telos Venture Partners, LP $ 1,500,000
SICAN GmbH 500,000
-----------
$ 2,000,000
OTHER INVESTMENTS
Thinking Machines $ 1,420
Wang 4,356
-----------
$ 5,776
DEPOSITS:
Japan $ 2,877,104
Korea 695,390
-----------
$ 3,572,494
MINORITY INTERESTS:
Cadence Design Systems KK (92.75%) $ 1,481,020
Integrated Measurement Systems, Inc. (55%) 10,609,279
-----------
$12,090,299
</TABLE>
INVESTMENTS IN SUBSIDIARIES LISTED IN SCHEDULE 4.1(D)
333
<PAGE> 258
SCHEDULE 5.3(d)
LIENS AND DEBTS
CADENCE DESIGN SYSTEMS, INC.: LIENS
CALIFORNIA - SECRETARY OF STATE
File 87215345, 9/2/87, Equitable Life Leasing Corporation,
particular equipment described; Amendment UCC-2 File 87215345A0 dated 9/6/88;
Continuation UCC-2 File 87215345A1 dated 7/20/92.
File 88037529, 2/18/88, Equitable Life Leasing Corporation,
particular equipment described; Amendment UCC-2 File 88037529A0 dated 9/6/88;
Continuation UCC-2 File 88037529A1 dated 1/15/93.
File 91043855, 3/7/91, Comdisco, Inc., particular equipment
described.
File 91156573, 7/23/91, Comdisco, Inc., particular equipment
described.
File 91202357, 9/17/91, Forsythe/McArthur Associates, Inc.,
particular equipment described.
File 91223368, 10/16/91, Hewlett Packard Company, particular
equipment described.
File 91225855, 10/21/91, Comdisco, Inc., particular equipment
described.
File 91236418, 11/4/91, Hewlett-Packard Company, particular
equipment described.
File 92077146, 4/16/92, Hewlett-Packard Company, particular
equipment described.
File 92202951, 9/18/92, Hewlett-Packard Company, particular
equipment described.
File 92224145, 10/20/92, Comdisco, Inc., assignee IBJ Schroder
Leasing Corporation, particular equipment described.
File 92225622, 10/22/92, Comdisco, Inc., particular equipment
described.
File 92235316, 11/6/92, Comdisco, Inc., particular equipment
described.
File 92240191, 11/6/92, Hewlett-Packard Company, particular
equipment described.
File 92240194, 11/6/92, Hewlett-Packard Company, particular
equipment described.
File 92240202, 11/6/92, Hewlett Packard Co., particular equipment
described.
File 92241886, 11/9/92, Hewlett-Packard Co., particular equipment
described.
File 92249420, 11/25/92, Comdisco, Inc., particular equipment
described.
File 93025549, 2/4/93, Hewlett-Packard Co., particular equipment
described.
File 93052405, 3/15/93, Sun Microsystems Finance, Inc., assignee
International Leasing Corp., particular equipment described.
File 93052406, 3/15/93, Sun Microsystems Finance, Inc., assignee
International Leasing Corp., particular equipment described.
File 93066639, 4/2/93, Hewlett-Packard Co., particular equipment
described.
334
<PAGE> 259
File 93069741, 4/6/93, Hewlett-Packard Co., particular equipment
described.
File 93078596, 4/19/93, Sun Microsystems Finance, Inc., assignee
International Leasing Corp., particular equipment described.
File 93124883, 6/21/93, Sun Microsystems Finance, Inc., assignee
International Leasing Corp., particular equipment described.
File 93124884, 6/21/93, Sun Microsystems Finance, Inc., assignee
International Leasing Corp., particular equipment described.
File 93168684, 8/18/93, Hewlett-Packard Co., particular equipment
described.
File 93168685, 8/18/93, Hewlett-Packard Company, particular
equipment described.
File 93169332, 8/19/93, Hewlett-Packard Company, particular
equipment described.
File 94119655, 6/13/94, Hewlett-Packard Company, particular
equipment described.
File 94178467, 9/2/94, Comdisco, Inc., particular equipment
described.
File 9433260222, 11/3/94, Hewlett-Packard Company, particular
equipment described.
CALIFORNIA - SANTA CLARA COUNTY
No filings.
TEXAS - SECRETARY OF STATE
File 93-161482, 8/18/93, Hewlett-Packard Company, particular
equipment described.
MASSACHUSETTS - SECRETARY OF THE COMMONWEALTH
1. File 180581, 8/18/93, Hewlett-Packard Company, particular equipment
described.
CADENCE DESIGN SYSTEMS, INC.: CONSOLIDATED DEBTS
LONG TERM OBLIGATIONS:
<TABLE>
<S> <C>
Capital Leases - Cadence Inc. 58,000
Capital Leases - IMS 55,000
Capital Leases - Cadence, KK 1,506,000
----------
$1,619,000
</TABLE>
SEELEY PROPERTIES, INC.: LIENS
CALIFORNIA - SECRETARY OF STATE
No filings as of 3/7/96.
335
<PAGE> 260
CALIFORNIA - SANTA CLARA COUNTY
No filings as of 3/7/96.
SEELY PROPERTIES, INC.: LIENS
CALIFORNIA - SECRETARY OF STATE
No filings as of 3/6/96.
CALIFORNIA - SANTA CLARA COUNTY
No filings as of 3/12/96.
RIVER OAKS PLACE ASSOCIATES, A CALIFORNIA LIMITED PARTNERSHIP: LIENS
CALIFORNIA - SECRETARY OF STATE
No filings as of 3/12/96.
CALIFORNIA - SANTA CLARA COUNTY (related debt repaid in December,
1995: liens to be removed)
File 10437156, 2/28/90, The Prudential Insurance Company of
America, Deed of Trust, Security Agreement and Fixture Filing with Assignment of
Rents.
File 10437157, 2/28/90, The Prudential Insurance Company of
America, Assignment of Lessor's Interest in Leases.
File 10816077, 2/25/91, The Prudential Insurance Company of
America, Amendment to Deed of Trust, Security Agreement and Fixture Filing with
Assignment of Rents.
VALID LOGIC SYSTEMS: LIENS
CALIFORNIA - SECRETARY OF STATE
File 86166332, 6/30/86, Equitable Life Leasing Corporation,
particular equipment described; Continuation UCC-2 File 86166332A0 dated
3/22/91.
File 86166333, 6/30/86, Equitable Life Leasing Corporation,
particular equipment described; Continuation UCC-2 86166333A0 dated 3/22/91.
File 86166334, 6/30/86, Equitable Life Leasing Corporation,
particular equipment described; Continuation UCC-2 86166334A0 dated 3/22/91.
File 86232884, 9/15/86, Equitable Life Leasing Corporation,
particular equipment described; Continuation UCC-2 86232884A0 dated 4/4/91.
File 86232885, 9/15/86, Equitable Life Leasing Corporation,
particular equipment described; Continuation UCC-2 86232885A0 dated 3/22/91.
336
<PAGE> 261
File 86232886, 9/15/86, Equitable Life Leasing Corporation,
particular equipment described; Continuation UCC-2 86232886A0 dated 3/22/91.
File 86232887, 9/15/86, Equitable Life Leasing Corporation,
particular equipment described; Continuation UCC-2 86232887A0 dated 3/22/91.
File 86232888, 9/15/86, Equitable Life Leasing Corporation,
particular equipment described; Continuation UCC-2 86232888A0 dated 3/22/91.
File 91107572, 5/15/91, SPCC, Inc., particular equipment
described.
File 91165873, 7/30/91, Hewlett Packard Company, particular
equipment described.
File 91217088, 10/7/91, Hewlett Packard Company, particular
equipment described.
File 91241628, 11/13/91, El Camino Resources, Ltd., assignee
Heritage/Pullman Bank and Trust Company, particular equipment described.
File 91241629, 11/13/91, El Camino Resources, Ltd., assignee
Heritage/Pullman Bank and Trust Company, particular equipment described.
File 91241630, 11/13/91, El Camino Resources, Ltd., assignee
Heritage/Pullman Bank and Trust Company, particular equipment described.
File 91241631, 11/13/91, El Camino Resources, Ltd., assignee
Heritage/Pullman Bank and Trust Company, particular equipment described.
File 91241632, 11/13/91, El Camino Resources, Ltd., assignee
Heritage/Pullman Bank and Trust Company, particular equipment described.
File 91241633, 11/13/91, El Camino Resources, Ltd., assignee
Heritage/Pullman Bank and Trust Company, particular equipment described.
File 91241634, 11/13/91, El Camino Resources, Ltd., assignee
Heritage/Pullman Bank and Trust Company, particular equipment described.
File 91241635, 11/13/91, El Camino Resources, Ltd., assignee
Heritage/Pullman Bank and Trust Company, particular equipment described.
CALIFORNIA - SANTA CLARA COUNTY
No filings as of 3/26/96.
337
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-END> MAR-01-1996
<CASH> 73,436
<SECURITIES> 9,722
<RECEIVABLES> 90,908
<ALLOWANCES> 0
<INVENTORY> 6,620
<CURRENT-ASSETS> 198,384
<PP&E> 242,594
<DEPRECIATION> 109,590
<TOTAL-ASSETS> 378,860
<CURRENT-LIABILITIES> 211,481
<BONDS> 0
0
0
<COMMON> (20,412)
<OTHER-SE> 149,964
<TOTAL-LIABILITY-AND-EQUITY> 378,860
<SALES> 163,430
<TOTAL-REVENUES> 163,430
<CGS> 33,639
<TOTAL-COSTS> 33,639
<OTHER-EXPENSES> 91,218
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 38,178
<INCOME-TAX> 12,599
<INCOME-CONTINUING> 25,579
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,579
<EPS-PRIMARY> .28
<EPS-DILUTED> .28
</TABLE>
