Exhibit 4.4


 


INTERCREDITOR AGREEMENT


 


THIS INTERCREDITOR AGREEMENT (this “Agreement”), dated as
of                      ,
2003, is made among SILICON GRAPHICS, INC.,
a Delaware corporation (“SGI”), U.S. BANK
NATIONAL ASSOCIATION, a national banking association organized and
existing under the laws of the United States of America (“Trustee”), and WELLS FARGO FOOTHILL, INC., a California
corporation, as Administrative Agent for itself and other Lenders (“Agent”).


 


WHEREAS,
SGI, Silicon Graphics Federal, Inc., a Delaware corporation (together with SGI,
collectively, “Borrowers”), Agent, and the Lenders named therein are parties to
that certain Amended and Restated Loan and Security Agreement, dated as of
September 20, 2002 (as amended, modified, renewed, extended, refunded,
restructured, refinanced, or replaced from time to time, the “Loan Agreement”),
pursuant to which Lenders have agreed to make certain financial accommodations
to Borrowers;


 


WHEREAS,
Trustee and SGI are parties to (i) that certain Indenture, dated as of
December     , 2003 with respect to
6.50% Senior Secured Convertible Notes due 2009 (“Secured Convertible Note
Indenture”); and (ii) that certain Indenture, dated as of December     , 2003 with respect to 11.75% Secured
Senior Notes due 2009 (“Secured Note Indenture”) (the Secured Convertible Note
Indenture and Secured Note Indenture hereinafter together are referred to as
the “Indentures”, and the notes issued under the Indentures are referred to as
the “Secured Notes.”  The holders of
such Secured Notes are referred to as the “Secured Noteholders”).


 


WHEREAS,
pursuant to the Indentures SGI may incur Indebtedness to the holders of Secured
Notes (such Indebtedness is included in the term “Junior Priority Debt” defined
below);


 


WHEREAS,
the Secured Notes constitute the consideration issued by Borrowers in exchange
for some of Borrowers’ unsecured long-term Indebtedness, pursuant to the
partial recapitalization of Borrowers’ Indebtedness effected concurrently
herewith;


 


WHEREAS,
the terms of the Indentures require that the Secured Notes be secured by a Lien
on the Collateral, which Lien, together with any and all other Liens now or
hereafter acquired by Trustee in the Collateral, is referred to herein as the
“Junior Priority Security Interest;”


 


WHEREAS,
Agent requires that the Lien securing payment of the Secured Notes be
subordinated to the Agent’s Lien on the Collateral, which Lien, together with
any and all other Liens now or hereafter acquired by the Lenders in the
Collateral, is referred to herein as the “Senior Priority Security Interest;”


 


NOW,
THEREFORE, in consideration of the mutual promises, covenants, conditions,
representations, and warranties set forth herein and for other good and
valuable consideration, the parties hereto agree as follows:


 


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SECTION
1        Definitions; Interpretation


 


(a)           Terms Defined in Loan Agreement.  All capitalized terms used in this Agreement
and not otherwise defined herein shall have the meanings assigned to them in
the Loan Agreement.


 


(b)           Certain
Defined Terms.  As used in this
Agreement, the following terms shall have the following meanings:


 


“Agent”
(i) has the meaning set forth in the recitals to this Agreement until the
indefeasible payment in full of all Senior Priority Debt under the Loan
Agreement and the termination of the lending commitments thereunder and (ii)
thereafter, the representative of the holders of any then outstanding Senior
Priority Debt designated by the Borrowers and the holders of the Senior
Priority Debt as the “Agent” hereunder.


 


“Agreement”
has the meaning set forth in the preamble to this Agreement.


 


“Governmental
Authority” means any federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
or any court, in each case whether of the United States or any other
jurisdiction.


 


“Insolvency
Event” means any dissolution, winding up, or total or partial liquidation or
reorganization, readjustment, arrangement or similar proceeding relating to any
Borrower or its property, whether voluntary or involuntary, or any bankruptcy,
insolvency, receivership, arrangement or similar proceedings or any assignment
for the benefit of creditors or any other marshalling or composition of the assets
and liabilities of any Borrower.


 


“Junior
Priority Debt” means all indebtedness, liabilities, and other obligations of
SGI owing to Trustee, in respect of the Secured Notes, whether now existing or
hereafter arising, and whether due or to become due, absolute or contingent,
liquidated or unliquidated, determined or undetermined, including all fees and
all other amounts payable by SGI to Trustee under or in connection with any
documents or instruments related thereto.


 


“Loan
Agreement” is defined in the first recital; provided that the term “Loan
Agreement” shall also include any renewal, extension, refunding, restructuring,
replacement or refinancing thereof, so long as Agent remains as the
administrative agent; provided that any such renewal, extension, refunding,
restructuring, replacement or refinancing does not increase the principal
amount thereof beyond the limit set forth in the Indentures.


 


“Senior
Priority Debt” means (i) the Obligations and other indebtedness and liabilities
of any Borrower to the Lender Group under or in connection with the Loan
Agreement and the other Loan Documents, including all unpaid principal of the
Advances, all interest accrued thereon (including all interest that, but for
the provisions of the Bankruptcy Code, would have accrued), all fees due under
the Loan Agreement and the other Loan Documents (including all fees that, but
for the provisions of the Bankruptcy Code, would have accrued), and all other
amounts payable by any Borrower to any member of the Lender Group thereunder or
in connection therewith, whether now existing or hereafter arising, and whether
due or to become due, absolute or contingent, liquidated or unliquidated,
determined or undetermined and (ii) any


 


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future secured indebtedness incurred by SGI
permitted under: (A) the Loan Documents (if in effect at the time), (B) any
other agreements then outstanding restricting SGI’s ability to incur additional
indebtedness and (C) under Section 4.06(e) of the Indentures, pursuant to which
SGI has granted a security interest in the Collateral senior to that granted to
the Trustee on behalf of holders of the Secured Notes and has designated such
secured indebtedness as “Senior Priority Debt” for purposes hereof.


 


“Trustee”
has the meaning set forth in the preamble to this Agreement.


 


(c)           Interpretation.  Unless the context of this Agreement clearly
requires otherwise, references to the plural include the singular, references
to the singular include the plural, the term “including” is not limiting, the
term “or” has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or,” and any provision that is set forth herein
as part of a list or series is to be construed in a manner that does not result
in duplication of any other provision in such list or series.  The words “hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.  Section, subsection, clause, schedule, and
exhibit references herein are to this Agreement unless otherwise
specified.  Any reference in this
Agreement to any agreement, instrument, or document shall include all alterations,
amendments, changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as applicable
(subject to any restrictions on such alterations, amendments, changes,
extensions, modifications, renewals, replacements, substitutions, joinders, and
supplements set forth herein). 
References to statutes or regulations are to be construed as including
all statutory and regulatory provisions consolidating, amending, or replacing
the statute or regulation referred to. 
The captions and headings are for convenience of reference only and
shall not affect the construction of this Agreement.


 


SECTION
2        Lien Priorities


 


(a)           The
Junior Priority Security Interest obtained by Trustee in the Collateral and any
such Junior Priority Security Interest that heretofore has been, is now, or is
hereafter retained or obtained, shall at all times be junior to the Senior
Priority Security Interest heretofore, now or hereafter granted to or obtained
by the Lender Group or other holder or representative of Senior Priority Debt,
and Trustee hereby agrees, whenever requested by the Agent, to execute such
documents and instruments, in form reasonably acceptable to the Agent and its
counsel, and suitable for filing in the appropriate governmental office,
confirming the superiority of the Senior Priority Security Interest in the
Collateral to the Junior Priority Security Interest in the Collateral.


 


(b)           The
priorities specified herein are applicable irrespective of the time or order of
attachment or perfection of the respective security interests or the time or
order of the filing of any Financing Statements or other similar documents, or
the time or order of recordation of any mortgage, deed of trust, or other
similar document, or the time or order of the giving of value to support the
security agreements, any mortgage, deed of trust, or other similar documents,
or the giving or failure to give notice of the advance of any sums by the
Lender Group or other holder of Senior Priority Debt (the “Priority Lender
Group”) to any Borrower after the date hereof, or the giving or failure to give
notice of the acquisition of additional


 


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security interests or
liens, or any statutes, rules of law, or court decisions to the contrary, or the
time or order of the giving of value to support the security agreements.


 


SECTION
3        Exercise of Remedies.  Until the indefeasible payment and
performance in full of all of the Senior Priority Debt, the Priority Lender
Group may dispose of any or all of the Collateral free and clear of the Junior
Priority Security Interest collateralizing obligations due from Borrowers, or
any of them, to Trustee, through judicial or non-judicial proceedings, in
accordance with applicable law, including taking title in lieu of
foreclosure.  Trustee hereby agrees that
any such or other disposition by the Priority Lender Group of the Collateral
shall be free and clear of the Junior Priority Security Interest granted by
Borrowers or any of them, provided the entire proceeds (after deducting
reasonable costs, attorneys’ fees and other expenses of sale) are applied first
in reduction of the Senior Priority Debt. 
Trustee retains all of its rights as a junior priority secured creditor
with respect to the surplus, if any, arising from any such disposition of the
Collateral.


 


SECTION
4        Subordination of Remedies.  Until such time as the Trustee has received
written notice of the termination of this Agreement, Trustee shall not, without
the prior written consent of Agent:


 


(a)           foreclose
upon or otherwise enforce any Junior Priority Security Interest; or


 


(b)           indirectly
or directly collect, or attempt to collect from, or notify or communicate with
any of, any Borrower’s Account Debtors or obligors on any Collateral concerning
any indebtedness owed to any Borrower without the prior written consent of
Agent, nor may Trustee exercise any of its rights with respect to any of the
Collateral, including but not limited to the institution of any lawsuits,
whether or not any Borrower is then in default of any of its obligations to
Trustee or any holder of the Secured Notes.


 


SECTION
5        Management and Sale of
Collateral and Insurance Proceeds.


 


(a)           Management
of Collateral.  Until Trustee has
received written notice of termination of this Agreement, Agent shall have the
exclusive right to manage, perform and enforce the terms of the Loan Documents
or other agreement evidencing or governing the Senior Priority Debt (the
“Priority Loan Documents”) with respect to the Collateral and to exercise and
enforce all privileges and rights thereunder according to its discretion and
the exercise of its business judgment, including, without limitation, the
exclusive right to enforce or settle insurance claims, take or retake control
or possession of such Collateral and to hold, prepare for sale, process, sell,
lease, dispose of, or liquidate such Collateral.  In connection therewith, Trustee waives any and all rights to
affect the method or challenge the appropriateness of any action by Agent.


 


(b)           Sale
of Collateral.  Notwithstanding
anything to the contrary contained in either of the Indentures, until such time
as the Trustee has received written notice of termination of this Agreement,
only Agent shall have the right to restrict or permit, or approve or disapprove,
the sale, transfer or other disposition of Collateral.  Trustee will, promptly upon the request of
Agent, release or otherwise terminate its Liens upon the Collateral, to the
extent such Collateral


 


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is sold or otherwise disposed of either by
Agent, its agents or any Borrower with the consent of Agent, and Trustee will
promptly deliver such release documents as Agent may require in connection
therewith; provided, however, that Agent and Trustee shall retain its Lien upon
the proceeds of such Collateral.


 


(c)           Insurance
Proceeds.  Until Trustee has
received written notice of termination of this Agreement, Agent, as the holder
of the Senior Priority Security Interest on the Collateral insured, shall have
the sole and exclusive right, as against Trustee, to adjust settlement of
insurance claims in the event of any covered loss, theft or destruction of such
Collateral.  Until Trustee has received
written notice of termination of this Agreement, all proceeds of such insurance
shall inure to Agent, to the extent of Agent’s claim, and thereafter to
Borrowers and Trustee, to the extent of Trustee’s claim, in accordance with the
terms of the Indentures.  Trustee shall
cooperate (if necessary) in a reasonable manner in effecting the payment of
insurance proceeds to Agent.  In the
event Agent, in its sole discretion or pursuant to agreement with any Borrower,
permits Trustee to utilize the proceeds of insurance to replace Collateral, the
consent of Agent thereto shall be deemed to include the consent of Trustee.


 


SECTION
6        Certain Agreements of Trustee.


 


(a)           No
Interference.  Trustee acknowledges
that Borrowers have granted to the Priority Lender Group security interests in
certain of Borrowers’ assets, and agrees not to interfere with or in any manner
oppose a disposition of any Collateral by the Priority Lender Group in
accordance with the Loan Documents and applicable law.


 


(b)           Prohibition
on Contesting Liens.   Each of the
Trustee, for itself and on behalf of each Secured Noteholder, and the Agent,
for itself and on behalf of the Priority Lender Group, agrees that it shall not
(and hereby waives any right to) contest or support any other Person in
contesting, in any proceeding (including in connection with any Insolvency
Event), the priority, validity or enforceability of a Lien held by the Priority
Lender Group in the Collateral or by the Secured Noteholders in the Collateral,
as the case may be.  Trustee agrees that
it will not contest the validity, perfection, priority or enforceability of the
Liens of Agent in the Collateral and that as between Trustee and Agent, the
terms of this Agreement shall govern even if part or all of the Senior Priority
Debt or the Senior Priority Security Interest securing payment and performance
thereof or part or all of the Secured Notes or the Junior Priority Security
Interest securing payment and performance thereof, are avoided, disallowed, set
aside or otherwise invalidated in any judicial proceeding or otherwise.


 


(c)           Reliance
by Priority Lender Group.  Trustee
acknowledges and agrees that the Priority Lender Group will have relied upon
and will continue to rely upon the lien priority provisions provided for herein
and the other provisions hereof in making or issuing the Advances, the Letters
of Credit, or other financial accommodations under the Priority Loan Documents.


 


(d)           Obligations
of Borrowers Not Affected.  Trustee
hereby agrees that at any time and from time to time, without notice to or the
consent of Trustee, without the Priority Lender Group incurring responsibility
to Trustee, and without impairing or releasing the lien priority provided for
herein or otherwise impairing the rights of the Priority Lender Group


 


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hereunder: (i) the
time for Borrowers’ performance of or compliance with any of their agreements
contained in the Loan Documents may be extended or such performance or
compliance may be waived by the Priority Lender Group; (ii) the agreements of
Borrowers with respect to the Loan Documents may from time to time be modified
by Borrowers and the Priority Lender Group for the purpose of adding any
requirements thereto or changing in any manner the rights and obligations of
Borrowers or the Priority Lender Group thereunder; (iii) the manner, place, or
terms for payment of Senior Priority Debt or any portion thereof may be altered
or the terms for payment extended, or the Senior Priority Debt may be renewed
in whole or in part; (iv) the maturity of the Senior Priority Debt may be
accelerated in accordance with the terms of any present or future agreement by
Borrowers and the Priority Lender Group; (v) any Collateral may be sold,
exchanged, released, or substituted and any Lien in favor of the Priority
Lender Group may be terminated, subordinated, or fail to be perfected or become
unperfected; (vi) any Person liable in any manner for Senior Priority Debt may
be discharged, released, or substituted; and (vii) all other rights against any
Borrower, any other Person, or with respect to any Collateral may be exercised
(or the Priority Lender Group may waive or refrain from exercising such
rights).


 


(e)           Rights
of Priority Lender Group Not to Be Impaired.  No right of the Priority Lender Group to enforce the lien
priority provided for herein or to exercise its other rights hereunder shall at
any time in any way be prejudiced or impaired by any act or failure to act by
any Borrowers or the Priority Lender Group hereunder or under or in connection
with the other Priority Loan Documents or by any noncompliance by any Borrower
with the terms and provisions and covenants herein or in any other Loan
Document, regardless of any knowledge thereof the Priority Lender Group may
have or otherwise be charged with.


 


(f)            Financial
Condition of Borrower.  Trustee
shall not have any right to require the Priority Lender Group to obtain or
disclose any information with respect to: 
(i) the financial condition or character of any Borrower or the ability
of any Borrower to pay and perform Senior Priority Debt; (ii) the Senior
Priority Debt; (iii) the Collateral or other security for any or all of the
Senior Priority Debt; (iv) the existence or nonexistence of any guarantees of,
or any other subordination agreements with respect to, all or any part of the
Senior Priority Debt; (v) any action or inaction on the part of the Priority
Lender Group or any other Person; or (vi) any other matter, fact, or occurrence
whatsoever.


 


(g)           Acquisition
of Liens or Guaranties.   Other than
as otherwise permitted under this Agreement, Trustee shall not, without the
prior consent of Agent, acquire any right or interest in or to any Collateral.


 


(h)           Section
9-611 Notice and Waivers.  Trustee
acknowledges that this Agreement shall constitute notice of Agent’s interests
in the Collateral as provided by Section 9-611 of the Code, and Trustee hereby
waives any right to compel any marshaling of any of the Collateral.  Except as provided under the Priority Loan
Documents, Trustee hereby waives any and all notice of the incurrence of the Senior
Priority Debt or any part thereof.


 


SECTION
7        Representations and Warranties.  Trustee hereby represents and warrants to
Agent that:


 


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(a)           Authority.  It has the right, power and authority to
execute and deliver, and to perform its obligations under, this Agreement and
has taken all necessary action to authorize the execution, delivery and
performance of this Agreement;


 


(b)           Binding
Agreement.  This Agreement
constitutes a legal, valid and binding obligation of Trustee enforceable in
accordance with its terms, except as affected by bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting the enforcement of creditors’ rights generally;


 


(c)           No
Violation of Applicable Laws.  The
execution, delivery and performance of this Agreement by Trustee will not
violate any state or federal statutes, rules, regulations, orders and
directives applicable to the banking or trust powers of Trustee or any agreement
to which Trustee is a party;


 


(d)           Consents.  No consent or authorization of, filing with,
or other act by or in respect of, any arbitrator or Governmental Authority of
the State of California or the United States, in either case governing the banking
or trust powers of Trustee, and no consent of any other Person is required
under the laws of the State of California or the United States governing the
banking or trust powers of Trustee in connection with the execution, delivery,
performance, validity or enforceability of this Agreement;


 


(e)           No
Litigation.  No litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of Trustee, threatened against
Trustee which, in any way, relates to any Borrower, any of the Junior Priority
Debt or any Lien securing any of the Junior Priority Debt or could adversely
affect the ability of Trustee to perform this Agreement in any respect;


 


(f)            No
Cross-Default.  The Indentures do
not and will not provide that any default thereunder is triggered by a default
under any other agreement to which any Borrower is a party, except for the
Senior Convertible Note relating to the Senior Convertible Notes;


 


(g)           No
Assignments.  Trustee has not
assigned: (i) any interest in any of the Junior Priority Debt; (ii) any Lien
securing any of the Junior Priority Debt; or (iii) any interest in the
Indentures; and


 


(h)           No
Other Secured Parties No Person, other than Trustee, has: (i) any interest
in any of the Junior Priority Debt, except the holders of the Secured Notes; or
(ii) any Lien securing any of the Junior Priority Debt or the Indentures
(whether as joint holders of the Junior Priority Debt, participants or
otherwise).  All of the Junior Priority
Debt is owing only to Trustee, on behalf of the holders of the Secured Notes.


 


SECTION
8        Rights As Unsecured Creditors.  Notwithstanding anything to the contrary in
this Agreement, the Trustee and the Secured Noteholders may exercise rights and
remedies as unsecured creditors against the Borrowers in accordance with the
terms of the Indenture and applicable law. 
Nothing in this Agreement shall prohibit the receipt by the Trustee or
any Secured Noteholders of the required payments of interest and principal on
the Secured Notes so long as such receipt is not the direct or indirect result
of the exercise by the Trustee or any of the Secured Noteholders of rights and
remedies as a secured creditor or enforcement of


 


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any Lien held by any of them in contravention
of this Agreement.  In the event that
the Trustee or any Secured Noteholders becomes a judgment lien creditor in
respect of Collateral as a result of its enforcement of its rights as an
unsecured creditor, such judgment lien shall be subject to the terms of this
Agreement for all purposes (including in relation to the Priority Lender Group
Liens) as the other Liens securing the claims of the Secured Noteholders
subject to this Agreement.  Nothing in
this Agreement modifies any rights or remedies the Priority Lender Group may
have with respect to the Collateral.


 


SECTION
9        Continuing Agreement;
Reinstatement.


 


(a)           Continuing
Agreement.  This Agreement is a
continuing agreement of lien priority and shall continue in effect and be
binding upon Trustee until payment and performance in full in cash of the
Senior Priority Debt.  The
subordinations, agreements, and priorities set forth herein shall remain in
full force and effect regardless of whether any party hereto in the future seeks
to rescind, amend, terminate, or reform, by litigation or otherwise, its
respective agreements with any Borrower.


 


(b)           Reinstatement.  This Agreement shall continue to be
effective or shall be reinstated, as the case may be, if, for any reason, any
payment of the Senior Priority Debt by or on behalf of any Borrower shall be
rescinded or must otherwise be restored by the Priority Lender Group, whether
as a result of an Insolvency Event or otherwise.


 


(c)           Bankruptcy
Financing Issues.  This Agreement
shall continue in full force and effect after the filing of any petition
(“Petition”) by or against any Borrower under the Bankruptcy Code and all
converted or succeeding cases in respect thereof.  All references herein to any Borrower shall be deemed to apply to
such Borrower as debtor-in-possession and to a trustee for any Borrower.  If any Borrower shall become subject to a
proceeding under the Bankruptcy Code:


 


(i)            If Agent shall desire to permit the use of cash
collateral or to provide post-Petition financing from Agent to any Borrower
under the Bankruptcy Code, Trustee agrees as follows:  (1) adequate notice to Trustee shall be deemed to have been
provided for such post-Petition financing if Trustee receives notice thereof at
least three (3) business days (or such shorter notice as is given to Agent)
prior to the earlier of (a) any hearing on a request to approve such
post-Petition financing or (b) the date of entry of an order approving the
same; and (2) no objection will be raised by Trustee to any such use of cash
collateral or such post-Petition financing from Agent.


 


(ii)           Trustee shall not extend credit or otherwise provide any
post-Petition financing to any Borrower pursuant to which, or as a result of
which, Trustee’s Lien on any Borrower’s assets would be equal or superior to,
or have priority over, Agent’s Lien, in contravention of this Agreement.
Trustee shall not on behalf of itself or the holders of the Secured Notes
propose or approve a plan of reorganization of any Borrower that will conflict
with any plan of reorganization proposed by Agent or the terms of this
Agreement.


 


SECTION
10      Successor Trustee.  Each successor Trustee under the Indentures
shall execute and deliver a counterpart of and become a party to this
Agreement, and no


 


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replacement or resignation of the Trustee
shall be effective until its successor has delivered an executed counterpart of
this Agreement.


 


SECTION
11      Obligations of Borrowers Not
Affected.  The provisions of this
Agreement are intended solely for the purpose of defining the relative rights
of Trustee against Borrowers, on the one hand, and of the Priority Lender Group
against Trustee, on the other hand. 
Nothing contained in this Agreement shall (i) impair, as between Trustee
and Borrowers, the obligation of Borrowers to pay their obligations with
respect to the Junior Priority Debt as and when the same shall become due and
payable, or (ii) otherwise affect the relative rights of Trustee against
Borrowers, on the one hand, and of the creditors (other than the Priority
Lender Group) of Borrowers against Borrowers, on the other hand.


 


SECTION
12      Receipt of Agreements.  Trustee hereby acknowledges that it has
delivered to Agent a correct and complete copy of the Indentures as in effect
on the date hereof.  Agent hereby
acknowledges that it has delivered to Trustee receipt of a correct and complete
copy of the Loan Agreement as in effect on the date hereof.


 


SECTION
13      No Amendment of Indentures.  So long as the Loan Agreement remains in
effect, neither Borrowers nor Trustee shall enter into any amendment to or
modification of either of the Indentures or the Junior Priority Debt which is
inconsistent with the terms of this Agreement.


 


SECTION
14      Notice of Default and Certain Events.  Until the Senior Priority Debt is paid in
full in cash, Trustee shall undertake in good faith to notify Agent of the
occurrence of any of the following as applicable:


 


(a)           the
obtaining of actual knowledge of the occurrence of any default under any of the
Indentures;


 


(b)           the
acceleration of any Junior Priority Debt or any of the indebtedness payable
under either of the Indentures;


 


(c)           the
granting by Trustee of any waiver of any “default” or “event of default” under
any of the Indentures; or


 


(d)           The
payment in full by Borrowers (whether as a result of refinancing or otherwise)
of all Junior Priority Debt.


 


SECTION
15      Endorsement of Trustee
Documents; Further Assurances and Additional Acts.


 


(a)           Endorsement
of Trustee Documents.  At the
request of Agent, all documents and instruments evidencing any of the Junior
Priority Debt, if any, shall be endorsed with a legend noting that such
documents and instruments are subject to this Agreement, and Trustee shall
promptly deliver to Agent evidence of the same.


 


(b)           Further
Assurances and Additional Acts. 
Trustee shall execute, acknowledge, deliver, file, notarize, and
register at its own expense all such further agreements,


 


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instruments, certificates, financing
statements, documents, and assurances, and perform such acts as Agent
reasonably shall deem necessary or appropriate to effectuate the purposes of
this Agreement, and promptly provide Agent with evidence of the foregoing
reasonably satisfactory in form and substance to Agent.


 


SECTION
16      Notices.  Unless otherwise provided in this Agreement,
all notices or demands by the parties hereunder shall be in writing and shall
be personally delivered, or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, electronic mail (at such
email addresses as any party hereto, as applicable, may designate to each other
in accordance herewith), or telefacsimile to any party hereto as the case may
be, at its address set forth below:


 


	
  Borrowers:

  	
  c/o Silicon Graphics, Inc.

  1600 Amphitheatre Parkway

  Mountain View, California 94043

  Attn: Jean Furter, Vice President and Treasurer

  Fax No.: (650) 932-0660

  Telephone No.: (650) 980-1860

  Email address: jean@sgi.com

  
	
   

  	
   

  
	
  If to Agent:

  	
  c/o Wells Fargo Foothill,
  Inc.

  2450 Colorado Avenue, Suite 3000

  West Santa Monica, California  90404

  Attn:  Business Finance Division
  Manager and

  Tom Shughrue

  Fax No.: (310) 478-9788

  Telephone No.: (310) 453-7300

  Email address: Tshughrue@wffoothill.com

  
	
   

  	
   

  
	
  with a copy to:

  	
  Jeffer, Mangels, Butler
  & Marmaro LLP

  1900 Avenue of the Stars, 7th Floor

  Los Angeles, California  90067

  Attn:  Joel J. Berman, Esq.

  Fax No.: (310) 203-0567

  Telephone No.: (310) 203-8080

  Email address:  jjb@jmbm.com

  



 


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  If to Trustee:

  	
  U.S. Bank National
  Association

  633 West Fifth Street, 24th Floor,

  LM-CA-T24T

  Los Angeles, California  90071

  Attn: Corporate Trust Services (Silicon

  Graphics, Inc.)

  Fax No.: (213) 615-6197

  Telephone No.: (213) 615-6043

  Email address: 
  paula.oswald@usbank.com

  



 


Any party may change the address at which it
is to receive notices hereunder, by notice in writing in the foregoing manner
to the other parties.  All notices or
demands sent in accordance with this Section 16, other than notices by Agent in
connection with enforcement rights against the Collateral under the provisions
of the Code, shall be deemed received on the earlier of the date of actual
receipt or 3 Business Days after the deposit thereof in the mail.  Borrowers and Trustee each acknowledge and
agree that notices sent by the Priority Lender Group in connection with the
exercise of enforcement rights against Collateral under the provisions of the
Code shall be deemed sent when deposited in the mail or personally delivered,
or, where permitted by law, transmitted by telefacsimile or any other method
set forth above.  Notwithstanding the
foregoing, notices to the Trustee shall be effective upon receipt.


 


SECTION
17      No Waiver; Cumulative Remedies.  No failure on the part of the Priority
Lender Group to exercise, and no delay in exercising, any right, remedy, power,
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power, or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power, or privilege.  The rights and
remedies under this Agreement are cumulative and not exclusive of any rights,
remedies, powers, and privileges that may otherwise be available to the
Priority Lender Group.


 


SECTION
18      Costs and Expenses.


 


(a)           Payments
by Borrowers.  Borrowers agree to
pay to Agent on demand the costs and expenses of the Priority Lender Group, and
the fees and disbursements of counsel to Agent, in connection with the
negotiation, preparation, execution, delivery, and administration of this
Agreement, and any amendments, modifications, or waivers of the terms thereof.


 


(b)           Payment
of Fees and Costs of Agent and Trustee. 
If either Agent or Trustee institutes any legal proceeding arising from
or relating to this Agreement, the prevailing party in such legal proceeding
shall be entitled to recover all of its expenses from the non-prevailing party,
including without limitation all of its expenses and the fees and disbursements
of counsel, in connection with such proceeding and the enforcement or attempted
enforcement of, and preservation of rights or interests under, this Agreement.


 


SECTION
19      Survival.  All covenants, agreements, representations
and warranties made in this Agreement shall, except to the extent otherwise
provided herein, survive the execution and delivery of this Agreement, and
shall continue in full force and effect so long


 


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as any Senior Priority Debt remains
unpaid.  Without limiting the generality
of the foregoing, the obligations of Trustee under Section 18 shall survive the
satisfaction of the Senior Priority Debt.


 


SECTION
20      Benefits of Agreement.  This Agreement is entered into for the sole
protection and benefit of the parties hereto and their successors and assigns,
and no other Person shall be a direct or indirect beneficiary of, or shall have
any direct or indirect cause of action or claim in connection with, this
Agreement.


 


SECTION
21      Binding Effect.  This Agreement shall be binding upon, inure
to the benefit of and be enforceable by Trustee and the Priority Lender Group
and their respective successors and permitted assigns.


 


SECTION
22      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.


 


SECTION
23      SUBMISSION TO JURISDICTION.  BORROWERS AND TRUSTEE EACH HEREBY (i)
SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA
AND THE FEDERAL COURTS OF THE UNITED STATES SITTING IN THE COUNTY OF LOS
ANGELES, STATE OF CALIFORNIA, FOR THE PURPOSE OF ANY ACTION OR PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH
COURTS, OR AT THE SOLE OPTION OF AGENT, IN ANY OTHER COURT IN WHICH AGENT SHALL
INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER
JURISDICTION OVER THE MATTER IN CONTROVERSY, (iii) IRREVOCABLY WAIVES (TO THE
EXTENT PERMITTED BY APPLICABLE LAW) ANY OBJECTION WHICH IT NOW OR HEREAFTER MAY
HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY OF
THE FOREGOING COURTS, AND ANY OBJECTION ON THE GROUND THAT ANY SUCH ACTION OR
PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (iv)
AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT
OR IN ANY OTHER MANNER PERMITTED BY LAW.


 


SECTION
24      WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY EXPRESSLY WAIVES
ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A)
ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH
OR RELATED OR INCIDENTAL TO THE DEALINGS OF AGENT, TRUSTEE OR SGI OR ANY OF
THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR
AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE
TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR
HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND
EACH PARTY HERETO


 


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HEREBY AGREES AND CONSENTS THAT ANY CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY,
AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION
WITH ANY COURT AS WRITTEN EVIDENCE OF THEIR CONSENT TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.


 


SECTION
25      Entire Agreement; Amendments
and Waivers.


 


(a)           Entire
Agreement.  This Agreement
constitutes the entire agreement of each of the parties hereto with respect to
the matters set forth herein and supersedes any prior agreements, commitments,
drafts, communications, discussions, and understandings, oral or written, with
respect thereto.


 


(b)           Amendments
and Waivers.  No amendment to any
provision of this Agreement shall in any event be effective unless the same
shall be in writing and signed by each of the parties hereto; and no waiver of
any provision of this Agreement, or consent to any departure by Agent
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Agent.  Any such amendment,
waiver, or consent shall be effective only in the specific instance and for the
specific purpose for which given.


 


SECTION
26      Conflicts.  In case of any conflict or inconsistency
between any terms of this Agreement, on the one hand, and any documents or
instruments in respect of the Senior Priority Debt or the Junior Priority Debt,
on the other hand, then the terms of this Agreement shall control.


 


SECTION
27      Severability.  Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under all applicable laws and regulations. 
If, however, any provision of this Agreement shall be prohibited by or
invalid under any such law or regulation in any jurisdiction, it shall, as to
such jurisdiction, be deemed modified to conform to the minimum requirements of
such law or regulation, or, if for any reason it is not deemed so modified, it
shall be ineffective and invalid only to the extent of such prohibition or
invalidity without affecting the remaining provisions of this Agreement or the
validity or effectiveness of such provision in any other jurisdiction.


 


SECTION
28      Interpretation.  This Agreement is the result of negotiations
among, and has been reviewed by the respective counsel to, each of the parties
hereto and is the product of all parties hereto.  Accordingly, this Agreement shall not be construed against the
Priority Lender Group merely because of the Priority Lender Group’s involvement
in the preparation hereof.  The
obligations of each Borrower hereunder shall be joint and several.


 


SECTION
29      Counterparts; Telefacsimile
Execution.  This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which, when so 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
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 also shall deliver
an original executed counterpart


 


13

















 


of this Agreement but the failure to deliver
an original executed counterpart shall not affect the validity, enforceability,
and binding effect of this Agreement.


 


SECTION
30      Rights to Specific Performance.  Agent absolutely, irrevocably and
unconditionally hereby is authorized to demand, receive and obtain specific
performance of this Agreement at any time when Trustee has failed to comply
with any of the provisions of this Agreement. Trustee absolutely, irrevocably
and unconditionally hereby waives and relinquishes any defense based on the
adequacy of a remedy at law which might be asserted as a bar to such remedy of
specific performance.


 


SECTION
31      Termination of Agreement.  Upon payment and performance in full in cash
of the Senior Priority Debt, this Agreement shall terminate and Agent shall
promptly execute and deliver to Trustee such documents and instruments as shall
be reasonably necessary to evidence such termination; provided, however, that
the obligations of Trustee under Section 18 shall survive such termination.


 


14

















 


IN WITNESS WHEREOF, the
undersigned have caused their respective duty authorized officers to execute
and deliver this Agreement as of the date first written above.


 


	
   

  	
  TRUSTEE:

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL
  ASSOCIATION, a national

  banking association organized and existing under the

  laws of the United States of America

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title: Vice President

  
	
   

  	
   

  
	
   

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO FOOTHILL, INC,

  
	
   

  	
  a California corporation,
  as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  CONSENTED AND AGREED TO:

  
	
   

  	
   

  
	
   

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  SILICON GRAPHICS, INC., a
  Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  
	
   

  	
  SILICON GRAPHICS FEDERAL,
  INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Title:

  	
   

  
						



 


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