Restructuring Agreement (2006)Full Document 

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RESTRUCTURING AGREEMENT

RESTRUCTURING AGREEMENT (this “Agreement”), dated as of May 7, 2006, by and among Silicon Graphics, Inc., a Delaware corporation (“SGI”), and [Holder] in its capacity as a holder or investment manager or adviser for the beneficial owners (“Holder”) of certain of SGI’s 6.50% Senior Secured Convertible Notes due 2009 (the “Notes”).

WHEREAS, SGI and Holder have engaged in good faith negotiations with the objective of reaching an agreement with regard to a financial restructuring of SGI, including the restructuring of indebtedness outstanding under the Indenture (as defined below);

WHEREAS, SGI and Holder desire to implement a financial restructuring of SGI on the terms and subject to the conditions set forth in the Plan Term Sheet outlining the provisions of a plan of reorganization embodying the terms of such consensual restructuring (the “Plan Term Sheet”) attached hereto as Exhibit A (unless otherwise stated, capitalized terms used but not otherwise defined herein having the respective meanings ascribed to them in the Plan Term Sheet);

WHEREAS, in order to implement such financial restructuring, SGI has agreed, on the terms and subject to the conditions of this Agreement and applicable law, to use its reasonable best efforts to cause a plan of reorganization to be confirmed in connection with one or more cases (collectively, the “Chapter 11 Case”) under chapter 11 of title 11 of the United States Code, 11 U.S.C. §§ 101-1532 (as amended, the “Bankruptcy Code”), incorporating the terms and conditions set forth in the Plan Term Sheet and such other terms and conditions as are otherwise acceptable to Holder in its sole discretion (consummation of such a plan of reorganization in the Chapter 11 Case being the “Financial Restructuring”); and

WHEREAS, to expedite and ensure the implementation of the Financial Restructuring, the undersigned Holder is prepared to commit, on the terms and subject to the conditions of this Agreement and applicable law, if and when solicited to do so, to vote (or, in the case of managed or advised accounts, instruct its custodial agents to vote or, if Holder does not have discretionary authority over such account, recommend to vote) to accept the Joint Reorganization Plan (as defined below) in the Chapter 11 Case.

NOW THEREFORE, in consideration of the promises and the mutual covenants and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, SGI and Holder hereby agree as follows:

1. Agreement to Complete the Financial Restructuring. Subject to the terms and conditions of this Agreement, SGI shall use its reasonable best efforts and shall cause each of the U.S. Subsidiaries (as defined below) to use its reasonable best efforts to effectuate the Financial Restructuring through the Chapter 11 Case, under which SGI shall file a voluntary petition for relief under chapter 11 of the Bankruptcy Code and cause each of its subsidiaries listed on Exhibit B attached hereto (collectively, the “U.S. Subsidiaries”) simultaneously to file voluntary petitions for relief under chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”), and use its reasonable best efforts to cause the Joint Reorganization Plan (as defined below) to be confirmed by the Bankruptcy Court in accordance herewith.


2. Forbearance. Subject to the terms and conditions of this Agreement, for a period commencing on the Agreement Date (as defined below) and ending on the occurrence of an Agreement Termination Event (as defined below) and subject to SGI’s continuing compliance with its obligations to provide adequate protection under the DIP Financing Commitment Letter (as defined below) and the definitive documents in connection with the DIP Financing (as defined below) and the Interim Order (as defined below) and the Final Order (as defined below) and their being no Event of Default under the DIP Financing (as defined below), Holder hereby agrees to forbear from seeking to lift the automatic stay to foreclose on the collateral securing the obligations under the indenture pursuant to which the Notes were issued (the “Indenture”).

3. Voting. Holder agrees that, subject to the conditions that (a) the terms and conditions of the Restructuring Documents (as defined below) implementing the Financial Restructuring shall be consistent with those set forth in the Plan Term Sheet and otherwise acceptable to Holder as provided herein, (b) each of the Restructuring Documents (as defined below) shall be in form and substance acceptable to Holder as provided herein; and (c) no Agreement Termination Event (as defined below) or other termination of this Agreement shall have occurred, Holder shall (i) when properly solicited to do so pursuant to a disclosure statement in compliance with section 1125 of the Bankruptcy Code, vote (or, in the case of managed or advised accounts, instruct its custodial agents to vote or, if Holder does not have discretionary authority over such account, recommend to vote) to accept the Joint Reorganization Plan (as defined below) in the Chapter 11 Case, (ii) support confirmation of the Joint Reorganization Plan (as defined below) in the Chapter 11 Case, (iii) provide to SGI, subject to any limitations contained in section 1125 of the Bankruptcy Code or order of the Bankruptcy Court, a letter to other holders of the Notes in support of the Joint Reorganization Plan (which letter shall be in form and substance satisfactory to Holder in its sole discretion) for inclusion in the solicitation packages for the Joint Reorganization Plan and (iv) refrain from supporting any other proposed plan of reorganization for SGI and the U.S. Subsidiaries.

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