Exhibit 4.9 SECURITY AGREEMENT This
SECURITY AGREEMENT, dated as of December 24, 2003 (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
Agreement), is made by SILICON
GRAPHICS, INC., a Delaware corporation (the Grantor), in favor of U.S. BANK NATIONAL ASSOCIATION, in its
capacity as Trustee and for the benefit of the Noteholders (such capitalized
terms to have the meanings set forth in Article I). W  I  T  N  E  S  S  E  T
H: WHEREAS,
the Grantor, Wells Fargo Foothill, Inc. (as successor in interest to
Foothill Capital Corporation), as Arranger and Administrative Agent (and
together with any successor(s) thereto in such capacity, the Administrative Agent) and certain
financial institutions (collectively, the Lender
Group), are parties to the Amended and Restated Loan and Security
Agreement, dated as of September 24, 2002 and amended on April 11,
2003 and September 17, 2003 (as further amended, supplemented, amended and
restated or otherwise modified from time to time, the Loan Agreement), among the Grantor, its
subsidiaries signatory thereto, the Lender Group, the Administrative Agent and
Bank of America, N.A., as the Documentation Agent; WHEREAS,
the Grantor and U.S. Bank National Association, as Trustee (in such capacity,
the Trustee) are parties to
(i) that certain indenture, dated as of the date hereof (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
Secured Convertible Note Indenture),
pursuant to which the Grantor is issuing 6.50% Senior Secured Notes due 2009
(the Secured Convertible Notes),
and (ii) that certain Indenture, dated as of the date hereof (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
Secured Note Indenture, and,
together with the Secured Convertible Note Indenture, the Indentures), pursuant to which the Grantor
is issuing 11.75% Senior Secured Notes due 2009 (the Secured Notes and, together with the
Secured Convertible Notes, the Notes)
in an aggregate principal amount of up to $230,591,000; WHEREAS,
pursuant to the Indentures, the Grantor is required to execute and deliver this
Agreement; WHEREAS,
the Grantor, the Trustee and the Administrative Agent have entered into an
Intercreditor Agreement, dated as of the date hereof (as further amended,
supplemented, amended and restated or otherwise modified from time to time, the
Foothill Intercreditor Agreement);
and WHEREAS
pursuant to the terms of the Indentures and subject to the terms of the
Intercreditor Agreement, U.S. Bank National Association, in its capacity as
Trustee has agreed to accept the pledge and assignment and the grant of a
security interest in the Collateral under this Agreement as security for the
Notes. NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, and in order to induce the Trustee to enter into
the Indentures and to induce holders of the Grantors 5.25% Senior Convertible
Notes due 2004 (the Old Notes)
to exchange the Old Notes for the Notes, the parties hereto agree as follows: ARTICLE I
DEFINITIONS Section 1.1.Certain Terms.    The
following terms when used in this Agreement, including its preamble and
recitals, shall have the following meanings (such definitions to be equally
applicable to the singular and plural forms thereof): Account Debtor means any Person who is or
who may become obligated under, with respect to, or on account of, any Account,
General Intangible Collateral or Negotiable Property Collateral. Accounts means all of the Grantors now
owned or hereafter acquired right, title, and interest with respect to accounts
(as that term is defined in the Code), and any and all supporting obligations 
   in
respect thereof, and as for which the Account Debtor obligated thereon
maintains its chief executive office in the United States or is organized under
the laws of the United States or any state thereof. Additional Documents has the meaning set
forth in Section 3.6. Administrative Agent is defined in the
first recital to this Agreement and includes any successor thereto exercising
substantially the same rights and powers and any representative of lenders to
whom the Grantor has granted a Senior Priority Lien on the Collateral as
permitted under the Indentures. Agreement is defined in the preamble to
this Agreement. Books means all of the Grantors now owned
or hereafter acquired 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), excluding (y) books and records relating to
(i) General Intangibles other than General Intangibles described above in
this definition or in clause (f) of the definition of Collateral or
(ii) Real Property, or (z) any of the foregoing which is located
outside of the United States. Code means the New York Uniform Commercial
Code, as in effect from time to time. Collateral means, except for the Excluded
Intellectual Property, all of the Grantors now owned or hereafter acquired
right, title, and interest in and to each of the following: (a)   Accounts, (b)   Books, (c)   Equipment, (d)   IP
Collateral, (e)   Inventory, (f)    Negotiable
Property, (g)   money
of the Grantor that now or hereafter comes into the possession, custody or
control of the Trustee, (h)   the
proceeds and products, whether tangible or intangible, of any of the foregoing
described in clauses (a) through (g) above, including
(x) proceeds of insurance covering any or all of the foregoing, and
(y) any and all Accounts, Books, Equipment, IP Collateral, General
Intangibles, Inventory, Investment Property, Negotiable Property, Real
Property, money, deposit accounts, or other tangible or intangible property,
solely to the extent, in the case of each of the foregoing clauses (x) and
(y), resulting from the sale, exchange, collection, or other disposition of any
of the foregoing described in clauses (a) through (g) above, or any
portion thereof or interest therein, and the proceeds thereof; provided,
however, that Collateral shall not include (A) such General Intangibles:
(i) which cannot be subject to a consensual security interest in favor of
Trustee without the consent of the licensor or other party thereto,
(ii) as to which any such restriction described in clause (i) is
effective and enforceable under applicable law including Section 9-408 of
the Code, and (iii) to which such consent described in clause (i) has
not been obtained by the party granting the security interest and (B) any
property not subject to a Senior Priority Lien, other than any such property
that was, immediately prior to the discharge of such Senior Priority Lien
Obligations, subject to a Senior Priority Lien, except to the extent that such
property, or any portion thereof, was disposed of in order to repay Senior
Priority Lien Obligations. Collections means all cash, checks, notes,
instruments, and other items of payment (including insurance proceeds, proceeds
of cash sales, rental proceeds, and tax refunds) of Grantor, but excluding 2 
   any of
the foregoing directly arising out of the disposition of Real Property or any
patent, trademark or copyright of the Grantor. Copyrights means all of the Grantors
right, title and interest in and to copyrights in works of authorship of any
kind, and all registration applications, registrations and recordings thereof
in the Office of the United States Register of Copyrights, Library of Congress,
or in any similar office or agency of any country or political subdivision
thereof throughout the world, whether now owned or hereafter acquired by such
Grantor, including those described in Schedule 5.16A annexed hereto and
made a part hereof, together with all extensions, renewals, reversionary
rights, and corrections thereof and all licenses thereof or pertaining thereto. Equipment means all of the Grantors now
owned or hereafter acquired right, title, and interest with respect to
equipment, machinery, machine tools, motors, furniture, furnishings, fixtures,
vehicles (including motor vehicles), tools, parts, spare parts, goods (other
than consumer goods, farm products, or Inventory), including all attachments,
accessories, accessions, replacements, substitutions, additions, and
improvements to any of the foregoing, in each case to the extent that any of
the foregoing is located anywhere within the United States. Excluded Intellectual Property means each
Patent, Trademark and Copyright presently owned by the Grantor and listed on
Schedule 5.16B. General Intangibles means all of the
Grantors now owned or hereafter acquired right, title, and interest with
respect to general intangibles (including payment intangibles, contract rights,
rights to payment, rights arising under common law, statutes, or regulations,
choses or things in action, goodwill, patents, trade names, trademarks,
servicemarks, copyrights, 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,
infringement claims, computer programs, information contained on computer disks
or tapes, software, literature, reports, catalogs, money, deposit accounts,
insurance premium rebates, tax refunds, and tax refund claims), and any and all
supporting obligations in respect thereof, and any other personal property
other than goods, Accounts, Books, Inventory, Equipment, Investment Property,
and Negotiable Property. General Intangibles Collateral means that
portion of the General Intangibles which is included in the Collateral as
proceeds of other Collateral. Grantor is defined in the preamble to this
Agreement. Intellectual Property Security Agreement
means an intellectual property security agreement executed and delivered by the
Grantor and Trustee, the form and substance of which is satisfactory to the
Trustee. Intercreditor Agreement means (i) the
Foothill Intercreditor Agreement defined in the fourth recital to this
Agreement and (ii) any agreement entered into among Grantor, the Trustee
and any lender or holder of Senior Priority Debt (or its representative) to
whom the Grantor has granted a senior security interest in the Collateral
pursuant of Section 4.06(e) of the Indentures. Inventory means all Grantors now owned or
hereafter acquired right, title, and interest with respect to inventory,
including goods (and any software embedded therein or otherwise included
therewith and all rights to such software) held for sale or lease or to be
furnished under a contract of service, goods that are leased by the Grantor as
lessor, goods that are furnished by the Grantor under a contract of service,
and raw materials, work in process, or materials used or consumed in the
Grantors business, in each case to the extent that any of the foregoing is
located anywhere in the United States. 3 
   Investment Property means all of the
Grantors now owned or hereafter acquired right, title, and interest with
respect to investment property as that term is defined in the Code, and any
and all supporting obligations in respect thereof. IP Collateral means collectively, the
Patent Collateral, Trademarks and Copyrights. Junior Priority Debt means all
indebtedness, liabilities and other obligations of Grantor owing to Trustee, in
respect of the Notes, whether now existing or hereafter arising, and whether
due or to become due, absolute or contingent, liquidated or unliquidated,
determined or underdetermined, including all fees and all other amounts payable
by Grantor to Trustee under or in connection with any documents or instruments
related thereto. Junior Priority Security Documents means,
collectively, this Agreement, the Intellectual Property Security Agreement, and
all other security agreements, pledges, collateral assignments, mortgages or
other instruments evidencing or creating any security interests in favor of the
Trustee, for the benefit of the Noteholders, in all or any portion of the
Collateral, in each case, as amended, amended and restated, supplemented,
replaced or otherwise modified from time to time, in accordance with the terms
thereof. Negotiable Property means all of Grantors
now owned and hereafter acquired right, title, and interest with respect to
letters of credit, letter of credit rights, instruments, promissory notes,
drafts, documents, and chattel paper (including electronic chattel paper and
tangible chattel paper), and any and all supporting obligations in respect
thereof. Negotiable Property Collateral means that
portion of the Negotiable Property which is included in the Collateral as
proceeds of other Collateral. Noteholder means any holder of the Secured
Notes or Secured Convertible Notes. Noteholder Documents means the Indentures,
the Notes, this Agreement, the other Junior Priority Security Documents and the
Intercreditor Agreement. Patents means all of Grantors right,
title and interest in and to all inventions and letters patent and registration
applications therefor, and all registrations and recordings thereof, including,
without limitation, registration applications, registrations and recordings in
the United States Patent and Trademark Office or in any similar office or
agency of the United States or any state thereof, or in any similar office or
agency of any country or political subdivision thereof throughout the world,
including those described in Schedule 5.16A,
together with all re-examinations, reissues, continuations,
continuations-in-part, divisions, improvements and extensions thereof and all
licenses thereof or pertaining thereto and all licenses of patent rights to
Grantor now in effect or entered into during the term of this Agreement and the
rights to make, use and sell, and all other rights with respect to, the
inventions disclosed or claimed therein, all inventions, designs, proprietary
or technical information, know-how, other data or information, software,
databases, all embodiments or fixations thereof and related documentation, all
information pertaining to the foregoing having value in connection with Grantors
business and all other trade secret pertaining to the foregoing rights not
described above. Patent Collateral means all of the Grantors
right, title and interest in and to all registrations and recordings in the
United States Patent and Trademark Office described in Schedule 5.16A,
together with all re-examinations, reissues, continuations,
continuations-in-part, divisions, improvements and extensions thereof and all
licenses thereof or pertaining thereto and all licenses of patent rights to the
Grantor now in effect or entered into during the term of this Agreement and the
rights to make, use and sell, and all other rights with respect to, the
inventions disclosed or claimed therein, all inventions, designs, proprietary
or technical information, know-how, other data or information, software,
databases, all embodiments or fixations thereof and related documentation, all
information pertaining to the 4 
   foregoing
having value in connection with the Grantors business and all other trade
secret pertaining to the foregoing rights not described above. Person means natural persons,
corporations, limited liability companies, limited partnerships, general
partnerships, limited liability partnerships, joint ventures, trusts, land
trusts, business trusts, or other organizations, irrespective of whether they
are legal entities, and governments and agencies and political subdivisions
thereof. Real Property means any estates or
interests in real property now owned or hereafter acquired by the Grantor and
the improvements thereto. Record 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. Senior Priority Debt means any
indebtedness incurred by the Grantor as permitted under Section 4.06(e) of
the Indentures that is secured by a security interest in the Collateral senior
to that granted to the Trustee on behalf of the Noteholders, including, but not
limited to indebtedness incurred under the Loan Agreement. Trademarks means all of the Grantors
right, title and interest in and to trademarks, trade names, trade styles,
service marks, logos, emblems, prints and labels, all elements of package or
trade dress of goods, and all general intangibles of like nature, now existing
or hereafter adopted or acquired by the Grantor, together with the goodwill of
the Grantors business connected with the use thereof and symbolized thereby,
and all registration applications, registrations and recordings thereof,
including, without limitation, registration applications, registrations and
recordings in the United States Patent and Trademark Office or in any similar
office or agency of the United States or in any office of the Secretary of
State (or equivalent) of any state thereof, or in any similar office or agency
of any country or political subdivision thereof throughout the world, whether
now owned or hereafter acquired by the Grantor, including those described in
Schedule 5.16A annexed hereto and made a part hereof, together with all
extensions, renewals and corrections thereof and all licenses thereof or
pertaining thereto. Trustee means U.S. Bank National
Association and shall include any additional or successor representative of any
then outstanding Notes. SECTION
1.2.Definitions.    Unless
otherwise defined herein or the context otherwise requires, terms used in this
Agreement, including its preamble and recitals, have the meanings provided in
the Indentures, or, if not defined in the Indentures, the Intercreditor
Agreement. SECTION
1.3.Code
Definitions.    Unless otherwise defined herein,
in the Indentures or, if not defined in the Indentures, the Intercreditor
Agreement, or the context otherwise requires, terms for which meanings are
provided in the Code are used in this Agreement (whether or not capitalized
herein), including its preamble and recitals, with such meanings. ARTICLE II
SECURITY INTEREST SECTION
2.1.Grant of
Security Interest.    The Grantor hereby grants
to the Trustee, for the benefit of each Noteholder, a continuing security
interest in all of the Grantors right, title and interest in all currently
existing and hereafter acquired or arising Collateral. SECTION
2.2.Security for
Noteholder Claims.    This Security Agreement
and the Collateral in which the Trustee is granted a security interest
hereunder secures the payment of the Junior Priority Debt. 5 
   SECTION
2.3.Grantor Remains
Liable.    Anything herein to the contrary
notwithstanding, (a)   the
Grantor will remain liable under the contracts and agreements included in the
Collateral to the extent set forth therein, and will perform all of its duties
and obligations under such contracts and agreements to the same extent as if
this Agreement had not been executed; (b)   the
exercise by the Trustee of any of its rights hereunder will not release the
Grantor from any of its duties or obligations under any such contracts or
agreements included in the Collateral; and (c)   none
of the Trustee or any Noteholder will have any obligation or liability under
any contracts or agreements included in the Collateral by reason of this
Agreement, nor will the Trustee or any Noteholder be obligated to perform any
of the obligations or duties of the Grantor thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder. ARTICLE III
COVENANTS The
Grantor covenants and agrees that, at all times prior to the discharge of the
Indentures or earlier release of Liens on all Collateral pursuant to Section 6.10 of this Agreement, the
Grantor will perform, comply with and be bound by the obligations set forth in
the Indentures and as follows: SECTION
3.1.Senior Priority
Debt.    The Grantor shall furnish to the
Trustee, as long as any Senior Priority Debt is outstanding, with copies of all
agreements or instruments evidencing or governing the Senior Priority Debt,
including copies of all schedules thereto relating to the Collateral, and all
amendments, restatements, modifications, renewals, extensions or replacements
thereof; provided that documents reflecting modifications or other alterations
to such agreements need only be provided to Trustee to the extent that they
relate to or affect the Collateral. Such documents shall be furnished to
Trustee within five Business Days of the execution of such documents. SECTION
3.2.Collateral
Reporting.    The Grantor shall furnish to the
Trustee (i) as long as any Senior Priority Debt is outstanding, copies of
any statements, schedules and reports relating to and describing the Collateral
that it is required to furnish to holders of Senior Priority Debt and
(ii) thereafter, such statements and schedules identifying and describing
the Collateral and such other reports in connection with the Collateral as
Trustee shall reasonably request. SECTION
3.3.Intellectual
Property; IP Collateral.    The Grantor shall
enter into and comply with the Intellectual Property Security Agreement in the
form of Exhibit A hereto, with respect to all of the IP Collateral owned
on the date hereof, and shall execute and deliver to the Trustee any other
document requested by the Trustee required to acknowledge or register or
perfect the Trustees interest in the United States in any part of such IP
Collateral. SECTION
3.4.Assignment of
Proceeds.    The Grantor shall execute and
deliver to the Trustee any and all additional documents that the Trustee may
reasonably request, in form and substance reasonably satisfactory to the Trustee,
providing for the assignment of all proceeds to the Trustee arising from any
license or royalty agreement entered into by the Grantor with respect to
Grantors General Intangibles. SECTION
3.5.Collection of
Accounts, etc.    At any time after Trustee has
received notice of full and indefeasible payment of all Senior Priority Debt
and after the occurrence and during the continuation of an Event of Default
under the Indentures, the Trustee may (i) notify Account Debtors of
Grantor that the Accounts, Negotiable Property Collateral and General
Intangibles Collateral have been assigned to or that the Trustee has a security
interest therein, or (ii) collect the Accounts, Negotiable Property
Collateral and General Intangibles Collateral directly. 6 
   SECTION
3.6.Further
Assurances.    At any time upon the request of
the Trustee, Grantor shall execute and deliver to the Trustee, any and all
financing statements, original financing statements in lieu of continuation
statements, fixture filings, security agreements, pledges, assignments,
endorsements of certificates of title, and all other documents (the Additional Documents) that the Trustee may
reasonably request, in form and substance reasonably satisfactory to the
Trustee, to perfect and continue perfected or better perfect the Trustees
Liens in the Collateral (whether now owned or hereafter arising or acquired).
To the maximum extent permitted by applicable law, Grantor authorizes the
Trustee to execute any such Additional Documents in Grantors name and
authorizes the Trustee to file such executed Additional Documents in any
appropriate filing office. SECTION
3.7.Trustee
Appointed Attorney-in-Fact.    The Grantor
hereby irrevocably appoints the Trustee the Grantors attorney-in-fact, with
full authority in the place and stead of the Grantor and in the name of the
Grantor or otherwise, to (a) if Grantor refuses to, or fails timely to
execute and deliver any of the documents described in Section 3.6, sign the name of Grantor
on any of the documents described in Section 3.6,
(b) at any time that an Event of Default has occurred and is continuing,
sign Grantors name on any invoice or bill of lading relating to the
Collateral, drafts against Account Debtors, or notices to Account Debtors,
(c) send requests for verification of Accounts; provided, however,
that so long as no Event of Default has occurred which is continuing, Trustee
will coordinate any such verification activities with Grantor, (d) endorse
Grantors name on any Collection item that may come into the Trustees
possession, (e) at any time that an Event of Default has occurred and is
continuing, make, settle, and adjust all claims under such Grantors policies
of insurance and make all determinations and decisions with respect to such
policies of insurance, and (f) at any time that an Event of Default has
occurred and is continuing, settle and adjust disputes and claims respecting
the Accounts, General Intangibles Collateral or Negotiable Property Collateral
directly with Account Debtors, for amounts and upon terms that Trustee
determines to be reasonable, and Trustee may cause to be executed and delivered
any documents and releases that Trustee determines to be necessary. The
Grantor hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 3.7 is irrevocable and coupled with an
interest. SECTION
3.8.Disposition of
Collateral.    Subject to the terms of
agreements and instruments governing the Senior Priority Debt, Grantor may
sell, exchange, assign, lease, license or otherwise dispose of any of the
Collateral; and concurrently with any such sale or other disposition, the liens
granted under this Agreement on the assets sold or disposed of (but not in any
proceeds arising from such sale or disposition) will cease immediately without
any action by the Trustee or any other secured party. The Trustee will, at the
Grantors expense, execute and deliver to Grantor such documents as Grantor
shall reasonably request to evidence the fact that any asset so sold or
disposed of is no longer subject to the security interest created by the Junior
Priority Security Documents. ARTICLE IV
SUCCESSOR TRUSTEE (a)   The
Trustee has been appointed to act as such pursuant to the Noteholder Documents,
with such powers, rights and obligations as are expressly delegated to it by
the terms of such Noteholder Documents. The Trustee may, subject to the terms
of the Intercreditor Agreement, resign its position hereunder and under the Indentures
by notifying the Grantor in accordance with the procedures set forth in
Section 7.08 of the Indentures and a successor Trustee will be appointed
in accordance with the procedures set forth in the Indentures; provided that,
if Trustee resigns or is removed from its position pursuant to
Section 7.08 of the Indentures, then it will also be deemed to have
resigned as Trustee under this Agreement; 7 
  (b)   Upon
the acceptance of its appointment as Trustee hereunder and under the
Indentures, (i) a successor Trustee shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Trustee, and the retiring Trustee shall be discharged from its duties and
obligations hereunder, and (ii) the retiring Trustee shall promptly
transfer all Collateral within its possession or control to the possession or
control of the successor Trustee and shall execute and deliver such notices,
instructions and assignments as may be necessary or desirable to transfer the
rights of the Trustee in respect of the Collateral to the successor Trustee. ARTICLE V
REMEDIES SECTION
5.1.Certain
Remedies.    Subject to the Intercreditor
Agreement, if any Event of Default under the Indentures shall have occurred and
be continuing, the Trustee may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the Code (whether or not the Code applies to the affected Collateral) and
also may (a)   without
notice to or demand upon Grantor, make such payments and do such acts as
Trustee considers necessary or reasonable to protect its security interests in
the Collateral. Grantor agrees to assemble the Collateral if Trustee so
requires, and to make the Collateral available to Trustee at a place that
Trustee may designate which is reasonably convenient to both parties. Grantor
authorizes Trustee to enter the premises where the Collateral is located, to
take and maintain possession of the Collateral, or any part of it, and to pay,
purchase, contest, or compromise any Lien that in Grantors determination
appears to conflict with the Trustees Liens (other than the Liens securing
Senior Priority Debt) and to pay all expenses incurred in connection therewith.
With respect to any of Grantors owned or leased premises, Grantor hereby
grants Trustee a license to enter into possession of such premises and to
occupy the same, without charge, in order to exercise the Noteholders rights
or remedies provided herein, at law, in equity, or otherwise; (b)   Trustee
may (a) notify Account Debtors of Grantor that the Accounts, General
Intangibles Collateral and Negotiable Property Collateral of Grantor have been
assigned to Trustee or that Trustee has a security interest therein, or
(b) collect such Accounts, General Intangibles Collateral and Negotiable
Property Collateral directly and charge the collection costs and expenses to
the Grantor. Grantor agrees that it will hold in trust for Trustee any
Collections that it receives and immediately will deliver said Collections to
Trustee in their original form as received by Grantor; (c)   hold,
as cash collateral, any and all balances and deposits of Grantor held by the
Trustee to secure the full and final repayment of all of the Junior Priority
Debt; (d)   ship,
reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise
for sale, and sell (in the manner provided for herein) the Collateral. Grantor
hereby grants to Trustee a license or other right to use, without charge,
Grantors software (including all rights thereto as owner or licensee thereof),
labels, patents, copyrights, trade secrets, trade names, trademarks, service
marks, and advertising matter, or any property of a similar nature, as it
pertains to the Collateral, in completing production of, advertising for sale,
and selling any Collateral and Grantors rights under all licenses and all
franchise agreements shall inure to the Trustee and the Noteholders benefit; (e)   sell
the Collateral at either a public or private sale, or both, by way of one or
more contracts or transactions, for cash or on terms, in such manner and at
such places (including Grantors premises) as Trustee determines is
commercially reasonable. It is not necessary that the Collateral be present at
any such sale; 8 
   (f)    Trustee
shall give notice of the disposition of the Collateral as follows: (i)  Trustee
shall give Grantor a notice in writing of the time and place of public sale,
or, if the sale is a private sale or some other disposition other than a public
sale is to be made of the Collateral, the time on or after which the private
sale or other disposition is to be made; and (ii)  The
notice shall be personally delivered or mailed, postage prepaid, to Grantor as
provided in Section 6.4, at
least 10 days before the earliest time of disposition set forth in the
notice; no notice needs to be given prior to the disposition of any portion of
the Collateral that is perishable or threatens to decline speedily in value or
that is of a type customarily sold on a recognized market; (g)   Trustee,
on behalf of the Noteholders may credit bid and purchase at any public sale; (h)   Trustee
may seek the appointment of a receiver or keeper to take possession of all or
any portion of the Collateral or to operate same and, to the maximum extent
permitted by law, may seek the appointment of such a receiver without the
requirement of prior notice or a hearing; (i)    The
Trustee and Noteholders shall have all other rights and remedies available to
them at law or in equity pursuant to any other Noteholder Documents; and (j)    Any
deficiency that exists after disposition of the Collateral as provided above
will be paid immediately by Grantor. Any excess will be returned, without
interest and subject to the rights of third Persons, by Trustee to Grantor. SECTION
5.2.Remedies
Cumulative.    The rights and remedies of the
Trustee under this Agreement, the other Noteholder Documents and all other
agreements are cumulative. The Trustee shall have all other rights and remedies
not inconsistent with the Noteholder Documents as provided under the Code, by
law, or in equity. No exercise by the Trustee of one right or remedy shall be
deemed an election, and no waiver by the Trustee of any Event of Default shall
be deemed a continuing waiver. No delay by the Trustee shall constitute a
waiver, election, or acquiescence by it. SECTION
5.3.Expenses.    The
Grantor will, upon demand, pay to the Trustee the amount of any and all
reasonable expenses, including the reasonable fees and disbursements of its
counsel and of any experts and agents, which the Trustee may incur in
connection with (i) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral and
(ii) the exercise or enforcement of any of the rights of the Trustee or
the Noteholders under the Noteholder Documents. ARTICLE VI
MISCELLANEOUS PROVISIONS SECTION
6.1.Relationship of
this Agreement with Loan Agreement and Intercreditor Agreement.    Notwithstanding
anything herein to the contrary, the lien and security interest granted to the
Trustee pursuant to this Agreement and the exercise of any right or remedy by
the Trustee hereunder are subject to the provisions of the Intercreditor
Agreement and the agreements evidencing Senior Priority Debt (including, without
limitation, the Loan Agreement) during such periods as the Intercreditor
Agreement is in effect and any Senior Priority Debt is outstanding. In the
event of any conflict between the terms of the Intercreditor Agreement or the
agreements evidencing Senior Priority Debt (including, without limitation, the
Loan Agreement) and this Agreement, the terms of the Intercreditor Agreement or
agreements evidencing Senior Priority Debt (including, without limitation, the
Loan Agreement), as applicable, shall govern. SECTION
6.2.Binding on
Successors, Transferees and Assigns; Assignment.    This
Agreement shall be binding upon the Grantor and its successors, transferees and
assigns and shall inure to the benefit of 9 
   and be
subject to the terms of the Noteholder Documents, enforceable by the Trustee
and each Noteholder (subject to the limitations set forth in the applicable
Noteholder Documents) and their respective successors, transferees and assigns. SECTION
6.3.Amendments, etc.    Subject
to the Intercreditor Agreement, no amendment to or waiver of any provision of
this Agreement, nor consent to any departure by the Grantor from its
obligations under this Agreement, shall in any event be effective unless the
same shall be in writing and signed by the Trustee and is permitted by Section 13 of the Intercreditor
Agreement and then such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it is given. SECTION
6.4.Notices.    All
notices and other communications provided to any party under this Agreement
shall be in writing (including facsimile communication) and mailed, telecopied
or delivered to the appropriate party at the address or facsimile number of
such party set forth in or specified pursuant to the Indentures. All such
notices and other communications, when mailed and properly addressed with
postage prepaid or if properly addressed and sent by pre-paid courier service,
shall be deemed given when received; any such notice or communication, if
transmitted by facsimile, shall be deemed given when transmitted and
electronically confirmed. SECTION
6.5.No Waiver.    No
failure on the part of the Trustee or any Noteholder to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. SECTION
6.6.Captions.    Section
captions used in this Agreement are for convenience of reference only, and
shall not affect the construction of this Agreement. SECTION
6.7.Severability.    Wherever
possible each provision of this Agreement shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of this
Agreement shall be prohibited by or invalid under such law, such provision
shall be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement. SECTION
6.8.Governing Law,
Entire Agreement, etc.    THIS AGREEMENT SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE
STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE
SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY
PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. SECTION
6.9.Counterparts.    This
Agreement may be executed by the parties hereto in several counterparts, each
of which shall be deemed to be an original and all of which shall constitute
together but one and the same agreement. Delivery of an executed counterpart of
a signature page to this Agreement by facsimile shall be effective as delivery
of a manually executed counterpart of this Agreement. SECTION
6.10.Release of
Liens.    The security interests granted
hereunder in any Collateral shall be released by the Trustee in the manner, at
the times and to the extent specified in Section 3 or Section 5(b) of
the Intercreditor Agreement or as may be permitted by the Indentures and any
other Noteholder Documents. In addition, upon the discharge of the Indentures,
the security interests granted hereunder shall automatically terminate. Upon
any such release or termination, the Trustee will, at the Grantors sole
expense, deliver to the Grantor all Collateral held by the Trustee hereunder in
which the security interest granted hereunder is released or terminated, and
execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such release or termination. [THE REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK.] 10 
  IN
WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
duly executed and delivered by its officer thereunto duly authorized as of the
date first written above. SILICON GRAPHICS, INC.By
  /s/Jeffrey V. ZellmerName:
  Jeffrey V. ZellmerTitle:
  Senior Vice President and 
  Chief Financial OfficerU.S. BANK NATIONAL ASSOCIATION, as TrusteeBy
  /s/Paula OswaldName:
  Paula OswaldTitle:
  Vice President 11