Document:

Exhibit
10.20

 

PLEDGE AGREEMENT

 

                This Pledge Agreement (“Agreement”) is made and
entered into as of this 27th day of September, 2000 (“Effective Date”) by and
between Silicon Graphics, Inc., a Delaware corporation (“SGI”), and WARREN C.
PRATT (“Pledgor”).

 

                RECITALS

 

                A.            SGI
has agreed to make a loan (“Loan”) to Pledgor in the original principal amount
of Two Hundred Fifty Thousand Dollars and 00/100 ($250,000.00) pursuant to the
terms of that certain promissory note of even date herewith.

 

                B.            SGI
has granted or may hereafter grant to Pledgor certain stock options for the
purchase of shares of common stock of SGI pursuant to the terms and conditions
of that certain Incentive Stock Option Grant Agreement and/or Non-qualified
Stock Option Agreement, as the same may be amended from time to time
(collectively, “Option Agreement”).

 

                C.            Pledgor
now desires to pledge all of its right, title and interest in and to the
Pledged Collateral (as defined below) to SGI upon the terms and conditions set
forth hereinbelow.

 

                NOW, THEREFORE, Pledgor hereby covenants and agrees
as follows:

 

                1.             Pledge
of Collateral.  Pledgor hereby
pledges, assigns, grants and delivers to SGI a security interest in all of
Pledgor’s right, title and interest in and to the Option Agreement, all options
and shares of common stock of SGI now or hereafter issued or issuable to
Pledgor thereunder (“Shares”) and all cash and non-cash proceeds and
substitutions thereof (collectively, the “Pledged Collateral”) as security for
the prompt performance of Pledgor’s obligations under the Loan.  Pledgor’s stock options under the Option
Agreement as of the Effective Date are more particularly set forth in Exhibit A
attached hereto.

 

                2.             Pledgor’s
Covenants.  Pledgor hereby
represents, warrants and covenants to SGI as follows:

 

                                (a)           The
Pledged Collateral is free and clear of any security interests, liens,
encumbrances or other interests other than this Agreement.

 

                                (b)           Pledgor
has full power and authority to create a lien on the Pledged Collateral in
favor of SGI and no disability or contractual obligation exists which would
prohibit Pledgor from pledging the Pledged Collateral pursuant to this
Agreement.

 

                                (c)           Pledgor
shall not assign, create or permit to exist any other claim to, lien or
encumbrance upon, or security interest in any of the Pledged Collateral, and 

 

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shall not permit
Pledgor’s rights in the Pledged Collateral to be reached by attachment, levy or
other judicial process.

 

                                (d)           At SGI’s request, Pledgor shall
execute and acknowledge such other documents and instruments which SGI deems
necessary or desirable to evidence, continue or preserve SGI’s security
interest in the Pledged Collateral and/or to otherwise effect any of the terms
of this Agreement.

 

                The foregoing representations, warranties and
covenants shall survive the termination of this Agreement.

 

                3.             Payment
of Proceeds.

 

                                (a) 
With regard to the Balloon Payment Note, fifty percent (50%) of all
monies or other proceeds payable to Pledgor in connection with the sale or
transfer of any Shares shall be applied first to the payment of principal,
accrued interest and other charges then outstanding under the Balloon Note;
provided, however, that if SGI’s employment of Employee shall terminate or
cease for any reason, whether voluntary or involuntary, and whether with or
without cause, or if Pledgor shall be in default hereunder, all monies or other
proceeds payable to Pledgor in connection therewith shall be applied to the
payment of principal, accrued interest and other charges then outstanding under
the Balloon Note.  Upon Pledgor’s
payment to SGI of all principal, accrued interest and other charges under the
Loan, the security interest created under this Agreement shall automatically
terminate, and SGI shall promptly deliver to Pledgor all remaining Shares then
held by SGI.

 

                                (b) 
With respect to the concurrent exercise and disposition of Shares by
“Same Day Sale,” Pledgor shall instruct Pledgor’s stock broker (“Broker”) to
pay directly to SGI from Broker’s account an amount equal to the lesser of (i)
the gross proceeds from the sale of such Shares, less applicable commissions,
to the extent payable by Pledgor pursuant to subparagraph (a) above or (ii) the
amount of principal, accrued interest and other charges then outstanding under
the Loan.  SGI shall have no obligation
to deliver the Shares to Broker unless and until SGI receives written
confirmation from Broker that the foregoing payment shall be promptly made by
Broker to SGI.

 

 

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                                (c) 
With respect to the exercise of Shares by “Cash Exercise,” the exercise
price paid by Pledgor shall be applied to the payment of the exercise price for
such Shares, the applicable shares of SGI’s common stock shall be issued and
deemed delivered to Pledgor, and SGI shall retain possession of such shares
until either (i) all principal, accrued interest and other charges under the
Loan have been paid in full, in which event the security interest under this Agreement
shall terminate as to all of the Shares, or (ii) the applicable proceeds from
the sale of such Shares have been paid to SGI and applied to the payment of
principal, accrued interest and other charges then outstanding under the Loan,
in which event the security interest under this Agreement shall terminate as to
such Shares sold by Pledgor.  If Pledgor
desires to sell any such Shares, Pledgor shall instruct Broker to pay directly
to SGI from Broker’s account an amount equal to the lesser of (i) the sales
price of the Shares, less commissions, to the extent payable by Pledgor
pursuant to subparagraph (a) above or (ii) the amount of principal, accrued
interest and other charges then outstanding under the Loan.  SGI shall have no obligation to deliver the
Shares to Pledgor or Broker unless and until SGI receives written confirmation
from Broker that the foregoing payment shall be promptly made by Broker to SGI.

 

                                (d) 
All instructions required to be submitted by Pledgor to Broker shall be
irrevocable and in writing, with a copy thereof delivered concurrently to
SGI.  All proceeds paid for the Shares
(less commissions) and otherwise payable to SGI hereunder shall be deposited
directly into the account of Broker for payment to SGI.  SGI’s delivery of any Shares to Broker shall
be for the sole purpose of facilitating the sale of such Shares, and SGI’s
security interest therein shall continue until Broker shall have paid to SGI
all applicable sums as required hereinabove.

 

                4.             Events
of Default.  Each of the following
shall constitute an event of default (“Event of Default”) hereunder:

 

                                (a)           The
failure by Pledgor to observe or perform any of the provisions of this
Agreement or to pay any amount due under the Loan, including, without
limitation, the Forgivable Note, and/or this Agreement.

 

                                (b)           The
inaccuracy or breach of any warranty, representation or statement made or
furnished to SGI by or on behalf of Pledgor.

 

                                (c)           The
assignment for the benefit of creditors or the commencement of any proceeding
under any bankruptcy or insolvency law by or against Pledgor.

 

                                (d)           The
seizure or attachment of, or a levy on all or any portion of the Pledged
Collateral.

 

 

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                5.             SGI’s
Remedies Upon Default.

 

                                (a)           Upon
the occurrence of an Event of Default, SGI shall have the right to:

 

                                                (i)            Declare all of the obligations and
liabilities of Pledgor under the Loan immediately due and payable.

 

                                                (ii)           Repurchase all or part of the Shares
from Pledgor for a purchase price equal to the lesser of (i) the fair market
value of such Shares as of the date of the Event of Default, or (ii) the fair
market value of such Shares as of the date of repurchase.  The fair market value of the Shares, as of
any date, shall be the closing price for a share of SGI’s common stock as
reported in The
Wall Street Journal or a similar readily available public
source.  If no sales of Shares were made
on such date, the fair market value of the Shares shall be determined using the
closing price of a Share as reported for the preceding day on which a sale of
Shares occurred.  Notwithstanding the
foregoing, the fair market value of any stock options comprising Shares shall
be determined using the fair market value of SGI’s common stock as of the
applicable date set forth above less the applicable exercise price under such
stock options and any costs incurred by SGI pursuant to subparagraph (b) below.

 

                                                (iii)          Exercise any and all rights of a
secured party under the Uniform Commercial Code of the State of California
which SGI, in its sole judgment,  deems
necessary or appropriate, including without limitation the right to sell or
otherwise dispose of all or any part of the Pledged Collateral.

 

                                (b)           After
the repurchase, sale or transfer of any of the Pledged Collateral, SGI may
deduct all reasonable attorneys’ fees, brokerage commissions and other expenses
incurred by SGI in preserving, collecting, selling, repurchasing and/or
delivering the Pledged Collateral and for enforcing its rights with respect to
the Loan and this Agreement, and shall apply the residue of the proceeds to, or
hold as a reserve against, the Loan in such manner as SGI in its reasonable
discretion shall determine, and shall pay the balance, if any, to Pledgor.

 

                6              SGI’s
Duties.  SGI shall have no duty or
liability for the Pledged Collateral except for the exercise of reasonable care
of the Pledged Collateral while in the possession of SGI.

 

                7.             General
Provisions.

 

                                (a)           Successors
and Assigns.  This Agreement shall
bind and insure to the benefit of the respective heirs, successors and
permitted assigns of each of the parties; provided, however, that neither this
Agreement nor any rights hereunder may be assigned by Pledgor without SGI’s
prior written consent, which consent may be granted or withheld in SGI’s sole
discretion.

 

                                (b)           Severability
of Provisions.  Each provision of
this Agreement shall 

 

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be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision. 
In case one or more of the provisions contained in this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, the
invalidity, illegality or unenforceability of that provision shall not affect
any other provision of this Agreement.

 

                                (c)           Joint
and Several Obligations.  If Pledgor
consists of more than one person, the obligations of Pledgor shall be the joint
and several obligations of all such persons. 
When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and the
masculine shall include the feminine and neuter and vice versa.

 

                                (d)           No
Waiver.  No delay or omission by SGI
in exercising any right or remedy arising from any default of Pledgor shall be
construed as a waiver of such default or as an acquiescence therein, nor shall
any single or partial exercise thereof preclude any further exercise
thereof.  SGI may, at its option, waive
any of the conditions herein and any such waiver shall not be deemed the waiver
of SGI’s rights hereunder.  The waiver
of any Event of Default shall not be construed as any waiver of or acquiescence
in or consent to any preceding or subsequent Event of Default by Pledgor
hereunder.

 

                                (e)           Collection
Costs.  Pledgor shall promptly pay
SGI all reasonable attorneys’ fees and all costs and other expenses paid or
incurred by SGI in enforcing or exercising its rights or remedies created by,
connected with or provided in this Agreement, and payment thereof shall be
secured by the Pledged Collateral.

 

                IN WITNESS WHEREOF, this Pledge Agreement has been
executed as of the Effective Date.

 

 

	
   

  	
  PLEDGOR:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/  Warren
  C. Pratt

  	
   

  
	
   

  	
  WARREN C. PRATT

  	
   

  

 

 

5Exhibit 10.21

 

AMENDED AND RESTATED PROMISSORY NOTE

SECURED BY DEED OF TRUST

(FORGIVABLE LOAN)

Amended as of April 25,
2001

 

 

	
  $500,000.00

  	
   

  	
  Mountain View, California

  
	
   

  	
   

  	
  September 27, 2000

  

 

For
value received, the undersigned, Warren C. Pratt (“Employee”) and Elizabeth
Pratt (collectively, “Borrower”) jointly and severally promise to pay to
SILICON GRAPHICS, INC., a Delaware corporation (“SGI”), or order, at 1600
Amphitheatre Parkway, Mountain View, California 94039-7311, or such other place
as SGI may designate in writing from time to time, in lawful money of the
United States of America, without abatement, demand, deduction, setoff or
counterclaim (except as provided in Paragraph 5), the principal sum of Five
Hundred Thousand and  00/100 Dollars
($500,000.00).  This Promissory Note
shall bear no interest, except as provided in Paragraph 4 below.

 

1.             Payments.  All outstanding principal and accrued
interest under this Promissory Note shall be due and payable on the Due Date
(as defined below); provided, however, that so long as Employee remains
employed by SGI on a regular and full-time basis, Borrower’s obligation to pay
principal and interest under this Promissory Note shall be forgiven as follows:
(i) principal in the amount of Eight Thousand Three Hundred Thirty-Three and
33/100 ($8,333.33) per month shall be forgiven on October 22, 2000 and on the
twenty-second (22nd) day of each of the fifty-eight  (58) calendar months
thereafter, and (ii) principal in the amount of Eight Thousand Three Hundred
Thirty-Three and 53/100 ($8,333.53) shall be forgiven on September 22,
2005.  Every payment received by SGI
with respect to this Promissory Note shall be applied as follows: first, to the
payment of any late charges; second, to the payment of accrued but unpaid interest;
and, third, to the payment of the outstanding principal balance of this
Promissory Note.

 

2.             Due
Date.  The “Due Date” shall be the
earlier of (i) the date of termination or cessation of SGI’s employment of
Employee, involuntarily with cause, or (ii) September 22, 2005.  The loan will be forgiven in full
if employment is terminated prior to the end of the five-year term (i) by SGI
other than for Cause (ii) by Employee for Good Reason or (iii) as a result of
death or Disability.  Defined terms not
otherwise set forth in this promissory note will have the meaning given to
those terms in our letter agreement dated April 25, 2001 relating to
forgiveable loan advances in an aggregate amount of up to $5,000,000 (the “2001
Letter Agreement”).

 

3.             Purpose
of Loan.  Borrower acknowledges and
agrees that SGI is making this loan to Borrower for the express purpose of
facilitating Employee’s relocation to the area of SGI’s corporate headquarters
located in Mountain View, California. 
Borrower represents and warrants to SGI that Borrower will use all
proceeds of this Promissory Note for purposes of purchasing 

 

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and improving Borrower’s new principal residence
located at (address omitted)  (“New Residence”).

 

4.             Default.  In the event that Borrower fails to timely
pay any amount or perform any other obligation of Borrower under this
Promissory Note, the Deed of Trust (as defined below), or any other agreement
or instrument now or hereafter executed by Borrower to evidence or secure the
performance of Borrower’s obligations thereunder, SGI may, at its option,
declare the entire principal sum under this Promissory Note immediately due and
payable.  In the event that SGI
exercises this option, or the principal balance of this Promissory Note
otherwise becomes due and payable, all principal then outstanding under this
Promissory Note shall thereafter bear simple interest at the lesser of ten
percent (10%) per annum or the maximum rate permitted by law.  Failure to exercise this option shall not
constitute a waiver of SGI’s right to exercise the same with respect to any
prior or subsequent defaults.

 

5.             Right
to Offset.  Borrower will have the
right to deduct or offset (1) amounts due but not yet paid by SGI to Borrower
under the 2001 Letter Agreement or (2) to the extent not paid by SGI when due,
the amount of the tax gross-up to be provided by SGI under paragraph 9 of this
Promissory Note, from or against amounts payable by Borrower to SGI under this
Promissory Note.

 

6.             Security.  Borrower’s obligations under this Promissory
Note are secured by that certain Deed of Trust with Assignment of Rents of even
date herewith (“Deed of Trust”) encumbering the New Residence, as more
particularly described in the Deed of Trust.

 

7.             Due
on Sale.  The Deed of Trust provides
as follows:

 

If the trustor shall sell, convey or alienate said
property, or any part thereof, or any interest therein, or shall be divested of
his title or any interest therein in any manner or way, whether voluntarily or
involuntarily, without the written consent of the beneficiary being first had
and obtained, beneficiary shall have the right, at its option, except as
prohibited by law, to declare any indebtedness or obligations secured hereby,
irrespective of the maturity date specified in any not evidencing the same,
immediately due and payable.

 

8.             Attorneys’
Fees.  In the event any legal action
or proceeding is required to enforce or interpret any provision of this
Promissory Note, Borrower shall pay to SGI upon demand all costs of collection
and reasonable attorneys’ fees incurred by SGI in connection therewith.

 

9.             Tax
Liability. The income tax liability to Borrower resulting from this
Promissory Note (including, imputed interest or the forgiveness of principal and
interest hereunder) shall be offset by the tax gross-up provided by SGI.  Borrower agrees that the non-interest
bearing nature of this Promissory Note is personal to Borrower and
non-transferable, and is conditioned upon the future performance of substantial

 

2

 

services by Employee.  Borrower
certifies to SGI that Borrower reasonably expects to itemize deductions for
each year that principal is outstanding under this Promissory Note.

 

10.           Miscellaneous.
 If any provision of this Promissory
Note shall be invalid or unenforceable for any reason, the same shall be
ineffective, but the remainder of this Promissory Note shall not be affected
thereby and shall remain in full force and effect.  Time is of the essence of each and every obligation of Borrower
and SGI hereunder.  Presentment and
demand for payment, notice of dishonor, protest and notice of protest are
hereby waived by Borrower and SGI with respect to amounts owed by each of them
respectively under the provisions of this Note.  If the due date for any payment under this Promissory Note falls
on a Saturday, Sunday or legal holiday, then such due date shall be extended to
the next business day.  None of the
terms or provisions of this Promissory Note may be waived, altered, modified or
amended except by a writing signed by SGI and Borrower.  The provisions of this Promissory Note shall
be governed by California law.  The covenants,
terms and conditions hereof shall bind the heirs, successors and assigns of
Borrower and shall inure to the benefit of the successors and assigns of SGI.

 

IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of
the date first set forth above.

 

 

	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  WARREN
  C. PRATT

  
	
   

  	
  WARREN C. PRATT

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/  ELIZABETH
  PRATT

  
	
   

  	
  ELIZABETH PRATT

  

 

Amendment Agreed and Accepted by SGI:

 

 

	
  By:

  	
  /s/  SANDRA
  ESCHER

  	
   

  
	
  Sandra Escher

  	
   

  	
   

  
	
  Senior Vice President and General Counsel

  	
   

  	
   

  
				

 

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