This SECURITY AGREEMENT (this “Agreement”), dated as of October 17, 2006, among the Grantors listed on the signature pages hereof and those additional entities that hereafter become parties hereto by executing the form of Supplement attached hereto as Ann (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and General Electric Capital Corporation (“GE”), in its capacity as collateral agent for the Secured Creditors (together with its successors, the “Collateral Agent”).
W I T N E S S E T H:
WHEREAS, Silicon Graphics, Inc., 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 Participating Lenders party thereto from time to time, Morgan Stanley Senior Funding, Inc., as Administrative Agent for the Participating 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 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;
WHEREAS, the Collateral Agent has agreed to act as collateral agent for the benefit of the Secured Creditors in connection with the transactions contemplated by this Agreement; and
WHEREAS, to induce the Participating 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, the Grantors have agreed to grant a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance and performance of the Secured Obligations 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:
Section 1.1. Defined Terms. All capitalized terms used herein (including in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit Agreement. Any terms used in this Agreement that are defined in the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein or in the Credit Agreement; provided, however, that to the extent that the UCC is used to define any term herein and such term is defined differently in different articles of the UCC, the definition of such term
contained in Article 9 of the UCC shall govern. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings:
“Account” means any “account” as such term is defined in the UCC and, in any event, shall include all rights to payment of any monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a policy of insurance issued or to be issued, (d) for a secondary obligation incurred or to be incurred, (e) for energy provided or to be provided, (f) for the use or hire of a vessel under a charter or other contract, (g) arising out of the use of a credit or charge card or information contained on or for use with the card, or (h) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State. Without limiting the foregoing, the term “account” shall include all Health-Care-Insurance Receivables.
“Account Debtor” means any Person who is obligated on an Account, chattel paper or a general intangible.
“Additional Intellectual Property” shall have the meaning provided in Section 4.7.
“Agreement” means this Security Agreement, together with all Exhibits and Schedules hereto, as such agreement may be amended, supplemented or otherwise modified from time to time.
“As-Extracted Collateral” shall mean “as-extracted collateral” as such term is defined in the UCC.
“Books” means books and records (including each Grantor’s records indicating, summarizing or evidencing such Grantor’s assets (including the Collateral) or liabilities, each Grantor’s records relating to such Grantor’s business operations or financial condition and each Grantor’s goods or General Intangibles related to such information).
“Borrower” and “Borrowers” shall have the meaning specified therefor in the recitals hereto.
“Capital Stock” has the meaning specified therefor in the Credit Agreement.
“Cash Equivalents” has the meaning specified therefor in the Credit Agreement.
“Chattel Paper” means chattel paper as that term is defined in the UCC, and includes tangible chattel paper and electronic chattel paper.
“Collateral” has the meaning specified therefor in Section 2.1.
“Collateral Access Agreement” means a landlord waiver, mortgagee waiver, bailee letter, or acknowledgement agreement of any warehouseman, processor, lessor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the Books,
Equipment, or Inventory of any Grantor, in each case, in form and substance reasonably satisfactory to the Collateral Agent.
“Collateral Agent” has the meaning ascribed to such term in the introductory paragraph hereto.
“Commercial Tort Claims” means commercial tort claims as that term is defined in the UCC, and includes those commercial tort claims listed on Schedule 5.01(z) attached to the Credit Agreement.
“Contract Rights” shall mean all rights of any Grantor under each Contract, including (i) any and all rights to receive and demand payments under any or all Contracts, (ii) any and all rights to receive and compel performance under any or all Contracts and (iii) any and all other rights, interests and claims now existing or in the future arising in connection with any or all Contracts.
“Contracts” shall mean all contracts between any Grantor and one or more additional parties (including any partnership agreements, joint venture agreements and limited liability company agreements).
“Control Agreement” has the meaning specified therefor in the Credit Agreement.
“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”).
“Copyrights” means published and unpublished works of authorship, whether copyrightable or not (including without limitation databases and other compilations of information), copyrights therein and thereof and registrations and applications therefor, including all copyright registrations, recordings, and applications listed on Schedule 5.01(u) attached to the Credit Agreement and made a part hereof (as such schedule may be amended or supplemented from time to time), and (a) all extensions, restorations, reversions, or renewals thereof, (b) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past, present, or future infringements or other violations thereof, (c) the right to sue for past, present, or future infringements or other violations thereof, (d) the goodwill of each Grantor’s business symbolized by the foregoing and connected therewith, and (e) all of each Grantor’s rights corresponding thereto throughout the world.
“Copyright Security Agreement” means each Copyright Security Agreement among the Grantors, or any of them, and the Collateral Agent, for the benefit of the Secured Creditors, in substantially the form of Annex 2 attached hereto, pursuant to which the Grantors have granted to the Collateral Agent, for the benefit of the Secured Creditors, a security interest in all their respective Copyrights.
“Credit Agreement” has the meaning specified therefor in the recitals to this Agreement.
“Deposit Account” means any deposit account as that term is defined in the UCC.
“Documents” shall mean “documents” as such term is defined in the UCC.
“Equipment” has the meaning specified therefor in the Credit Agreement.
“Event of Default” has the meaning specified therefor in Article X of the Credit Agreement.
“General Intangibles” means general intangibles as that term is defined in the UCC and, in any event, including payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill (including the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks, servicemarks, Copyrights, URLs and domain names, industrial designs, other industrial or Intellectual Property or rights therein or applications therefor, whether under license or otherwise, programs, programming materials, blueprints, drawings, purchase orders, customer lists, rights to monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, including Intellectual Property Licenses, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, uncertificated securities, and any other personal property other than commercial tort claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and oil, gas, or other minerals before extraction.
“Goods” shall mean “goods” as such term is defined in the UCC.
“Grantor” and “Grantors” has the meaning ascribed to such term in the introductory paragraph hereto.
“Guaranty” has the meaning specified therefor in the Credit Agreement.
“Health-Care-Insurance Receivable” shall mean any “health-care-insurance receivable” as such term is defined in the UCC.
“Hedging Agreement Provider” has the meaning specified therefor in the Credit Agreement.
“Hedging Obligations” has the meaning specified therefor in the Credit Agreement.
“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.
“Instrument” shall mean “instruments” as such term is defined in the UCC.
“Intellectual Property” means all (a) Trademarks; (b) Patents; (c) Trade Secrets; (d) Copyrights; and (e) all other intellectual property or proprietary rights.
“Intellectual Property Collateral” shall have the meaning provided in Section 2.1(o).
“Intellectual Property Licenses” means rights under or interest in any Patent, Trademark, Copyright or other Intellectual Property, including software license agreements with any other party, whether the applicable Grantor is a licensee or licensor under any such license agreement, including the license agreements listed on Schedule 5.01(u) attached to the Credit Agreement and made a part hereof, and the right to use the foregoing in connection with the enforcement of the Secured Creditors’ rights under the Loan Documents, including the right to prepare for sale and sell any and all Inventory and Equipment now or hereafter owned by any Grantor and now or hereafter covered by such licenses.
“Intellectual Property Security Agreement” shall have the meaning provided in Section 4.6.
“Intellectual Property Security Agreement Supplement” shall have the meaning provided in Section 4.7.
“Inventory” has the meaning specified therefor in the Credit Agreement.
“Investment Related Property” means (i) investment property as that term is defined in the UCC and (ii) all of the following regardless of whether classified as investment property under the UCC: all Pledged Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.
“Letter-of-Credit Rights” shall mean “letter-of-credit rights” as such term is defined in the UCC.
“Loan Documents” has the meaning specified therefor in the Credit Agreement.
“Location” shall have the meaning provided in Section 9-307 of the UCC.
“Negotiable Collateral” means letters of credit, letter of credit rights, notes, instruments, promissory notes, drafts and documents (as that term is defined in the UCC) and chattel paper (including electronic chattel paper and tangible chattel paper).
“Obligations” has the meaning specified therefor in the Credit Agreement.
“Participating Lenders” has the meaning specified therefor in the Credit Agreement.
“Patents” means inventions and discoveries, whether patentable or not and all patents, registrations, invention disclosures, and patent applications therefor, including all patents and patent applications listed on Schedule 5.01(u) attached to the Credit Agreement and made a part hereof (as such schedule may be amended or supplemented from time to time), and (a) all divisions, continuations, continuations-in-part and renewal applications, and all renewals, extensions and reissues thereof, (b) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past, present, or future infringements or other violations thereof, (c) the right to sue for past, present, or future
infringements or other violations thereof, and (d) all of each Grantor’s rights corresponding thereto throughout the world.
“Patent Security Agreement” means each Patent Security Agreement among the Grantors, or any of them, and the Collateral Agent, for the benefit of the Secured Creditors, in substantially the form of Annex 3 attached hereto, pursuant to which the Grantors have granted to the Collateral Agent, for the benefit of the Secured Creditors, a security interest in all their respective Patents.
“Permitted Encumbrance” has the meaning specified therefor in the Credit Agreement.
“Permitted Protest” has the meaning specified therefor in the Credit Agreement.
“Person” has the meaning specified therefor in the Credit Agreement.
“Pledged Companies” means each Person listed on Schedule A to the Pledge Agreement as an “Issuer”, together with each other Person, all or a portion of whose Capital Stock, is acquired or otherwise owned by a Grantor after the Closing Date.
“Pledged Interests” means all of each Grantor’s right, title and interest in and to all of the Capital Stock now or hereafter owned by such Grantor, regardless of class or designation, including, in each of the Pledged Companies, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including any certificates representing the Stock, the right to request after the occurrence and during the continuation of an Event of Default that such Stock be registered in the name of the Collateral Agent or any of its nominees, the right to receive any certificates representing any of the Stock and the right to require that such certificates be delivered to the Collateral Agent together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by such Grantor, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, cash, instruments and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing; provided, however, 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, however, 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 Grantor owning such voting capital stock, the Collateral shall include, and the security interest granted by each Grantor shall attach to, such greater percentage of capital stock of each Controlled Foreign Corporation owned by such Grantor; provided, further, however, that, in no event shall the foregoing be construed to exclude the Proceeds of all capital stock of SGI Biomedical, SGCS or any Controlled Foreign Corporation from the security interest created by this Agreement.
“Pledged Interests Addendum” means a Pledged Interests Addendum substantially in the form of Annex 5 to this Agreement.
“Pledged Operating Agreements” means all of each Grantor’s rights, powers and remedies under the limited liability company operating agreements of each of the Pledged Companies that are limited liability companies.
“Pledged Partnership Agreements” means all of each Grantor’s rights, powers and remedies under the partnership agreements of each of the Pledged Companies that are partnerships.
“Proceeds” has the meaning specified therefor in Section 2.1.
“Real Estate Asset” has the meaning specified therefor in the Credit Agreement.
“Real Property” means any estates or interests in real property now owned or hereafter acquired by any Grantor and the improvements thereto.
“Records” 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.
“Registered” means issued by, registered with, renewed by or the subject of a pending application before any Governmental Authority or internet domain name registrar.
“Registered Organization” shall have the meaning provided in the UCC.
“Scheduled Intellectual Property Collateral” has the meaning specified therefor in the Credit Agreement.
“Secured Creditors” shall mean the Participating Lenders, the Collateral Agent, the Administrative Agent, the Revolving Agent, the Agent-Related Persons and the Lender-Related Persons, the Hedging Agreement Providers, if any, and GE Capital, as holder of Swap Related Reimbursement Obligations, if any.
“Secured Obligations” means all (a) Obligations and (b) all liabilities, obligations, or undertakings owing by any Grantor 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 Grantor is required to pay in connection with any of the foregoing, whether compelled to do so by law, or otherwise, including (i) 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 (ii) in the event of any proceeding for the collection or enforcement of