Exhibit
10.2


 


SECURITY AGREEMENT


 


This SECURITY AGREEMENT (this “Agreement”) is made the 12th day
of April, 2005, among Grantors listed on the signature pages hereof
(collectively, jointly and severally, “Grantors” and each individually “Grantor”),
and WELLS FARGO FOOTHILL, INC., in its capacity as administrative agent for the
Lender Group and the Bank Product Providers (together with its successors, “Agent”).


 


W I T N E S S E T H:


 


WHEREAS, the Borrowers, the Agent and the Lenders have entered into a
Loan and Security Agreement providing for a secured credit facility (the “2001
Credit Agreement”); as of September 24, 2002, the 2001 Credit
Agreement was amended and restated in its entirety (as so amended and restated,
and as further amended thereafter, the “Existing Credit Agreement”);


 


WHEREAS, pursuant to the Existing Credit Agreement, Grantors executed
and delivered to Agent an Amended and Restated Intellectual Property Security
Agreement, dated as of March 21, 2005 (the “Existing Intellectual Property
Security Agreement”); a copy of the Existing Intellectual Property Security
Agreement is attached hereto as Exhibit A.


 


WHEREAS, the Borrowers have requested that the Lenders agree to further
amend and restate the Existing Credit Agreement, in order to, among other
things, make available a secured credit facility of $60,000,000;


 


WHEREAS, pursuant to that certain Second Amended and Restated Credit
Agreement of even date herewith (as amended, restated, supplemented or
otherwise modified from time to time, including all schedules thereto, the “Credit
Agreement”) among Silicon Graphics, Inc., a Delaware corporation (“Parent”)
and each of Parent’s Subsidiaries identified on the signature pages thereof
(such Subsidiaries, together with Parent, are referred to hereinafter as a “Borrower”
and individually and collectively, jointly and severally, as the “Borrowers”,
the lenders party thereto as “Lenders” (“Lenders”), and Agent, the
Lender Group is willing to make available to Borrowers a secured credit
facility of $60,000,000 from time to time pursuant to the terms and conditions
thereof, and


 


WHEREAS, Agent has agreed to act as agent for the benefit of the Lender
Group and the Bank Product Providers in connection with the transactions
contemplated by this Agreement, and


 


WHEREAS, in order to induce the Lender Group to enter into the Credit
Agreement and the other Loan Documents and to induce the Lender Group to make
financial accommodations to Borrowers as provided for in the Credit Agreement,
Grantors have agreed to grant a continuing security interest in and to the
Collateral in order to secure the prompt and complete payment, observance and
performance of, among other things, (a) the obligations of Grantors arising
from this Agreement, the Credit Agreement, and the other Loan Documents, (b)
all Bank Product Obligations, and (c) all Obligations of any Borrower
(including, without limitation, any interest, fees or expenses that accrue
after the filing of an Insolvency Proceeding, regardless of whether allowed or
allowable in whole or in part as a claim in any Insolvency Proceeding), plus
reasonable attorneys fees and expenses if the obligations represented
thereunder are collected by law, through an attorney-at-law, or under advice
therefrom (clauses (a), (b), and (c) being hereinafter referred to as the “Secured
Obligations”), by the granting of the security interests contemplated by
this Agreement, and


 


NOW, THEREFORE, for and in consideration of the recitals made above and
other good and valuable consideration, the receipt, sufficiency and adequacy of
which are hereby acknowledged, the parties hereto agree as follows:


 





















 


1.             Defined
Terms. All capitalized terms used herein (including, without limitation, in
the preamble and recitals hereof) without definition shall have the meanings
ascribed thereto in the Credit Agreement or the Existing Intellectual Property
Security Agreement.  Any terms used in
this Agreement that are defined in the Code shall be construed and defined as
set forth in the Code unless otherwise defined herein or in the Credit
Agreement; provided, however, that to the extent that the Code is
used to define any term herein and such term is defined differently in
different Articles of the Code, the definition of such term contained in
Article 9 of the Code shall govern.  In
addition to those terms defined elsewhere in this Agreement, as used in this
Agreement, the following terms shall have the following meanings:


 


(a)           “Accounts” means accounts (as that
term is defined in the Code).


 


(b)           “Code” means the California Uniform
Commercial Code, as in effect from time to time; provided, however, that in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection, priority, or remedies with respect to Agent’s Lien on
any Collateral is governed by the Uniform Commercial Code as enacted and in
effect in a jurisdiction other than the State of California, the term “Code”
shall mean the Uniform Commercial Code as enacted and in effect in such other
jurisdiction solely for purposes of the provisions thereof relating to such
attachment, perfection, priority, or remedies.


 


(c)           “Copyrights” has meaning set forth in
the Existing Intellectual Property Security Agreement.


 


(d)           “Copyright Security Agreement” means
each Copyright Security Agreement among Grantors, or any of them, and Agent,
for the benefit of the Lender Group and the Bank Product Providers, in
substantially the form of Exhibit B attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the
Bank Product Providers, a security interest in all their respective Copyrights.


 


(e)           “Deposit Account” means deposit
account (as that term is defined in the Code).


 


(f)             “Equipment” means equipment (as that
term is defined in the Code).


 


(g)           “General Intangibles” means general
intangibles (as that term is defined in the Code and, in any event, including,
without limitation, payment intangibles, contract rights, rights to payment,
rights arising under common law, statutes, or regulations, choses or things in
action, goodwill (including the goodwill associated with any Trademark, Patent,
or Copyright), Patents, Trademarks, Copyrights, URLs and domain names,
industrial designs, other industrial or intellectual property or rights therein
or applications therefor, whether under license or otherwise, programs,
programming materials, blueprints, drawings, purchase orders, customer lists,
monies due or recoverable from pension funds, route lists, rights to payment
and other rights under any royalty or licensing agreements, including
intellectual property licenses, infringement claims, computer programs,
information contained on computer disks or tapes, software, literature,
reports, catalogs, pension plan refunds, pension plan refund claims, insurance
premium rebates, tax refunds, and tax refund claims, uncertificated securities,
and any other personal property other than commercial tort claims, money,
Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property,
Negotiable Collateral, and oil, gas, or other minerals before extraction.


 


(h)           “Intellectual Property Collateral” has
meaning set forth in the Existing Intellectual Property Security Agreement.


 


(i)            [INTENTIONALLY OMITTED]


 


(j)            “Inventory” means inventory (as that
term is defined in the Code).


 


(k)           “Investment Related Property” means
(i) investment property (as that term is defined in the Code), and (ii) all of
the following regardless of whether classified as investment property under the
Code:  all Pledged Interests, Pledged
Operating Agreements, and Pledged Partnership Agreements.


 


(l)            “Patents” has meaning set forth in the
Existing Intellectual Property Security Agreement.


 


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(m)          “Patent Security Agreement” means each
Patent Security Agreement among Grantors, or any of them, and Agent, for the
benefit of the Lender Group and the Bank Product Providers, in substantially
the form of Exhibit C attached hereto, pursuant to which Grantors have
granted to Agent, for the benefit of the Lender Group and the Bank Product
Providers, a security interest in all their respective Patents.


 


(n)           “Pledged Companies” means, each Person
listed on Schedule 1 hereto as a “Pledged Company”, together with each
other Person, all or a portion of whose Stock, is
acquired or otherwise owned by a Grantor after the Closing Date.


 


(o)           “Pledged Interests” means all of each
Grantor’s right, title and interest in and to all of the Stock now or hereafter
owned by such Grantor, regardless of class or designation, including, without
limitation, in each of the Pledged Companies, and all substitutions therefor
and replacements thereof, all proceeds thereof and all rights relating thereto,
including, without limitation, any certificates representing the Stock, the
right to request after the occurrence and during the continuation of an Event
of Default that such Stock be registered in the name of Agent or any of its
nominees, the right to receive any certificates representing any of the Stock
and the right to require that such certificates be delivered to Agent together
with undated powers or assignments of investment securities with respect
thereto, duly endorsed in blank by such Grantor, all warrants, options, share
appreciation rights and other rights, contractual or otherwise, in respect
thereof and of all dividends, distributions of income, profits, surplus, or
other compensation by way of income or liquidating distributions, in cash or in
kind, and cash, instruments, and other property from time to time received,
receivable, or otherwise distributed in respect of or in addition to, in
substitution of, on account of, or in exchange for any or all of the foregoing.


 


(p)           “Pledged Interests Addendum” means a
Pledged Interests Addendum substantially in the form of Exhibit D to this
Agreement.


 


(q)           “Pledged Operating Agreements” means
all of each Grantor’s rights, powers, and remedies under the limited liability
company operating agreements of the Pledged Companies that are limited
liability companies.


 


(r)            “Pledged Partnership Agreements” means
all of each Grantor’s rights, powers, and remedies under the partnership
agreements of each of the Pledged Companies that are partnerships.


 


(s)           “Records” means information that is
inscribed on a tangible medium or which is stored in an electronic or other
medium and is retrievable in perceivable form.


 


(t)            “Securities Accounts” means securities
accounts (as that term is defined in the Code).


 


(u)           “Trademarks” has meaning set forth in
the Existing Intellectual Property Security Agreement.


 


(v)           “Trademark Security Agreement” means
each Trademark Security Agreement among Grantors, or any of them, and Agent,
for the benefit of the Lender Group and the Bank Product Providers, in
substantially the form of Exhibit E attached hereto, pursuant to which
Grantors have granted to Agent, for the benefit of the Lender Group and the
Bank Product Providers, a security interest in all their respective Trademarks.


 


(w)          “URL” means “uniform recourse locator,”
an internet web address.


 


2.             Grant
of Security.  Each Grantor hereby
unconditionally grants, assigns and pledges to Agent, for the benefit of the
Lender Group and the Bank Product Providers, a continuing security interest in
all of such Grantor’s right, title, and interest in and to the following,
whether now owned or hereafter acquired or arising and wherever located (the “Collateral”):


 


(a)           all of such Grantor’s Accounts;


 


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(b)           all of such Grantor’s books and records
(including all of its Records indicating, summarizing, or evidencing its assets
(including the Collateral) or liabilities, all of its Records relating to its
business operations or financial condition, and all of its goods or General
Intangibles related to such information) (“Books”);


 


(c)           all of such Grantor’s chattel paper (as that
term is defined in the Code) and, in any event, including, without limitation,
tangible chattel paper and electronic chattel paper (“Chattel Paper”);


 


(d)           all of such Grantor’s interest with respect to
any Deposit Account;


 


(e)           all of such Grantor’s Equipment and fixtures;


 


(f)            All of such Grantor’s General Intangibles;


 


(g)           all of such Grantor’s Inventory;


 


(h)           all of such Grantor’s Investment Related Property;


 


(i)            all of such Grantor’s letters of credit,
letter of credit rights, instruments, promissory notes, drafts, and documents
(as such terms may be defined in the Code) (“Negotiable Collateral”);


 


(j)            all of such Grantor’s rights in respect of
supporting obligations (as such term is defined in the Code), including letters
of credit and guaranties issued in support of Accounts, Chattel Paper,
documents, General Intangibles, instruments, or Investment Related Property (“Supporting
Obligations”);


 


(k)           all of such Grantor’s interest with respect to
any commercial tort claims (as that term is defined in the Code), including,
without limitation those commercial tort claims listed on Schedule 2
attached hereto (“Commercial Tort Claims”);


 


(l)            all of such Grantor’s money, Cash
Equivalents, or other assets of each such Grantor that now or hereafter come
into the possession, custody, or control of Agent or any other member of the
Lender Group or the Bank Product Providers;


 


(m)          all of the proceeds and products, whether
tangible or intangible, of any of the foregoing, including proceeds of
insurance or commercial tort claims covering or relating to any or all of the
foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts,
Equipment, General Intangibles, Inventory, Investment Related Property,
Negotiable Collateral, Supporting Obligations, money, or other tangible or
intangible property resulting from the sale, lease, license, exchange,
collection, or other disposition of any of the foregoing, the proceeds of any
award in condemnation with respect to any of the property of Grantors, any
rebates or refunds, whether for taxes or otherwise, and all proceeds of any
such proceeds, or any portion thereof or interest therein, and the proceeds
thereof, and all proceeds of any loss of, damage to, or destruction of the above,
whether insured or not insured, and, to the extent not otherwise included, any
indemnity, warranty, or guaranty payable by reason of loss or damage to, or
otherwise with respect to any of the foregoing Collateral (the “Proceeds”).  Without limiting the generality of the
foregoing, the term “Proceeds” includes whatever is receivable or received when
Investment Related Property or proceeds are sold, exchanged, collected, or
otherwise disposed of, whether such disposition is voluntary or involuntary, and
includes, without limitation, proceeds of any indemnity or guaranty payable to
any Grantor or Agent from time to time with respect to any of the Investment
Related Property.


 


3.             Security
for Obligations.  This Agreement and
the Security Interest created hereby secures the payment and performance of all
the Secured Obligations, whether now existing or arising hereafter.  Without limiting the generality of the
foregoing, this Agreement secures the payment of all amounts which constitute
part of the Obligations owed by Grantors, or any of them, to Agent, the Lender
Group, the Bank Product Providers or any of them.


 


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4.             Grantors
Remain Liable.  Anything herein to
the contrary notwithstanding, (a) each of the Grantors shall remain liable
under the contracts and agreements included in the Collateral, including,
without limitation, the Pledged Operating Agreements and the Pledged
Partnership Agreements, to perform all of the duties and obligations thereunder
to the same extent as if this Agreement had not been executed, (b) the exercise
by Agent or any other member of the Lender Group or the Bank Product Providers
of any of the rights hereunder shall not release any Grantor from any of its
duties or obligations under such contracts and agreements included in the
Collateral, and (c) none of the members of the Lender Group or the Bank Product
Providers shall have any obligation or liability under such contracts and
agreements included in the Collateral by reason of this Agreement, nor shall
any of the members of the Lender Group or the Bank Product Providers be
obligated to perform any of the obligations or duties of any Grantors
thereunder or to take any action to collect or enforce any claim for payment
assigned hereunder.  Until an Event of
Default shall occur and be continuing, except as otherwise provided in this
Agreement, the Credit Agreement, or other Loan Documents, Grantors shall have
the right to possession and enjoyment of the Collateral for the purpose of conducting
the ordinary course of their respective businesses, subject to and upon the
terms hereof and of the Credit Agreement and the other Loan Documents.  Without limiting the generality of the
foregoing, it is the intention of the parties hereto that record and beneficial
ownership of the Pledged Interests, including, without limitation, all voting,
consensual, and dividend rights, shall remain in the applicable Grantor until
the occurrence of an Event of Default and until Agent shall notify the applicable
Grantor of Agent’s exercise of voting, consensual, and/or dividend rights with
respect to the Pledged Interests pursuant to Section 15 hereof.


 


5.             Representations
and Warranties.  Each Grantor hereby
represents and warrants as follows:


 


(a)           The exact legal name of each of the Grantors
is set forth on the signature pages of this Agreement or a written notice
provided to Agent pursuant to Section 6.5 of the Credit Agreement.


 


(b)           Schedule 3 attached hereto sets forth all Real Property owned by Grantors as of
the Closing Date.  


 


(c)           [INTENTIONALLY OMITTED]


 


(d)           This Agreement creates a valid security
interest in the Collateral of each of Grantors, to the extent a security
interest therein can be created under the Code, securing the payment of the
Secured Obligations.  Except to the
extent a security interest in the Collateral cannot be perfected by the filing
of a financing statement under the Code,  all filings and other actions
necessary or desirable to perfect and protect such security interest have been duly
taken or will have been taken upon the filing of financing statements listing
each applicable Grantor, as a debtor, and Agent, as secured party, in the
jurisdictions listed next to such Grantor’s name on Schedule 8 attached
hereto.  Upon the making of such filings,
Agent shall have a first priority perfected security interest in the Collateral
(subject to Permitted Liens) of each Grantor to the extent such security
interest can be perfected by the filing of a financing statement.


 


(e)           Except for the Security Interest created
hereby, each Grantor is and will at all times be the sole holder of record and
the legal and beneficial owner, free and clear of all Liens other than
Permitted Liens, of the Pledged Interests indicated on Schedule 1 as
being owned by such Grantor and, when acquired by such Grantor, any Pledged
Interests acquired after the Closing Date; (ii) all of the Pledged Interests
are duly authorized, validly issued, fully paid and nonassessable and the
Pledged Interests constitute or will constitute the percentage of the issued
and outstanding Equity Interests of the Pledged Companies of such Grantor
identified on Schedule 1 hereto as supplemented or modified by any
Pledged Interests Addendum or any Supplement to this Agreement; (ii) such
Grantor has the right and requisite authority to pledge, the Investment Related
Property pledged by such Grantor to Agent as provided herein; (iii) all actions
necessary or desirable to perfect, establish the first priority (subject to
Permitted Liens) of, or otherwise protect, Agent’s Liens in the Investment
Related Collateral, and the proceeds thereof, have been duly taken, (A) upon
the execution and delivery of this Agreement; (B) upon the taking of possession
by Agent of any certificates constituting the Pledged Interests, to the extent
such Pledged Interests are represented by certificates, together with undated
powers endorsed in blank by the applicable Grantor; (C) upon the filing of
financing statements in the applicable jurisdiction set forth on Schedule 4
attached hereto for such Grantor with respect to the Pledged Interests of such
Grantor that are not represented by certificates, and (D) with respect to any
Securities Accounts, upon the delivery of Control Agreements with respect
thereto; and (iv) each Grantor has


 


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delivered to and deposited
with Agent (or, with respect to any Pledged Interests created after the Closing
Date, will deliver and deposit in accordance with Sections 6(a) and 8
hereof) all certificates representing the Pledged Interests owned by such
Grantor to the extent such Pledged Interests are represented by certificates,
and undated powers endorsed in blank with respect to such certificates.


 


(f)            Other than the filing of financing statements,
Mortgages and the security agreements attached hereto as Exhibits B, C and E
and any requirement under applicable law to register Stock, no consent,
approval, authorization, or other order or other action by, and no notice to or
filing with, any Governmental Authority or any other Person is required (i) for
the grant of a Security Interest by such Grantor in and to the Collateral
pursuant to this Agreement or for the execution, delivery, or performance of
this Agreement by such Grantor, or (ii) for the exercise by Agent of the voting
or other rights provided for in this Agreement with respect to the Investment
Related Property or the remedies in respect of the Collateral pursuant to this
Agreement, except (x) as may be required in connection with such disposition
of Investment Related Property by laws affecting the offering and sale of
securities generally; and (y) for consents and approvals that have been
obtained and that are still in force and effect.


 


6.             Covenants.  Each Grantor, jointly and severally,
covenants and agrees with Agent and the Lender Group and the Bank Product
Providers that from and after the date of this Agreement and until the date of
termination of this Agreement in accordance with Section 22 hereof:


 


(a)           Possession of Collateral.  In
the event that any Collateral, including proceeds, is evidenced by or consists
of Negotiable Collateral, Investment Related Property, or Chattel Paper, and if
and to the extent that perfection or priority of Agent’s Security Interest is
dependent on or enhanced by possession, the applicable Grantor, immediately
upon the request of Agent and in accordance with Section 8 hereof, shall
execute such other documents as shall be reasonably requested by Agent or, if
applicable, endorse and deliver physical possession of such Negotiable
Collateral, Investment Related Property, or Chattel Paper to Agent, together
with such undated powers endorsed in blank as shall be requested by Agent;


 


(b)           Chattel Paper.


 


(i)            Upon the request of Agent, each Grantor shall
take all steps reasonably necessary to grant Agent control of all electronic
Chattel Paper in accordance with the Code and all “transferable records” as
that term is defined in Section 16 of the Uniform Electronic Transaction Act
and Section 201 of the federal Electronic Signatures in Global and National
Commerce Act as in effect in any relevant jurisdiction;


 


(ii)           If any Grantor retains possession of any
Chattel Paper or instruments (which retention of possession shall be subject to
the extent permitted hereby and by the Credit Agreement), promptly upon the
request of Agent, such Chattel Paper and instruments shall be marked with the
following legend: “This writing and the obligations evidenced or secured hereby
are subject to the Security Interest of Wells Fargo Foothill, Inc., as Agent
for the benefit of the Lender Group and the Bank Product Providers”;


 


(c)           Control Agreements.


 


(i)            Except to the extent otherwise permitted by
the Credit Agreement, each Grantor shall obtain an authenticated Control
Agreement, from each bank holding a Deposit Account for such Grantor;


 


(ii)           Except to the extent otherwise permitted by
the Credit Agreement, each Grantor shall obtain authenticated Control
Agreements, from each issuer of uncertificated securities, securities
intermediary, or commodities intermediary issuing or holding any financial
assets or commodities to or for any Grantor;


 


(d)           Letter of Credit Rights.  Each
Grantor that is or becomes the beneficiary of a letter of credit in excess of
$50,000 shall promptly (and in any event within 5 Business Days after becoming
a beneficiary), notify Agent thereof and, upon the request by Agent, enter into
a tri-party agreement with Agent and the issuer and/or confirmation bank with
respect to letter-of-credit rights (as that term is defined in the Code)
assigning such


 


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letter-of-credit rights to Agent and directing all payments
thereunder to Agent’s Account, all in form and substance satisfactory to Agent;


 


(e)           Commercial Tort Claims.  Each
Grantor shall promptly (and in any event within 5 Business Days of receipt
thereof), notify Agent in writing upon incurring or otherwise obtaining a
Commercial Tort Claim after the date hereof against any third party in an
amount exceeding $500,000 and, upon request of Agent, promptly amend Schedule
2 to this Agreement, authorize the filing of additional or amendments to
existing financing statements and do such other acts or things deemed necessary
or desirable by Agent to give Agent a first priority, perfected security
interest in any such Commercial Tort Claim;


 


(f)            Investment Related Property.


 


(i)            If any Grantor shall receive or become
entitled to receive any Pledged Interests after the Closing Date, it shall
promptly (and in any event within 5 Business Days of receipt thereof) deliver
to Agent a duly executed Pledged Interests Addendum identifying such Pledged
Interests;


 


(ii)           Each Grantor agrees that it will cooperate
with Agent in obtaining all necessary approvals and making all necessary filings
under federal, state, local, or foreign law in connection with the Security
Interest on the Investment Related Property or any sale or transfer thereof;


 


(iii)          As to all limited liability company or
partnership interests issued under any Pledged Operating Agreement or Pledged
Partnership Agreement, each Grantor hereby represents, warrants and covenants
that the Pledged Interests issued pursuant to such agreement (A) are not and
shall not be dealt in or traded on securities exchanges or in securities markets,
(B) do not and will not constitute investment company securities, and
(C) are not and will not be held by such Pledgor in a securities
account.  In addition, none of the
Pledged Operating Agreements, the Pledged Partnership Agreements, or any other
agreements governing any of the Pledged Interests issued under any Pledged
Operating Agreement or Pledged Partnership Agreement, provide or shall provide
that such Pledged Interests are securities governed by Article 8 of the Uniform
Commercial Code as in effect in any relevant jurisdiction;


 


(g)           Real Property; Fixtures. 
Subject to the terms of the Credit Agreement, each Grantor covenants and
agrees that upon the acquisition of any fee interest in Real Property it will
promptly (and in any event within 10 Business Days of acquisition) notify Agent
of the acquisition of such Real Property and will grant to Agent, for the
benefit of the Lender Group and the Bank Product Providers, a first priority
(subject to existing Liens and Permitted Liens) Mortgage on each fee interest
in Real Property now or hereafter owned by such Grantor and shall deliver such
other documentation and opinions, in form and substance reasonably satisfactory
to Agent, in connection with the grant of such Mortgage as Agent shall request
in its Permitted Discretion, including, without limitation, title insurance
policies, financing statements, fixture filings and environmental audits and
such Grantor shall pay all recording costs, intangible taxes and other fees and
costs (including reasonable attorneys fees and expenses) incurred in connection
therewith.  Each Grantor acknowledges and
agrees that, to the extent permitted by applicable law, all of the Collateral
shall remain personal property regardless of the manner of its attachment or
affixation to real property.


 


(h)           Transfers and Other Liens. 
Grantors shall not (i) sell, assign (by operation of law or otherwise)
or otherwise dispose of, or grant any option with respect to, any of the
Collateral, except expressly permitted by the Credit Agreement, or (ii) create
or permit to exist any Lien upon or with respect to any of the Collateral of
any of Grantors, except for Permitted Liens. 
The inclusion of Proceeds in the Collateral shall not be deemed to constitute
Agent’s consent to any sale or other disposition of any of the Collateral
except as expressly permitted in this Agreement or the other Loan Documents;
and


 


(i)            Other Actions as to
Any and All Collateral.  Each Grantor
shall promptly (and in any event within 5 Business Days of acquiring or
obtaining such Collateral) notify Agent in writing upon acquiring or otherwise
obtaining any Collateral after the date hereof consisting of Investment Related
Property, Chattel Paper (electronic,
tangible or otherwise), documents (as defined in the Code), or instruments (as
defined in the Code) and, upon the request of Agent and in accordance with Section
8 hereof, promptly execute such other documents, or if applicable, deliver
such Chattel Paper, other documents or certificates evidencing any Investment
Related Property


 


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in accordance with Section 6 hereof and
do such other acts or things deemed necessary or desirable by Agent to protect
Agent’s Security Interest therein.


 


7.             Relation
to Other Security Documents.  The provisions of this Agreement
shall be read and construed with the other Loan Documents referred to below in
the manner so indicated.


 


(a)           Credit Agreement. In the event of any conflict between any
provision in this Agreement and a provision in the Credit Agreement, such
provision of the Credit Agreement shall control.


 


(b)           The Existing Intellectual Property Security
Agreement and Patent, Trademark, Copyright Security Agreements.  The
provisions of the Existing Intellectual Property Security Agreement and the
Copyright Security Agreements, Trademark Security Agreements, and Patent
Security Agreements are supplemental to the provisions of this Agreement, and
nothing contained in the Existing Intellectual Property Security Agreement,
Copyright Security Agreements, Trademark Security Agreements, or the Patent
Security Agreements shall limit any of the rights or remedies of Agent
hereunder.


 


(c)           Coordination with the Existing Intellectual
Property Security Agreement.  Each Grantor hereby ratifies the Existing
Intellectual Property Security Agreement and acknowledges that: (i) the
Existing Intellectual Property Security Agreement is in full force and effect,
(ii) the Existing Intellectual Property Security Agreement constitutes a
grant of the Security Interest in favor of Agent, for the benefit of the Lender
Group and the Bank Product Providers to secure payment and performance of all
the Secured Obligations, whether now existing or arising hereafter.  In the event of a conflict between any provision this Agreement and a provision in the Existing
Intellectual Property Security Agreement, the provision in the Existing
Intellectual Property Security Agreement shall control.


 


8.             Further
Assurances.


 


(a)           Each Grantor agrees that from time to time,
at its own expense, such Grantor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary
or that Agent may reasonably request, in order to perfect and protect any
Security Interest granted or purported to be granted hereby or to enable Agent
to exercise and enforce its rights and remedies hereunder with respect to any
of the Collateral; provided that no Grantor shall be required to perfect any
such Security Interest in motor vehicles or to deliver Collateral Access
Agreements or Control Agreements except as required by the Credit Agreement.


 


(b)           Each Grantor authorizes the filing of such
financing or continuation statements, or amendments thereto, and such Grantor
will execute and deliver to Agent such other instruments or notices, as may be
necessary or as Agent may reasonably request, in order to perfect and preserve
the Security Interest granted or purported to be granted hereby.


 


(c)           Each Grantor authorizes Agent to file,
transmit, or communicate, as applicable, financing statements and amendments
describing the Collateral as “all personal property of debtor” or “all assets
of debtor” or words of similar effect, in order to perfect Agent’s security
interest in the Collateral without such Grantor’s signature.  Each Grantor also hereby ratifies its
authorization for Agent to have filed in any jurisdiction any financing
statements filed prior to the date hereof.


 


(d)           Each Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination
statement with respect to any financing statement filed in connection with this
Agreement without the prior written consent of Agent, subject to such Grantor’s
rights under Section 9-509(d)(2) of the Code.


 


9.             Agent’s
Right to Perform Contracts.  Upon the
occurrence of an Event of Default, Agent (or its designee) may proceed to
perform any and all of the obligations of any Grantor contained in any
contract, lease, or other agreement and exercise any and all rights of any
Grantor therein contained as fully as such Grantor itself could.


 


8





















 


10.           Agent
Appointed Attorney-in-Fact.  Each
Grantor hereby irrevocably appoints Agent its attorney-in-fact, with full
authority in the place and stead of such Grantor and in the name of such
Grantor or otherwise, at such time as an Event of Default has occurred and is
continuing under the Credit Agreement, to take any action and to execute any
instrument which Agent may reasonably deem necessary or advisable to accomplish
the purposes of this Agreement, without notice to any Grantor or Borrower,
including, without limitation:


 


(a)           to ask, demand, collect, sue for, recover,
compromise, receive and give acquittance and receipts for moneys due and to
become due under or in connection with the Accounts or any other Collateral of
such Grantor;


 


(b)           to receive and open all mail addressed to such
Grantor and to notify postal authorities to change the address for the delivery
of mail to such Grantor to that of Agent;


 


(c)           to receive, indorse, and collect any drafts or
other instruments, documents, Negotiable Collateral or Chattel Paper;


 


(d)           to file any claims or take any action or
institute any proceedings which Agent may deem necessary or desirable for the
collection of any of the Collateral of such Grantor or otherwise to enforce the
rights of Agent with respect to any of the Collateral;


 


(e)           to repair, alter, or supply goods, if any,
necessary to fulfill in whole or in part the purchase order of any Person obligated
to such Grantor in respect of any Account of such Grantor;


 


(f)            to use any labels, Patents, Trademarks, trade
names, URLs, domain names, industrial designs, Copyrights, advertising matter
or other industrial or intellectual property rights, in advertising for sale
and selling Inventory and other Collateral and to collect any amounts due under
Accounts, contracts or Negotiable Collateral of such Grantor; and


 


(g)           Agent on behalf of the Lender Group and the
Bank Product Providers shall have the right, but shall not be obligated, to
bring suit in its own name to enforce the Trademarks, Patents, Copyrights and
Intellectual Property Licenses and, if Agent shall commence any such suit, the
appropriate Grantor shall, at the request of Agent, do any and all lawful acts
and execute any and all proper documents reasonably required by Agent in aid of
such enforcement.


 


To the extent permitted
by law, each Grantor hereby ratifies all that such attorney-in-fact shall
lawfully do or cause to be done by virtue hereof.  This power of attorney is coupled with an
interest and shall be irrevocable until this Agreement is terminated.


 


11.           Agent
May Perform.  If any of Grantors
fails to perform any agreement contained herein, Agent may itself perform, or
cause performance of, such agreement, and the reasonable expenses of Agent
incurred in connection therewith shall be payable, jointly and severally, by
Grantors.


 


12.           Agent’s
Duties.  The powers conferred on
Agent hereunder are solely to protect Agent’s interest in the Collateral, for
the benefit of the Lender Group and the Bank Product Providers, and shall not
impose any duty upon Agent to exercise any such powers.  Except for the safe custody of any Collateral
in its actual possession and the accounting for moneys actually received by it
hereunder, Agent shall have no duty as to any Collateral or as to the taking of
any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Collateral. 
Agent shall be deemed to have exercised reasonable care in the custody
and preservation of any Collateral in its actual possession if such Collateral
is accorded treatment substantially equal to that which Agent accords its own
property.


 


13.           Collection
of Accounts, General Intangibles, Negotiable Collateral and Control Agreements.  At any time upon the occurrence and during
the continuation of an Event of Default, Agent or Agent’s designee may (a)
notify Account Debtors of any Grantor that the Accounts, General Intangibles,
Chattel Paper or Negotiable Collateral have been assigned to Agent, for the
benefit of the Lender Group and the Bank Product Providers, or that


 


9





















 


Agent has a security interest therein, and (b) collect
the Accounts, General Intangibles and Negotiable Collateral directly, and any
collection costs and expenses shall constitute part of such Grantor’s Secured
Obligations under the Loan Documents. 
With respect to each Control Agreement delivered pursuant to Section
6(c), at any time upon the occurrence and during the continuation of an Event
of Default, Agent shall be entitled to give any bank or securities intermediary
holding the relevant deposit or securities account instructions as to the
withdrawal or disposition of funds or assets held therein, all without further
consent of any Grantor; provided that Agent agrees it shall not give any bank
or securities intermediary such instructions unless an Event of Default has
occurred and is continuing.


 


14.           Disposition
of Pledged Interests by Agent.  None
of the Pledged Interests existing as of the date of this Agreement are, and
none of the Pledged Interests hereafter acquired on the date of acquisition
thereof will be, registered or qualified under the various federal or state
securities laws of the United States and disposition thereof after an Event of
Default may be restricted to one or more private (instead of public) sales in
view of the lack of such registration. 
Each Grantor understands that in connection with such disposition, Agent
may approach only a restricted number of potential purchasers and further
understands that a sale under such circumstances may yield a lower price for
the Pledged Interests than if the Pledged Interests were registered and
qualified pursuant to federal and state securities laws and sold on the open
market.  Each Grantor, therefore, agrees
that:  (a) if Agent shall, pursuant to
the terms of this Agreement, sell or cause the Pledged Interests or any portion
thereof to be sold at a private sale, Agent shall have the right to rely upon
the advice and opinion of any nationally recognized brokerage or investment
firm (but shall not be obligated to seek such advice and the failure to do so
shall not be considered in determining the commercial reasonableness of such
action) as to the best manner in which to offer the Pledged Interest for sale
and as to the best price reasonably obtainable at the private sale thereof; and
(b) such reliance shall be conclusive evidence that Agent has handled the
disposition in a commercially reasonable manner.


 


15.           Voting
Rights.


 


(a)           Upon the occurrence and during the
continuation of an Event of Default, (i) Agent may, at its option, and with 5
Business Days prior notice to any Grantor, and in addition to all rights and
remedies available to Agent under any other agreement, at law, in equity, or
otherwise, exercise all voting rights, and all other ownership or consensual
rights in respect of the Pledged Interests owned by such Grantor, but under no
circumstances is Agent obligated by the terms of this Agreement to exercise
such rights, and (ii) if Agent duly exercises its right to vote any of such
Pledged Interests, each Grantor hereby appoints Agent, such Grantor’s true and
lawful attorney-in-fact and IRREVOCABLE PROXY to vote such Pledged Interests in
any manner Agent deems advisable for or against all matters submitted or which
may be submitted to a vote of shareholders, partners or members, as the case
may be.  The power-of-attorney granted
hereby is coupled with an interest and shall be irrevocable.


 


(b)           For so long as any Grantor shall have the
right to vote the Pledged Interests owned by it, such Grantor covenants and
agrees that it will not, without the prior written consent of Agent, vote or
take any consensual action with respect to such Pledged Interests which would
materially adversely affect the rights of Agent and the other members of the
Lender Group and the Bank Product Providers or the value of the Pledged
Interests.


 


16.           Remedies.  Upon the occurrence and during the
continuance of an Event of Default:


 


(a)           Agent may exercise in respect of the
Collateral, in addition to other rights and remedies provided for herein, in
the other Loan Documents, or otherwise available to it, all the rights and
remedies of a secured party on default under the Code or any other applicable
law.  Without limiting the generality of
the foregoing, each Grantor expressly agrees that, in any such event, Agent
without demand of performance or other demand, advertisement or notice of any
kind (except a notice specified below of time and place of public or private
sale) to or upon any of Grantors or any other Person (all and each of which
demands, advertisements and notices are hereby expressly waived to the maximum
extent permitted by the Code or any other applicable law), may take immediate
possession of all or any portion of the Collateral and (i) require Grantors to,
and each Grantor hereby agrees that it will at its own expense and upon request
of Agent forthwith, assemble all or part of the Collateral as directed by Agent
and make it available to Agent at one or more locations where such Grantor
regularly maintains Inventory, and (ii) without notice except as specified
below, sell the Collateral or any part thereof in one or more parcels at public
or private sale, at any of Agent’s offices or elsewhere, for cash, on credit,
and upon such other terms as Agent may deem commercially reasonable.  Each Grantor agrees that, to the extent
notice of sale shall be


 


10





















 


required by law, at least 10
days notice to any of Grantors of the time and place of any public sale or the
time after which any private sale is to be made shall constitute reasonable
notification and specifically such notice shall constitute a reasonable “authenticated
notification of disposition” within the meaning of Section 9-611 of the
Code.  Agent shall not be obligated to
make any sale of Collateral regardless of notice of sale having been
given.  Agent may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.


 


(b)           Agent is hereby granted a non-exclusive
license or other right to use, without liability for royalties or any other
charge, each Grantor’s labels, Patents, Copyrights, rights of use of any name,
trade secrets, trade names, Trademarks, service marks and advertising matter,
URLs, domain names, industrial designs, other industrial or intellectual
property or any property of a similar nature, whether owned by any of Grantors
or with respect to which any of Grantors have rights under license, sublicense,
or other agreements, as it pertains to the Collateral, in preparing for sale,
advertising for sale and selling any Collateral, and each Grantor’s rights
under all licenses and all franchise agreements shall inure to the benefit of
Agent.


 


(c)           Any cash held by Agent as Collateral and all
cash proceeds received by Agent in respect of any sale of, collection from, or other realization upon all or any part of the
Collateral shall be applied against the Secured Obligations in the order set
forth in the Credit Agreement.   In the
event the proceeds of Collateral are insufficient to satisfy all of the Secured
Obligations in full, each Grantor shall remain jointly and severally liable for
any such deficiency.


 


(d)           Each Grantor hereby acknowledges that the
Secured Obligations arose out of a commercial transaction, and agrees that if
an Event of Default shall occur and be continuing Agent shall have the right to
an immediate writ of possession without notice of a hearing.  Agent shall have the right to the appointment
of a receiver for the properties and assets of each of Grantors, and each
Grantor hereby consents to such rights and such appointment and hereby waives,
to the fullest extent permitted by law, any objection such Grantors may have
thereto or the right to have a bond or other security posted by Agent.


 


17.           Remedies
Cumulative.  Each right, power, and
remedy of Agent as provided for in this Agreement or in the other Loan
Documents or now or hereafter existing at law or in equity or by statute or
otherwise shall be cumulative and concurrent and shall be in addition to every
other right, power, or remedy provided for in this Agreement or in the other
Loan Documents or now or hereafter existing at law or in equity or by statute
or otherwise, and the exercise or beginning of the exercise by Agent, of any
one or more of such rights, powers, or remedies shall not preclude the
simultaneous or later exercise by Agent of any or all such other rights,
powers, or remedies.


 


18.           Marshaling.  Agent shall not be required to marshal any
present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Secured Obligations or
any of them or to resort to such collateral security or other assurances of
payment in any particular order, and all of its rights and remedies hereunder
and in respect of such collateral security and other assurances of payment
shall be cumulative and in addition to all other rights and remedies, however
existing or arising.  To the extent that
it lawfully may, each Grantor hereby agrees that it will not invoke any law
relating to the marshaling of collateral which might cause delay in or impede
the enforcement of Agent’s rights and remedies under this Agreement or under
any other instrument creating or evidencing any of the Secured Obligations or
under which any of the Secured Obligations is outstanding or by which any of
the Secured Obligations is secured or payment thereof is otherwise assured,
and, to the extent that it lawfully may, each Grantor hereby irrevocably waives
the benefits of all such laws.


 


19.           Indemnity
and Expenses.


 


(a)           Each Grantor agrees to indemnify Agent and
the other members of the Lender Group and the Bank Product Providers from and
against all claims, lawsuits and liabilities (including reasonable attorneys
fees) growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement) or any other Loan Document to which
such Grantor is a party, except claims, losses or liabilities resulting from
the gross negligence or willful misconduct of the party seeking indemnification
as determined by a final non-appealable order of a court of competent
jurisdiction.  This provision shall
survive the termination of this Agreement and the Credit Agreement and the
repayment of the Secured Obligations.


 


11





















 


(b)           Grantors, jointly and severally, shall, upon
demand, pay to Agent (or Agent, may charge to the Loan Account) all the Lender
Group Expenses which Agent may incur in connection with (i) the administration
of this Agreement, (ii) the custody, preservation, use or operation of, or,
upon an Event of Default, the sale of, collection from, or other realization
upon, any of the Collateral in accordance with this Agreement and the other
Loan Documents, (iii) the exercise or enforcement of any of the rights of Agent
hereunder or (iv) the failure by any of Grantors to perform or observe any of
the provisions hereof.


 


20.           Merger,
Amendments; Etc.  THIS WRITTEN
AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE
PARTIES.  No waiver of any provision of
this Agreement, and no consent to any departure by any of Grantors herefrom,
shall in any event be effective unless the same shall be in writing and signed
by Agent, and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which given.  No amendment of any provision of this
Agreement shall be effective unless the same shall be in writing and signed by
Agent and each of Grantors to which such amendment applies.


 


21.           Addresses
for Notices.  All notices and other
communications provided for hereunder shall be given in the form and manner and
delivered to Agent at its address specified in the Credit Agreement, and to any
of the Grantors at their respective addresses specified in the Credit Agreement
or, as to any party, at such other address as shall be designated by such party
in a written notice to the other party.


 


22.           Continuing
Security Interest: Assignments under Credit Agreement.  This Agreement shall create a continuing
security interest in the Collateral and shall (a) remain in full force and effect
until the Obligations have been paid in full in cash in accordance with the
provisions of the Credit Agreement and the Commitments have expired or have
been terminated, (b) be binding upon each of Grantors, and their respective
successors and assigns, and (c) inure to the benefit of, and be enforceable by,
Agent, and its successors, transferees and assigns.  Without limiting the generality of the
foregoing clause (c), any the Lender may, in accordance with the provisions of
the Credit Agreement, assign or otherwise transfer all or any portion of its
rights and obligations under the Credit Agreement to any other Person, and such
other Person shall thereupon become vested with all the benefits in respect
thereof granted to such the Lender herein or otherwise.  Upon payment in full in cash of the
Obligations in accordance with the provisions of the Credit Agreement and the
expiration or termination of the Commitments, the Security Interest granted
hereby shall terminate and all rights to the Collateral shall revert to
Grantors or any other Person entitled thereto. 
At such time, Agent will authorize the filing of appropriate termination
statements to terminate such Security Interests.  No transfer or renewal, extension,
assignment, or termination of this Agreement or of the Credit Agreement, any
other Loan Document, or any other instrument or document executed and delivered
by any Grantor to Agent nor any additional Advances or other loans made by any
the Lender to Borrowers, nor the taking of further security, nor the retaking
or re-delivery of the Collateral to Grantors, or any of them, by Agent, nor any
other act of the Lender Group or the Bank Product Providers, or any of them,
shall release any of Grantors from any obligation, except a release or discharge
executed in writing by Agent in accordance with the provisions of the Credit
Agreement.  Agent shall not by any act,
delay, omission or otherwise, be deemed to have waived any of its rights or
remedies hereunder, unless such waiver is in writing and signed by Agent and
then only to the extent therein set forth. 
A waiver by Agent of any right or remedy on any occasion shall not be
construed as a bar to the exercise of any such right or remedy which Agent
would otherwise have had on any other occasion.


 


23.           Governing
Law.


 


(a)           THE VALIDITY OF THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN
DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION,
INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE
PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR
THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY,
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.


 


12





















 


(b)           THE PARTIES AGREE THAT ALL ACTIONS OR
PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA; PROVIDED, HOWEVER, THAT ANY SUIT
SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT ELECTS TO BRING
SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND.  GRANTORS AND EACH MEMBER OF THE LENDER GROUP
AND THE BANK PRODUCT PROVIDERS WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE
LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM  NON  CONVENIENS
OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE
WITH THIS SECTION 23(b).


 


(c)           GRANTORS AND EACH MEMBER OF THE LENDER GROUP
AND THE BANK PRODUCT PROVIDERS HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW
OR STATUTORY CLAIMS.  GRANTORS AND EACH
MEMBER OF THE LENDER GROUP AND THE BANK PRODUCT PROVIDERS REPRESENT THAT EACH
HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.  IN THE EVENT OF LITIGATION, A COPY OF THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.


 


24.           [INTENTIONALLY
OMITTED]


 


25.           Agent.  Each reference herein to any right granted
to, benefit conferred upon or power exercisable by the “Agent” shall be a
reference to Agent, for the benefit of the Lender Group and the Bank Product
Providers.


 


26.           Miscellaneous.


 


(a)           This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same
Agreement.  Delivery of an executed
counterpart of this Agreement by telefacsimile or other electronic method of
transmission shall be equally as effective as delivery of an original executed
counterpart of this Agreement.  Any party
delivering an executed counterpart of this Agreement by telefacsimile or other
electronic method of transmission also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect
of this Agreement.  The foregoing shall
apply to each other Loan Document mutatis
mutandis.


 


(b)           Any provision of this Agreement which is
prohibited or unenforceable shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof in that jurisdiction or affecting the validity or enforceability of such
provision in any other jurisdiction.


 


(c)           Headings used in this Agreement are for
convenience only and shall not be used in connection with the interpretation of
any provision hereof.


 


(d)           The pronouns used herein shall include, when
appropriate, either gender and both singular and
plural, and the grammatical construction of sentences shall conform thereto.


 


(e)           The representation, warranties and covenants
of each Grantor hereunder are joint and several.


 


(f)            All exhibits hereto are incorporated into this
Agreement.


 


13





















 


IN WITNESS WHEREOF, the
undersigned parties hereto have executed this Agreement by and through their
duly authorized officers, as of the day and year first above written.


 


 


	
  GRANTORS:

  	
  SILICON
  GRAPHICS, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jean Furter

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jean Furter

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President,
  Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SILICON
  GRAPHICS FEDERAL, INC.,

  
	
   

  	
  a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey Zellmer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Jeffrey Zellmer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  AGENT:

  	
  WELLS
  FARGO FOOTHILL, INC.,
  as Agent

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Shughrue

  	
   

  
	
   

  	
  Name:

  	
  Thomas P. Shughrue

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
												



 


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