Exhibit 4.2


SILICON GRAPHICS, INC.


11.75% Senior Notes Due 2009


 


INDENTURE


Dated as of                , 2003


 


U.S. BANK NATIONAL
ASSOCIATION

TRUSTEE


 

















 


 


TABLE OF
CONTENTS












 


	
   

  	
   

  	
  PAGE

  
	
  Article 1

  
	
  DEFINITIONS AND INCORPORATION BY REFERENCE

  
	
   

  	
   

  	
   

  
	
  Section 1.01.  Definitions

  	
   

  	
    1

  
	
  Section 1.02.  Other Definitions

  	
   

  	
    6

  
	
  Section
  1.03.  Incorporation by Reference of TIA

  	
   

  	
    6

  
	
  Section
  1.04.  Rules Of Construction

  	
   

  	
    6

  
	
   

  	
   

  	
   

  
	
  Article 2

  
	
  THE SECURITIES

  
	
   

  	
   

  	
   

  
	
  Section 2.01.  Form and Dating

  	
   

  	
    7

  
	
  Section
  2.02.  Execution And Authentication

  	
   

  	
    7

  
	
  Section
  2.03.  Registrar, Paying Agent and
  Conversion Agent

  	
   

  	
    8

  
	
  Section
  2.04.  Paying Agent to Hold Money and
  Securities in Trust

  	
   

  	
    8

  
	
  Section 2.05.  Securityholder Lists

  	
   

  	
    9

  
	
  Section
  2.06.  Exchange and Registration of Transfer
  of Securities; Depositary

  	
   

  	
    9

  
	
  Section
  2.07.  Replacement Securities

  	
   

  	
  11

  
	
  Section
  2.08.  Outstanding Securities; Determinations
  of Holders’ Action

  	
   

  	
  12

  
	
  Section 2.09.  Temporary Securities

  	
   

  	
  12

  
	
  Section 2.10.  Cancellation

  	
   

  	
  13

  
	
  Section
  2.11.  Persons Deemed Owners

  	
   

  	
  13

  
	
  Section
  2.12.  Payment of Interest; Interest Rights
  Preserved

  	
   

  	
  13

  
	
  Section
  2.13.  Computation of Interest

  	
   

  	
  15

  
	
  Section
  2.14.  Preservation of Information;
  Communications to Holders.

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  Article 3

  
	
  REDEMPTION

  
	
   

  	
   

  	
   

  
	
  Section
  3.01.  Right to Redeem; Notices to Trustee

  	
   

  	
  15

  
	
  Section
  3.02.  Selection of Securities to be
  Redeemed

  	
   

  	
  16

  
	
  Section 3.03.  Notice of Redemption

  	
   

  	
  16

  
	
  Section
  3.04.  Effect of Notice of Redemption

  	
   

  	
  16

  
	
  Section
  3.05.  Deposit of Redemption Price

  	
   

  	
  17

  
	
  Section
  3.06.  Securities Redeemed in Part

  	
   

  	
  17

  
	
  Section
  3.07.  Redemption at Option of the Holder
  upon a Fundamental Change

  	
   

  	
  17

  



 

















 


 


	
   

  	
   

  	
   

  
	
  Article 4

  
	
  COVENANTS

  
	
   

  	
   

  	
   

  
	
  Section
  4.01.  Payment of Securities

  	
   

  	
  20

  
	
  Section 4.02.  SEC Reports

  	
   

  	
  21

  
	
  Section 4.03.  Compliance Certificate

  	
   

  	
  21

  
	
  Section
  4.04.  Further Instruments and Acts

  	
   

  	
  21

  
	
  Section
  4.05.  Maintenance of Office or Agency

  	
   

  	
  21

  
	
  Section
  4.06.  Restriction on Additional
  Indebtedness

  	
   

  	
  21

  
	
  Section 4.07.  Restricted Payments

  	
   

  	
  22

  
	
   

  	
   

  	
   

  
	
  Article 5

  
	
  SUCCESSOR CORPORATION

  
	
   

  	
   

  	
   

  
	
  Section
  5.01.  When Company May Merge or Transfer
  Assets

  	
   

  	
  23

  
	
   

  	
   

  	
   

  
	
  Article 6

  
	
  DEFAULTS AND REMEDIES

  
	
   

  	
   

  	
   

  
	
  Section 6.01.  Events of Default

  	
   

  	
  24

  
	
  Section 6.02.  Acceleration

  	
   

  	
  25

  
	
  Section 6.03.  Other Remedies

  	
   

  	
  25

  
	
  Section
  6.04.  Waiver of Past Defaults

  	
   

  	
  26

  
	
  Section 6.05.  Control by Majority

  	
   

  	
  26

  
	
  Section 6.06.  Limitation on Suits

  	
   

  	
  26

  
	
  Section
  6.07.  Rights of Holders to Receive Payment

  	
   

  	
  27

  
	
  Section
  6.08.  Collection Suit by Trustee

  	
   

  	
  27

  
	
  Section
  6.09.  Trustee May File Proofs of Claim

  	
   

  	
  27

  
	
  Section 6.10.  Priorities

  	
   

  	
  28

  
	
  Section
  6.11.  Undertaking for Costs

  	
   

  	
  28

  
	
  Section
  6.12.  Waiver of Stay, Extension or Usury
  Laws

  	
   

  	
  29

  
	
   

  	
   

  	
   

  
	
  Article 7

  
	
  TRUSTEE

  
	
   

  	
   

  	
   

  
	
  Section 7.01.  Duties of Trustee

  	
   

  	
  29

  
	
  Section 7.02.  Rights of Trustee

  	
   

  	
  30

  
	
  Section
  7.03.  Individual Rights of Trustee

  	
   

  	
  30

  
	
  Section 7.04.  Trustee’s Disclaimer

  	
   

  	
  30

  
	
  Section 7.05.  Notice of Defaults

  	
   

  	
  31

  
	
  Section
  7.06.  Disqualification; Conflicting
  Interests

  	
   

  	
  31

  
	
  Section
  7.07.  Compensation and Indemnity

  	
   

  	
  31

  
	
  Section
  7.08.  Replacement of Trustee

  	
   

  	
  32

  
	
  Section
  7.09.  Successor Trustee by Merger

  	
   

  	
  32

  
	
  Section
  7.10.  Eligibility; Disqualification

  	
   

  	
  33

  
	
  Section
  7.11.  Preferential Collection of Claims
  Against Company

  	
   

  	
  33

  



 


 


ii

















 


 


	
  Section 7.12.  Reports by Trustee

  	
   

  	
  33

  
	
   

  	
   

  	
   

  
	
  Article 8

  
	
  DISCHARGE OF INDENTURE

  
	
   

  	
   

  	
   

  
	
  Section
  8.01.  Discharge of Liability on Securities

  	
   

  	
  33

  
	
  Section
  8.02.  Repayment to the Company

  	
   

  	
  34

  
	
   

  	
   

  	
   

  
	
  Article 9

  
	
  AMENDMENTS

  
	
   

  	
   

  	
   

  
	
  Section
  9.01.  Without Consent of Holders

  	
   

  	
  34

  
	
  Section
  9.02.  With Consent of Holders

  	
   

  	
  34

  
	
  Section 9.03.  Compliance with TIA

  	
   

  	
  35

  
	
  Section
  9.04.  Revocation and Effect of Consents,
  Waivers and Actions

  	
   

  	
  35

  
	
  Section
  9.05.  Notation on or Exchange of Securities

  	
   

  	
  36

  
	
  Section
  9.06.  Trustee to Sign Supplemental
  Indentures

  	
   

  	
  36

  
	
  Section
  9.07.  Effect of Supplemental Indentures

  	
   

  	
  36

  
	
   

  	
   

  	
   

  
	
  Article 10

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 10.01.  Conflict with TIA

  	
   

  	
  36

  
	
  Section 10.02.  Notices

  	
   

  	
  36

  
	
  Section
  10.03.  Communication by Holders with Other
  Holders

  	
   

  	
  37

  
	
  Section
  10.04.  Certificate and Opinion as to
  Conditions Precedent

  	
   

  	
  37

  
	
  Section
  10.05.  Statements Required in Certificate or
  Opinion

  	
   

  	
  38

  
	
  Section
  10.06.  Separability Clause

  	
   

  	
  38

  
	
  Section
  10.07.  Rules By Trustee, Paying Agent,
  Conversion Agent and Registrar

  	
   

  	
  38

  
	
  Section 10.08.  Legal Holidays

  	
   

  	
  38

  
	
  Section 10.09.  Governing Law

  	
   

  	
  38

  
	
  Section
  10.10.  No Recourse Against Others

  	
   

  	
  39

  
	
  Section 10.11.  Successors

  	
   

  	
  39

  
	
  Section 10.12.  Multiple Originals

  	
   

  	
      39(1)

  
	
   

  	
   

  	
   

  
	
  Exhibit A — Form of Security

  	
   

  	
  A-1

  



 












(1) This Table of Contents shall not, for any
purpose, be deemed to be part of the Indenture.


 


iii

















 


 


INDENTURE, dated as of          , 2003, between SILICON GRAPHICS, INC., a Delaware
corporation (the “Company”), and U.S. BANK NATIONAL
ASSOCIATION, a national banking association organized and existing under the
laws of the United States of America (the “Trustee”).


Each party agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders of the
Company’s 11.75% Senior Notes Due 2009 (the “Securities”):


ARTICLE
1

DEFINITIONS AND INCORPORATION BY REFERENCE


Section 1.01.  Definitions.


“Affiliate” of any specified Person means
any other Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such specified Person.  For the purposes of this definition,
“control,” when used with respect to any specified Person means the power to
direct or cause the direction of the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms “controlling” and “controlled” have
meanings correlative to the foregoing.


“Average Life” means, with respect to any
indebtedness, the quotient obtained by dividing the sum of the products of (1)
the number of years from the date of determination to the dates of each
successive scheduled principal payment on such indebtedness, and (2) the amount
of such principal payment, by the sum of all such principal payments.


“Board of Directors” means either the board
of directors of the Company or any duly authorized committee of such board.


“Business Day” means each day of the year on
which banking institutions are not required or authorized to close in The City
of New York or at the principal corporate trust office of the Trustee.


“Capital Stock” means (1) in the case of a
corporation, corporate stock, (2) in the case of an association or business
entity, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock, (3) in the case of a
partnership, partnership interests (whether general or limited), and (4) any
other interest or participation that confers on a person the right to receive a
share of the profits and losses of, or distribution of assets of, the issuing
person.

















 


“Common Stock” means any stock of any class
of the Company which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the Company and which is not subject to redemption by the
Company.


“Company” means the party named as the
“Company” in the first paragraph of this Indenture until a successor replaces
it pursuant to the applicable provisions of this Indenture and, thereafter,
shall mean such successor.  The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.


“Company Request” or “Company Order” means a
written request or order signed in the name of the Company by its Chairman of
the Board, a Vice Chairman, its President, a Senior Vice President or a Vice
President, and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary, and delivered to the Trustee.


“Custodian” means U.S. Bank National
Association, as custodian with respect to any Global Security, or any
successor.


“Default” means any event which is, or after
notice or passage of time or both would be, an Event of Default.


“Defaulted Interest” has the meaning
specified in Section 2.12.


“Depositary” means, with respect to the
Securities issuable or issued in whole or in part in global form, the person
specified in Section 2.06 as the Depositary with respect to the Securities,
until a successor Depositary shall have been appointed and become such pursuant
to the applicable provisions of this Indenture, and thereafter, “Depositary”
shall mean or include such successor.


“Disqualified Stock” means Capital Stock
that, by its terms (or the terms of any security into which it is convertible
or for which it is exchangeable), or upon the happening of any event, matures
or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder, in whole or in part,
on or prior to the date that is the Stated Maturity of the Securities and the
New Convertible Notes.


“Event of Default” means any event or
condition specified as such in Section 6.01.


“Exchange Act” means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the SEC promulgated
thereunder.


“Fundamental Change” means the occurrence of
any transaction or event in connection with which all or substantially all the
Common Stock shall be 


 


2

















 


exchanged for, converted
into, acquired for or constitute solely the right to receive (whether by means
of an exchange offer, liquidation, tender offer, consolidation, merger,
combination, reclassification, recapitalization or otherwise) consideration
which is not all or substantially all common stock listed (or, upon
consummation of such transaction or event, will be listed) on a United States
national securities exchange or approved for quotation in the Nasdaq National
Market or any similar system of automated dissemination of quotations of
securities prices.


“Global Security” means a Security that is
registered in the Security Register in the name of the Depository or a nominee
thereof.


“Holder” or “Securityholder” means a
Person in whose name a Security is registered on the Registrar’s books.


“Indenture” means this Indenture, as amended
or supplemented from time to time in accordance with the terms hereof.


“Interest Payment Date” means the Stated
Maturity of an installment of interest on the Securities.


“Maturity” when used with respect to any
Security, means the date on which the principal of such Security becomes due
and payable as therein or herein provided, whether at the Stated Maturity or by
declaration of acceleration, call for redemption, redemption upon a Fundamental
Change or otherwise.


“New Convertible Indenture” means that
certain Indenture dated as of          
, 2003 among the Company and the Trustee, relating to the New
Convertible Notes.


“New Convertible Notes” means the Company’s
6.50% Senior Convertible Notes Due 2009.


“Officer” means the Chairman of the Board,
any Vice Chairman, the President, any Senior Vice President, any Vice
President, the Treasurer or the Secretary or any Assistant Treasurer or
Assistant Secretary of the Company.


“Officers’ Certificate” means a written
certificate containing the information specified in Sections 10.04 and 10.05,
signed in the name of the Company by its Chairman of the Board, a Vice
Chairman, its President, a Senior Vice President or a Vice President, and by
its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary,
and delivered to the Trustee.


“Old Notes” means the Company’s 51⁄4% Senior
Convertible Notes Due 2004.


 


3

















 


“Old Notes Indenture” means that certain
Indenture dated as of September 1, 1997 among the Company and the U.S. Bank
National Association, as successor trustee to State Street Bank and Trust
Company of California, N.A., relating to the Old Notes.


“Opinion of Counsel” means a written opinion
signed by legal counsel who may be an employee of or counsel to the Company and
who shall be satisfactory to the Trustee. 
Each such opinion shall comply with Section 314 of the Trust Indenture
Act and include the information specified in Sections 10.04 and 10.05.


“Options” means any warrants, options or
other rights to acquire Capital Stock of the Company (but excluding (i) any
options or other rights issued under a plan maintained by the Company for the
benefit of employees, directors and consultants, and (ii) any debt security
that is convertible into or exchangeable for Capital Stock of the Company).


“Person” means any individual, corporation,
partnership, limited liability company, joint venture, association, joint-stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof.


“Predecessor Security” of any particular
Security means every previous Security evidencing all or a portion of the same
debt as that evidenced by such particular Security.  For the purposes of this definition, any Security authenticated
and delivered under Section 2.06 in exchange for or in lieu of a mutilated,
destroyed, lost or stolen Security shall be deemed to evidence the same debt as
the mutilated, destroyed, lost or stolen Security.


“Redemption Date” shall mean a date
specified for redemption of the Securities (other than redemption upon a
Fundamental Change at the option of the Securityholder) in accordance with the
terms of the Securities and Section 3.01 of this Indenture.


“Redemption Price” shall have the meaning
set forth in paragraph 5 of the Securities.


“Regular Record Date” for the interest
payable on any Interest Payment Date means the December 15 or June 15 (whether
or not a Business Day), as the case may be, next preceding such Interest
Payment Date.


“SEC” means the Securities and Exchange
Commission.


“Secured Credit Facility” means that certain
Amended and Restated Loan and Security Agreement between the Company and
Foothill Capital Corporation and the Bank of America, N.A. dated September 24,
2002, as 


 


4

















 


amended by that certain
Amendment Number One to Amended and Restated Loan Agreement, dated as of April
11, 2003, among the Company and Foothill Capital Corporation, as the same may
be amended from time to time.


“Security” or “Securities” means any of the
Company’s 11.75% Senior Notes Due 2009, as amended or supplemented from time to
time, issued under this Indenture.


“Securities Act” means the Securities Act of
1933, as amended, and the rules and regulations of the SEC promulgated
thereunder.


“Securityholder” or “Holder” means a person in
whose name a Security is registered on the Registrar’s books.


“Security Register” has the meaning
specified in Section 2.05.


“SGI Japan Secured Debt” means that Loan
Agreement between the Company, Silicon Graphics World Trade B.V. and SGI Japan,
Ltd. as of November 9, 2001, as the same may be amended from time to time.


“Special Record Date” for the payment of any
Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.12.


“Stated Maturity” when used with respect to
any Security or any installment of interest thereon, means the date specified
in such Security as the fixed date on which the principal of such Security or
such installment of interest is due and payable, and when used with respect to
any other indebtedness or any installment of interest thereon, the date
specified as the fixed date on which the principal of such debt or such
installment of interest is due and payable as set forth in the documentation
governing that debt, not including any contingent obligation to repay, redeem
or repurchase prior to the regularly scheduled date for payment.


“Subsidiary” means a corporation of which a
majority of the capital stock (which for purposes of this definition means any
and all shares, interests, rights to purchase, warrants, options,
participations or other equivalents of or interests in (however designated)
stock issued by such corporation) having voting power under ordinary
circumstances to elect a majority of the board of directors of such corporation
is owned directly or indirectly by (i) the Company, (ii) the Company and one or
more Subsidiaries or (iii) one or more Subsidiaries.


“TIA” means the Trust Indenture Act of 1939
as in effect on the date of this Indenture, except as provided in Section 9.03.


“Trust Officer” means any officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.


 


5

















 


“Trustee” means the party named as the
“Trustee” in the first paragraph of this Indenture until a successor replaces
it pursuant to the applicable provisions of this Indenture and, thereafter,
shall mean such successor.  The
foregoing sentence shall likewise apply to any subsequent such successor or
successors.


Section 1.02.  Other Definitions.


	
   

  	
  Term

  	
   

  	
  Defined in

  Section

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Bankruptcy Law

  	
   

  	
  6.01

  	
   

  
	
   

  	
  Company Notice

  	
   

  	
  3.07

  	
   

  
	
   

  	
  Event of Default

  	
   

  	
  6.01

  	
   

  
	
   

  	
  Fundamental Change Repurchase Date

  	
   

  	
  3.07

  	
   

  
	
   

  	
  Fundamental Change Redemption Price

  	
   

  	
  3.07

  	
   

  
	
   

  	
  Incur

  	
   

  	
  4.06

  	
   

  
	
   

  	
  Legal Holiday

  	
   

  	
  10.08

  	
   

  
	
   

  	
  Notice of Default

  	
   

  	
  6.01

  	
   

  
	
   

  	
  Paying Agent

  	
   

  	
  2.03

  	
   

  
	
   

  	
  Registrar

  	
   

  	
  2.03

  	
   

  



 


Section 1.03.  Incorporation by Reference of TIA. 
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.  The following TIA terms used in this
Indenture have the following meanings:


“Commission” means the SEC.


“Indenture Securities” means the Securities.


“Indenture Security Holder” means a
Securityholder.


“Indenture to be Qualified” means this
Indenture.


“Indenture Trustee” or “Institutional Trustee” means
the Trustee.


“Obligor” on the indenture securities means
the Company.


All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.


Section 1.04.  Rules of Construction. 
Unless the context otherwise requires:


 


6

















 


(a)       a term has the meaning
assigned to it;


(b)      an accounting term not
otherwise defined has the meaning assigned to it in accordance with generally
accepted accounting principles as in effect from time to time;


(c)       “or” is not exclusive;


(d)      “including” means
including, without limitation; and


(e)       words in the singular
include the plural, and words in the plural include the singular.


ARTICLE
2

THE SECURITIES


Section 2.01.  Form and Dating. 
The Securities and the Trustee’s certificate of authentication shall be
substantially in the form of Exhibit A, which is a part of this Indenture.  The Securities may have notations, legends
or endorsements required by law, stock exchange rule or usage (provided that
any such notation, legend or endorsement required by usage is in a form
acceptable to the Company).  The Company
shall provide any such notations, legends or endorsements to the Trustee in
writing.  Each Security shall be dated
the date of its authentication.


Section 2.02.  Execution And Authentication. 
The Securities shall be executed on behalf of the Company by its
Chairman of the Board, one of its Vice Chairman, its President, one of its
Senior Vice Presidents or one of its Vice Presidents, under its corporate seal
reproduced thereon and attested by its Secretary or one of its Assistant
Secretaries.  The signature of any of
these officers on the Securities may be manual or facsimile.


Securities bearing the manual or facsimile
signatures of individuals who were at any time the proper Officers of the
Company shall bind the Company, notwithstanding that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery
of such Securities or did not hold such offices at the date of authentication
of such Securities.


No Security shall be entitled to any benefit under
this Indenture or be valid or obligatory for any purpose unless there appears
on such Security a certificate of authentication substantially in the form
provided for herein duly executed by the Trustee by manual signature of an
authorized officer, and such certificate upon any Security shall be conclusive
evidence, and the only evidence, that such Security has been duly authenticated
and delivered hereunder.


 


7

















 


The Trustee shall authenticate and deliver
Securities for original issue in an aggregate principal amount of up to
$230,000,000 upon a Company Order without any further action by the
Company.  The aggregate principal amount
of Securities and New Convertible Notes outstanding at any time may not exceed
the amount set forth in the foregoing sentence, except as provided in Section
2.07.


Section 2.03.  Registrar, Paying Agent and Conversion
Agent.  The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange (“Registrar”), and an office or agency where
Securities may be presented for purchase or payment (“Paying Agent”).  The Registrar shall keep a register (the “Security
Register”) of the Securities and of their transfer and
exchange.  The Company may have one or
more co-registrars, one or more additional paying agents and one or more
additional conversion agents.  The term
Paying Agent includes any additional paying agent.


The Company shall enter into an appropriate agency
agreement with any Registrar, Paying Agent or co-registrar (if not the
Trustee).  The agreement shall implement
the provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent.  If the Company fails to maintain a Registrar
or Paying Agent, the Trustee shall act as such and shall be entitled to
appropriate compensation therefor pursuant to Section 7.07. The Company or any
Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar
or co-registrar.


The Company initially appoints the Trustee as
Registrar and Paying Agent in connection with the Securities.


Section 2.04.  Paying Agent to Hold Money and Securities in
Trust.  Except as otherwise provided
herein, prior to or on each due date of payments in respect of any Security,
the Company shall deposit with the Paying Agent a sum of money or securities
sufficient to make such payments when so becoming due.  The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold
in trust for the benefit of Securityholders or the Trustee all money and
securities held by the Paying Agent for the making of payments in respect of
the Securities and shall notify the Trustee of any default by the Company in
making any such payment.  At any time
during the continuance of any such default, the Paying Agent shall, upon the
written request of the Trustee, forthwith pay to the Trustee all money and
securities so held in trust.  If the
Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent,
it shall segregate the money and securities held by it as Paying Agent and hold
it as a separate trust fund.  The
Company at any time may require a Paying Agent to pay all money and securities
held by it to the Trustee and to account for any funds and securities disbursed
by it.  Upon doing so, the Paying Agent
shall have no further liability for the money or securities.


 


8

















 


Section 2.05.  Securityholder Lists. 
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Securityholders.  If the Trustee is not
the Registrar, the Company shall cause to be furnished to the Trustee at least
semiannually on December 15 and June 15 a listing of Holders dated within 15
days of the date on which the list is furnished and at such other times as the
Trustee may request in writing a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.


Section 2.06.  Exchange and Registration of Transfer of
Securities; Depositary.  Upon surrender
for registration of transfer of any Security at any office or agency of the
Company designated as Registrar or co-registrar pursuant to Section 2.03 and
satisfaction of the requirements for such transfer set forth in this Section
2.06, the Company shall execute, and the Trustee shall authenticate and
deliver, in the name of the designated transferee or transferees, one or more
new Securities of any authorized denominations and of a like aggregate
principal amount.


Securities may be exchanged for a like aggregate
principal amount of Securities of other authorized denominations.  Securities to be exchanged shall be
surrendered at any office or agency to be maintained by the Company designated
as Registrar or co-registrar pursuant to Section 2.03 and the Company shall
execute and register and the Trustee shall authenticate and deliver in exchange
therefor the Security or Securities which the Securityholder making the
exchange shall be entitled to receive, bearing registration numbers not
contemporaneously outstanding.


All Securities presented for registration of
transfer or for exchange, purchase, redemption or payment shall (if so required
by the Company, the Trustee, the Registrar or any co-registrar) be duly
endorsed by, or be accompanied by a written instrument or instruments of transfer
in form satisfactory to the Company and the Trustee, duly executed by the
Holder or his attorney duly authorized in writing.


No service charge shall be charged to the
Securityholder for any exchange or registration of transfer of Securities, but
the Company may require payment of a sum sufficient to cover any tax,
assessments or other governmental charges that may be imposed in connection
therewith.


None of the Company, the Trustee, the Registrar or
any co-registrar shall be required to exchange or register a transfer of (a)
any Securities for a period of 15 days next preceding any selection of
Securities to be redeemed or (b) any Securities or portions thereof selected or
called for redemption or (c) any Securities or portion thereof surrendered for
redemption (and not withdrawn) pursuant to Section 3.07.


 


9

















 


All Securities issued upon any transfer or exchange
of Securities shall be valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture as the Securities
surrendered upon such exchange or transfer.


The provisions of Clauses (a), (b), (c), (d) and (e)
below shall apply only to Global Securities:


(a)       Each Global Security
authenticated under this Indenture shall be registered in the name of the
Depositary designated for such Global Security or a nominee thereof and
delivered to such Depositary or a nominee thereof or Custodian therefor, and
each such Global Security shall constitute a single Security for all purposes
of this Indenture.


(b)      Notwithstanding any other
provision in this Indenture, no Global Security may be exchanged in whole or in
part for Securities registered, and no transfer of a Global Security in whole
or in party may be registered, in the name of any Person other than the
Depositary for such Global Security or a nominee thereof unless (A) such
Depositary (i) has notified the Company that it is unwilling or unable to
continue as Depositary for such Global Security or (ii) has ceased to be a
clearing agency registered under the Exchange Act, or (B) there shall have
occurred and be continuing an Event of Default with respect to such Global
Security.


(c)       Subject to 2.06(b)
above, any exchange of a Global Security for other Securities may be made in
whole or in part, and all Securities issued in exchange for a Global Security
or any portion thereof shall be registered in such names as the Depositary for
such Global Security shall direct.


(d)      Every Security
authenticated and delivered upon registration of transfer of, or in exchange
for or in lieu of, a Global Security or any portion thereof whether pursuant to
this Article Two or otherwise, shall be authenticated and delivered in the form
of, and shall be, a Global Security, unless such Security is registered in the
name of a Person other than the Depositary for such Global Security or a
nominee thereof.


(e)       The Depositary or its
nominee, as registered own of a Global Security, shall be the Holder of such
Global Security for all purposes under the Indenture and the Securities, and
owners of beneficial interests in a Global Security shall hold such interests
pursuant to the applicable procedures. 
Accordingly, any such owner’s beneficial interest in a Global Security
will be shown only on, and the transfer of such 


 


10

















 




interest shall be effected only through, records maintained by the Depositary
or its nominee or its agent members and such owners of beneficial interests in
a Global Security will not be considered the owners or holders thereof.


The Depositary shall be a clearing agency registered
under the Exchange Act.  The Company
initially appoints The Depository Trust Company to act as Depositary with
respect to the Securities in global form. 
Initially, the Global Security shall be issued to the Depositary,
registered in the name of Cede & Co., as the nominee of the Depositary, and
deposited with the Trustee as custodian for Cede & Co.


If at any time the Depositary for the Global
Security notifies the Company that it is unwilling or unable to continue as
Depositary for such Global Security, the Company may appoint a successor
Depositary with respect to such Security. 
If a successor Depositary for the Global Security is not appointed by
the Company within 90 days after the Company receives such notice, the Company
will execute, and the Trustee, upon receipt of a Company Order for
authentication and delivery of Securities, will authenticate and deliver,
Securities in definitive form, in an aggregate principal amount equal to the
principal amount of the Global Security, in exchange for such Security in the
global form.


Section 2.07.  Replacement Securities. 
If (i) any mutilated Security is surrendered to the Trustee, or (ii)
the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of notice to the Company or
the Trustee that such Security has been acquired by a bona fide purchaser, the
Company shall execute and upon its written request the Trustee shall
authenticate and deliver, in exchange for any such mutilated Security or in lieu
of any such destroyed, lost or stolen Security, a new Security of like tenor
and principal amount, bearing a number not contemporaneously outstanding.


In case any such mutilated, destroyed, lost or
stolen Security has become or is about to become due and payable, or is about
to be redeemed by the Company pursuant to Article 3 hereof, the Company in its
discretion may, instead of issuing a new Security, pay or redeem such Security,
as the case may be.


Upon the issuance of any new Securities under this
Section, the Company may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee) connected
therewith.


Every new Security issued pursuant to this Section
in lieu of any mutilated, destroyed, lost or stolen Security shall constitute
an original additional 


 


11

















 


contractual obligation of
the Company, whether or not the destroyed, lost or stolen Security shall be at
any time enforceable by anyone, and shall be entitled to all benefits of this
Indenture equally and proportionately with any and all other Securities duly
issued hereunder.


The provisions of this Section are exclusive and
shall preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Securities.


Section 2.08.  Outstanding Securities; Determinations of
Holders’ Action.  Securities outstanding
at any time are all the Securities authenticated by the Trustee except for
those canceled by it, those delivered to it for cancellation and those
described in this Section 2.08 as not outstanding.  A Security does not cease to be outstanding because the Company
or an Affiliate thereof holds the Security; provided, however, that in
determining whether the Holders of the requisite principal amount of Securities
have given or concurred in any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the Company or any
other obligor upon the Securities or any Affiliate of the Company or such other
obligor shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Securities which the Trustee knows to be so owned shall be so disregarded.  Subject to the foregoing, only Securities
outstanding at the time of such determination shall be considered in any such
determination (including, without limitation, determinations pursuant to
Articles 6 and 9).


If a Security is replaced pursuant to Section 2.07,
it ceases to be outstanding unless the Trustee receives proof satisfactory to
it that the replaced Security is held by a bona fide purchaser.


If the Paying Agent holds, in accordance with this
Indenture, on a Redemption Date, on a Fundamental Change Repurchase Date or on
Stated Maturity, money or securities, if permitted hereunder, sufficient to pay
Securities payable on that date, then on and after that date such Securities
shall cease to be outstanding and interest on such Securities shall cease to
accrue; provided, that if such Securities are to be redeemed, notice of such
redemption has been duly given pursuant to this Indenture or provision therefor
satisfactory to the Trustee has been made.


Section 2.09.  Temporary Securities. 
Pending the preparation of definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, 


 


12

















 


substitutions
and other variations as the officers executing such Securities may determine,
as conclusively evidenced by their execution of such Securities.


If temporary Securities are issued, the Company will
cause definitive Securities to be prepared without unreasonable delay.  After the preparation of definitive
Securities, the temporary Securities shall be exchangeable for definitive
Securities upon surrender of the temporary Securities at the office or agency
of the Company designated for such purpose pursuant to Section 2.03, without
charge to the Holder.  Upon surrender
for cancellation of any one or more temporary Securities the Company shall
execute and the Trustee shall authenticate and deliver in exchange therefor a
like principal amount of definitive Securities of authorized
denominations.  Until so exchanged the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.


Section 2.10.  Cancellation. 
All Securities surrendered for payment, redemption or registration of
transfer or exchange shall, if surrendered to any Person other than the
Trustee, be delivered to the Trustee and shall be promptly canceled by it.  The Company may at any time deliver to the
Trustee for cancellation any Securities previously authenticated and delivered
hereunder which the Company may have acquired in any manner whatsoever, and all
Securities so delivered shall be promptly canceled by the Trustee.  The Company may not issue new Securities to
replace Securities it has paid or delivered to the Trustee for cancellation.  No Securities shall be authenticated in lieu
of or in exchange for any Securities canceled as provided in this Section,
except as expressly permitted by this Indenture.  All canceled Securities held by the Trustee shall be destroyed by
the Trustee and evidence of their destruction delivered to the Company unless the
Company directs by Company Order that the Trustee deliver canceled Securities
to the Company.


Section 2.11.  Persons Deemed Owners. 
Prior to due presentment of a Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Person in whose name such Security is registered as the owner of such
Security for the purpose of receiving payment of principal amount, premium, if
any, interest, Redemption Price and Fundamental Change Redemption Price in respect
thereof, for all purposes whatsoever, whether or not such Security be overdue,
and none of the Company, the Trustee or any agent of the Company or the Trustee
shall be affected by notice to the contrary.


Section 2.12.  Payment of Interest; Interest Rights
Preserved.  Interest on any Security
which is payable, and is punctually paid or duly provided for, on any Interest
Payment Date shall be paid to the person in whose name that Security (or one or
more Predecessor Securities) is registered at the close of business on the
Regular Record Date for such interest.


 


13

















 


Any interest on any Security which is payable, but
is not punctually paid or dully provided for, on any Interest Payment Date
(herein called “Defaulted Interest”) shall forthwith cease to be payable to
the Holder on the relevant Regular Record Date by virtue of having been such
Holder, and such Defaulted Interest may be paid by the Company, at its election
in each case, as provided in (a) or (b) below:


(a)       The Company may elect to
make payment of any Defaulted Interest to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed to
be paid on each Security and the date of the proposed payment, and at the same
time the Company shall deposit with the Trustee an amount of money equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit on or
prior to the date of the proposed payment, such money when deposited to be held
in trust for the benefit of the Persons entitled to such Defaulted Interest as
in this Clause provided. Thereupon the Trustee shall fix a Special Record Date
for the payment of such Defaulted Interest which shall be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Trustee of the notice of the
proposed payment.  The Trustee shall
promptly notify the Company of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of proposed payment of such
Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in the
Security Register, not less than 10 days prior to such Special Record
Date.  Notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor having been so
mailed, such Defaulted Interest shall be paid to the Persons in whose names the
Securities (or their respective Predecessor Securities) are registered at the
close of business on such Special Record Date and shall no longer be payable
pursuant to the following 2.12(b).


(b)      The Company may make
payment of any Defaulted Interest in any other lawful manner not inconsistent
with the requirements of any securities exchange or market on which the
Securities may be listed, and upon such notice as may be required by such
exchange or market, if, after notice given by the Company to the Trustee of the
proposed payment pursuant to this Clause, such manner of payment shall be
deemed practicable by the Trustee.


 


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Subject to the foregoing provisions of this Section,
each Security delivered under this Indenture upon registration of transfer of
or in exchange for or in lieu of any other Security shall carry the rights to
interest accrued and unpaid, and to accrue, which were carried by such other
Security.


Section 2.13.  Computation of Interest. 
Interest on the Securities shall be computed on the basis of a 360-day
year of twelve 30-day months.


Section 2.14.  Preservation of Information; Communications
to Holders.


(a)   The Trustee shall preserve, in as current a
form as is reasonably practicable, the names and addresses of Holders contained
in the most recent list furnished to the Trustee as provided in Section 2.05
and the names and addresses of Holders received by the Trustee in its capacity
as Security Registrar.  The Trustee may
destroy any list furnished to it as provided in Section 2.05 upon receipt of a
new list so furnished.


(b)   The rights of Holders to communicate with
other Holders with respect to their rights under this Indenture or under the
Securities, and the corresponding right and duties of the Trustee, shall be as
provided in the TIA.


(c)   Every Holder of Securities, by receiving and
holding the same, agrees with the Company and the Trustee that neither the
Company nor the Trustee nor any agent of either of them shall be held accountable
by reason of the disclosure of information as to names and addresses of the
Holders made pursuant to the TIA.


ARTICLE
3

REDEMPTION


Section 3.01.  Right to Redeem; Notices to Trustee. 
The Company, at its option, may redeem the Securities in accordance
with the provisions of paragraph 5 of the Securities.  If the Company elects to redeem Securities pursuant to paragraph
5 of the Securities, it shall notify the Trustee in writing of the Redemption
Date, the principal amount of Securities to be redeemed, the Redemption Price,
and the amount of accrued interest to, but excluding, the Redemption Date.


The Company shall give the notice to the Trustee
provided for in this Section 3.01 (i) in the case of any redemption of fewer
than all of the Securities, at least 45 days before the Redemption Date and
(ii) in the case of a redemption of all of the Securities, no later than the
Company is required to give notice to the Holders pursuant to Section 3.03, in
each case unless a shorter notice shall be satisfactory to the Trustee.


 


15

















 


Section 3.02.  Selection of Securities to be Redeemed. 
If less than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed pro rata or by lot or by a method the
Trustee considers fair and appropriate (as long as such method is not
prohibited by the rules of any stock exchange or automated quotation system on
which the Securities are then listed). 
The Trustee shall make the selection at least 10 days, but not more than
60 days, before the Redemption Date from outstanding Securities not previously
called for redemption.  The Trustee may
select for redemption portions of the principal amount of Securities that have
denominations larger than $1,000. 
Securities and portions of Securities selected by the Trustee shall be
in principal amounts of $1,000 or a multiple of $1,000.  Provisions of this Indenture that apply to Securities
called for redemption also apply to portions of Securities called for redemption.  The Trustee shall notify the Company
promptly of the Securities or portions of Securities to be redeemed.


Section 3.03.  Notice of Redemption. 
At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail, postage
prepaid, to each Holder of Securities to be redeemed.


The notice shall identify the Securities to be
redeemed and shall state:


(a)       the Redemption Date;


(b)      the Redemption Price,
together with the amount of accrued interest to, but excluding, the Redemption
Date;


(c)       the name and address of
the Paying Agent;


(d)      that Securities called
for redemption must be surrendered to the Paying Agent to collect the
Redemption Price and accrued interest to, but excluding, the Redemption Date;


(e)       if fewer than all the
outstanding Securities are to be redeemed, the certificate number and principal
amounts of the particular Securities to be redeemed; and


(f)       that interest on
Securities called for redemption will cease to accrue on and after the
Redemption Date.


At the Company’s request, the Trustee shall give the
notice of redemption in the Company’s name and at the Company’s expense.


Section 3.04.  Effect of Notice of Redemption. 
Once notice of redemption is given, Securities called for redemption
become due and payable on the 


 


16

















 


Redemption
Date and at the Redemption Price, together with accrued interest to, but
excluding, the Redemption Date, stated in the notice.


Upon the later of the Redemption Date or the date
such Securities are surrendered to the Paying Agent, such Securities shall be
paid at the Redemption Price, together with accrued interest to, but excluding,
the Redemption Date, stated in the notice.


Section 3.05.  Deposit of Redemption Price. 
Prior to or on the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of
them is the Paying Agent, shall segregate and hold in trust) money sufficient
to pay the Redemption Price and accrued interest to, but excluding, the
Redemption Date of all Securities to be redeemed on that date other than
Securities or portions of Securities called for redemption which prior thereto
have been delivered by the Company to the Trustee for cancellation; provided
that if such payment is made on the Redemption Date it must be received by the
Trustee or Paying Agent, as the case may be, by 10:00 a.m.  New York City time, on such Redemption
Date.  If such money is then held by the
Company in trust and is not required for such purpose it shall be discharged
from such trust.


Section 3.06.  Securities Redeemed in Part. 
Upon surrender of a Security that is redeemed in part, the Company
shall execute and the Trustee shall authenticate and deliver to the Holder a
new Security in an authorized denomination equal in principal amount to the
unredeemed portion of the Security surrendered.


Section 3.07.  Redemption at Option of the Holder upon a
Fundamental Change.  (a)  If a Fundamental Change shall occur at any
time prior to July 1, 2009, each Holder of Securities shall have the right, at
such Holder’s option, to require the Company to redeem such Holder’s Securities
on the date (the “Fundamental Change Repurchase Date”) (or if
such date is not a Business Day, the next succeeding Business Day) that is 45
days after the date of the Company’s notice of such Fundamental Change.  The Securities will be redeemable in part in
multiples of $1,000 of principal amount. 
Such repayment shall be made at 100% of the principal amount (the “Fundamental
Change Redemption Price”) thereof. In each case, the Company shall
also pay to such Holders accrued interest to, but excluding, the Fundamental
Change Repurchase Date on the redeemed Securities; provided that if such
Fundamental Change Repurchase Date is an Interest Payment Date, then the
interest payable on such date shall be paid to the Holder of the Security on
the next preceding the Regular Record Date.


(b)   On or before the tenth day after the occurrence
of a Fundamental Change, the Company, or, at its written request (which must be
received by the 


 


17

















 


Trustee at least five
Business Days prior to the date the Trustee is requested to give notice as
described below), the Trustee in the name of and at the expense of the Company,
shall mail or cause to be mailed to all Holders of record on the date of the
Fundamental Change a notice (the “Company Notice”) of the occurrence of such
Fundamental Change and of the redemption right at the option of the Holders
arising as a result thereof.  Such
notice shall be mailed in the manner and with the effect set forth in Section
3.03.  The Company shall also deliver a
copy of the Company Notice to the Trustee at such time as it is mailed to the
Holders.


Each Company Notice shall specify the circumstances
constituting the Fundamental Change, the Fundamental Change Repurchase Date,
the Fundamental Change Redemption Price at which the Company shall be obligated
to redeem the Securities, the amount of interest accrued on each Security to,
but excluding, the Fundamental Change Repurchase Date, the latest time by which
the Holder must exercise the redemption right (the “Fundamental Change Expiration Time”),
that the Holder shall have the right to withdraw any Notes prior to the
Fundamental Change Expiration Time, a description of the procedure which a
Holder must follow to exercise such redemption right and to withdraw any
surrendered Notes and the place or places where the Holder is to surrender such
Holder’s Securities.


No failure of the Company to give the foregoing
notices and no defect therein shall limit the Holders’ redemption rights or
affect the validity of the proceedings for the repurchase of the Securities
pursuant to this Section 3.07.


(c)   For a Security to be so redeemed at the
option of the Holder, the Paying Agent must receive such Security with the form
entitled “Option to Elect Redemption Upon a Fundamental Change” on the reverse
thereof duly completed (a “Fundamental Change Redemption Notice”),
together with such Security duly endorsed for transfer, on or before the 30th
day after the date of such Company Notice (or if such 30th day is not a
Business Day, the immediately preceding Business Day).  All questions as to the validity,
eligibility (including time of receipt) and acceptance of any Security for
redemption shall be determined by the Company, whose determination shall be
final and binding.


(d)   Upon receipt by the Company of the
Fundamental Change Redemption Notice specified in Section 3.07(c), the Holder
of the Security in respect of which such Fundamental Change Redemption Notice
was given shall (unless such Fundamental Change Redemption Notice is withdrawn
as specified in the following two paragraphs) thereafter be entitled to receive
solely the Fundamental Change Redemption Price, together with accrued interest
to, but excluding, the Fundamental Change Repurchase Date, with respect to such
Security.  Such Fundamental Change
Redemption Price together with accrued interest to, but excluding, the
Fundamental Change Repurchase Date, shall be 


 


18

















 


paid to such Holder promptly
following the Fundamental Change Repurchase Date.


A Fundamental Change Redemption Notice may be
withdrawn by the Holder by means of a written notice of withdrawal delivered to
the office of the Paying Agent at any time prior to the close of business on
the Fundamental Change Repurchase Date to which it relates specifying:


(i)    the certificate number of
the Security in respect of which such notice of withdrawal is being submitted,


(ii)   the principal amount of the
Security with respect to which such notice of withdrawal is being submitted,
and


(iii)  the principal amount, if
any, of such Security which remains subject to the original Fundamental Change
Redemption Notice and which has been or will be delivered for purchase by the
Company.


There shall be no redemption pursuant to Section
3.07 if there has occurred prior to, on or after, as the case may be, the
giving, by the Holders of such Securities, of the required Fundamental Change
Redemption Notice and is continuing an Event of Default (other than a default
in the payment of the Fundamental Change Redemption Price, together with
accrued interest to, but excluding, the Fundamental Change Repurchase Date,
with respect to such Securities).


(e)   On or before the Fundamental Change
Repurchase Date the Company shall deposit with the Trustee or with the Paying
Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is
acting as the Paying Agent, shall segregate and hold in trust as provided in
Section 2.04) an amount of money and/or securities, if permitted hereunder,
sufficient to pay the aggregate Fundamental Change Redemption Price, together
with accrued interest to, but excluding, the Fundamental Change Repurchase
Date, of all the Securities or portions thereof which are to be redeemed as of
such Fundamental Change Repurchase Date; provided that if such payment is made
on the Fundamental Change Repurchase Date it must be received by the Trustee or
Paying Agent, as the case may be, by 10:00 a.m.  New York City time, on such Fundamental Change Repurchase Date.


(f)    Any Security that is to be redeemed upon a
Fundamental Change only in part shall be surrendered at the office of the
Paying Agent (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly
authorized in writing) and the Company shall execute and, upon the Company’s
written direction to the Trustee, 


 


19

















 


the Trustee shall
authenticate and deliver to the Holder of such Security, without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder in aggregate principal amount equal to, and in
exchange for, the portion of the principal amount of the Security so
surrendered which is not redeemed.


(g)   In connection with any offer to redeem
Securities under Section 3.07 hereof the Company shall comply with all Federal
and state securities laws so as to permit the rights and obligations under
Section 3.07 to be exercised in the time and in the manner specified in Section
3.07.


(h)   The Trustee and the Paying Agent shall return
to the Company any cash that remains unclaimed as provided in paragraph 9 of
the Securities, together with interest or dividends, if any (subject to the
provisions of Section 7.01(f)), thereon, held by them for the payment of a
Fundamental Change Redemption Price, together with accrued interest to, but
excluding, the Fundamental Change Repurchase Date; provided, however that to
the extent that the aggregate amount of cash deposited by the Company pursuant
to Section 3.07 exceeds the aggregate Fundamental Change Redemption Price,
together with accrued interest to, but excluding, the Fundamental Change
Repurchase Date, of the Securities or portions thereof which the Company is
obligated to purchase as of the Fundamental Change Repurchase Date then
promptly after the Business Day following the Fundamental Change Repurchase
Date the Trustee and the Paying Agent shall return any such excess to the
Company together with interest or dividends, if any, thereon.


ARTICLE
4

COVENANTS


Section 4.01.  Payment of Securities. 
The Company shall promptly make all payments in respect of the
Securities on the dates and in the manner provided in the Securities or
pursuant to this Indenture.  The
principal amount, premium, if any, accrued interest, Redemption Price and
Fundamental Change Redemption Price shall be considered paid on the applicable
date due if on such date the Trustee or the Paying Agent holds on or before
10:00 a.m.  New York City time on such
date, in accordance with this Indenture, money or securities, if permitted
hereunder, sufficient to pay all such amount then due.


The Company shall pay interest at the rate set forth
in paragraph 1 of the Securities and it shall pay interest on overdue interest
at the same rate compounded semiannually (to the extent that the payment of
such interest shall be legally enforceable), which interest on overdue interest
shall accrue from the date such amounts became overdue.


 


20

















 


Section 4.02.  SEC Reports. 
The Company shall file with the Trustee, within 15 days after it files
such annual and quarterly reports, information, documents and other reports
with the SEC, copies of its annual report and of the information, documents and
other reports (or copies of such portions of any of the foregoing as the SEC
may by rules and regulations prescribe) which the Company is required to file
with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.


Section 4.03.  Compliance Certificate. 
The Company shall deliver to the Trustee within 120 days after the end
of each fiscal year of the Company (beginning with the fiscal year ending in
June 2004) an Officers’ Certificate stating whether or not the signers know of
any Default that occurred during such period. 
If they do, such Officers’ Certificate shall describe the Default and
its status.


Section 4.04.  Further Instruments and Acts. 
Upon request of the Trustee, the Company will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purposes of this Indenture.


Section 4.05.  Maintenance of Office or Agency. 
The Company will maintain in the Borough of Manhattan, The City of New
York, an office or agency where Securities may be presented or surrendered for
payment, where Securities may be surrendered for registration of transfer,
exchange, or redemption and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served.  The office of U.S. Bank Trust National
Association, an Affiliate of the Trustee, at 100 Wall Street, Suite 1600, New
York, NY 10005, shall be such office or agency for all of the aforesaid
purposes unless the Company shall maintain some other office or agency for such
purposes and shall give prompt written notice to the Trustee of the location,
and any change in the location, of such other office or agency.  If at any time the Company shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee with
the address thereof, such presentations, surrenders, notices and demands may be
made or served at the address of the Trustee set forth in Section 10.02.


The Company may also from time to time designate one
or more other offices or agencies where the Securities may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall
in any manner relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York, for such purposes.


Section 4.06.  Restriction on Additional Indebtedness. 
The Company shall not, nor shall it permit any Subsidiary to, directly
or indirectly (including by means of a merger or an acquisition involving a
company with outstanding indebtedness), create, incur, 


 


21

















 


assume,
guaranty or otherwise become directly or indirectly liable for (“Incur”)
any additional indebtedness for borrowed money (other than additional
indebtedness that is (i) in an aggregate principal amount no greater than
$35,000,000, (ii) is subordinate in right of payment to all amounts payable
under the Securities and New Convertible Notes, (iii) does not have a final
Stated Maturity prior to the Stated Maturity of the Securities and the New
Convertible Notes, and (iv) has an Average Life at least equal to the remaining
Average Life of the Securities and the New Convertible Notes) or issue any
Disqualified Stock, except that the Company may, and may permit any Subsidiary
to Incur additional indebtedness


(a)   pursuant to any interest rate swap agreement,
interest rate cap agreement or other agreement designed to protect against
fluctuations in interest rates, any foreign exchange forward contract, currency
swap agreement or other agreement designed to protect against fluctuations in
foreign exchange rates, or any commodity or raw material futures contract or
any other agreement designed to protect against fluctuations in raw material
prices, entered into in the ordinary course of business for the purpose of
limiting risks associated with our business and not for speculation;


(b)   with respect to letters of credit and
bankers’ acceptances issued in the ordinary course of business and not
supporting indebtedness for borrowed money, including letters of credit
supporting performance, surety or appeal bonds, indemnification obligations,
lease or other contractual deposits, or other similar obligations;


(c)   the proceeds of which, less fees and
expenses, are used to repay, redeem or repurchase, at the option of the
Company, Securities, New Convertible Notes, or Old Notes, provided that if any
Securities or New Convertible Notes will remain outstanding, the Stated
Maturity of the indebtedness incurred must be at least 120 days after the
Stated Maturity of the Securities and New Convertible Notes;


(d)   indebtedness incurred to refinance, renew or
replace the SGI Japan Secured Debt, or any extensions or amendments of the SGI
Japan Secured Debt, in each case that do not increase the principal amount
thereof; or


(e)   other indebtedness to banks or other
institutional lenders in the form of revolving credit loans or term loans or
the issuance of letters of credit or bankers’ acceptances or the like,
including the Secured Credit Facility as it may be extended, refinanced,
renewed or replaced, provided that the aggregate principal amount of such other
indebtedness at any time outstanding does not exceed $100 million.


Section 4.07.  Restricted Payments. 
The Company shall not


(a)   declare or pay any dividend or make any
distribution on its Capital Stock, other than dividends or distributions paid
in its or its Subsidiaries’ Capital Stock other than Disqualified Stock;


 


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(b)   purchase, redeem or otherwise acquire or
retire for value any of its Capital Stock or Options, other than (1) the
repurchase of unvested restricted stock in connection with voluntary or
involuntary terminations of employment with an aggregate purchase price less
than $100,000 per fiscal year, or (2) repurchases, redemptions, acquisitions or
retirements paid for with its Capital Stock other than Disqualified Stock or
Options to buy Capital Stock other than Disqualified Stock; 


(c)   pay any funds to or for the account of, make
any investment in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect, any transaction with,
any Affiliate except on an arms-length basis on terms at least as favorable to
the Company as could have been obtained from a third party that was not an
Affiliate (except that the Company may enter into compensatory arrangements
with and pay such salary, bonus or other compensation to employees, officers
and directors as have been approved by a committee of the Company's Board of
Directors comprised of independent directors); or


(d)   repay, redeem, repurchase, defease or otherwise
acquire or retire for value, any indebtedness subordinated in right of payment
to the Securities or the New Convertible Notes except a payment of interest or
principal when due.


ARTICLE
5

SUCCESSOR CORPORATION


Section 5.01.  When Company May Merge or Transfer Assets. 
Company shall not consolidate with or merge with or into any other
Person (other than in a merger or consolidation in which the Company is the
surviving Person) or convey, transfer or lease its properties and assets
substantially as an entirety to any Person, unless:


(a)       the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or the Person which acquires by conveyance, transfer or lease the
properties and assets of the Company substantially as an entirety (i) shall be
a corporation, partnership or trust organized and validly existing under the
laws of the United States or any State thereof or the District of Columbia and
(ii) shall expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all of the
obligations of the Company under the Securities and this Indenture;


(b)      immediately after giving
effect to such transaction, no Default shall have occurred and be continuing; and


(c)       the Company shall have
delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel,
each stating that such consolidation, merger, conveyance, transfer or lease
and, if a supplemental indenture is required in connection with such transaction,
such supplemental indenture, comply with this Article and that all conditions
precedent herein provided for relating to such transaction have been satisfied.


The successor Person formed by such consolidation or
into which the Company is merged or the successor Person to which such
conveyance, transfer or lease is made shall succeed to, and be substituted for,
and may exercise every 


 


23

















 


right and power of, the
Company under this Indenture with the same effect as if such successor had been
named as the Company herein; and thereafter, except in the case of a lease of
its properties and assets substantially as an entirety, the Company shall be
discharged from all obligations and covenants under this Indenture and the
Securities.


ARTICLE
6

DEFAULTS AND REMEDIES


Section 6.01.  Events of Default. 
“Event
of Default” occurs if:


(a)   the Company defaults in the payment of the
principal amount of, premium, if any, Redemption Price or Fundamental Change
Redemption Price on any Security when the same becomes due and payable at its
Stated Maturity, upon redemption, upon declaration or otherwise;


(b)   the Company defaults in the payment of any
installment of interest upon any of the Securities as and when the same shall
become due and payable, and continuance of such default for 30 days;


(c)   the Company fails to comply with any of its
agreements in the Securities or this Indenture (other than those referred to in
clause (1) or (2) above) and such failure continues for 60 days after receipt
by the Company of a Notice of Default;


(d)   a decree or order by a court having
jurisdiction in the premises shall have been entered adjudging the Company a
bankrupt or insolvent, or approving as properly filed a petition seeking reorganization
of the Company under any Bankruptcy Law, and such decree or order shall have
continued undischarged and unstayed for a period of 60 consecutive days; or a
decree or order of a court having jurisdiction in the premises of the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of its property, or for the winding-up or
liquidation of its affairs, shall have been entered, and such decree or order
shall have remained in force undischarged and unstayed of a period of 60
consecutive days; or


(e)   the Company shall institute proceedings to be
adjudicated a voluntary bankrupt, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization under any Bankruptcy Law, or shall consent to the filing
of any such petition, or shall consent to the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of it or of its
property or shall make an assignment for the benefit of creditors, or shall
admit in writing its inability to pay its debts generally as they become due.


 


24

















 


(f)    an event of default under the Secured Credit
Facility, the Old Notes Indenture or the New Convertible Indenture shall have
occurred which results in the principal amount and accrued interest on that
debt becoming immediately due and payable.


“Bankruptcy Law” means Title 11, United
States Code, or any similar Federal or state law for the relief of debtors.


A Default under clause (c) above is not an Event of
Default until the Trustee notifies the Company, or the Holders of at least 25%
in aggregate principal amount of the Securities at the time outstanding notify
the Company and the Trustee, of the Default and the Company does not cure such
Default (and such Default is not waived) within the time specified in clause
(3) above after actual receipt of such notice (a “Notice of Default”).  Any such notice must specify the Default,
demand that it be remedied and state that such notice is a Notice of Default.


Section 6.02.  Acceleration. 
If an Event of Default (other than an Event of Default specified in
Section 6.01(d) or (e)) occurs and is continuing, the Trustee by notice to the
Company, or the Holders of at least 25% in aggregate principal amount of the
Securities at the time outstanding by notice to the Company and the Trustee,
may declare the principal amount and premium, if any, on all the Securities and
the interest accrued thereon to be immediately due and payable.  Upon such a declaration, such principal
amount, premium, if any, and interest accrued thereon shall be due and payable
immediately.  If an Event of Default
specified in Section 6.01(d) or (e) occurs and is continuing, the principal
amount and premium, if any, on all the Securities and the interest accrued
thereon shall become and be immediately due and payable without any declaration
or other act on the part of the Trustee or any Securityholders.  The Holders of a majority in aggregate
principal amount of the Securities at the time outstanding, by notice to the
Trustee (and without notice to any other Securityholder) may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of the principal amount, premium, if any, and interest
accrued thereon that has become due solely as a result of acceleration and if
all amounts due to the Trustee under Section 7.07 have been paid.  No such rescission shall affect any
subsequent Default or impair any right consequent thereto.


Section 6.03.  Other Remedies. 
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy to collect the payment of the principal amount and
premium, if any, on the Securities and interest accrued thereon or to enforce
the performance of any provision of the Securities or this Indenture.


 


25

















 


The Trustee may maintain a proceeding even if the
Trustee does not possess any of the Securities or does not produce any of the
Securities in the proceeding.  A delay
or omission by the Trustee or any Securityholder in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of, or acquiescence in, the Event of Default.  No remedy is exclusive of any other
remedy.  All available remedies are
cumulative.


Section 6.04.  Waiver of Past Defaults. 
The Holders of a majority in aggregate principal amount of the
Securities at the time outstanding, by notice to the Trustee (and without
notice to any other Securityholder), may waive an existing Default and its
consequences except (1) an Event of Default described in Section 6.01(a)  or 6.01(b), or (2) a Default in respect of a
provision that under Section 9.02 cannot be amended without the consent of each
Securityholder affected.  When a Default
is waived, it is deemed cured, but no such waiver shall extend to any
subsequent or other Default or impair any consequent right.


Section 6.05.  Control by Majority. 
The Holders of a majority in aggregate principal amount of the
Securities at the time outstanding may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture or that the Trustee
determines in good faith is unduly prejudicial to the rights of other
Securityholders or would involve the Trustee in personal liability unless the
Trustee is offered indemnity satisfactory to it.


Section 6.06.  Limitation on Suits. 
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:


(a)       the Holder gives to the
Trustee written notice stating that an Event of Default is continuing;


(b)      the Holders of at least
25% in aggregate principal amount of the Securities at the time outstanding
make a written request to the Trustee to pursue the remedy;


(c)       such Holder or Holders
offer to the Trustee reasonable security or indemnity against any loss,
liability or expense satisfactory to the Trustee;


(d)      the Trustee does not
comply with the request within 60 days after receipt of the notice, the request
and the offer of security or indemnity; and


 


26

















 


(e)       the Holders of a
majority in aggregate principal amount of the Securities at the time outstanding
do not give the Trustee a direction inconsistent with the request during such
60-day period.


A Securityholder may not use this Indenture to
prejudice the rights of any other Securityholder or to obtain a preference or
priority over any other Securityholder.


Section 6.07.  Rights of Holders to Receive Payment. 
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of the principal amount, premium, if any, accrued
interest, Redemption Price or Fundamental Change Redemption Price in respect of
the Securities held by such Holder, on or after the respective due dates
expressed in the Securities or any Redemption Date or Fundamental Change
Repurchase Date, as the case may be, or to bring suit for the enforcement of
any such payment on or after such respective dates, shall not be impaired or
affected adversely without the consent of each such Holder.


Section 6.08.  Collection Suit by Trustee. 
If an Event of Default described in Section 6.01(a) or 6.01(b) occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company for the whole amount owing with
respect to the Securities and the amounts provided for in Section 7.07.


Section 6.09.  Trustee May File Proofs of Claim. 
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal amount, premium,
if any, accrued interest, Redemption Price or Fundamental Change Redemption
Price in respect of the Securities shall then be due and payable as therein
expressed or by declaration or otherwise and irrespective of whether the
Trustee shall have made any demand on the Company for the payment of any such
amount) shall be entitled and empowered, by intervention in such proceeding or
otherwise,


(a)   to file and prove a claim for the whole
amount of the principal amount, premium, if any, accrued interest, Redemption
Price or Fundamental Change Redemption Price and to file such other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and of the
Holders allowed in such judicial proceeding, and


 


27

















 


(b)   to collect and receive any moneys or other
property payable or deliverable on any such claims and to distribute the same;


and any custodian, receiver, assignee, trustee,
liquidator, sequestrator or similar official in any such judicial proceeding is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07.


Nothing herein contained
shall be deemed to authorize the Trustee to authorize or consent to or accept
or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the Securities or the rights of any Holder
thereof, or to authorize the Trustee to vote in respect of the claims of any
Holder in any such proceeding.


Section 6.10.  Priorities. 
If the Trustee collects any money pursuant to this Article 6, it shall
pay out the money in the following order:


First:  to the Trustee for amounts due under Section 7.07;


Second:  to Securityholders for amounts due and unpaid on the Securities
for the principal amount, premium, if any, accrued interest, Redemption Price
or Fundamental Change Redemption Price, as the case may be, ratably, without
preference or priority of any kind, according to such amounts due and payable
on the Securities; and


Third:  the balance, if any, to the Company.


The Trustee may fix a record date and payment date
for any payment to Securityholders pursuant to this Section 6.10.  At least 15 days before such record date,
the Company shall mail to each Securityholder and the Trustee a notice that
states the record date, the payment date and amount to be paid.


Section 6.11.  Undertaking for Costs. 
In any suit for the enforcement of any right or remedy, under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant (other than the Trustee) in the suit of an undertaking to pay the
costs of the suit, and the court in its discretion may assess reasonable costs,
including reasonable attorneys’ fees, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defenses made
by the party litigant.  This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 or a suit by Holders of more than 10% in aggregate principal amount of the
Securities at the time outstanding.


 


28

















 


Section 6.12.  Waiver of Stay, Extension or Usury Laws. 
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law or any
usury or other law wherever enacted, now or at any time hereafter in force,
which would prohibit or forgive the Company from paying all or any portion of
the principal amount, premium, if any, accrued interest, Redemption Price or
Fundamental Change Redemption Price in respect of Securities as contemplated
herein, or which may affect the covenants or the performance of this Indenture;
and the Company (to the extent that it may lawfully do so) hereby expressly
waives all benefit or advantage of any such laws and covenants that it will not
hinder, delay or impede the execution of any power herein granted to the
Trustee, but will suffer and permit the execution of every such power as though
no such law had been enacted.


ARTICLE
7

TRUSTEE


Section 7.01.  Duties of Trustee. 
(a)  If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in its
exercise as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.


(b)   Except during the continuance of an Event of
Default:


(i)    the Trustee need perform
only those duties that are specifically set forth in this Indenture and no
others; and


(ii)   in the absence of bad faith
on its part, the Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.


(c)   The Trustee may not be relieved from
liability for its own negligent action, its own negligent failure to act or its
own willful misconduct, except that:


(i)    this paragraph (c) does not
limit the effect of paragraph (b) of this Section 7.01;


 


29

















 


(ii)   the Trustee shall not be
liable for any error of judgment made in good faith by a Trust Officer unless
it is proved that the Trustee was negligent in ascertaining the pertinent
facts; and


(iii)  the Trustee shall not be
liable with respect to any action it takes or omits to take in good faith in
accordance with a direction received by it pursuant to Section 6.05.


(d)   Every provision of this Indenture that in any
way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of
this Section 7.01.


(e)   The Trustee may refuse to perform any duty or
exercise any right or power or extend or risk its own funds or otherwise incur
any financial liability unless it receives indemnity satisfactory to it against
any loss, liability or expense.


(f)    Money held by the Trustee in trust hereunder
need not be segregated from other funds except to the extent required by law.


Section 7.02.  Rights of Trustee. 
(a) The Trustee may rely on any document believed by it to be genuine
and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or
matter stated in the document.


(b)   Before the Trustee acts or refrains from
acting, it may require a Company Order, an Officers’ Certificate or an Opinion
of Counsel.  The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such Company Order, Officers’ Certificate or Opinion of Counsel.


(c)   The Trustee may act through agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.


(d)   Subject to the provisions of Section 7.01(c),
the Trustee shall not be liable for any action it takes or omits to take in
good faith which it believes to be authorized or within its rights or powers.


Section 7.03.  Individual Rights of Trustee. 
The Trustee in its individual or any other capacity may become the owner
or pledgee of Securities and may otherwise deal with the Company or its
Affiliates with the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar or co-registrar
may do the same with the like rights. 
However, the Trustee must comply with Section 7.10.


Section 7.04.  Trustee’s Disclaimer. 
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company’s
use of the proceeds from the Securities, it shall not be responsible for any
statement in the Prospectus for the Securities or in the 


 


30

















 


Indenture
of the Securities (other than its certificate of authentication), the acts of
an prior Trustee hereunder, or the determination as to which beneficial owners
are entitled to receive any notices hereunder.


Section 7.05.  Notice of Defaults. 
If a Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall give to each Securityholder notice of the Default
within 90 days after it occurs.  Except
in the case of a Default described in Section 6.01(a) or 6.01(b), the Trustee
may withhold the notice if and so long as a committee of its Trust Officers in
good faith determines that withholding the notice is in the interests of
Securityholders.  The Trustee shall not
give notice of a Default pursuant to Section 6.01(c) until at least sixty (60)
days have passed since its occurrence.


Section 7.06.  Disqualification; Conflicting Interests. 
If the Trustee has or shall acquire any conflicting interest within the
meaning of the TIA, it shall either eliminate such conflicting interest or
resign, to the extent and in the manner provided by, and subject to the
provisions of the TIA and this Indenture.


Section 7.07.  Compensation and Indemnity. 
The Company agrees:


(a)       to pay to the Trustee
from time to time reasonable compensation for all services rendered by it
hereunder (which compensation shall not be limited by any provision of law in
regard to the compensation of a trustee of an express trust);


(b)      to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expense, advances and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and


(c)       to indemnify the Trustee
for, and to hold it harmless against, any loss, liability or expense incurred
without negligence or bad faith on its part, arising out of or in connection
with the acceptance or administration of this trust, including the costs and
expenses of defending itself against any claim or liability in connection with
the exercise or performance of any of its powers or duties hereunder.


To secure the Company’s payment obligations in this
Section 7.07, the Trustee shall have a lien prior to the Securities on all
money or property held or collected by the Trustee, except that held in trust
to pay the principal amount, premium, if any, accrued interest, Redemption
Price or Fundamental Change Redemption Price, as the case may be, on particular
Securities.


 


31

















 


The Company’s payment obligations pursuant to this
Section 7.07 shall survive the discharge of this Indenture.  When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.01(d)or (e), the expenses are
intended to constitute expenses of administration under any Bankruptcy Law.


Section 7.08.  Replacement of Trustee. 
The Trustee may resign by so notifying the Company; provided, however,
no such resignation shall be effective until a successor Trustee has accepted
its appointment pursuant to this Section 7.08. 
The Holders of a majority in aggregate principal amount of the
Securities at the time outstanding may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. 
The Company shall remove the Trustee if:


(a)       the Trustee fails to
comply with, or ceases to be eligible under, Section 7.10;


(b)      the Trustee is adjudged
bankrupt or insolvent;


(c)       a receiver or public
officer takes charge of the Trustee or its property; or


(d)      the Trustee otherwise
becomes incapable of acting.


If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall promptly
appoint, by resolution of its Board of Directors, a successor Trustee.


A successor Trustee shall deliver a written
acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the
retiring Trustee shall become effective, and the successor Trustee shall have
all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of
its succession to Securityholders.  The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee, subject to the lien provided for in Section 7.07.


If a successor Trustee does not take office within
30 days after the retiring Trustee resigns or is removed, the retiring Trustee,
the Company or the Holders of a majority in aggregate principal amount of the
Securities at the time outstanding may petition any court of competent
jurisdiction for the appointment of a successor Trustee.


If the Trustee fails to comply with Section 7.10,
any Securityholder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.


Section 7.09.  Successor Trustee by Merger. 
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all its corporate 


 


32

















 


trustee
business or assets (including the administration of the trust created by this
Indenture) to, another corporation, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.


Section 7.10.  Eligibility; Disqualification. 
The Trustee (or if a Trustee is a member of a bank holding company, its
bank holding company) shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of
conditions.  If at any time the Trustee
shall cease to be eligible in accordance with the provisions of this Section,
it shall resign immediately in the manner and with the effect hereinafter
specified in this Article.


Section 7.11.  Preferential Collection of Claims Against
Company.  If and when the Trustee
shall be or become a creditor of the Company (or any other obligor upon the
Securities), the Trustee shall be subject to the provisions of the TIA
regarding the collection of claims against the Company (or any such other
obligor).


Section 7.12.  Reports by Trustee.


(a)   The Trustee shall transmit to Holders such
reports concerning the Trustee and its actions under this Indenture as may be
required pursuant to the TIA at the times and in the manner provided pursuant
thereto.


(b)   A copy of each such report shall, at the time
of such transmission to Holders, be filed by the Trustee with each stock
exchange or market upon which the Securities are listed, with the Commission
and with the Company.  The Company will
notify the Trustee when the Securities are listed on any stock exchange or
market.


ARTICLE
8

DISCHARGE OF INDENTURE


Section 8.01.  Discharge of Liability on Securities. 
When (i) the Company delivers to the Trustee all outstanding Securities
(other than Securities replaced pursuant to Section 2.07) for cancellation or
(ii) all outstanding Securities have become due and payable and the Company
deposits with the Trustee cash and/or securities, as permitted by the terms
hereof, sufficient to pay at Stated Maturity the principal amount of all
outstanding Securities (other than Securities replaced pursuant to Section
2.07), and if in either case the Company pays all other sums payable hereunder
by the Company, then this Indenture shall, subject to Section 7.07, cease to be
of further effect.  The Trustee shall
join in the execution of a document prepared by the Company acknowledging
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers’ Certificate and Opinion of Counsel and at the cost
and expense of the Company.


 


33

















 


Section 8.02.  Repayment to the Company. 
The Trustee and the Paying Agent shall return to the Company upon
written request any money or securities held by them for the payment of any amount
with respect to the Securities that remains unclaimed for two years, provided,
however, that the Trustee or such Paying Agent, before being required to make
any such return, shall at the expense of the Company cause to be published once
in a newspaper of general circulation in The City of New York or mail to each
such Holder notice that such money or securities remains unclaimed and that,
after a date specified therein, which shall not be less than 30 days from the
date of such publication or mailing, any unclaimed money or securities then
remaining will be returned to the Company. 
After return to the Company, Holders entitled to the money or securities
must look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.


ARTICLE
9

AMENDMENTS


Section 9.01.  Without Consent of Holders. 
The Company and the Trustee may amend this Indenture or the Securities
without the consent of any Securityholder:


(a)       to cure any ambiguity,
defect or inconsistency;


(b)      to comply with Article 5;


(c)       to provide for
uncertificated Securities in addition to certificated Securities so long as
such uncertificated Securities are in registered form for purposes of the
Internal Revenue Code of 1986, as amended;


(d)      to make any change that
does not adversely affect the right of any Securityholder; or


(e)       to make any change to
comply with the TIA, or any amendment thereto, or to comply with any
requirement of the SEC in connection with the qualification, if any, of the
Indenture under the TIA.


Section 9.02.  With Consent of Holders. 
With the written consent of the Holders of at least a majority in
aggregate principal amount of the Securities at the time outstanding, the
Company and the Trustee may amend this Indenture or the Securities.  However, without the consent of each
Securityholder affected, an amendment or supplement to this Indenture or the
Securities may not:


 


34

















 


(a)       make any change to the
manner or rate of accrual in connection with interest, reduce the rate of
interest referred to in paragraph 1 of the Securities or extend the time for
payment of interest on any Security;


(b)      reduce the Redemption
Price or extend the Stated Maturity;


(c)       reduce the Redemption
Price or Fundamental Change Redemption Price of any Security;


(d)      make any Security payable
in money or securities other than that stated in the Security;


(e)       make any change in
Section 6.04, Section 6.07 or this Section 9.02, except to increase any such
percentage; or


(f)       make any change that
adversely affects the right to require the Company to redeem the Securities
upon a Fundamental Change in accordance with the terms thereof and this
Indenture;


and no such amendment or
supplement to this Indenture may reduce the aforesaid percentage of Securities
whose Holders must consent to any such amendment or supplemental indenture,
without the consent of the Holders of all the Securities then outstanding.


It shall not be necessary for the consent of the
Holders under this Section 9.02 to approve the particular form of any proposed
amendment or supplemental indenture, but it shall be sufficient if such consent
approves the substance thereof.


After an amendment under this Section 9.02 becomes
effective, the Company shall mail to each Holder a notice briefly describing
the amendment.


Section 9.03.  Compliance with TIA. 
Every supplemental indenture executed pursuant to this Article shall
comply with the TIA as then in effect.


Section 9.04.  Revocation and Effect of Consents, Waivers
and Actions.  Until an amendment,
supplemental indenture, waiver or other action becomes effective, a consent to
it or any other action by a Holder of a Security hereunder is a continuing
consent by the Holder and every subsequent Holder of that Security or portion
of the Security that evidences the same obligation as the consenting Holder’s
Security, even if notation of the consent, waiver or action is not made on the
Security.  However, any such Holder or
subsequent Holder may revoke the consent, waiver or action as to such Holder’s
Security or portion of the Security if the Trustee receives the notice or
revocation before the date the amendment, supplemental indenture, waiver or
action becomes effective.  After an 


 


35

















 


amendment,
supplemental indenture, waiver or action becomes effective, it shall bind every
Securityholder.


Section 9.05.  Notation on or Exchange of Securities. 
Securities authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article may, and shall if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for
in such supplemental indenture.  If the
Company shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any such supplemental
indenture may be prepared and executed by the Company and authenticated and
delivered by the Trustee in exchange for outstanding Securities,


Section 9.06.  Trustee to Sign Supplemental Indentures. 
The Trustee shall sign any supplemental indenture authorized pursuant
to this Article 9 if the amendment does not adversely affect the rights,
duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, but need not, sign such supplemental
indenture.  In signing such supplemental
indenture the Trustee shall be entitled to receive, and (subject to the
provisions of Section 7.01) shall be fully protected in relying upon, an
Officers’ Certificate and an Opinion of Counsel stating that such supplemental
indenture is authorized or permitted by this Indenture.


Section 9.07.  Effect of Supplemental Indentures. 
Upon the execution of any supplemental indenture under this Article,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every
Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.


ARTICLE
10

MISCELLANEOUS


Section 10.01.  Conflict with TIA. 
If any provision hereof limits, qualifies or conflicts with a provision
of the TIA that is required under the TIA to be a part of and govern this
Indenture, the latter provision shall control. 
If any provision of this Indenture modifies or excludes any provision of
the TIA that may be so modified or excluded, the latter provision shall be
deemed to apply to this Indenture as so modified or excluded, as the case may
be.


Section 10.02.  Notices. 
Any request, demand, authorization, notice, waiver, consent or
communication shall be in writing and delivered in person or mailed by first
class mail, postage prepaid, addressed as follows or transmitted by facsimile
transmission (confirmed by overnight courier) to the following facsimile
numbers:


 


36

















 


if to the Company:


Silicon Graphics, Inc.

1600 Amphitheatre Parkway

Mountain View, California 94043

Attn:  General Counsel

Telephone Number:  (415) 960-1980

Facsimile Number:  (415) 969-6289


if to the Trustee:


U.S. Bank National Association

550 South Hope Street, 5th Floor

Los Angeles, California 90071

Attention:  Corporate Trust Services
(Silicon Graphics, Inc.)

Telephone Number:  (213) 533-8418

Telefax Number:  (213) 533-8729


The Company or the Trustee by notice to the other
may designate additional or different addresses for subsequent notices or
communications.


Any notice or communication given to a
Securityholder shall be mailed to the Securityholder, by first class mail, postage
prepaid, at the Securityholder’s address as it appears on the registration
books of the Registrar and shall be sufficiently given if so mailed within the
time prescribed.


Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its sufficiency with
respect to other Securityholders.  If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not received by the addressee.


If the Company mails a notice or communication to the
Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying
Agent, Conversion Agent or co-registrar.


Section 10.03.  Communication by Holders with Other Holders. 
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities.  The Company, the Trustee,
the Registrar, the Paying Agent, the Conversion Agent and anyone else shall
have the protection of TIA Section 312(c).


Section 10.04.  Certificate and Opinion as to Conditions
Precedent.  Upon any request or
application by the Company to the Trustee to take any action under this
Indenture, the Company shall furnish to the Trustee:


 


37

















 


(a)       an Officers’ Certificate
stating that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with; and


(b)      an Opinion of Counsel
stating that, in the opinion of such counsel, all such conditions precedent
have been complied with.


Section 10.05.  Statements Required in Certificate or
Opinion.  Each Officers’ Certificate
or Opinion of Counsel with respect to compliance with a covenant or condition
provided for in this Indenture shall include:


(a)       a statement that each
person making such Officers’ Certificate or Opinion of Counsel has read such
covenant or condition,


(b)      a brief statement as to
the nature and scope of the examination or investigation upon which the
statements or opinions contained in such Officers’ Certificate or Opinion of
Counsel are based;


(c)       a statement that, in the
opinion of each such person, he has made such examination or investigation as
is necessary to enable such person to express an informed opinion as to whether
or not such covenant or condition has been complied with; and


(d)      a statement that, in the
opinion of such person, such covenant or condition has been complied with.


Section 10.06.  Separability Clause. 
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.


Section 10.07.  Rules By Trustee, Paying Agent, Conversion Agent
and Registrar.  The Trustee may make
reasonable rules for action by or a meeting of Securityholders.  The Registrar, Conversion Agent and the
Paying Agent may make reasonable rules for their functions.


Section 10.08.  Legal Holidays. 
A “Legal Holiday” is any day other than a Business Day.  If any specified date (including a date for
giving notice) is a Legal Holiday, the action shall be taken on the next
succeeding day that is not a Legal Holiday, and, to the extent applicable, no
interest, if any, shall accrue for the intervening period.


Section 10.09.  Governing Law. 
THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE
SECURITIES.


 


38

















 


Section 10.10.  No Recourse Against Others. 
A director, officer, employee or stockholder, as such, of the Company
shall not have any liability for any obligations of the Company under the
Securities or this Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation. 
By accepting a Security, each Securityholder shall waive and release all
such liability.  The waiver and release
shall be part of the consideration for the issue of the Securities.


Section 10.11.  Successors. 
All agreements of the Company in this Indenture and the Securities
shall bind its successor.  All
agreements of the Trustee in this Indenture shall bind its successor.


Section 10.12.  Multiple Originals. 
The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but
all of them together represent the same agreement.  One signed copy is enough to prove this Indenture.


 


39

















 


IN WITNESS WHEREOF, the undersigned, being duly
authorized, have executed this Indenture on behalf of the respective parties
hereto as of the date first written above.


	
   

  	
  SILICON GRAPHICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:  Jeffrey Zellmer

  
	
   

  	
   

  	
  Title:  Chief Financial Officer

  



 


 


	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  



 


[SEAL]


 


 


	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:  Paula M. Oswald

  
	
   

  	
   

  	
  Title:  Vice President

  



 


 


40

















 


 


EXHIBIT A


[FORM OF FACE OF SECURITY]


[FORM OF LEGEND FOR GLOBAL
SECURITY:


UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH
OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS
AN INTEREST HEREIN.]


SILICON GRAPHICS, INC.


11.75% SENIOR NOTE DUE 2009


	
  No.

  	
  $

  	
   

  
	
   

  	
  CUSIP

  	
   

  



 


Silicon Graphics, Inc., a Delaware corporation,
promises to pay to or registered assigns, the principal amount of_____________
Dollars ($) on July 1, 2009 and to pay interest thereon from  [the date after expiration of the exchange
offer], 2003 or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, semi-annually on January 1 and July 1
in each year, commencing January 1, 2004, at the rate of 11.75% per annum
until the principal hereof is paid or made available for payment.  The interest so payable, and punctually paid
or duly provided for, on any Interest Payment Date will, as provided in such
Indenture, be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on the Regular
Record Date for such interest, which shall be the December 15 or June  15 (whether or not a Business Day), as the
case may be, next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities not less than 10 days prior to such 


 


A-1

















 


Special Record Date, or be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange or other market on which the Securities
may be listed, and upon such notice as may be required by such exchange or
market, all as more fully provided in said Indenture.  Payment of the principal of (and premium, if any) and interest on
this Security will be made at the Corporate Trust Office or the office or
agency of the Company maintained for that purposes in the Borough of Manhattan,
The City of New York, New York in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of, or by wire transfer to
the account of, the Person entitled thereto as such address shall appear in the
Security Register.


Additional provisions of this Security are set forth
on the other side of this Security.


 


 


A-2

















 


IN WITNESS WHEREOF, Silicon Graphics, Inc.  has caused this instrument to be duly
executed under its corporate seal.


 


	
   

  	
  SILICON GRAPHICS, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  



 


[SEAL]


 


 


	
  Attest:

  	
   

  	
   

  



 


 


Dated:


 


	
  TRUSTEE’S CERTIFICATE OF
  AUTHENTICATION

  	
   

  
	
   

  	
   

  	
   

  
	
  This is one of the
  Securities referred to in the within mentioned Indenture.

  	
   

  
	
   

  	
   

  	
   

  
	
  U.S. BANK NATIONAL
  ASSOCIATION, as Trustee,

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized Signatory

  	
   

  
	
   

  	
   

  	
   

  



 


 


A-3

















 


[FORM OF REVERSE SIDE OF
SECURITY]


SILICON GRAPHICS, INC.


11.75% SENIOR NOTE DUE 2009


1.             Interest


This Security shall bear interest at 11.75% per
annum in the manner set forth in the Indenture and the face of this
Security.  In the event that principal
hereof or any portion of such principal is not paid when due (whether upon
acceleration pursuant to Section 6.02 of the Indenture, upon the date set for
payment of the Redemption Price pursuant to paragraph 5 hereof, upon the date
set for payment of a Fundamental Change Redemption Price pursuant to paragraph
6 hereof or upon the Stated Maturity of this Security), then in each such case
the overdue amount shall bear interest at the rate of 11.75% per annum,
compounded semiannually (to the extent that the payment of such interest shall
be legally enforceable), which interest shall accrue from the date such overdue
amount was due to the date payment of such amount, including interest thereon,
has been made or duly provided for.  All
such interest shall be payable on demand.


2.             Method of Payment


Subject to the terms and conditions of the
Indenture, the Company will make payments in respect of the Securities to the
persons who are registered Holders of Securities at the close of business on
the Redemption Date, Fundamental Change Repurchase Date or Stated Maturity, as
the case may be.  Holders must surrender
Securities to a Paying Agent to collect such payments in respect of the
Securities.  The Company will pay cash
amounts in money of the United States that at the time of payment is legal
tender for payment of public and private debts.  However, the Company may make such cash payments by check mailed
to the address of, or by wire transfer to the account of, the person entitled
to such payment.


3.             Paying Agent and
Registrar


Initially, U.S. Bank National Association, a
national banking association (the “Trustee”), will act as Paying Agent and Registrar.  The Company may appoint and change any
Paying Agent, Registrar or co-registrar without notice, other than notice to
the Trustee.  The Company or any of its
Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion
Agent, Registrar or co-registrar.


 


A-4

















 


4.             Indenture


The Company issued the Securities under an Indenture
dated as of           , 2003 (the “Indenture”),
between the Company and the Trustee. 
Capitalized terms used herein and not defined herein have the meanings
ascribed thereto in the Indenture.  The
Securities are subject to all such terms, and Securityholders are referred to
the Indenture for a statement of those terms.


The Securities are general unsecured obligations of
the Company limited to $230,000,000 aggregate principal amount (subject to
Section 2.02 and 2.07 of the Indenture).


5.             Redemption at the
Option of the Company


Prior to July 1, 2003, the Securities will not be
redeemable at the option of the Company. 
Beginning on July 1, 2003, the Company may redeem the Securities for
cash as a whole at any time, or from time to time in part, upon not less than
10 days’ nor more than 60 days’ notice at the following prices (the “Redemption
Price”) (expressed as percentages of the principal amount), together
with accrued and unpaid interest to, but excluding, the Redemption Date.


If redeemed prior to July 1, 2004, the Redemption
Price shall be 105% of the principal amount, plus accrued and unpaid interest
thereon.  Beginning on July 1, 2004, the
Redemption Price shall be 104% of the principal amount plus accrued and unpaid
interest thereon.  Beginning on July 1,
2005, the Redemption Price shall be 103% of the principal amount plus accrued
and unpaid interest thereon.  Beginning
on July 1, 2006, the Redemption Price shall be 102% of the principal amount
plus accrued and unpaid interest thereon. Beginning on July 1, 2007, the
Redemption Price shall be 101% of the principal amount plus accrued and unpaid
interest thereon.  Beginning on July 1,
2008, the Redemption Price shall be 100% of the principal amount plus accrued
and unpaid interest thereon.


If any Redemption Date is an Interest Payment Date,
then the interest payable on such date shall be paid to the Holder of the Security
on the next preceding Regular Record Date. 
No Securities may be redeemed by the Company if an Event of Default with
respect to the payment of interest on the Securities has occurred and is
continuing.


No sinking fund is provided for the Securities.


Notice of redemption at the option of the Company
will be mailed at least 30 days but not more than 60 days before the Redemption
Date to each Holder of Securities to be redeemed at the Holder’s registered
address.  If money sufficient to pay the
Redemption Price, together with accrued interest to, but excluding, the
Redemption Date, of all Securities (or portions thereof) to be redeemed on the 


 


A-5

















 


Redemption Date is deposited
with the Paying Agent prior to or on the Redemption Date, on and after such
date interest ceases to accrue on such Securities or portions thereof.  Securities in denominations larger than
$1,000 of principal amount may be redeemed in part but only in multiples of
$1,000 of principal amount.


6.             Redemption at the
Option of the Holder Upon a Fundamental Change


(a)           At the option of the Holder and
subject to the terms and conditions of the Indenture, the Company shall become
obligated to redeem the Securities held by such Holder on the date (the “Fundamental
Change Repurchase Date”) (or if such date is not a Business Day, the
next succeeding Business Day) that is 45 days after the date of the Company’s
notice of such Fundamental Change (as defined in the Indenture) occurring on or
prior to July 1, 2009 at 100% of the principal amount.  In each case, the Company shall also pay
accrued but unpaid interest, if any, on such Securities to, but excluding, the
Fundamental Change Repurchase Date; provided that if such Fundamental Change
Repurchase Date is an Interest Payment Date, then the interest payable on such
date shall be paid to the Holder of the Security on the next preceding Regular
Record Date.  Securities in
denominations larger than $1,000 of principal amount may be redeemed in part in
connection with a Fundamental Change, but only in multiples of $1,000 of
principal amount.


(b)           Holders have the right to withdraw
any Fundamental Change Redemption Notice by delivering to the Paying Agent a
written notice of withdrawal in accordance with the provisions of the
Indenture.


(c)           If cash sufficient to pay the
Fundamental Change Redemption Price, together with accrued interest to, but
excluding, the Fundamental Change Repurchase Date, of all Securities or
portions thereof to be purchased as of the Fundamental Change Repurchase Date
is deposited with the Paying Agent on or prior to the Fundamental Change
Repurchase Date, interest ceases to accrue on such Securities (or portions
thereof) on and after the Fundamental Change Repurchase Date, and the Holder thereof
shall have no other rights as such (other than the right to receive the
Fundamental Change Redemption Price, together with accrued interest to, but
excluding, the Fundamental Change Repurchase Date, upon surrender of such
Security).


7.             Denominations;
Transfer; Exchange


The Securities are in registered form, without
coupons, in denominations of $1,000 of principal amount and multiples of
$1,000.  A Holder may transfer or
exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents and to pay any taxes
and fees required by law or permitted by the 


 


A-6

















 


Indenture.  The Registrar need not transfer or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities in respect of which a Fundamental Change Redemption Notice has been
given and not withdrawn (except, in the case of a Security to be purchased in
part, the portion of the Security not to be purchased) or any Securities for a
period of 15 days before a selection of Securities to be redeemed.


8.             Persons Deemed
Owners


The registered Holder of this Security may be
treated as the owner of this Security for all purposes.


9.             Unclaimed Money or
Securities


The Trustee and the Paying Agent shall return to the
Company upon written request any money or securities held by them for the
payment of any amount with respect to the Securities that remains unclaimed for
two years, provided, however, that the Trustee or such Paying Agent, before
being required to make any such return, shall at the expense of the Company
cause to be published once in a newspaper of general circulation in The City of
New York or mail to each such Holder notice that such money or securities
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication or mailing, any unclaimed
money or securities then remaining will be returned to the Company.  After return to the Company, Holders
entitled to the money or securities must look to the Company for payment as
general creditors unless an applicable abandoned property law designates
another person.


10.          Amendment; Waiver


Subject to certain exceptions set forth in the
Indenture, (i) the Indenture or the Securities may be amended with the written
consent of the Holders of at least a majority in aggregate principal amount of
the Securities at the time outstanding and (ii) certain defaults or
noncompliance with certain provisions may be waived with the written consent of
the Holders of a majority in aggregate principal amount of the Securities at
the time outstanding.  Subject to
certain exceptions set forth in the Indenture, without the consent of any
Securityholder, the Company and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, defect or inconsistency, or to comply with
Article 5 of the Indenture, to provide for uncertificated Securities in
addition to or in place of certificated Securities or to make any change that
does not adversely affect the rights of any Securityholder or to comply with
any requirement of the SEC in connection with the qualification of the
Indenture under the TIA.


 


A-7

















 


11.          Defaults and Remedies


Under the Indenture, Events of Default include (i)
default in payment of the principal amount, Redemption Price or Fundamental
Change Redemption Price, as the case may be, in respect of the Securities when
the same becomes due and payable; (ii) default for 30 days in the payment of
any installment of interest on the Securities; (iii) failure by the Company to
comply with other agreements in the Indenture or the Securities, subject to
notice and lapse of time; (iv) an event of default under the Secured Credit
Facility, the Old Notes Indenture or the New Convertible Indenture shall have
occurred that results in the principal amount of and accrued interest on that
debt becoming immediately due and payable, and (v) certain events of bankruptcy
or insolvency.  If an Event of Default
occurs and is continuing, the Trustee, or the Holders of at least 25% in
aggregate principal amount of the Securities at the time outstanding, may
declare all the Securities to be due and payable immediately.  Certain events of bankruptcy or insolvency
are Events of Default which will result in the Securities being declared due
and payable immediately upon the occurrence of such Events of Default.


Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture.  The Trustee may refuse to enforce the Indenture or the Securities
unless it receives reasonable indemnity or security.  Subject to certain limitations, Holders of a majority in aggregate
principal amount of the Securities at the time outstanding may direct the
Trustee in its exercise of any trust or power. 
The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of amounts specified in  (i) or (ii) above) if it determines that
withholding notice is in their interests.


12.          Trustee Dealings with
the Company


The Trustee under the Indenture, in its individual
or any other capacity, may become the owner or pledgee of Securities and may
otherwise deal with and collect obligations owed to it by the Company or its
Affiliates and may otherwise deal with the Company or its Affiliates with the
same rights it would have if it were not Trustee.


13.          No Recourse Against
Others


A director, officer, employee or stockholder, as
such, of the Company shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation.  By accepting a Security, each Securityholder
waives and releases all such liability. 
The waiver and release are part of the consideration for the issue of
the Securities.


 


A-8

















 


14.          Authentication


This Security shall not be valid until an authorized
officer of the Trustee manually signs the Trustee’s Certificate of
Authentication on the other side of this Security.


15.          Abbreviations


Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with right of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (Uniform Gift to
Minors Act).


16.          Governing Law


THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INDENTURE AND THIS SECURITY.












The Company will furnish to any Securityholder upon
written request and without charge a copy of the Indenture which has in it the
text of this Security in larger type. 
Requests may be made to:


Silicon Graphics, Inc.


1600 Amphitheatre Parkway


Mountain View, California
94043


Attn:  General Counsel


 


 


A-9

















 


 


[FORM OF OPTION TO ELECT
REDEMPTION

UPON A FUNDAMENTAL CHANGE]


To:          Silicon Graphics, Inc.


The
undersigned registered holder of this Security hereby acknowledges receipt of a
notice from Silicon Graphics, Inc.  (the
“Company”) as to the occurrence of a Fundamental Change with respect to the Company
and requests and instructs the Company to redeem this Security, or the portion
hereof (which is $1,000 principal amount or a multiple thereof) below
designated, in accordance with the terms of the Indenture referred to in this
Security.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  principal
  amount to be redeemed

  
	
   

  	
   

  	
   

  	
  (if
  less than all):

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  $__________

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Social
  Security or other

  
	
   

  	
   

  	
   

  	
  Taxpayer
  Identification Number

  



 


 


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[FORM OF ASSIGNMENT]


For value received _________________________
hereby sell(s), assign(s) and transfer(s) unto 


	
   

  
	
  (Please
  insert social security or other taxpayer identification number of assignee.)

  



 


the within Security and hereby irrevocably
constitutes and appoints _______________________ attorney to transfer the said
Security on the books of the Company, with full power of substitution in the
premises.


 


	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s)

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature(s)
  must be guaranteed by a

  
	
   

  	
   

  	
   

  	
  commercial
  bank or trust company or a

  
	
   

  	
   

  	
   

  	
  member
  firm of a major stock exchange.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature
  Guarantee

  



 


 


NOTICE: 
The above signatures of the holder(s) hereof must correspond with the
name as written upon the face of the Security in every particular without
alteration or enlargement or any change whatever.


 


 


A-11