Document:

Exhibit 10.5

 

DESCRIPTION OF
EXECUTIVE INCENTIVE PLAN 

AND SUMMARY FORMS OF NOTICE

 

Date:                                          

To:                                                    

From:                                        

Re:                               Executive
Incentive Plan for FY     

 

The Board of Directors has approved our Executive Incentive Plan for FY
      . 
Your annual target bonus under this plan is      %
of your annual base salary.  The
provisions of the plan are listed below:

 

• Payout
requires achievement of both plan revenue and operating profit for the Company.

• We must
also have a positive operating profit for payout.

• This year
we will divide the plan into both a quarterly and an annual plan (both based on
the above criteria).

• 50% of
your target incentive will be for the quarterly plan (i.e., 1/8 per quarter) and
50% of your target incentive will be for the annual plan.

 

 

Date:                                          

To:                                                    

From:                                        

Re:                               Your
FY      Compensation Plan

 

Attached is your compensation plan for FY     .  The Board of Directors recently approved this
in the           
meeting.  In addition, you are eligible
to participate in the Corporate Executive Incentive plan with a target bonus of
     % of your annual base salary.  The criteria for the corporate plan are as
follows:

 

• Measurement
will be on an annual basis.

• Payout
requires achievement of both annual revenue and operating profit plan.

• We must
have a positive operating profit for payout.

 

2EXHIBIT 10.6

 

Description
of Sales Executive Compensation Plan

And
Summary Forms of Notice

 

[Name]

 

	
  Annual
  Target Compensation Mix

  

 

Base
Salary:                                                                                           

Target Incentive (TI):                                                              % of Base Salary

On Target Earnings (OTE):                                                                

 

	
  OTE
  Quarterly Plan Components

  

 

I. Quarterly Geographic (Products & Service) Revenue Bonus:

•                  Quarterly
Revenue Bonus equals      % of
TI (     % of TI each quarter).

•                  Paid quarterly
based on performance against quarterly revenue plan.

•                  Quarterly bonus
payment per Table I, Schedule A

•                  If
both the Quarterly Revenue and the Quarterly Geographic Contribution Margin
(dollar) plans are met or exceeded (i.e. achievement on both is >100%) in
the same quarter, payment for the revenue bonus will be paid on a higher
schedule.  (Table I,
Schedule B).

 

II. Quarterly Geographic Contribution Margin:

•                  The Quarterly
Geographic Contribution Margin represents      %
of TI (     % TI each quarter).

•                  Paid quarterly
based on performance against Quarterly Geographic Contribution Margin Plan.

•                  Quarterly bonus
payment per Table II.

•                  Measurement is
based on Geographic Contribution Margin dollars.

 

 

Approved by:                                                           Date:                                                       

 

Definitions:

 

Base Salary: The
non-variable portion of total on-target earnings (OTE).

Target Incentive (TI):
Total variable amount an Executive would receive by meeting his/her targets.

On-Target-Earnings
(OTE): Total cash paid to an Executive for meeting
specified individual targets.

 

	
  TABLE I:

  Quarterly Revenue Bonus

  Payment Schedules

  	
   

  	
  TABLE II:

  Quarterly Geographic Contribution

  Margin Payment Schedule

  
	
  % Achieved

  	
   

  	
  Schedule A

  % of Quarterly

  Revenue

  Bonus Paid

  	
   

  	
  Schedule B

  % of Quarterly

  Revenue Bonus Paid

  When Quarterly

  Contribution Margin

  is Met

  	
   

  	
  % Achieved

  	
   

  	
  % of Quarterly

  Contribution Margin

  Bonus Paid

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Payment
Calculations: For purposes of bonus payment
calculations, actual achievement will be rounded to a whole number using
conventional rounding (i.e. .01 - .49 will be rounded DOWN .5 - .99 will be
rounded UP)

 

 

FY ‘05
Executive Compensation Plan

 

[Name]

 

	
  Annual
  Target Compensation Mix

  

 

Base
Salary:                                                                                        

Target Incentive (TI):                                                                              %
of Base Salary

 

On Target Earnings (OTE):                                                             

 

	
  OTE
  Quarterly Plan Components

  

 

I. Quarterly Product Group Revenue Bonus:

•                  Quarterly
Revenue Bonus equals      %
of TI(     % of TI
each quarter).

•                  Paid quarterly
based on performance against quarterly Product Group revenue plan.

•                  Quarterly bonus
payment per Table I

 

II. Quarterly Product Group Gross Margin:

•                  The Quarterly
Product Group Gross Margin represents      %
of TI (     %TI each quarter).

•                  Paid quarterly
based on performance against Quarterly Product Group Gross Margin Plan.

•                  Quarterly bonus
payment per Table II.

 

 

Approved by:                                                 Date:
                                                 

 

Definitions:

 

Base Salary: The
non-variable portion of total on-target earnings (OTE).

Target Incentive (TI):
Total variable amount an Executive would receive by meeting his/her targets.

On-Target-Earnings
(OTE): Total cash paid to an Executive for meeting
specified individual targets.

 

	
  TABLE I:

  Quarterly Revenue Bonus 

  Payment Schedules

  	
   

  	
  TABLE II:

  Quarterly Product Group Gross Margin

  Bonus Payment Schedule

  
	
  % Achieved

  	
   

  	
  % of Quarterly Product Revenue

  Bonus Paid 

  	
   

  	
  % Achieved

  	
   

  	
  % of Quarterly Gross

  Margin Bonus Paid

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Payment
Calculations: For purposes of bonus payment
calculations, actual achievement will be rounded to a whole number using
conventional rounding (i.e. .01 - .49 will be rounded DOWN .5 - .99 will be rounded
UP)

 

 

FY ‘05 Executive Compensation Plan

 

[Name]

 

Annual
Target Compensation Mix

 

Base
Salary:

	
  Target
  Incentive (TI):

  	
  % of Base Salary

  

 

On Target
Earnings (OTE):

 

OTE
Quarterly Plan Components

 

I. Quarterly
Strategic Technology Initiative Contract Bonus (Q1 & Q2 only):

•      Quarterly Contract Bonus equals     % of TI.

•      A one-time payment based on the successful
completion of the contract. Determination of the successful completion will be
made by Finance and Legal.

•      The maximum payout for this opportunity
is    % of TI.

 

II. Quarterly
Strategic Technology Initiative Revenue Bonus (Q3 & Q4 only):

•      Quarterly Revenue Bonus equals      of TI (     % of TI each quarter).

•      Paid quarterly based on performance
against quarterly Strategic Technology Initiative revenue plan.

•      Quarterly bonus payment per Table I

 

III. Quarterly
Strategic Technology Initiative Gross Margin (Q3 & Q4 only):

•      The Quarterly Product Group Gross Margin
Bonus represents     %
of TI (     %TI each quarter).

•      Paid quarterly based on performance
against Quarterly Strategic Technology Initiative Gross Margin Plan.

•      Quarterly bonus payment per Table II.

 

 

	
  Approved by:

  	
  Date:

  

 

Definitions:

 

Base Salary: The non-variable portion
of total on-target earnings (OTE).

Target Incentive (TI):
Total variable amount an Executive would receive by meeting his/her targets.

On-Target-Earnings (OTE):
Total cash paid to an Executive for meeting specified individual targets.

 

	
  TABLE I:

  Quarterly Revenue Bonus

  Payment Schedule

  	
   

  	
  TABLE
  II:

  Quarterly Product Group Gross Margin Bonus

  Payment Schedule

  
	
  % Achieved

  	
   

  	
  % of Quarterly 

  Product Revenue

  Bonus Paid

  	
   

  	
  % Achieved

  	
   

  	
  % of Quarterly

  Gross Margin

  Bonus Paid

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  

 

Payment Calculations:
For purposes of bonus payment calculations, actual achievement will be rounded
to a whole number using conventional rounding (i.e. .01 - .49 will be rounded
DOWN .5 - .99 will be rounded UP)Exhibit 10.8

 

AMENDMENT
NUMBER ELEVEN TO AMENDED AND RESTATED

LOAN AND SECURITY AGREEMENT

 

THIS AMENDMENT NUMBER ELEVEN TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this “Amendment”),
dated as of January 31, 2005, is entered into between and among the lenders
identified on the signature pages hereof (such lenders, together with their
respective successors and assigns, are referred to hereinafter each
individually as a “Lender” and collectively as the “Lenders”), WELLS FARGO FOOTHILL, INC., a California
corporation, as the arranger and administrative agent for the Lenders (“Agent”
and together with the Lenders, collectively, the “Lender Group”), SILICON GRAPHICS, INC., a Delaware
corporation (“Parent”), and each of Parent’s Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with Parent, are referred
to hereinafter each individually as a “Borrower,” and individually and
collectively, jointly and severally, as “Borrowers”), in light of the
following:

 

W I  T  N  E  S  S  E  T  H

 

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

 

WHEREAS, Borrowers have requested that the Lender Group (i) waive
Borrowers’ default resulting from Borrowers’ breach of the covenant set forth
in Section 7.20(a) (Minimum EBITDA) of the Loan Agreement for the three
(3) month period ending on December 24, 2004 (the “Designated Event of
Default”) and (ii) confirm and adjust the minimum cash collateral required
to support L/C’s which expire after the Maturity Date;

 

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

 

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

 

1.             DEFINITIONS.

 

Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to
them in the Loan Agreement, as amended hereby.

 

2.             AMENDMENTS TO LOAN AGREEMENT.

 

Subject to the cash
collateral requirements set forth in Sections 2.4(b) and 3.6 of the Loan
Agreement, the parties hereto acknowledge that: (a) the Agent’s requirements
for cash collateral for each Extended L/C are hereby eliminated, and (b) the
limitations on the Letter of Credit Usage set forth in Section 2.12 of the Loan
Agreement are hereby confirmed.  As used
herein, “Extended L/C” means an L/C which expires on a date after the Maturity
Date.

 

 

3.             WAIVER.

 

The Lender Group grants
to Borrowers a waiver of the Designated Event of Default.  This waiver is not a waiver of any subsequent
Default or Event of Default arising from a breach of Section 7.20(a) of
the Loan Agreement, nor is it a waiver of any other current or future Default
or Event of Default. Lender is not obligated to provide this or any other
waiver of its default rights.

 

4.             CONDITIONS PRECEDENT TO THIS
AMENDMENT.

 

The satisfaction of each
of the following shall constitute conditions precedent to the effectiveness of
this Amendment and each and every provision hereof:

 

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

 

(b)           Except for the Designated Event of
Default, no Default or Event of Default shall have occurred and be continuing
on the date hereof or as of the date of the effectiveness of this Amendment;

 

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

 

(d)           Borrowers pay Agent a non-refundable
fee of $25,000 (the “Waiver Fee”); upon Agent’s receipt of a copy of
this Amendment executed by Borrowers, Agent shall be authorized to charge
Borrowers’ Loan Account the Waiver Fee, which Waiver Fee shall be
non-refundable when charged; provided, however, that if Borrowers extend the
credit facility provided by the Loan Agreement for a period of no less than
three (3) years on terms satisfactory to Borrower and the Lender Group (the “Extension”),
then the Waiver Fee shall be deemed to be a partial payment of the extension
fee charged in connection with the Extension, as and when such extension fee is
due and payable.

 

5.             CONSTRUCTION.

 

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

 

6.             ENTIRE AMENDMENT; EFFECT OF
AMENDMENT.

 

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

 

 

Documents, the terms and provisions of this Amendment
shall control.  This Amendment is a Loan
Document.

 

7.             COUNTERPARTS; TELEFACSIMILE
EXECUTION.

 

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

 

8.             MISCELLANEOUS.

 

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

 

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

 

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

 

 

	
   

  	
  WELLS FARGO FOOTHILL, INC.,

  
	
   

  	
  a California corporation, as
  Agent and as a Lender

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Thomas P. Shaghrue

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Thomas P. Shaghrue

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Vice President

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICON GRAPHICS, INC.,

  
	
   

  	
  a Delaware Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jean Furter

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Jean Furter

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Vice President, Treasurer

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SILICON GRAPHICS FEDERAL, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Jeff Zellmer

  	
   

  
	
   

  	
  Name:

  	
   

  	
  Jeff Zellmer

  	
   

  
	
   

  	
  Title:

  	
   

  	
  Vice President

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