This PLEDGE AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time including all schedules thereto, this “Agreement”), dated as of October 17, 2006, is entered into by and among SILICON GRAPHICS, INC., a Delaware corporation (the “Parent”), each of the Parent’s Subsidiaries signatory hereto (together with the Parent, each a “Pledgor” and collectively, jointly and severally, the “Pledgors”) and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (“GE”), in its capacity as the Collateral Agent under the Credit Agreement (as defined below), with reference to the following:
WHEREAS, the Pledgors beneficially own the Pledged Collateral (as defined below);
WHEREAS, the Parent, Silicon Graphics Federal, Inc. and Silicon Graphics World Trade Corporation (each a ”Borrower” and collectively, the “Borrowers”), the other Credit Parties party thereto from time to time as guarantors, the Lenders party thereto from time to time, Morgan Stanley Senior Funding, Inc., as Administrative Agent for the Lenders, and as Book Runner and Lead Arranger, and GE, as Revolving Agent, Syndication Agent and Collateral Agent, have entered into that certain Senior Secured Credit Agreement, dated as of the date hereof (as it may be amended, restated, modified, or supplemented or extended from time to time, including all exhibits and schedules thereto, or otherwise modified, the “Credit Agreement”), providing for a senior secured credit facility to the Borrowers, all as contemplated therein; and
WHEREAS, to induce the Lenders under the Credit Agreement and the other Secured Creditors (as defined below) to make the financial accommodations provided to the Borrowers pursuant to the Credit Agreement and the other Loan Documents, each Pledgor has agreed to pledge to the Collateral Agent, for the benefit of the Secured Creditors, all of the Pledged Collateral (as defined below) to secure the Secured Obligations (as defined below), as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants, representations, and warranties set forth herein and for other good and valuable consideration the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Definitions and Construction.
All initially capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed thereto in the Credit Agreement. As used in this Agreement:
“Agreement” shall have the meaning specified therefor in the preamble hereto.
“Borrower” and “Borrowers” shall have the meaning specified therefor in the recitals hereto.
“Capital Stock” means all shares, units, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company, or equivalent entity, whether voting or nonvoting, including general partner partnership interests, limited partner partnership interests, limited liability company membership interests, common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act) in each case whether constituting “general intangibles” or “investment property” or otherwise under (and as defined in) the UCC; provided, however, that Capital Stock shall not include that portion of the voting capital stock of a Controlled Foreign Corporation that would cause the threshold of voting capital stock with respect to such Controlled Foreign Corporation as described in the definition of Pledged Collateral to be violated.
“Chief Executive Office” means, with respect to each Pledgor, the address of the chief executive office of such Pledgor set forth on Schedule B to this Agreement.
“Collateral Agent” means GE in its capacity as Collateral Agent under the Credit Agreement, and any successors or assigns to GE in such capacity.
“Controlled Foreign Corporation” has the meaning set forth in the United States Internal Revenue Code of 1986, as amended from time to time (the “Tax Code”).
“Credit Agreement” shall have the meaning specified therefor in the recitals hereto.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute.
“Future Rights” means: (i) all the Capital Stock (other than the Pledged Interests existing on the date hereof) of the Issuers, and all securities convertible or exchangeable into, and all warrants, options, or other rights to purchase, the Capital Stock of the Issuers; (ii) to the extent of each Pledgor’s interest therein, all shares of, all securities convertible or exchangeable into, and all warrants, options, or other rights to purchase the Capital Stock of each Issuer; and (iii) the certificates or instruments representing such additional Capital Stock, convertible or exchangeable securities, warrants, and other rights and all dividends, cash, options, warrants, rights, instruments, and other property or proceeds from time to time received, receivable, or otherwise distributed in respect of or in exchange for any or all of such Capital Stock.
“Governing Documents” shall have the meaning set forth in the Credit Agreement.
“Hedging Agreement” shall have the meaning set forth in the Credit Agreement.
“Holder” shall have the meaning specified therefor in Section 3(c) hereto.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other federal, state or foreign bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, liquidation or other similar relief.
“Issuer” and “Issuers” shall mean each of the Persons identified as an Issuer on Schedule A attached hereto (or any addendum thereto), and any successors thereto, whether by merger or otherwise.
“Lender” means individually, and “Lenders” means collectively, each of the Participating Lenders (together with their respective successors and assigns).
“Loan Documents” shall have the meaning set forth in the Credit Agreement.
“Pledged Collateral” shall mean the Pledged Interests, the Future Rights, and the Proceeds, collectively. Anything contained in this Agreement to the contrary notwithstanding, the terms “Pledged Collateral” and “Pledged Interests” shall not include any of the voting capital stock of Silicon Graphics Biomedical (1995) Ltd. (“SGI Biomedical”) or Silicon Graphics Computer Systems Limited (“SGCS”), each an entity organized under the laws of Israel or more than 65% of the Capital Stock of any Subsidiary that is a Controlled Foreign Corporation; provided that immediately upon the amendment of the Tax Code to allow the pledge of a greater percentage of the voting power of capital stock in a Controlled Foreign Corporation without adverse tax consequences to the Pledgor owning such voting capital stock, the Pledged Collateral shall include, and the security interest granted by each Pledgor shall attach to, such greater percentage of capital stock of each Controlled Foreign Corporation owned by such Pledgor; provided, however, that, in no event shall the foregoing be construed to exclude the Proceeds of all capital stock of a Controlled Foreign Corporation from the security interest created by this Agreement.
“Pledged Interests” means all of the Capital Stock in which the Pledgors have any right, title and interest, or any of them, including those identified as Pledged Interests on Schedule A attached hereto (or any addendum thereto).
“Pledgor” and “Pledgors” shall have the respective meanings specified therefor in the preamble hereto.
“Proceeds” means all proceeds (and all proceeds of proceeds) of the Pledged Interests and Future Rights including all: (i) rights, benefits, distributions, premiums, profits, dividends, interest, cash, instruments, documents of title, accounts, contract rights, inventory, equipment, general intangibles, deposit accounts, chattel paper, negotiable collateral, supporting
obligations and other property from time to time received, receivable, or otherwise distributed in respect of or in exchange for, or as a replacement of or a substitution for, any of the Pledged Interests, Future Rights, or proceeds thereof (including any cash, Capital Stock, or other securities or instruments issued after any recapitalization, readjustment, reclassification, merger or consolidation with respect to the Issuer and any security entitlements, as defined in the UCC, with respect thereto); (ii) all “proceeds” (as that term is defined in Section 9-102(a)(64) of the UCC) of Collateral; (iii) payments under any policy of insurance and proceeds of any insurance (excluding directors and officers insurance), indemnity, warranty, or guaranty (including guaranties of delivery) payable from time to time with respect to any of the Pledged Interests, Future Rights, or proceeds thereof; (iv) payments (in any form whatsoever) made or due and payable to Pledgor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Pledged Interests, Future Rights, or proceeds thereof; and (v) other amounts from time to time paid or payable under or in connection with any of the Pledged Interests, Future Rights, or proceeds thereof.
“Secured Creditors” shall have the meaning set forth in the Security Agreement.
“Secured Obligations” means all (i) Obligations and (ii) all liabilities, obligations, or undertakings owing by any Pledgor to any of the Secured Creditors of any kind or description arising out of or outstanding under, advanced or issued pursuant to, or evidenced by the Credit Agreement, this Agreement, or any of the other Loan Documents, in each case irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, voluntary or involuntary, whether now existing or hereafter arising, and including all interest, indemnities and any and all costs, fees (including attorneys’ fees), and expenses and any other amounts (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, whether or not allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding) which such Pledgor is required to pay in connection with any of the foregoing, whether compelled to do so by law, or otherwise, including (A) any and all reasonable sums advanced by any Secured Creditor in order to preserve its security interest in the Pledged Collateral or upon the occurrence and during the continuance of an Event of Default, preserve the Pledged Collateral, and (B) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations, or liabilities of such Pledgor referred to above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of the Collateral Agent of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Pledged Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with its reasonable attorneys’ fees and court costs.