Document:

Exhibit 10.27

 

 

February 6, 2004

 

 

SILICON GRAPHICS, INC.

SILICON GRAPHICS FEDERAL, INC.

1600 Amphitheatre Parkway

Mountain View, California 94043

Attn:  Jean Furter, Vice
President and Treasurer

 

Re:                               Amended and Restated
Loan and Security Agreement

 

Dear Jean:

 

Reference is made to that certain Amended and
Restated Loan and Security Agreement, dated as of September 20, 2002 (as
amended, restated, supplemented, or modified from time to time, the “Loan
Agreement”), entered into among Silicon Graphics, Inc., a Delaware
corporation (“Parent”), Silicon Graphics Federal, Inc., a Delaware
corporation (together with Parent, “Borrowers”), the Lenders signatory
thereto (the “Lenders”), and Wells Fargo Foothill, Inc., a California
corporation (formerly known as Foothill Capital Corporation), as the arranger
and administrative agent for the Lenders (“Agent”).  Capitalized terms, which are used herein but
not defined herein, shall have the meanings ascribed to them in the Loan
Agreement.

 

Borrowers have requested that the Loan
Agreement be amended to modify Borrowers’ EBITDA covenant calculation, to allow
for an add-back of a non-cash charge associated with Borrowers’ Exchange Offer
completed December 22, 2003, for the 3 month period ended December 26, 2003.

 

Subject to the satisfaction of the terms and
conditions set forth in this letter agreement, Agent is willing to grant the
amendment requested by Borrowers as described in the preceding sentence.

 

NOW, THEREFORE, Agent and Borrowers hereby
agree to the following:

 

1.                                       Section
1.1 of the Loan Agreement is hereby amended by amending and restating the
following definition in its entirety:

 

“‘EBITDA’ means, with respect to any
fiscal period, Parent’s and its Subsidiaries’ consolidated net earnings (or
loss), minus interest income and extraordinary gains, including gains on sale
of assets, plus interest expense, income taxes, and depreciation and
amortization for such period, as determined in accordance with GAAP; provided,
however, that EBITDA for the 3 month period ended December 26, 2003,
shall be adjusted to add thereto a non-cash charge attributable to the Exchange
Offer in an amount up to $30,500,000.”

 

2.                                       The
satisfaction of each of the following shall constitute conditions precedent to
the effectiveness of this letter agreement and each and every provision hereof:

 

1

 

a.                                       The
representations and warranties in the Loan Agreement and the other Loan
Documents shall be true and correct in all respects on and as of the date hereof,
as though made on such date (except to the extent that such representations and
warranties relate solely to an earlier date);

 

b.                                      No
Event of Default shall have occurred between the date hereof and the date of
the effectiveness of this letter agreement; and

 

c.                                       No
injunction, writ, restraining order, or other order of any nature prohibiting,
directly or indirectly, the consummation of the transactions contemplated
herein shall have been issued and remain in force by any Governmental Authority
against any Borrower or Agent.

 

3.                                       This
letter agreement constitutes an amendment to the Loan Agreement.  Except as expressly set forth herein, the
Loan Documents shall remain in full force and effect.

 

4.                                       Borrowers
agree that all of Agent’s attorneys’ fees and costs in drafting and negotiating
this letter agreement are part of the Lender Group Expenses and are payable on
demand.

 

5.                                       This
letter agreement may be executed in any number of counterparts and by different
parties on separate counterparts.  Each
of such counterparts shall be deemed to be an original, and all of such
counterparts, taken together, shall constitute but one and the same
agreement.  Delivery of an executed
counterpart of this letter agreement by telefacsimile shall be equally
effective as delivery of a manually executed counterpart.

 

Please indicate your agreement with the foregoing by signing in the
space provided below and returning the same to the undersigned.

 

	
   

  	
  WELLS FARGO FOOTHILL, INC.,

  
	
   

  	
  a California corporation, as Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Shughrue

  
	
   

  	
  Name:

  	
  Thomas P. Shughrue

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

	
  Acknowledged and Agreed:

  
	
   

  
	
  SILICON GRAPHICS, INC.,

  
	
  a Delaware corporation

  
	
   

  
	
  By:

  	
  /s/ Jean Furter

  	
   

  
	
  Name:

  	
  Jean Furter

  	
   

  
	
  Title:

  	
  Vice President & Treasurer

  	
   

  
					

 

2

 

	
  SILICON GRAPHICS FEDERAL, INC.,

  
	
  a Delaware corporation

  
	
   

  
	
   

  
	
  By:

  	
  /s/ Jeff Zellmer

  	
   

  
	
  Name:

  	
  Jeff Zellmer

  	
   

  
	
  Title:

  	
  Vice President

  	
   

  
					

 

3Exhibit 10.28

 

 

AMENDMENT NUMBER SEVEN TO AMENDED AND
RESTATED

LOAN AND SECURITY AGREEMENT

 

THIS
AMENDMENT NUMBER SEVEN TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
(this “Amendment”), dated as of April 29, 2004, is entered into between
and among, the lenders identified on the signature pages hereof (such lenders,
together with their respective successors and assigns, are referred to
hereinafter each individually as a “Lender” and collectively as the “Lenders”),
WELLS FARGO FOOTHILL, INC., a
California corporation, as the arranger and administrative agent for the
Lenders (“Agent” and together with the Lenders, collectively, the “Lender
Group”), SILICON GRAPHICS, INC.,
a Delaware corporation (“Parent”), and each of Parent’s Subsidiaries
identified on the signature pages hereof (such Subsidiaries, together with
Parent, are referred to hereinafter each individually as a “Borrower,”
and individually and collectively, jointly and severally, as “Borrowers”),
in light of the following:

 

WITNESSETH

 

WHEREAS, Borrowers
and the Lender Group are parties to that certain Amended and Restated Loan and
Security Agreement, dated as of September 20, 2002 (as amended, restated,
supplemented, or modified from time to time, the “Loan Agreement”);

 

WHEREAS,
Borrowers have requested that Agent (i) modify the capital expenditure covenant
to exclude certain reimbursable tenant improvement expenses; (ii) revise
concentration limits for certain account debtors, (iii) modify eligibility
criteria of Eligible Canadian Accounts to include all Canadian account debtors,
and (iv) amend the Loan Agreement to reflect the new headquarters of Parent;
and

 

WHEREAS,
subject to the satisfaction of the conditions set forth herein, the Lender
Group is willing to so consent to the amendment of the Loan Agreement.

 

NOW,
THEREFORE, for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree to amend the Loan Agreement as
follows:

 

1.                                      DEFINITIONS.  Capitalized terms, which are used in this
Amendment but not defined herein, shall have the meanings ascribed to them in
the Loan Agreement, as amended hereby.

 

2.                                      AMENDMENTS
TO LOAN AGREEMENT.

 

(a)                                  Section 1.1 of
the Loan Agreement is hereby amended by adding the following defined terms in
proper alphabetical order or amending and restating the following definition in
its entirety, as the case may be:

 

“‘Eligible
Canadian Accounts’ means those Accounts created by a Borrower in the
ordinary course of its business as to which the following is applicable: such
Account does not qualify as an Eligible Domestic Account solely because the
Account Debtor with respect to such Account maintains its chief executive
office in Canada rather than in the

 

1

 

United States
or is organized under the laws of Canada or a political subdivision thereof
rather than under the laws of the United States or any state thereof.”

 

“‘Eligible
Domestic Accounts’ means those Accounts created by one of Borrowers in the
ordinary course of its business, that arise out of its sale of goods, that
comply with each of the representations and warranties respecting Eligible
Accounts made by Borrowers under the Loan Documents, and that are not excluded
as ineligible by virtue of one or more of the criteria set forth below;
provided, however, that such criteria may be fixed and revised from time to
time by Agent in Agent’s Permitted Discretion to address the results of any
audit performed by Agent from time to time after the Closing Date.  In determining the amount to be included,
Eligible Accounts shall be calculated net of customer deposits and unapplied
cash remitted to Borrowers.  Eligible
Accounts shall not include the following:

 

(a)                                  Accounts
that the Account Debtor has failed to pay within 90 days of original invoice
date or Accounts with selling terms of more than 60 days,

 

(b)                                 Accounts
owed by an Account Debtor (or any Person known by any Borrower to be an
Affiliate of such Account Debtor) where 50% or more of all Accounts owed by
that Account Debtor (or any such Affiliate) are deemed ineligible under clause
(a) above,

 

(c)                                  Accounts
with respect to which the Account Debtor is an employee, Affiliate, or agent of
any Borrower (other than any Person that: 
(A) is not an Affiliate or employee of any Borrower and (B) has entered
into a written distribution agreement with any Borrower),

 

(d)                                 Accounts
arising in a transaction wherein goods are placed on consignment or are sold
pursuant to a guaranteed sale, a sale or return, a sale on approval, a bill and
hold, or any other terms by reason of which the payment by the Account Debtor
may be conditional,

 

(e)                                  Accounts
that are not payable in Dollars,

 

(f)                                    Accounts
with respect to which the Account Debtor either (i) does not maintain its chief
executive office in the United States, or (ii) is not organized under the laws
of the United States or any state thereof, or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof, unless (y) the Account is
supported by an irrevocable letter of credit satisfactory to Agent (as to form,
substance, and issuer or domestic confirming bank) that has been delivered to
Agent and is directly drawable by Agent, or (z) the Account is covered by
credit insurance in form, substance, and amount, and by an insurer,
satisfactory to Lenders,

 

(g)                                 Accounts
that arise out of the rendition of services by any Person,

 

2

 

(h)                                 Accounts
with respect to which the Account Debtor is a creditor of any Borrower, has or
has asserted a right of setoff, has disputed its liability, or has made any
claim with respect to its obligation to pay the Account, to the extent of such
claim, right of setoff, or dispute,

 

(i)                                     Accounts
with respect to an Account Debtor whose total obligations owing to Borrower
exceed 10% of all Eligible Accounts, to the extent of the obligations owing by
such Account Debtor in excess of such percentage; provided, however, if
Accounts with respect to which the Account Debtor is (x) General Electric
Corporation exceed 35% (or such other percentage as Agent may determine in its
sole discretion) of all Eligible Accounts in the aggregate, to the extent of
the obligations owing by such Account Debtor in excess of such percentage, (y)
Northrop Grumman, NEC Corporation, General Services Administration, Raytheon
Company or Lockheed Martin exceed 20% (or such other percentage as Agent may
determine in its sole discretion) of all Eligible Accounts in the aggregate, to
the extent of the obligations owing by such Account Debtor in excess of such
percentage, or (z) BAE Systems or Maryland Procurement exceed 15% (or such other
percentage as Agent may determine in its sole discretion) of all Eligible
Accounts in the aggregate, to the extent of the obligations owing by such
Account Debtor in excess of such percentage;

 

(j)                                     Accounts
with respect to which the Account Debtor is subject to an Insolvency
Proceeding, is not Solvent, has gone out of business, or as to which a Borrower
has received notice of an imminent Insolvency Proceeding or a material
impairment of the financial condition of such Account Debtor,

 

(k)                                  Accounts
with respect to which the Account Debtor is located in the states of New
Jersey, Minnesota, or West Virginia (or any other state that requires a
creditor to file a business activity report or similar document in order to
bring suit or otherwise enforce its remedies against such Account Debtor in the
courts or through any judicial process of such state), unless the applicable
Borrower has qualified to do business in New Jersey, Minnesota, West Virginia,
or such other states, or has filed a business activities report with the
applicable division of taxation, the department of revenue, or with such other
state offices, as appropriate, for the then-current year, or is exempt from
such filing requirement,

 

(l)                                     Accounts,
the collection of which, Agent, in its Permitted Discretion, has notified
Administrative Borrower that Agent believes to be doubtful by reason of the
Account Debtor’s financial condition,

 

(m)                               Accounts
that are not subject to a valid and perfected first priority Agent’s Lien,

 

(n)                                 Accounts
with respect to which (i) the goods giving rise to such Account have not been
shipped and billed to the Account Debtor, or (ii) the services giving rise to
such Account have not been performed and billed to the Account Debtor,

 

3

 

(o)                                 Accounts
that represent the right to receive progress payments or other advance billings
that are due prior to the completion of performance by the applicable Borrower
of the subject contract for goods or services, or

 

(p)                                 Accounts
for which the applicable Borrower has executory performance obligations or
which have acceptance criteria, until such time as such performance obligations
or acceptance criteria have been completed, accepted or waived, as applicable.”

 

(b)                                 The parties confirm
that, effective as of April 11, 2003, Section 1.1 of the Loan Agreement
is amended by restating the following in its entirety:

 

“‘Accounts’
means all of Borrowers’ 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 Canada or is organized under the laws of the United States or
any state thereof or under the laws of Canada or any political subdivision
thereof.”

 

(c)                                  Schedule 5.7
of the Loan Agreement is hereby amended and restated in its entirety as
attached hereto as Schedule 5.7.

 

(d)                                 Section 7.20(c)
of the Loan Agreement is hereby deleted in its entirety and replaced by the
following:

 

“Maximum
Capital Expenditures.  Make
capital expenditures in excess of $10,000,000 in any fiscal quarter, excluding
reimbursable tenant improvement expenses incurred solely in connection with the
relocation of Parent’s executive offices to 1400 and 1500 Crittenden Lane,
Mountain View, CA 94043.”

 

(e)                                  Section 12 of
the Loan Agreement is hereby amended and restated in its entirety as follows:

 

“12.                         NOTICES.

 

Unless otherwise provided in
this Agreement, all notices or demands by Borrowers or Agent to the other
relating to this Agreement or any other Loan Document shall be in writing and
(except for financial statements and other informational documents which may be
sent by first-class mail, postage prepaid) 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 the
Administrative Borrower or Agent, as applicable, may designate to each other in
accordance herewith), or telefacsimile to Borrowers in care of Administrative
Borrower or to Agent, as the case may be, at its address set forth below:

 

4

 

	
  Administrative Borrower:

  	
   

  	
  Silicon Graphics, Inc.

  
	
   

  	
   

  	
  1500 Crittenden Lane

  
	
   

  	
   

  	
  Mountain View, California 94043

  
	
   

  	
   

  	
  Attn: 
  Jean Furter, Vice President and Treasurer

  
	
   

  	
   

  	
  Fax No.: (650) 933-0415

  
	
   

  	
   

  	
  Email address:  jean@sgi.com

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
   

  	
  Davis Polk & Wardwell

  
	
   

  	
   

  	
  1600 El Camino Real

  
	
   

  	
   

  	
  Menlo Park, CA 94025

  
	
   

  	
   

  	
  Attn: 
  Sally Brammell, Esq.

  
	
   

  	
   

  	
  Fax No.: (650) 752-2111

  
	
   

  	
   

  	
  Email address:  brammell@dpw.com

  
	
   

  	
   

  	
   

  
	
  and copies to:

  	
   

  	
   

  	
  Silicon Graphics, Inc.

  
	
   

  	
   

  	
  1500 Crittenden Lane

  
	
   

  	
   

  	
  Mountain View, California 94043

  
	
   

  	
   

  	
  Attn: Barry Weinert, Esq., Associate
  General Counsel

  
	
   

  	
   

  	
  Fax No.: (650) 933-0651

  
	
   

  	
   

  	
  Email address:  barryw@sgi.com

  
	
   

  	
   

  	
   

  
	
  If to Lenders:

  	
   

  	
   

  	
  c/o Wells Fargo Foothill, Inc.

  
	
   

  	
   

  	
  2450 Colorado Avenue

  
	
   

  	
   

  	
  Suite 3000 West

  
	
   

  	
   

  	
  Santa Monica, California 90404

  
	
   

  	
   

  	
  Attn: 
  Business Finance Division Manager

  
	
   

  	
   

  	
  Fax No.: 
  (310) 478-9788

  
	
   

  	
   

  	
   

  
	
  with copies to:

  	
   

  	
   

  	
  Jeffer, Mangels, Butler & Marmaro LLP

  
	
   

  	
   

  	
  1900 Avenue of the Stars

  
	
   

  	
   

  	
  7th Floor

  
	
   

  	
   

  	
  Los Angeles, California 90067

  
	
   

  	
   

  	
  Attn: 
  Joel J. Berman, Esq.

  
	
   

  	
   

  	
  Fax: 
  (310) 203-0567

  
	
   

  	
   

  	
  Email address:  jjb@jmbm.com

  
					

 

Agent and
Borrowers may change the address at which they are to receive notices
hereunder, by notice in writing in the foregoing manner given to the other
party.  All notices or demands sent in
accordance with this Section 12, 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.  Each Borrower acknowledges and agrees that
notices sent by the 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.”

 

5

 

(f)                                    Exhibit C-1
of the Loan Agreement is hereby amended and restated in its entirety as
attached hereto as Exhibit C-1.

 

3.                                      ACKNOWLEDGMENT
OF PERMITTED DISPOSITION.  Agent
hereby acknowledges that the sale of Borrowers’ Alias graphics software
business pursuant to that Purchase Agreement, dated as of April 14, 2004, by
and among Parent, Accel-KKR Company, LLC and the other parties thereto (the “Alias
Transaction”) is a Permitted Disposition in accordance with that certain
letter, dated April 12, 2001, by Borrower, a copy of which is attached hereto
as Exhibit A.  Agent agrees that
its security interest in those assets which are sold pursuant to the Alias
Transaction will automatically be released upon the consummation of the Alias
Transaction and authorizes Borrowers to file any and all UCC-3 Financing
Statement Amendments, and other similar statements or documents, required or
advisable to evidence such release; provided, however, that prior to making any
such filings Borrowers shall provide to Agent (i) the final closing statement
for the Alias Transaction, (ii) copies of any and all UCC-3 Financing Statement
Amendments, and (iii) notice of the closing of the Alias Transaction, each in
form and substance satisfactory to Agent in its sole discretion.

 

4.                                      CONDITIONS
PRECEDENT TO THIS AMENDMENT. 
The satisfaction of each of the following shall constitute conditions
precedent to the effectiveness of this Amendment and each and every provision
hereof:

 

(a)                                  The representations
and warranties in the Loan Agreement and the other Loan Documents shall be true
and correct in all respects on and as of the date hereof, as though made on
such date (except to the extent that such representations and warranties relate
solely to an earlier date);

 

(b)                                 No Default or Event of
Default shall have occurred and be continuing on the date hereof or as of the
date of the effectiveness of this Amendment; and

 

(c)                                  No injunction, writ,
restraining order, or other order of any nature prohibiting, directly or
indirectly, the consummation of the transactions contemplated herein shall have
been issued and remain in force by any Governmental Authority against Borrower
or the Lender Group.

 

5.                                      CONSTRUCTION.  THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF CALIFORNIA.

 

6.                                      ENTIRE
AMENDMENT; EFFECT OF AMENDMENT. 
This Amendment, and terms and provisions hereof, constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes any and all prior or contemporaneous amendments relating to the
subject matter hereof Except for the amendments to the Loan Agreement expressly
set forth in Section 2 hereof, the Loan Agreement and other Loan
Documents shall remain unchanged and in full force and effect. To the extent
any terms or provisions of this Amendment conflict with those of the Loan
Agreement or other Loan Documents, the terms and provisions of this Amendment
shall control. This Amendment is a Loan Document.

 

6

 

7.                                      COUNTERPARTS;
TELEFACSIMILE EXECUTION.  This
Amendment may be executed in any number of counterparts, all of which taken
together shall constitute one and the same instrument and any of the parties
hereto may execute this Amendment by signing any such counterpart. Delivery of
an executed counterpart of this Amendment by telefacsimile shall be equally as
effective as delivery of an original executed counterpart of this Amendment.
Any party delivering an executed counterpart of this Amendment by telefacsimile
also shall deliver an original executed counterpart of this Amendment, but the failure
to deliver an original executed counterpart shall not affect the validity,
enforceability, and binding effect of this Amendment.

 

8.                                      MISCELLANEOUS.

 

(a)                                  Upon the
effectiveness of this Amendment, each reference in the Loan Agreement to “this
Agreement”, “hereunder”, “herein”, “hereof” or words of like import referring
to the Loan Agreement shall mean and refer to the Loan Agreement as amended by
this Amendment.

 

(b)                                 Upon the effectiveness
of this Amendment, each reference in the Loan Documents to the “Loan
Agreement”, “thereunder”, “therein”, “thereof” or words of like import
referring to the Loan Agreement shall mean and refer to the Loan Agreement as
amended by this Amendment.

 

[Signature
page follows]

 

7

 

IN WITNESS
WHEREOF, the parties have caused this Amendment to be executed and delivered as
of the date first written above.

 

	
   

  	
  WELLS FARGO FOOTHILL, INC.,

  
	
   

  	
  a California corporation, as Agent and as a
  Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Thomas P. Shughrue

  	
   

  
	
   

  	
  Name:

  	
  Thomas P. Shughrue

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
	
   

  	
   

  
	
   

  	
  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/ Jeff Zellmer

  	
   

  
	
   

  	
  Name:

  	
  Jeff Zellmer

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
									

 

8

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