Document:

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:

 

1

 

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

 

2

 

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

 

3

 

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

 

4

 

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

 

5

 

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:

 

6

 

(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

 

7

 

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

 

8

 

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,

 

9

 

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

  

 

10

 

	
  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

 

11

 

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

 

12

 

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:

  	
   

  
						

 

15Exhibit
4.5

 

SECURITY AGREEMENT

 

This SECURITY AGREEMENT, dated as of
December [    ], 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

 

2

 

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 9-318(4) of the Code or
Section 9-408 of Article 9 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

 

3

 

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 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.

 

4

 

“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.

 

“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

 

5

 

amended, amended and restated, supplemented, replaced or otherwise
modified from time to time, in accordance with the terms 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.

 

“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 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.

 

6

 

“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.

 

7

 

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:

 

8

 

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 the Trustee has received notice of full and
indefeasible payment of all Senior Priority Debt, and after 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

 

9

 

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.

 

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

 

10

 

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;

 

(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

 

11

 

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;

 

12

 

(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;

 

(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

 

13

 

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 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.

 

14

 

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

 

15

 

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.]

 

16

 

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

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  U.S. BANK NATIONAL

  ASSOCIATION,

  
	
   

  	
  as Trustee

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  

 

17

 

Exhibit
A

 

INTELLECTUAL
PROPERTY SECURITY AGREEMENT

 

This Intellectual Property Security Agreement
(the “Agreement”),
is made as of December      , 2003, by and among
U.S. BANK NATIONAL ASSOCIATION, as trustee for the Noteholders (“Trustee”),
SILICON GRAPHICS, INC., a Delaware corporation (the “Grantor”), with reference to
the following facts:

 

A.           The Grantor has adopted
certain trademarks and service marks, as identified herein and in
Schedule A annexed hereto and made a part hereof, and

 

B.             The Grantor is the
owner and holder of certain patents, patent applications, inventions and trade
secret information, as identified herein and in Schedule B annexed hereto
and made a part hereof.

 

C.             The Grantor is the
owner of the copyrights in certain works of authorship, as described herein and
in Schedule C annexed hereto and made a part hereof.

 

WHEREAS, the Grantor and U.S. Bank National
Association, as Trustee are parties to (1) certain  indentures, pursuant to which the Grantor is issuing notes in an
aggregate principal amount of up to $230,591,000 (the “Notes”) and (2) a security
agreement (the “Security Agreement”) dated as of the date hereof, pursuant to
which Grantor has granted the Trustee a security interest in certain
collateral, including the intellectual property collateral set forth in
Schedules A, B and C hereto (the “ IP Collateral”);

 

WHEREAS, pursuant to the Security Agreement,
the Grantor is required to execute and deliver this Agreement;

 

WHEREAS, the Grantor, the Trustee and the
Wells Fargo Foothill, Inc. have entered into an Intercreditor Agreement, dated
as of the date hereof setting forth the relative priorities of the parties’
security interests in the IP Collateral and other collateral in which the
Trustee has been granted a security interest pursuant to the Security
Agreement; and

 

WHEREAS, pursuant to the terms of the
Indentures and the Security Agreement 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 IP 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:

 

D.            This Agreement is the
Intellectual Property Security Agreement as defined and described in the
Security Agreement.  Capitalized terms
used herein and not otherwise defined shall have the meaning set forth in the
Security Agreement.

 

A-1

 

NOW, THEREFORE, IT IS AGREED that, for and in
consideration of the premises set forth above, the terms and conditions
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, and as collateral security for
the prompt payment in full when due (whether at stated maturity, by
acceleration or otherwise) of the Notes, the Grantor hereby grants to Trustee,
subject to the Intercreditor Agreement and any other agreement or instrument
evidencing Senior Priority Debt, for the benefit of the Noteholders, a
continuing security interest in all of the Grantor’s right, title and interest
in and to the IP Collateral, except for the Excluded Intellectual Property
described in Schedule D annexed hereto and made a part hereof, including:

 

(a)                        all of the Grantor’s customer
lists and other records of the Grantor relating to the distribution of products
bearing, constituting or incorporating the Trademarks, Patent Collateral and
Copyrights; and

 

(b)                       the proceeds and products,
whether tangible or intangible, of any of the foregoing, including (w) proceeds
from any claims by the Grantor against third parties for past, present or
future infringement of the Trademarks, Patent Collateral or Copyrights and any
royalties from licenses to third parties of the Trademarks, Patent Collateral
or Copyrights, (x) proceeds of insurance covering any or all of the foregoing,
and (y) any and all money, deposit accounts, or other tangible or intangible
property, solely to the extent, in the case of each of the foregoing clauses
(w), (x) and (y), resulting from the sale, exchange, collection, or other
disposition of any of the foregoing, or any portion thereof or interest
therein, and the proceeds thereof; provided, however, that the IP 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 9318(4) of the Code or, from and after the effective
date thereof, Section 9408 of the revised Article 9 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.

 

1.               The Grantor hereby
represents, warrants, covenants and agrees as follows, except with respect to
the Excluded Intellectual Property:

 

(a)                        The Grantor will promptly
perform all acts and execute all documents, including, without limitation,
grants of security in forms acceptable to Trustee and suitable for recording
with (i) the United States Patent and Trademark Office and the United States
Register of Copyrights, and (ii) the appropriate offices and agencies of
foreign jurisdictions reasonably requested by the Trustee at any time to
evidence, perfect, maintain, record or enforce Noteholders’ security interest
in the IP Collateral or otherwise in furtherance of the provisions of this
Agreement.  The Grantor hereby
authorizes the Trustee to execute and file one or

 

A-2

 

more financing statements (and any similar
documents) or copies thereof or of this Agreement with respect to the IP
Collateral signed only by Trustee (with a copy sent to the Grantor).

 

(b)                       In the event that either the
Grantor, either itself or through any subsidiary, affiliate, trustee, employee,
licensee or designee, shall file an application for the registration of any
trademark with the United States Patent and Trademark Office, or any similar
office of the United States or in any office of the Secretary of State (or
equivalent) of any state thereof, or for the registration of any copyright with
the United States Register of Copyrights, or for the registration of any
Trademark or Copyright in any similar office or agency of any country or
political subdivision thereof throughout the world, or shall obtain
registration of any Trademark or Copyright previously applied for, or shall
adopt, acquire or obtain rights to any new trademark, or work for which a
copyright application has been or is expected to be filed, the Grantor shall
(i) inform the Trustee of any such event or action in reports which the Grantor
is required to deliver to Trustee pursuant to the Security Agreement and, (ii)
execute and deliver any and all assignments, agreements, instruments, documents
and papers as are necessary or appropriate or as the Trustee may reasonably request
to evidence the Noteholders’ security interest in such Trademark, or Copyright
and the goodwill and general intangibles of the Grantor’s relating thereto or
represented thereby.  The Grantor hereby
constitutes the Trustee, or its Trustee, its attorney-in-fact to execute and
file all such writings for the foregoing purposes, all acts of such attorney
being hereby ratified and confirmed; such power being coupled with an interest
is irrevocable until the Notes are paid in full.  The Grantor authorizes the amendment of the schedules hereto to
include any future Trademark, or Copyright registrations or applications which
may be acquired or made by the Grantor.

 

2.               Upon the occurrence
and during the continuance of an Event of Default (as defined in the Indentures),
the Trustee may, subject to the Intercreditor Agreement and except with respect
to the Excluded Intellectual Property and except to the extent otherwise
expressly provided or required below, do any one or more of the following, all
of which are authorized by the Grantor, in addition to all other rights and
remedies provided for in the Security Agreement, all such rights and remedies
being cumulative, not exclusive, and enforceable alternatively, successively or
concurrently, without (except as provided herein or in the Security Agreement)
notice to, or consent by the Grantor:

 

(a)                        Trustee may (without assuming
any obligations or liability thereunder), at any time, enforce (and shall have
the exclusive right to enforce) against any licensee or sublicensee all rights
and remedies of the Grantor in, to and under any one or more license agreements
with respect to the IP Collateral, and take or refrain from taking any action
under any thereof, and the Grantor hereby releases Noteholders from, and agrees
to hold the Noteholders free and harmless from and against any claims arising
out of, any action taken or omitted to be taken with respect to any such
license agreement;

 

A-3

 

(b)                       The Trustee, for the benefit of
the Noteholders, may, at any time and from time to time, upon ten (10) days’
prior notice to the Grantor, assign, sell, or otherwise dispose of the IP
Collateral or any of it, either with or without special or other conditions or
stipulations, with power to buy the IP Collateral or any part of it, and do all
other acts and things for completing the assignment, sale or disposition which
Trustee shall, in its sole discretion, deem appropriate or proper;

 

(c)                        In addition to the foregoing,
in order to implement the assignment, sale, license or other disposal of any of
the IP Collateral pursuant to subparagraphs 2(b) hereof, the Trustee may, at
any time, pursuant to the authority granted in the Powers of Attorney described
in paragraph 3 hereof (such authority becoming effective upon an Event of
Default), execute and deliver on behalf of the Grantor one or more instruments
of assignment sale, license or other disposition of the IP Collateral.  The Grantor agrees to pay when due all
reasonable costs incurred in any such transfer of the IP Collateral, including
any taxes, fees and reasonable attorneys’ fees.  The Trustee may apply the proceeds actually received from any
such license, assignment, sale or other disposition in accordance with
paragraph (d) of this Section 2; and the Grantor shall remain liable and
will pay the Trustee on demand any deficiency remaining, together with interest
thereon at a rate equal to the rate then payable on the Notes and the balance
of any expenses unpaid.  Nothing herein
contained shall be construed as requiring the Trustee to take any such action
at any time; and

 

(d)                       Except as otherwise herein
expressly provided, the proceeds of any collection, sale or other realization
of all or any part of the IP Collateral pursuant hereto, shall be applied to
the Notes until the Notes shall have been paid in full in cash.  The application of proceeds hereunder to the
Notes shall be made by the Trustee in accordance with the provisions of
Article 6 of the Indentures.

 

3.               The following
documents will be concurrently executed and delivered to the Trustee as
conditions precedent to the execution and delivery of this Agreement:

 

(a)                        Three original Powers of
Attorney,  in the form of Exhibit A,
Exhibit B, and Exhibit C hereto, respectively, executed by the Grantor, for the
implementation of any assignment, sale or other disposition of the Trademarks,
Patent Collateral or Copyrights, respectively, pursuant to paragraphs 2(a) and
(b) hereof;

 

4.               No provision hereof
shall be modified, altered or limited except by a written instrument expressly
referring to this Agreement and executed by the party to be charged.  This Agreement shall be binding upon the
successors, permitted assigns or other legal representatives of the Grantor,
and shall, together with the rights and remedies of the Noteholders hereunder
inure to the benefit of the Noteholders, its successors, permitted assigns or
other legal representatives.  This
Agreement and the IP Collateral, except for the Excluded Intellectual Property,
shall be governed in all respects by the laws of the United States and the laws
of the State of New York.  If any term
of this

 

A-4

 

Agreement shall be held to be invalid,
illegal or unenforceable, the validity of all other terms hereof shall in no
way be affected thereby.

 

5.               This Agreement
shall continue to be effective and shall be reinstated in the event that at any
time after the Notes have been paid in full, any payment of the Notes is
rescinded or must otherwise be restored or returned by the Noteholders.

 

6.               Upon payment and
performance in full in cash by the Grantor of all of the obligations with
respect to the Notes under the Indentures (other than indemnification
obligations for which no claim has been made) and upon the termination of the
Indentures, this Agreement shall terminate and the Trustee shall execute, file
and record in each office in which any financing statement or assignment
relative to the IP Collateral, or any part thereof, shall have been filed, a
termination statement, assignment or other appropriate instrument releasing its
interest therein, all without recourse to or warranty by the Noteholders and at
the sole cost and expense of the Grantor.

 

7.               This Agreement 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 Agreement by signing any such counterpart.

 

IN WITNESS WHEREOF, the undersigned have
caused this Agreement to be duly executed and delivered on the day and year
first above written.

 

	
  SILICON GRAPHICS, INC.,

  	
   

  
	
  a Delaware corporation

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Its:

  	
  Vice President and Treasurer

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  US BANK NATIONAL ASSOCIATION,

  	
   

  
	
  a California corporation, as Trustee

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
   

  
	
  Its:

  	
   

  
				

 

A-5

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