Exhibit 10.1


 


Highfields
Capital Management LP


200
Clarendon Street


51st
Floor


Boston,
MA 02117


 


April 18,
2003


Silicon Graphics, Inc.


1600 Amphitheatre Parkway


Mountain View, CA 94043


Attention: Robert Bishop


Ladies and Gentlemen:


Reference is made to the
letter agreement dated February 11, 2003 (the “Confidentiality Agreement”)
between Highfields Capital Management LP (“Highfields”) and Silicon Graphics,
Inc.  (the “Company”).  Pursuant to the Confidentiality Agreement,
the Company provided Highfields with certain Information (as defined in the
Confidentiality Agreement) about the Company and its proposed restructuring of
the $230 million outstanding principal amount of its 5.25% Senior Convertible
Notes due September 1, 2004 (the “Old Notes”) issued under an Indenture dated
September 1, 1997 between the Company and State Street Bank and Trust Company
of California, N.A., as trustee ( the “Indenture”).  The proposed restructuring is referred to as the “Transaction” in
the Confidentiality Agreement.  The Company
has determined that the Transaction will be structured as an exchange offer
(the “Exchange Offer”), pursuant to which all holders of the Old Notes will be
offered, in exchange for each $1000 in principal amount of Old Notes, a choice
between $1000 principal amount of the Company ‘s 11.75% Notes due July 1, 2009
(the “New Notes”) or $1000 principal amount of the Company’s 6.50% Convertible
Notes due July 1, 2009.  The Exchange
Offer will be made as a public offer to all holders of the Old Notes by means
of a registration statement and a tender offer statement, such statements to be
filed with the U.S. Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as
amended, respectively.  The registration
statement and tender offer statement are referred to collectively as the
“Exchange Offer Materials”.  The
Exchange Offer Materials include a description of the New Notes.


Highfields represents that
investment entities over which it or its affiliates exercise investment
discretion and control (“the Funds”) are the sole beneficial owners of
$67,558,000 in aggregate principal amount of the Old Notes and that on behalf
of such Funds, it has full power to enter into this agreement and to dispose of
such Old Notes.  Highfields has reviewed
the Information it has received from the Company and has participated in
discussions with the Company of the terms of the Transaction.  Highfields acknowledges that the Company has
provided it the access and opportunity to obtain such additional Information as
it has deemed necessary to make an informed decision to participate in the
Exchange Offer, including the Exchange Offer Materials in the form in which
such Materials are to be filed with the SEC on the date that the Exchange Offer
is to be announced ( the “Launch Date”). 
The Company represents to Highfields that, as of the Launch Date the
Exchange Offer Materials as filed with the SEC will not contain any misstatements
of material fact or omissions of material fact necessary to make the statements
contained therein not misleading.  On
the Launch Date, all material Information


 


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provided
to Highfields pursuant to the Confidentiality Agreement will be made publicly
available and the “Restricted Period” under the Confidentiality Agreement shall
terminate.  Highfields therefore agrees as
follows:


1.             Promptly upon its receipt of the Exchange Offer
Materials after the commencement of the Exchange Offer, it will tender 100% of
its Old Notes in exchange for New Notes in accordance with the procedures set
forth in the Exchange Offer Materials.


2.             Highfields’ agreement to tender its notes in the
Exchange Offer shall be irrevocable and conditioned solely upon the Company’s
consummation of the Exchange Offer on the terms set forth in the Exchange Offer
Materials as filed with the SEC, as such materials may be amended in accordance
with the rules and regulations of the SEC, provided that the Company shall not
amend the Materials to change the terms of the Exchange Offer in any material
respect (whether or not such change is adverse or favorable to tendering
holders of Old Notes, and including specifically and without any implied
limitation, any waiver by the Company of the minimal principal amount of the
Old Notes to be tendered) unless it offers Highfields the opportunity to
withdraw its tender.  In the event that
the Exchange Offer is not completed by the Company on or before June 30, 2003,
or if the Exchange Offer is terminated or withdrawn by the Company prior to
June 30, 2003, or if there shall be an Event of Default (as defined in the
Indenture) under Section 6.01(4) or 6.01(5) of the Indenture, Highfields’
agreement to tender shall terminate, and 
the Old Notes tendered by Highfields’ shall be returned in accordance
with the procedures set forth in the Exchange Offer Materials.


3.             The Company shall be permitted to disclose Highfields’
commitment to participate in the Exchange Offer in accordance with the terms of
this agreement in the Exchange Offer Materials and other public communications
relating to the Exchange Offer, provided that the Company agrees that it will
submit any written statement it proposes to publish relating to Highfield’s
participation in the Exchange Offer to Highfields for comment a reasonable  period of time prior to the statement’s
public release


4.             If the Company pays any fee to holders of the Old Notes
in connection with the Exchange Offer, it will pay an identical fee on
identical terms to Highfields.


5.             This agreement 
and the Confidentiality Agreement contain the entire understanding of
the parties hereto with respect to the matters covered hereby and each such
agreement may be amended only by an agreement in writing executed by each of the
parties.


6.             This agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties’ respective successors and
assigns, including in the case of Highfields, any transferee of the Old Notes
beneficially owned by Highfields on the date hereof


7.             The parties agree that money damages would not be a
sufficient remedy for any breach of this agreement and that specific
performance and injunctive or other equitable relief shall be available as a
non-exclusive remedy for any such breach.


8.             This agreement shall be governed by and construed in
accordance with the internal laws (as opposed to conflict of law provisions) of
the State of Delaware.


 


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If the foregoing correctly
sets forth our agreement as to the matters set forth herein, please confirm our
agreement by executing and returning a copy of this agreement to the
undersigned.


	
   

  	
  Very truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
  Highfields Capital Management LP

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Grubman

  
	
   

  	
  Name:

  	
  Richard Grubman

  
	
   

  	
  Title:

  	
  Managing Member of Highfields GP LLC,

  
	
   

  	
   

  	
  Its general partner

  
	
   

  	
   

  	
   

  
				



 


The foregoing terms are
agreed to.


 


SILICON GRAPHICS, INC.


 


 


By:             /s/ Robert Bishop                                              

Name:        Robert Bishop


Title:          Chairman and Chief Executive Officer


 


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