Exhibit 10.I

 

MENTOR GRAPHICS CORPORATION

 

FIRST AMENDMENT

TO CREDIT AGREEMENT

 

This FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”) is dated as of
October 21, 2003 and entered into by and among Mentor Graphics Corporation, an
Oregon corporation (the “Company”), the financial institutions listed on the
signature pages hereof (the “Banks”) and Bank of America, N.A., as
administrative agent for the Banks (“Agent”), and is made with reference to that
certain Credit Agreement dated as of July 14, 2003 (the “Credit Agreement”), by
and among the Company, the Banks, Key Corporate Capital, Inc., as documentation
agent, Fleet National Bank, as syndication agent and the Agent. Capitalized
terms used herein without definition shall have the same meanings herein as set
forth in the Credit Agreement.

 

RECITALS

 

WHEREAS the Company has requested a change in the minimum tangible net worth
covenant set forth in Section 7.14(b) of the Credit Agreement; and

 

WHEREAS, for this and other purposes, the Company has requested that the
Majority Banks agree to certain amendments to the Credit Agreement as set forth
below and the Majority Banks have agreed to such request, subject to the terms
and conditions of this Amendment;

 

NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein contained, the parties hereto agree as follows:

 

Section 1. AMENDMENTS TO THE CREDIT AGREEMENT

 

1.1 Amendments to Article VII: Negative Covenants

 

Section 7.14(b) of the Credit Agreement is hereby amended by deleting it in its
entirety and substituting the following therefor:

 

“(b) Minimum Tangible Net Worth. The Company shall not as of the end of any
calendar quarter permit Consolidated Tangible Net Worth to be less than the sum
of (i) negative $25,479,000, plus (ii) for each calendar quarter commencing with
the calendar quarter ending June 30, 2003 (to the extent Consolidated Net Income
for any such calendar quarter is positive) (A) with respect to any calendar
quarter for which the Company’s

 

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Consolidated Tangible Net Worth is less than $60,000,000, 75% of Consolidated
Net Income for such calendar quarter, and (B) with respect to any calendar
quarter for which the Company’s Consolidated Tangible Net Worth is equal to or
greater than $60,000,000, 65% of Consolidated Net Income for such calendar
quarter, plus (iii) 100% of the amortization of intangible assets for each
calendar quarter commencing with the calendar quarter ending June 30, 2003, plus
(iv) 100% of the Net Issuance Proceeds of any new equity issued by the Company
after March 31, 2003 (excluding (A) equity issued under employee stock option or
purchase plans and (B) equity issued to finance an Acquisition, provided that
such amount is in fact applied to transaction costs relating to such Acquisition
and such Acquisition is consummated no later than 120 days after the date of
such issuance), minus (v) goodwill and other intangibles arising during such
calendar quarter from Acquisitions permitted pursuant to Section 7.04, provided
that (A) the aggregate amount of such goodwill and other intangibles excluded
under this clause (v) in connection with any Acquisition shall be the product of
(1) the Net Cash Consideration given in respect of such Acquisition divided by
the total fair market value of all cash and non-cash consideration given in
respect of such Acquisition multiplied by (2) the aggregate amount of all
goodwill and other intangibles acquired in such Acquisition, and (B) the
aggregate amount of all such goodwill and other intangibles excluded under this
clause (v) in any calendar year shall in no case exceed the amount of Net Cash
Consideration permitted to be given in respect of Acquisitions in such calendar
year under Section 7.04(d)(i), minus (vi) without duplication, the lesser of (A)
the actual goodwill and other intangibles recorded during the calendar quarter
ended June 30, 2003 with respect to Acquisitions and (B) $12,000,000.”

 

1.2 Substitution of Exhibit C: Form of Compliance Certificate

 

Exhibit C to the Credit Agreement is hereby amended by deleting said Exhibit C
in its entirety and substituting in place thereof a new Exhibit C in the form of
Exhibit C to this Amendment.

 

Section 2. CONDITIONS TO EFFECTIVENESS

 

Section 1 of this Amendment shall become effective only upon the satisfaction of
all of the following conditions precedent (the date of satisfaction of such
conditions being referred to herein as the “First Amendment Effective Date”):

 

A. On or before the First Amendment Effective Date, the Company shall deliver to
the Agent (with sufficient originally executed copies, where appropriate, for
each Bank and its counsel) executed copies of this Amendment.

 

B. On or before the First Amendment Effective Date, all corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by the Agent and its counsel shall be satisfactory in form and
substance to the Agent and such counsel, and the Agent and such counsel shall
have received all such counterpart originals or certified copies of such
documents as the Agent may reasonably request.

 

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C. The Company shall have paid to the Agent a non-refundable amendment fee for
the benefit of each Bank that executes this Amendment by the close of business
on October 21, 2003 in an amount equal to 0.05% of each such Bank’s Commitment,
and any other fees referenced in Section 4B hereof (to the extent invoiced).

 

Section 3. COMPANY’S REPRESENTATIONS AND WARRANTIES

 

In order to induce the Banks to enter into this Amendment and to amend the
Credit Agreement in the manner provided herein, the Company represents and
warrants to each Bank that the following statements are true, correct and
complete:

 

A. Corporate Power and Authority. The Company has all requisite corporate power
and authority to enter into this Amendment and to carry out the transactions
contemplated by, and perform its obligations under, the Credit Agreement as
amended by this Amendment (the “Amended Agreement”).

 

B. Authorization of Agreements. The execution and delivery of this Amendment and
the performance of the Amended Agreement have been duly authorized by all
necessary corporate action on the part of the Company.

 

C. No Conflict. The execution and delivery by the Company of this Amendment and
the performance by the Company of the Amended Agreement do not and will not (i)
contravene the terms of any of the Company’s Organization Documents, (ii)
conflict with or result in any breach or contravention of, or the creation of
any Lien under, any document evidencing any Contractual Obligation to which the
Company is a party or any order, injunction, writ or decree of any Governmental
Authority to which the Company or its property is subject, or (iii) violate any
Requirement of Law, except, in each case referred to in the foregoing clauses
(ii) and (iii), where the conflict, breach, contravention, creation or violation
is not reasonably expected to have a Material Adverse Effect.

 

D. Governmental Consents. The execution and delivery by the Company of this
Amendment and the performance by the Company of the Amended Agreement do not and
will not require any approval, consent, exemption, authorization, or other
action by, or notice to, or filing with, any Governmental Authority.

 

E. Binding Obligation. This Amendment has been duly executed and delivered by
the Company and this Amendment and the Amended Agreement are the legally valid
and binding obligations of the Company, enforceable against the Company in
accordance with their respective terms, except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or limiting
creditors’ rights generally or by equitable principles relating to
enforceability.

 

F. Incorporation of Representations and Warranties From Credit Agreement. The
representations and warranties contained in Article V of the Credit Agreement
are and will be true, correct and complete in all material respects on and as of
the First Amendment Effective Date to the same extent as though made on and as
of that date,

 

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except to the extent such representations and warranties specifically relate to
an earlier date, in which case they were true, correct and complete in all
material respects on and as of such earlier date; provided that, if a
representation and warranty is generally qualified as to materiality, with
respect to such representation and warranty the applicable materiality qualifier
set forth above shall be disregarded for purposes of this provision.

 

G. Absence of Default. No Default or Event of Default exists or shall result
from this Amendment.

 

Section 4. MISCELLANEOUS

 

A. Reference to and Effect on the Credit Agreement and the Other Loan Documents.

 

(i) On and after the First Amendment Effective Date, each reference in the
Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words
of like import referring to the Credit Agreement, and each reference in the
other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words
of like import referring to the Credit Agreement shall mean and be a reference
to the Amended Agreement.

 

(ii) Except as specifically amended by this Amendment, the Credit Agreement and
the other Loan Documents shall remain in full force and effect and are hereby
ratified and confirmed.

 

(iii) The execution, delivery and performance of this Amendment shall not,
except as expressly provided herein, constitute a waiver of any provision of, or
operate as a waiver of any right, power or remedy of the Agent or any Bank
under, the Credit Agreement or any of the other Loan Documents.

 

B. Fees and Expenses. The Company acknowledges that all costs, fees and expenses
as described in Section 10.04 of the Credit Agreement incurred by the Agent and
its counsel with respect to this Amendment and the documents and transactions
contemplated hereby shall be for the account of the Company.

 

C. Headings. Section and subsection headings in this Amendment are included
herein for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose or be given any substantive effect.

 

D. Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT
OF LAW PRINCIPLES THAT WOULD REQUIRE APPLICATION OF ANOTHER LAW; PROVIDED THAT
THE AGENT AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

 

E. Counterparts; Effectiveness. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which

 

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when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document. This Amendment (other than the provisions of Section 1
hereof, the effectiveness of which is governed by Section 2 hereof) shall become
effective upon the execution of a counterpart hereof by the Company and Majority
Banks and receipt by the Company and the Agent of written or telephonic
notification of such execution and authorization of delivery thereof.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.

MENTOR GRAPHICS CORPORATION By:   /s/    Dennis Weldon            

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Name:   Dennis Weldon Title:   Treasurer

 

 

and

By:   /s/    Dean Freed            

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Name:   Dean Freed Title:   Vice President and General Counsel

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BANK OF AMERICA, N.A., as Agent and as a

Bank

By:   /s/    Kevin McMahaon            

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Name:   Kevin McMahaon Title:   Managing Director

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FLEET NATIONAL BANK By:   /s/    Joan Kiekhaefer    

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Name:   Joan Kiekhaefer Title:   Managing Director

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KEY CORPORATE CAPITAL, INC.

By:

 

/s/    Robert W. Boswell

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Name:

  Robert W. Boswell

Title:

  Vice President

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MIZUHO CORPORATE BANK, LIMITED

By:

 

/s/    Bertram H. Tang

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Name:

  Bertram H. Tang

Title:

  Vice President and Team Leader

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EXHIBIT C

 

Exhibit C