EXHIBIT 10.36
AMENDED AND RESTATED GUARANTY
from
ELECTRONIC ARTS INC.
to
FLATIRONS FUNDING, LIMITED PARTNERSHIP
Dated as of March 7, 1997
AMENDED AND RESTATED GUARANTY
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AMENDED AND RESTATED GUARANTY, dated as of Xxxxx 0, 0000 (xxx
"Xxxxxxxx"), from ELECTRONIC ARTS INC., a Delaware corporation (the
"Guarantor"), to FLATIRONS FUNDING, LIMITED PARTNERSHIP, a Delaware limited
partnership (the "Lessor").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Guarantor and the Lessor entered into a Guaranty dated as
of February 14, 1995 (the "Original Guaranty") pursuant to which the Guarantor
guaranteed to the Lessor the due and punctual payment and performance by
Electronic Arts Redwood, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Guarantor (the "Guaranteed Subsidiary"), of its obligations
under a certain Agreement for Lease (the "Agreement for Lease") and a certain
Lease Agreement (the "Master Lease") both dated as of February 14, 1995; and
WHEREAS, the Lessor and the Guaranteed Subsidiary propose to enter
into an amended and restated Agreement for Lease, (the "Amended and Restated
Agreement for Lease") and an amendment to the Lease Agreement (the "Master Lease
Amendment") both dated as of the date hereof (the Amended and Restated Agreement
for Lease, as it may be further amended, restated, modified, supplemented or
extended from time to time, and the Master Lease, as amended by the Master Lease
Amendment and as it may be further amended, restated, modified, supplemented, or
extended from time to time, are collectively hereinafter referred to as the
"Guaranteed Agreements"); and
WHEREAS, the Lessor is unwilling to enter into the Amended and
Restated Agreement for Lease and the Master Lease Amendment with the Guaranteed
Subsidiary unless the Guarantor enters into this Amended and Restated Guaranty
amending and restating the Original Guaranty in its entirety.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Original Guaranty is hereby amended and restated in its
entirety as follows:
1. Guaranty. (a) The Guarantor hereby unconditionally and
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irrevocably guarantees to the Lessor the due and punctual performance of and
compliance by the Guaranteed Subsidiary with all obligations, covenants,
warranties, undertakings and conditions contained in or arising under the
Guaranteed Agreements, including, but not limited to, the full and punctual
payment by the Guaranteed Subsidiary, when due, whether at the stated due date,
by acceleration or otherwise, of any and all rent, obligations, liabilities,
indebtedness and other amounts of every kind arising out of the Guaranteed
Agreements, all amounts in respect of the indemnities provided for in the
Guaranteed Agreements, and all damages (whether provided for in the
Guaranteed Agreements or otherwise permitted by law) in respect of any failure
or refusal by the Guaranteed Subsidiary to make any such payment, howsoever
created, arising or evidenced, voluntary or involuntary, whether direct or
indirect, absolute or contingent, now or hereafter existing or owing to the
Lessor (all the foregoing obligations and undertakings are collectively referred
to hereinafter as the "Obligations").
(b) This Guaranty is an absolute and unconditional guaranty of
performance and payment when due under the Guaranteed Agreements and not of
collection of any indebtedness contained in or arising under the Guaranteed
Agreements. This Guaranty is in no way conditioned upon any attempt to collect
from the Guaranteed Subsidiary or upon any other event or contingency, and shall
be binding upon and enforceable against the Guarantor without regard to the
validity or enforceability of the Guaranteed Agreements or of any term thereof.
If for any reason the Guaranteed Subsidiary shall fail or be unable duly and
punctually to pay any such amount when due under the Guaranteed Agreements, the
Guarantor will forthwith pay, if not already paid by the Guaranteed Subsidiary,
the same immediately upon demand.
(c) In case either of the Guaranteed Agreements shall be terminated
as a result of the rejection thereof by any trustee, receiver or liquidating
agent of the Guaranteed Subsidiary or any of its properties in any bankruptcy,
insolvency, reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar proceeding, the Guarantor's obligations hereunder shall
continue to the same extent as if such agreement had not been so rejected. The
Guarantor agrees that this Guaranty shall continue to be effective or be
reinstated, as the case may be, if at any time payment to the Lessor of the
Obligations or any part thereof is rescinded or must otherwise be returned by
the Lessor upon the insolvency, bankruptcy or reorganization of the Guaranteed
Subsidiary, or otherwise, as though such payment to the Lessor had not been
made.
(d) The Guarantor shall pay all reasonable costs, expenses and
damages incurred (including, without limitation, attorneys' fees and
disbursements) in connection with the enforcement of (i) the Obligations to the
extent that such costs, expenses and damages are not paid by the Guaranteed
Subsidiary and (ii) the obligations of the Guarantor under this Guaranty.
2. Guaranty Continuing and Unlimited. The obligations of the
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Guarantor hereunder shall be continuing and unlimited, shall not be subject to
any counterclaim, set-off, deduction or defense (other than payment or
performance) based upon any claim the Guarantor may have against the Lessor or
the Guaranteed Subsidiary or any other Person, and shall remain in full force
and effect without regard to, and shall not be released, discharged or in any
way affected by any circumstance or condition (whether or not the Guarantor
shall have any knowledge or notice thereof) whatsoever which might constitute a
legal or equitable discharge or defense including, but not limited to (a) any
express or implied amendment or modification of or supplement to the Guaranteed
Agreements or any other agreement referred to in either thereof, or any other
instrument applicable to the Guaranteed Subsidiary or to the Obligations, or any
part thereof, or any assignment or transfer of any thereof; (b) any failure on
the part of the Guaranteed Subsidiary to perform or comply with the Guaranteed
Agreements or any failure of any other Person to perform or comply with any term
of the Guaranteed Agreements, or any
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other agreement as aforesaid; (c) any waiver, consent, change, extension,
indulgence or other action or any action or inaction under or in respect of the
Guaranteed Agreements, or any other agreement as aforesaid, or this Guaranty,
whether or not the Lessor, the Guaranteed Subsidiary or the Guarantor has notice
or knowledge of any of the foregoing; (d) any bankruptcy, insolvency,
reorganization, arrangement, readjustment, composition, liquidation or similar
proceeding with respect to the Guarantor or the Guaranteed Subsidiary, or their
respective properties or their creditors, or any action taken by any trustee or
receiver or by any court in any such proceeding; (e) any furnishing or
acceptance of additional security or any release of any security (and the
Guarantor authorizes the Lessor to furnish, accept or release said security);
(f) any limitation on the liability or Obligations of the Guaranteed Subsidiary
under the Guaranteed Agreements (other than any limitation expressly provided
for therein) or any termination, cancellation, frustration, invalidity or
unenforceability, in whole or in part, of the Guaranteed Agreements, or any term
of any thereof; (g) any lien, charge or encumbrance on or affecting the
Guarantor's or the Guaranteed Subsidiary's respective assets and properties; (h)
any act, omission or breach on the part of the Lessor under the Guaranteed
Agreements, or any other agreement at any time existing between the Lessor and
the Guaranteed Subsidiary or any other law, governmental regulation or other
agreement applicable to the Lessor or any Obligation; (i) any claim as a result
of any other dealings among the Lessor, the Guarantor or the Guaranteed
Subsidiary or any of them; (j) the assignment of the Guaranteed Agreements by
the Lessor to any other Person, or the assignment of this Guaranty by the Lessor
to any Person permitted under Section 6 of that certain Amended and Restated
Guarantor's Consent dated as of the date hereof among the Guarantor, the Lessor
and The Dai-Ichi Kangyo Bank, Limited, New York Branch, as Collateral Agent; (k)
any change in the name of the Lessor, the Guaranteed Subsidiary or any other
person referred to herein; or (l) any failure by the Lessor to perfect or
continue the perfection of any lien or security interest in any collateral or
any failure by the Lessor to protect the property covered by any such lien or
security interest.
The unconditional obligations of the Guarantor set forth herein
constitute the full recourse obligations of the Guarantor enforceable against it
to the full extent of all of its present and future income, assets and
properties.
3. Waiver. The Guarantor unconditionally waives: (a) notice of any
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of the matters referred to in Section 2 hereof; (b) all notices which may be
required by statute, rule of law or otherwise to preserve any rights against the
Guarantor hereunder, including, without limitation, notice of the acceptance of
this Guaranty, or the creation, renewal, extension, modification or accrual of
the Obligations or notice of any other matters relating thereto, any
presentment, demand, notice of dishonor, protest, nonpayment of any damages or
other amounts payable under the Guaranteed Agreements; (c) any requirement for
the enforcement, assertion or exercise of any right, remedy, power or privilege
under or in respect of the Guaranteed Agreements, including, without limitation,
diligence in collection or protection of or realization upon the Obligations or
any part thereof or any collateral therefor; (d) any requirement of diligence;
(e) any requirement to mitigate the damages resulting from a default by the
Guaranteed Subsidiary under the Guaranteed Agreements; (f) the occurrence of
every other condition precedent to which the Guarantor or the Guaranteed
Subsidiary may otherwise be entitled; (g) the right to require the Lessor to
proceed against the Guaranteed Subsidiary or any
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other Person liable on the Obligations, to proceed against or exhaust any
security held from the Guaranteed Subsidiary or any other Person, or to pursue
any other remedy in the Lessor's power whatsoever, and the Guarantor waives the
right to have the property of the Guaranteed Subsidiary first applied to the
discharge of the Obligations; and (h) the defense of any statute of limitations
affecting the enforcement of the Guaranty or the liability of the Guarantor, the
Guaranteed Subsidiary or any other Person liable on the Obligations.
The Lessor may, at its election, exercise any right or remedy it may
have against the Guaranteed Subsidiary or any security held by the Lessor,
including, without limitation, the right to foreclose upon any such security by
judicial or nonjudicial sale, without affecting or impairing in any way the
liability of the Guarantor hereunder, except to the extent the Obligations have
been paid, and the Guarantor waives any defense arising out of the absence,
impairment or loss of any right of reimbursement, contribution or subrogation or
any other right or remedy of the Guarantor against the Guaranteed Subsidiary or
any such security, whether resulting from such election by the Lessor or
otherwise.
The Guarantor understands that the liability of the Guaranteed
Subsidiary to the Lessor for the Obligations may be secured by real property and
that the Guarantor shall be liable for the full amount of its liability
hereunder notwithstanding foreclosure on such real property by trustee sale or
any other reason impairing the Guarantor's right to proceed against the
Guaranteed Subsidiary. The Guarantor waives all rights and defenses that the
Guarantor may have because the Guaranteed Subsidiary's Obligations are secured
by real property. This means, among other things: (a) the Lessor may collect
from the Guarantor without first foreclosing on any real or personal property
collateral pledged by the Guaranteed Subsidiary; and (b) if the Lessor
forecloses on any real property collateral pledged by the Guaranteed Subsidiary:
(i) the amount of the debt may be reduced only by the price for which that
collateral is sold at the foreclosure sale, even if the collateral is worth more
than the sale price, and (ii) the Lessor may collect from the Guarantor even if
the Lessor, by foreclosing on the real property collateral, has destroyed any
right the Guarantor may have to collect from the Guaranteed Subsidiary. This is
an unconditional and irrevocable waiver of any rights and defenses the Guarantor
may have because the Guaranteed Subsidiary's Obligations are secured by real
property. These rights and defenses include, but are not limited to, any rights
or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code
of Civil Procedure.
The Guarantor waives any defense arising by reason of any disability
or other defense of the Guaranteed Subsidiary or by reason of the cessation from
any cause whatsoever of the liability, either in whole or in part, of the
Guaranteed Subsidiary to the Lessor for the Obligations. The Guarantor hereby
waives, to the fullest extent permitted by law, all rights and benefits under
Section 2809 of the California Civil Code purporting to reduce a guarantor's
obligations in proportion to the principal obligation, all rights and benefits
under Section 580a of the California Code of Civil Procedure governing
determination of fair market value following the exercise of power of sale, all
rights and benefits under Section 580b of the California Code of Civil Procedure
stating that no deficiency may be recovered on a real property purchase money
obligation, all rights and benefits under Section 580d of the California Code of
Civil Procedure stating that no deficiency may be recovered on a note secured by
a deed of trust on
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real property in case such real property is sold under the power of sale
contained in such deed of trust, and all rights and benefits under Section 726
of the California Code of Civil Procedure and any and all similar laws now in
effect or hereafter enacted in the State of California regarding the procedures
to be followed by a creditor with real property security and/or limiting the
right of such a creditor to a deficiency judgment, including, without
limitation, the California law now in effect stating that the Lessor must first
proceed against any real property collateral before commencing an action to
collect the Obligations, if such sections, or any of them, have any application
hereto or any application to the Guarantor. Without limiting the generality of
the foregoing or any other provision hereof, the Guarantor irrevocably waives
any defense that the Guarantor may have under Section 580a of the California
Code of Civil Procedure including, without limitation, the requirement that (x)
the Lessor bring a lawsuit against the Guarantor under this Guaranty (if at all)
within three months after the date which the Lessor may hereafter elect to
complete a nonjudicial foreclosure sale (if any) under any deed of trust now or
hereafter securing the Obligations and (y) the Guarantor be credited with the
fair market value (as determined after court hearing) of any real property
encumbered by any such deed of trust which the Lessor may hereafter elect to
nonjudicially foreclose (if any). The Guarantor expressly waives any and all
benefits under the California Civil Code Sections 2808, 2810, 2819, 2821, 2839,
2845, 2848, 2849, 2850 and 2855.
The Guarantor understands that the Lessor's exercise of certain rights
and remedies contained in the Guaranteed Agreements may affect or eliminate the
Guarantor's rights of subrogation against the Guaranteed Subsidiary and that the
Guarantor may therefore incur partially or totally nonreimbursable liability
hereunder; nevertheless, the Guarantor hereby authorizes and empowers the
Lessor, its successors, endorsees and/or assignees, to exercise in its or their
sole discretion, any rights and remedies, or any combination thereof, which may
then be available, it being the purpose and intent of the Guarantor that its
obligations hereunder shall be absolute, independent and unconditional under any
and all circumstances.
The Guarantor assumes the responsibility for being and keeping
informed of the financial condition of the Guaranteed Subsidiary and of all
other circumstances bearing upon the risk of nonpayment of the Obligations and
agrees that the Lessor shall not have any duty to advise the Guarantor of
information regarding any condition or circumstance or any change in such
condition or circumstance. The Guarantor acknowledges that the Lessor has not
made any representation to the Guarantor concerning the financial condition of
the Guaranteed Subsidiary.
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4. Representations and Warranties of the Guarantor. The Guarantor
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represents and warrants to the Lessor that:
(a) Corporate Existence. The Guarantor (i) is duly organized,
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validly existing and in good standing under the laws of the State of Delaware,
(ii) has the corporate power, authority and legal right to own or operate its
properties or to lease the properties it operates and to conduct the business in
which it is currently engaged and (iii) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of properties or the conduct of its business
requires such qualification, except where such failure to qualify would not have
a material adverse effect on the financial condition or business of Guarantor
and its subsidiaries, taken as a whole.
(b) Corporate Power; Authorization; Enforceable Obligations. The
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Guarantor has the corporate power, authority and legal right to make, deliver
and perform this Guaranty and has taken all necessary corporate action to
authorize the execution, delivery and performance of this Guaranty. No consent
of any other Person (including, without limitation, stockholders and creditors
of the Guarantor), and no authorization of, notice to, or other act by any
governmental authority, agency or instrumentality is required in connection with
the execution, delivery, performance, validity or enforceability of this
Guaranty. This Guaranty has been duly executed and delivered on behalf of the
Guarantor and constitutes a legal, valid and binding obligation of the
Guarantor, enforceable against the Guarantor in accordance with its terms.
(c) No Legal Bar. The execution, delivery and performance by the
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Guarantor of this Guaranty will not violate any provision of any law or
regulation applicable to the Guarantor or of any award, order or degree
applicable to the Guarantor of any court, arbitrator or governmental authority,
or of the Certificate of Incorporation or By-Laws of the Guarantor, or of any
security issued by the Guarantor or of any material mortgage, indenture, lease,
contract or other agreement or undertaking to which the Guarantor is a party or
by which the Guarantor or any of its properties or assets may be bound.
(d) No Material Litigation. There is no action, suit, proceeding or
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investigation at law or in equity by or before any court, governmental body,
agency, commission or other tribunal now pending or, to the best knowledge of
Guarantor, threatened against or affecting the Guarantor or any of its property
or rights which questions the enforceability of this Guaranty or which, if
adversely determined, would have a material adverse impact on the financial
condition or business of the Guarantor and its subsidiaries, taken as a whole,
or which, if adversely determined, would materially impair the ability of the
Guarantor to perform its obligations hereunder.
(e) Employee Benefit Plans. Each Plan and, to the best knowledge of
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the Guarantor, each Multiemployer Plan, has been administered in accordance with
its terms in all material respects and complies in all material respects with
all applicable requirements of law and regulations, and, to the extent
applicable, (i) no Reportable Event has occurred with respect to any Plan or, to
the best knowledge of the Guarantor, any Multiemployer Plan which would have a
materially adverse effect on the financial condition or business of the
Guarantor and its
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affiliates, taken as a whole; (ii) no steps have been taken to terminate any
Plan or to appoint a receiver to administer any Plan or, to the best knowledge
of the Guarantor, to terminate or appoint a receiver to administer any
Multiemployer Plan, and neither the Guarantor nor any of its affiliates has
withdrawn from any Multiemployer Plan or initiated steps to do so; (iii) there
is no Unfunded Vested Liability or withdrawal liability with respect to any Plan
or, to the best knowledge of the Guarantor, any Multiemployer Plan, that would
have, in the event of termination of such Plan or withdrawal from such
Multiemployer Plan, a materially adverse effect on the financial condition or
business of the Guarantor and its affiliates, taken as a whole; (iv) no
contribution failure has occurred with respect to any Plan sufficient to give
rise to a lien under Section 302(f) of the Employee Retirement Income Security
Act of 1974, as amended, and any regulations promulgated and rulings issued
thereunder ("ERISA"); and (v) no condition exists or event or transaction has
occurred with respect to any Plan or, to the best knowledge of the Guarantor,
any Multiemployer Plan, which could reasonably be expected to result in the
incurrence by the Guarantor or any of its affiliates of any material liability,
fine or penalty. For purposes of this Guaranty: (A) Plan shall mean an "employee
pension benefit plan", as such term is defined in Section 3(2) of ERISA, which
is subject to Title IV of ERISA (other than a Multiemployer Plan) and to which
the Guarantor or any corporation, trade or business that is, at any relevant
time, required to be aggregated with the Guarantor, under Sections 414(b), (c),
(m) or (o) of the Internal Revenue Code of 1986, as amended, and any regulations
promulgated and rulings issued thereunder (the "Code") or Section 4001 of ERISA,
may have any liability, including any liability by reason of having been a
substantial employer within the meaning of Section 4063 of ERISA, at any time
during the preceding five years, or by reason of being deemed to be a
contributing sponsor under Section 4069 of ERISA; (B) Multiemployer Plan shall
mean a plan described in Section 3(37) of ERISA and to which the Guarantor or
any corporation, trade or business that is, at any relevant time, required to be
aggregated with the Guarantor, under Sections 414(b), (c), (m) or (o) or of the
Code or Section 4001 of ERISA may have any liability; (C) Reportable Event shall
mean a "reportable event" as defined in Section 4043 of ERISA and the
regulations issued thereunder; and (D) Unfunded Vested Liability shall mean,
relative to any Plan, at any time, the excess (if any) of (I) the present value
of all vested nonforfeitable benefits under such Plan over (II) the fair market
value of all Plan assets allocable to such benefits, all determined as of the
then most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of the Guarantor or any affiliate to the
Pension Benefit Guaranty Corporation or any successor thereto (the "PBGC") or
the Plan under Title IV of ERISA. Neither the Guarantor nor any entity required
(at any relevant time) to be aggregated with the Guarantor under Section 414(b),
(c), (m) or (o) of the Code or Section 4001 of ERISA has ever sponsored or
maintained, had any obligation to contribute to, had liability under or has
otherwise been a party to, any (i) "employee pension benefit plan" (as such term
is defined in ERISA) subject to Section 412 of the Code, Part 3 of Subtitle B of
Title I of ERISA or Title IV of ERISA, or (ii) a "welfare plan" (as such term is
defined ERISA) that provides for continuing benefits or coverage for any
participant or beneficiary of a participant after such participant's termination
of employment except to the extent required by applicable law.
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(f) Guaranteed Subsidiary. The Guarantor owns and will continue to
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own, directly or indirectly, not less than all of the issued and outstanding
shares of capital stock of the Guaranteed Subsidiary. All such shares have been
validly issued, are fully paid and non-assessable and are free and clear of any
liens or encumbrances.
(g) Taxes. The Guarantor and each of its subsidiaries has filed all
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federal and other income tax returns and reports required by law to have been
filed by it and has paid all taxes and governmental charges thereby shown to be
owing, except any such taxes or charges which are being diligently contested in
good faith by appropriate proceedings and for which adequate reserves in
accordance with generally accepted accounting principles shall have been set
aside on its books.
(h) Compliance with Laws. The Guarantor and each of its subsidiaries
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is in compliance with all applicable laws, rules, regulations and orders of any
governmental authority (including, without limitation, all applicable laws,
rules, regulations and orders relating to environmental protection, the use and
disposal of hazardous substances and building and land use), except those the
non-compliance with which would not, either singly or in the aggregate,
materially adversely effect the financial condition or business of the Guarantor
and its subsidiaries taken as a whole or impair the ability of the Guarantor to
perform its obligations hereunder.
5. Payments. Each payment by the Guarantor to the Lessor under this
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Guaranty shall be made by transferring the amount thereof to the Lessor or an
account designated by the Lessor in immediately available funds without set-off
or counterclaim. The making of any payments by the Guarantor hereunder shall
not constitute a waiver of any rights not waived pursuant hereto that the
Guarantor may have against the Lessor or the Guaranteed Subsidiary.
6. Parties. This Guaranty shall inure to the benefit of the Lessor
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and its successors, assigns or transferees, and shall be binding upon the
Guarantor and its successors and assigns. The Guarantor may not delegate any of
its duties under this Guaranty without the prior written consent of the Lessor
or any Person to whom the Lessor has assigned this Guaranty. Upon notice to the
Guarantor, the Lessor and its successors, assigns and transferees may assign its
or their rights and benefits under this Guaranty to any financial institution
providing financing to the Lessor in connection with the Guaranteed Agreements.
7. Notices. All notices, demands and other communications between
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the Lessor and the Guarantor under this Guaranty shall be in writing and shall
be delivered or sent to the address or telecopier number shown below, or to such
other address or telecopier number as either party may by written notice to the
other have designated for such purpose. Any such notice, demand or other
communication shall not be effective until actually received.
If to the Lessor:
Flatirons Funding, Limited Partnership
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c/o ML Leasing Equipment Corp. -
Project and Lease Finance Group
World Financial Center
North Tower - 27th Floor
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxx Xxxxxxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
With a copy of each such notice to be simultaneously given,
delivered or served to Xxxxxx Xxxxx at the following address:
ML Leasing Equipment Corp.
Controllers Office
World Financial Center
South Tower - 8th Floor
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attention: Xxxxxx Xxxxx
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
If to the Guarantor:
Electronic Arts Inc.
0000 Xxxxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx Xxxxxxx, Esq.
Vice President and General Counsel
Telecopier: (000) 000-0000
Telephone: (000) 000-0000
8. Remedies. The Guarantor stipulates that the remedies at law in
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respect of any default or threatened default by the Guarantor in the performance
of or compliance with any of the terms of this Guaranty are not and will not be
adequate, and that any of such terms may be specifically enforced by a decree
for specific performance or by an injunction against violation of any such terms
or otherwise.
9. Rights to Deal with the Guaranteed Subsidiary. At any time and
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from time to time, without terminating, affecting or impairing the validity of
this Guaranty or the obligations of the Guarantor hereunder, the Lessor may deal
with the Guaranteed Subsidiary in the same manner and as fully as if this
Guaranty did not exist and shall be entitled, among other
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things, to grant the Guaranteed Subsidiary, without notice or demand and without
affecting the Guarantor's liability hereunder, such extension or extensions of
time to perform, renew, compromise, accelerate or otherwise change the time for
payment of or otherwise change the terms of payment or any part thereof
contained in or arising under the Guaranteed Agreements, or to waive any
Obligation of the Guaranteed Subsidiary to perform, any act or acts as the
Lessor may deem advisable.
10. Subrogation. The Guarantor irrevocably waives any and all
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rights to which it may be entitled, by operation of law or otherwise, upon
making any payment hereunder to be subrogated to the rights of the payee against
the Guaranteed Subsidiary with respect to such payment or otherwise to be
reimbursed, indemnified or exonerated by the Guaranteed Subsidiary in respect
thereof until the Obligations have been fully, finally and indefeasibly paid in
cash to the Lessor and the Guaranteed Agreement and all obligations of the
Lessor thereunder terminated.
11. Guarantor's Covenants. The Guarantor hereby covenants and agrees
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that until the Obligations and all obligations of the Guarantor under this
Guaranty have been paid or discharged in full:
(a) Compliance with Law. The Guarantor shall comply, and shall cause
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each of its subsidiaries to comply, in all material respects with all
applicable laws, rules, regulations and orders of any governmental authority
having jurisdiction over its or such subsidiary's business, as the case may be,
except (i) such noncompliance as would not materially adversely affect the
financial condition or business of the Guarantor and its subsidiaries, taken as
a whole, or (ii) such noncompliance as is being contested in good faith by
appropriate proceedings.
(b) Payment of Taxes. The Guarantor shall, and shall cause each of
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its subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it or such subsidiary or upon its or such
subsidiary's income or properties, as the case may be, prior to the date on
which penalties attach thereto, except to the extent that (i) any such tax,
assessment, charge or levy is being contested in good faith by appropriate
proceedings and adequate reserves therefor have been established by the
Guarantor or such subsidiary, as the case may be, or (ii) the failure so to pay
or discharge any such tax, assessment, charge or levy would not materially
adversely affect the financial condition or business of the Guarantor and its
subsidiaries, taken as a whole.
(c) Maintenance of Insurance. The Guarantor shall maintain, and
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shall cause each of its subsidiaries to maintain, with financially sound and
reputable independent insurers, insurance with respect to its or such
subsidiary's properties and business, as the case may be, against loss or damage
of the kinds customarily insured against by entities engaged in the same or
similarly situated business, of such types and in such amounts as are
customarily carried under similar circumstances by such other entities.
(d) Consolidated Tangible Net Worth. The Guarantor shall maintain
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at all
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times a consolidated tangible net worth of not less than the sum of (a)
$180,000,000 plus (b) 50% of the Guarantor's cumulative positive net income for
each of its fiscal quarters that shall have elapsed during the period from the
date of the Original Guaranty to the date such determination is being made,
commencing with the fiscal quarter ended June 30, 1995; provided, however, that
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in no event shall the Guarantor's consolidated tangible net worth at any time
during the periods set forth below be less than the amount set forth opposite
such period:
Period Amount
------ ------
March 7, 1997 to March 30, 1997 $210,000,000
March 31, 1997 to March 30, 1998 $245,000,000
Thereafter $290,000,000
For purposes of this Section 11(d): (i) consolidated tangible net worth shall
mean the total stockholder's equity of the Guarantor and its subsidiaries less
the amount of all intangible assets (excluding software acquired by the
Guarantor or any subsidiary which is capitalized in accordance with generally
accepted accounting principles) of the Guarantor and its subsidiaries, in each
case determined on a consolidated basis in accordance with generally accepted
accounting principles; and (ii) net income shall mean, for any period, the net
income (or loss) of the Guarantor and its subsidiaries for such period, less
----
(plus) the amount of any extraordinary or non-recurring gains (or losses) for
----
such period included in net income, determined in each case on a consolidated
basis in accordance with generally accepted accounting principles.
(e) Fixed Charge Coverage Ratio. The Guarantor shall not permit the
---------------------------
ratio of its consolidated EBITDAR to consolidated fixed charges as of the
end of any measurement period to be less than 3:1. For purposes of this Section
11(e): (i) EBITDAR shall mean, with respect to the Guarantor and its
subsidiaries for any period, the sum of (a) the consolidated net income of the
Guarantor and its subsidiaries for such period before any extraordinary items
and deduction of interest expenses and income taxes, plus (b) depreciation and
----
amortization expenses of the Guarantor and its subsidiaries for such period to
the extent such expenses were deducted in computing the net income of the
Guarantor and its subsidiaries for such period, plus (c) the aggregate amount of
----
all rentals paid during such period by the Guarantor and its subsidiaries under
any lease (other than leases capitalized or required under generally accepted
accounting principles to be capitalized on the balance sheet of the Guarantor
and its subsidiaries) to the extent such rentals were deducted in computing the
net income of the Guarantor and its subsidiaries for such period, in each case
determined on a consolidated basis in accordance with generally accepted
accounting principles; (ii) consolidated fixed charges shall mean, with respect
to the Guarantor and its subsidiaries for any period, the sum (without
duplication) of (a) the aggregate amount of all interest payments due during
such period in respect of any Indebtedness (as defined in the Master Lease) or
other liabilities of the Guarantor and its subsidiaries (including, without
limitation, the portion of any rent payable under any lease capitalized or
required under generally accepted accounting principles to be capitalized on the
balance sheet of the Guarantor and its subsidiaries attributable to interest),
plus (b) the aggregate amount of all rentals paid by the Guarantor and its
----
subsidiaries during such period under any lease (other than leases capitalized
or required under generally accepted accounting principles to
11
be capitalized on the balance sheet of the Guarantor and its subsidiaries), in
each case determined on a consolidated basis in accordance with generally
accepted accounting principles; and (iii) measurement period shall mean, 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) Total Consolidated Debt. The Guarantor shall not at any time
-----------------------
permit its total consolidated debt to exceed 60% of its total consolidated
capital. As used in this Section 11(f): (i) total consolidated debt shall mean
the sum (without duplication) of (a) all Indebtedness (as defined in the Master
Lease) of the Guarantor and its subsidiaries, plus (b) the aggregate amount of
----
the Obligations as reasonably determined by the Guarantor in good faith, but in
no event less than the total Adjusted Acquisition Cost of all Property (as such
terms are defined in the Guaranteed Agreements) and (ii) total consolidated
capital shall mean, with respect to the Guarantor and its subsidiaries, the sum
of (a) the total consolidated stockholders equity of the Guarantor and its
subsidiaries as reflected in accordance with generally accepted accounting
principles on its most recent consolidated balance sheet, plus (b) total
----
consolidated debt (as defined in clause (i) above) of the Guarantor and its
subsidiaries.
(g) Dividends. The Guarantor shall not, nor shall it permit any of
---------
its subsidiaries to declare, pay or make any dividend on, or make any payment on
account of, or purchase, redeem, defease, return or otherwise acquire, or set
apart assets for a sinking or other analogous fund for the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class of stock
of the Guarantor or any option or warrant thereon, whether now or hereafter
outstanding, or make any other distribution in respect thereof or on any warrant
or option thereon, whether directly or indirectly, whether in cash or property
or in obligations of the Guarantor or any subsidiary (all of the foregoing,
"Dividends"), except that, provided the Guarantor is not in default of any of
its obligations under this Guaranty, the Guarantor may (i) during any fiscal
year pay Dividends in an amount not in excess of 50% of the Guarantor's net
income (as defined in Section 11(d)) for such fiscal year, (ii) repurchase up to
two million shares of its common stock (after any adjustment for any stock
splits or combinations) pursuant to a share repurchase program authorized by
written consent of the Guarantor's Board of Directors on July 22, 1994 (it being
understood that amounts paid to repurchase shares pursuant to this clause (ii)
shall be excluded for purposes of determining the amount of any Dividends
permitted to be paid pursuant to clause (i)) and (iii) declare and pay Dividends
on its common stock provided such Dividends are payable solely in additional
shares of its common stock or warrants, options or rights to acquire additional
shares of its common stock or split-ups combinations of its shares of common
stock into more or less such shares, as the case may be).
(h) Delivery of Financial Statements, Compliance Certificate and
------------------------------------------------------------
Notices. The Guarantor shall, for so long as this Guaranty shall remain in
-------
effect, furnish to the Lessor and any Assignee each of following:
(i) as soon as available, but in any event within 120
days after the end of each fiscal year of the Guarantor, a copy of the
audited consolidated balance sheet of the Guarantor as at the end of
such year and the related audited consolidated statements of income,
stockholders' investment and
12
cash flows for such year, setting forth in each case in comparative
form the figures as of the end of and for the previous year, all in
reasonable detail, certified, without qualification, by a firm of
independent accountants of nationally recognized standing acceptable
to the Lessor;
(ii) as soon as available, but in any event not later than
60 days after the end of each of the first three fiscal quarters of
each fiscal year of the Guarantor, a copy of the unaudited
consolidated balance sheet of the Guarantor as at the end of each such
fiscal quarter and the related unaudited consolidated statements of
income, stockholders' investment and cash flows of the Guarantor for
such quarter and the portion of the fiscal year through such date, all
in reasonable detail and setting forth in comparative form the figures
as of the end of and for the corresponding period of the previous
year, certified as to fairness of presentation by the Chief Financial
Officer, the Vice President of Finance or the Controller of the
Guarantor;
all such financial statements to be complete and correct in all
material respects (subject, in the case of interim statements, to
normal year-end audit adjustments) and to be prepared in reasonable
detail and in accordance with generally accepted accounting principles
(except, in the case of interim financial statements, that such
financial statements need not contain footnotes and shall be prepared
substantially in accordance with generally accepted accounting
principles) applied consistently throughout the periods reflected
therein (except as approved by the Guarantor's independent accountants
and disclosed therein);
(iii) concurrently with the delivery of the financial
statements referred to in clauses (i) and (ii), a certificate signed
by the Chief Financial Officer, the Vice President of Finance, the
Controller or the Assistant Controller of the Guarantor setting forth
(w) computations in reasonable detail demonstrating compliance with
the financial covenants set forth in Section 11(d), (e) and (f); (x)
the calculation of the ratio of Total Consolidated Debt to
Consolidated Tangible Net Worth; (y) the current S&P and Xxxxx'x
rating, if any, for Guarantor's long-term unsecured debt; and (z) a
statement that, to the best of such officer's knowledge, the Guarantor
during the relevant period has observed or performed all of its
covenants and other agreements hereunder, and satisfied every
condition contained herein to be observed, performed or satisfied by
it, and that such officer has obtained no knowledge of any default
hereunder except as described in such certificate (any such
description to be in reasonable detail and to include a description of
any action to be taken with respect to such default); and
(iv) promptly upon obtaining knowledge thereof, notice of
the occurrence of a Reportable Event under, or the institution of
steps by the Guarantor or any of its affiliates to withdraw from any
Multiemployer Plan, or the institution of any steps to terminate any
Plan or the failure to make a
13
required contribution to any Plan, or the taking of any action with
respect to a Plan or, to the best of its knowledge, any Multiemployer
Plan, which could reasonably be expected to result in the requirement
that the Guarantor or any of its affiliates furnish a bond or other
security to the PBGC or such Plan or Multiemployer Plan, or the
occurrence of any event with respect to any Plan or, to the best of
its knowledge, any Multiemployer Plan, which could reasonably be
expected to result in the incurrence by the Guarantor or any of its
affiliates of any material liability, fine or penalty, or the
occurrence of any material increase in the contingent liability of the
Guarantor or any of its affiliates with respect to any post-retirement
"welfare plan" (as such term is defined in ERISA) benefit, and in each
case the action which the Guarantor proposes to take with respect
thereto.
(i) Merger, etc. The Guarantor shall comply with Section 26(b) of
------------
the Master Lease.
12. Survival of Representations, Warranties, etc. All
---------------------------------------------
representations, warranties, covenants and agreements made herein and in
statements or certificates delivered pursuant hereto shall survive any
investigation or inspection made by or on behalf of the Lessor and shall
continue in full force and effect until all of the obligations of the Guarantor
under this Guaranty shall be fully performed in accordance with the terms
hereof, and until the payment in full of all sums payable by the Guaranteed
Subsidiary under the Guaranteed Agreements and the performance in full of all
obligations of the Guaranteed Subsidiary in accordance with the terms and
provisions of such agreements.
13. GOVERNING LAW AND CONSENT TO JURISDICTION; WAIVER OF JURY
---------------------------------------------------------
TRIAL. (a) THIS GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
-----
THE SUBSTANTIVE LAWS OF THE STATE OF NEW YORK. THE GUARANTOR HEREBY IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK LOCATED IN THE CITY
AND COUNTY OF NEW YORK IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND
RELATED TO OR IN CONNECTION WITH THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED
THEREBY, AND TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR HEREBY
WAIVES AND AGREES NOT TO ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN
ANY SUCH SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT
TO THE JURISDICTION OF SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS
BROUGHT IN AN INCONVENIENT FORUM, THAT THE VENUE OF THE SUIT, ACTION OR
PROCEEDING IS IMPROPER, OR THAT THIS GUARANTY OR ANY DOCUMENT OR ANY INSTRUMENT
REFERRED TO HEREIN OR THE SUBJECT MATTER HEREOF MAY NOT BE LITIGATED IN OR BY
SUCH COURTS. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE GUARANTOR AGREES
NOT TO SEEK AND HEREBY WAIVES THE RIGHT TO ANY REVIEW OF THE JUDGMENT OF
14
ANY SUCH COURT BY ANY COURT OF ANY OTHER NATION OR JURISDICTION WHICH MAY BE
CALLED UPON TO GRANT AN ENFORCEMENT OF SUCH JUDGMENT. THE GUARANTOR AGREES THAT
SERVICE OF PROCESS MAY BE MADE UPON IT BY CERTIFIED OR REGISTERED MAIL TO THE
ADDRESS FOR NOTICES SET FORTH IN THIS GUARANTY OR ANY METHOD AUTHORIZED BY THE
LAWS OF NEW YORK. THE REFERENCES IN THIS GUARANTY TO CALIFORNIA STATUTES ARE
PRECAUTIONARY ONLY, AND NEITHER THE GUARANTOR NOR THE LESSOR DESIRES OR INTENDS
THAT THIS GUARANTY OR THE RIGHTS AND REMEDIES OF THE LESSOR HEREUNDER SHALL IN
ANY RESPECT BE GOVERNED BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF
NEW YORK.
(b) THE PARTIES HERETO KNOWINGLY, VOLUNTARILY AND EXPRESSLY WAIVE ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ENFORCING OR
DEFENDING ANY RIGHTS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY. THE GUARANTOR ACKNOWLEDGES THAT THE
PROVISIONS OF THIS SECTION 13(b) HAVE BEEN BARGAINED FOR AND THAT IT HAS BEEN
REPRESENTED BY COUNSEL IN CONNECTION THEREWITH.
15
14. Miscellaneous. If any term of this Guaranty or any application
-------------
thereof shall be invalid or unenforceable, the remainder of this Guaranty and
any other application of such term shall not be affected thereby. Any term of
this Guaranty may be amended, waived, discharged or terminated only by an
instrument in writing signed by the Guarantor and the Lessor. The headings in
this Guaranty are for purposes of reference only and shall not limit or define
the meaning hereof. This Guaranty may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the undersigned have caused this Guaranty to be
executed and delivered as of the day and year first above written.
ELECTRONIC ARTS INC.,
as Guarantor
By: /s/ Xxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Vice President, Finance
Acknowledged and Agreed:
FLATIRONS FUNDING, LIMITED PARTNERSHIP
By: Flatirons Capital, Inc.,
Managing General Partner
By: /s/ Xxxx X. Xxxxxxxxx
----------------------------------------------
Name: Xxxx X. Xxxxxxxxx
Title: Vice President and Assistant Secretary
