AMENDMENT NO. 1 TO GUARANTY
AMENDMENT No. 1 ("Amendment No. 1"), dated as of March 15, 1995, from
SILICON GRAPHICS, INC., a Delaware corporation (the "Guarantor"), to VIRTUAL
FUNDING, LIMITED PARTNERSHIP, a Delaware limited partnership (the "Lessor").
WHEREAS, the Lessor and Silicon Graphics Real Estate, Inc. entered
into an Agreement for Lease dated as of November 18, 1993, as amended by
Amendment No. 1 to Agreement for Lease dated as of March 15, 1995; and
WHEREAS, the Lessor and Silicon Graphics Real Estate, Inc, entered
into a Lease Agreement dated as of November 18, 1993, as amended by Amendment
No. 1 to Lease Agreement dated as of March 15, 1995; and
WHEREAS, the Guarantor and the Lessor entered into a Guaranty, dated
as of November 18, 1993 (the "Guaranty"); and
WHEREAS, in connection with Amendment No. 1 to Lease Agreement and
Amendment No. 1 to Agreement for Lease, the Guarantor and the Lessor now desire
to amend the Guaranty.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and for good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:
1. Section 11 of the Guaranty is hereby amended by adding the
following new subparagraphs (d), (e) and (f) to such section, which new
subparagraphs shall read in their entirety as follows:
(d) CONSOLIDATED TANGIBLE NET WORTH. The Guarantor's Consolidated
Tangible Net Worth as of the last day of any fiscal quarter of the
Guarantor ending after the date hereof shall not be less than the sum
of (i) $402 million PLUS (ii) an amount equal to fifty percent (50%)
of the Guarantor's cumulative positive net income for each of its
fiscal quarters that shall have commenced after December 31, 1994 and
ended prior to (but not on) the date such determination is being made.
For purposes hereof, the term: (1) "Consolidated Tangible Net Worth"
means, on any date of determination, the total shareholder equity of
the Guarantor, less goodwill and intangible assets (other than
intangibles for capitalized software, prepaid royalties, patents and
other intellectual property), all as determined on a consolidated
basis in accordance with generally accepted accounting principles and
as
shown on the Guarantor's Compliance Certificate (as hereinafter
defined) delivered by the Guarantor pursuant to this Section 11(d),
provided that if the Guarantor shall fail to furnish any such
certificate, Consolidated Tangible Net Worth shall be determined on
the basis of the Guarantor's most recent quarterly financial
statements; and (2) "net income" shall mean, for any period, the net
income of the Guarantor and its subsidiaries for such period,
determined on a consolidated basis in accordance with generally
accepted accounting principles. The Guarantor shall deliver to the
Lessor promptly, and in any event not more than 100 days after the end
of each fiscal year of the Guarantor, and in any event not more than
60 days after the end of each fiscal quarter), a certificate of an
appropriate officer of the Guarantor (a "Compliance Certificate")
setting forth the calculation and/or information in respect of (x) the
Guarantor's Consolidated Tangible Net Worth as of the end of such
fiscal period, determined in accordance with this Section 11(d), (y)
the Guarantor's Fixed Charge Coverage Ratio (as defined in Section
11(e)) as of the end of such fiscal period, determined in accordance
with Section 11(e) hereof and (z) any purchases, redemptions or
acquisitions of the capital stock of the Guarantor and/or any of its
subsidiaries other than the type described in clause (ii) of Section
11(f) hereof made during such fiscal period.
(e) FIXED CHARGE COVERAGE RATIO. The Guarantor shall not permit its
Fixed Charge Coverage Ratio as of the end of any Measurement Period,
to be less than 2.00:1.00. For purposes hereof, the term "Fixed
Charge Coverage Ratio" means, on any date of determination, determined
on a consolidated basis in accordance with generally accepted
accounting principles, the ratio of (i) the sum of the Guarantor's
earnings before interest expense, rent expense, income taxes and
non-recurring charges (i.e., restructuring and merger related charges)
for such Measurement Period, but including interest income for such
Measurement Period, TO (ii) all obligations of the Guarantor paid in
such Measurement Period in respect of interest expense and rent
expense. For purposes hereof, the term "Measurement Period" means,
with respect to any fiscal quarter of the Guarantor, the period of
four fiscal quarters ending on the last day of such fiscal quarter.
(f) STOCK REPURCHASE. The Guarantor shall not, and shall not suffer
or permit any of its subsidiaries to purchase, redeem, or otherwise
acquire for value any shares of its capital stock or any warrants or
options to acquire such shares, now or hereafter outstanding; except
that (i) the Guarantor and its subsidiaries may
purchase shares of their respective capital stock; PROVIDED, that the
aggregate amount of cash or other consideration for such purchases
does not exceed $250 million during any fiscal year of the Guarantor
and (ii) the Guarantor and its subsidiaries may effect purchases,
redemptions or other acquisitions for value of the capital stock of
any subsidiary of the Guarantor in connection with the merger,
consolidation, or other corporate reorganization or restructuring
involving the Guarantor and/or its subsidiaries, provided that such
merger, consolidation or other corporate reorganization or
restructuring is otherwise permitted by this Guaranty.
2. The Guarantor hereby agrees to deliver to the Lessor on the date
hereof a certificate dated the date of this Amendment No. 1, from the Secretary
or Assistant Secretary of the Guarantor certifying (i) as to the incumbency and
signature of each officer of the Guarantor authorized to execute and deliver
this Amendment No. 1, (ii) that attached thereto are true and complete copies of
the Restated Certificate of Incorporation and By-Laws of the Guarantor as in
full force and effect on the date of this Amendment No. 1 and (iii) that
attached thereto is a true and complete copy of the resolutions of the Board of
Directors of the Guarantor authorizing the execution, delivery and performance
of this Amendment No. 1 and the transactions contemplated hereby, together with
a certificate of another officer of the Guarantor as to the incumbency and
signature of such Secretary or Assistant Secretary.
3. The Guarantor hereby represents and warrants that each of the
representations and warranties made in Section 4 of the Guaranty are Accurate
and Complete with the same force and effect as though made on and as of the date
of this Amendment No. 1, except to the extent that any such representations or
warranties expressly relate to an earlier date, in which case, such
representations and warranties were Accurate and Complete on and as of such
earlier date.
For purposes of this paragraph, the term "Accurate and Complete" means
when referring to any representation or warranty, that such representation and
warranty is true in all material respects and that the Guarantor has not failed
to disclose to the Lessor in writing any fact which if not disclosed to the
Lessor would make the facts actually stated materially misleading.
4. Except as expressly modified and amended hereby, the Guaranty
remains unchanged and in full force and effect in all respects. As expressly
modified and amended hereby, the Guarantor hereby affirms the Guaranty.
5. THIS AMENDMENT NO. 1 SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
6. This Amendment No. 1 may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same Amendment No. 1.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment No. 1 to be executed by their officers thereunto duly authorized as of
the date first above written.
SILICON GRAPHICS, INC.,
as Guarantor
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Senior Vice President,
Finance and Chief
Financial Officer
By: /s/ Xxx Xxxxxx
--------------------
Name: Xxx Xxxxxx
Title: Vice President,
Finance and Treasurer
Acknowledged and Agreed:
VIRTUAL FUNDING, LIMITED PARTNERSHIP
By: Virtual Capital, Inc.,
General Partner
By: /s/ Xxxxxxx X. Xxxx
-------------------------
Name: Xxxxxxx X. Xxxx
Title: Vice President and
Assistant Secretary
