S-4/A

QuickLinks -- Click here to rapidly navigate through this document

As filed with the Securities and Exchange Commission on December 8, 2003

Registration No. 333-110683

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

SILICON GRAPHICS, INC.

Delaware (State or other jurisdiction of incorporation or organization)	3571 (Primary Standard Industrial Classification Code Number)	94-2789662 (I.R.S. Employer Identification Number)
1600 Amphitheatre Parkway Mountain View, California 94043 (650) 960-1980 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices)
Sandra M. Escher Senior Vice President and General Counsel Silicon Graphics, Inc. 1600 Amphitheatre Parkway Mountain View, California 94043 (650) 960-1980 (Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:
William M. Kelly
Davis Polk & Wardwell
1600 El Camino Real
Menlo Park, California 94043
Tel: (650) 752-2000
Fax: (650) 752-2111

Approximate date of commencement of proposed sale to the public:
As promptly as possible upon effectiveness of this Registration Statement.

        If the securities being registered on this form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box:    o

        If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

        If this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

SUBJECT TO COMPLETION, DATED DECEMBER 8, 2003

The information in this prospectus may change. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting offers to buy these securities in any state where the offer or sale is not permitted.

PROSPECTUS

Silicon Graphics, Inc.

Offer to Exchange

11.75% Senior Secured Notes Due 2009 or
6.50% Senior Secured Convertible Notes Due 2009

for all our outstanding

5.25% Senior Convertible Notes Due 2004 (CUSIP No. 827056AC6)

        We are offering to exchange $1,000 principal amount of our 11.75% Senior Secured Notes Due 2009, referred to as the New Secured Notes, or $1,000 principal amount of our 6.50% Senior Secured Convertible Notes Due 2009, referred to as the New Secured Convertible Notes and, together with the New Secured Notes, referred to as the 2009 Secured Notes, for an equal principal amount of our 5.25% Senior Convertible Notes Due 2004, referred to as the Old Notes, that is properly tendered and accepted for exchange on the terms set forth in this prospectus and in the accompanying Letter of Transmittal, which we refer to together as the exchange offer.

        You may choose to exchange your Old Notes entirely for New Secured Notes, entirely for New Secured Convertible Notes or for any combination thereof.

        The exchange offer is subject to important conditions, including that at least 80% in principal amount of the Old Notes are properly tendered by the expiration of the exchange offer. See page 27 for how to tender Old Notes.

        The exchange offer will expire at midnight New York City time on December 19, 2003, unless we extend it. We will announce any extensions by press release or other permitted means no later than 9:00 a.m. on the business day after expiration of the exchange offer. You may withdraw any notes tendered until the expiration of the exchange offer.

        The Old Notes are traded on the New York Stock Exchange and the reported last sale price for $1,000 principal amount of Old Notes was $98.406 on November 19, 2003. We will apply to list the New Secured Notes and the New Secured Convertible Notes on the New York Stock Exchange.

The exchange offer is described in detail in this prospectus, and we urge you to read it carefully, including the risk factors beginning on page 17.

Neither our Board of Directors nor any other person is making any recommendation as to whether you should choose to exchange your Old Notes for New Secured Notes or for New Secured Convertible Notes, or whether you should exchange your Old Notes at all.

        NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

TABLE OF CONTENTS

SUMMARY	4
The Exchange Offer	4
SGI	6
Summary Comparison of Old Notes to 2009 Secured Notes	7
The Information Agent	11
Selected Historical Consolidated Financial Data of SGI	12
Ratio of Earnings to Fixed Charges	14
Unaudited Pro Forma Information	14
Pro Forma Ratio of Earnings to Fixed Charges	14
Pro Forma Interest Expense	14
Pro Forma Book Value Per Share	14
Equity Capitalization	15
MARKET AND MARKET PRICES	16
RISK FACTORS	17
Risks Relating to the Exchange Offer	17
Risks Relating to Our Business	20
DESCRIPTION OF THE EXCHANGE OFFER	24
Purpose of the Exchange Offer	24
Terms of the Exchange Offer; Period for Tendering	24
Important Reservation of Rights Regarding the Exchange Offer	25
Conditions to the Exchange Offer	26
Procedures for Tendering	27
Book-Entry Transfer	28
Guaranteed Delivery Procedures	29
Acceptance of Old Notes and Delivery of 2009 Secured Notes	29
Withdrawal Rights	30
Exchange Agent	30
Fees and Expenses	31
Transfer Taxes	31
Consequences of Failure to Properly Tender Old Notes in the Exchange Offer	31
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS	32
TAX CONSEQUENCES TO UNITED STATES HOLDERS	33
TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS	37
DESCRIPTION OF THE 2009 SECURED NOTES	40
General	40
Principal and Interest; Maturity Date	40
Collateral	41
Restriction on Additional Indebtedness	42
Restricted Payments	44
Conversion of New Secured Convertible Notes	44
Redemption of the 2009 Secured Notes at the Option of the Company	44
Redemption at the Option of the Holder Upon a Fundamental Change	45
DESCRIPTION OF THE OLD NOTES	47
General	47

2

Principal and Interest	47
Conversion of Old Notes	48
Redemption of the Old Notes at the Option of the Company	50
Redemption at the Option of the Holder upon a Fundamental Change	50
Mergers and Sales of Assets by the Company	51
Events of Default; Notice and Waiver	52
Modification	53
No Personal Liability of Incorporators, Stockholders, Officers, Directors, or Employees	53
Concerning the Trustee	54
Governing Law	54
Book-Entry System	54
Certificated Notes	55
LEGAL MATTERS	56
EXPERTS	56
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS	56
WHERE YOU CAN FIND MORE INFORMATION	56

        You should rely only on information contained in this prospectus. No one is authorized to provide you with information that is different from that contained in this prospectus. The contents of any websites referred to in this prospectus are not part of this prospectus.

        We are offering to sell, and are seeking offers to buy, the New Secured Notes and the New Secured Convertible Notes only in jurisdictions where offers and sales are permitted. The information contained in this prospectus is accurate only as of its date regardless of the time of delivery of this prospectus or of any sale of the New Secured Notes and the New Secured Convertible Notes.

        This prospectus incorporates important business and financial information about the Company that is not included in or delivered with this document. This information is available without charge to security holders upon written or oral request to Office of the Corporate Secretary, Silicon Graphics, Inc., 1600 Amphitheatre Parkway, Mountain View, California 94043, (650) 960-1980. In order to obtain timely delivery, security holders must request the information no later than five business days prior to the expiration date.

3

SUMMARY

This summary highlights selected information from this document and may not contain all of the information that is important to you. To understand the exchange offer better, you should read this entire document carefully, as well as those additional documents to which we refer you. See "Where You Can Find More Information." References in this prospectus to "SGI", "we", "us", "our", "the company" and "our company" refer to Silicon Graphics, Inc. and its consolidated subsidiaries unless otherwise specified.

THE EXCHANGE OFFER

The Exchange Offer

        SGI is offering to exchange $1,000 principal amount of either New Secured Notes or New Secured Convertible Notes for each $1,000 principal amount of Old Notes accepted for exchange. Upon expiration of the exchange offer, we will also pay accrued and unpaid interest up to the date of acceptance on Old Notes accepted for exchange.

Purpose of the Exchange Offer

        We do not currently believe that we will be able to generate sufficient cash to repay the Old Notes in full at maturity on September 1, 2004. Our unrestricted cash, cash equivalents and marketable investments were approximately $116 million at September 26, 2003. The working capital requirements of our business result in substantial fluctuations in our cash balances during fiscal quarters. We would be unable to repurchase or repay at maturity any significant portion of the Old Notes without depleting our cash balance to a level that would be insufficient to support our business. If we are unable to complete the exchange offer there is a substantial risk that uncertainty about our ability to repay or refinance the Old Notes could erode customer confidence which would have a material adverse effect on our business. In addition, the maturity date of our secured credit facility will be accelerated to June 2, 2004 if we fail to complete the exchange offer or otherwise refinance 80% of the Old Notes prior to March 5, 2004. Therefore unless we are able to refinance the Old Notes prior to maturity, there is a substantial risk of default at maturity.

        The purpose of the exchange offer is to offer holders of the Old Notes an increase in yield, the benefit of a security interest (and in the case of the New Secured Convertible Notes, a decrease in the conversion price) in return for an extension of the maturity. If the exchange offer is successful, it will provide time to return our business to profitability and positive cash flow. We cannot assure you that, even if the exchange offer is successful, we will achieve these objectives.

Conditions to Exchange Offer

        The exchange offer is subject to various conditions, including that at least 80% of the outstanding principal amount of Old Notes be validly tendered and not withdrawn by the expiration of the exchange offer, that our shareholders approve the issuance of shares of our common stock upon conversion of the New Secured Convertible Notes, and that the registration statement and any post-effective amendment to the registration statement covering the 2009 Secured Notes be effective under the Securities Act of 1933, as amended.

Expiration of the Exchange Offer

The exchange offer will expire at midnight New York City time on December 19, 2003 unless we decide to extend it. We may extend the expiration date for any reason. If we decide to extend it, we will announce any extensions by press release or other permitted means no later than 9:00 a.m. on the business day after the scheduled expiration of the exchange offer.

4

Tenders and Withdrawals of Notes

        In order to tender Old Notes, you must submit the notes together with a properly completed letter of transmittal and the other agreements and documents described in this document. If you own Old Notes held through a broker or other third party, or in "street name", you will need to follow the instructions in this document on how to instruct them to tender the notes on your behalf, as well as submit a letter of transmittal and the other documents described in this document. We will determine in our reasonable discretion whether any Old Notes have been properly tendered. Please carefully follow the instructions contained in this document on how to tender your notes.

        If you decide to tender Old Notes in the exchange offer, you may withdraw them at any time prior to the expiration of the exchange offer.

        If we decide for any reason not to accept any Old Notes for exchange, they will be returned without expense promptly after the expiration of the exchange offer.

Please see pages 27 through 28 for instructions on how to tender or withdraw your Old Notes.

Acceptance of Old Notes

        We will accept all Old Notes validly tendered and not withdrawn as of the expiration of the exchange offer and will issue the 2009 Secured Notes promptly after expiration of the exchange offer. We will accept Old Notes for exchange after the Exchange Agent has received a timely book-entry confirmation of transfer of Old Notes into the Exchange Agent's DTC account and a properly completed and executed letter of transmittal. Our oral or written notice of acceptance to the Exchange Agent will be considered our acceptance of the exchange offer.

Accrued Interest on Existing Notes

        Upon completion of our exchange offer, we will pay exchanging holders accrued and unpaid interest on their Old Notes through the date of acceptance.

Amendment of the Exchange Offer

        We reserve the right not to accept any of the notes tendered, and to otherwise interpret or modify the terms of this exchange offer, provided that we will comply with applicable laws that require us to extend the period during which notes may be tendered or withdrawn as a result of changes in the terms of or information relating to the exchange offer.

Use of Proceeds; Fees and Expenses of the Exchange Offer

        We will not receive any cash proceeds from this exchange offer. Old Notes that are properly tendered and exchanged pursuant to the exchange offer will be retired and canceled. Accordingly, our issuance of 2009 Secured Notes will not result in any cash proceeds to us. We estimate that the approximate total cost of the exchange offer will be $4.3 million.

Retail Solicitation Fee

        We will pay a retail solicitation fee to soliciting dealers who are acknowledged in writing by their clients as having solicited and obtained the tender from such clients as beneficial holders of the Old Notes. The amount of the fee will be $2.50 per $1,000 principal amount of Old Notes solicited from and tendered by beneficial holders of more than $50,000 and less than $250,000 principal amount of Old Notes, and $5.00 per $1,000 principal amount of Old Notes solicited from and tendered by beneficial holders of $50,000 or less principal amount of Old Notes. These fees will be paid only for

5

tenders by beneficial holders of $250,000 or less principal amount of Old Notes that are accepted in the exchange offer.

Collateral Securing 2009 Secured Notes

        The 2009 Secured Notes will be secured by a junior priority lien on those assets in which the lenders under our secured credit facility currently hold a senior priority security interest, including accounts receivable, books, equipment, certain intellectual property, inventory, negotiable property, including proceeds from these assets but excluding cash in the custody, control or possession of the agent for our lenders under the secured credit facility. We refer to these assets collectively as the collateral. The lenders under our secured credit facility hold a senior priority interest in this collateral. We will enter into an intercreditor agreement with the agent representing our senior secured lenders and the trustee of the 2009 Secured Notes setting forth the relative priorities of the secured parties. We will have substantial discretion to sell, lease, license and otherwise deal with the collateral without the consent of the holders of the 2009 Secured Notes.

Please see "Description of the 2009 Secured Notes—the Intercreditor Agreement" beginning on page 42.

Taxation

        We believe that the exchange of Old Notes for 2009 Secured Notes should be treated as a recapitalization for U.S. federal income tax purposes. Accordingly, holders of Old Notes who participate in the exchange offer should not recognize gain or loss in connection with the exchange.

        The 2009 Secured Notes may be treated as issued with original issue discount for U.S. federal income tax purposes. If that is the case, holders will generally be required to include original issue discount on the 2009 Secured Notes in income for U.S. federal income tax purposes as it accrues, in accordance with a constant yield method based on a compounding of interest, before the receipt of cash payments attributable to this income.

Please see "Material United States Federal Income Tax Considerations" beginning on page 32.

SGI

        SGI, a Delaware corporation incorporated in California in 1981 and reincorporated in Delaware in 1990, is a leader in high-performance computing, visualization and the management of large-scale complex data. We sell highly scalable servers, advanced visualization systems, desktop workstations, storage solutions and a range of software products which enable our customers in the scientific, technical and creative communities to solve their most challenging problems and provide them with strategic and competitive advantages in their marketplace. We also offer a range of technical solutions, including professional services, Reality Center™ immersive visualization centers, customer support and education. These products and services are targeted primarily towards five market segments: Government and Defense, Science, Manufacturing, Energy, and Media.

        We maintain offices worldwide and operate a manufacturing facility in Chippewa Falls, Wisconsin. Our principal executive offices are located at 1600 Amphitheatre Parkway, Mountain View, California 94043. Our U.S. telephone number is (650) 960-1980.

        Our common stock is traded on the New York Stock Exchange under the symbol "SGI". For additional information concerning SGI, please see "Where You Can Find More Information" on page 56.

6

SUMMARY COMPARISON OF OLD NOTES TO 2009 SECURED NOTES

        The following comparison of the terms of the Old Notes to the terms of the New Secured Notes and New Secured Convertible Notes is only a summary. For a more detailed description of the terms of the Old Notes and terms common to all of the notes, please see "Description of the Old Notes." For a more detailed description of the differences between our New Secured Notes and our New Secured Convertible Notes, and of the differences between those notes and the Old Notes, please see "Description of the 2009 Secured Notes".

	Old Notes	New Secured Notes	New Secured Convertible Notes
Issuer	Silicon Graphics, Inc.	Silicon Graphics, Inc.	Silicon Graphics, Inc.
Notes Offered	$230,591,000 aggregate principal amount of 5.25% Senior Notes Due 2004, issued under an indenture dated September 7, 1997 between us and U.S. Bank National Association, as trustee.	Up to $230,591,000 aggregate principal amount of 11.75% Senior Secured Notes Due 2009, issued under an indenture to be entered into between us and U.S. Bank National Association, as trustee.	Up to $230,591,000 aggregate principal amount of 6.50% Senior Secured Convertible Notes Due 2009, issued under an indenture to be entered into between us and U.S. Bank National Association, as trustee.
Interest Payment Dates	Payable on March 1 and September 1 of each year.	Payable on December 1 and June 1 of each year, commencing June 1, 2004.	Same terms as New Secured Notes.
Interest	5.25% per annum in cash.	11.75% per annum in cash accruing from the first date after the expiration of the exchange offer, subject to increase in certain events.	6.50% per annum in cash accruing from the first date after the expiration of the exchange offer.
Maturity	September 1, 2004	June 1, 2009	June 1, 2009
Conversion	Convertible at the option of the holder into shares of common stock at a conversion price equal to $18.70 per share, subject to adjustment in certain events.	Not convertible.	Convertible at the option of the holder into shares of common stock at a conversion price equal to $1.25 per share, subject to adjustment in certain events.
Ranking	The Old Notes are unsubordinated and rank pari passu with all of our other unsubordinated indebtedness.	Same as Old Notes. However, the 2009 Secured Notes will be secured as described under "Collateral".	Same terms as New Secured Notes.

7

Collateral	None	Secured by a junior priority security interest in those assets that currently secure our senior facility, excluding cash in the possession of the agent under our senior facility.	Same terms as New Secured Notes.
Redemption at the Option of the Company	The Old Notes are redeemable at our option, in whole or in part, on not less than 30 days' nor more than 60 days' notice, at the following redemption prices in effect during the 12-month period beginning September 1 of each of the following years (expressed as percentages of the principal amount), plus accrued and unpaid interest thereon to, but excluding, the redemption date: 100.75% in 2003 and 100% at September 1, 2004.	The New Secured Notes are redeemable at our option, in whole or in part, on not less than 10 days' nor more than 60 days' notice, at the following redemption prices in effect during the 12-month period beginning June 1 of each of the following years (expressed as percentages of the principal amount), plus accrued and unpaid interest thereon to, but excluding, the redemption date: • 104% in 2004 • 103% in 2005 • 102% in 2006 • 101% in 2007 • 100% thereafter until maturity	The New Secured Convertible Notes are not redeemable at the option of the Company for the first two years following issuance. In the third year following issuance, the New Secured Convertible Notes may be redeemed at our option, in whole or in part, on not less than 10 days' nor more than 60 days' notice, at 100% of the principal amount thereof, plus accrued and unpaid % interest thereon to, but excluding, the redemption date, provided that the closing price of our common stock has been at least 150% of the then-applicable conversion price for the 20 consecutive trading days ending two trading days prior to the notice of redemption. Thereafter, New Secured Convertible Notes may be redeemed at our option, in whole or in part, at 100% of the principal amount

8

			thereof, plus accrued and unpaid interest thereon to, but excluding, the redemption date.
Redemption at the Option of the Holder upon a Fundamental Change	If a Fundamental Change occurs at any time prior to September 1, 2004, each holder of Old Notes will have the right, at the holder's option, to require us to redeem any or all of that holder's Old Notes at a price determined by a formula based upon the price paid to common shareholders as a result of such Fundamental Change, or if consideration other than cash is paid, based on the market price of our common stock during the 10 trading days prior to the record date in connection with such Fundamental Change. Based upon an assumed price of $1.50 per common share, such redemption price would be $80.21 per $1000 principal amount.	If a Fundamental Change occurs at any time prior to June 1, 2009, each holder of New Secured Notes will have the right, at the holder's option, to require us to redeem any or all of its New Secured Notes in cash at 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the repurchase date.	Same terms as New Secured Notes.
Events of Default	• Default in payment of principal, or default for 30 days in payment of interest, • Failure to cure within 60 days a default on any other agreements in the Old Notes or old indenture, or	Same terms as for Old Notes, except that any event of default under the old indenture, or either of the new indentures that results in the principal amount of and accrued interest on that debt becoming immediately due and payable will also be an	Same terms as New Secured Notes.

9

	• Certain events of bankruptcy or insolvency.	event of default under both new indentures.
Listing	The Old Notes are listed on the New York Stock Exchange.	We intend to apply to list the New Secured Notes on the New York Stock Exchange.	We intend to apply to list the New Secured Convertible Notes on the New York Stock Exchange.
Covenants	The indenture governing the Old Notes contains a covenant limiting our ability to: • consolidate or merge with, or sell substantially all our assets to, another person.	Same terms as the Old Notes, except that the indenture governing the New Secured Notes will contain covenants limiting our ability to: • incur additional debt, • pay dividends on our capital stock, and • redeem or repurchase capital stock or prepay or repurchase subordinated debt. See "Description of the 2009 Secured Notes—Restriction on Additional Indebtedness" for a description of these covenants.	Same terms as New Secured Notes.

10

THE INFORMATION AGENT

        The information agent for the exchange offer will be MacKenzie Partners, Inc. The address and telephone number of the information agent are as follows:

105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com

THE EXCHANGE AGENT

        U.S. Bank National Association will act as exchange agent for purposes of processing tenders and withdrawals of Old Notes in the exchange offer. The address and telephone number of the exchange agent are as follows:

U.S. Bank National Association
West Side Flats Operations Center
60 Livingston Avenue
St. Paul, MN 55107
Telephone (651) 495-3511
Facsimile (651) 495-8158
Attn: Specialized Finance

        We will pay the exchange agent and information agent reasonable and customary fees for their services and will reimburse them for all their reasonable out-of-pocket expenses.

11

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SGI

        The selected historical financial data as of and for each of the five years ended June 27, 2003, June 28, 2002, June 30, 2001, June 30, 2000 and June 30, 1999 have been derived from our audited consolidated financial statements. These selected historical data are not necessarily indicative of future operations. Several factors affect comparability of the information presented below. For example, we sold our Cray product line and distributed our remaining interest in MIPS Technologies, Inc. to our stockholders in the third and fourth quarters, respectively, of fiscal 2000 and sold a majority interest in our SGI Japan subsidiary to NEC in the second quarter of fiscal 2002.

        The selected financial data as of and for the three-month periods ended September 26, 2003 and September 27, 2002 are derived from unaudited consolidated financial statements incorporated by reference in this prospectus. The interim results for the three month period ended September 26, 2003 are not necessarily indicative of results that may be expected for the entire fiscal year ending June 25, 2004 or for future interim periods.

        These selected historical financial data should be read in conjunction with Management's Discussion and Analysis of Financial Condition and Results of Operations and the consolidated financial statements and accompanying notes included in our 2003 Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the quarter ended September 26, 2003, incorporated into this prospectus by reference.

		Fiscal Years Ended															Three Months Ended
		June 27, 2003 (fiscal 2003)			June 28, 2002 (fiscal 2002)			June 30, 2001 (fiscal 2001)			June 30, 2000(1) (fiscal 2000)			June 30, 1999 (fiscal 1999)			September 26, 2003			September 27, 2002
		(in thousands, except per share amounts)
Operating Data:
Total revenue		$	961,748		$	1,341,385		$	1,854,461		$	2,331,134		$	2,748,957		$	218,027		$	241,718
Costs and expenses:
	Cost of revenue		572,814			770,412			1,247,713			1,503,525			1,603,250			123,441			144,279
	Research and development		170,937			176,893			236,240			301,248			380,346			35,349			42,643
	Selling, general and administrative		319,360			450,365			716,591			785,196			907,612			78,599			86,777
	Other operating expense (recovery)(2)		30,046			44,476			102,052			102,861			(15,107	)		24,236			8,444
	Operating loss		(131,409	)		(100,761	)		(448,135	)		(361,696	)		(127,144	)		(43,598	)		(40,425	)
	Interest and other income (expense), net(3)		(24,558	)		18,502			(18,020	)		(20,188	)		252,865			(6,912	)		(560	)
	(Loss) income before income taxes		(155,967	)		(82,259	)		(466,155	)		(381,884	)		125,721			(50,510	)		(40,985	)
	Net (loss) income	$	(129,704	)	$	(46,323	)	$	(493,043	)	$	(829,544	)	$	53,829		$	(47,929	)	$	(41,072	)
	Net Loss per share—basic	$	(0.64	)	$	(0.24	)	$	(2.59	)	$	(4.52	)	$	0.29		$	(0.23	)	$	(0.21	)
	Net Loss per share—diluted	$	(0.64	)	$	(0.24	)	$	(2.59	)	$	(4.52	)	$	0.28		$	(0.23	)	$	(0.21	)
Shares used in the calculation of net income per share—basic:			201,424			194,974			190,338			183,528			186,374			209,570			199,676
Shares used in the calculation of net income per share—diluted:			201,424			194,974			190,338			183,528			189,427			209,570			199,676

12

	As of													As of
	June 27, 2003 (fiscal 2003)			June 28, 2002 (fiscal 2002)			June 30, 2001 (fiscal 2001)			June 30, 2000 (fiscal 2000)		June 30, 1999 (fiscal 1999)		September 26, 2003
Balance Sheet Data:
Cash, cash equivalents and unrestricted investments	$	141,276		$	218,180		$	126,107		$	258,081	$	688,143	$	115,503
Current assets		432,893			631,613			853,708			920,309		1,847,033		377,064
Noncurrent assets		216,961			278,506			429,321			918,902		941,224		188,519
Working capital (deficiency)		1,489			93,938			(41,884	)		58,781		869,980		(257,782	)
Total assets		649,854			910,119			1,283,029			1,839,211		2,788,257		565,583
Current liabilities		431,404			537,675			895,592			861,528		977,053		634,846
Long-term debt and other		383,341			427,085			412,720			385,133		387,005		142,297
Stockholders' (deficit) equity		(164,891	)		(54,641	)		(25,283	)		592,550		1,424,199		(211,560	)
Book value per diluted share	$	(0.82	)	$	(0.28	)	$	(0.13	)	$	3.23	$	7.52	$	(1.01	)
Statistical Data:
Number of employees		3,714			4,443			5,956			6,726		9,191		3,210

(1)

Amounts reflect the March 31, 2000 sale of our Cray product line.

(2)

Fiscal 2003 amounts include net restructuring charges ($27 million) and asset impairment charges ($3 million). Fiscal 2002 amounts include net restructuring charges ($33 million) and impairment charges ($12 million). Fiscal 2001 amounts include net restructuring charges ($82 million) and impairment charges ($20 million). Fiscal 2000 amounts include net restructuring charges ($65 million) and impairment charges ($38 million). Fiscal 1999 amounts include a reduction in previously estimated restructuring charges ($14 million). Amounts for the three-month period ended September 26, 2003 include net restructuring charges ($24 million). Amounts for the three-month period ended September 27, 2002 represent net restructuring charges ($8 million).

(3)

Fiscal 2003 amounts include net interest expense of $23 million and a $3 million other than temporary decline in the value of an investment. Fiscal 2002 amounts include a $64 million gain on sale of 60% interest in SGI Japan and $24 million in class action lawsuit settlement expense. Fiscal 2001 amounts include an $83 million write-off of our investment in a private company and $50 million in gains from the sale of marketable investments. Fiscal 2000 amounts include a loss on the sale of the Cray product line ($8 million). Fiscal 1999 amounts include a $273 million gain on the sale of a portion of SGI's interest in MIPS Technologies, Inc.

13

RATIO OF EARNINGS TO FIXED CHARGES

        Our ratio of earnings to fixed charges for the fiscal year ended June 30, 1999 was 4.3. For the fiscal years ended June 27, 2003, June 28, 2002, June 30, 2001 and June 30, 2000 and for the three months ended September 26, 2003, earnings were insufficient to cover fixed charges by $156.0 million, $82.3 million, $466.2 million, $381.9 million, and $50.5 million, respectively, and for this reason no ratios are provided for these periods.

UNAUDITED PRO FORMA INFORMATION

        The unaudited information below is presented pro forma to reflect the effects of the exchange offer, assuming in case (A) that 100% of holders of the Old Notes participate in the exchange offer and in case (B) that 80% of the holders of the Old Notes participate in the exchange offer. In both case (A) and case (B), we have presented the information under two scenarios; under alternative (1) below, we have assumed that all exchanging holders of Old Notes exchanged for New Secured Notes, and under alternative (2) that all exchanging holders of Old Notes exchanged for New Secured Convertible Notes.

Pro Forma Ratio of Earnings to Fixed Charges

        For the fiscal year ended June 27, 2003 and for the three months ended September 26, 2003, earnings would have been insufficient to cover fixed charges by:

(A)

under alternative (1), $170.9 million and $54.2 million, respectively, and

under alternative (2), $158.8 million and $51.2 million, respectively.

(B)

under alternative (1), $167.9 million and $53.5 million, respectively,

under alternative (2), $158.3 million and $51.1 million, respectively.

Pro Forma Interest Expense

        For the fiscal year ended June 27, 2003 and for the three months ended September 26, 2003, the Company's interest expense related to the 2009 Secured Notes would have been:

(A)

under alternative (1), $27.0 million and $6.8 million, respectively, and

under alternative (2), $15.0 million and $3.7 million, respectively.

(B)

under alternative (1), $24.0 million and $6.0 million, respectively, and

under alternative (2), $14.4 million and $3.6 million, respectively.

        Actual interest expense related to the Old Notes for the corresponding periods was $12.1 million and $3.0 million, respectively.

Pro Forma Book Value Per Share

        As of September 26, 2003, assuming all exchanging holders exchanged for New Secured Convertible Notes and assuming conversion to common stock of all such New Secured Convertible Notes, the book value per common share would have been $(0.54) in case (A) and $(.059) in case (B).

14

EQUITY CAPITALIZATION

        The following table presents information regarding our equity capitalization as of September 26, 2003 on an actual basis and on a pro forma basis to reflect the consummation of the exchange offer and a proposed increase in the number of shares issuable under our Employee Stock Purchase Plan to be voted on by stockholders at our annual meeting.

	As of September 26, 2003
	Actual			Pro Forma(1)			Pro Forma(2)
Common Stock	Shares	Percent of Outstanding (fully Diluted Basis)		Shares	Percent of Outstanding (Fully Diluted Basis)		Shares	Percent of Outstanding (Fully Diluted Basis)
Shares authorized	500,000,000			500,000,000			500,000,000
Shares outstanding	210,760,780	73.87	%	210,760,780	44.85	%	210,760,780	48.35	%
Shares reserved for issuance under Old Notes	12,331,070	4.32	%	—	—		2,466,214	—
Shares reserved for issuance under New Convertible Notes	—	—		185,000,000	39.36	%	148,000,000	33.98	%
Shares reserved for issuance under convertible subordinated debentures due February 2011	1,242,762	0.44	%	1,242,762	0.26	%	1,242,762	0.28	%
Shares reserved for issuance under employee stock plans	60,968,933	21.37	%	72,968,933	15.53	%	72,968,933	16.74	%
Total outstanding and reserved	285,303,545			469,972,475			435,438,689

(1)

Assumes exchange of 100% of the currently outstanding 5.25% Senior Convertible Notes due 2004 for New Secured Convertible Notes and stockholder approval of the increase in the number of shares available for issuance under our Employee Stock Purchase Plan (the "ESPP").

(2)

Assumes exchange of 80% of the Old Notes for New Secured Convertible Notes and stockholder approval of the increase in the number of shares available for issuance under the ESPP.

CALCULATION OF GAIN/LOSS TO BE RECORDED IN CONNECTION WITH THE OFFER

        Following the completion of the offer, we will account for the transaction by comparing the fair value of the 2009 Secured Notes to the book value of the Old Notes and record a gain (loss) on the transaction as appropriate. The fair value of the 2009 Secured Notes will be accreted to par value over their term. We do not believe that this gain (loss) will be material to us, although the ultimate amount recorded will be based upon the results of an independent third party valuation.

15

MARKET AND MARKET PRICES

        Our common stock and the Old Notes currently trade on the NYSE under the symbols "SGI" and "SGI 04", respectively. The last reported sale price of our common stock on the NYSE on November 20, 2003 was $1.02. The reported last sale price per Old Note on the NYSE on November 19, 2003 was $98.406. As of November 20, 2003 there were 211,108,892 shares of common stock outstanding.

Our Common Stock

        The following table sets forth the high and low sale prices per share of our common stock on the New York Stock Exchange for the periods indicated. For current price information, you should consult publicly available sources.

		High		Low
Fiscal 2002
	First Quarter	$	1.28	$	0.32
	Second Quarter	$	2.40	$	0.44
	Third Quarter	$	4.61	$	2.10
	Fourth Quarter	$	4.16	$	2.50
Fiscal 2003
	First Quarter	$	2.82	$	0.82
	Second Quarter	$	1.72	$	0.57
	Third Quarter	$	1.65	$	1.12
	Fourth Quarter	$	1.54		41.06
Fiscal 2004
	First Quarter	$	1.75	$	0.85
	Second Quarter (through November 19, 2003)	$	1.29	$	0.91

Our Old Notes

        The following table sets forth the high and low sale prices paid for the Old Notes for the periods indicated. For current price information, you should consult publicly available sources.

		High		Low
Fiscal 2002
	First Quarter	$	22.50	$	15.00
	Second Quarter	$	57.88	$	20.50
	Third Quarter	$	77.25	$	57.75
	Fourth Quarter	$	75.50	$	61.00
Fiscal 2003
	First Quarter	$	66.00	$	48.00
	Second Quarter	$	63.50	$	48.00
	Third Quarter	$	76.88	$	58.50
	Fourth Quarter	$	82.00	$	72.38
Fiscal 2004
	First Quarter	$	81.00	$	71.13
	Second Quarter (through November 19, 2003)	$	98.81	$	76.75

16

RISK FACTORS

        SGI operates in a rapidly changing environment that involves a number of risks, some of which are beyond our control. Additionally, in recent years SGI has experienced declining revenue and substantial operating losses. Some of the risks related to the environment in which we operate and our current financial condition are highlighted below under the caption "Risks Relating to Our Business". An investment in the 2009 Secured Notes involves its own set of risks. Risks related specifically to your participation or failure to participate in the exchange offer and ownership of the 2009 Secured Notes are discussed under the caption "Risks Relating to the Exchange Offer".

        You should carefully consider the risks described below in deciding whether to tender your Old Notes.

Risks Relating to the Exchange Offer

        If the exchange offer is unsuccessful we may be unable to repay the Old Notes at maturity.

        We do not currently believe that we will be able to generate sufficient cash to repay the Old Notes at maturity on September 1, 2004. The working capital requirements of our business result in substantial fluctuations in our cash balances during fiscal quarters. We would be unable to repurchase or repay the Old Notes at maturity without depleting our cash balance to a level that would be insufficient to support our business.

        Failure to complete the exchange offer would have a material adverse effect on our business.

        If we are unable to complete the exchange offer, there is a substantial risk that uncertainty about our ability to repay or refinance the Old Notes could erode customer confidence which would have a material adverse effect on our business. In addition, the maturity date of our secured credit facility will be accelerated if we fail to complete the exchange offer or otherwise refinance 80% of the Old Notes prior to March 5, 2004. Therefore unless we are able to refinance the Old Notes prior to maturity, there is a substantial risk of default at maturity.

        The lien on the collateral for the 2009 Secured Notes will be junior to that under our credit facility and other permitted secured debt.

        The 2009 Secured Notes will effectively rank junior to all amounts owed under our credit facility, as the credit facility is secured by a senior priority lien on the collateral pledged for the benefit of the 2009 Secured Notes. As a result, the lenders under the credit facility will be paid in full from the proceeds of the collateral pledged to them before holders of the 2009 Notes are paid from such proceeds. In addition, subject to the restrictions contained in the indentures and our secured credit facility, we may incur additional debt that is secured by senior priority liens on the collateral or by liens on assets that are not pledged to the holders of the 2009 Secured Notes, all of which would effectively rank senior to the 2009 Secured Notes to the extent of the value of the assets securing such debt.

        The disposition and management of the collateral securing the 2009 Secured Notes will be controlled by us and our senior secured lenders.

        The intercreditor agreement that we will enter into with the trustee of the 2009 Secured Notes and the agent for our senior secured lenders will provide that, while any senior priority lien obligations are outstanding, the agent for the senior lenders will have the sole ability to control remedies with respect to the collateral. As a result, the trustee of the 2009 Secured Notes will not be able to force a sale of the collateral or exercise other remedies of secured creditors without the consent of our senior secured lenders. The trustee of the 2009 Secured Notes will be required, at the request of the agent for the senior lenders, to release its liens on the collateral, to the extent collateral is sold or otherwise disposed

17

of under the terms of our secured credit facility. In addition, our senior secured lenders may amend the terms of their agreements with us without the consent of the holders of the 2009 Secured Notes even if such amendments adversely affect the 2009 Secured Notes. Subject to the terms of our agreements with our senior secured lenders and the indentures, we will have the right to remain in possession of, and exercise control over the collateral securing our credit facility and the 2009 Notes (other than any cash constituting part of the collateral that may be deposited with the agent for our senior secured lenders in accordance with the provisions of our loan agreement with them), to use, lease, license and dispose of the collateral and to collect, invest and dispose of any income therefrom.

        Proceeds from sales of the collateral will be applied first to satisfy amounts owed to our senior secured creditors, and the value of the collateral may not be sufficient to repay the holders of the 2009 Secured Notes.

        SGI will secure its obligations under the 2009 Secured Notes with a junior priority lien on certain assets that are also pledged on a senior priority basis to the lenders under our credit facility. As a result, upon any foreclosure on the collateral, proceeds will be applied first to repay amounts owed under our credit facility and any other then-existing senior secured debt, and only then to satisfy amounts owed to holders of the 2009 Secured Notes. The value of the collateral in the event of liquidation will depend on the activity of our business prior to liquidation, market and economic conditions and other factors. The proceeds from the sale or sales of all of such collateral may not be sufficient to satisfy the amounts due on the 2009 Secured Notes in the event of a default. If such proceeds were not sufficient to repay amounts due on the 2009 Secured Notes, then holders of the 2009 Secured Notes (to the extent not repaid from the proceeds of the sale of the collateral) would only have an unsecured claim against our remaining assets. The collateral has not been appraised in connection with this exchange offer.

        If you do not tender your Old Notes, the holders of the 2009 Secured Notes will have a superior claim to you on our assets securing the 2009 Secured Notes.

        Although the Old Notes and the 2009 Secured Notes will each be our senior unsubordinated obligations, the 2009 Secured Notes will be secured by a junior priority lien on the assets currently securing our senior credit facility. Thus, in an event of default or insolvency or other liquidation event, the holders of the 2009 Secured Notes would have a claim on these assets that is senior to the unsecured claims of the holders of the Old Notes. Upon any foreclosure on the collateral, after full payment of our senior secured creditors, the holders of the 2009 Secured Notes will be entitled to full satisfaction of their claims from any remaining proceeds of the collateral before holders of the Old Notes have any access to such proceeds.

        Bankruptcy laws may limit your rights and ability to realize value from the collateral

        The commencement of bankruptcy proceedings by or against us would likely impact the rights and recovery of holders of the 2009 Secured Notes. Among other things, there can be no assurance that we would continue to comply with covenants under the Indentures, that interest would continue to accrue or be paid during the proceedings or that the 2009 Secured Notes would be repaid when due. Moreover, the exercise of remedies in respect of the 2009 Notes, including the right of the trustee to foreclose upon and dispose of the assets securing the 2009 Secured Notes, would likely be limited by applicable bankruptcy law. Under U.S. bankruptcy laws, a secured creditor is generally stayed from realizing on its collateral without bankruptcy court approval. Provided that the secured creditor is given "adequate protection," the Bankruptcy Code generally permits a debtor to retain and use collateral (even where a debtor is in default under the applicable debt instruments) including, potentially, as collateral for new loans from other parties. "Adequate protection" is intended to protect the value of the secured creditor's interest in the collateral and to compensate for any diminution thereof during the pendency of bankruptcy proceedings. Adequate protection may take the form of cash payments or

18

the granting of additional security. It is impossible to predict (1) how long payments of interest or principal under the 2009 Secured Notes could be delayed following commencement of a bankruptcy case, (2) whether or when the trustee could realize upon the pledged assets or (3) whether or to what extent holders of the 2009 Secured Notes would be adequately compensated (through "adequate protection") for any delay in payment or loss of value of the pledged assets. In addition, confirmation of a chapter 11 plan of reorganization under the Bankruptcy Code could result in alteration of the terms of the 2009 Secured Notes or cause them to be exchanged for other securities and cancelled.

        Our interest expense will increase as a result of the exchange offer.

        Because the Old Notes bear interest at the rate of 5.25% and the New Secured Notes and New Secured Convertible Notes will pay interest at rates of 11.75% and 6.50%, respectively, our interest expense will increase, perhaps significantly, as a result of the exchange offer. The extent of the increase will depend on the proportion of New Secured Notes and New Secured Convertible Notes issued in the exchange offer. If the Old Notes were exchanged exclusively for New Secured Convertible Notes, our annual interest expense related to the notes would increase from its current level of approximately $12 million to $15 million. If the Old Notes were exchanged exclusively for New Secured Notes, the annual interest expense would be approximately $27 million.

        We may be unable to repay our 2009 Secured Notes.

        At maturity, the entire principal amount of our New Secured Notes and the outstanding principal amount of the New Secured Convertible Notes will become due and payable. The 2009 Secured Notes do not have the benefit of a sinking fund or other requirement that we prepay principal. At maturity we may not have sufficient funds and may be unable to arrange for additional financing to pay the principal amount or repurchase price due on our 2009 Secured Notes then outstanding.

        We cannot give you any assurance as to the liquidity of any trading market for the 2009 Secured Notes.

        The Old Notes currently trade on the New York Stock Exchange, and we intend to apply for listing of the 2009 Secured Notes on the New York Stock Exchange. The liquidity of the respective trading markets for the New Secured Notes and the New Secured Convertible Notes will depend largely on how the holders of the Old Notes choose between these securities. An issue of securities with a smaller float may be more volatile in price than a comparable issue of securities with a greater float. Thus, if a disproportionately large percentage of holders of the Old Notes chooses either issue of the 2009 Secured Notes, the liquidity and price of the smaller issue may be adversely affected. There is no minimum requirement for either issue of the 2009 Secured Notes.

        If you do not tender your Old Notes, the notes you retain are expected to become less liquid as a result of the exchange offer.

        If the exchange offer is completed successfully, the liquidity of the markets for Old Notes remaining after the completion of the exchange offer will be substantially reduced. The reduced float of the Old Notes after the consummation of the exchange offer may cause the market price of the Old Notes to decline and their trading price to be more volatile. If the market value of the Old Notes outstanding after the exchange offer is less than $1 million, the NYSE may delist the Old Notes.

        We have not obtained a third-party determination that the exchange offer is fair to holders of the Old Notes.

        We have designed the New Secured Notes and the New Secured Convertible Notes to be economically attractive by offering holders a higher interest rate and, in the case of the New Secured Convertible Notes, a lower conversion price compared to the Old Notes and by securing the 2009

19

Notes with a junior priority lien on our domestic assets in which the lenders under our secured credit facility hold a senior priority lien. The exchange offer has been unanimously approved by our Board of Directors. However, we have not retained and do not intend to retain any unaffiliated representative to act solely on behalf of the holders for purposes of negotiating the terms of the exchange offer and/or preparing a report concerning the fairness of the exchange offer. We cannot assure holders of the Old Notes that the value of the 2009 Secured Notes will equal or exceed the value of the Old Notes, and we do not take a position or make a recommendation as to whether you ought to participate in the exchange offer or how you should choose between the New Secured Notes and the New Secured Convertible Notes.

Risks Relating to Our Business

        We have recently introduced a number of new products, including most recently, the SGI Altix 3000 products, but we cannot assure you they will achieve market acceptance.    In January 2003, we introduced the SGI Altix family of servers and superclusters based on the Intel® Itanium® 2 processor and the Linux® operating system. Risks associated with this new product line include dependence on Intel in terms of price, supply, performance, and product roadmaps; the availability of Linux applications optimized for the 64-bit Itanium platform or our scalable systems architecture; acceptance of the Linux operating system in demanding environments; and competition from other suppliers of Intel-based servers. There can be no assurance that this new product line will achieve market acceptance or provide significant incremental revenue. In July 2003, we introduced new highly scalable visualization products. Our ability to achieve future revenue growth will depend significantly on the market success of these products. If one or more of the product lines were to fail in the market, it could have an adverse effect on our business.

        We are concentrating our R&D investments.    As an increasing percentage of our R&D and marketing budget is devoted to potential growth areas, including the SGI Altix family, visualization and storage, a declining amount both in percentage and absolute terms is being devoted to the traditional MIPS® and IRIX products, which continue to supply the bulk of our revenue. Managing this transition without unduly compromising the competitiveness of the MIPS and IRIX family and the quality of support received by customers will be key to our success. There can be no assurance that this transition will not impair our customer relationships and our competitive position.

        We have been incurring losses and consuming cash in our operations and must reverse these trends and generate cash from other sources in fiscal 2004.    We have incurred net losses and negative cash flows from operations during each of the past several fiscal years. At September 26, 2003, our principal sources of liquidity included unrestricted cash and marketable investments of $116 million, down from $141 million at June 27, 2003. We expect to continue to consume cash from operations through the first half of fiscal 2004. Due to the significant intra-quarter fluctuations in our cash levels that result from timing differences between our payments to vendors and our collections from customers, our cash levels tend to be at their highest at the end of the quarter. As a result, we continue to focus on expense controls and working capital efficiencies to maintain adequate cash levels. We also are exploring alternatives for generating cash through financing transactions and dispositions of non-core assets and will consider a range of alternatives in the event of a material revenue shortfall. If we fail to reduce the cash consumption from operations and to generate cash from these other sources on a timely basis, or if the cash requirements of our business change as the result of changes in terms from vendors or other causes, we could no longer have the cash resources required to run our business.

        We may not be able to obtain additional capital when needed.    We have an asset-based credit facility that may be declared to be in default if we fail to meet certain financial and other covenants. This facility matures in April 2005, subject to acceleration upon various events of default or the failure to successfully extend the maturity of our senior convertible notes due September 2004 on terms

20

satisfactory to the secured lender on or before March 5, 2004. The facility is secured by our U.S. and Canadian accounts receivable, U.S. inventory and equipment, the pledge of certain intellectual property and $10 million cash collateral. We also deposit additional cash when eligible accounts receivable and other collateral, which fluctuate within the quarter, are below the level needed to secure our letters of credit. At September 26, 2003, this facility was secured by a total of $17 million cash collateral. We obtained waivers of compliance with the covenants of the facility from the lenders in the first, third and fourth quarters of fiscal 2003. If we are not able to comply with the financial and other covenants of this facility or there is a material adverse change impairing our ability to repay the outstanding balance, the facility may be declared to be in default. If a default is declared and not waived or if the facility matures and is not renewed, we may not be able to obtain alternative sources of financing on acceptable terms.

        In the future, we may need to obtain additional financing to fund our business or repay our debt, and there can be no assurance that financing will be available in amounts or on terms acceptable to us. In addition, if funds are raised through further incurrence of debt, our operations and finances may become subject to further restrictions and we may be required to limit our service or product development activities or other operations, or otherwise modify our business strategy. If we obtain additional funds by selling any of our equity securities or if we issue equity derivative securities in connection with obtaining debt financing, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights, preferences or privileges senior to the common stock.

        We may become involved in intellectual property disputes.    We routinely receive communications from third parties asserting patent or other rights covering our products and technologies. Based upon our evaluation, we may take no action or may seek to obtain a license. We are in discussions with several parties that have asserted intellectual property infringement claims. In any given case there is a risk that a license will not be available on terms that we consider reasonable, or that litigation will ensue. We expect that, as the number of hardware and software patents issued continues to increase, and as competition in the markets we address intensifies, the volume of these intellectual property claims will also increase.

        In addition, our increasing visibility as a supplier of Linux-based systems and as a participant in the open source software community increases our risk of becoming embroiled in the intellectual property disputes concerning these subjects, such as the current widely reported litigations between SCO Group on the one hand and IBM and Red Hat on the other. We recently received a notice from SCO Group stating its intention to terminate our fully paid license to certain UNIX operating system-related code, under which we distribute our IRIX operating system, on the basis that we have breached the terms of such license. We believe that the SCO Group's allegations are without merit and that our fully paid license is non-terminable. Nonetheless, there can be no assurance that this dispute with SCO Group will not escalate into litigation, which could have a material adverse effect on SGI, or that SCO Group's intellectual property claims will not impair the market acceptance of the Linux operating system.

        We are increasingly dependent on partners and suppliers.    Our business has always involved close collaboration with partners and suppliers. However, many elements of our current business strategy, including the recent addition of scalable servers based on Itanium 2 processors and the Linux operating system, will increase our dependence on Intel and other partners, and on our manufacturing partners and other component suppliers. Our business could be adversely affected, for example, if Intel fails to meet product release schedules, if we experience supply constraints, or if we experience any other interruption or delay in the supply chain. The competitiveness of our system products, particularly our servers, is significantly affected by the availability on our platform of third-party software applications that are important to customers in our target markets. Our ability to work with our software partners

21

to ensure porting of these applications to our IRIX operating system and to Linux is a key factor to our business success.

        We are dependent on sales to the U.S. government.    A significant portion of our revenue is derived from sales to the U.S. government, either directly by us or through system integrators and other resellers. Sales to the government present risks in addition to those involved in sales to commercial customers, including potential disruptions due to appropriation and spending patterns. The U.S. government can typically terminate or modify its contracts with us at any time for its convenience. Any disruption or limitation in our ability to do business with the U.S. Government could have an adverse impact on SGI.

        A portion of our business requires security clearances from the U.S. government. We have implemented measures to maintain our clearances in light of the fact that our Chairman and Chief Executive Officer, Robert Bishop, is an Australian citizen. These arrangements are subject to periodic review by customer agencies and the Defense Security Service of the Department of Defense.

        Our business experiences period-to-period fluctuations in operating results.    Our operating results may fluctuate for a number of reasons. Delivery cycles, other than those for large-scale server products, are typically short. Over half of each quarter's product revenue results from orders booked and shipped during the third month, and disproportionately in the latter half of that month. These factors make the forecasting of revenue inherently uncertain. Because we plan our operating expenses, many of which are relatively fixed in the short term, on expected revenue, even a relatively small revenue shortfall may cause a period's results to be substantially below expectations. Such a revenue shortfall could arise from any number of factors, including lower than expected demand, supply constraints, delays in the availability of new products, transit interruptions, overall economic conditions, military or terrorist actions, or natural disasters. Demand can also be adversely affected by concerns specifically associated with our financial health and by product and technology transition announcements by SGI or our competitors. The timing of customer acceptance of certain large-scale server products may also have a significant effect on periodic operating results. Margins are heavily influenced by revenue levels, mix considerations, including geographic concentrations, the mix of product and service revenue, and the mix of server and desktop product revenue as well as the mix of configurations within these product categories.

        The present global economic uncertainty has impacted the timing of buying decisions of our customers. Unless and until the global economic environment becomes more positive it will be difficult for us to experience growth in revenue.

        Many of our international sales require export licenses.    Our sales to foreign customers are subject to export regulations. Sales of many of our high-end products require clearance and export licenses from the U.S. Department of Commerce under these regulations. Our international sales would be adversely affected if such regulations were tightened, or if they are not modified over time to reflect the increasing performance of our products.

        The Swiss authorities are investigating compliance with their export regulations in connection with exports from the Swiss manufacturing facility that was closed during the second quarter of fiscal 2002. We believe that this matter will be resolved without a significant adverse effect on our business, operating results or financial condition.

        We may not be able to develop and introduce new products on a timely basis.    Meeting our objectives for the future will require that our recently introduced products achieve success in the marketplace and that we succeed in the timely development and introduction of more successful new products. Product transitions are a recurring part of our business. A number of risks are inherent in this process.

22

        The development of new technology and products is increasingly complex and uncertain, which increases the risk of delays. The introduction of new computer systems requires close collaboration and continued technological advancement involving multiple hardware and software design teams, internal manufacturing teams, outside suppliers of key components such as semiconductors and outsource manufacturing partners. The failure of any one of these elements could cause our products under development to fail to meet specifications or to miss the aggressive timetables that we establish. There is no assurance that development or acceptance of our new systems will not be affected by delays in this process.

        Short product life cycles place a premium on our ability to manage the transition to new products. We often announce new products in the early part of a quarter while the product is in the final stages of development and testing, and seek to manufacture and ship the product in volume during the same quarter. Our results could be adversely affected by such factors as development delays, the release of products to manufacturing late in any quarter, quality or yield problems experienced by suppliers, variations in product costs and excess inventories of older products and components. In addition, some customers may delay purchasing existing products in anticipation of new product introductions.

        Most products are upgraded during their product life cycle. The ability to upgrade products in a timely fashion is necessary to compete in the computer industry. Delay in introducing updates and upgrades can adversely affect acceptance and demand for product.

        Downward fluctuations in the price of our common stock may cause our common stock to be delisted.    On October 24, 2002 we were notified by the New York Stock Exchange that we were not in compliance with its requirement that listed securities trade at a minimum per share price of $1.00 averaged over a thirty day trading period. Our stock price subsequently increased to more than $1.00, but if it were to decline again and not recover, the NYSE could terminate the listing of our common stock. As of November 4, 2003, the 30-day trading average of our stock was $1.10. Declines in the price of our common stock may be caused by our failure to meet the investment community's expectations for quarterly revenue or earnings or by broader market trends unrelated to our performance. Delisting would adversely affect the liquidity and market price of our common stock.

        We operate in a highly competitive industry.    The computer industry is highly competitive, with rapid technological advances and constantly improving price/performance. Most of our competitors have substantially greater technical, marketing and financial resources. They also generally have a larger installed base of customers and a wider range of available applications software. Competition may result in significant discounting and lower gross margins.

        We may not be able to retain and attract qualified employees.    Our success depends on our ability to continue to attract, retain and motivate highly qualified technical, sales and marketing and management personnel. The uncertainties surrounding our business prospects and our continuing restructuring actions have increased the challenges of retaining world-class talent. We implemented further restructuring actions during fiscal 2003 and the first quarter of fiscal 2004. As we continue to work through the turnaround process, there is no guarantee that we will not lose highly qualified employees or that we will be able to hire highly qualified candidates, as new skills are needed.

        Our business is subject to market risk.    In the normal course of business, our financial position is routinely subjected to a variety of risks, including market risk associated with interest rate movements and currency rate movements on non-U.S. dollar denominated assets and liabilities, as well as collectibility of accounts receivable. We regularly assess these risks and have established policies and business practices to protect against the adverse effects of these and other potential exposures. As a result, we do not anticipate material losses in these areas.

23

DESCRIPTION OF THE EXCHANGE OFFER

Purpose of the Exchange Offer

        We do not currently believe that we will be able to generate sufficient cash to repay the Old Notes in full at maturity on September 1, 2004. Our unrestricted cash, cash equivalents and marketable investments were approximately $116 million at September 26, 2003. The working capital requirements of our business result in substantial fluctuations in our cash balances during fiscal quarters. We would be unable to repurchase or repay at maturity the Old Notes without depleting our cash balance to a level that would be insufficient to support our business. If we are unable to complete the exchange offer, there is a substantial risk that uncertainty about our ability to repay or refinance the Old Notes could erode customer confidence which would have a material adverse effect on our business. In addition, the maturity date of our secured credit facility will be accelerated to June 2, 2004 if we fail to complete the exchange offer or otherwise refinance 80% of the Old Notes prior to March 5, 2004. Therefore unless we are able to refinance the Old Notes prior to maturity, there is a substantial risk of default at maturity.

        The purpose of the exchange offer is to offer holders of the Old Notes an increase in yield, the benefit of a security interest and, in the case of the New Secured Convertible Notes, a decrease in the conversion price of their investment in return for an extension of the maturity. If the exchange offer is successful, it will provide time to return our business to profitability and positive cash flow so that we can repay or refinance our debt prior to its revised maturity. We cannot assure you that, even if the exchange offer is successful, we will achieve these objectives.

        The exchange offer is not being made to, nor will we accept tenders for exchange from, holders of Old Notes in any jurisdiction in which the exchange offer or the acceptance of it would not be in compliance with the securities or blue sky laws of such jurisdiction.

Terms of the Exchange Offer; Period for Tendering

        This prospectus and the accompanying letter of transmittal contain the terms and conditions of the exchange offer. Upon the terms and subject to the conditions included in this prospectus and in the accompanying letter of transmittal, which together are the exchange offer, we will accept for exchange Old Notes which are properly tendered on or prior to the expiration date, unless you have previously withdrawn them.

•

When you tender to us Old Notes as provided below, our acceptance of the Old Notes will constitute a binding agreement between you and us upon the terms and subject to the conditions in this prospectus and in the accompanying letter of transmittal.



•

For each $1,000 principal amount of Old Notes you tender accepted by us in the exchange offer, we will give you that principal amount of 2009 Secured Notes. Upon completion of the exchange offer, we will also pay accrued and unpaid interest up to the date of acceptance on Old Notes that we accept for exchange.



•

The exchange offer is conditioned on the holders of 80% in principal amount of the Old Notes having tendered and not withdrawn their Old Notes at the expiration of the exchange offer our shareholders' approval of the issuance of the shares of common stock underlying the New Secured Convertible Notes and on effectiveness of the registration statement. Our obligation to accept Old Notes for exchange in the exchange offer is also subject to the conditions described under "—Conditions to the Exchange Offer".



•

You may exchange your Old Notes entirely for New Secured Notes, entirely for New Secured Convertible Notes, or for any combination of New Secured and New Secured Convertible Notes.

24

•

The exchange offer expires at midnight New York City time on December 19, 2003. We may, however, in our sole discretion, extend the period of time for which the exchange offer is open. References in this prospectus to the expiration date mean midnight New York City time on December 19, 2003 or, if extended by us, the latest time and date to which the exchange offer is extended by us.



•

We will keep the exchange offer open for no fewer than 20 business days, or longer if required by applicable law, after the date that we first mail notice of the exchange offer to the holders of the Old Notes.



•

We expressly reserve the right, at any time, to extend the period of time during which the exchange offer is open, and thereby delay acceptance of any Old Notes, by giving oral or written notice of an extension to the Exchange Agent and notice of that extension to the holders as described below. During any extension, all Old Notes previously tendered will remain subject to the exchange offer unless withdrawal rights are exercised. Any Old Notes not accepted for exchange for any reason will be returned without expense to the tendering holder promptly after the expiration or termination of the exchange offer.



•

We expressly reserve the right to amend or terminate the exchange offer at any time prior to the expiration date, and not to accept for exchange any Old Notes that we have not yet accepted for exchange, if any of the conditions of the exchange offer specified below under "Conditions to the Exchange Offer" are not satisfied.



•

We will give oral or written notice of any extension, amendment, waiver, termination or non-acceptance described above to holders of the Old Notes promptly. If we amend this exchange offer in any respect or waive any condition to the exchange offer, we will give written notice of the amendment or waiver to the Exchange Agent and will make a public announcement of the amendment or waiver as promptly as practicable afterward. If we extend the expiration date, we will give notice by means of a press release or other public announcement no later than 9:00 a.m., New York City time, on the business day after the previously scheduled expiration date. As required by SEC rules, we will extend the exchange offer by at least five business days if we amend the offer in any material respect, including waiver of a material condition. Without limiting the manner in which we may choose to make any public announcement and subject to applicable law, we will have no obligation to publish, advertise or otherwise communicate any public announcements other than by issuing a release to the Dow Jones News Service.



•

Holders of Old Notes do not have any appraisal or dissenters' rights in connection with the exchange offer.



•

We intend to conduct the exchange offer in accordance with the applicable requirements of the Securities Exchange Act of 1934, as amended and the applicable rules and regulations of the United States Securities and Exchange Commission.

Important Reservation of Rights Regarding the Exchange Offer

        You should note that:

•

All questions as to the validity, form, eligibility, time of receipt and acceptance of Old Notes tendered for exchange will be determined by SGI in its sole discretion, and its determination shall be final and binding.



•

SGI reserves the absolute right to reject any and all tenders of any particular Old Notes not properly tendered or not to accept any particular Old Notes the acceptance of which might, in SGI's judgment or the judgment of SGI's counsel, be unlawful.

25

•

SGI also reserves the absolute right to waive any defects or irregularities as to any particular Old Notes either before or after the expiration date, including the right to waive the ineligibility of any holder who seeks to tender Old Notes in the exchange offer. If we waive a condition with respect to any particular noteholder, we will waive it for all noteholders. Unless SGI agrees to waive any defect or irregularity in connection with the tender of Old Notes for exchange, you must cure any defect or irregularity within any reasonable period of time as SGI shall determine.



•

SGI's interpretation of the terms and conditions of the exchange offer either before or after the expiration date shall be final and binding on all parties.



•

Neither SGI, the Exchange Agent nor any other person shall be under any duty to give notification of any defect or irregularity with respect to any tender of Old Notes for exchange, nor shall any of them incur any liability for failure to give any notification.

Conditions to the Exchange Offer

        We will accept for exchange all Old Notes validly tendered and not withdrawn if at least 80% of Old Notes are tendered for exchange before the expiration of the exchange offer. We will not be required to accept for exchange any Old Notes and may terminate, amend or extend the exchange offer before the acceptance of the Old Notes, if, on or before the expiration date:

•

holders of at least 80% of the principal amount of Old Notes have not validly tendered and not withdrawn their Old Notes;



•

SGI or any of its respective subsidiaries does not receive or obtain any consent, authorization, approval or exemption of or from any governmental authority that may be required or advisable in connection with the completion of this exchange offer, including that the registration statement of which this prospectus is a part shall not have been declared, or shall not continue to be, effective;



•

SGI does not receive approval from its shareholders for the issuance of the shares of our common stock issuable upon conversion of the New Secured Convertible Notes;



•

any action, proceeding or litigation seeking to enjoin, make illegal, delay the completion of or challenge in any respect the exchange offer, or otherwise relating in any manner to the exchange offer, is instituted or threatened;



•

any order, stay, judgment or decree is issued by any court, government, governmental authority or other regulatory or administrative authority and is in effect or any statute, rule, regulation, governmental order or injunction shall have been proposed, enacted, enforced or deemed applicable to the exchange offer, any of which would or might restrain, prohibit or delay completion of the exchange offer or impair the contemplated benefits of the exchange offer, to SGI;



•

any tender or exchange offer, other than this exchange offer, with respect to some or all of the outstanding Old Notes, or any merger, acquisition or other business combination proposal involving SGI or a substantial portion of its assets, shall have been proposed, announced or made by any person or entity; or there has occurred;



•

any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States or the European Union;



•

the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States;

26

•

any change in the general political, market, economic or financial conditions in the United States or abroad that could, in our reasonable judgment, have a material adverse effect on the business, condition (financial or other), income, operations or prospects of SGI or otherwise materially impair in any way the contemplated future conduct of SGI;



•

in the case of any of the foregoing existing at the time of the commencement of the exchange offer, a material acceleration or worsening thereof; or



•

a material adverse change in our financial condition or business prospects or an unforeseeable event that makes completion of the exchange offer inadvisable.

        The conditions listed above are for SGI's sole benefit and may be asserted by SGI regardless of the circumstances giving rise to any of these conditions. On or before the expiration date, SGI may waive these conditions in our sole discretion in whole or in part at any time and from time to time. The failure by SGI at any time to exercise any of the above rights will not be considered a waiver of that right, and these rights will be considered to be ongoing rights which may be asserted, before the expiration date, at any time and from time to time.

        If SGI determines in its reasonable discretion that any of the conditions are not satisfied, it may:

•

refuse to accept any Old Notes, return all tendered Old Notes to the tendering holders, and terminate the exchange offer;



•

extend the exchange offer and retain all Old Notes tendered before the expiration of the exchange offer, subject, however, to the rights of holders to withdraw these Old Notes (see "Withdrawal Rights" below); or



•

waive unsatisfied conditions relating to the exchange offer and accept all properly tendered Old Notes that have not been withdrawn. If we waive any material condition to the offer, we will extend the exchange offer by at least five business days, as required by Rule 13e-4(e)(3).

Procedures for Tendering

What to submit and how

        If you, as the registered holder of Old Notes, wish to tender your Old Notes for exchange in the exchange offer, you must transmit a properly completed and duly executed letter of transmittal (or agent's message in lieu thereof as described below under "Book-Entry Transfer") to U.S. Bank National Association, as Exchange Agent at the address set forth below under "Exchange Agent" on or prior to the expiration date.

        In addition,

        (1)   a timely confirmation of a book-entry transfer of Old Notes, if such procedure is available, into the Exchange Agent's account at DTC using the procedure for book-entry transfer described below, must be received by the Exchange Agent prior to the expiration date; or

        (2)   you must comply with the guaranteed delivery procedures described below.

        The method of delivery of Old Notes, letters of transmittal and notices of guaranteed delivery is at your election and risk. If delivery is by mail, we recommend that registered mail, properly insured, with return receipt requested, be used. In all cases, sufficient time should be allowed to assure timely delivery. No letters of transmittal or Old Notes should be sent to SGI.

27

How to sign your letter of transmittal and other documents

        Signatures on a letter of transmittal or a notice of withdrawal, as the case may be, must be guaranteed unless the Old Notes being surrendered for exchange are tendered either:

        (1)   by a registered holder of the Old Notes who has not completed the box entitled "Special Issuance Instructions" or "Special Delivery Instructions" on the letter of transmittal; or

        (2)   for the account of an eligible institution.

If signatures on a letter of transmittal or a notice of withdrawal, as the case may be, are required to be guaranteed, the guarantees must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Exchange Agent, which requirements include membership or participation in the Security Transfer Agent Medallion Program, referred to in this prospectus as STAMP, or such other "signature guarantee program" as may be determined by the Exchange Agent in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

        If the letter of transmittal or powers of attorney are signed by trustees, executors, administrators, guardians, attorneys-in-fact, officers or corporations or others acting in a fiduciary or representative capacity, the person should so indicate when signing and, unless waived by SGI, proper evidence satisfactory to SGI of its authority to so act must be submitted.

Book-Entry Transfer

        The Exchange Agent will make a request to establish an account with respect to the Old Notes at DTC for purposes of the exchange offer promptly after the date of this prospectus. Any financial institution that is a participant in DTC's systems may make book-entry delivery of Old Notes by causing DTC to transfer Old Notes into the Exchange Agent's account in accordance with DTC's Automated Tender Offer Program procedures for transfer. However, the exchange for the Old Notes so tendered will only be made after timely confirmation of book-entry transfer of Old Notes into the Exchange Agent's account, and timely receipt by the Exchange Agent of an agent's message, transmitted by DTC and received by the Exchange Agent and forming a part of a book-entry confirmation. The agent's message must state that DTC has received an express acknowledgment from the participant tendering Old Notes that are the subject of that book-entry confirmation that the participant has received and agrees to be bound by the terms of the letter of transmittal, and that we may enforce the agreement against that participant.

        If your Old Notes are held through DTC, you must complete a form called "instructions to registered holder and/or book-entry participant", which will instruct the DTC participant through whom you hold your notes of your intention to tender your Old Notes or not tender your Old Notes. Please note that delivery of documents to DTC in accordance with its procedures does not constitute delivery to the Exchange Agent and we will not be able to accept your tender of notes until the Exchange Agent receives a letter of transmittal (or an agent's message in lieu thereof) and a book-entry confirmation from DTC with respect to your notes. A copy of that form is available from the Exchange Agent.

        Except as described under "Description of the Old Notes—Book-Entry System—Certificated Notes", we have arranged for the 2009 Secured Notes to be issued in the form of global notes registered in the name of DTC or its nominee and each holder's interest in it will be transferable only in book-entry form through DTC.

28

Guaranteed Delivery Procedures

        If you are a holder of Old Notes and you want to tender your Old Notes but the procedure for book-entry transfer cannot be completed on a timely basis, a tender may be effected if:

        (1)   the tender is made through an eligible institution;

        (2)   prior to the expiration date, the Exchange Agent receives, by facsimile transmission, mail or hand delivery, from that eligible institution a properly completed and duly executed letter of transmittal and notice of guaranteed delivery, substantially in the form provided by us and stating:

•

the name and address of the holder of Old Notes,



•

the amount of Old Notes tendered, and



•

that the tender is being made by delivering that notice and guaranteeing that within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery, confirmation of a book-entry transfer of the tendered Old Notes to the Exchange Agent; and

        (3)   confirmation of a book-entry transfer is received by the Exchange Agent within three New York Stock Exchange trading days after the date of execution of the Notice of Guaranteed Delivery.

Acceptance of Old Notes and Delivery of 2009 Secured Notes

        Once all of the conditions to the exchange offer are satisfied or waived, we will accept, promptly after the expiration date, all Old Notes properly tendered and will issue the 2009 Secured Notes. See "—Conditions to the Exchange Offer". For purposes of the exchange offer, our giving of oral or written notice of our acceptance to the Exchange Agent will be considered our acceptance of the exchange offer.

        In all cases, we will issue 2009 Secured Notes in exchange for Old Notes that are accepted for exchange only after timely receipt by the Exchange Agent of:

•

a book-entry confirmation of transfer of Old Notes into the Exchange Agent's account at DTC using the book-entry transfer procedures described below, and



•

a properly completed and duly executed letter of transmittal (or agent's message in lieu thereof.)

        We will have accepted validly tendered Old Notes if and when we have given oral or written notice to the Exchange Agent. The Exchange Agent will act as agent for the tendering holders for the purposes of receiving the 2009 Secured Notes from us, and will make the exchange on, or promptly after, the expiration date. Following this exchange the holders in whose names the 2009 Secured Notes will be issuable upon exchange will be deemed the holders of record of the 2009 Secured Notes.

        The reasons we may not accept tendered Old Notes are:

•

the Old Notes were not validly tendered pursuant to the procedures for tendering. See "Procedures for Tendering";



•

we determine in our reasonable discretion that any of the conditions to the exchange offer have not been satisfied. See "Conditions to the Exchange Offer";



•

a holder has validly withdrawn a tender of Old Notes as described under "Withdrawal Rights"; or



•

we have, prior to the expiration date of the exchange offer, delayed or terminated the exchange offer for any of the reasons set forth under the caption "—Conditions to the Exchange Offer." See also "—Terms of the Exchange; Period for Tendering".

29

        If we do not accept any tendered Old Notes for any reason, we will return any unaccepted or non-exchanged Old Notes tendered promptly after the expiration or termination of the exchange offer.

        Old Notes which are not tendered for exchange or are tendered but not accepted in connection with the exchange offer will remain outstanding and remain subject to the old indenture.

Withdrawal Rights

        You can withdraw your tender of Old Notes at any time on or prior to the expiration date. You may also withdraw your tender if we have not accepted your Old Notes for payment after the expiration of 40 business days from the commencement of the exchange offer.

        For a withdrawal to be effective, a written notice of withdrawal must be received by the Exchange Agent at one of the addresses listed below under "Exchange Agent". Any notice of withdrawal must specify:

•

the name of the person having tendered the Old Notes to be withdrawn;



•

the principal amount of the Old Notes to be withdrawn; and



•

if Old Notes have been tendered using the procedure for book-entry transfer described above, the name and number of the account at DTC to be credited with the withdrawn Old Notes, and otherwise comply with the procedures of that facility.

        Please note that all questions as to the validity, form, eligibility and time of receipt of notices of withdrawal will be determined by us, and our determination shall be final and binding on all parties. Any Old Notes so withdrawn will be considered not to have been validly tendered for exchange for purposes of the exchange offer.

        If you have properly withdrawn Old Notes and wish to re-tender them, you may do so by following one of the procedures described under "—Procedures for Tendering" above at any time on or prior to the expiration date.

Exchange Agent

        U.S. Bank National Association has been appointed as the Exchange Agent for the exchange offer. All executed letters of transmittal should be directed to the Exchange Agent at one of the addresses set forth below. Questions and requests for assistance, requests for additional copies of this prospectus or of the letter of transmittal and requests for notices of guaranteed delivery should be directed to the Exchange Agent, addressed as follows:

Deliver to:

U.S. Bank National Association

By Hand or Overnight Courier:	By Mail:
U.S. Bank National Association West Side Flats Operations Center 60 Livingston Avenue St. Paul, MN 55107 Attn: Specialized Finance	U.S. Bank National Association West Side Flats Operations Center 60 Livingston Avenue St. Paul, MN 55107 Attn: Specialized Finance

Facsimile Transmissions:
(By Eligible Institutions Only)
(651) 495-8158

To Confirm by Telephone:
(651) 495-3511

        Delivery to an address other than as listed above or transmission of instructions via facsimile other than as listed above does not constitute a valid delivery.

30

Fees and Expenses

        The expenses of soliciting tenders of Old Notes will be borne by SGI. The Information Agent and the Exchange Agent will mail solicitation materials on our behalf. Chanin Capital Partners ("Chanin") is acting as our financial advisor in connection with the exchange offer and will receive a fee of up to $3.0 million. We will also reimburse Chanin for reasonable out-of-pocket expenses. We will pay a retail solicitation fee to soliciting dealers who are named as having solicited and obtained the tender by beneficial holders of the Old Notes in a qualifying letter to clients. The amount of the fee will be $2.50 per $1,000 principal amount of Old Notes solicited from and tendered by beneficial holders of more than $50,000 and less than $250,000 principal amount of Old Notes and $5.00 per $1,000 principal amount of Old Notes solicited from and tendered by beneficial holders of up to and including $50,000 principal amount of Old Notes. This fee will be paid only with respect to tenders by beneficial holders of less than $250,000 principal amount of the Old Notes that are accepted in the exchange offer. The total expenses expected to be incurred by us in connection with the exchange offer, other than fees paid to Chanin, but including Chanin's reasonable expenses, printing, accounting and legal fees, and the fees and expenses of the Exchange Agent, Information Agent and trustee are estimated to be approximately $1.3 million.

Transfer Taxes

        Holders who tender their Old Notes for exchange will not be obligated to pay any transfer taxes, except that holders who instruct us to register 2009 Secured Notes in the name of, or request that Old Notes not tendered or not accepted in the exchange offer be returned to, a person other than the registered tendering holder, will be responsible for the payment of any applicable transfer tax.

Consequences of Failure to Properly Tender Old Notes in the Exchange Offer

        Issuance of the 2009 Secured Notes in exchange for the Old Notes under the exchange offer will be made only after timely receipt by the Exchange Agent of such Old Notes, a properly completed and duly executed letter of transmittal (or agent's message in lieu thereof) and all other required documents. Therefore holders desiring to tender Old Notes in exchange for 2009 Secured Notes should allow sufficient time to ensure timely delivery. We are under no duty to give notification of defects or irregularities of tenders of Old Notes for exchange.

        To the extent that Old Notes are tendered and accepted in connection with the exchange offer, any trading markets for the remaining Old Notes could be adversely affected. See "Risk Factors—Risks Relating to the Exchange Offer".

        To the extent that any Old Notes remain outstanding following completion of the exchange offer, they will remain obligations of SGI.

31

MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS

        The following are the material United States federal income tax consequences of the exchange offer to exchanging holders of Old Notes. This discussion applies only to Old Notes and 2009 Secured Notes held as capital assets, and does not describe all of the tax consequences that may be relevant to a holder in light of the holder's particular circumstances or to holders subject to special rules, such as:

•

certain financial institutions;



•

insurance companies;



•

dealers in securities or foreign currencies;



•

persons holding Old Notes or 2009 Secured Notes as part of a hedge;



•

United States Holders (defined below) whose functional currency is not the U.S. dollar;



•

partnerships or other entities classified as partnerships for U.S. federal income tax purposes;



•

persons subject to the alternative minimum tax; or



•

persons that own, or are deemed to own, more than 5% of the common stock of the Company or persons that beneficially own more than 5% of the fair market value of the New Secured Convertible Notes.

        This summary is based on the Internal Revenue Code of 1986, as amended to the date hereof (the "Code"), administrative pronouncements, judicial decisions and final, temporary and proposed Treasury regulations, changes to any of which subsequent to the date of this exchange offer may affect the tax consequences described herein. Persons considering participation in the exchange offer are urged to consult their tax advisers with regard to the application of the United States federal income tax laws to their particular situations as well as any tax consequences arising under the laws of any state, local or foreign taxing jurisdiction.

32

TAX CONSEQUENCES TO UNITED STATES HOLDERS

        As used in this prospectus, the term "United States Holder" means a beneficial owner of an Old Note or a 2009 Secured Note acquired in the exchange offer that is for United States federal income tax purposes:

•

a citizen or resident of the United States;



•

a corporation, or other entity taxable as a corporation for U.S. federal income tax purposes, created or organized in or under the laws of the United States or of any political subdivision thereof; or



•

an estate or trust the income of which is subject to United States federal income taxation regardless of its source.

        The term United States Holder also includes certain former citizens and residents of the United States.

The Exchange

        The tax treatment of a United States Holder's exchange of Old Notes for 2009 Secured Notes pursuant to the exchange offer will depend on whether the exchange is treated as a recapitalization. The exchange will be treated as a recapitalization only if both the Old Notes and the 2009 Secured Notes constitute "securities" within the meaning of the provisions of the Code governing reorganizations. This, in turn, depends upon the terms and conditions of, and other facts and circumstances relating to, the Old Notes and the 2009 Secured Notes, and upon the application of numerous judicial decisions. We believe the exchange should qualify as a recapitalization for U.S. federal income tax purposes.

        Provided that the exchange is treated as a recapitalization under the Code, (i) a United States Holder will not recognize any gain or loss in respect of the exchange, (ii) the holding period for the 2009 Secured Notes received in the exchange will include the period of time during which the holder held the corresponding Old Notes, and (iii) the tax basis in the 2009 Secured Notes received in the exchange will equal the holder's adjusted tax basis in the Old Notes immediately prior to the exchange.

        If the exchange of the Old Notes for the 2009 Secured Notes failed to qualify as a recapitalization under the Code, a United States Holder would recognize gain or loss equal to the difference, if any, between the amount realized on the exchange and the holder's adjusted tax basis in the Old Notes. In that case, the amount realized would equal the issue price (determined as described below) of the 2009 Secured Notes received. Subject to the application of the market discount rules discussed in the next paragraph, any gain or loss would be capital gain or loss, and would be long-term capital gain or loss if at the time of the exchange the Old Notes had been held for more than one year. The deduction of capital losses for U.S. federal income tax purposes is subject to limitations. A United States Holder's holding period for a 2009 Secured Note would commence on the date immediately following the date of issuance and the holder's tax basis in the 2009 Secured Note would be the issue price of the 2009 Secured Note (determined as described below).

        If a United States Holder holds Old Notes acquired at a "market discount", any gain recognized by the holder on the exchange of such Old Notes for 2009 Secured Notes would be recharacterized as ordinary interest income to the extent of the accrued market discount that had not previously been included as ordinary income.

33

The 2009 Secured Notes

Original Issue Discount

        Regardless of whether the exchange qualifies as a recapitalization, the 2009 Secured Notes will be treated as being issued with original issue discount ("OID") for U.S. federal income tax purposes if the stated redemption price at maturity of the 2009 Secured Notes exceeds their issue price, subject to a statutory de minimis exception. Assuming the 2009 Secured Notes are listed on the New York Stock Exchange, the issue price of the 2009 Secured Notes will equal their fair market value at the time of the exchange. If the 2009 Secured Notes were not considered publicly traded, the issue price of the 2009 Secured Notes would equal the fair market value of the Old Notes at the time of the exchange. The amount of OID is de minimis if it is less than ¹/4 of 1 percent of the stated redemption price at maturity multiplied by the number of complete years to maturity from the date of exchange. The stated redemption price at maturity is the sum of all payments to be made under the 2009 Secured Notes other than qualified stated interest. Qualified stated interest generally is stated interest that is unconditionally payable at least annually at a single fixed rate over the entire term of the 2009 Secured Notes.

        If the 2009 Secured Notes are treated as issued with more than de minimis OID, a United States Holder will be required to include OID on the 2009 Secured Notes in income for U.S. federal income tax purposes as it accrues, in accordance with a constant yield method based on a compounding of interest, before the receipt of cash payments attributable to this income. The holder will also increase its tax basis in the 2009 Secured Notes by a corresponding amount. The holder generally will be required to include in income increasingly greater amounts of original issue discount in successive accrual periods. A United States Holder will be required to include any qualified stated interest payments on the 2009 Secured Notes in income in accordance with the holder's method of accounting for U.S. federal income tax purposes.

Constant Yield Election

        A United States Holder may make an election to include in gross income all interest that accrues on the 2009 Secured Notes (including stated interest, acquisition discount, original issue discount, de minimis original issue discount, market discount, de minimis market discount, and unstated interest, as adjusted by any amortizable bond premium or acquisition premium) in accordance with a constant yield method based on the compounding of interest (a "constant yield election").

Amortizable Bond Premium

        Regardless of whether the exchange qualifies as a recapitalization under the Code, if, immediately after the exchange, a United States Holder had a tax basis in the 2009 Secured Notes (determined in accordance with applicable regulations) in excess of the stated principal amount of the 2009 Secured Notes, the 2009 Secured Notes would be treated as issued with bond premium, and no OID would be required to be included in the gross income of the holder in respect of the 2009 Secured Notes. In addition, the holder may elect to amortize the bond premium. An election to amortize bond premium applies to all taxable debt obligations then owned and thereafter acquired by the holder and may be revoked only with the consent of the Internal Revenue Service. If a holder makes a constant yield election (as described above) for a 2009 Secured Note with amortizable bond premium, such election will result in a deemed election to amortize bond premium for all of the holder's debt instruments with amortizable bond premium and may be revoked only with the permission of the Internal Revenue Service with respect to debt instruments acquired after revocation.

34

Acquisition Premium

        Assuming that the exchange qualifies as a recapitalization under the Code, a United States Holder would be treated as having "acquisition premium" with respect to the 2009 Secured Notes if the tax basis in the holder's 2009 Secured Notes (determined in the manner described above) is greater than the issue price of the 2009 Secured Notes immediately after the exchange, but is less than or equal to the stated principal amount of the 2009 Secured Notes. In this case, the amount of any OID includible in the holder's gross income in any taxable year will be reduced by an allocable portion of the acquisition premium (generally determined by multiplying the annual OID accrual by a fraction, the numerator of which is the amount of the acquisition premium, and the denominator of which is the total OID on the 2009 Secured Notes).

Market Discount

        Assuming that the exchange qualifies as a recapitalization under the Code, if a United States Holder acquired Old Notes for a purchase price that was less than the stated redemption price of the Old Notes (or, if the Old Notes were treated as issued with OID, their "revised issue price", as defined in Section 1278(a)(4) of the Code), the difference would constitute "market discount" for U.S. federal income tax purposes, subject to a de minimis exception. If the 2009 Secured Notes have OID, some or all of the market discount could effectively convert into OID under the rules discussed above. In general, gain recognized upon the sale or other disposition of 2009 Secured Notes having market discount should be treated as ordinary income to the extent of the market discount that accrued during a United States Holder's holding period for the 2009 Secured Notes, unless the holder elects to include market discount in gross income annually as the market discount accrues or pursuant to a constant yield election by the holder, as described above.

Conversion of New Secured Convertible Notes into Common Stock

        A United States Holder's conversion of a New Secured Convertible Note into common stock will not be a taxable event, except that the receipt of cash in lieu of a fractional share of common stock will result in capital gain or loss (measured by the difference between the cash received in lieu of the fractional share and the United States Holder's tax basis in the fractional share).

        A United States Holder's tax basis in common stock received upon a conversion of a New Secured Convertible Note will be the same as the United States Holder's basis in the New Secured Convertible Note at the time of conversion, reduced by any basis allocated to a fractional share. The United States Holder's holding period for the common stock received will include the Holder's holding period for the New Secured Convertible Note converted.

Constructive Dividends With Respect to New Secured Convertible Notes

        Section 305 of the Internal Revenue Code and applicable Treasury Regulations may treat a holder of New Secured Convertible Notes as having received a constructive distribution if an adjustment is made to the conversion price of the New Secured Convertible Notes that has the effect of increasing the proportionate interest of the holder in our common equity, whether or not the holder ever exercises its conversion privilege. In that case, the holder would be required to recognize ordinary income (and may be eligible for the dividends received deduction) to the extent of our current and/or accumulated earnings and profits. Adjustments to the conversion price made pursuant to a bona fide reasonable adjustment formula having the effect of preventing dilution of the interests of holders of the New Secured Convertible Notes will generally not be treated as resulting in a constructive distribution. However, adjustments made in connection with a distribution of property to holders of common stock (generally other than distributions of common stock or rights to acquire common stock) generally would result in a constructive distribution.

35

Sale, Exchange or Retirement of 2009 Secured Notes

        Upon the sale, exchange or retirement of a 2009 Secured Note (other than a conversion of the New Secured Convertible Notes into common stock), a United States Holder will recognize taxable gain or loss equal to the difference, if any, between the amount realized on the sale, exchange or retirement (other than accrued but unpaid interest, which will be taxable as such), and the holder's adjusted tax basis in the 2009 Secured Note. Subject to the application of the market discount rules described above, any such gain or loss will be capital gain or loss, and will be long-term capital gain or loss if the United States Holder held the 2009 Secured Notes for more than one year at the time of sale, exchange or retirement.

Information Reporting and Backup Withholding

        Information returns will be filed with the Internal Revenue Service in connection with payments on the 2009 Secured Notes and the proceeds from a sale or other disposition of 2009 Secured Notes. A United States Holder will be subject to United States backup withholding tax on these payments if the United States Holder fails to provide its taxpayer identification number to the paying agent and comply with certain certification procedures or otherwise establish an exemption from backup withholding. The amount of any backup withholding from a payment to a United States Holder will be allowed as a credit against the United States Holder's United States federal income tax liability and may entitle the United States Holder to a refund, provided that the required information is furnished to the Internal Revenue Service.

36

TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS

        As used herein, the term "Non-United States Holder" means a beneficial owner of an Old Note, a 2009 Secured Note or common stock acquired through the conversion of a New Secured Convertible Note that is, for United States federal income tax purposes:

•

an individual who is classified as a nonresident alien for U.S. federal income tax purposes;



•

a foreign corporation; or



•

a foreign estate or trust.

        The term "Non-United States Holder" as used herein does not include an individual present in the United States for 183 days or more in the taxable year of disposition or exchange and who is not otherwise a resident of the United States for U.S. federal income tax purposes. Any such person is urged to consult his or her own tax adviser regarding the U.S. federal income tax consequences of the exchange of an Old Note pursuant to the exchange offer, or of the sale, exchange or other disposition of a 2009 Secured Note or common stock acquired through the conversion of a New Secured Convertible Note.

The 2009 Secured Notes and Common Stock Acquired through Conversion of New Secured Convertible Notes

General

        Subject to the discussion below concerning backup withholding, payments of principal, interest (including OID, if any) and premium on a 2009 Secured Note by us or any paying agent to any Non-United States Holder will not be subject to U.S. federal withholding tax, provided that, in the case of interest, (i) the holder does not own, actually or constructively, 10 percent or more of the total combined voting power of all classes of our stock entitled to vote, and is not a controlled foreign corporation related to us, directly or indirectly, through stock ownership; and (ii) the beneficial owner of the 2009 Secured Note certifies on Internal Revenue Service Form W-8BEN, under penalties of perjury, that it is not a United States person.

        A Non-United States Holder of a 2009 Secured Note will not be subject to U.S. federal income tax on gain realized on the sale, exchange or other disposition of a New Secured Note, or on gain realized upon exchange of an Old Note pursuant to the exchange offer, unless the gain is effectively connected with the conduct by the holder of a trade or business in the United States. If a Non-United States Holder of a 2009 Secured Note is engaged in a trade or business in the United States, and if interest (including OID, if any) on the 2009 Secured Note is effectively connected with the conduct of this trade or business, the holder, although exempt from the withholding tax discussed above, will generally be taxed in the same manner as a United States Holder (see above), except that the holder will be required to provide to us a properly executed Internal Revenue Service Form W-8ECI in order to claim an exemption from withholding tax. These holders should consult their own tax advisers with respect to other U.S. tax consequences of the ownership and disposition of 2009 Secured Notes, including the possible imposition of a 30% branch profits tax.

Conversion of New Secured Convertible Notes into Common Stock

        A Non-United States Holder's conversion of a New Secured Convertible Note into common stock will not be a taxable event. However, to the extent that a Non-United States Holder receives cash in lieu of a fractional share upon conversion, any gain upon the receipt of cash would be subject to the rules described below regarding the sale or exchange of common stock.

37

Sale, Exchange or Other Disposition of Common Stock or New Secured Convertible Notes

        Subject to an applicable treaty providing otherwise, a Non-United States Holder generally will not be subject to U.S. federal income tax on gain realized on a sale or other disposition of common stock or New Secured Convertible Notes, unless:

•

the gain is effectively connected with a trade or business of the Non-United States Holder in the United States; or



•

we are or have been a U.S. real property holding corporation, within the meaning of Section 897 of the Code, at any time within the five-year period preceding the disposition or the Non-United States Holder's holding period, whichever period is shorter, and our common stock has ceased to be traded on an established securities market prior to the beginning of the calendar year in which the sale or disposition occurs.

        We believe that we are not, and we do not anticipate becoming, a U.S. real property holding corporation.

Dividends

        Dividends (including deemed dividends on the New Secured Convertible Notes described above under "Tax Consequences to United States Holders—Constructive Dividends") paid to a Non-United States Holder of common stock generally will be subject to withholding tax at a 30% rate or a reduced rate specified by an applicable income tax treaty. In order to obtain a reduced rate of withholding, a Non-United States Holder will be required to provide an Internal Revenue Service Form W-8BEN certifying its entitlement to benefits under a treaty.

        The withholding tax does not apply to dividends paid to a Non-United States Holder who provides a Form W-8ECI, certifying that the dividends are effectively connected with the Non-United States Holder's conduct of a trade or business within the United States. Instead, the effectively connected dividends will be subject to regular U.S. income tax as if the Non-United States Holder were a U.S. resident. A non-U.S. corporation receiving effectively connected dividends may also be subject to an additional "branch profits tax" imposed at a rate of 30% (or a lower treaty rate).

Information Reporting and Backup Withholding

        Information returns will be filed with the United States Internal Revenue Service in connection with payments on the 2009 Secured Notes or our common stock, and may be filed in connection with the proceeds from a sale or other disposition of the 2009 Secured Notes or our common stock. A Non-United States Holder may be subject to U.S. backup withholding tax on these payments unless the holder complies with certification procedures to establish that it is not a United States person. The certification procedures required to claim the exemption from withholding tax on interest and original issue discount described above will satisfy the certification requirements necessary to avoid the backup withholding tax as well. The amount of any backup withholding from a payment to a Non-United States Holder will be allowed as a credit against the holder's U.S. federal income tax liability and may entitle the holder to a refund, provided that the required information is furnished to the Internal Revenue Service.

38

Federal Estate Tax

        Subject to benefits provided by an applicable estate tax treaty, a 2009 Secured Note held by an individual who is a Non-United States Holder may be subject to United States federal estate tax upon the individual's death if, at such time, interest payments on the 2009 Secured Note would have been:

•

subject to United States federal withholding tax (even if the certification requirement described above were satisfied), without regard to the availability of a treaty exemption or



•

effectively connected with the conduct by the holder of a trade or business in the United States.

        An individual Non-United States Holder who is treated as the owner of, or has made certain lifetime transfers of, an interest in common stock will be required to include the value of the stock in his or her gross estate for U.S. federal estate tax purposes, and may be subject to U.S. federal estate tax unless an applicable estate tax treaty provides otherwise.

39

DESCRIPTION OF THE 2009 SECURED NOTES

General

        The New Secured Notes and New Secured Convertible Notes are senior secured obligations of the Company, ranking equally with all existing and future senior obligations of the Company, ranking senior to all existing and future subordinated indebtedness of the Company. The Secured 2009 Notes are secured by a junior priority lien on certain collateral as described under "—Collateral". In addition to a description of the security provisions of the Secured 2009 Notes, this section describes the other material differences in the terms of the Secured 2009 Notes and the Old Notes including the new maturity dates, increased interest rates and the terms upon which the New Secured Convertible Notes will be convertible into shares of our common stock. The New Secured Notes and the New Secured Convertible Notes will be issued under indentures which we refer to as the new indentures, to be entered into between us and U.S. Bank National Association, as trustee of the 2009 Secured Notes. The terms on which the Secured 2009 Notes are secured are set forth in a security agreement between us and the trustee and an intercreditor agreement among us, the administrative agent for our senior secured lender group, Wells Fargo Foothill, Inc., referred to as the agent and the trustee of the 2009 Secured Notes. The forms of the security agreement, the intercreditor agreement and the new indentures are filed as exhibits to the Registration Statement of which this prospectus forms a part. The following summaries of certain provisions of the 2009 Secured Notes and these agreements do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all the provisions of the documents themselves, including the definitions therein. The new indentures are subject to and governed by the Trust Indenture Act of 1939, as amended.

        The 2009 Secured Notes will be issued only as fully registered securities in the name of Cede & Co. as nominee for The Depository Trust Company, referred to as DTC, which will act as depositary for the 2009 Secured Notes. One or more fully registered global certificates representing the total principal amount of 2009 Secured Notes will be issued and deposited with DTC. You will generally not be entitled to receive physical delivery of 2009 Secured Notes. Accordingly, you will have to rely on the procedures of DTC to exercise any rights under the 2009 Secured Notes. A more detailed description of the DTC book-entry system and the circumstances in which you would be entitled to receive physical delivery of 2009 Secured Notes are set forth under "Description of the Old Notes—Book-Entry System—The Depository Trust Company".

Principal and Interest; Maturity Date

        The New Secured Notes will bear interest at the annual rate of 11.75% from and including the first day after expiration of the exchange offer, payable semi-annually on December 1 and June 1 of each year, commencing June 1, 2004 to the holders of record at the close of business on the preceding November 15 and May 15, respectively. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.

        The New Secured Convertible Notes will bear interest at the annual rate of 6.50% from and including the first day after expiration of the exchange offer, payable semi-annually on December 1 and June 1 of each year, commencing June 1, 2004 to the holders of record at the close of business on the preceding November 15 and May 15, respectively. Interest will be computed on the basis of a 360-day year consisting of twelve 30-day months.

        Principal and interest on the notes will be payable, transfers of the notes will be registered, and notes will be exchanged for the same type and total principal amount of New Secured Notes or New Secured Convertible Notes, as applicable, of other permitted denominations, at the office or agency of the Trustee for the 2009 Secured Notes in New York, New York. At our option we may pay interest by check mailed to the address of, or by wire transfer to the account of, the person entitled to the

40

interest. The payment of principal on any note will be made only on surrender of that note to the trustee.

        Up to $230,591,000 aggregate principal amount of 2009 Secured Notes will be issued in any combination of New Secured Notes and New Secured Convertible Notes. The amount of New Secured Notes and New Secured Convertible Notes issued will depend on the choice holders of the Old Notes make between receiving New Secured Notes and New Secured Convertible Notes. We will announce the amount of New Secured Notes and New Secured Convertible Notes issued after expiration of the exchange offer. We may not issue additional New Secured Notes or New Secured Convertible Notes to replace those that mature or are converted, redeemed or otherwise canceled, except in connection with registrations of transfers, exchanges or replacements.

        The New Secured Notes and New Secured Convertible Notes will mature on June 1, 2009.

Collateral

        The Secured 2009 Notes will be secured by junior priority liens on those assets in which the lenders under our secured credit facility currently hold a senior priority security interest, including domestic accounts receivable, books, equipment, certain intellectual property, inventory, negotiable property, and proceeds of these assets, but excluding money in the possession, custody or control of the agent under our secured credit facility or its successor. The 2009 Secured Notes will also be secured by money in the possession, custody or control of the trustee of the 2009 Secured Notes, if any. In addition, any other senior lien obligations permitted under the new indentures may be secured by liens on the collateral that are senior to the liens securing the Secured 2009 Notes.

        We will enter into a security agreement with the trustee of the 2009 Secured Notes in which we will grant the trustee a security interest in the collateral for the benefit of the holders of the 2009 Notes. Subject to the terms of the Intercreditor Agreement described below, we will be required to deliver to the trustee such documentation as it requests to perfect its security interest in the collateral. Although the Intercreditor Agreement will prohibit it from taking such actions without the consent of the holders of any outstanding senior secured debt under the terms of the security agreement, the trustee will have the right as a secured party to exercise remedies with respect to the collateral in an event of default under the indentures, including taking possession of and selling the collateral.

        The New Secured Notes and New Secured Convertible Notes are only our obligations and are not obligations of our subsidiaries. Accordingly, references to us in this section do not, unless the context otherwise indicates, include our subsidiaries. Since our operations are conducted in part through subsidiaries, our cash flow and ability to service debt, including the New Secured Notes and New Secured Convertible Notes, depends in part on the earnings of our subsidiaries and our receipt of distributions of those earnings, or of loans or other payments from those subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due under the New Secured Notes or New Secured Convertible Notes or to make funds available to us for amounts due under the New Secured Notes or New Secured Convertible Notes, whether by dividend, loan or other payments. In addition, the ability of our subsidiaries to pay dividends and make loans and advances to us may be subject to statutory or contractual restrictions, is contingent upon the earnings of those subsidiaries and may be subject to other business considerations. Our right to receive assets of any of our subsidiaries upon any liquidation or reorganization, and the ability of the holders of the New Secured Notes or New Secured Convertible Notes to look to those assets for payment, will be effectively subordinated to the claims of that subsidiary's trade and other creditors, except to the extent we are recognized as a creditor of the subsidiary, in which case our claims would still be subject to any security interests in the assets of that subsidiary and subordinate to any indebtedness of that subsidiary senior to that held by us.

41

The Intercreditor Agreement

        The intercreditor agreement among us, the agent and the trustee provides that while any senior priority lien obligations are outstanding, the agent will control all remedies related to the collateral, including its management and disposition and the junior priority liens will not entitle the trustee to take any action with respect to the collateral, other than limited actions to preserve the junior priority liens that do not impair the senior priority liens. Thus, while any senior priority liens are outstanding, the trustee and the holders of the 2009 Secured Notes will not be able to force a sale of the collateral or otherwise exercise remedies normally available to secured creditors, nor will they be able to challenge any actions in respect thereof by the holders of the senior priority liens. The terms of the agreements governing the senior priority liens may be modified, extended or waived and the collateral sold, released or substituted without the consent of the trustee and the holders of the 2009 Secured Notes. To the extent that the agent disposes of or elects to release liens on a portion of the collateral, other than in connection with a complete repayment of the obligations secured by those first priority liens, the trustee will be obligated to release its liens on that portion of the collateral. The intercreditor agreement survives the filing of a bankruptcy petition by or against us and permits the agent to use cash collateral or to provide post-petition financing and restricts the trustee's right to object to such financing or to propose, provide or approve alternative financing or an alternative plan of reorganization to the agent's or that would conflict with the agent's rights under the intercreditor agreement. While the intercreditor agreement is in effect, the trustee may not amend the new indentures without the consent of the agent and is required to inform the agent of the occurrence of a default under either of the new indentures. The intercreditor agreement terminates upon payment in full of all senior priority debt.

Restriction on Additional Indebtedness

        The new indentures will provide that we will not, and we will not permit our subsidiaries to, directly or indirectly, create, incur, assume, guaranty or otherwise become directly or indirectly liable for any additional indebtedness for borrowed money or issue any Disqualified Stock.

        The covenant will not restrict our ability to, or permit our subsidiaries to, incur:

(i)

indebtedness pursuant to any interest rate swap agreement, interest rate cap agreement or other agreement designed to protect against fluctuations in interest rates, any foreign exchange forward contract, currency swap agreement or other agreement designed to protect against fluctuations in foreign exchange rates, or any commodity or raw material futures contract or any other agreement designed to protect against fluctuations in raw material prices, entered into in the ordinary course of business for the purpose of limiting risks associated with our business and not for speculation;



(ii)

indebtedness with respect to letters of credit and bankers' acceptances issued in the ordinary course of business and not supporting indebtedness for borrowed money, including letters of credit supporting performance, surety or appeal bonds, indemnification obligations, lease or other contractual deposits or other similar obligations;



(iii)

indebtedness the proceeds of which, less fees and expenses, are used to repay, redeem or repurchase, at our option, New Secured Notes, New Secured Convertible Notes or Old Notes, provided that if any New Secured Notes or New Secured Convertible Notes will remain outstanding, the Stated Maturity of the indebtedness incurred must be at least 120 days after the Stated Maturity of the New Secured Notes and New Secured Convertible Notes;



(iv)

indebtedness incurred to refinance, renew or replace our existing approximately $26.726 million as of September 26, 2003 of yen-denominated secured indebtedness to SGI

42

Japan Ltd., or any extensions or amendments of the SGI Japan secured debt, in each case that do not increase the principal amount thereof; or

(v)

other indebtedness to banks or other institutional lenders in the form of revolving credit loans or term loans or the issuance of letters of credit or bankers' acceptances or the like, including our existing secured credit facility as it may be extended, refinanced, renewed or replaced, provided that the aggregate principal amount of such other indebtedness at any time outstanding does not exceed $100 million.



(vi)

indebtedness represented by purchase money liens or the interests of lessors under Capital Leases to the extent that such liens or interests secure Permitted Purchase Money Indebtedness and so long as such lien attaches only to the asset purchased or acquired and the proceeds thereof, including indebtedness incurred to refund, refinance or replace any indebtedness incurred pursuant to this clause (vi).



(vii)

indebtedness which is in an aggregate principal amount no greater than $35 million and is subordinate in right of payment to all amounts payable under the New Secured Notes and New Secured Convertible Notes, does not have a Stated Maturity prior to the Stated Maturity of the New Secured Notes and the New Secured Convertible Notes, and has an Average Life at least equal to the remaining Average Life of the New Secured Notes and the New Secured Convertible Notes.

        "Average Life" means, with respect to any indebtedness, the quotient obtained by dividing the sum of the products of (1) the number of years from the date of determination to the dates of each successive scheduled principal payment on such indebtedness and (2) the amount of such principal payment, by the sum of all such principal payments.

        "Stated Maturity" means with respect to any indebtedness or any installment of interest thereon, the date specified as the fixed date on which the principal of such debt or such installment of interest is due and payable as set forth in the documentation governing that debt, not including any contingent obligation to repay, redeem or repurchase prior to the regularly scheduled date for payment.

        "Capital Lease" means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

        "Permitted Purchase Money Indebtedness" means indebtedness incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

        "Disqualified Stock" means Capital Stock that, by its terms (or the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder, in whole or in part, on or prior to the date that is the Stated Maturity of the New Secured Notes and the New Secured Convertible Notes.

        "Capital Stock" means (1) in the case of a corporation, corporate stock, (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (3) in the case of a partnership, partnership interests (whether general or limited) and (4) any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing person.

        Each of the exceptions in paragraphs (i) through (vii) to the restrictions on our ability to incur additional indebtedness is independent of the others and the incurrence of indebtedness pursuant to one exception will not serve to reduce the amount of indebtedness we may incur for a separate purpose pursuant to another exception.

43

        The additional indebtedness that we may incur pursuant to the above-listed exceptions to this covenant may be unsecured or secured debt. To the extent permitted under our secured credit facility, additional secured debt may include debt secured by additional liens on the collateral currently securing our senior credit facility and the 2009 Secured Notes, as well as debt secured by any of our assets that are not pledged to secure our senior credit facility and the 2009 Secured Notes. Any additional security interests we grant on the collateral securing the 2009 Notes to secure additional indebtedness may be senior in priority to liens securing the 2009 Notes.

Restricted Payments

        The new indentures will provide that we will not:

•

declare or pay any dividend or make any distribution on our Capital Stock, other than dividends or distributions paid in our or our subsidiaries' Capital Stock other than Disqualified Stock;



•

purchase, redeem or otherwise acquire or retire for value any of our Capital Stock or Options, other than (1) the repurchase of unvested restricted stock in connection with voluntary or involuntary terminations of employment for an aggregate purchase price less than $100,000 per fiscal year, or (2) repurchases, redemptions, acquisitions or retirements paid for with our Capital Stock other than Disqualified Stock or Options to buy Capital Stock other than Disqualified Stock;



•

pay any funds to or for the account of, make any investment in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in, or effect, any transaction with, any affiliate except on an arms-length basis on terms at least as favorable to us as could have been obtained from a third party that was not an affiliate (except that we may enter into compensatory arrangements with and pay such salary, bonus or other compensation to employees, officers and directors as have been approved by a committee of our Board of Directors comprised of independent directors); or



•

repay, redeem, repurchase, defease or otherwise acquire or retire for value, any indebtedness subordinated in right of payment to the 2009 Secured Notes except a payment of interest or principal when due.

        "Options" means any warrants, options or other rights to acquire our Capital Stock (but excluding (1) any options or other rights issued under a plan we maintain for the benefit of employees, directors and consultants, and (2) any debt security that is convertible into or exchangeable for our Capital Stock). The other terms used but not defined in this section are defined above under "—Restriction on Additional Indebtedness".

Conversion of New Secured Convertible Notes

        A holder of a New Secured Convertible Note may convert it into shares of our common stock, $0.001 par value per share, at any time through the close of business on June 1, 2009, unless previously redeemed, at an initial conversion price of $1.25 principal amount of New Secured Notes per share, subject to adjustment or reduction in certain events and otherwise on the terms described under "Description of the Old Notes—Conversion of the Old Notes".

        The New Secured Notes will not be convertible.

Redemption of the 2009 Secured Notes at the Option of the Company

        No sinking fund is provided for the New Secured Notes or New Secured Convertible Notes.

        We may redeem the New Secured Notes for cash as a whole at any time, or from time to time in part, on not less than 10 days' nor more than 60 days' notice at the following prices (expressed as

44

percentages of the principal amount), together with accrued and unpaid interest to, but excluding, the date fixed for redemption.

If redeemed from June 1, 2004 through May 30, 2005:	104	%
If redeemed from June 1, 2005 through May 30, 2006:	103	%
If redeemed from June 1, 2006 through May 30, 2007:	102	%
If redeemed from June 1, 2007 through May 30, 2008:	101	%
If redeemed from and after June 1, 2008:	100	%

        The New Secured Convertible Notes are not redeemable by us for the first two years following issuance. In the third year following issuance, the New Secured Convertible Notes may be redeemed at our option, in whole or in part, on not less than 10 days' nor more than 60 days' notice, at 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the redemption date, provided that the closing price of our common stock has been at least 150% of the then-applicable conversion price for the 20 consecutive trading days ending two trading days prior to the notice of redemption. Thereafter, New Secured Convertible Notes may be redeemed at our option, in whole or in part, on not less than 10 days' nor more than 60 days' notice, at 100% of the principal amount thereof, plus accrued and unpaid interest thereon to, but excluding, the redemption date.

        Notwithstanding the foregoing, any semi-annual payment of interest becoming due on the date fixed for redemption shall be payable to the holders of record on the relevant record date for the redemption of the applicable notes. We may not redeem notes if an event of default (as defined below) with respect to the payment of interest on that series of notes has occurred and is continuing.

        If fewer than all of a series of notes is to be redeemed, the trustee will select the notes to be redeemed by lot or, in its discretion, on a pro rata basis. If any note is to be redeemed in part only, a new note or notes in the aggregate principal amount equal to the unredeemed principal portion will be issued. If a portion of a holder's New Secured Convertible Notes is selected for redemption and the holder converts a portion of these notes, the converted notes shall be deemed to be taken from the notes selected for redemption.

Redemption at the Option of the Holder Upon a Fundamental Change

        If a Fundamental Change defined below occurs at any time prior to June 1, 2009, each holder of New Secured Notes or New Secured Convertible Notes will have the right, at the holder's option, to require us to redeem any or all of that holder's notes on the date, referred to as the repurchase date, that is 45 days after the date of our notice of the Fundamental Change. The notes will be redeemable in multiples of $1,000 principal amount.

        We will redeem these New Secured Notes or New Secured Convertible Notes at 100% of the principal amount thereof, plus accrued interest on the redeemed notes up to, but excluding, the repurchase date; provided that, if that repurchase date is an interest payment date, then the interest payable on that date shall be paid to the holder of record of the notes on the relevant record date.

        This is a change from the terms of the Old Notes, which provide that the price paid on redemption of the Old Notes at the option of the holder upon a Fundamental Change will be determined by a formula based upon the price paid to common shareholders as a result of such Fundamental Change, or if consideration other than cash is paid, based on the market price of our common stock during the 10 trading days prior to the record date in connection with such Fundamental Change. Based upon an assumed price of $1.50 per common share, such redemption price would be $80.21 per $1,000 principal amount. See "Description of the Old Notes—Redemption at the Option of the Holder Upon a Fundamental Change".

45

        "Fundamental Change" means the occurrence of any transaction or event in connection with which all or substantially all our common stock shall be exchanged for, converted into, acquired for or constitute solely the right to receive consideration (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) which is not all or substantially all common stock listed (or, upon consummation of or immediately following such transaction or event, which will be listed) on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities prices.

        We will mail to all holders of record of the 2009 Secured Notes a notice of the occurrence of a Fundamental Change and of the redemption right arising as a result thereof on or before the tenth day after the occurrence of that Fundamental Change. We will deliver a copy of this notice to the trustee. To exercise the redemption right, noteholders must deliver, on or before the 30^th day after the date of our notice of a Fundamental Change, the 2009 Secured Notes to be so redeemed, duly endorsed for transfer, together with the form entitled "Option to Elect Redemption Upon a Fundamental Change" on the reverse thereof duly completed, to us (or an agent designated by us for such purpose). We will comply with any rules under the Securities Exchange Act of 1934, as amended, which may then be applicable in connection with the redemption rights of holders in the event of a Fundamental Change. The redemption rights of the holders of 2009 Secured Notes could discourage a potential acquiror of us. The Fundamental Change redemption feature, however, is not the result of management's knowledge of any specific effort to obtain control of us by means of a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of anti-takeover provisions.

        No 2009 Secured Notes may be redeemed at the option of holders on a Fundamental Change if there has occurred and is continuing an Event of Default with respect to the 2009 Secured Notes, as described under "Description of Old Notes—Events of Default; Notice and Waiver", other than a default in the payment of the redemption price in the event of a Fundamental Change with respect to the notes.

Events of Default

        Under the new indentures, the events of default will be as described under "Description of Old Notes—Events of Default; Notice and Waiver" except that any event of default under the old indenture or either of the new indentures which results in the principal amount of and accrued interest on that debt becoming immediately due and payable will also be an event of default under both new indentures.

46

DESCRIPTION OF THE OLD NOTES

General

        There are approximately $230 million in aggregate principal amount of Old Notes outstanding. The Old Notes are unsecured unsubordinated obligations of ours and mature on September 1, 2004.

        The Old Notes were issued under an indenture dated as of September 1, 1997, which we refer to as the old indenture, between us and U.S. Bank National Association, as the trustee, and references in this section to the trustee refer to the trustee under the old indenture. The form of the old indenture is an exhibit to the registration statement of which this prospectus forms a part and what follows is only a summary of the material provisions of the Old Notes and the old indenture that is subject to and qualified by reference to the more detailed provisions of the Old Notes and the old indenture. The old indenture is subject to and governed by the Trust Indenture Act of 1939, as amended.

        The Old Notes were issued only as fully registered securities registered in the name of Cede & Co. as nominee for The Depository Trust Company, referred to as DTC, which acts as depositary for the Old Notes. One or more fully registered global certificates representing the total principal amount of Old Notes was issued and deposited with DTC. You are generally not entitled to receive physical delivery of Old Notes. Accordingly, you must rely on the procedures of DTC to exercise any rights under the Old Notes. A more detailed description of the DTC book-entry system and the circumstances in which you would be entitled to receive physical delivery of Old Notes is set forth below under "Book-Entry System—Certificated Notes".

Principal and Interest

        The Old Notes bear interest at the annual rate of 5.25%, payable semi-annually on March 1 and September 1 of each year, to the holders of record at the close of business on the preceding February 15 and August 15, respectively. Interest is computed on the basis of a 360-day year consisting of twelve 30-day months.

        We may not issue additional Old Notes to replace those that mature or are converted, redeemed or otherwise canceled, except in connection with registrations of transfers, exchanges or replacements.

        The Old Notes will mature on September 1, 2004 and are our unsecured obligations. The old indenture does not limit our ability to incur additional indebtedness.

        The Old Notes are only our obligation and are not obligations of our subsidiaries. Accordingly, references to us in this section do not, unless the context otherwise indicates, include our subsidiaries. Since our operations are conducted in part through subsidiaries, our cash flow and ability to service debt, including the Old Notes, depends in part on the earnings of our subsidiaries and our receipt of distributions of those earnings, or of loans or other payments from those subsidiaries. Our subsidiaries are separate and distinct legal entities and have no obligation, contingent or otherwise, to pay any amounts due under the Old Notes or to make funds available to us for amounts due under the Old Notes, whether by dividend, loan or other payments. In addition, the ability of our subsidiaries to pay dividends and make loans and advances to us may be subject to statutory or contractual restrictions, is contingent upon the earnings of those subsidiaries and may be subject to other business considerations. Our right to receive assets of any of our subsidiaries upon any liquidation or reorganization, and the ability of the holders of the Old Notes to look to those assets for payment on the notes will be effectively subordinated to the claims of that subsidiary's trade and other creditors, except to the extent we are recognized as a creditor of the subsidiary, in which case our claims would still be subject to any security interests in the assets of that subsidiary and subordinate to any indebtedness of that subsidiary senior to that held by us.

47

        Principal and interest on the notes will be payable, transfers of the notes will be registered, and notes will be exchanged for the same type and total principal amount of Old Notes of other permitted denominations, at the office or agency of the trustee in New York, New York. At our option we may pay interest by check mailed to the address of, or by wire transfer to the account of, the person entitled to the interest. The payment of principal on any note will be made only on surrender of that note to the trustee.

Conversion of Old Notes

        A holder of an Old Note may convert it into shares of our common stock, $0.001 par value, at any time through the close of business on September 1, 2004 unless previously redeemed, at the conversion price of $18.70 principal amount of Old Notes per share, subject to adjustment as described below.

        A holder exercising its option to require redemption of notes upon a fundamental change as described below under "—Redemption at the Option of the Holder upon a Fundamental Change" may convert those notes only if the holder withdraws its election to require redemption in accordance with the terms of the new convertible indenture. If a note is called by us for redemption, the holder may convert it only until the close of business on the last trading day prior to the redemption date. A holder may convert notes in part, with a minimum of $1,000 principal amount and multiples thereof. A holder entitled to a fractional share of our common stock on conversion of notes will receive cash equal to the then-current market value of that fractional share.

        Except as described below, no adjustment will be made on conversion of any notes for any accrued interest, or for dividends on any common stock issued. If any notes not called for redemption are converted after a record date for the payment of interest and prior to the next succeeding interest payment date, those notes must be accompanied by funds equal to the interest payable on that succeeding interest payment date on the principal amount so converted.

        To convert a note into shares of our common stock, a holder must:

•

complete and manually sign the conversion notice on the back of the note (or complete and manually sign a facsimile thereof) and deliver the notice to the conversion agent;



•

surrender the note to the conversion agent;



•

if required, furnish appropriate endorsements and transfer documents; and



•

if required, pay all transfer or similar taxes.

        The old indenture refers to the date on which all of the foregoing requirements have been satisfied as of the conversion date.

        The conversion price is subject to adjustment under formulas set forth in the applicable indenture in case of certain events, including:

•

our issuance of our common stock as a dividend or distribution on our common stock;



•

subdivisions and combinations of our common stock;



•

the issuance to all holders of our common stock of certain rights or warrants entitling them to subscribe for or purchase our common stock at less than the current market price (as defined below);



•

the distribution to all holders of our common stock of shares of capital stock (other than our common stock) or evidences of our indebtedness or of assets (other than cash distributions covered by the next bullet point) or rights or warrants to subscribe for or purchase any of our securities (excluding rights or warrants to purchase our common stock referred to in the previous bullet point);

48

•

distributions consisting of cash, excluding any quarterly cash dividend on our common stock to the extent that the aggregate cash dividend per share of common stock in any quarter does not exceed the greater of (1) the amount per share of common stock of the next preceding quarterly dividend on the common stock to the extent that such preceding quarterly dividend did not require an adjustment of the conversion rate under the provision described in this bullet point (as adjusted to reflect subdivisions or combinations of our common stock) and (2) 3.75% of the average of the last reported sales price of our common stock during the ten trading days immediately prior to the date of declaration of the dividend, and excluding any dividend or distribution in connection with any liquidation, dissolution or winding up of us. If any adjustment is required to be made under the preceding sentence as a result of a distribution that is an excluded quarterly dividend, the adjustment will be based on the amount by which the distribution exceeds the amount of the quarterly dividend permitted as described above. If an adjustment is required to be made as set forth above as a result of a distribution that is not a quarterly dividend, the adjustment would be based upon the full amount of the distribution;



•

payment in respect of a tender or exchange offer by us or any of our subsidiaries for our common stock to the extent that the cash and value of any other consideration included in the payment per share of common stock exceeds the current market price, as defined below, per share of our common stock on the trading day next succeeding the last date on which tenders or exchanges may be made pursuant to such tender or exchange offer; and



•

payment in respect of a tender offer or exchange offer by a person other than us or any of our subsidiaries in which, as of the closing date of the offer, our Board of Directors is not recommending rejection of the offer. The adjustment referred to the preceding sentence will only be made if the tender offer or exchange offer is for an amount which increases the offeror's ownership of our common stock to more than 25% of the total shares of common stock outstanding, and if the cash and value of any other consideration included in such payment per share of common stock exceeds the current market price, as defined below, per share of common stock on the business day next succeeding the last date on which tenders or exchanges may be made pursuant to the tender or exchange offer. The adjustment will generally not be made, however, if, as of the closing of the offer, the offering documents with respect to the offer disclose a plan or an intention to cause us to engage in a consolidation or merger or a sale of all or substantially all of our assets.

        No adjustment in the conversion price will be required unless that adjustment would require a change of at least 1% in the conversion price then in effect, but any adjustment that would otherwise be required to be made will be carried forward and taken into account in any subsequent adjustment.

        In the case of any reclassification of our common stock, or a consolidation or merger involving us or a sale or conveyance to another corporation of our property and assets as an entirety or substantially as an entirety, in each case as a result of which holders of our common stock shall be entitled to receive stock, other securities, other property or assets (including cash) with respect to or in exchange for such common stock, the holders of the notes then outstanding will be entitled thereafter to convert such notes into the kind and amount of shares of stock, other securities or other property or assets (including cash) which they would have owned or been entitled to receive upon such reclassification, consolidation, merger, sale or conveyance had such notes been converted immediately prior to such reclassification, consolidation, merger, sale or conveyance assuming that a holder of notes would not have exercised any rights of election as to the stock, other securities or other property or assets (including cash) receivable in connection therewith.

        In the event of a taxable distribution to holders of our common stock or in certain other circumstances requiring an adjustment to the conversion price, the holders of notes may, in certain circumstances, be deemed to have received a distribution subject to United States income tax as a

49

dividend. In certain other circumstances, the absence of such an adjustment may result in a taxable dividend to the holders of our common stock. From time to time we may, to the extent permitted by law, decrease the conversion price by any amount for any period of at least 20 days, in which case we will give at least 15 days' notice of such decrease, if the Board of Directors has made a determination that such decrease would be in our best interests, which determination shall be conclusive. We may, at our option, make such decreases in the conversion price, in addition to those set forth above, as the Board of Directors deems advisable to avoid or diminish any income tax to holders of common stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes.

Redemption of the Old Notes at the Option of the Company

        No sinking fund is provided for the Old Notes. Until the Old Notes mature on September 1, 2004, we may redeem the Old Notes for cash as a whole at any time, or from time to time in part, upon not less than 30 days' nor more than 60 days' notice at their principal amount, together with accrued and unpaid interest to, but excluding, the date fixed for redemption.

        Any semi-annual payment of interest becoming due on the date fixed for redemption shall be payable to the holders of record on the relevant record date of the Old Notes being redeemed. We may not redeem Old Notes if an event of default (as defined below) with respect to the payment of interest on the notes has occurred and is continuing.

        If fewer than all of the Old Notes are to be redeemed, the trustee will select the notes to be redeemed by lot or, in its discretion, on a pro rata basis. If any note is to be redeemed in part only, a new note or notes in the aggregate principal amount equal to the unredeemed principal portion will be issued. If a portion of a holder's notes are selected for redemption and the holder converts a portion of its notes, the converted notes shall be deemed to be taken from the notes selected for redemption.

Redemption at the Option of the Holder upon a Fundamental Change

        If a Fundamental Change (as defined below) occurs at any time prior to September 1, 2004 each holder of Old Notes will have the right, at the holder's option, to require us to redeem any or all of that holder's Old Notes on the date, referred to as the repurchase date, that is 45 days after the date of our notice of the Fundamental Change. The notes will be redeemable in multiples of $1,000 principal amount.

        We will redeem these Old Notes at a price of 100% of principal amount except that if the Applicable Price (as defined below) with respect to the Fundamental Change is less than the Reference Market Price (as defined below), we will redeem these Old Notes at a price equal to the foregoing redemption price multiplied by the fraction obtained by dividing the Applicable Price by the Reference Market Price. The effect of the foregoing is that the redemption price may be substantially reduced to the extent that the conversion price of the Old Notes is lower than the then-current price of our common stock. In each case, we will also pay accrued interest on the redeemed notes to, but excluding, the repurchase date; except that if that repurchase date is an interest payment date, then the interest payable on that date shall be paid to the holder of record of the notes on the relevant record date.

        "Fundamental Change" means the occurrence of any transaction or event in connection with which all or substantially all our common stock shall be exchanged for, converted into, acquired for or constitute solely the right to receive consideration (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) which is not all or substantially all common stock listed (or, upon consummation of or immediately following such transaction or event, which will be listed) on a United States national securities exchange or approved for quotation on the Nasdaq National Market or any similar United States system of automated dissemination of quotations of securities prices.

50

        "Applicable Price" means, in the event of a Fundamental Change in which the holders of our common stock receive only cash, the amount of cash received by the holder of one share of our common stock, and in the event of any other Fundamental Change, the average of the last reported sale price for our common stock during the ten trading days prior to the record date for the determination of the holders of common stock entitled to receive cash, securities, property or other assets in connection with that Fundamental Change, or, if there is no such record date, the date on which the holders of our common stock shall have the right to receive such cash, securities, property or other assets in connection with the Fundamental Change.

        "Reference Market Price" currently means $18.70 (as compared to the $1.02 closing price of our common stock on November 20, 2003) and, in the event of any adjustment to the conversion price pursuant to the provisions of the old indenture, the Reference Market Price shall also be adjusted so that the Reference Market Price shall be equal to the initial Reference Market Price multiplied by a fraction the numerator of which is the initial conversion price and the denominator of which is the conversion price following such adjustment.

        We will mail to all note holders of record a notice of the occurrence of a Fundamental Change and of the redemption right arising as a result thereof on or before the tenth day after the occurrence of that Fundamental Change. We will deliver a copy of this notice to the trustee. To exercise the redemption right, noteholders must deliver, on or before the 30^th day after the date of our notice of a Fundamental Change, the notes to be so redeemed, duly endorsed for transfer, together with the form entitled "Option to Elect Redemption Upon a Fundamental Change" on the reverse thereof duly completed, to us (or an agent designated by us for such purpose). We will comply with the provisions of Rule 13e-4 and any other tender offer rules under the Securities Exchange Act of 1934, as amended, which may then be applicable in connection with the redemption rights of holders in the event of a Fundamental Change. The redemption rights of the holders of New Secured Notes could discourage a potential acquisition of us. The Fundamental Change redemption feature, however, is not the result of management's knowledge of any specific effort to obtain control of us by means of a merger, tender offer, solicitation or otherwise, or part of a plan by management to adopt a series of anti-takeover provisions.

        No notes may be redeemed at the option of holders on a Fundamental Change if there has occurred and is continuing an Event of Default described below under "—Events of Default; Notice and Waiver" other than a default in the payment of the redemption price in the event of a Fundamental Change with respect to the notes.

Mergers and Sales of Assets by the Company

        The old indenture restricts our ability to consolidate with or merge into any other person or convey, transfer or lease our properties and assets substantially as an entirety to another person, unless, among other things,

•

the resulting, surviving or transferee entity (if not us) is organized and existing under the laws of the United States, any state thereof or the District of Columbia;



•

the successor entity assumes all of our obligations under the Old Notes and under the old indentures; and



•

we or the other successor shall not immediately thereafter be in default under the old indenture.

        On the assumption of our obligations by a successor in such circumstances, subject to certain exceptions, we will be discharged from all obligations under the Old Notes and the old indenture. Certain transactions which would constitute a Fundamental Change would permit each holder to require us to redeem the Old Notes of that holder as described above under "—Redemption at the Option of the Holder Upon a Fundamental Change".

51

Events of Default; Notice and Waiver

        Under the old indenture, an "Event of Default" is defined as:

•

default in payment of the principal of, or premium, if any, on the Old Notes;



•

default for 30 days in the payment of any installment of interest on the Old Notes;



•

our failure to comply with any of our other agreements in the Old Notes or the old indenture upon receipt of notice of that default by the trustee or by holders of not less than 25% in aggregate principal amount of the notes then outstanding and our failure to cure that default within 60 days after our receipt of that notice; or



•

certain events of bankruptcy or insolvency.

        The old indenture provides that, if an Event of Default specified therein shall have happened and shall be continuing, either the trustee or the holders of not less than 25% in aggregate principal amount of the Old Notes then outstanding may declare the principal of and accrued interest on the Old Notes to be immediately due and payable. In the case of certain events of bankruptcy or insolvency, the principal of, premium, if any, and accrued and unpaid interest on the Old Notes shall automatically become and be immediately due and payable. However, if we cure all defaults (except the non-payment of principal of, premium, if any, and interest on any of the Old Notes which shall have become due by acceleration) and certain other conditions are met, with certain exceptions, such declaration may be canceled and past defaults may be waived by the holders of a majority in principal amount of the Old Notes then outstanding. Interest shall accrue and be payable on demand upon a default in the payment of the principal of, premium, if any, accrued interest, or any redemption price to the extent that payment of such interest shall be legally enforceable.

        The trustee shall give notice to holders of the Old Notes of any continuing default known to the trustee within 90 days after the occurrence thereof, except that the trustee may withhold the notice if it determines in good faith that withholding the notice is in the interests of the holders.

        The holders of a majority in aggregate principal amount of the outstanding Old Notes may direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee, provided that such direction shall not be in conflict with any law or the old indenture and subject to various other limitations. Before proceeding to exercise any right or power under the old indenture at the direction of the holders, the trustee shall be entitled to receive from the holders reasonable security or indemnity satisfactory to it against the costs, expenses and liabilities which might be incurred by it in complying with any such direction. No holder of any Old Note will have any right to pursue any remedy with respect to the old indenture or the Old Notes, unless:

•

that holder shall have previously given the trustee written notice of a continuing Event of Default;



•

the holders of at least 25% in aggregate principal amount of the outstanding Old Notes shall have made a written request to the trustee to pursue that remedy;



•

the holder or holders have offered to the trustee reasonable indemnity satisfactory to the trustee;



•

the holders of a majority in aggregate principal amount of the outstanding Old Notes have not given the trustee a direction inconsistent with the request within 60 days after receipt of such request; and



•

the trustee shall have failed to comply with the request within such 60-day period.

52

        However, the right of any holder

•

to receive payment of the principal amount, premium, if any, and any interest in respect of a default in the payment of any such amounts on an Old Note, on or after the due date expressed in that Old Note;



•

to institute suit for the enforcement of any such payments or conversion; or



•

to convert Old Notes

shall not be impaired or adversely affected without such holder's consent. The holders of at least a majority in aggregate principal amount of the outstanding Old Notes may waive an existing default and its consequences, other than

•

any default in any payment on the Old Notes;



•

any default with respect to the conversion rights of the Old Notes; or



•

any default in respect of certain covenants or provisions in the old indenture which may not be modified without the consent of the holder of each Old Note as described in "—Modification" below.

        We will be required to furnish to the trustee annually a statement as to any default by us in the performance and observance of our obligations under the old indenture.

Modification

        Without the consent of any holder of Old Notes, we and the trustee may amend the old indenture to cure any ambiguity, defect or inconsistency, to provide for the assumption by a successor corporation of our obligations under the old indenture or to make any change that does not adversely affect the rights of any holder of Old Notes.

        Modification and amendment of the old indenture or the Old Notes may be effected by us and the trustee with the consent of the holders of not less than a majority in aggregate principal amount of the Old Notes then outstanding, except that no such modification or amendment shall:

•

extend the fixed maturity of any Old Note;



•

reduce the rate or extend the time for payment of interest thereon;



•

reduce the principal amount thereof or premium, if any, thereon;



•

reduce any amount payable upon redemption thereof;



•

change our obligation to redeem any Old Note upon the happening of any Fundamental Change in a manner adverse to holders of Old Notes;



•

impair the right of a holder to institute suit for the payment thereof or impair the right to convert the Old Notes into our common stock subject to the terms set forth in the old indenture, without the consent of each holder of an Old Note so affected; or



•

reduce the aforesaid percentage of Old Notes whose holders are required to consent to any such supplemental indenture, without the consent of the holders of all of the Old Notes then outstanding.

No Personal Liability of Incorporators, Stockholders, Officers, Directors, or Employees

        The old indenture provides that none of our directors, officers, employees or stockholders, as such, shall have any liability for any obligation under the Old Notes or the old indenture or for any claim

53

based on, in respect of or by reason of such obligations or their creation. Each holder, by accepting the notes, waives and releases all such liability.

Concerning the Trustee

        U.S. Bank National Association, the trustee, has been appointed by us as the paying agent, conversion agent, registrar and custodian with respect to the notes. An affiliate of the trustee is the transfer agent and registrar of our common stock. We may have normal banking relationships with the trustee in the ordinary course of business.

        The indenture provides that, except during the continuance of a default, the trustee will not be liable, except for the performance of such duties as are specifically set forth in the indenture. If an event of default has occurred and is continuing, the trustee will exercise such rights and powers vested in it under the indenture and will use the same degree of care and skill in its exercise as a prudent person would exercise under the circumstances in the conduct of such person's own affairs.

Governing Law

        The old indenture and the Old Notes are governed by, and construed in accordance with, the internal laws of the State of New York.

Book-Entry System

        The Old Notes were issued in the form of one or more global notes. The global notes were deposited with, or on behalf of, The Depository Trust Company, which we refer to as DTC, and registered in the name of Cede & Co, as nominee of DTC. Except as set forth below, the global notes may be transferred, in whole and not in part, only to DTC or another nominee of DTC. A holder may hold beneficial interests in the global notes directly through DTC if such holder has an account with DTC or indirectly through organizations which have accounts with DTC, including Euroclear and Clearstream.

The Depository Trust Company

        DTC has advised us as follows: DTC is a limited purpose trust company organized under the laws of the State of New York a member of the Federal Reserve System a clearing corporation within the meaning of the New York Uniform Commercial Code and a clearing agency registered pursuant to the provisions of Section 17A of the Exchange Act. DTC was created to hold securities of institutions that have accounts with DTC, referred to as "participants," and to facilitate the clearance and settlement of securities transactions among its participants in such securities through electronic book-entry changes in accounts of the participants, thereby eliminating the need for physical movement of securities certificates. DTC's participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. Access to DTC's book-entry system is also available to others such as banks, brokers, dealers and trust companies (collectively, the "indirect participants") that clear through or maintain a custodial relationship with a participant, whether directly or indirectly.

        Pursuant to procedures established by DTC, upon the deposit of the global notes with DTC, DTC credited on its book entry registration and transfer system the principal amount of Old Notes represented by such global notes to the accounts of participants. Ownership of beneficial interests in the global notes will be limited to participants or persons that may hold interests through participants. Ownership of beneficial interests in the global notes will be shown on and the transfer of those ownership interests will be effected only through, records maintained by DTC (with respect to participants' interests), the participants and the indirect participants (with respect to the owners of beneficial interests in the global note other than participants). All interests in a global note deposited with DTC are subject to the procedures and requirements of DTC.

54

        The laws of some jurisdictions may require that certain purchasers of securities take physical delivery of such securities in definitive form. These limits and laws may impair the ability to transfer or pledge beneficial interests in the global notes.

        So long as DTC (or its nominee) is the registered holder and owner of a global note, DTC (or such nominee) will be considered the sole legal owner and holder of the notes evidenced by such global note for all purposes of such notes and the applicable indenture. Except as set forth below under "—Certificated Notes", as an owner of a beneficial interest in a global note, you will not be entitled to have the notes represented by such global note registered in your name, will not receive or be entitled to receive physical delivery of certificated notes and will not be considered to be the owner or holder of any notes under such global note. We understand that under existing industry practice, in the event an owner of a beneficial interest in a global note desires to take any action that DTC, as the holder of such global note, is entitled to take, DTC would authorize the participants to take such action, and the participants would authorize beneficial owners owning through such participants to take such action or would otherwise act upon the instructions of beneficial owners owning through them.

        We will make payments of principal of, premium, if any, and interest on the Old Notes represented by the global notes registered in the name of and held by DTC or its nominee to DTC or its nominee, as the case may be, as the registered owner and holder of the global notes. We expect that DTC (or its nominee), upon receipt of any payment of principal of, premium, if any, or interest on the global notes will credit the accounts of their relevant participants or account holders, as applicable, with payments in amounts proportionate to their respective beneficial interests in the principal amount of the applicable global note as shown on the records of DTC (or its nominee). We also expect that payments by participants or indirect participants or account holders, as applicable, to owners of beneficial interests in the global notes held through such participants or indirect participants or account holders will be governed by standing instructions and customary practices and will be the responsibility of such participants or indirect participants or account holders, as applicable. We will not have any responsibility or liability for any aspect of the records relating to, or payments made on account of, beneficial ownership interests in the global notes for any note or for maintaining, supervising or reviewing any records relating to such beneficial ownership interests or for any other aspect of the relationship between DTC and its participants or indirect participants, or the relationship between such participants or indirect participants, and the owners of beneficial interests in the global notes owning through such participants.

        All amounts payable under the notes will be payable in U.S. dollars, except as may otherwise be agreed between any applicable securities clearing system and any holders. Payments will be subject in all cases to any fiscal or other laws and regulations (including any regulations of any applicable securities clearing system) applicable thereto. None of the trustee, SGI or any of our respective agents shall be liable to any holder of a global note or other person for any commissions, costs, losses or expenses in relation to or resulting from any currency conversion or rounding effected in connection therewith. Investors may be subject to foreign exchange risks that may have important economic and tax consequences to them.

Certificated Notes

        Subject to certain conditions, the notes represented by the global notes are exchangeable for certificated notes in definitive form of like tenor in denominations of $1,000 principal amount and multiples thereof if:

        (1)   DTC provides notification that it is unwilling or unable to continue as depository for the global notes or DTC ceases to be a clearing agency registered under the Exchange Act, and in either case, a successor depositary is not appointed within 90 days or

55

        (2)   a default entitling the holders of the applicable notes to accelerate the maturity thereof has occurred and is continuing.

        Any note that is exchangeable as above is exchangeable for certificated notes issuable in authorized denominations and registered in such names as DTC, shall direct. Subject to the foregoing, a global note is not exchangeable, except for a global note of the same aggregate denomination to be registered in the name of DTC (or its nominee).

LEGAL MATTERS

        The validity of the 2009 Secured Notes offered hereby will be passed upon for us by Davis Polk & Wardwell, Menlo Park, California.

EXPERTS

        Ernst & Young LLP, independent auditors, have audited our consolidated financial statements and schedule included in our Annual Report on Form 10-K for the year ended June 27, 2003, as set forth in their report, which is incorporated by reference in this prospectus and elsewhere in the registration statement. Our financial statements and schedule are incorporated by reference in reliance on Ernst & Young LLP's report, given on their authority as experts in accounting and auditing.

INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

        This document contains "forward-looking statements". These statements may be made directly in this document referring to SGI, and they may also be made a part of this document by reference to other documents filed with the SEC, which is known as "incorporation by reference".

        Words such as "anticipate", "estimate", "expect", "project", "intend", "plan", "believe" and words and terms of similar substance used in connection with any discussion of future operating or financial performance, identify forward-looking statements. All forward-looking statements are management's present estimates of future events and are subject to a number of factors and uncertainties, including without limitation the risks associated with the lack of complete data and the potential inaccuracy of data relied upon in making such forward-looking statements, that could cause actual results to differ materially from those described in the forward-looking statements. In addition the risks related to the businesses of SGI, among others, could cause actual results to differ materially from those described in the forward-looking statements. Noteholders are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this document or as of the date of any document incorporated by reference in this document, as applicable. SGI is not under any obligation, and each expressly disclaims any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

        For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please see the annual reports on Form 10-K and the quarterly reports on Form 10-Q that SGI has filed with the SEC.

        All subsequent forward-looking statements attributable to SGI or any person acting on their behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section.

WHERE YOU CAN FIND MORE INFORMATION

        SGI files annual, quarterly and special reports, prospectuses and other information with the SEC. The SEC allows us to "incorporate by reference" information into this prospectus, which means that we can disclose important information to you by referring you to another document we have filed

56

separately with the SEC. The information incorporated by reference is deemed to be part of this prospectus, except for any information superseded by information contained directly in this prospectus.

        This prospectus incorporates by reference the documents set forth below that SGI has previously filed with the SEC. These documents contain important information about the financial condition of SGI.

        SGI SEC Filings (File No. 1-10441):

•

Annual Report on Form 10-K for the year ended June 27, 2003, filed on September 29, 2003 and 10-K/A filed on October 27, 2003



•

Quarterly Report on Form 10-Q for the quarter ended September 26, 2003, filed on November 10, 2003



•

Description of SGI's common stock contained in its Registration Statement on Form 8-A filed March 16, 1990



•

Item 5 of Current Report on Form 8-K filed on July 25, 2003

        We also incorporate by reference into this prospectus additional documents that may be filed by SGI with the SEC pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act from the date of the filing of the registration statement of which this prospectus forms a part until the completion or termination of this offering. Any statement contained in a previously filed document incorporated by reference into this prospectus is deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus, or in a subsequently filed document also incorporated by reference herein, modifies or supersedes that statement.

        SGI filed a registration statement on Form S-4 under the Securities Act with the SEC with respect to our offering of the 2009 Secured Notes. This prospectus does not contain all of the information included in the registration statement and the exhibits and schedules to the registration statement. You will find additional information about the 2009 Secured Notes and SGI in the registration statement. Certain items are omitted in accordance with the rules and regulations of the SEC. For further information with respect to SGI and the 2009 Secured Notes, reference is made to the registration statement and the exhibits and any schedules filed therewith. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other document filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference.

        You may obtain copies of any documents incorporated by reference in this prospectus from us, from the SEC or from the SEC's website as described below. Documents incorporated by reference are available from us without charge, excluding exhibits thereto unless we have specifically incorporated by reference such exhibits in this prospectus. Any person, including any beneficial owner, to whom this prospectus is delivered may obtain documents incorporated by reference in, but not delivered with, this prospectus by requesting them from the Information Agent in writing or by telephone at the address set forth on the back cover of this prospectus. Any request should be made not later than five business days prior to the end of the tender offer.

        You may also read and copy any reports, statements or other information that SGI files at the SEC's public reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549; Woolworth Building, 13^th floor, 233 Broadway, New York, New York 10279 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The SEC filings of SGI are also available to the public from commercial document retrieval services and at the website maintained by the SEC at www.sec.gov.

        If for any reason we are not required to comply with the reporting requirements of the Securities Exchange Act of 1934, as amended, we are still required under the indenture to furnish the holders of the 2009 Secured Notes with the information, documents and other reports specified in Sections 13 and 15(d) of the Exchange Act.

57

THE INFORMATION AGENT

        The information agent for the exchange offer will be MacKenzie Partners, Inc. The address and telephone number of the information agent are as follows:

105 Madison Avenue
New York, New York 10016
(212) 929-5500 (Call Collect)
or
Call Toll-Free (800) 322-2885
Email: proxy@mackenziepartners.com

THE EXCHANGE AGENT

        U.S. Bank National Association will act as exchange agent for purposes of processing tenders and withdrawals of Old Notes in the exchange offer. The address and telephone number of the exchange agent are as follows:

U.S. Bank National Association
West Side Flats Operations Center
60 Livingston Avenue
St. Paul, MN 55107
Telephone (651) 495-3511
Facsimile (651) 495-8158
Attn: Specialized Finance

        We will pay the exchange agent and information agent reasonable and customary fees for their services and will reimburse them for all their reasonable out-of-pocket expenses.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 20. Indemnification of Directors and Officers.


Silicon Graphics, Inc.

        SGI is a corporation organized under Delaware law. Pursuant to the statutes of the State of Delaware, a director or officer of a corporation is entitled, under specified circumstances, to indemnification by the corporation against reasonable expenses, including attorney's fees, incurred by him/her in connection with the defense of a civil or criminal proceeding to which he/she has been made, or threatened to be made, a party by reason of the fact that he/she was such director or officer. In certain circumstances, indemnity is provided against judgments, fines and amounts paid in settlement.

        In general, indemnification is available where the director or officer acted in good faith, for a purpose he/she reasonably believed to be in the best interests of the corporation. Specific court approval is required in some cases. The foregoing statement is subject to the detailed provisions of Sections 715, 717 and 721-725 of the Delaware Business Corporation Law.

        The SGI by-laws provide that SGI is authorized, to the fullest extent permitted by applicable law, to provide indemnification and to advance expenses to its directors and officers in respect of claims, actions, suits or proceedings based upon, arising from, relating to or by reason of the fact that any such director or officer serves or served in such capacity with SGI or at the request of SGI in any capacity with any other enterprise.

        The directors and officers of SGI are covered by insurance policies indemnifying against certain liabilities, including certain liabilities arising under the Securities Act, that might be incurred by them in such capacities.

Item 21. Exhibits and Financial Statement Schedules

Exhibit No.	Document
3.1	Restated Certificate of Incorporation of Silicon Graphics, Inc.*
3.2	Amended and Restated By-laws of Silicon Graphics, Inc.**
4.1	Form of Indenture, dated as of September 1, 1997 between SGI and State Street Bank and Trust Company of California, N.A., as trustee for the Old Notes***
4.2	Form of Indenture to be entered into between SGI and U.S. Bank National Association, as trustee for the New Secured Notes†
4.3	Form of Indenture to be entered into between SGI and U.S. Bank National Association, as trustee for the New Secured Convertible Notes†
4.4	Form of Intercreditor Agreement to be entered into among SGI, Wells Fargo Foothill, Inc. and U.S. Bank National Association†
4.5	Form of Security Agreement to be entered into between SGI and U.S. Bank National Association, as trustee for the 2009 Secured Notes†
5.1	Opinion of Davis Polk & Wardwell with respect to the New Secured Notes and the New Secured Convertible Notes†
10.1	Letter of Amendment dated November 11, 2003 to Amended and Restated Loan and Security Agreement dated September 20, 2002 among SGI, Silicon Graphics, Federal, Inc., to the lenders' signatory thereto and Wells Fargo Foothill, Inc., as administrative agent for the lenders†

II-1

12.1	Statement Regarding Computation of Ratio of Earnings to Fixed Charges†
23.1	Consent of Ernst & Young LLP, Independent Auditors****
23.2	Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
24.1	Powers of Attorney****
25.1	Statement of Eligibility on Form T-1 of U.S. Bank National Association, as Trustee for the New Secured Notes†
25.2	Statement of Eligibility on Form T-1 of U.S. Bank National Association, as Trustee for the New Secured Convertible Notes†
99.1	Form of Letter of Transmittal****
99.2	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees****
99.3	Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees****
99.4	Form of Notice of Guaranteed Delivery****

†

Filed herewith

*

Incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K filed on September 29, 2003.

**

Incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K filed on October 15, 2001.

***

Incorporated by reference to our Amended Registration Statement on Form S-4/A, filed on August 7, 1997.

****

Previously filed.

Item 22. Undertakings

        (a)   The undersigned hereby undertakes to respond to requests for information that is incorporated by reference into the prospectus pursuant to Item 11 of this form, within one business day of receipt of such request, and to send the incorporated documents by first class mail or other equally prompt means. This includes information contained in documents filed subsequent to the effective date of the registration statement through the date of responding to the request.

        (b)   Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. If a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by one of our directors, officers or controlling persons in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the notes being registered, we will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.

II-2

SIGNATURES FOR SILICON GRAPHICS, INC.

        Pursuant to the requirements of the Securities Act of 1933, as amended, Silicon Graphics, Inc. certifies that it has reasonable grounds to believe that it meets all of the requirements for filing and has duly caused this amended registration statement on Form S-4 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Mountain View, State of California, on December 8, 2003.

SILICON GRAPHICS, INC.
By:	/s/  SANDRA M. ESCHER Name: Sandra M. Escher Title: Senior Vice President and General Counsel

POWER OF ATTORNEY

        Pursuant to the requirements of the Securities Act of 1933, as amended, this amended registration statement on Form S-4 has been signed by the following persons in the capacities and on the dates indicated.

Signature		Capacity	Date
* Robert R. Bishop		Chairman and Chief Executive Officer (Principal Executive Officer)	December 8, 2003
* Jeffrey V. Zellmer		Senior Vice President and Chief Financial Officer (Principal Financial Officer)	December 8, 2003
* Kathy Lanterman		Vice President and Corporate Controller (Principal Accounting Officer)	December 8, 2003
* Arthur L. Money		Director	December 8, 2003
* James A. McDivitt		Director	December 8, 2003
* Charles Steinberg		Director	December 8, 2003
* Dr. Robert M. White		Director	December 8, 2003
* Dr. Lewis S. Edelheit		Director	December 8, 2003
* Anthony R. Muller		Director	December 8, 2003
*By:	/s/  SANDRA M. ESCHER Sandra M. Escher	Attorney-in-Fact

II-3

INDEX OF EXHIBITS

Exhibit No.	Document
3.1	Restated Certificate of Incorporation of Silicon Graphics, Inc.*
3.2	Amended and Restated By-laws of Silicon Graphics, Inc.**
4.1	Form of Indenture, dated as of September 1, 1997 between SGI and State Street Bank and Trust Company of California, N.A., as trustee for the Old Notes***
4.2	Form of Indenture to be entered into between SGI and U.S. Bank National Association, as trustee for the New Secured Notes†
4.3	Form of Indenture to be entered into between SGI and U.S. Bank National Association, as trustee for the New Secured Convertible Notes†
4.4	Form of Intercreditor Agreement to be entered into among SGI, Wells Fargo Foothill, Inc. and U.S. Bank National Association†
4.5	Form of Security Agreement to be entered into between SGI and U.S. Bank National Association as trustee for the 2009 Secured Notes†
5.1	Opinion of Davis Polk & Wardwell with respect to the New Secured Notes and the New Secured Convertible Notes†
10.1	Letter of Amendment dated November 11, 2003 to Amended and Restated Loan and Security Agreement dated September 20, 2002 among SGI, Silicon Graphics, Federal, Inc., to the lenders' signatory thereto and Wells Fargo Foothill, Inc., as administrative agent for the lenders†
12.1	Statement Regarding Computation of Ratio of Earnings to Fixed Charges†
23.1	Consent of Ernst & Young LLP, Independent Auditors****
23.2	Consent of Davis Polk & Wardwell (included in Exhibit 5.1)
24.1	Powers of Attorney****
25.1	Statement of Eligibility on Form T-1 of U.S. Bank National Association, as Trustee for the New Secured Notes†
25.2	Statement of Eligibility on Form T-1 of U.S. Bank National Association, as Trustee for the New Secured Convertible Notes†
99.1	Form of Letter of Transmittal****
99.2	Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees****
99.3	Form of Letter to Clients for Use by Brokers, Dealers, Commercial Banks, Trust Companies and Other Nominees****
99.4	Form of Notice of Guaranteed Delivery****

†

Filed herewith

*

Incorporated by reference to Exhibit 3.1 to our Annual Report on Form 10-K filed on September 29, 2003.

**

Incorporated by reference to Exhibit 3.2 to our Annual Report on Form 10-K filed on October 15, 2001.

***

Incorporated by reference to our Amended Registration Statement on Form S-4/A, filed on August 7, 1997.

****

Previously filed

QuickLinks

TABLE OF CONTENTS
SUMMARY
THE EXCHANGE OFFER
SGI
SUMMARY COMPARISON OF OLD NOTES TO 2009 SECURED NOTES
THE INFORMATION AGENT
THE EXCHANGE AGENT
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA OF SGI
RATIO OF EARNINGS TO FIXED CHARGES
UNAUDITED PRO FORMA INFORMATION
EQUITY CAPITALIZATION
CALCULATION OF GAIN/LOSS TO BE RECORDED IN CONNECTION WITH THE OFFER
MARKET AND MARKET PRICES
RISK FACTORS
DESCRIPTION OF THE EXCHANGE OFFER
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
TAX CONSEQUENCES TO UNITED STATES HOLDERS
TAX CONSEQUENCES TO NON-UNITED STATES HOLDERS
DESCRIPTION OF THE 2009 SECURED NOTES
DESCRIPTION OF THE OLD NOTES
LEGAL MATTERS
EXPERTS
INFORMATION REGARDING FORWARD-LOOKING STATEMENTS
WHERE YOU CAN FIND MORE INFORMATION
THE EXCHANGE AGENT
PART II INFORMATION NOT REQUIRED IN PROSPECTUS
Item 20. Indemnification of Directors and Officers.
Item 21. Exhibits and Financial Statement Schedules
Item 22. Undertakings
SIGNATURES FOR SILICON GRAPHICS, INC.
POWER OF ATTORNEY
INDEX OF EXHIBITS

EX-4.2

Exhibit 4.2

SILICON GRAPHICS, INC.

11.75% Senior Secured Notes Due 2009


INDENTURE

Dated as of December     , 2003



U.S. BANK NATIONAL ASSOCIATION
TRUSTEE

CROSS-REFERENCE TABLE

TIA Section		Indenture Section
310	(a)(1)	7.10
	(a)(2)	7.10
	(a)(3)	N.A.
	(a)(4)	N.A.
	(a)(5)	7.10
	(b)	7.06; 7.08
	(c)	N.A.
311	(a)	7.11
	(b)	7.11
	(c)	N.A.
312	(a)	2.05; 2.14
	(b)	2.14(b); 13.03
	(c)	2.14(c); 13.03
313	(a)	7.12(a)
	(b)	7.12(a)
	(c)	7.12(a)
	(d)	7.12(b)
314	(a)	4.03; 4.04
	(b)	11.05
	(c)(1)	12.04
	(c)(2)	12.04
	(c)(3)	N.A.
	(d)	11.05
	(e)	12.05
	(f)	N.A.
315	(a)	7.01
	(b)	7.05; 13.02
	(c)	7.01
	(d)	7.01
	(e)	6.11
316	(a)(1)(A)	6.02
	(a)(1)(B)	6.04
	(a)(2)	N.A.
	(b)	6.07
	(c)	N.A.
317	(a)(1)	6.08
	(a)(2)	6.09
	(b)	2.04
318	(a)	12.01
	(b)	N.A.
	(c)	12.01

Note:This cross-reference table shall not, for any purpose, be deemed to be a part of the Indenture.

TABLE OF CONTENTS(1)

(1) This Table of Contents shall not, for any purpose, be deemed to be part of the Indenture.

ii

iii

iv

INDENTURE, dated as of December     , 2003, between SILICON GRAPHICS, INC., a Delaware corporation (the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America (the “Trustee”).

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company’s 11.75% Senior Secured Notes Due 2009 (the “Securities”):

ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.  Definitions.

“Administrative Agent” means Wells Fargo Foothill, Inc., as administrative agent for the lenders under the Secured Credit Facility, and any successor thereto “exercising substantially the same rights and powers and representative of lender to whom the Company has granted a Senior Priority Lien on the collateral as permitted under this Indenture.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control,” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Average Life” means, with respect to any indebtedness, the quotient obtained by dividing the sum of the products of (1) the number of years from the date of determination to the dates of each successive scheduled principal payment on such indebtedness, and (2) the amount of such principal payment, by the sum of all such principal payments.

“Board of Directors” means either the board of directors of the Company or any duly authorized committee of such board.

“Business Day” means each day of the year on which banking institutions are not required or authorized to close in The City of New York or at the principal corporate trust office of the Trustee.

“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

“Capital Stock” means (1) in the case of a corporation, corporate stock, (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (3) in the case of a partnership, partnership interests (whether general or limited), and (4) any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing person.

“Code” means the New York Uniform Commercial Code, as in effect from time to time.

“Collateral” means all assets of the Company that secure the Securities pursuant to the Junior Priority Security Documents as amended from time to time.

“Common Stock” means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company.

“Company” means the party named as the “Company” in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor.  The foregoing sentence shall likewise apply to any subsequent such successor or successors.

“Company Request” or “Company Order” means a written request or order signed in the name of the Company by its Chairman of the Board, a Vice Chairman, its President, a Senior Vice President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Custodian” means U.S. Bank National Association, as custodian with respect to any Global Security, or any successor.

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“Defaulted Interest” has the meaning specified in Section 2.12.

“Depositary” means, with respect to the Securities issuable or issued in whole or in part in global form, the person specified in Section 2.06 as the Depositary with respect to the Securities, until a successor Depositary shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, “Depositary” shall mean or include such successor.

2

“Disqualified Stock” means Capital Stock that, by its terms (or the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder, in whole or in part, on or prior to the date that is the Stated Maturity of the Securities and the New Convertible Notes.

“Event of Default” means any event or condition specified as such in Section 6.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Fundamental Change” means the occurrence of any transaction or event in connection with which all or substantially all the Common Stock shall be exchanged for, converted into, acquired for or constitute solely the right to receive (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) consideration which is not all or substantially all common stock listed (or, upon consummation of such transaction or event, will be listed) on a United States national securities exchange or approved for quotation in the Nasdaq National Market or any similar system of automated dissemination of quotations of securities prices.

“GAAP” means generally accepted accounting principles.

“Global Security” means a Security that is registered in the Security Register in the name of the Depository or a nominee thereof.

“Holder” or “Securityholder” means a Person in whose name a Security is registered on the Registrar’s books.

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

“Intellectual Property Security Agreement” means an intellectual property security agreement executed and delivered pursuant to the terms of the Security Agreement by the Company and Trustee, the form and substance of which is satisfactory to the Trustee.

“Intercreditor Agreement” means (i) the intercreditor agreement dated as of the date hereof among the Company, the Trustee and Wells Fargo Foothill, Inc., as Administrative Agent under the Secured Credit Facility and (ii) any agreement entered into among the Company, the Trustee and any holder of a Senior Priority Lien (or its representative).

3

“Interest Payment Date” means the Stated Maturity of an installment of interest on the Securities.

“Interest Period” shall have the meaning set forth in Section 10.02.

“Junior Priority Lien” means, to the extent securing the Securities, a Lien granted by a Junior Priority Security Document as security for the Securities, which is junior in priority to the Senior Priority Liens.

“Junior Priority Security Documents” means, collectively, the Security Agreement, the Intellectual Property Agreement and all other security agreements, pledges, collateral assignments, mortgages or other instruments evidencing or creating any Security Interests in favor of the Trustee, for the benefit of the Trustee and the Securityholders, in all or any portion of the Collateral, in each case, as amended, amended and restated, supplemented, replaced or otherwise modified from time to time, in accordance with the terms thereof.

“Lien” means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, whether such interest shall be based on the common law, statute, or contract, whether such interest shall be recorded or perfected, and whether such interest shall be contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances, including the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also including reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting real property.

“Maturity” when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, redemption upon a Fundamental Change or otherwise.

“New Convertible Indenture” means that certain Indenture dated as of December   , 2003 between the Company and the Trustee, relating to the New Convertible Notes.

“New Convertible Notes” means the Company’s 6.50% Senior Secured Convertible Notes Due 2009.

“Noteholder Documents” means this Indenture, the Securities, the Intercreditor Agreement and the Junior Priority Security Documents.

4

“Officer” means the Chairman of the Board, any Vice Chairman, the President, any Senior Vice President, any Vice President, the Treasurer or the Secretary or any Assistant Treasurer or Assistant Secretary of the Company.

“Officers’ Certificate” means a written certificate containing the information specified in Sections 12.04 and 12.05, signed in the name of the Company by its Chairman of the Board, a Vice Chairman, its President, a Senior Vice President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Old Notes” means the Company’s 5.25% Senior Convertible Notes Due 2004.

“Old Notes Indenture” means that certain Indenture dated as of September 1, 1997 between the Company and the U.S. Bank National Association, as successor trustee to State Street Bank and Trust Company of California, N.A., relating to the Old Notes.

“Opinion of Counsel” means a written opinion signed by legal counsel who may be an employee of or counsel to the Company and who shall be satisfactory to the Trustee.  Each such opinion shall comply with Section 314 of the Trust Indenture Act and include the information specified in Sections 12.04 and 12.05.

“Options” means any warrants, options or other rights to acquire Capital Stock of the Company (but excluding (i) any options or other rights issued under a plan maintained by the Company for the benefit of employees, directors and consultants, and (ii) any debt security that is convertible into or exchangeable for Capital Stock of the Company).

“Permitted Purchase Money Indebtedness” means indebtedness incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof.

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security.  For the purposes of this definition, any Security authenticated and delivered under Section 2.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

5

“Prospectus” means the prospectus dated November 21, 2003, as amended or supplemented from time to time included in the registration statement (File No. 333-110683) on Form S-3 filed by the Company under the Securities Act with the SEC pursuant to which the Company offered to exchange the Securities and the New Notes for its Old Notes.

“Redemption Date” shall mean a date specified for redemption of the Securities (other than redemption upon a Fundamental Change at the option of the Securityholder) in accordance with the terms of the Securities and Section 3.01 of this Indenture.

“Redemption Price” shall have the meaning set forth in paragraph 5 of the Securities.

“Regular Record Date” for the interest payable on any Interest Payment Date means the December 15 or June 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.

“SEC” means the Securities and Exchange Commission.

“Secured Credit Facility” means that certain Amended and Restated Loan and Security Agreement among the Company, Silicon Graphics Federal, Inc. and Wells Fargo Foothill, Inc., as Administrative Agent for itself and other lenders, and the Bank of America, N.A. dated as of September 20, 2002, as the same shall be renewed, replaced, restructured or refinanced (whether with the original administrative agent and lenders or others, and whether provided under the original Secured Credit Facility or any other agreement or indenture).

“Security” or “Securities” means any of the Company’s 11.75% Senior Secured Notes Due 2009, as amended or supplemented from time to time, issued under this Indenture.

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Security Agreement” means the security agreement dated as of the date hereof between the Trustee and the Company.

“Security Interests” means the Liens on the Collateral created by the Junior Priority Security Documents in favor of the Trustee on a junior priority basis, for the benefit of the Trustee and the Securityholders.

“Securityholder” or “Holder” means a person in whose name a Security is registered on the Registrar’s books.

“Security Register” has the meaning specified in Section 2.05.

6

“Senior Priority Lien” means any lien on the Collateral created by the Company that this senior to the lien granted to Securityholders under the Security Agreement and that secures debt permitted under Section 4.06(e) of this Indenture, including, but not limited to the liens created under the Secured Credit Facility.

“Senior Priority Lien Obligations” means all indebtedness incurred by the Company and permitted under this Indenture that is secured by a Senior Priority Lien.

“SGI Japan Secured Debt” means that Loan Agreement between the Company, Silicon Graphics World Trade B.V. and SGI Japan, Ltd. as of November 9, 2001, as the same may be amended from time to time.

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.12.

“Stated Maturity” when used with respect to any Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable, and when used with respect to any other indebtedness or any installment of interest thereon, the date specified as the fixed date on which the principal of such debt or such installment of interest is due and payable as set forth in the documentation governing that debt, not including any contingent obligation to repay, redeem or repurchase prior to the regularly scheduled date for payment.

“Subsidiary” means a corporation of which a majority of the capital stock (which for purposes of this definition means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by such corporation) having voting power under ordinary circumstances to elect a majority of the board of directors of such corporation is owned directly or indirectly by (i) the Company, (ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries.

“TIA” means the Trust Indenture Act of 1939 as in effect on the date of this Indenture, except as provided in Section 9.03.

“Trust Officer” means any officer of the Trustee assigned by the Trustee to administer its corporate trust matters.

“Trustee” means the party named as the “Trustee” in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor.  The foregoing sentence shall likewise apply to any subsequent such successor or successors.

7

Section 1.02.  Other Definitions.

Term	Defined in Section
Bankruptcy Law	6.01
Company Notice	3.07
Event of Default	6.01
Fundamental Change Repurchase Date	3.07
Fundamental Change Redemption Price	3.07
Incur	4.06
Legal Holiday	12.08
Notice of Default	6.01
Paying Agent	2.03
Registrar	2.03

Section 1.03.  Incorporation by Reference of TIA.  Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.  The following TIA terms used in this Indenture have the following meanings:

“Commission” means the SEC.

“Indenture Securities” means the Securities.

“Indenture Security Holder” means a Securityholder.

“Indenture to be Qualified” means this Indenture.

“Indenture Trustee” or “Institutional Trustee” means the Trustee.

“Obligor” on the indenture securities means the Company.

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

Section 1.04.  Rules of Construction.  Unless the context otherwise requires:

(a)           a term has the meaning assigned to it;

(b)           an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time;

8

(c)           “or” is not exclusive;

(d)           “including” means including, without limitation; and

(e)           words in the singular include the plural, and words in the plural include the singular.

ARTICLE 2
THE SECURITIES

Section 2.01.  Form and Dating.  The Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A, which is a part of this Indenture.  The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage (provided that any such notation, legend or endorsement required by usage is in a form acceptable to the Company).  The Company shall provide any such notations, legends or endorsements to the Trustee in writing.  Each Security shall be dated the date of its authentication.

Section 2.02.  Execution And Authentication.  The Securities shall be executed on behalf of the Company by its Chairman of the Board, one of its Vice Chairman, its President, one of its Senior Vice Presidents or one of its Vice Presidents, under its corporate seal reproduced thereon and attested by its Secretary or one of its Assistant Secretaries.  The signature of any of these officers on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of individuals who were at any time the proper Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of authentication of such Securities.

No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.

The Trustee shall authenticate and deliver Securities for original issue in an aggregate principal amount of up to $230,591,000 upon a Company Order without any further action by the Company.

9

Section 2.03.  Registrar, Paying Agent and Conversion Agent.  The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (“Registrar”), and an office or agency where Securities may be presented for purchase or payment (“Paying Agent”).  The Registrar shall keep a register (the “Security Register”) of the Securities and of their transfer and exchange.  The Company may have one or more co-registrars, one or more additional paying agents and one or more additional conversion agents.  The term Paying Agent includes any additional paying agent.

The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar (if not the Trustee).  The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent.  If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar or co-registrar.

The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securities.

Section 2.04.  Paying Agent to Hold Money and Securities in Trust.  Except as otherwise provided herein, prior to or on each due date of payments in respect of any Security, the Company shall deposit with the Paying Agent a sum of money or securities sufficient to make such payments when so becoming due.  The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money and securities held by the Paying Agent for the making of payments in respect of the Securities and shall notify the Trustee of any default by the Company in making any such payment.  At any time during the continuance of any such default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and securities so held in trust.  If the Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall segregate the money and securities held by it as Paying Agent and hold it as a separate trust fund.  The Company at any time may require a Paying Agent to pay all money and securities held by it to the Trustee and to account for any funds and securities disbursed by it.  Upon doing so, the Paying Agent shall have no further liability for the money or securities.

Section 2.05.  Securityholder Lists.  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders.  If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee at least semiannually on November 15 and May 15 a listing of Holders dated within 15 days of the date on which the list is furnished and at such other times as the Trustee may request in

10

writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders.

Section 2.06.  Exchange and Registration of Transfer of Securities; Depositary.  Upon surrender for registration of transfer of any Security at any office or agency of the Company designated as Registrar or co-registrar pursuant to Section 2.03 and satisfaction of the requirements for such transfer set forth in this Section 2.06, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount.

Securities may be exchanged for a like aggregate principal amount of Securities of other authorized denominations.  Securities to be exchanged shall be surrendered at any office or agency to be maintained by the Company designated as Registrar or co-registrar pursuant to Section 2.03 and the Company shall execute and register and the Trustee shall authenticate and deliver in exchange therefor the Security or Securities which the Securityholder making the exchange shall be entitled to receive, bearing registration numbers not contemporaneously outstanding.

All Securities presented for registration of transfer or for exchange, purchase, redemption or payment shall (if so required by the Company, the Trustee, the Registrar or any co-registrar) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee, duly executed by the Holder or his attorney duly authorized in writing.

No service charge shall be charged to the Securityholder for any exchange or registration of transfer of Securities, but the Company may require payment of a sum sufficient to cover any tax, assessments or other governmental charges that may be imposed in connection therewith.

None of the Company, the Trustee, the Registrar or any co-registrar shall be required to exchange or register a transfer of (a) any Securities for a period of 15 days next preceding any selection of Securities to be redeemed or (b) any Securities or portions thereof selected or called for redemption or (c) any Securities or portion thereof surrendered for redemption (and not withdrawn) pursuant to Section 3.07.

All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Securities surrendered upon such exchange or transfer.

11

The provisions of Clauses (a), (b), (c), (d) and (e) below shall apply only to Global Securities:

(a)           Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or Custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b)           Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in party may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act, or (B) there shall have occurred and be continuing an Event of Default with respect to such Global Security.

(c)           Subject to 2.06(b) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct.

(d)           Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof whether pursuant to this Article Two or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

(e)           The Depositary or its nominee, as registered own of a Global Security, shall be the Holder of such Global Security for all purposes under the Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the applicable procedures.  Accordingly, any such owner’s beneficial interest in a Global Security will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its agent members and such owners of beneficial interests in a Global Security will not be considered the owners or holders thereof.

12

The Depositary shall be a clearing agency registered under the Exchange Act.  The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Securities in global form.  Initially, the Global Security shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as custodian for Cede & Co.

If at any time the Depositary for the Global Security notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security, the Company may appoint a successor Depositary with respect to such Security.  If a successor Depositary for the Global Security is not appointed by the Company within 90 days after the Company receives such notice, the Company will execute, and the Trustee, upon receipt of a Company Order for authentication and delivery of Securities, will authenticate and deliver, Securities in definitive form, in an aggregate principal amount equal to the principal amount of the Global Security, in exchange for such Security in the global form.

Section 2.07.  Replacement Securities.  If (i) any mutilated Security is surrendered to the Trustee, or (ii) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be redeemed by the Company pursuant to Article 3 hereof, the Company in its discretion may, instead of issuing a new Security, pay or redeem such Security, as the case may be.

Upon the issuance of any new Securities under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

13

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

Section 2.08.  Outstanding Securities; Determinations of Holders’ Action.  Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding.  A Security does not cease to be outstanding because the Company or an Affiliate thereof holds the Security; provided, however, that in determining whether the Holders of the requisite principal amount of Securities have given or concurred in any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded.  Subject to the foregoing, only Securities outstanding at the time of such determination shall be considered in any such determination (including, without limitation, determinations pursuant to Articles 6 and 9).

If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser.

If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, on a Fundamental Change Repurchase Date or on Stated Maturity, money or securities, if permitted hereunder, sufficient to pay Securities payable on that date, then on and after that date such Securities shall cease to be outstanding and interest on such Securities shall cease to accrue; provided, that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made.

Section 2.09.  Temporary Securities.  Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities.

If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay.  After the preparation of

14

definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 2.03, without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations.  Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

Section 2.10.  Cancellation.  All Securities surrendered for payment, redemption or registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it.  The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee.  The Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation.  No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture.  All canceled Securities held by the Trustee shall be destroyed by the Trustee and evidence of their destruction delivered to the Company unless the Company directs by Company Order that the Trustee deliver canceled Securities to the Company.

Section 2.11.  Persons Deemed Owners.  Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal amount, premium, if any, interest, Redemption Price and Fundamental Change Redemption Price in respect thereof, for all purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary.

Section 2.12.  Payment of Interest; Interest Rights Preserved.  Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.

Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted

15

Interest may be paid by the Company, at its election in each case, as provided in (a) or (b) below:

(a)           The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner. The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following clause 2.12(b).

(b)           The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or market on which the Securities may be listed, and upon such notice as may be required by such exchange or market, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

16

Section 2.13.  Computation of Interest.  Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months.

Section 2.14.  Preservation of Information; Communications to Holders.

(a)        The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list furnished to the Trustee as provided in Section 2.05 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar.  The Trustee may destroy any list furnished to it as provided in Section 2.05 upon receipt of a new list so furnished.

(b)        The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding right and duties of the Trustee, shall be as provided in the TIA.

(c)        Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to names and addresses of the Holders made pursuant to the TIA.

ARTICLE 3
REDEMPTION

Section 3.01.  Right to Redeem; Notices to Trustee.  The Company, at its option, may redeem the Securities in accordance with the provisions of paragraph 5 of the Securities.  If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the Redemption Date, the principal amount of Securities to be redeemed, the Redemption Price, and the amount of accrued interest to, but excluding, the Redemption Date.

The Company shall give the notice to the Trustee provided for in this Section 3.01 (i) in the case of any redemption of fewer than all of the Securities, at least 45 days before the Redemption Date and (ii) in the case of a redemption of all of the Securities, no later than the Company is required to give notice to the Holders pursuant to Section 3.03, in each case unless a shorter notice shall be satisfactory to the Trustee.

Section 3.02.  Selection of Securities to be Redeemed.  If less than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or by lot or by a method the Trustee considers fair and appropriate (as long as such method is not prohibited by the rules of any stock

17

exchange or automated quotation system on which the Securities are then listed).  The Trustee shall make the selection at least 10 days, but not more than 60 days, before the Redemption Date from outstanding Securities not previously called for redemption.  The Trustee may select for redemption portions of the principal amount of Securities that have denominations larger than $1,000.  Securities and portions of Securities selected by the Trustee shall be in principal amounts of $1,000 or a multiple of $1,000.  Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption.  The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed.

Section 3.03.  Notice of Redemption.  At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail, postage prepaid, to each Holder of Securities to be redeemed.

The notice shall identify the Securities to be redeemed and shall state:

(a)           the Redemption Date;

(b)           the Redemption Price, together with the amount of accrued interest to, but excluding, the Redemption Date;

(c)           the name and address of the Paying Agent;

(d)           that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price and accrued interest to, but excluding, the Redemption Date;

(e)           if fewer than all the outstanding Securities are to be redeemed, the certificate number and principal amounts of the particular Securities to be redeemed; and

(f)            that interest on Securities called for redemption will cease to accrue on and after the Redemption Date.

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense.

Section 3.04.  Effect of Notice of Redemption.  Once notice of redemption is given, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price, together with accrued interest to, but excluding, the Redemption Date, stated in the notice.

Upon the later of the Redemption Date or the date such Securities are surrendered to the Paying Agent, such Securities shall be paid at the Redemption

18

Price, together with accrued interest to, but excluding, the Redemption Date, stated in the notice.

Section 3.05.  Deposit of Redemption Price.  Prior to or on the Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of them is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the Redemption Price and accrued interest to, but excluding, the Redemption Date of all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which prior thereto have been delivered by the Company to the Trustee for cancellation; provided that if such payment is made on the Redemption Date it must be received by the Trustee or Paying Agent, as the case may be, by 10:00 a.m.  New York City time, on such Redemption Date.  If such money is then held by the Company in trust and is not required for such purpose it shall be discharged from such trust.

Section 3.06.  Securities Redeemed in Part.  Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Security in an authorized denomination equal in principal amount to the unredeemed portion of the Security surrendered.

Section 3.07.  Redemption at Option of the Holder upon a Fundamental Change.

(a)        If a Fundamental Change shall occur at any time prior to July 1, 2009, each Holder of Securities shall have the right, at such Holder’s option, to require the Company to redeem such Holder’s Securities on the date (the “Fundamental Change Repurchase Date”) (or if such date is not a Business Day, the next succeeding Business Day) that is 45 days after the date of the Company’s notice of such Fundamental Change.  The Securities will be redeemable in part in multiples of $1,000 of principal amount.  Such repayment shall be made at 100% of the principal amount (the “Fundamental Change Redemption Price”) thereof. In each case, the Company shall also pay to such Holders accrued interest to, but excluding, the Fundamental Change Repurchase Date on the redeemed Securities; provided that if such Fundamental Change Repurchase Date is an Interest Payment Date, then the interest payable on such date shall be paid to the Holder of the Security on the next preceding the Regular Record Date.

(b)        On or before the tenth day after the occurrence of a Fundamental Change, the Company, or, at its written request (which must be received by the Trustee at least five Business Days prior to the date the Trustee is requested to give notice as described below), the Trustee in the name of and at the expense of the Company, shall mail or cause to be mailed to all Holders of record on the date

19

of the Fundamental Change a notice (the “Company Notice”) of the occurrence of such Fundamental Change and of the redemption right at the option of the Holders arising as a result thereof.  Such notice shall be mailed in the manner and with the effect set forth in Section 3.03.  The Company shall also deliver a copy of the Company Notice to the Trustee at such time as it is mailed to the Holders.

Each Company Notice shall specify the circumstances constituting the Fundamental Change, the Fundamental Change Repurchase Date, the Fundamental Change Redemption Price at which the Company shall be obligated to redeem the Securities, the amount of interest accrued on each Security to, but excluding, the Fundamental Change Repurchase Date, the latest time by which the Holder must exercise the redemption right (the “Fundamental Change Expiration Time”), that the Holder shall have the right to withdraw any Notes prior to the Fundamental Change Expiration Time, a description of the procedure which a Holder must follow to exercise such redemption right and to withdraw any surrendered Notes and the place or places where the Holder is to surrender such Holder’s Securities.

No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders’ redemption rights or affect the validity of the proceedings for the repurchase of the Securities pursuant to this Section 3.07.

(c)        For a Security to be so redeemed at the option of the Holder, the Paying Agent must receive such Security with the form entitled “Option to Elect Redemption Upon a Fundamental Change” on the reverse thereof duly completed (a “Fundamental Change Redemption Notice”), together with such Security duly endorsed for transfer, on or before the 30th day after the date of such Company Notice (or if such 30th day is not a Business Day, the immediately preceding Business Day).  All questions as to the validity, eligibility (including time of receipt) and acceptance of any Security for redemption shall be determined by the Company, whose determination shall be final and binding.

(d)        Upon receipt by the Company of the Fundamental Change Redemption Notice specified in Section 3.07(c), the Holder of the Security in respect of which such Fundamental Change Redemption Notice was given shall (unless such Fundamental Change Redemption Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, with respect to such Security.  Such Fundamental Change Redemption Price together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, shall be paid to such Holder promptly following the Fundamental Change Repurchase Date.

20

A Fundamental Change Redemption Notice may be withdrawn by the Holder by means of a written notice of withdrawal delivered to the office of the Paying Agent at any time prior to the close of business on the Fundamental Change Repurchase Date to which it relates specifying:

(i)            the certificate number of the Security in respect of which such notice of withdrawal is being submitted,

(ii)           the principal amount of the Security with respect to which such notice of withdrawal is being submitted, and

(iii)          the principal amount, if any, of such Security which remains subject to the original Fundamental Change Redemption Notice and which has been or will be delivered for purchase by the Company.

There shall be no redemption pursuant to Section 3.07 if there has occurred prior to, on or after, as the case may be, the giving, by the Holders of such Securities, of the required Fundamental Change Redemption Notice and is continuing an Event of Default (other than a default in the payment of the Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, with respect to such Securities).

(e)        On or before the Fundamental Change Repurchase Date the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an amount of money and/or securities, if permitted hereunder, sufficient to pay the aggregate Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, of all the Securities or portions thereof which are to be redeemed as of such Fundamental Change Repurchase Date; provided that if such payment is made on the Fundamental Change Repurchase Date it must be received by the Trustee or Paying Agent, as the case may be, by 10:00 a.m.  New York City time, on such Fundamental Change Repurchase Date.

(f)         Any Security that is to be redeemed upon a Fundamental Change only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and, upon the Company’s written direction to the Trustee, the Trustee shall authenticate and deliver to the Holder of such Security, without service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange

21

for, the portion of the principal amount of the Security so surrendered which is not redeemed.

(g)        In connection with any offer to redeem Securities under Section 3.07 hereof the Company shall comply with all Federal and state securities laws so as to permit the rights and obligations under Section 3.07 to be exercised in the time and in the manner specified in Section 3.07.

(h)        The Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed as provided in paragraph 9 of the Securities, together with interest or dividends, if any (subject to the provisions of Section 7.01(f)), thereon, held by them for the payment of a Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date; provided, however that to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.07 exceeds the aggregate Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, of the Securities or portions thereof which the Company is obligated to purchase as of the Fundamental Change Repurchase Date then promptly after the Business Day following the Fundamental Change Repurchase Date the Trustee and the Paying Agent shall return any such excess to the Company together with interest or dividends, if any, thereon.

ARTICLE 4
COVENANTS

Section 4.01.  Payment of Securities.  The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities or pursuant to this Indenture.  The principal amount, premium, if any, accrued interest, Redemption Price and Fundamental Change Redemption Price shall be considered paid on the applicable date due if on such date the Trustee or the Paying Agent holds on or before 10:00 a.m.  New York City time on such date, in accordance with this Indenture, money or securities, if permitted hereunder, sufficient to pay all such amount then due.

The Company shall pay interest at the rate set forth in paragraph 1 of the Securities and it shall pay interest on overdue interest at the same rate compounded semiannually (to the extent that the payment of such interest shall be legally enforceable), which interest on overdue interest shall accrue from the date such amounts became overdue.

Section 4.02.  SEC Reports.  The Company shall file with the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the SEC, copies of its annual report and of the

22

information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.

Section 4.03.  Compliance Certificate.  The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending in June 2004) an Officers’ Certificate stating whether or not the signers know of any Default that occurred during such period.  If they do, such Officers’ Certificate shall describe the Default and its status.

Section 4.04.  Further Instruments and Acts.  Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.

Section 4.05.  Maintenance of Office or Agency.  The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, exchange, or redemption and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served.  The office of U.S. Bank Trust National Association, an Affiliate of the Trustee, at 100 Wall Street, Suite 1600, New York, NY 10005, shall be such office or agency for all of the aforesaid purposes unless the Company shall maintain some other office or agency for such purposes and shall give prompt written notice to the Trustee of the location, and any change in the location, of such other office or agency.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 12.02.

The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes.

Section 4.06.  Restriction on Additional Indebtedness.  The Company shall not, nor shall it permit any Subsidiary to, directly or indirectly, create, incur, assume, guaranty or otherwise become directly or indirectly liable for (“Incur”) any additional indebtedness for borrowed money or issue any Disqualified Stock,

23

except that the Company may, and may permit any Subsidiary to Incur additional indebtedness:

(a)        pursuant to any interest rate swap agreement, interest rate cap agreement or other agreement designed to protect against fluctuations in interest rates, any foreign exchange forward contract, currency swap agreement or other agreement designed to protect against fluctuations in foreign exchange rates, or any commodity or raw material futures contract or any other agreement designed to protect against fluctuations in raw material prices, entered into in the ordinary course of business for the purpose of limiting risks associated with our business and not for speculation;

(b)        with respect to letters of credit and bankers’ acceptances issued in the ordinary course of business and not supporting indebtedness for borrowed money, including letters of credit supporting performance, surety or appeal bonds, indemnification obligations, lease or other contractual deposits, or other similar obligations;

(c)        the proceeds of which, less fees and expenses, are used to repay, redeem or repurchase, at the option of the Company, Securities, New Convertible Notes, or Old Notes, provided that if any Securities or New Convertible Notes will remain outstanding, the Stated Maturity of the indebtedness incurred must be at least 120 days after the Stated Maturity of the Securities and New Convertible Notes;

(d)        indebtedness incurred to refinance, renew or replace the SGI Japan Secured Debt, or any extensions or amendments of the SGI Japan Secured Debt, in each case that do not increase the principal amount thereof;

(e)        other indebtedness to banks or other institutional lenders in the form of revolving credit loans or term loans or the issuance of letters of credit or bankers’ acceptances or the like, including the Secured Credit Facility as it may be extended, refinanced, renewed or replaced, provided that the aggregate principal amount of such other indebtedness at any time outstanding does not exceed $100 million;

(f)         indebtedness represented by purchase money liens or the interests of lessors under Capital Leases to the extent that such liens or interests secure Permitted Purchase Money Indebtedness and so long as such lien attaches only to the asset purchased or acquired and the proceeds thereof, including indebtedness incurred to refund, refinance or replace any indebtedness incurred pursuant to this clause (f); or

(g)        that is (i) in an aggregate principal amount no greater than $35,000,000, (ii) is subordinate in right of payment to all amounts payable under

24

the Securities and the New Notes, (iii) does not have a final Stated Maturity prior to the Stated Maturity of the Securities and the New Notes, and (iv) has an Average Life at least equal to the remaining Average Life of the Securities and the New Notes.

Section 4.07.  Restricted Payments.  The Company shall not

(a)        declare or pay any dividend or make any distribution on its Capital Stock, other than dividends or distributions paid in its or its Subsidiaries’ Capital Stock other than Disqualified Stock;

(b)        purchase, redeem or otherwise acquire or retire for value any of its Capital Stock or Options, other than (1) the repurchase of unvested restricted stock in connection with voluntary or involuntary terminations of employment with an aggregate purchase price less than $100,000 per fiscal year, or (2) repurchases, redemptions, acquisitions or retirements paid for with its or its Subsidiaries’ Capital Stock other than Disqualified Stock or Options to buy Capital Stock other than Disqualified Stock;

(c)        pay any funds to or for the account of, make any investment in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, participate in, or effect, any transaction with, any Affiliate except on an arms-length basis on terms at least as favorable to the Company as could have been obtained from a third-party that was not an Affiliate (except that the Company may enter into compensatory arrangements with and pay such salary, bonus or other compensation to employees, officers and directors as have been approved by a committee of the Company’s Board of Directors comprised of independent directors); or

(d)        repay, redeem, repurchase, defease or otherwise acquire or retire for value, any indebtedness subordinated in right of payment to the Securities or the New Convertible Notes except a payment of interest or principal when due.

ARTICLE 5
SUCCESSOR CORPORATION

Section 5.01.  When Company May Merge or Transfer Assets.  Company shall not consolidate with or merge with or into any other Person (other than in a merger or consolidation in which the Company is the surviving Person) or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless:

(a)        the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which

25

acquires by conveyance, transfer or lease the properties and assets of the Company substantially as an entirety (i) shall be a corporation, partnership or trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of the obligations of the Company under the Securities and this Indenture;

(b)        immediately after giving effect to such transaction, no Default shall have occurred and be continuing; and

(c)        the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article and that all conditions precedent herein provided for relating to such transaction have been satisfied.

The successor Person formed by such consolidation or into which the Company is merged or the successor Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of (i) a lease of its properties and assets substantially as an entirety, the Company shall be discharged from all obligations and covenants under this Indenture and the Securities.

ARTICLE 6
DEFAULTS AND REMEDIES

Section 6.01.  Events of Default.  “Event of Default” occurs if:

(a)        the Company defaults in the payment of the principal amount of, premium, if any, Redemption Price or Fundamental Change Redemption Price on any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration or otherwise;

(b)        the Company defaults in the payment of any installment of interest upon any of the Securities as and when the same shall become due and payable, and continuance of such default for 30 days;

26

(c)        the Company fails to comply with any of its agreements in the Securities, this Indenture or the Junior Priority Security Documents and such failure continues for 60 days after receipt by the Company of a Notice of Default;

(d)        a decree or order by a court having jurisdiction in the premises shall have been entered adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company under any Bankruptcy Law, and such decree or order shall have continued undischarged and unstayed for a period of 60 consecutive days; or a decree or order of a court having jurisdiction in the premises of the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the winding-up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged and unstayed of a period of 60 consecutive days; or

(e)        the Company shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any Bankruptcy Law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due.

(f)         an event of default under the Old Notes Indenture or the New Convertible Indenture shall have occurred which results in the principal amount and accrued interest on that debt becoming immediately due and payable.

“Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors.

A Default under clause (c) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default (and such Default is not waived) within the time specified in clause (3) above after actual receipt of such notice (a “Notice of Default”).  Any such notice must specify the Default, demand that it be remedied and state that such notice is a Notice of Default.

Section 6.02.  Acceleration.  If an Event of Default (other than an Event of Default specified in Section 6.01(d) or (e)) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding by notice to the Company and the Trustee, may declare the principal amount and premium, if any, on all the

27

Securities and the interest accrued thereon to be immediately due and payable.  Upon such a declaration, such principal amount, premium, if any, and interest accrued thereon shall be due and payable immediately.  If an Event of Default specified in Section 6.01(d) or (e) occurs and is continuing, the principal amount and premium, if any, on all the Securities and the interest accrued thereon shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders.  The Holders of a majority in aggregate principal amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder) may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of the principal amount, premium, if any, and interest accrued thereon that has become due solely as a result of acceleration and if all amounts due to the Trustee under Section 7.07 have been paid.  No such rescission shall affect any subsequent Default or impair any right consequent thereto.

Section 6.03.  Other Remedies.  If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the principal amount and premium, if any, on the Securities and interest accrued thereon or to enforce the performance of any provision of the Securities or this Indenture.

The Trustee may maintain a proceeding even if the Trustee does not possess any of the Securities or does not produce any of the Securities in the proceeding.  A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of, or acquiescence in, the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative.

Section 6.04.  Waiver of Past Defaults.  The Holders of a majority in aggregate principal amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder), may waive an existing Default and its consequences except (1) an Event of Default described in Section 6.01(a) or 6.01(b), or (2) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected.  When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.

Section 6.05.  Control by Majority.  The Holders of a majority in aggregate principal amount of the Securities at the time outstanding may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any direction that conflicts

28

with law or this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability unless the Trustee is offered indemnity satisfactory to it.

Section 6.06.  Limitation on Suits.  A Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless:

(a)           the Holder gives to the Trustee written notice stating that an Event of Default is continuing;

(b)           the Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding make a written request to the Trustee to pursue the remedy;

(c)           such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense satisfactory to the Trustee;

(d)           the Trustee does not comply with the request within 60 days after receipt of the notice, the request and the offer of security or indemnity; and

(e)           the Holders of a majority in aggregate principal amount of the Securities at the time outstanding do not give the Trustee a direction inconsistent with the request during such 60-day period.

A Securityholder may not use this Indenture to prejudice the rights of any other Securityholder or to obtain a preference or priority over any other Securityholder.

Section 6.07.  Rights of Holders to Receive Payment.  Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price in respect of the Securities held by such Holder, on or after the respective due dates expressed in the Securities or any Redemption Date or Fundamental Change Repurchase Date, as the case may be, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected adversely without the consent of each such Holder.

Section 6.08.  Collection Suit by Trustee.  If an Event of Default described in Section 6.01(a) or 6.01(b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount owing with respect to the Securities and the amounts provided for in Section 7.07.

29

Section 6.09.  Trustee May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price in respect of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise,

(a)           to file and prove a claim for the whole amount of the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and

(b)           to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claims of any Holder in any such proceeding.

Section 6.10.  Priorities.  If the Trustee collects any money pursuant to this Article 6 (including upon realization of any Lien on the Collateral), it shall pay out the money in the following order:

First:  to the Trustee for amounts due under Section 7.07;

Second:  to Securityholders for amounts due and unpaid on the Securities for the principal amount, premium, if any, accrued interest, Redemption Price or

30

Fundamental Change Redemption Price, as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Securities; and

Third:  the balance, if any, to the Company.

The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section 6.10.  At least 15 days before such record date, the Company shall mail to each Securityholder and the Trustee a notice that states the record date, the payment date and amount to be paid.

Section 6.11.  Undertaking for Costs.  In any suit for the enforcement of any right or remedy, under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant (other than the Trustee) in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in aggregate principal amount of the Securities at the time outstanding.

Section 6.12.  Waiver of Stay, Extension or Usury Laws.  The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price in respect of Securities as contemplated herein, or which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such laws and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE 7TRUSTEE

Section 7.01.  Duties of Trustee.  (a)  If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs.

31

(b)        Except during the continuance of an Event of Default:

(i)            the Trustee need perform only those duties that are specifically set forth in this Indenture and no others; and

(ii)           in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c)        The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i)            this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.01;

(ii)           the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii)          the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(d)        Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.

(e)        The Trustee may refuse to perform any duty or exercise any right or power or extend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense.

(f)         Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.

Section 7.02.  Rights of Trustee.  (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.

(b)        Before the Trustee acts or refrains from acting, it may require a Company Order, an Officers’ Certificate or an Opinion of Counsel.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Company Order, Officers’ Certificate or Opinion of Counsel.

32

(c)        The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d)        Subject to the provisions of Section 7.01(c), the Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

Section 7.03.  Individual Rights of Trustee.  The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar or co-registrar may do the same with the like rights.  However, the Trustee must comply with Section 7.10.

Section 7.04.  Trustee’s Disclaimer.  The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be responsible for any statement in the Prospectus with respect to the Securities or in the Indenture of the Securities (other than its certificate of authentication), the acts of an prior Trustee hereunder, or the determination as to which beneficial owners are entitled to receive any notices hereunder.

Section 7.05.  Notice of Defaults.  If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall give to each Securityholder notice of the Default within 90 days after it occurs.  Except in the case of a Default described in Section 6.01(a) or 6.01(b), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders.  The Trustee shall not give notice of a Default pursuant to Section 6.01(c) until at least sixty (60) days have passed since its occurrence.

Section 7.06.  Disqualification; Conflicting Interests.  If the Trustee has or shall acquire any conflicting interest within the meaning of the TIA, it shall either eliminate such conflicting interest or resign, to the extent and in the.  manner provided by, and subject to the provisions of the TIA and this Indenture.

Section 7.07.  Compensation and Indemnity.  The Company agrees:

(a)           to pay to the Trustee from time to time reasonable compensation for all services rendered by it under the Noteholder Documents to which it is a party (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(b)           to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in

33

accordance with any provision of the Noteholder Documents to which it is a party (including the reasonable compensation and the expense, advances and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and

(c)           to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under the Noteholder Documents to which it is a party.

To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price, as the case may be, on particular Securities.

The Company’s payment obligations pursuant to this Section 7.07 shall survive the discharge of this Indenture.  When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(d)or (e), the expenses are intended to constitute expenses of administration under any Bankruptcy Law.

Section 7.08.  Replacement of Trustee.  The Trustee may resign by so notifying the Company; provided that if the Trustee resigns its position hereunder it shall be deemed to have also resigned as trustee under the Junior Priority Security Documents.  Any such resignation shall not be effective until a successor Trustee hereunder and under the Junior Priority Security Documents has accepted its appointment pursuant to this Section 7.08.  The Holders of a majority in aggregate principal amount of the Securities at the time outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee hereunder and under the Junior Priority Security Documents.  The Company shall remove the Trustee if:

(a)           the Trustee fails to comply with, or ceases to be eligible under, Section 7.10;

(b)           the Trustee is adjudged bankrupt or insolvent;

(c)           a receiver or public officer takes charge of the Trustee or its property; or

(d)           the Trustee otherwise becomes incapable of acting.

34

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint, by resolution of its Board of Directors, a successor Trustee hereunder and under the Junior Priority Security Documents.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture.  The successor Trustee shall mail a notice of its succession to Securityholders.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate principal amount of the Securities at the time outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Section 7.09.  Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trustee business or assets  (including the administration of the trust created by this Indenture) to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

Section 7.10.  Eligibility; Disqualification.  The Trustee (or if a Trustee is a member of a bank holding company, its bank holding company) shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of conditions.  If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

Section 7.11.  Preferential Collection of Claims Against Company.  If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the TIA regarding the collection of claims against the Company (or any such other obligor).

Section 7.12.  Reports by Trustee.

35

(a)        The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the TIA at the times and in the manner provided pursuant thereto.

(b)        A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange or market upon which the Securities are listed, with the Commission and with the Company.  The Company will notify the Trustee when the Securities are listed on any stock exchange or market.

ARTICLE 8DISCHARGE OF INDENTURE

Section 8.01.  Discharge of Liability on Securities.  When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding Securities have become due and payable and the Company deposits with the Trustee cash and/or securities, as permitted by the terms hereof, sufficient to pay at Stated Maturity the principal amount of all outstanding Securities (other than Securities replaced pursuant to Section 2.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 7.07, cease to be of further effect as to all outstanding Securities issued hereunder and all Security Interests in the Collateral created by the Junior Priority Security Documents in favor of the Trustee and the Securityholders.  The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’ Certificate and Opinion of Counsel and at the cost and expense of the Company.

Section 8.02.  Repayment to the Company.  The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, provided, however, that the Trustee or such Paying Agent, before being required to make any such return, shall at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each such Holder notice that such money or securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or securities then remaining will be returned to the Company.  After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

36

ARTICLE 9AMENDMENTS

Section 9.01.  Without Consent of Holders.  The Company and the Trustee may amend this Indenture or the Securities without the consent of any Securityholder:

(a)           to cure any ambiguity, defect or inconsistency;

(b)           to comply with Article 5;

(c)           to provide for uncertificated Securities in addition to certificated Securities so long as such uncertificated Securities are in registered form for purposes of the Internal Revenue Code of 1986, as amended;

(d)           to make any change that does not adversely affect the right of any Securityholder;

(e)           to make any change to comply with the TIA, or any amendment thereto, or to comply with any requirement of the SEC in connection with the qualification, if any, of the Indenture under the TIA;

(f)            to add any additional assets as Collateral;

(g)           to reflect the grant of Liens on the Collateral for the benefit of another secured party to the extent such indebtedness is permitted by the terms of Section 4.06(e) of this Indenture;

(h)           to release Collateral from the Lien of this Indenture and the Junior Priority Security Documents when permitted or required by the Noteholder Documents; or

(i)            to conform the text of this Indenture or the other Noteholder Documents to any provision contained in the Prospectus under the section “Description of the 2009 Secured Notes.”

Section 9.02.  With Consent of Holders.  With the written consent of the Holders of at least a majority in aggregate principal amount of the Securities at the time outstanding, the Company and the Trustee may amend this Indenture or the Securities.  However, without the consent of each Securityholder affected, an amendment or supplement to this Indenture or the Securities may not:

(a)           make any change to the manner or rate of accrual in connection with interest, reduce the rate of interest referred to in paragraph

37

1 of the Securities or extend the time for payment of interest on any Security;

(b)           reduce the Redemption Price or extend the Stated Maturity;

(c)           reduce the Redemption Price or Fundamental Change Redemption Price of any Security;

(d)           make any Security payable in money or securities other than that stated in the Security;

(e)           make any change in Section 6.04 or this Section 9.02, except to increase any such percentage; or

(f)            make any change that adversely affects the right to require the Company to redeem the Securities upon a Fundamental Change in accordance with the terms thereof and this Indenture;

and no such amendment or supplement to this Indenture may reduce the aforesaid percentage of Securities whose Holders must consent to any such amendment or supplemental indenture, without the consent of the Holders of all the Securities then outstanding.

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or supplemental indenture, but it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Section 9.02 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment.

Section 9.03.  Compliance with TIA.  Every supplemental indenture executed pursuant to this Article shall comply with the TIA as then in effect.

Section 9.04.  Revocation and Effect of Consents, Waivers and Actions.  Until an amendment, supplemental indenture, waiver or other action becomes effective, a consent to it or any other action by a Holder of a Security hereunder is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same obligation as the consenting Holder’s Security, even if notation of the consent, waiver or action is not made on the Security.  However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder’s Security or portion of the Security if the Trustee receives the notice or revocation before the date the amendment, supplemental indenture, waiver or action becomes effective.  After an amendment, supplemental indenture, waiver or action becomes effective, it shall bind every Securityholder.

38

Section 9.05.  Notation on or Exchange of Securities.  Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Securities,

Section 9.06.  Trustee to Sign Supplemental Indentures.  The Trustee shall sign any supplemental indenture authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, but need not, sign such supplemental indenture.  In signing such supplemental indenture the Trustee shall be entitled to receive, and (subject to the provisions of Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such supplemental indenture is authorized or permitted by this Indenture.

Section 9.07.  Effect of Supplemental Indentures.  Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

Notwithstanding anything to the contrary contained in this Article 9, the Company may amend (i) the Secured Credit Facility and (ii) to the extent contemplated by the Intercreditor Agreement and Section 11.04 hereof, any agreement or instrument evidencing a Security Interest without the consent of Trustee or any Securityholder.

ARTICLE 10RANKING OF NOTE LIENS

Section 10.01.  Agreement for the Benefit of Holders of Senior Priority Liens.  The Trustee and each Securityholder by accepting a Security agrees, that:

(a)        the Junior Priority Liens securing the Securities upon any and all Collateral are, to the extent and in the manner provided in the Intercreditor Agreement, junior in ranking to all present and future Senior Priority Liens:

(i)        are enforceable by the holders of Senior Priority Liens, for the benefit of the holders of Senior Priority Lien Obligations secured thereby;

39

(ii)       will remain enforceable by the holders of Senior Priority Liens until the payment in full in cash of all Senior Priority Lien Obligations.

(b)        without the necessity of any consent of or prior notice to the Trustee or any Securityholder, the Company may (1) amend, modify, supplement or terminate the Senior Credit Facility and (2) enter into such agreements, including an Intercreditor Agreement, as may be necessary or desirable to reflect its grant of Senior Priority Liens on the Collateral for the benefit of additional secured parties, as permitted under Section 4.06(e) of this Indenture.

(c)        as among the Trustee and the Securityholders and the holders of Senior Priority Liens, the holders of the Senior Priority Liens and the Administrative Agent will have the sole ability to control and obtain remedies with respect to all Collateral without the necessity of any consent of or notice to the Trustee or any Securityholder, as set forth in more detail in the Intercreditor Agreement;

(d)        any or all Liens as set forth in, and granted under the Junior Priority Security Documents for the benefit of the Securityholders will be released by the Trustee as provided by Sections 3 or 5(b) of the Intercreditor Agreement, without the necessity of any consent of the Securityholders, upon the request of the Administrative Agent;

(e)        the Indenture and Securities are subject to the Intercreditor Agreement.  In case of any conflict or inconsistency between the terms of the Intercreditor Agreement and the Junior Priority Security Documents, the terms of the Intercreditor Agreement shall control.

Section 10.02.  Securities not Subordinated.  The provisions of this Article 10 are intended solely to set forth the relative ranking, as Liens, of the Junior Priority Liens as against the Senior Priority Liens.  The Securities are senior non-subordinated obligations of the Company.  Neither the Securities nor the exercise or enforcement of any right or remedy for the payment or collection thereof (other than the exercise of rights and remedies of a secured party, which are subject to the Intercreditor Agreement) are intended to be, or will ever be by reason of the provisions of this Article 10, in any respect subordinated, deferred, postponed, restricted or prejudiced.

Section 10.03.  Relative Rights.  The Intercreditor Agreement defines the relative rights, as lienholders, of holders of Junior Priority Liens and holders of Senior Priority Liens.  Nothing in this Indenture or the Intercreditor Agreement will:

40

(a)        impair, as between the Company and the Securityholders, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium and interest on such Securities in accordance with their terms or to perform any other obligation of the Company under this Indenture or the Securities;

(b)        restrict the right of any Securityholder to sue for payments that are then due and owing;

(c)        prevent the Trustee or any Securityholder from exercising against the Company or any other obligor any of its other available remedies upon a Default or Event of Default (other than its rights as a secured party, which are subject to the Intercreditor Agreement); or

(d)        restrict the right of the Trustee or any Securityholder:

(i)        to file and prosecute a petition seeking an order for relief in an involuntary bankruptcy case as to the Company or otherwise to commence, or seek relief commencing, any insolvency or liquidation proceeding involuntarily against the Company;

(ii)       to make, support or oppose any request for an order for dismissal, abstention or conversion in any insolvency or liquidation proceeding;

(iii)      to make, support or oppose, in any insolvency or liquidation proceeding, any request for an order extending or terminating any period during which the debtor (or any other Person) has the exclusive right to propose a plan of reorganization or other dispositive restructuring or liquidation plan therein;

(iv)     to seek the creation of, or appointment to, any official committee representing creditors (or certain of the creditors) in any insolvency or liquidation proceedings and, if appointed, to serve and act as a member of such committee without being in any respect restricted or bound by, or liable for, any of the obligations under this Article 10;

(v)      to seek or object to the appointment of any professional person to serve in any capacity in any insolvency or liquidation proceeding or to support or object to any request for compensation made by any professional person or others therein;

(vi)     to make, support or oppose any request for order appointing a trustee or examiner in any insolvency or liquidation proceedings; or

41

(vii)    otherwise to make, support or oppose any request for relief in any insolvency or liquidation proceeding that it is permitted by law to make, support or oppose;

(x)            if it were a holder of unsecured claims; or

(y)           as to any matter relating to any plan of reorganization or other restructuring or liquidation plan or as to any matter relating to the administration of the estate or the disposition of the case or proceeding

(except as set forth in the Intercreditor Agreement).

ARTICLE 11COLLATERAL AND SECURITY

Section 11.01.  Junior Priority Security Documents.

(a)        The payment of the principal of and interest and premium, if any, on the Securities when due, whether on an interest payment date, at maturity, by acceleration, repurchase, redemption or otherwise by the Company and the performance of all other obligations of the Company under this Indenture and the Securities are secured as provided in the Junior Priority Security Documents which the Company and Trustee have entered into simultaneously with the execution of this Indenture and will be secured by Junior Priority Security Documents hereafter delivered as required or permitted by this Indenture.

(b)        Pursuant to the terms of the Junior Priority Security Agreements, the Company has agreed to take such actions as may be necessary to perfect the Security Interests.  To the extent that perfection of the Collateral secured pursuant to the Intellectual Property Security Agreement may be attained by filing of financing statements under the Code, such actions will be taken on or prior to the date hereof.  To the extent that perfection of such Security Interests requires recordation with the Copyright Office and Patent and Trademark Office, the Company shall file the documentation required to effect such recordation on or before the date hereof and shall notify the Trustee of such recordation upon its effectiveness.

Section 11.02.  Trustee’s Rights and Obligations with Respect to the Collateral.

(a)        Subject to Section 7.01, neither the Trustee nor any of its respective officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral, for the legality,

42

enforceability, effectiveness or sufficiency of the Junior Priority Security Documents, for the creation, perfection, priority, sufficiency or protection of any Junior Priority Lien, or for any defect or deficiency as to any such matters, or for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of the Junior Priority Liens or Junior Priority Security Documents or any delay in doing so.

(b)        Except as required or permitted by this Indenture, the Trustee will not be obligated:

(i)        to act upon directions purported to be delivered to it by any other Person;

(ii)       to foreclose upon or otherwise enforce any Junior Priority Lien; or

(iii)      to take any other action whatsoever with regard to any or all of the Junior Priority Liens, Junior Priority Security Documents or Collateral.

(c)        The Trustee will be accountable only for amounts that it actually receives as a result of the enforcement of the Junior Priority Liens or Junior Priority Security Documents.

Section 11.03.  Authorization of Actions to be Taken.

(a)        Each Securityholder, by its acceptance thereof, consents and agrees to the terms of the Noteholder Documents, as originally in effect and as amended, supplemented or replaced from time to time in accordance with its terms, authorizes and directs the Trustee to enter into and deliver the Noteholder Documents to which it is a party, and authorizes and empowers the Trustee to bind the Securityholders as set forth in the Noteholder Documents to which it is a party and to perform its obligations and exercise its rights and powers thereunder.

(b)        The Trustee is authorized and empowered to receive for the benefit of the Securityholders any funds collected or distributed under the Noteholder Documents to which the Trustee is a party and to make further distributions of such funds to the Securityholders according to the provisions of this Indenture.

(c)        Subject to the provisions of Section 7.01, Section 7.02, Article 10, and the Intercreditor Agreement, the Trustee may, in its sole discretion and without the consent of the Securityholders take all actions it deems necessary or appropriate in order to:

(i)        foreclose upon or otherwise enforce any or all of the Junior Priority Liens;

43

(ii)       enforce any of the terms of the Noteholder Documents to which the Trustee is a party; or

(iii)      collect and receive payment of any and all Securities.

Subject to the Intercreditor Agreement, the Trustee is authorized and empowered to institute and maintain such suits and proceedings as it may deem expedient to protect or enforce the Junior Priority Liens or the Junior Priority Security Documents to which the Trustee is a party or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Junior Priority Security Documents to which Trustee is a party or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Securityholders in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the Security Interests under the Junior Priority Security Documents or be prejudicial to the interests of Securityholders or the Trustee.

Section 11.04.  Release of Junior Priority Liens.

(a)        The Junior Priority Liens will be released, with respect to the Securities:

(i)        in accordance with Sections 3 and 5(b) of the Intercreditor Agreement;

(ii)       in whole, upon payment in full of the principal of, accrued and unpaid interest and premium, if any, on the Securities;

(iii)      in whole, upon satisfaction and discharge of this Indenture pursuant to Section 8.01;

(iv)     in part, as to any property constituting Collateral that is sold or otherwise disposed of by the Company to any Person other than the Company in a transaction permitted by the Noteholder Documents, at the time of such sale or disposition, to the extent of the interest sold or disposed of.

(b)        Upon delivery to the Trustee of an Officers’ Certificate requesting execution of an instrument confirming the release of the Junior Priority Liens pursuant to Section 11.04(a), accompanied by:

(i)        an Opinion of Counsel confirming that such release is permitted by Section 11.04(a); and

44

(ii)       all instruments requested by the Company to effectuate or confirm such release.

The Trustee will promptly execute and deliver such instruments.

(c)        All instruments effectuating or confirming any release of any Junior Priority Liens will have the effect solely of releasing such Junior Priority Liens as to the Collateral described therein, on customary terms and without any recourse, representation, warranty or liability whatsoever.

(d)        The Company will bear and pay all costs and expenses associated with any release of Junior Priority Liens pursuant to this Section 11.04, including all reasonable fees and disbursements of any attorneys or representatives acting for the Trustee.

Section 11.05.  Filing, Recording and Opinions.

(a)        The Company will comply with the provisions of TIA §314(b) and 314(d), except to the extent not required as set forth in any Commission regulation or interpretation (including any no-action letter issued by the Staff of the Commission, whether issued to the Company or any other Person).  To the extent the Company is required to furnish to the Trustee an Opinion of Counsel pursuant to TIA §314(b)(2), the Company will furnish such opinion not more than 60 but not less than 30 days prior to each December [23].

(b)        Any release of Collateral permitted by Section 11.04 hereof will be deemed not to impair the Liens under the Indenture and the Junior Priority Security Documents in contravention thereof and any person that is required to deliver an Officer’s Certificate or Opinion of Counsel pursuant to Section 314(d) of the TIA, shall be entitled to rely upon the foregoing as a basis for delivery of such certificate or opinion.  The Trustee may, to the extent permitted by Section 7.01 and Section 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and Opinion of Counsel.

ARTICLE 12MISCELLANEOUS

Section 12.01.  Conflict with TIA.  If any provision hereof limits, qualifies or conflicts with a provision of the TIA that is required under the TIA to be a part of and govern this Indenture, the latter provision shall control.  If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.

45

Section 12.02.  Notices.  Any request, demand, authorization, notice, waiver, consent or communication shall be in writing and delivered in person or mailed by first class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by overnight courier) to the following facsimile numbers:

if to the Company:

Silicon Graphics, Inc.
1600 Amphitheatre Parkway
Mountain View, California 94043
Attn:       General Counsel
Telephone Number:             (415) 960-1980
Facsimile Number:                (415) 969-6289

if to the Trustee:

U.S. Bank National Association
633 West Fifth Street, 24th Floor
Los Angeles, California 90071
Attention:  Corporate Trust Services (Silicon Graphics, Inc.)
Telephone Number:  (213) 615-6043
Telefax Number:  (213) 615-6197
Paula.Oswald@usbank.com

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication given to a Securityholder shall be mailed to the Securityholder, by first class mail, postage prepaid, at the Securityholder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee.

If the Company mails a notice or communication to the Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar.

Section 12.03.  Communication by Holders with Other Holders.  Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities.

46

The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have the protection of TIA Section 312(c).

Section 12.04.  Certificate and Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

(a)           an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(b)           an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

Section 12.05.  Statements Required in Certificate or Opinion.  Each Officers’ Certificate or Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(a)           a statement that each person making such Officers’ Certificate or Opinion of Counsel has read such covenant or condition,

(b)           a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers’ Certificate or Opinion of Counsel are based;

(c)           a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable such person to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d)           a statement that, in the opinion of such person, such covenant or condition has been complied with.

Section 12.06.  Separability Clause.  In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 12.07.  Rules By Trustee, Paying Agent, Conversion Agent and Registrar.  The Trustee may make reasonable rules for action by or a meeting of Securityholders.  The Registrar, Conversion Agent and the Paying Agent may make reasonable rules for their functions.

Section 12.08.  Legal Holidays.  A “Legal Holiday” is any day other than a Business Day.  If any specified date (including a date for giving notice) is a Legal Holiday, the action shall be taken on the next succeeding day that is not a

47

Legal Holiday, and, to the extent applicable, no interest, if any, shall accrue for the intervening period.

Section 12.09.  Governing Law.  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES.

Section 12.10.  No Recourse Against Others.  A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Security, each Securityholder shall waive and release all such liability.  The waiver and release shall be part of the consideration for the issue of the Securities.

Section 12.11.  Successors.  All agreements of the Company in this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this Indenture shall bind its successor.

Section 12.12.  Multiple Originals.  The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Indenture.

48

IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first written above.

	SILICON GRAPHICS, INC.
	By:
		Name:	Jeffrey Zellmer
		Title:	Chief Financial Officer
Attest:
________________________
Title:
[SEAL]
	U.S. BANK NATIONAL ASSOCIATION
	By:
		Name:	Paula M. Oswald
		Title:	Vice President

49

EXHIBIT A

[FORM OF FACE OF SECURITY]

[FORM OF LEGEND FOR GLOBAL SECURITY:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

SILICON GRAPHICS, INC.

$               11.75% SENIOR SECURED NOTE DUE 2009

REGISTERED CUSIP No. 827056 AE 2

No. 1

Silicon Graphics, Inc., a Delaware corporation, promises to pay to or registered assigns, the principal amount of                      Dollars ($) on June 1, 2009 and to pay interest thereon from December     , 2003 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on December 1 and June 1 in each year, commencing June 1, 2004, at the rate of 11.75%  per annum until the principal hereof is paid or made available for payment.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date, as provided in such Indenture, will be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be November 15 or May 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.  Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the

A-1

requirements of any securities exchange or other market on which the Securities may be listed, and upon such notice as may be required by such exchange or market, all as more fully provided in said Indenture.  Payment of the principal of (and premium, if any) and interest on this Security will be made at the Corporate Trust Office or the office or agency of the Company maintained for that purposes in the Borough of Manhattan, The City of New York, New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of, or by wire transfer to the account of, the Person entitled thereto as such address shall appear in the Security Register.

Additional provisions of this Security are set forth on the other side of this Security.

A-2

IN WITNESS WHEREOF, Silicon Graphics, Inc.  has caused this instrument to be duly executed under its corporate seal.

		SILICON GRAPHICS, INC.
		By:
			Name:
			Title:
[SEAL]
Attest:
Dated:
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION, as Trustee,
By:
	Authorized Signatory

A-3

[FORM OF REVERSE SIDE OF SECURITY]

SILICON GRAPHICS, INC.

11.75% SENIOR SECURED NOTE DUE 2009

1.             Interest

This Security shall bear interest at 11.75% per annum in the manner set forth in the Indenture and the face of this Security.  In the event that principal hereof or any portion of such principal is not paid when due (whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the date set for payment of the Redemption Price pursuant to paragraph 5 hereof, upon the date set for payment of a Fundamental Change Redemption Price pursuant to paragraph 6 hereof or upon the Stated Maturity of this Security), then in each such case the overdue amount shall bear interest at the rate of 11.75% per annum, compounded semiannually (to the extent that the payment of such interest shall be legally enforceable), which interest shall accrue from the date such overdue amount was due to the date payment of such amount, including interest thereon, has been made or duly provided for.  All such interest shall be payable on demand.

2.             Method of Payment

Subject to the terms and conditions of the Indenture, the Company will make payments in respect of the Securities to the persons who are registered Holders of Securities at the close of business on the Redemption Date, Fundamental Change Repurchase Date or Stated Maturity, as the case may be.  Holders must surrender Securities to a Paying Agent to collect such payments in respect of the Securities.  The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.  However, the Company may make such cash payments by check mailed to the address of, or by wire transfer to the account of, the person entitled to such payment.

3.             Paying Agent and Registrar

Initially, U.S. Bank National Association, a national banking association (the “Trustee”), will act as Paying Agent and Registrar.  The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice, other than notice to the Trustee.  The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar.

A-4

4.             Indenture

The Company issued the Securities under an Indenture dated as of December [      ], 2003 (the “Indenture”), between the Company and the Trustee.  Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and Securityholders are referred to the Indenture for a statement of those terms.

The Securities are general unsecured obligations of the Company limited to $230,591,000 aggregate principal amount (subject to Sections 2.02 and 2.07 of the Indenture).

5.             Redemption at the Option of the Company

Prior to June 1, 2004, the Securities will not be redeemable at the option of the Company.  Beginning on June 1, 2004, the Company may redeem the Securities for cash as a whole at any time, or from time to time in part, upon not less than 10 days’ nor more than 60 days’ notice at the following prices (the “Redemption Price”) (expressed as percentages of the principal amount), together with accrued and unpaid interest to, but excluding, the Redemption Date.  Beginning on June 1, 2004, the Redemption Price shall be 104% of the principal amount plus accrued and unpaid interest thereon.  Beginning on June 1, 2005, the Redemption Price shall be 103% plus accrued and unpaid interest thereon.  Beginning on June 1, 2006, the Redemption Price shall be 102% plus accrued and unpaid interest thereon.  Beginning on June 1, 2007, the Redemption Price shall be 101% plus accrued and unpaid interest thereon.  Beginning on June 1, 2008, the Redemption Price shall be 100% plus accrued and unpaid interest thereon.

If any Redemption Date is an Interest Payment Date, then the interest payable on such date shall be paid to the Holder of the Security on the next preceding Regular Record Date.  No Securities may be redeemed by the Company if an Event of Default with respect to the payment of interest on the Securities has occurred and is continuing.

No sinking fund is provided for the Securities.

Notice of redemption at the option of the Company will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at the Holder’s registered address.  If money sufficient to pay the Redemption Price, together with accrued interest to, but excluding, the Redemption Date, of all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, on and after such date interest ceases to accrue on such Securities or portions thereof.  Securities in denominations larger than $1,000 of

A-5

principal amount may be redeemed in part but only in multiples of $1,000 of principal amount.

6.             Redemption at the Option of the Holder Upon a Fundamental Change

(a)           At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to redeem the Securities held by such Holder on the date (the “Fundamental Change Repurchase Date”) (or if such date is not a Business Day, the next succeeding Business Day) that is 45 days after the date of the Company’s notice of such Fundamental Change (as defined in the Indenture) occurring on or prior to June 1, 2009 at 100% of the principal amount.  In each case, the Company shall also pay accrued but unpaid interest, if any, on such Securities to, but excluding, the Fundamental Change Repurchase Date; provided that if such Fundamental Change Repurchase Date is an Interest Payment Date, then the interest payable on such date shall be paid to the Holder of the Security on the next preceding Regular Record Date.  Securities in denominations larger than $1,000 of principal amount may be redeemed in part in connection with a Fundamental Change, but only in multiples of $1,000 of principal amount.

(b)           Holders have the right to withdraw any Fundamental Change Redemption Notice by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture.

(c)           If cash sufficient to pay the Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, of all Securities or portions thereof to be purchased as of the Fundamental Change Repurchase Date is deposited with the Paying Agent on or prior to the Fundamental Change Repurchase Date, interest ceases to accrue on such Securities (or portions thereof) on and after the Fundamental Change Repurchase Date, and the Holder thereof shall have no other rights as such (other than the right to receive the Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, upon surrender of such Security).

7.             Denominations; Transfer; Exchange

The Securities are in registered form, without coupons, in denominations of $1,000 of principal amount and multiples of $1,000.  A Holder may transfer or exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not transfer or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities in respect of which a

A-6

Fundamental Change Redemption Notice has been given and not withdrawn (except, in the case of a Security to be purchased in part, the portion of the Security not to be purchased) or any Securities for a period of 15 days before a selection of Securities to be redeemed.

8.             Persons Deemed Owners

The registered Holder of this Security may be treated as the owner of this Security for all purposes.

9.             Unclaimed Money or Securities

The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, provided, however, that the Trustee or such Paying Agent, before being required to make any such return, shall at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each such Holder notice that such money or securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or securities then remaining will be returned to the Company.  After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

10.          Amendment; Waiver

Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities at the time outstanding and (ii) certain defaults or noncompliance with certain provisions may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Securities at the time outstanding.  Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities to cure any ambiguity, defect or inconsistency, or to comply with Article 5 of the Indenture, to provide for uncertificated Securities in addition to or in place of certificated Securities or to make any change that does not adversely affect the rights of any Securityholder or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA.

A-7

11.          Defaults and Remedies

Under the Indenture, Events of Default include (i) default in payment of the principal amount, Redemption Price or Fundamental Change Redemption Price, as the case may be, in respect of the Securities when the same becomes due and payable; (ii) default for 30 days in the payment of any installment of interest on the Securities; (iii) failure by the Company to comply with other agreements in the Indenture or the Securities, subject to notice and lapse of time; (iv) an event of default under the Old Notes Indenture, the New Convertible Indenture or the Junior Priority Security Documents shall have occurred that results in the principal amount of and accrued interest on that debt becoming immediately due and payable, and (v) certain events of bankruptcy or insolvency.  If an Event of Default occurs and is continuing, the Trustee, or the Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding, may declare all the Securities to be due and payable immediately.  Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being declared due and payable immediately upon the occurrence of such Events of Default.

Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture.  The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security.  Subject to certain limitations, Holders of a majority in aggregate principal amount of the Securities at the time outstanding may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of amounts specified in  (i) or (ii) above) if it determines that withholding notice is in their interests.

12.          Lien Subordination and Sharing.  This Security is secured by Junior Priority Liens upon the Collateral pursuant to certain Junior Priority Security Documents.  The Junior Priority Liens upon any and all Collateral are, to the extent and in the manner provided in the Intercreditor Agreement, subordinate in ranking to all present and future Senior Priority Liens as set forth in the Indenture and the Intercreditor Agreement.

13.          Trustee Dealings with the Company

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

14.          No Recourse Against Others

A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the

A-8

Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Security, each Securityholder waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

15.          Authentication

This Security shall not be valid until an authorized officer of the Trustee manually signs the Trustee’s Certificate of Authentication on the other side of this Security.

16.          Abbreviations

Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (Uniform Gift to Minors Act).

17.          Governing Law

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS SECURITY.

The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture which has in it the text of this Security in larger type.  Requests may be made to:

Silicon Graphics, Inc.

1600 Amphitheatre Parkway

Mountain View, California 94043

Attn:  General Counsel

A-9

[FORM OF OPTION TO ELECT REDEMPTION
UPON A FUNDAMENTAL CHANGE]

To:          Silicon Graphics, Inc.

The undersigned registered holder of this Security hereby acknowledges receipt of a notice from Silicon Graphics, Inc.  (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to redeem this Security, or the portion hereof (which is $1,000 principal amount or a multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security.

Dated:
	Signature(s)
	principal amount to be redeemed
	(if less than all):
	$
	Social Security or other
	Taxpayer Identification Number

A-10

[FORM OF ASSIGNMENT]

For value received                       hereby sell(s), assign(s) and transfer(s) unto

(Please insert social security or other taxpayer identification number of assignee.)

the within Security and hereby irrevocably constitutes and appoints                                  attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:
	Signature(s)
	Signature(s) must be guaranteed by a commercial bank or trust company or a member firm of a major stock exchange.
	Signature Guarantee

NOTICE:  The above signatures of the holder(s) hereof must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever.

A-11

EX-4.3

Exhibit 4.3

SILICON GRAPHICS, INC.

6.50% Senior Secured Convertible Notes Due 2009

INDENTURE

Dated as of December   , 2003

U.S. BANK NATIONAL ASSOCIATION

TRUSTEE

CROSS-REFERENCE TABLE

TIA Section		Indenture Section
310	(a)(1)	7.10
	(a)(2)	7.10
	(a)(3)	N.A.
	(a)(4)	N.A.
	(a)(5)	7.10
	(b)	7.06; 7.08
	(c)	N.A.
311	(a)	7.11
	(b)	7.11
	(c)	N.A.
312	(a)	2.05; 2.14
	(b)	2.14(b); 13.03
	(c)	2.14(c); 13.03
313	(a)	7.12(a)
	(b)	7.12(a)
	(c)	7.12(a)
	(d)	7.12(b)
314	(a)	4.03; 4.04
	(b)	12.05
	(c)(1)	13.04
	(c)(2)	13.04
	(c)(3)	N.A.
	(d)	12.05
	(e)	13.05
	(f)	N.A.
315	(a)	7.01
	(b)	7.05; 13.02
	(c)	7.01
	(d)	7.01
	(e)	6.11
316	(a)(1)(A)	6.02
	(a)(1)(B)	6.04
	(a)(2)	N.A.
	(b)	6.07
	(c)	N.A.
317	(a)(1)	6.08
	(a)(2)	6.09
	(b)	2.04
318	(a)	13.01
	(b)	N.A.
	(c)	13.01

Note:This cross-reference table shall not, for any purpose, have been deemed to be a part of the Indenture.

TABLE OF CONTENTS(1)

(1)  This Table of Contents shall not, for any purpose, be deemed to be part of the Indenture.

i

ii

iii

iv

INDENTURE, dated as of December    , 2003, between SILICON GRAPHICS, INC., a Delaware corporation (the “Company”), and U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America (the “Trustee”).

Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the Holders of the Company’s 6.50% Senior Secured Convertible Notes Due 2009 (the “Securities”):

ARTICLE 1

DEFINITIONS AND INCORPORATION BY REFERENCE

Section 1.01.  Definitions.

“Administrative Agent” means Wells Fargo Foothill, Inc., as administrative agent for the lenders under the Secured Credit Facility, and any successor thereto “exercising substantially the same rights and powers and representative of lender to whom the Company has granted a Senior Priority Lien on the collateral as permitted under this Indenture.

“Affiliate” of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person.  For the purposes of this definition, “control,” when used with respect to any specified Person means the power to direct or cause the direction of the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Average Life” means, with respect to any indebtedness, the quotient obtained by dividing the sum of the products of (1) the number of years from the date of determination to the dates of each successive scheduled principal payment on such indebtedness, and (2) the amount of such principal payment, by the sum of all such principal payments.

“Board of Directors” means either the board of directors of the Company or any duly authorized committee of such board.

“Business Day” means each day of the year on which banking institutions are not required or authorized to close in The City of New York or at the principal corporate trust office of the Trustee.

“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

“Capital Stock” means (1) in the case of a corporation, corporate stock, (2) in the case of an association or business entity, any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, (3) in the case of a partnership, partnership interests (whether general or limited), and (4) any other interest or participation that confers on a person the right to receive a share of the profits and losses of, or distribution of assets of, the issuing person.

“Closing Price” means with respect to any securities on any day the closing sale price regular way on such day or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices, regular way, in each case on the New York Stock Exchange, or, if such security is not listed or admitted to trading on such Exchange, on the principal national security exchange or quotation system on which such security is quoted or listed or admitted to trading, or, if not quoted or listed or admitted to trading on any national securities exchange or quotation system, the average of the closing bid and asked prices of such security on the over-the-counter market on the day in question as reported by the National Quotation Bureau Incorporated, or a similar generally accepted reporting service, or if not so available, in such manner as furnished by any New York Stock Exchange member firm selected from time to time by the Board of Directors for that purpose, or a price determined in good faith by the Board of Directors or, to the extent permitted by applicable law, a duly authorized committee thereof, whose determination shall be conclusive.

“Code” means the New York Uniform Commercial Code, as in effect from time to time.

“Collateral” means all assets of the Company that secure the Securities pursuant to the Junior Priority Security Documents as amended from time to time.

“Common Stock” means any stock of any class of the Company which has no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which is not subject to redemption by the Company.  Subject to the provisions of Section 10.14, however, shares issuable on conversion of the Securities shall include only shares of Common Stock, par value $.00l per share, of the Company as it exists on the date of this Indenture or shares of any class or classes resulting from any reclassification or reclassifications thereof and which have no preference in respect of dividends or of amounts payable in the event of any voluntary or involuntary liquidation, dissolution or winding up of the Company and which are not subject to redemption by the Company; provided that if at any time there shall be more than one such resulting class, the shares of each such class then so issuable shall be substantially in the proportion which the total number of shares of such class resulting from all such reclassifications bears to

2

the total number of shares of all such classes resulting from all such reclassifications.

“Company” means the party named as the “Company” in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor.  The foregoing sentence shall likewise apply to any subsequent such successor or successors.

“Company Request” or “Company Order” means a written request or order signed in the name of the Company by its Chairman of the Board, a Vice Chairman, its President, a Senior Vice President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Conversion Price” has the meaning specified in Section 10.01

“Current Market Price” per share of Common Stock at any date shall be the average of the last reported sale prices for the ten consecutive Trading Days preceding the day before the record date with respect to any distribution, issuance or other event requiring such computation.  The last reported sale price for each day shall be (i) the last reported sale price of Common Stock on the New York Stock Exchange, or, if such security is not listed or admitted to trading on such Exchange, on the principal national security exchange on which such security is listed, or on the Nasdaq National Market or any similar system of automated dissemination of quotations of securities prices then in common use, if so quoted, or (ii) if not quoted as described in clause (i), the mean between the high bid and low asked quotations for Common Stock as reported by the National Quotation Bureau Incorporated if at least two securities dealers have inserted both bid and asked quotations for the Common Stock on at least 5 of the 10 preceding days, or (iii) if the Common Stock is listed or admitted for trading on any national securities exchange, the last sale price, or the closing bid price if no sale occurred, of the Common Stock on the principal securities exchange on which the Common Stock is listed.  If the Common Stock is quoted on a national securities or central market system, in lieu of a market or quotation system described above, the last reported sale price shall be determined in the manner set forth in clause (ii) of the preceding sentence if bid and asked quotations are reported but actual transactions are not, and in the manner set forth in clause (iii) of the preceding sentence if actual transactions are reported.  If none of the conditions set forth above is met, the last reported sale price of Common Stock on any day or the average of such last reported sale prices for any period shall be the fair market value of the Common Stock as determined by a member firm of the New York Stock Exchange, Inc. selected by the Company.

3

“Custodian” means U.S. Bank National Association, as custodian with respect to any Global Security, or any successor.

“Default” means any event which is, or after notice or passage of time or both would be, an Event of Default.

“Defaulted Interest” has the meaning specified in Section 2.12.

“Depositary” means, with respect to the Securities issuable or issued in whole or in part in global form, the person specified in Section 2.06 as the Depositary with respect to the Securities, until a successor Depositary shall have been appointed and become such pursuant to the applicable provisions of this Indenture, and thereafter, “Depositary” shall mean or include such successor.

“Disqualified Stock” means Capital Stock that, by its terms (or the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder, in whole or in part, on or prior to the date that is the Stated Maturity of the New Notes and the Securities.

“Event of Default” means any event or condition specified as such in Section 6.01.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Fundamental Change” means the occurrence of any transaction or event in connection with which all or substantially all the Common Stock shall be exchanged for, converted into, acquired for or constitute solely the right to receive (whether by means of an exchange offer, liquidation, tender offer, consolidation, merger, combination, reclassification, recapitalization or otherwise) consideration which is not all or substantially all common stock listed (or, upon consummation of such transaction or event, will be listed) on a United States national securities exchange or approved for quotation in the Nasdaq National Market or any similar system of automated dissemination of quotations of securities prices.

“GAAP” means generally accepted accounting principles.

“Global Security” means a Security that is registered in the Security Register in the name of the Depository or a nominee thereof.

“Holder” or “Securityholder” means a Person in whose name a Security is registered on the Registrar’s books.

4

“Indenture” means this Indenture, as amended or supplemented from time to time in accordance with the terms hereof.

“Intellectual Property Security Agreement” means an intellectual property security agreement executed and delivered pursuant to the terms of the Security Agreement by the Company and Trustee, the form and substance of which is satisfactory to the Trustee.

“Intercreditor Agreement” means (i) the intercreditor agreement dated as of the date hereof among the Company, the Trustee and Wells Fargo Foothill, Inc., as Administrative Agent under the Secured Credit Facility and (ii) any agreement entered into among the Company, the Trustee and any holder of a Senior Priority Lien (or its representative).

“Interest Payment Date” means the Stated Maturity of an installment of interest on the Securities.

“Interest Period” shall have the meaning set forth in Section 10.02.

“Junior Priority Lien” means, to the extent securing the Securities, a Lien granted by a Junior Priority Security Document as security for the Securities, which is junior in priority to the Senior Priority Liens.

“Junior Priority Security Documents” means, collectively, the Security Agreement, the Intellectual Property Agreement and all other security agreements, pledges, collateral assignments, mortgages or other instruments evidencing or creating any Security Interests in favor of the Trustee, for the benefit of the Trustee and the Securityholders, in all or any portion of the Collateral, in each case, as amended, amended and restated, supplemented, replaced or otherwise modified from time to time, in accordance with the terms thereof.

“Lien” means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, whether such interest shall be based on the common law, statute, or contract, whether such interest shall be recorded or perfected, and whether such interest shall be contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances, including the lien or security interest arising from a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement, security agreement, conditional sale or trust receipt, or from a lease, consignment, or bailment for security purposes and also including reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting real property.

5

“Maturity” when used with respect to any Security, means the date on which the principal of such Security becomes due and payable as therein or herein provided, whether at the Stated Maturity or by declaration of acceleration, call for redemption, redemption upon a Fundamental Change or otherwise.

“New Indenture” means that certain Indenture dated as of December    , 2003 between the Company and the Trustee, relating to the New Notes.

“New Notes” means the Company’s 11.75% Senior Notes Due 2009.

“Noteholder Documents” means this Indenture, the Securities, the Intercreditor Agreement and the Junior Priority Security Documents.

“Officer” means the Chairman of the Board, any Vice Chairman, the President, any Senior Vice President, any Vice President, the Treasurer or the Secretary or any Assistant Treasurer or Assistant Secretary of the Company.

“Officers’ Certificate” means a written certificate containing the information specified in Sections 13.04 and 13.05, signed in the name of the Company by its Chairman of the Board, a Vice Chairman, its President, a Senior Vice President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee.

“Old Notes” means the Company’s 5.25% Senior Convertible Notes Due 2004.

“Old Notes Indenture” means that certain Indenture dated as of September 1, 1997 between the Company and the U.S. Bank National Association, as successor trustee to State Street Bank and Trust Company of California, N.A., relating to the Old Notes.

“Opinion of Counsel” means a written opinion signed by legal counsel who may be an employee of or counsel to the Company and who shall be satisfactory to the Trustee.  Each such opinion shall comply with Section 314 of the Trust Indenture Act and include the information specified in Sections 13.04 and 13.05 of this Indenture.

“Options” means any warrants, options or other rights to acquire Capital Stock of the Company (but excluding (i) any options or other rights issued under a plan maintained by the Company for the benefit of employees, directors and consultants, and (ii) any debt security that is convertible into or exchangeable for Capital Stock of the Company).

“Permitted Purchase Money Indebtedness” means indebtedness incurred at the time of, or within 20 days after, the acquisition of any fixed assets for the purpose of financing all or any part of the acquisition cost thereof.

6

“Person” means any individual, corporation, partnership, limited liability company, joint venture, association, joint-stock company, trust, unincorporated organization, or government or any agency or political subdivision thereof.

“Predecessor Security” of any particular Security means every previous Security evidencing all or a portion of the same debt as that evidenced by such particular Security.  For the purposes of this definition, any Security authenticated and delivered under Section 2.06 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen Security.

“Prospectus” means the prospectus dated November 21, 2003, as amended or supplemented from time to time included in the registration statement (File No. 333-110683) on Form S-3 filed by the Company under the Securities Act with the SEC pursuant to which the Company offered to exchange the Securities and the New Notes for its Old Notes.

“Redemption Date” shall mean a date specified for redemption of the Securities (other than redemption upon a Fundamental Change at the option of the Securityholder) in accordance with the terms of the Securities and Section 3.01 of this Indenture.

“Redemption Price” shall have the meaning set forth in paragraph 5 of the Securities.

“Regular Record Date” for the interest payable on any Interest Payment Date means the December 15 or June 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date.

“SEC” means the Securities and Exchange Commission.

“Secured Credit Facility” means that certain Amended and Restated Loan and Security Agreement among the Company, Silicon Graphics Federal, Inc. and Wells Fargo Foothill, Inc., as Administrative Agent for itself and other lenders, and the Bank of America, N.A. dated as of September 20, 2002, as the same shall be renewed, replaced, restructured or refinanced (whether with the original administrative agent and lenders or others, and whether provided under the original Secured Credit Facility or any other agreement or indenture.).

“Security” or “Securities” means any of the Company’s 6.50% Senior Convertible Notes Due 2009, as amended or supplemented from time to time, issued under this Indenture.

7

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

“Security Agreement” means the security agreement dated as of the date hereof between the Trustee and the Company.

“Security Interests” means the Liens on the Collateral created by the Junior Priority Security Documents in favor of the Trustee on a junior priority basis, for the benefit of the Trustee and the Securityholders.

“Securityholder” or “Holder” means a person in whose name a Security is registered on the Registrar’s books.

“Security Register” has the meaning specified in Section 2.05.

“Senior Priority Lien” means any lien on the Collateral created by the Company that is senior to the lien granted to Securityholders under the Security Agreement and that secures debt permitted under Section 4.06(e) of this Indenture, including, but not limited to the liens created under the Secured Credit Facility.

“Senior Priority Lien Obligations” means all indebtedness incurred by the Company and permitted under this Indenture that is secured by a Senior Priority Lien.

“SGI Japan Secured Debt” means that Loan Agreement between the Company, Silicon Graphics World Trade B.V. and SGI Japan, Ltd. as of November 9, 2001, as the same may be amended from time to time.

“Special Record Date” for the payment of any Defaulted Interest means a date fixed by the Trustee pursuant to Section 2.12.

“Stated Maturity” when used with respect to any Security or any installment of interest thereon, means the date specified in such Security as the fixed date on which the principal of such Security or such installment of interest is due and payable, and when used with respect to any other indebtedness or any installment of interest thereon, the date specified as the fixed date on which the principal of such debt or such installment of interest is due and payable as set forth in the documentation governing that debt, not including any contingent obligation to repay, redeem or repurchase prior to the regularly scheduled date for payment.

“Subsidiary” means a corporation of which a majority of the capital stock (which for purposes of this definition means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) stock issued by such corporation) having voting power

8

under ordinary circumstances to elect a majority of the board of directors of such corporation is owned directly or indirectly by (i) the Company, (ii) the Company and one or more Subsidiaries or (iii) one or more Subsidiaries.

“TIA” means the Trust Indenture Act of 1939 as in effect on the date of this Indenture, except as provided in Section 9.03.

“Trading Day” means a day during which trading in securities generally occurs on the New York Stock Exchange or, if the applicable security is not listed on the New York Stock Exchange, on the principal other national or regional securities exchange on which the applicable security is then listed or, if the applicable security is not listed on a national or regional securities exchange, on the Nasdaq National Market or, if the applicable security is not quoted on the Nasdaq National Market, on the principal other market on which the applicable security is then traded.

“Trust Officer” means any officer of the Trustee assigned by the Trustee to administer its corporate trust matters.

“Trustee” means the party named as the “Trustee” in the first paragraph of this Indenture until a successor replaces it pursuant to the applicable provisions of this Indenture and, thereafter, shall mean such successor.  The foregoing sentence shall likewise apply to any subsequent such successor or successors.

Section 1.02.  Other Definitions. 

Term	Defined in Section
Bankruptcy Law	6.01
Company Notice	3.08
Conversion Agent	2.03
Event of Default	6.01
Fundamental Change Repurchase Date	3.08(a)
Fundamental Change Redemption Price	3.08(a)
Incur	4.06
Legal Holiday	13.08
Notice of Default	6.01
Paying Agent	2.03
Registrar	2.03

Section 1.03.  Incorporation by Reference of TIA.  Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture.  The following TIA terms used in this Indenture have the following meanings:

9

“Commission” means the SEC.

“Indenture Securities” means the Securities.

“Indenture Security Holder” means a Securityholder.

“Indenture to be Qualified” means this Indenture.

“Indenture Trustee” or “Institutional Trustee” means the Trustee.

“Obligor” on the indenture securities means the Company.

All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions.

Section 1.04.  Rules of Construction.  Unless the context otherwise requires:

(a)a term has the meaning assigned to it;

(b)an accounting term not otherwise defined has the meaning assigned to it in accordance with generally accepted accounting principles as in effect from time to time;

(c)“or” is not exclusive;

(d)“including” means including, without limitation; and

(e)words in the singular include the plural, and words in the plural include the singular.

ARTICLE 2

THE SECURITIES

Section 2.01.  Form and Dating.  The Securities and the Trustee’s certificate of authentication shall be substantially in the form of Exhibit A, which is a part of this Indenture.  The Securities may have notations, legends or endorsements required by law, stock exchange rule or usage (provided that any such notation, legend or endorsement required by usage is in a form acceptable to the Company).  The Company shall provide any such notations, legends or endorsements to the Trustee in writing.  Each Security shall be dated the date of its authentication.

10

Section 2.02.  Execution And Authentication.  The Securities shall be executed on behalf of the Company by its Chairman of the Board, one of its Vice Chairman, its President, one of its Senior Vice Presidents or one of its Vice Presidents, under its corporate seal reproduced thereon and attested by its Secretary or one of its Assistant Secretaries.  The signature of any of these officers on the Securities may be manual or facsimile.

Securities bearing the manual or facsimile signatures of individuals who were at any time the proper Officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Securities or did not hold such offices at the date of authentication of such Securities.

No Security shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Security a certificate of authentication substantially in the form provided for herein duly executed by the Trustee by manual signature of an authorized officer, and such certificate upon any Security shall be conclusive evidence, and the only evidence, that such Security has been duly authenticated and delivered hereunder.

The Trustee shall authenticate and deliver Securities for original issue in an aggregate principal amount of up to $230,591,000 upon a Company Order without any further action by the Company.

Section 2.03.  Registrar, Paying Agent and Conversion Agent.  The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (“Registrar”), an office or agency where Securities may be presented for purchase or payment (“Paying Agent”) and an office or agency where Securities may be presented for conversion (“Conversion Agent”).  The Registrar shall keep a register (the “Security Register”) of the Securities and of their transfer and exchange.  The Company may have one or more co-registrars, one or more additional paying agents and one or more additional conversion agents.  The term Paying Agent includes any additional paying agent.  The term Conversion Agent includes any additional conversion agent.

The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent, Conversion Agent or co-registrar (if not the Trustee).  The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent.  If the Company fails to maintain a Registrar, Paying Agent or Conversion Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07.  The Company or any Subsidiary or an Affiliate of either of them may act as Paying Agent, Registrar, Conversion Agent or co-registrar.

11

The Company initially appoints the Trustee as Registrar, Conversion Agent and Paying Agent in connection with the Securities.

Section 2.04.  Paying Agent to Hold Money and Securities in Trust.  Except as otherwise provided herein, prior to or on each due date of payments in respect of any Security, the Company shall deposit with the Paying Agent a sum of money or securities sufficient to make such payments when so becoming due.  The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Securityholders or the Trustee all money and securities held by the Paying Agent for the making of payments in respect of the Securities and shall notify the Trustee of any default by the Company in making any such payment.  At any time during the continuance of any such default, the Paying Agent shall, upon the written request of the Trustee, forthwith pay to the Trustee all money and securities so held in trust.  If the Company, a Subsidiary or an Affiliate of either of them acts as Paying Agent, it shall segregate the money and securities held by it as Paying Agent and hold it as a separate trust fund.  The Company at any time may require a Paying Agent to pay all money and securities held by it to the Trustee and to account for any funds and securities disbursed by it.  Upon doing so, the Paying Agent shall have no further liability for the money or securities.

Section 2.05.  Securityholder Lists.  The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Securityholders.  If the Trustee is not the Registrar, the Company shall cause to be furnished to the Trustee at least semiannually on November 15 and May 15 a listing of Holders dated within 15 days of the date on which the list is furnished and at such other times as the Trustee may request in writing a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Securityholders.

Section 2.06.  Exchange and Registration of Transfer of Securities; Depositary.  Upon surrender for registration of transfer of any Security at any office or agency of the Company designated as Registrar or co-registrar pursuant to Section 2.03 and satisfaction of the requirements for such transfer set forth in this Section 2.06, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, one or more new Securities of any authorized denominations and of a like aggregate principal amount.

Securities may be exchanged for a like aggregate principal amount of Securities of other authorized denominations.  Securities to be exchanged shall be surrendered at any office or agency to be maintained by the Company designated as Registrar or co-registrar pursuant to Section 2.03 and the Company shall execute and register and the Trustee shall authenticate and deliver in exchange therefor the Security or Securities which the Securityholder making the exchange

12

shall be entitled to receive, bearing registration numbers not contemporaneously outstanding.

All Securities presented for registration of transfer or for exchange, purchase, redemption, conversion or payment shall (if so required by the Company, the Trustee, the Registrar or any co-registrar) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee, duly executed by the Holder or his attorney duly authorized in writing.

No service charge shall be charged to the Securityholder for any exchange or registration of transfer of Securities, but the Company may require payment of a sum sufficient to cover any tax, assessments or other governmental charges that may be imposed in connection therewith.

None of the Company, the Trustee, the Registrar or any co-registrar shall be required to exchange or register a transfer of (a) any Securities for a period of 15 days next preceding any selection of Securities to be redeemed or (b) any Securities or portions thereof selected or called for redemption or (c) any Securities or portion thereof surrendered for conversion or (d) any Securities or portion thereof surrendered for redemption (and not withdrawn) pursuant to Section 3.08.

All Securities issued upon any transfer or exchange of Securities shall be valid obligations of the Company, evidencing the same debt, and entitled to the same benefits under this Indenture as the Securities surrendered upon such exchange or transfer.

The provisions of Clauses (a), (b), (c), (d), and (e) below shall apply only to Global Securities:

(a)Each Global Security authenticated under this Indenture shall be registered in the name of the Depositary designated for such Global Security or a nominee thereof and delivered to such Depositary or a nominee thereof or Custodian therefor, and each such Global Security shall constitute a single Security for all purposes of this Indenture.

(b)Notwithstanding any other provision in this Indenture, no Global Security may be exchanged in whole or in part for Securities registered, and no transfer of a Global Security in whole or in party may be registered, in the name of any Person other than the Depositary for such Global Security or a nominee thereof unless (A) such Depositary (i) has notified the Company that it is unwilling or unable to continue as Depositary for such Global Security or (ii) has ceased to be a clearing agency registered under the Exchange Act, or (B) there

13

shall have occurred and be continuing an Event of Default with respect to such Global Security.

(c)Subject to 2.06(b) above, any exchange of a Global Security for other Securities may be made in whole or in part, and all Securities issued in exchange for a Global Security or any portion thereof shall be registered in such names as the Depositary for such Global Security shall direct.

(d)Every Security authenticated and delivered upon registration of transfer of, or in exchange for or in lieu of, a Global Security or any portion thereof whether pursuant to this Article Two or otherwise, shall be authenticated and delivered in the form of, and shall be, a Global Security, unless such Security is registered in the name of a Person other than the Depositary for such Global Security or a nominee thereof.

(e)The Depositary or its nominee, as registered own of a Global Security, shall be the Holder of such Global Security for all purposes under the Indenture and the Securities, and owners of beneficial interests in a Global Security shall hold such interests pursuant to the applicable procedures.  Accordingly, any such owner’s beneficial interest in a Global Security will be shown only on, and the transfer of such interest shall be effected only through, records maintained by the Depositary or its nominee or its agent members and such owners of beneficial interests in a Global Security will not be considered the owners or holders thereof.

The Depositary shall be a clearing agency registered under the Exchange Act.  The Company initially appoints The Depository Trust Company to act as Depositary with respect to the Securities in global form.  Initially, the Global Security shall be issued to the Depositary, registered in the name of Cede & Co., as the nominee of the Depositary, and deposited with the Trustee as custodian for Cede & Co.

If at any time the Depositary for the Global Security notifies the Company that it is unwilling or unable to continue as Depositary for such Global Security, the Company may appoint a successor Depositary with respect to such Security.  If a successor Depositary for the Global Security is not appointed by the Company within 90 days after the Company receives such notice, the Company will execute, and the Trustee, upon receipt of a Company Order for authentication and delivery of Securities, will authenticate and deliver, Securities in definitive form, in an aggregate principal amount equal to the principal amount of the Global Security, in exchange for such Security in the global form.

Section 2.07.  Replacement Securities.  If (i) any mutilated Security is surrendered to the Trustee, or (ii) the Company and the Trustee receive evidence to their satisfaction of the destruction, loss or theft of any Security, and there is

14

delivered to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Security has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in exchange for any such mutilated Security or in lieu of any such destroyed, lost or stolen Security, a new Security of like tenor and principal amount, bearing a number not contemporaneously outstanding.

In case any such mutilated, destroyed, lost or stolen Security has become or is about to become due and payable, or is about to be redeemed by the Company pursuant to Article 3 hereof, the Company in its discretion may, instead of issuing a new Security, pay or redeem such Security, as the case may be.

Upon the issuance of any new Securities under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith.

Every new Security issued pursuant to this Section in lieu of any mutilated, destroyed, lost or stolen Security shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Security shall be at any time enforceable by anyone, and shall be entitled to all benefits of this Indenture equally and proportionately with any and all other Securities duly issued hereunder.

The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Securities.

Section 2.08.  Outstanding Securities; Determinations of Holders’ Action.  Securities outstanding at any time are all the Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section 2.08 as not outstanding.  A Security does not cease to be outstanding because the Company or an Affiliate thereof holds the Security; provided, however, that in determining whether the Holders of the requisite principal amount of Securities have given or concurred in any request, demand, authorization, direction, notice, consent or waiver hereunder, Securities owned by the Company or any other obligor upon the Securities or any Affiliate of the Company or such other obligor shall be disregarded and deemed not to be outstanding, except that, in determining whether the Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Securities which the Trustee knows to be so owned shall be so disregarded.  Subject to the foregoing, only Securities outstanding at the time of such determination shall be considered in any such determination (including, without limitation, determinations pursuant to Articles 6 and 9).

15

If a Security is replaced pursuant to Section 2.07, it ceases to be outstanding unless the Trustee receives proof satisfactory to it that the replaced Security is held by a bona fide purchaser.

If the Paying Agent holds, in accordance with this Indenture, on a Redemption Date, on a Fundamental Change Repurchase Date or on Stated Maturity, money or securities, if permitted hereunder, sufficient to pay Securities payable on that date, then on and after that date such Securities shall cease to be outstanding and interest on such Securities shall cease to accrue; provided that if such Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Indenture or provision therefor satisfactory to the Trustee has been made.

If a Security is converted in accordance with Article 10, then from and after such conversion such Security shall cease to be outstanding and interest shall cease to accrue on such Security.

Section 2.09.  Temporary Securities.  Pending the preparation of definitive Securities, the Company may execute, and upon Company Order the Trustee shall authenticate and deliver, temporary Securities which are printed, lithographed, typewritten, mimeographed or otherwise produced, in any authorized denomination, substantially of the tenor of the definitive Securities in lieu of which they are issued and with such appropriate insertions, omissions, substitutions and other variations as the officers executing such Securities may determine, as conclusively evidenced by their execution of such Securities.

If temporary Securities are issued, the Company will cause definitive Securities to be prepared without unreasonable delay.  After the preparation of definitive Securities, the temporary Securities shall be exchangeable for definitive Securities upon surrender of the temporary Securities at the office or agency of the Company designated for such purpose pursuant to Section 2.03, without charge to the Holder.  Upon surrender for cancellation of any one or more temporary Securities the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a like principal amount of definitive Securities of authorized denominations.  Until so exchanged the temporary Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Securities.

Section 2.10.  Cancellation.  All Securities surrendered for payment, conversion, redemption or registration of transfer or exchange shall, if surrendered to any Person other than the Trustee, be delivered to the Trustee and shall be promptly canceled by it.  The Company may at any time deliver to the Trustee for cancellation any Securities previously authenticated and delivered hereunder which the Company may have acquired in any manner whatsoever, and all Securities so delivered shall be promptly canceled by the Trustee.  The

16

Company may not issue new Securities to replace Securities it has paid or delivered to the Trustee for cancellation or that any Holder has converted pursuant to Article 10.  No Securities shall be authenticated in lieu of or in exchange for any Securities canceled as provided in this Section, except as expressly permitted by this Indenture.  All canceled Securities held by the Trustee shall be destroyed by the Trustee and evidence of their destruction delivered to the Company unless the Company directs by Company Order that the Trustee deliver canceled Securities to the Company.

Section 2.11.  Persons Deemed Owners.  Prior to due presentment of a Security for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose name such Security is registered as the owner of such Security for the purpose of receiving payment of principal amount, premium, if any, interest, Redemption Price and Fundamental Change Redemption Price in respect thereof, for the purpose of conversion and for all other purposes whatsoever, whether or not such Security be overdue, and none of the Company, the Trustee or any agent of the Company or the Trustee shall be affected by notice to the contrary.

Section 2.12.  Payment of Interest; Interest Rights Preserved.  Interest on any Security which is payable, and is punctually paid or duly provided for, on any Interest Payment Date shall be paid to the person in whose name that Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest.

Any interest on any Security which is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called “Defaulted Interest”) shall forthwith cease to be payable to the Holder on the relevant Regular Record Date by virtue of having been such Holder, and such Defaulted Interest may be paid by the Company, at its election in each case, as provided in (a) or (b) below:

(a)The Company may elect to make payment of any Defaulted Interest to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on a Special Record Date for the payment of such Defaulted Interest, which shall be fixed in the following manner.  The Company shall notify the Trustee in writing of the amount of Defaulted Interest proposed to be paid on each Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit on or prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this Clause provided. Thereupon the Trustee shall fix a Special Record Date for the payment of such Defaulted Interest which shall be not

17

more than 15 days and not less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment.  The Trustee shall promptly notify the Company of such Special Record Date and, in the name and at the expense of the Company, shall cause notice of proposed payment of such Defaulted Interest and the Special Record Date therefor to be mailed, first-class postage prepaid, to each Holder at his address as it appears in the Security Register, not less than 10 days prior to such Special Record Date.  Notice of the proposed payment of such Defaulted Interest and the Special Record Date therefor having been so mailed, such Defaulted Interest shall be paid to the Persons in whose names the Securities (or their respective Predecessor Securities) are registered at the close of business on such Special Record Date and shall no longer be payable pursuant to the following Clause (b).

(b)The Company may make payment of any Defaulted Interest in any other lawful manner not inconsistent with the requirements of any securities exchange or market on which the Securities may be listed, and upon such notice as may be required by such exchange or market, if, after notice given by the Company to the Trustee of the proposed payment pursuant to this Clause, such manner of payment shall be deemed practicable by the Trustee.

Subject to the foregoing provisions of this Section, each Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Security shall carry the rights to interest accrued and unpaid, and to accrue, which were carried by such other Security.

In the case of any Security which is converted after any Regular Record Date on or prior to the close of business on the next succeeding Interest Payment Date (other than any Security whose Maturity is prior to such Interest Payment Date), interest whose Stated Maturity is on such Interest Payment Date shall be payable on such Interest Payment Date notwithstanding such conversion, and such interest (whether or not punctually paid or duly provided for) shall be paid to the Person whose name that Security (or one or more Predecessor Securities) is registered at the close of business on such Regular Record Date.  Except as otherwise expressly provided in the immediately preceding sentence, in the case of any Security which is converted, interest whose Stated Maturity is after the date of conversion of such Security shall not be payable.

Section 2.13.  Computation of Interest.  Interest on the Securities shall be computed on the basis of a 360-day year of twelve 30-day months.

Section 2.14.  Preservation of Information; Communications to Holders.

(a)The Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of Holders contained in the most recent list

18

furnished to the Trustee as provided in Section 2.05 and the names and addresses of Holders received by the Trustee in its capacity as Security Registrar.  The Trustee may destroy any list furnished to it as provided in Section 2.05 upon receipt of a new list so furnished.

(b)The rights of Holders to communicate with other Holders with respect to their rights under this Indenture or under the Securities, and the corresponding right and duties of the Trustee, shall be as provided in the TIA.

(c)Every Holder of Securities, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to names and addresses of the Holders made pursuant to the TIA.

ARTICLE 3

REDEMPTION

Section 3.01.  Right to Redeem; Notices to Trustee.  The Company, at its option, may redeem the Securities in accordance with the provisions of paragraph 5 of the Securities.  If the Company elects to redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the Trustee in writing of the Redemption Date, the principal amount of Securities to be redeemed, the Redemption Price, and the amount of accrued interest to, but excluding, the Redemption Date.

The Company shall give the notice to the Trustee provided for in this Section 3.01 (i) in the case of any redemption of fewer than all of the Securities, at least 45 days before the Redemption Date and (ii) in the case of a redemption of all of the Securities, no later than the Company is required to give notice to the Holders pursuant to Section 3.03, in each case unless a shorter notice shall be satisfactory to the Trustee.

Section 3.02.  Selection of Securities to be Redeemed.  If less than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or by lot or by a method the Trustee considers fair and appropriate (as long as such method is not prohibited by the rules of any stock exchange or automated quotation system on which the Securities are then listed).  The Trustee shall make the selection at least 10 days, but not more than 60 days, before the Redemption Date from outstanding Securities not previously called for redemption.  The Trustee may select for redemption portions of the principal amount of Securities that have denominations larger than $1,000.  Securities and portions of Securities selected by the Trustee shall be in principal amounts of $1,000 or a multiple of $1,000.  Provisions of this Indenture that apply to

19

Securities called for redemption also apply to portions of Securities called for redemption.  The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed.

If any Security selected for partial redemption is converted in part before termination of the conversion right with respect to the portion of the Security so selected, the converted portion of such Security shall be deemed (so far as may be) to be the portion selected for redemption.  Securities which have been converted during a selection of Securities to be redeemed may be treated by the Trustee as outstanding for the purpose of such selection.

Section 3.03.  Notice of Redemption.  At least 30 days but not more than 60 days before a Redemption Date, the Company shall mail a notice of redemption by first-class mail, postage prepaid, to each Holder of Securities to be redeemed.

The notice shall identify the Securities to be redeemed and shall state:

(a)the Redemption Date;

(b)the Redemption Price, together with the amount of accrued interest to, but excluding, the Redemption Date;

(c)the Conversion Price;

(d)the name and address of the Paying Agent and Conversion Agent;

(e)that Securities called for redemption may be converted at any time before the close of business on the last Trading Day prior to the Redemption Date;

(f)that Holders who want to convert Securities must satisfy the requirements set forth in paragraph 7 of the Securities;

(g)that Securities called for redemption must be surrendered to the Paying Agent to collect the Redemption Price and accrued interest to, but excluding, the Redemption Date;

(h)if fewer than all the outstanding Securities are to be redeemed, the certificate number and principal amounts of the particular Securities to be redeemed; and

(i)that interest on Securities called for redemption will cease to accrue on and after the Redemption Date.

At the Company’s request, the Trustee shall give the notice of redemption in the Company’s name and at the Company’s expense.

20

Section 3.04.  Effect of Notice of Redemption.  Once notice of redemption is given, Securities called for redemption become due and payable on the Redemption Date and at the Redemption Price, together with accrued interest to, but excluding, the Redemption Date, stated in the notice except for Securities which are converted in accordance with the terms of this Indenture.

Upon the later of the Redemption Date or the date such Securities are surrendered to the Paying Agent, such Securities shall be paid at the Redemption Price, together with accrued interest to, but excluding, the Redemption Date, stated in the notice.

Section 3.05.  Deposit of Redemption Price.  Prior to or on the Redemption Date, the Company shall deposit with the Paying Agent (or if the Company or a Subsidiary or an Affiliate of either of them is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the Redemption Price and accrued interest to, but excluding, the Redemption Date of all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which prior thereto have been delivered by the Company to the Trustee for cancellation or have been converted; provided that if such payment is made on the Redemption Date it must be received by the Trustee or Paying Agent, as the case may be, by 10:00 a.m.  New York City time, on such Redemption Date.  The Paying Agent shall as promptly as practicable return to the Company any money, with interest, if any, thereon (subject to the provisions of Section 7.01(f)), not required for that purpose because of conversion of Securities.  If such money is then held by the Company in trust and is not required for such purpose it shall be discharged from such trust.

Section 3.06.  Securities Redeemed in Part.  Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate and deliver to the Holder a new Security in an authorized denomination equal in principal amount to the unredeemed portion of the Security surrendered.

Section 3.07.  Conversion Arrangement on Call for Redemption.  In connection with any redemption of Securities, the Company may arrange for the purchase and conversion of any Securities called for redemption by an agreement with one or more investment bankers or other purchasers to purchase such Securities by paying to the Paying Agent in trust for the Securityholders, on or before the close of business on the Redemption Date, an amount that, together with any amounts deposited with the Paying Agent by the Company for the redemption of the Securities, is not less than the Redemption Price, together with interest, if any, accrued to the Redemption Date, of such Securities.  Notwithstanding anything to the contrary contained in this Article 3, the obligation of the Company to pay the Redemption Price of such Securities, including all accrued interest, shall be deemed to be satisfied and discharged to

21

the extent such amount is so paid by such purchasers.  If such an agreement is entered into, any Securities not duly surrendered for conversion by the Holders thereof may, at the option of the Company, be deemed, to the fullest extent permitted by law, acquired by such purchasers from such Holders and (notwithstanding anything to the contrary contained in Article 10) surrendered by such purchasers for conversion, all immediately prior to the close of business on the Redemption Date, subject to payment of the above amount as aforesaid.

The Paying Agent shall hold and pay to the Holders whose Securities are selected for redemption any such amount paid to it in the same manner as it would moneys deposited with it by the Company for the redemption of Securities.  Without the Paying Agent’s prior written consent, no arrangement between the Company and such purchasers for the purchase and conversion of any Securities shall increase or otherwise affect any of the powers, duties, responsibilities or obligations of the Paying Agent as set forth in this Indenture, and the Company agrees to indemnify the Paying Agent from, and hold it harmless against, any loss, liability or expense arising out of or in connection with any such arrangement for the purchase and conversion of any Securities between the Company and such purchasers, including the costs and expenses incurred by the Paying Agent in the defense of any claim or liability arising out of or in connection with the exercise or performance of any of its powers, duties, responsibilities or obligations under this Indenture.

Section 3.08.  Redemption at Option of the Holder upon a Fundamental Change.  (a)If a Fundamental Change shall occur at any time prior to July 1, 2009, each Holder of Securities shall have the right, at such Holder’s option, to require the Company to redeem such Holder’s Securities on the date (the “Fundamental Change Repurchase Date”) (or if such date is not a Business Day, the next succeeding Business Day) that is 45 days after the date of the Company’s notice of such Fundamental Change.  The Securities will be redeemable in part in multiples of $1,000 of principal amount.  Such repayment shall be made at 100% of the principal amount (the “Fundamental Change Redemption Price”) thereof. In each case, the Company shall also pay to such Holders accrued interest to, but excluding, the Fundamental Change Repurchase Date on the redeemed Securities; provided that if such Fundamental Change Repurchase Date is an Interest Payment Date, then the interest payable on such date shall be paid to the Holder of the Security on the next preceding the Regular Record Date.

(b)On or before the tenth day after the occurrence of a Fundamental Change, the Company, or, at its written request (which must be received by the Trustee at least five Business Days prior to the date the Trustee is requested to give notice as described below), the Trustee in the name of and at the expense of the Company, shall mail or cause to be mailed to all Holders of record on the date of the Fundamental Change a notice (the “Company Notice”) of the occurrence

22

of such Fundamental Change and of the redemption right at the option of the Holders arising as a result thereof.  Such notice shall be mailed in the manner and with the effect set forth in Section 3.03.  The Company shall also deliver a copy of the Company Notice to the Trustee at such time as it is mailed to the Holders.

Each Company Notice shall specify the circumstances constituting the Fundamental Change, the Fundamental Change Repurchase Date, the Fundamental Change Redemption Price at which the Company shall be obligated to redeem the Securities, the amount of interest accrued on each Security to, but excluding, the Fundamental Change Repurchase Date, the latest time by which the Holder must exercise the redemption right (the “Fundamental Change Expiration Time”), that the Holder shall have the right to withdraw any Notes prior to the Fundamental Change Expiration Time, a description of the procedure which a Holder must follow to exercise such redemption right and to withdraw any surrendered Notes and the place or places where the Holder is to surrender such Holder’s Securities.

No failure of the Company to give the foregoing notices and no defect therein shall limit the Holders’ redemption rights or affect the validity of the proceedings for the repurchase of the Securities pursuant to this Section 3.08.

(c)For a Security to be so redeemed at the option of the Holder, the Paying Agent must receive such Security with the form entitled “Option to Elect Redemption Upon a Fundamental Change” on the reverse thereof duly completed (a “Fundamental Change Redemption Notice”), together with such Security duly endorsed for transfer, on or before the 30th day after the date of such Company Notice (or if such 30th day is not a Business Day, the immediately preceding Business Day).  All questions as to the validity, eligibility (including time of receipt) and acceptance of any Security for redemption shall be determined by the Company, whose determination shall be final and binding.

(d)Upon receipt by the Company of the Fundamental Change Redemption Notice specified in Section 3.08(c), the Holder of the Security in respect of which such Fundamental Change Redemption Notice was given shall (unless such Fundamental Change Redemption Notice is withdrawn as specified in the following two paragraphs) thereafter be entitled to receive solely the Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, with respect to such Security.  Such Fundamental Change Redemption Price together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, shall be paid to such Holder promptly following the Fundamental Change Repurchase Date.  Securities in respect of which a Fundamental Change Redemption Notice has been given by the Holder thereof may not be converted into shares of Common Stock on or after the date of the delivery of such Fundamental Change

23

Redemption Notice, unless such Fundamental Change Redemption Notice has first been validly withdrawn as specified in the following two paragraphs.

A Fundamental Change Redemption Notice may be withdrawn by the Holder by means of a written notice of withdrawal delivered to the office of the Paying Agent at any time prior to the close of business on the Fundamental Change Repurchase Date to which it relates specifying:

(i)the certificate number of the Security in respect of which such notice of withdrawal is being submitted,

(ii)the principal amount of the Security with respect to which such notice of withdrawal is being submitted, and

(iii)the principal amount, if any, of such Security which remains subject to the original Fundamental Change Redemption Notice and which has been or will be delivered for purchase by the Company.

There shall be no redemption pursuant to Section 3.08 if there has occurred prior to, on or after, as the case may be, the giving, by the Holders of such Securities, of the required Fundamental Change Redemption Notice and is continuing an Event of Default (other than a default in the payment of the Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, with respect to such Securities).

(e)On or before the Fundamental Change Repurchase Date the Company shall deposit with the Trustee or with the Paying Agent (or, if the Company or a Subsidiary or an Affiliate of either of them is acting as the Paying Agent, shall segregate and hold in trust as provided in Section 2.04) an amount of money sufficient to pay the aggregate Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, of all the Securities or portions thereof which are to be redeemed as of such Fundamental Change Repurchase Date; provided that if such payment is made on the Fundamental Change Repurchase Date it must be received by the Trustee or Paying Agent, as the case may be, by 10:00 a.m.  New York City time, on such Fundamental Change Repurchase Date.

(f)Any Security that is to be redeemed upon a Fundamental Change only in part shall be surrendered at the office of the Paying Agent (with, if the Company or the Trustee so requires, due endorsement by, or a written instrument of transfer in form satisfactory to the Company and the Trustee duly executed by, the Holder thereof or such Holder’s attorney duly authorized in writing) and the Company shall execute and, upon the Company’s written direction to the Trustee, the Trustee shall authenticate and deliver to the Holder of such Security, without

24

service charge, a new Security or Securities, of any authorized denomination as requested by such Holder in aggregate principal amount equal to, and in exchange for, the portion of the principal amount of the Security so surrendered which is not redeemed.

(g)In connection with any offer to redeem Securities under Section 3.08 hereof the Company shall comply with all Federal and state securities laws so as to permit the rights and obligations under Section 3.08 to be exercised in the time and in the manner specified in Section 3.08.

(h)The Trustee and the Paying Agent shall return to the Company any cash that remains unclaimed as provided in paragraph 11 of the Securities, together with interest or dividends, if any (subject to the provisions of Section 7.01(f)), thereon, held by them for the payment of a Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date; provided, however that to the extent that the aggregate amount of cash deposited by the Company pursuant to Section 3.08 exceeds the aggregate Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, of the Securities or portions thereof which the Company is obligated to purchase as of the Fundamental Change Repurchase Date then promptly after the Business Day following the Fundamental Change Repurchase Date the Trustee and the Paying Agent shall return any such excess to the Company together with interest or dividends, if any, thereon.

ARTICLE 4

COVENANTS

Section 4.01.  Payment of Securities.  The Company shall promptly make all payments in respect of the Securities on the dates and in the manner provided in the Securities or pursuant to this Indenture.  The principal amount, premium, if any, accrued interest, Redemption Price and Fundamental Change Redemption Price shall be considered paid on the applicable date due if on such date the Trustee or the Paying Agent holds on or before 10:00 a.m.  New York City time on such date, in accordance with this Indenture, money or securities, if permitted hereunder, sufficient to pay all such amount then due.

The Company shall pay interest at the rate set forth in paragraph 1 of the Securities and it shall pay interest on overdue interest at the same rate compounded semiannually (to the extent that the payment of such interest shall be legally enforceable), which interest on overdue interest shall accrue from the date such amounts became overdue.

25

Section 4.02.  SEC Reports.  The Company shall file with the Trustee, within 15 days after it files such annual and quarterly reports, information, documents and other reports with the SEC, copies of its annual report and of the information, documents and other reports (or copies of such portions of any of the foregoing as the SEC may by rules and regulations prescribe) which the Company is required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.

Section 4.03.  Compliance Certificate.  The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company (beginning with the fiscal year ending in June 2004) an Officers’ Certificate stating whether or not the signers know of any Default that occurred during such period.  If they do, such Officers’ Certificate shall describe the Default and its status.

Section 4.04.  Further Instruments and Acts.  Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purposes of this Indenture.

Section 4.05.  Maintenance of Office or Agency.  The Company will maintain in the Borough of Manhattan, The City of New York, an office or agency where Securities may be presented or surrendered for payment, where Securities may be surrendered for registration of transfer, exchange, redemption or conversion and where notices and demands to or upon the Company in respect of the Securities and this Indenture may be served.  The office of U.S. Bank Trust National Association, an Affiliate of the Trustee, at 100 Wall Street, Suite 1600, New York, NY 10005, shall be such office or agency for all of the aforesaid purposes unless the Company shall maintain some other office or agency for such purposes and shall give prompt written notice to the Trustee of the location, and any change in the location, of such other office or agency.  If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, surrenders, notices and demands may be made or served at the address of the Trustee set forth in Section 11.02.

The Company may also from time to time designate one or more other offices or agencies where the Securities may be presented or surrendered for any or all such purposes and may from time to time rescind such designations; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the Borough of Manhattan, The City of New York, for such purposes.

Section 4.06.  Restriction on Additional Indebtedness.  The Company shall not, nor shall it permit any Subsidiary to, directly or indirectly, create, incur,

26

assume, guaranty or otherwise become directly or indirectly liable for (“Incur”) any additional indebtedness for borrowed money or issue any Disqualified Stock, except that the Company may, and may permit any Subsidiary to Incur additional indebtedness

(a)pursuant to any interest rate swap agreement, interest rate cap agreement or other agreement designed to protect against fluctuations in interest rates, any foreign exchange forward contract, currency swap agreement or other agreement designed to protect against fluctuations in foreign exchange rates, or any commodity or raw material futures contract or any other agreement designed to protect against fluctuations in raw material prices, entered into in the ordinary course of business for the purpose of limiting risks associated with our business and not for speculation;

(b)with respect to letters of credit and bankers’ acceptances issued in the ordinary course of business and not supporting indebtedness for borrowed money, including letters of credit supporting performance, surety or appeal bonds, indemnification obligations, lease or other contractual deposits, or other similar obligations;

(c)the proceeds of which, less fees and expenses, are used to repay, redeem or repurchase, at the option of the Company, Securities, New Notes, or Old Notes, provided that if any Securities or New Notes will remain outstanding, the Stated Maturity of the indebtedness incurred must be at least 120 days after the Stated Maturity of the Securities and the New Notes;

(d)indebtedness incurred to refinance, renew or replace the SGI Japan Secured Debt, or any extensions or amendments of the SGI Japan Secured Debt, in each case that do not increase the principal amount thereof;

(e)other indebtedness to banks or other institutional lenders in the form of revolving credit loans or term loans or the issuance of letters of credit or bankers’ acceptances or the like, including the Secured Credit Facility as it may be extended, refinanced, renewed or replaced, provided that the aggregate principal amount of such other indebtedness at any time outstanding does not exceed $100 million; or

(f)indebtedness represented by purchase money liens or the interests of lessors under Capital Leases to the extent that such liens or interests secure Permitted Purchase Money Indebtedness and so long as such lien attaches only to the asset purchased or acquired and the proceeds thereof, including indebtedness incurred to refund, refinance or replace any indebtedness incurred pursuant to this clause (f).

27

(g)that is (i) in an aggregate principal amount no greater than $35,000,000, (ii) is subordinate in right of payment to all amounts payable under the Securities and the New Notes, (iii) does not have a final Stated Maturity prior to the Stated Maturity of the Securities and the New Notes, and (iv) has an Average Life at least equal to the remaining Average Life of the Securities and the New Notes.

Section 4.07.  Restricted Payments.  The Company shall not

(a)declare or pay any dividend or make any distribution on its Capital Stock, other than dividends or distributions paid in its or its Subsidiaries’ Capital Stock other than Disqualified Stock;

(b)purchase, redeem or otherwise acquire or retire for value any of its Capital Stock or Options, other than (1) the repurchase of unvested restricted stock in connection with voluntary or involuntary terminations of employment with an aggregate purchase price less than $100,000 per fiscal year, or (2) repurchases, redemptions, acquisitions or retirements paid for with its or its Subsidiaries’ Capital Stock other than Disqualified Stock or Options to buy Capital Stock other than Disqualified Stock;

(c)pay any funds to or for the account of, make any investment in, lease, sell, transfer or otherwise dispose of any assets, tangible or intangible, to, or participate in, or effect, any transaction with, any Affiliate except on an arms-length basis on terms at least as favorable to the Company as could have been obtained from a third-party that was not an Affiliate (except that the Company may enter into compensatory arrangements with and pay such salary, bonus or other compensation to employees, officers and directors as have been approved by a committee of the Company’s Board of Directors comprised of independent directors); or

(d)repay, redeem, repurchase, defease or otherwise acquire or retire for value, any indebtedness subordinated in right of payment to the Securities or the New Notes except a payment of interest or principal when due.

ARTICLE 5

SUCCESSOR CORPORATION

Section 5.01.  When Company May Merge or Transfer Assets.  Company shall not consolidate with or merge with or into any other Person (other than in a merger or consolidation in which the Company is the surviving Person) or convey, transfer or lease its properties and assets substantially as an entirety to any Person, unless:

28

(a)the Person (if other than the Company) formed by such consolidation or into which the Company is merged or the Person which acquires by conveyance, transfer or lease the properties and assets of the Company substantially as an entirety (i) shall be a corporation, partnership or trust organized and validly existing under the laws of the United States or any State thereof or the District of Columbia and (ii) shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Trustee, in form satisfactory to the Trustee, all of the obligations of the Company under the Securities and this Indenture;

(b)immediately after giving effect to such transaction, no Default shall have occurred and be continuing; and

(c)the Company shall have delivered to the Trustee an Officers’ Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and, if a supplemental indenture is required in connection with such transaction, such supplemental indenture, comply with this Article and that all conditions precedent herein provided for relating to such transaction have been satisfied.

The successor Person formed by such consolidation or into which the Company is merged or the successor Person to which such conveyance, transfer or lease is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Indenture with the same effect as if such successor had been named as the Company herein; and thereafter, except in the case of (i) a lease of its properties and assets substantially as an entirety and (ii) obligations the Company may have under a supplemental indenture pursuant to Section 10.14, the Company shall be discharged from all obligations and covenants under this Indenture and the Securities.

ARTICLE 6

DEFAULTS AND REMEDIES

Section 6.01.  Events of Default.  “Event of Default” occurs if:

(a)the Company defaults in the payment of the principal amount of, premium, if any, Redemption Price or Fundamental Change Redemption Price on any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration or otherwise;

(b)the Company defaults in the payment of any installment of interest upon any of the Securities as and when the same shall become due and payable, and continuance of such default for 30 days;

29

(c)the Company fails to comply with any of its agreements in the Securities, this Indenture or the Junior Priority Security Documents and such failure continues for 60 days after receipt by the Company of a Notice of Default;

(d)a decree or order by a court having jurisdiction in the premises shall have been entered adjudging the Company a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization of the Company under any Bankruptcy Law, and such decree or order shall have continued undischarged and unstayed for a period of 60 consecutive days; or a decree or order of a court having jurisdiction in the premises of the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of the Company or of its property, or for the winding-up or liquidation of its affairs, shall have been entered, and such decree or order shall have remained in force undischarged and unstayed of a period of 60 consecutive days; or

(e)the Company shall institute proceedings to be adjudicated a voluntary bankrupt, or shall consent to the filing of a bankruptcy proceeding against it, or shall file a petition or answer or consent seeking reorganization under any Bankruptcy Law, or shall consent to the filing of any such petition, or shall consent to the appointment of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency of it or of its property or shall make an assignment for the benefit of creditors, or shall admit in writing its inability to pay its debts generally as they become due.

(f)an event of default under the Old Notes Indenture or the New Indenture shall have occurred which results in the principal amount and accrued interest on that debt becoming immediately due and payable.

“Bankruptcy Law” means Title 11, United States Code, or any similar Federal or state law for the relief of debtors.

A Default under (c) above is not an Event of Default until the Trustee notifies the Company, or the Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding notify the Company and the Trustee, of the Default and the Company does not cure such Default (and such Default is not waived) within the time specified in clause (3) above after actual receipt of such notice (a “Notice of Default”).  Any such notice must specify the Default, demand that it be remedied and state that such notice is a Notice of Default.

Section 6.02.  Acceleration.  If an Event of Default (other than an Event of Default specified in Section 6.01(d) or (e)) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding by notice to the Company and the Trustee, may declare the principal amount and premium, if any, on all the

30

Securities and the interest accrued thereon to be immediately due and payable.  Upon such a declaration, such principal amount, premium, if any, and interest accrued thereon shall be due and payable immediately.  If an Event of Default specified in Section 6.01(d) or (e) occurs and is continuing, the principal amount and premium, if any, on all the Securities and the interest accrued thereon shall become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Securityholders.  The Holders of a majority in aggregate principal amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder) may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of the principal amount, premium, if any, and interest accrued thereon that has become due solely as a result of acceleration and if all amounts due to the Trustee under Section 7.07 have been paid.  No such rescission shall affect any subsequent Default or impair any right consequent thereto.

Section 6.03.  Other Remedies.  If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of the principal amount and premium, if any, on the Securities and interest accrued thereon or to enforce the performance of any provision of the Securities or this Indenture.

The Trustee may maintain a proceeding even if the Trustee does not possess any of the Securities or does not produce any of the Securities in the proceeding.  A delay or omission by the Trustee or any Securityholder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of, or acquiescence in, the Event of Default.  No remedy is exclusive of any other remedy.  All available remedies are cumulative.

Section 6.04.  Waiver of Past Defaults.  The Holders of a majority in aggregate principal amount of the Securities at the time outstanding, by notice to the Trustee (and without notice to any other Securityholder), may waive an existing Default and its consequences except (1) an Event of Default described in Section 6.01(a) or 6.01(b), (2) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Securityholder affected, or (3) a Default that constitutes a failure to convert any Security in accordance with the terms of Article 10.  When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right.

Section 6.05.  Control by Majority.  The Holders of a majority in aggregate principal amount of the Securities at the time outstanding may direct the time, method and place of conducting any proceeding for any remedy

31

available to the Trustee or of exercising any trust or power conferred on the Trustee.  However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or that the Trustee determines in good faith is unduly prejudicial to the rights of other Securityholders or would involve the Trustee in personal liability unless the Trustee is offered indemnity satisfactory to it.

Section 6.06.  Limitation on Suits.  A Securityholder may not pursue any remedy with respect to this Indenture or the Securities unless:

(a)the Holder gives to the Trustee written notice stating that an Event of Default is continuing;

(b)the Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding make a written request to the Trustee to pursue the remedy;

(c)such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense satisfactory to the Trustee;

(d)the Trustee does not comply with the request within 60 days after receipt of the notice, the request and the offer of security or indemnity; and

(e)the Holders of a majority in aggregate principal amount of the Securities at the time outstanding do not give the Trustee a direction inconsistent with the request during such 60-day period.

A Securityholder may not use this Indenture to prejudice the rights of any other Securityholder or to obtain a preference or priority over any other Securityholder.

Section 6.07.  Rights of Holders to Receive Payment.  Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price in respect of the Securities held by such Holder, on or after the respective due dates expressed in the Securities or any Redemption Date or Fundamental Change Repurchase Date, as the case may be, and to convert the Securities in accordance with Article 10, or to bring suit for the enforcement of any such payment on or after such respective dates or the right to convert, shall, not be impaired or affected adversely without the consent of each such Holder.

Section 6.08.  Collection Suit by Trustee.  If an Event of Default described in Section 6.01(a) or 6.01(b) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company

32

for the whole amount owing with respect to the Securities and the amounts provided for in Section 7.07.

Section 6.09.  Trustee May File Proofs of Claim.  In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relative to the Company or any other obligor upon the Securities or the property of the Company or of such other obligor or their creditors, the Trustee (irrespective of whether the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price in respect of the Securities shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Trustee shall have made any demand on the Company for the payment of any such amount) shall be entitled and empowered, by intervention in such proceeding or otherwise,

(a)to file and prove a claim for the whole amount of the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel) and of the Holders allowed in such judicial proceeding, and

(b)to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute the same;

and any custodian, receiver, assignee, trustee, liquidator, sequestrator or similar official in any such judicial proceeding is hereby authorized by each Holder to make such payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and counsel, and any other amounts due the Trustee under Section 7.07.

Nothing herein contained shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Holder any plan of reorganization, arrangement, adjustment or composition affecting the Securities or the rights of any Holder thereof, or to authorize the Trustee to vote in respect of the claims of any Holder in any such proceeding.

Section 6.10.  Priorities.  If the Trustee collects any money pursuant to this Article 6 (including upon realization of any Lien on the Collateral), it shall pay out the money in the following order:

First:  to the Trustee for amounts due under Section 7.07;

33

Second:  to Securityholders for amounts due and unpaid on the Securities for the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price, as the case may be, ratably, without preference or priority of any kind, according to such amounts due and payable on the Securities; and

Third:  the balance, if any, to the Company.

The Trustee may fix a record date and payment date for any payment to Securityholders pursuant to this Section 6.10.  At least 15 days before such record date, the Company shall mail to each Securityholder and the Trustee a notice that states the record date, the payment date and amount to be paid.

Section 6.11.  Undertaking for Costs.  In any suit for the enforcement of any right or remedy, under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant (other than the Trustee) in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys’ fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant.  This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in aggregate principal amount of the Securities at the time outstanding.

Section 6.12.  Waiver of Stay, Extension or Usury Laws.  The Company covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury or other law wherever enacted, now or at any time hereafter in force, which would prohibit or forgive the Company from paying all or any portion of the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price in respect of Securities as contemplated herein, or which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such laws and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted.

ARTICLE 7

TRUSTEE

Section 7.01.  Duties of Trustee.  (a)If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in its exercise as a prudent

34

man would exercise or use under the circumstances in the conduct of his own affairs.

(b)Except during the continuance of an Event of Default:

(i)the Trustee need perform only those duties that are specifically set forth in this Indenture and no others; and

(ii)in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture.

(c)The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that:

(i)this paragraph (c) does not limit the effect of paragraph (b) of this Section 7.01;

(ii)the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and

(iii)the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05.

(d)Every provision of this Indenture that in any way relates to the Trustee is subject to paragraphs (a), (b), (c) and (e) of this Section 7.01.

(e)The Trustee may refuse to perform any duty or exercise any right or power or extend or risk its own funds or otherwise incur any financial liability unless it receives indemnity satisfactory to it against any loss, liability or expense.

(f)Money held by the Trustee in trust hereunder need not be segregated from other funds except to the extent required by law.

Section 7.02.  Rights of Trustee.  (a) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person.  The Trustee need not investigate any fact or matter stated in the document.

35

(b)Before the Trustee acts or refrains from acting, it may require a Company Order, an Officers’ Certificate or an Opinion of Counsel.  The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Company Order, Officers’ Certificate or Opinion of Counsel.

(c)The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care.

(d)Subject to the provisions of Section 7.01(c), the Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers.

Section 7.03.  Individual Rights of Trustee.  The Trustee in its individual or any other capacity may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.  Any Paying Agent, Registrar, Conversion Agent or co-registrar may do the same with the like rights.  However, the Trustee must comply with Section 7.10.

Section 7.04.  Trustee’s Disclaimer.  The Trustee makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be responsible for any statement in the Prospectus with respect to the Securities or in the Indenture of the Securities (other than its certificate of authentication), the acts of an prior Trustee hereunder, or the determination as to which beneficial owners are entitled to receive any notices hereunder.

Section 7.05.  Notice of Defaults.  If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall give to each Securityholder notice of the Default within 90 days after it occurs.  Except in the case of a Default described in Section 6.01(a) or 6.01(b), the Trustee may withhold the notice if and so long as a committee of its Trust Officers in good faith determines that withholding the notice is in the interests of Securityholders.  The Trustee shall not give notice of a Default pursuant to Section 6.01(c) until at least sixty (60) days have passed since its occurrence.

Section 7.06.  Disqualification; Conflicting Interests.  If the Trustee has or shall acquire any conflicting interest within the meaning of the TIA, it shall either eliminate such conflicting interest or resign, to the extent and in the.  manner provided by, and subject to the provisions of the TIA and this Indenture.

Section 7.07.  Compensation and Indemnity.  The Company agrees:

(a)to pay to the Trustee from time to time reasonable compensation for all services rendered by it under the Noteholder Documents to which it is a party

36

(which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust);

(b)to reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any provision of the Noteholder Documents to which it is a party (including the reasonable compensation and the expense, advances and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence or bad faith; and

(c)to indemnify the Trustee for, and to hold it harmless against, any loss, liability or expense incurred under the Noteholder Documents without negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its powers or duties under the Noteholder Documents to which it is a party.

To secure the Company’s payment obligations in this Section 7.07, the Trustee shall have a lien prior to the Securities on all money or property held or collected by the Trustee, except that held in trust to pay the principal amount, premium, if any, accrued interest, Redemption Price or Fundamental Change Redemption Price, as the case may be, on particular Securities.

The Company’s payment obligations pursuant to this Section 7.07 shall survive the discharge of this Indenture.  When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(d) or (e), the expenses are intended to constitute expenses of administration under any Bankruptcy Law.

Section 7.08.  Replacement of Trustee.  The Trustee may resign by so notifying the Company; provided that if the Trustee resigns its position hereunder it shall be deemed to have also resigned as trustee under the Junior Priority Security Documents.  Any such resignation shall not be effective until a successor Trustee hereunder and under the Junior Priority Security Documents has accepted its appointment pursuant to this Section 7.08.  The Holders of a majority in aggregate principal amount of the Securities at the time outstanding may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee hereunder and under the Junior Priority Security Documents.  The Company shall remove the Trustee if:

(a)the Trustee fails to comply with, or ceases to be eligible under, Section 7.10;

(b)the Trustee is adjudged bankrupt or insolvent;

37

(c)a receiver or public officer takes charge of the Trustee or its property; or

(d)the Trustee otherwise becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the office of Trustee for any reason, the Company shall promptly appoint, by resolution of its Board of Directors, a successor Trustee hereunder and under the Junior Priority Security Documents.

A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company.  Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture and under the Junior Priority Security Documents.  The successor Trustee shall mail a notice of its succession to Securityholders.  The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the lien provided for in Section 7.07.

If a successor Trustee does not take office within 30 days after the retiring Trustee resigns or is removed, the retiring Trustee, the Company or the Holders of a majority in aggregate principal amount of the Securities at the time outstanding may petition any court of competent jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 7.10, any Securityholder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee.

Section 7.09.  Successor Trustee by Merger.  If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trustee business or assets (including the administration of the trust created by this Indenture) to, another corporation, the resulting, surviving or transferee corporation without any further act shall be the successor Trustee.

Section 7.10.  Eligibility; Disqualification.  The Trustee (or if a Trustee is a member of a bank holding company, its bank holding company) shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of conditions.  If at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article.

Section 7.11.  Preferential Collection of Claims Against Company.  If and when the Trustee shall be or become a creditor of the Company (or any other obligor upon the Securities), the Trustee shall be subject to the provisions of the

38

TIA regarding the collection of claims against the Company (or any such other obligor).

Section 7.12.  Reports by Trustee.

(a)The Trustee shall transmit to Holders such reports concerning the Trustee and its actions under this Indenture as may be required pursuant to the TIA at the times and in the manner provided pursuant thereto.

(b)A copy of each such report shall, at the time of such transmission to Holders, be filed by the Trustee with each stock exchange or market upon which the Securities are listed, with the Commission and with the Company.  The Company will notify the Trustee when the Securities are listed on any stock exchange or market.

ARTICLE 8

DISCHARGE OF INDENTURE

Section 8.01.  Discharge of Liability on Securities.  When (i) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.07) for cancellation or (ii) all outstanding Securities have become due and payable and the Company deposits with the Trustee cash and/or securities, as permitted by the terms hereof, sufficient to pay at Stated Maturity the principal amount of all outstanding Securities (other than Securities replaced pursuant to Section 2.07), and if in either case the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Section 7.07, cease to be of further effect as to all outstanding Securities issued hereunder and all Security Interests in the Collateral created by the Junior Priority Security Documents in favor of the Trustee and the Securityholders.  The Trustee shall join in the execution of a document prepared by the Company acknowledging satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers’ Certificate and Opinion of Counsel and at the cost and expense of the Company.

Section 8.02.  Repayment to the Company.  The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, provided, however, that the Trustee or such Paying Agent, before being required to make any such return, shall at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each such Holder notice that such money or securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or securities then remaining will be returned to the Company.

39

After return to the Company, Holders entitled to the money or securities must look to the Company for payment as general creditors unless an applicable abandoned property law designates another person.

ARTICLE 9

AMENDMENTS

Section 9.01.  Without Consent Of Holders.  The Company and the Trustee may amend this Indenture or the Securities without the consent of any Securityholder:

(a)to cure any ambiguity, defect or inconsistency;

(b)to comply with Article 5 or Section 10.14;

(c)to provide for uncertificated Securities in addition to certificated Securities so long as such uncertificated Securities are in registered form for purposes of the Internal Revenue Code of 1986, as amended;

(d)to make any change that does not adversely affect the right of any Securityholder;

(e)to make any change to comply with the TIA, or any amendment thereto, or to comply with any requirement of the SEC in connection with the qualification, if any, of the Indenture under the TIA;

(f)to add any additional assets as Collateral;

(g)to reflect the grant of Liens on the Collateral for the benefit of another secured party to the extent such indebtedness is permitted by the terms of Section 4.06(e) of this Indenture;

(h)to release Collateral from the Lien of this Indenture and the Junior Priority Security Documents when permitted or required by the Noteholder Documents; or

(i)to conform the text of this Indenture or the other Noteholder Documents to any provision contained in the Prospectus under the section “Description of the  2009 Secured Notes.”

Section 9.02.  With Consent of Holders.  With the written consent of the Holders of at least a majority in aggregate principal amount of the Securities at the time outstanding, the Company and the Trustee may amend this Indenture or the Securities.  However, without the consent of each Securityholder affected, an amendment or supplement to this Indenture or the Securities may not:

40

(a)make any change to the manner or rate of accrual in connection with interest, reduce the rate of interest referred to in paragraph 1 of the Securities or extend the time for payment of interest on any Security;

(b)reduce the Redemption Price or extend the Stated Maturity;

(c)reduce the Redemption Price or Fundamental Change Redemption - Price of any Security;

(d)make any Security payable in money or securities other than that stated in the Security;

(e)make any change in Section 6.04 or this Section 9.02, except to increase any such percentage;

(f)make any change that adversely affects the right to convert any Security; or

(g)make any change that adversely affects the right to require the Company to redeem the Securities upon a Fundamental Change in accordance with the terms thereof and this Indenture;

and no such amendment or supplement to this Indenture may reduce the aforesaid percentage of Securities whose Holders must consent to any such amendment or supplemental indenture, without the consent of the Holders of all the Securities then outstanding.

It shall not be necessary for the consent of the Holders under this Section 9.02 to approve the particular form of any proposed amendment or supplemental indenture, but it shall be sufficient if such consent approves the substance thereof.

After an amendment under this Section 9.02 becomes effective, the Company shall mail to each Holder a notice briefly describing the amendment.

Section 9.03.  Compliance with TIA.  Every supplemental indenture executed pursuant to this Article shall comply with the TIA as then in effect.

Section 9.04.  Revocation and Effect of Consents, Waivers and Actions.  Until an amendment, supplemental indenture, waiver or other action becomes effective, a consent to it or any other action by a Holder of a Security hereunder is a continuing consent by the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same obligation as the consenting Holder’s Security, even if notation of the consent, waiver or action is not made on the Security.  However, any such Holder or subsequent Holder may revoke the consent, waiver or action as to such Holder’s Security or portion of the Security if the Trustee receives the notice or revocation before the date the amendment,

41

supplemental indenture, waiver or action becomes effective.  After an amendment, supplemental indenture, waiver or action becomes effective, it shall bind every Securityholder.

Section 9.05.  Notation on or Exchange of Securities.  Securities authenticated and delivered after the execution of any supplemental indenture pursuant to this Article may, and shall if required by the Trustee, bear a notation in form approved by the Trustee as to any matter provided for in such supplemental indenture.  If the Company shall so determine, new Securities so modified as to conform, in the opinion of the Trustee and the Board of Directors, to any such supplemental indenture may be prepared and executed by the Company and authenticated and delivered by the Trustee in exchange for outstanding Securities,

Section 9.06.  Trustee to Sign Supplemental Indentures.  The Trustee shall sign any supplemental indenture authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee.  If it does, the Trustee may, but need not, sign such supplemental indenture.  In signing such supplemental indenture the Trustee shall be entitled to receive, and (subject to the provisions of Section 7.01) shall be fully protected in relying upon, an Officers’ Certificate and an Opinion of Counsel stating that such supplemental indenture is authorized or permitted by this Indenture.

Section 9.07.  Effect of Supplemental Indentures.  Upon the execution of any supplemental indenture under this Article, this Indenture shall be modified in accordance therewith, and such supplemental indenture shall form a part of this Indenture for all purposes; and every Holder of Securities theretofore or thereafter authenticated and delivered hereunder shall be bound thereby.

Notwithstanding anything to the contrary contained in this Article 9, the Company may amend (i) the Secured Credit Facility and (ii) to the extent contemplated by the Intercreditor Agreement and Section 12.04 hereof, any agreement or instrument evidencing a Security Interest without the consent of Trustee or any Securityholder.

ARTICLE 10

CONVERSION

Section 10.01.  Conversion Privilege.  A Holder of a Security may convert such Security into Common Stock at any time during the period stated in paragraph 7 of the Securities.  The conversion price per share of Common Stock (the “Conversion Price”) shall be that set forth in paragraph 7 in the Securities, subject to adjustment as herein set forth.

42

A Holder may convert a portion of the principal amount of a Security if the portion is $1,000 or a multiple of $1,000.  Provisions of this Indenture that apply to conversion of all of a Security also apply to conversion of a portion of a Security.

Section 10.02.  Conversion Procedure.  To convert a Security a Holder must satisfy the requirements in paragraph 7 of the Securities.  The date on which the Holder satisfies all those requirements is the conversion date (the “Conversion Date”).  Securities surrendered for conversion during the period from the close of business on any Regular Record Date to the close of business on the Trading Day immediately prior to the next succeeding Interest Payment Date (the “Interest Period”) shall (except in the case of Securities or portions thereof which have been called for redemption on a Redemption Date within such Interest Period) be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on such Interest Payment Date on the principal amount of Securities being surrendered for conversion.  Subject to the provisions of Section 3.07 relating to the payment of Defaulted Interest by the Company, the interest payment with respect to a Security surrendered for conversion during the Interest Period (except in the case of Securities or portions thereof which have been called for redemption on a Redemption Date within the Interest Period) shall be payable on such Interest Payment Date to the Holder of such Securities at the close of business on such Regular Record Date notwithstanding the conversion of such Securities during such Interest Period.

As soon as practicable after the Conversion Date, the Company shall deliver to the Holder, through the Conversion Agent, a certificate for the number of full shares of Common Stock issuable upon the conversion and cash in lieu of any fractional share determined pursuant to Section 10.03.  The person in whose name the certificate is registered shall be treated as a stockholder of record on and after the Conversion Date; provided, however, that no surrender of a Security on any date when the stock transfer books of the Company shall be closed shall be effective to constitute the person or persons entitled to receive the shares of Common Stock upon such conversion as the record holder or holders of such shares of Common Stock on such date, but such surrender shall be effective to constitute the person or persons entitled to receive such shares of Common Stock as the record holder or holders thereof for all purposes at the close of business on the next succeeding day on which such stock transfer books are open; such conversion shall be at the Conversion Price in effect on the date that such Security shall have been surrendered for conversion, as if the stock transfer books of the Company had not been closed.  Upon conversion of a Security, such person shall no longer be a Holder of such Security.

43

No payment or adjustment will be made for dividends on or other distribution with respect to any Common Stock except as provided in this Article 10.

If the Holder converts more than one Security at the same time, the number of shares of Common Stock issuable upon the conversion shall be based on the total principal amount of the Securities converted.

Upon surrender of a Security that is converted in part, the Company shall execute, and the Trustee shall authenticate and deliver to the Holder, a new Security in an authorized denomination equal in principal amount to the unconverted portion of the Security surrendered.

If the last day on which a Security may be converted is a Legal Holiday in a place where a Conversion Agent is located, the Security may be surrendered to that Conversion Agent on the next succeeding day that it is not a Legal Holiday.

Section 10.03.  Fractional Shares.  The Company will not issue a fractional share of Common Stock upon conversion of a Security.  Instead, the Company will deliver cash for the current market value of the fractional share.  The current market value of a fractional share shall be determined to the nearest 1/10,000th of a share by multiplying the last reported sale price (determined as set forth in the definition of Current Market Price), on the last Trading Day prior to the Conversion Date, of a full share by the fractional amount and rounding the product to the nearest whole cent.

Section 10.04.  Taxes on Conversion.  If a Holder converts a Security, the Company shall pay any documentary, stamp or similar issue or transfer tax due on the issue of shares of Common Stock upon the conversion.  However, the Holder shall pay any such tax which is due because the Holder requests the shares to be issued in a name other than the Holder’s name.  The Conversion Agent may refuse to deliver the certificates representing the Common Stock being issued in a name other than the Holder’s name until the Conversion Agent receives a sum sufficient to pay any tax which will be due because the shares are to be issued in a name other than the Holder’s name.  Nothing herein shall preclude any tax withholding required by law or regulations.

Section 10.05.  Company to Provide Stock.  The Company shall, prior to issuance of any Securities hereunder, and from time to time as may be necessary, reserve out of its authorized but unissued Common Stock a sufficient number of shares of Common Stock to permit the conversion of the Securities.

All shares of Common Stock delivered upon conversion of the Securities shall be newly issued shares or treasury shares, shall be duly and validly issued

44

and fully paid and nonassessable and shall be free from preemptive rights and free of any lien or adverse claim.

The Company will endeavor promptly to comply with all Federal and state securities laws regulating the offer and delivery of shares of Common Stock upon conversion of Securities, if any, and will endeavor promptly, if permitted by the rules of such exchange, over-the-counter market or other market, to list or cause to have quoted such shares of Common Stock on each national Securities exchange or in the over-the-counter market or such other market on which the Common Stock is then listed or quoted.

Section 10.06.  Adjustment for Change in Capital Stock.  In case the Company shall (i) pay a dividend, or make a distribution, in shares of its Common Stock, on its Common Stock, (ii) subdivide its outstanding Common Stock into a greater number of shares, or (iii) combine its outstanding Common Stock into a smaller number of shares, the Conversion Price in effect immediately prior thereto shall be adjusted so that the holder of any Security thereafter surrendered for conversion shall be entitled to receive the number of shares of Common Stock of the Company which he would have owned or have been entitled to receive after the happening of any of the events described above had such Security been converted immediately prior to the happening of such event.  If any dividend or distribution of the type described in clause (i) above is not so paid or made, the Conversion Price shall again be adjusted to the Conversion Price which would then be in effect if such dividend or distribution had not been declared.  An adjustment made pursuant to this Section 10.06 shall become effective immediately after the record date in the case of a dividend and shall become effective immediately after the effective date in the case of subdivision or combination.

Section 10.07.  Adjustment for Rights Issue.  In case the Company shall issue rights or warrants to all holders of its Common Stock entitling them (for a period expiring within 45 days after the record date mentioned below) to subscribe for or purchase Common Stock at a price per share less than the Current Market Price per share of Common Stock at the record date for the determination of stockholders entitled to receive such rights or warrants, the Conversion Price in effect immediately prior thereto shall be adjusted so that the same shall equal the Conversion Price determined by multiplying the Conversion Price in effect immediately prior to the date of issuance of such rights or warrants by a fraction of which the numerator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of shares which the aggregate offering price of the total number of shares so offered would purchase at such Current Market Price, and of which the denominator shall be the number of shares of Common Stock outstanding on the date of issuance of such rights or warrants plus the number of additional shares of Common Stock offered for subscription or purchase.  Such adjustment shall be made successively

45

whenever any such rights or warrants are issued, and shall become effective immediately after the opening of business on the day following the record date for the determination of the stockholders entitled to receive such rights or warrants.  To the extent that shares of Common Stock are not delivered after the expiration of such rights or warrants, the Conversion Price shall be readjusted to the Conversion Price which would then be in effect had the adjustments made upon the issuance of such rights or warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered.  If such rights or warrants are not so issued, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such record date for the determination of stockholders entitled to receive such rights or warrants had not been fixed.  In determining whether any rights or warrants entitle the holders to subscribe for or purchase shares of Common Stock at less than such Current Market Price, and in determining the aggregate offering price of such shares of Common Stock, there shall be taken into account any consideration received by the Company for such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors.

Section 10.08.  Adjustment for Other Distributions.  (a) In case the Company shall distribute to all holders of its Common Stock (excluding any distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary) any shares of any class of capital stock of the Company (other than Common Stock) or evidences of its indebtedness or assets (other than cash) or rights or warrants to subscribe for or purchase any of its securities (excluding those referred to in Section 10.07 hereof) (any of the foregoing hereinafter in this Section 10.08(a) called the “Distributed Securities”), then, in each case, the Conversion Price shall be adjusted so that the same shall equal the Conversion Price determined by multiplying the Conversion Price in effect immediately prior to the date of such distribution by a fraction of which the numerator shall be the Current Market Price per share of the Common Stock on the record date mentioned below less the fair market value on such record date (as determined by the Board of Directors of the Company, whose determination shall be conclusive, and described in a certificate filed with the Trustee) of the Distributed Securities so distributed applicable to one share of Common Stock, and the denominator shall be the Current Market Price per share of the Common Stock on such record date.  Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution.  Notwithstanding the foregoing, in the event the then fair market value (as so determined) of the portion of the Distributed Securities so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the relevant record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Securityholder shall have the right to receive upon conversion the amount of Distributed Securities such Holder would have received had such

46

Holder converted each Security on such record date.  In the event that such distribution is not so paid or made, the Conversion Price shall again be adjusted to the Conversion Price which would then be in effect if such distribution had not been declared.  If the Board of Director determines the fair market value of any distribution for purposes of this Section 10.08(a) by reference to the actual or when issued trading market for any securities, it must in doing so consider the prices in such market over the same period used in computing the Current Market Price of the Common Stock.

Notwithstanding the foregoing provisions of this Section 10.08(a), no adjustment shall be made thereunder for any distribution of Distributed Securities if the Company makes proper provision so that each Holder of a Security who converts such Security (or any portion thereof) after the record date for such distribution shall be entitled to receive upon such conversion, in addition to the shares of Common Stock issuable upon such conversion, the amount and kind of Distributed Securities that such Holder would have been entitled to receive if such Holder had, immediately prior to such record date, converted such Security into Common Stock, provided that, with respect to any Distributed Securities that are convertible, exchangeable or exercisable, the foregoing provision shall only apply to the extent (and so long as) the Distributed Securities receivable upon conversion of such Security would be convertible, exchangeable or exercisable, as applicable, without any loss of rights or privileges for a period of at least 60 days following conversion of such Security.

(b)In case the Company shall, by dividend or otherwise, distribute to all holders of its Common Stock cash (excluding (x) any quarterly cash dividend on the Common Stock to the extent the aggregate cash dividend per share of Common Stock in any fiscal quarter does not exceed the greater of (A) the amount per share of Common Stock of the next preceding quarterly cash dividend on the Common Stock to the extent such preceding quarterly dividend did not require any adjustment of the Conversion Price pursuant to this Section 10.08(b) (as adjusted to reflect subdivisions or combinations of the Common Stock), and (B) 3.75% of the average of the last reported sales prices of the Common Stock (determined as provided in the definition of Current Market Price) during the ten Trading Days next preceding the date of declaration of such dividend and (y) any dividend or distribution in connection with the liquidation, dissolution or winding up of the Company, whether voluntary or involuntary), then, in such case, unless the Company elects to reserve such cash for distribution to the holders of the Securities upon the conversion of the Securities so that any such holder converting Securities will receive upon such conversion, in addition to the shares of Common Stock to which such holder is entitled, the amount of cash which such holder would have received if such holder had, immediately prior to the record date for such distribution of cash, converted its Securities into Common Stock, the Conversion Price shall be decreased so that the same shall equal the Conversion Price determined by multiplying the Conversion Price in effect immediately prior

47

to the record date by a fraction of which the numerator shall be the Current Market Price of the Common Stock on the record date less the amount of cash so distributed (and not excluded as provided above) applicable to one share of Common Stock, and the denominator shall be such Current Market Price of the Common Stock, such decrease to be effective immediately prior to the opening of business on, the day following the record date; provided, however, that in the event the portion of the cash so distributed applicable to one share of Common Stock is equal to or greater than the Current Market Price of the Common Stock on the record date, in lieu of the foregoing adjustment, adequate provision shall be made so that each Securityholder shall have the right to receive upon conversion the amount of cash such holder would have received had such holder converted each Security on the record date.  If such dividend or distribution is not so paid or made, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such dividend or distribution had not been declared.  If any adjustment is required to be made as set forth in this Section 10.08(b) as a result of a distribution that is a quarterly dividend, such adjustment shall be based upon the amount by which such distribution exceeds the amount of the quarterly cash dividend permitted to be excluded pursuant hereto.  If an adjustment is required to be made as set forth in this Section 10.08(b) above as a result of a distribution that is not a quarterly dividend, such adjustment shall be based upon the full amount of the distribution.

(c)In case a tender or exchange offer made by the Company or any Subsidiary of the Company for all or any portion of the Common Stock shall expire and such tender or exchange offer shall involve the payment by the Company or such Subsidiary of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors or, to the extent permitted by applicable law, a duly authorized committee thereof, whose determination shall be conclusive, and described in a resolution of the Board of Directors or such duly authorized committee thereof, as the case may be, at the last time (the “Expiration Time”) tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended)) that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, the Conversion Price shall be decreased so that the same shall equal the Conversion Price determined by multiplying the Conversion Price in effect immediately prior to the Expiration Time by a fraction of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted up to

48

any such maximum, being referred to as the “Purchased Shares”) and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such decrease to become effective immediately prior to the opening of business on the day following the Expiration Time.  In the event that the Company is obligated to purchase shares pursuant to any such tender or exchange offer, but the Company is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be the Conversion Price which would then be effect if such tender or exchange offer had not been made.

(d)In case of a tender or exchange offer made by a Person other than the Company or any Subsidiary for an amount which increases the offeror’s ownership of Common Stock to more than 25% of the Common Stock outstanding and shall involve the payment by such person of consideration per share of Common Stock having a fair market value (as determined by the Board of Directors, whose determination shall be conclusive, and described in a resolution of the Board of Directors) at the last time (the “Offer Expiration Time”) tenders or exchanges may be made pursuant to such tender or exchange offer (as it shall have been amended) that exceeds the Current Market Price of the Common Stock on the Trading Day next succeeding the Offer Expiration Time, and in which, as of the Offer Expiration Time the Board of Directors is not recommending rejection of the offer, the Conversion Price shall be decreased so that the same shall equal the Conversion Price determined by multiplying the Conversion Price in effect immediately prior to the Offer Expiration Time by a fraction of which the numerator shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the Offer Expiration Time multiplied by the Current Market Price of the Common Stock on the Trading Day next succeeding the Offer Expiration Time, and the denominator shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to stockholders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Offer Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the “Accepted Purchased Shares”) and (y) the product of the number of shares of Common Stock outstanding (less any Accepted Purchased Shares) on the Offer Expiration Time and the Current Market Price of the Common Stock on the Trading Day next succeeding the Expiration Time, such decrease to become effective immediately prior to the opening of business on the day following the Offer Expiration Time.  In the event that such Person is obligated to purchase shares pursuant to any such tender or exchange offer, but such Person is permanently prevented by applicable law from effecting any such purchases or all such purchases are rescinded, the Conversion Price shall again be adjusted to be

49

the Conversion Price which would then be in effect if such tender or exchange offer had not been made.  Notwithstanding the foregoing, the adjustment described in this Section 10.08(d) shall not be made if as of the Offer Expiration Time, the offering documents with respect to such offer disclose a plan or intention to cause the Company to engage in any transaction described in Article 5.

Section 10.09.  When Adjustment May be Deferred.  No adjustment in the Conversion Price need be made unless the adjustment would require an increase or decrease of at least 1% in the Conversion Price.  Any adjustments that are not made shall be carried forward and taken into account in any subsequent adjustment.

All calculations under this Article 10 shall be made to the nearest cent or to the nearest 1/10,000th of a share, as the case may be.

Section 10.10.  When no Adjustment Required.  No adjustment need be made for rights to purchase Common Stock pursuant to a Company plan for reinvestment of dividends or interest.

No adjustment need be made for a change in the par value or no par value of the Common Stock.

To the extent the Securities become convertible into cash, assets, property or securities (other than capital stock of the Company), no adjustment need be made thereafter as to the cash, assets, property or such securities.  Interest will not accrue on the cash.

Section 10.11.  Notice of Adjustment.  Whenever the Conversion Price is adjusted, the Company shall promptly mail to Securityholders a notice of the adjustment.  The Company shall file with the Trustee and the Conversion Agent such notice.  The certificate shall, absent manifest error, be conclusive evidence that the adjustment is correct.  Neither the Trustee nor any Conversion Agent shall be under any duty or responsibility with respect to any such certificate except to exhibit the same to any Holder desiring inspection thereof.

Section 10.12.  Voluntary Decrease.  The Company may make such decreases in the Conversion Price, in addition to those required by Sections 10.06, 10.07 and 10.08, as the Board of Directors considers to be advisable to avoid or diminish any income tax to holders of Common Stock or rights to purchase Common Stock resulting from any dividend or distribution of stock (or rights to acquire stock) or from any event treated as such for income tax purposes.  To the extent permitted by applicable law, the Company from time to time may decrease the Conversion Price by any amount for any period of time if the period is at least 20 days, the decrease is irrevocable during the period and the Board of Directors

50

shall have made a determination that such decrease would be in the best interests of the Company, which determination shall be conclusive.  Whenever the Conversion Price is so decreased, the Company shall mail to Securityholders and file with the Trustee and the Conversion Agent a notice of the decrease.  The Company shall mail the notice at least 15 days before the date the decreased Conversion Price takes effect.  The notice shall state the decreased Conversion Price and the period it will be in effect.

Section 10.13.  Notice Of Certain Transactions.  If:

(a)the Company makes any distribution or dividend that would require an adjustment in the Conversion Price pursuant to Section 10.06, 10.07 or 10.08; or

(b)the Company takes any action that would require a supplemental indenture pursuant to Section 10.14; or

(c)there is a liquidation or dissolution of the Company;

then the Company shall mail to Securityholders and file with the Trustee and the Conversion Agent a notice referencing this Section 10.13 and stating the proposed record date for a dividend or distribution or the proposed effective date of a subdivision, combination, reclassification, consolidation, merger, sale, transfer, dissolution, liquidation or winding-up, and if applicable, the new Conversion Price.  The Company shall file and mail the notice at least 15 days before such date.  Failure to file or mail the notice or any defect in it shall not affect the validity of the transaction.  Unless and until the Trustee shall receive a notice pursuant to this Section 10.13, it shall not be deemed to have knowledge of any event required to be described in a notice pursuant to this Section 10.13.

Section 10.14.  Effect of Reclassification, Consolidation, Merger or Sale.  If any of the following events occur, namely (i) any reclassification or change of outstanding shares of Common Stock (other than a change in par value, or from par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), (ii) any consolidation, merger or combination of the Company with another corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, or (iii) any sale or conveyance of the properties and assets of the Company as, or substantially as, an entirety to any other corporation as a result of which holders of Common Stock shall be entitled to receive stock, securities or other property or assets (including cash) with respect to or in exchange for such Common Stock, then the Company or the successor or purchasing corporation, as the case may be, shall execute with the Trustee a supplemental indenture providing that each Security shall be convertible into the kind and amount of shares of stock and other securities or

51

property or assets (including cash) receivable upon such reclassification, change, consolidation, merger, combination, sale or conveyance by a holder of a number of shares of Common Stock issuable upon conversion of such Securities immediately prior to such reclassification, change, consolidation, merger, combination, sale or conveyance.  Such supplemental indenture shall provide for adjustments which shall be as nearly equivalent as may be practicable to the adjustments provided for in this Article.

The Company shall cause notice of the execution of such supplemental indenture to be mailed to each holder of Securities at his address appearing on the Security register provided for in Section 2.03 of this Indenture.

The above provisions of this Section shall similarly apply to successive reclassifications, consolidations, mergers, combinations, and sales.

If this Section applies, neither Section 10.06, 10.07 nor 10.08 applies.

Section 10.15.  Company Determination Final.  Any determination that the Company or the Board of Directors must make pursuant to Section 10.03, 10.06, 10.07, 10.08, 10.09, 10.10, 10.14 or 10.17 is conclusive.

Section 10.16.  Trustee’s Adjustment Disclaimer.  The Trustee has no duty to determine when an adjustment under this Article 10 should be made, how it should be made or what it should be.  The Trustee has no duty to determine whether a supplemental indenture under Section 10.14 need be entered into or whether any provisions of any supplemental indenture are correct.  The Trustee shall not be accountable for and makes no representation as to the validity or value of any securities or assets issued upon conversion of Securities.  The Trustee shall not be responsible for the Company’s failure to comply with this Article 10.  Each Conversion Agent shall have the same protection under this Section 10.16 as the Trustee.

Section 10.17.  Simultaneous Adjustment.  In the event that this Article 10 requires adjustments to the Conversion Price under more than one of Sections 10.06, 10.07, 10.08(a) or 10.08(b), and the record dates for the distributions giving rise to such adjustments shall occur on the same date, then such adjustments shall be made by applying, first, the provisions of Section 10.08(a), second, the provisions of Section 10.08(b), third the provisions of Section 10.06 and, fourth, the provisions of Section 10.07.

Section 10.18.  Successive Adjustments.  After an adjustment to the Conversion Price under this Article 10, any subsequent event requiring an adjustment under this Article 10 shall cause an adjustment to the Conversion Price as so adjusted.

52

Section 10.19.  Rights Issued in Respect of Common Stock Issued Upon Conversion.  Each share of Common Stock issued upon conversion of Securities pursuant to this Article 10 shall be entitled to receive the appropriate number of Rights (as defined below), if any, and the certificates representing the Common Stock issued upon such conversion shall bear such legends, if any, in each case as provided by and subject to the terms of the agreement governing such Rights (the “Rights Agreement”) as in effect at the time of such conversion.  If the Rights are separated from the Common Stock in accordance with the provisions of the Rights Agreement such that the Holders of Securities would thereafter not be entitled to receive any such Rights in respect to the Common Stock issuable upon conversion of such Securities, the Conversion Price will be adjusted as provided in Section 10.08(a) on the separation date; provided that if such Rights expire, terminate or are redeemed by the Company, the Conversion Price shall again be adjusted to be the Conversion Price which would then be in effect if such separation had not occurred.  In lieu of any such adjustment, the Company may amend the Rights Agreement to provide that upon conversion of the Securities the Holders will receive, in addition to the Common Stock issuable upon such conversion, the Rights which would have attached to such shares of Common Stock if the Rights had not become separated from the Common Stock pursuant to the provisions of the Rights Agreement.

Rights or warrants distributed by the Company to all holders of Common Stock entitling the holders thereof to subscribe for or purchase shares of the Company’s capital stock (either initially or under certain circumstances), which rights or warrants, until the occurrence of a specified event or events (“Trigger Event”):

(a)are deemed to be transferred with such shares of Common Stock,

(b)are not exercisable, and

(c)are also issued in respect of future issuances of Common Stock,

(“Rights”) shall not be deemed distributed for purposes of Section 10.08(a) until the occurrence of the earliest Trigger Event.  In addition, in the event of any distribution of rights or warrants, or any Trigger Event with respect thereto, that shall have resulted in an adjustment to the Conversion Price under Section 10.08(a), (1) in the case of any such rights or warrants which shall all have been redeemed or repurchased without exercise by any holders thereof, the Conversion Price shall be readjusted upon such final redemption or repurchase to give effect to such distribution or Trigger Event, as the case may be, as though it were a cash distribution, equal to the per share redemption or repurchase price received by a holder of Common Stock with respect to such rights or warrants (assuming such holder had retained such rights or warrants), made to all holders of Common Stock as of the date of such redemption or repurchase, and (2) in the case of any

53

such rights or warrants all of which shall have expired without exercise by any holder thereof, the Conversion Price shall be readjusted as if such issuance had not occurred.

Section 10.20.  General Considerations.  Whenever successive adjustments to the Conversion Price are called for pursuant to this Article 10, such adjustments shall be made to the Current Market Price as may be necessary or appropriate to effectuate the intent of this Article and to avoid unjust or inequitable results as determined in good faith by the Board of Directors.

ARTICLE 11
RANKING OF NOTE LIENS

Section 11.01.  Agreement for the Benefit of Holders of Senior Priority Liens.  The Trustee and each Securityholder by accepting a Security agrees, that:

(a)the Junior Priority Liens securing the Securities upon any and all Collateral are, to the extent and in the manner provided in the Intercreditor Agreement, junior in ranking to all present and future Senior Priority Liens:

(i)are enforceable by the holders of Senior Priority Liens, for the benefit of the holders of Senior Priority Lien Obligations secured thereby;

(ii)will remain enforceable by the holders of Senior Priority Liens until the payment in full in cash of all Senior Priority Lien Obligations.

(b)without the necessity of any consent of or prior notice to the Trustee or any Securityholder, the Company may (1) amend, modify, supplement or terminate the Senior Credit Facility and (2) enter into such agreements, including an Intercreditor Agreement, as may be necessary or desirable to reflect its grant of Senior Priority Liens on the Collateral for the benefit of additional secured parties, as permitted under Section 4.06(e) of this Indenture.

(c)as among the Trustee and the Securityholders and the holders of Senior Priority Liens, the holders of the Senior Priority Liens and the Administrative Agent will have the sole ability to control and obtain remedies with respect to all Collateral without the necessity of any consent of or notice to the Trustee or any Securityholder, as set forth in more detail in the Intercreditor Agreement;

(d)any or all Liens as set forth in, and granted under the Junior Priority Security Documents for the benefit of the Securityholders will be released by the

54

Trustee as provided by Sections 3 or 5(b) of the Intercreditor Agreement, without the necessity of any consent of the Securityholders, upon the request of the Administrative Agent;

(e)the Indenture and Securities are subject to the Intercreditor Agreement.  In case of any conflict or inconsistency between the terms of the Intercreditor Agreement and the Junior Priority Security Documents, the terms of the Intercreditor Agreement shall control.

Section 11.02.  Securities not Subordinated.  The provisions of this Article 11 are intended solely to set forth the relative ranking, as Liens, of the Junior Priority Liens as against the Senior Priority Liens.  The Securities are senior non-subordinated obligations of the Company.  Neither the Securities nor the exercise or enforcement of any right or remedy for the payment or collection thereof (other than the exercise of rights and remedies of a secured party, which are subject to the Intercreditor Agreement) are intended to be, or will ever be by reason of the provisions of this Article 11, in any respect subordinated, deferred, postponed, restricted or prejudiced.

Section 11.03.  Relative Rights.  The Intercreditor Agreement defines the relative rights, as lienholders, of holders of Junior Priority Liens and holders of Senior Priority Liens.  Nothing in this Indenture or the Intercreditor Agreement will:

(a)impair, as between the Company and the Securityholders, the obligation of the Company, which is absolute and unconditional, to pay principal of, premium and interest on such Securities in accordance with their terms or to perform any other obligation of the Company under this Indenture or the Securities;

(b)restrict the right of any Securityholder to sue for payments that are then due and owing;

(c)prevent the Trustee or any Securityholder from exercising against the Company or any other obligor any of its other available remedies upon a Default or Event of Default (other than its rights as a secured party, which are subject to the Intercreditor Agreement); or

(d)restrict the right of the Trustee or any Securityholder:

(i)to file and prosecute a petition seeking an order for relief in an involuntary bankruptcy case as to the Company or otherwise to commence, or seek relief commencing, any insolvency or liquidation proceeding involuntarily against the Company;

55

(ii)to make, support or oppose any request for an order for dismissal, abstention or conversion in any insolvency or liquidation proceeding;

(iii)to make, support or oppose, in any insolvency or liquidation proceeding, any request for an order extending or terminating any period during which the debtor (or any other Person) has the exclusive right to propose a plan of reorganization or other dispositive restructuring or liquidation plan therein;

(iv)to seek the creation of, or appointment to, any official committee representing creditors (or certain of the creditors) in any insolvency or liquidation proceedings and, if appointed, to serve and act as a member of such committee without being in any respect restricted or bound by, or liable for, any of the obligations under this Article 11;

(v)to seek or object to the appointment of any professional person to serve in any capacity in any insolvency or liquidation proceeding or to support or object to any request for compensation made by any professional person or others therein;

(vi)to make, support or oppose any request for order appointing a trustee or examiner in any insolvency or liquidation proceedings; or

(vii)otherwise to make, support or oppose any request for relief in any insolvency or liquidation proceeding that it is permitted by law to make, support or oppose;

(x)if it were a holder of unsecured claims; or

(y)as to any matter relating to any plan of reorganization or other restructuring or liquidation plan or as to any matter relating to the administration of the estate or the disposition of the case or proceeding

(except as set forth in the Intercreditor Agreement).

ARTICLE 12
COLLATERAL AND SECURITY

Section 12.01.  Junior Priority Security Documents.

(a)The payment of the principal of and interest and premium, if any, on the Securities when due, whether on an interest payment date, at maturity, by

56

acceleration, repurchase, redemption or otherwise by the Company and the performance of all other obligations of the Company under this Indenture and the Securities are secured as provided in the Junior Priority Security Documents which the Company and Trustee have entered into simultaneously with the execution of this Indenture and will be secured by Junior Priority Security Documents hereafter delivered as required or permitted by this Indenture.

(b)Pursuant to the terms of the Junior Priority Security Agreements, the Company has agreed to take such actions as may be necessary to perfect the Security Interests.  To the extent that perfection of the Collateral secured pursuant to the Intellectual Property Security Agreement may be attained by filing of financing statements under the Code, such actions will be taken on or prior to the date hereof.  To the extent that perfection of such Security Interests requires recordation with the Copyright Office and Patent and Trademark Office, the Company shall file the documentation required to effect such recordation on or before the date hereof and shall notify the Trustee of such recordation upon its effectiveness.

Section 12.02.  Trustee’s Rights and Obligations with Respect to the Collateral.

(a)Subject to Section 7.01, neither the Trustee nor any of its respective officers, directors, employees, attorneys or agents will be responsible or liable for the existence, genuineness, value or protection of any Collateral, for the legality, enforceability, effectiveness or sufficiency of the Junior Priority Security Documents, for the creation, perfection, priority, sufficiency or protection of any Junior Priority Lien, or for any defect or deficiency as to any such matters, or for any failure to demand, collect, foreclose or realize upon or otherwise enforce any of the Junior Priority Liens or Junior Priority Security Documents or any delay in doing so.

(b)Except as required or permitted by this Indenture, the Trustee will not be obligated:

(i)to act upon directions purported to be delivered to it by any other Person;

(ii)to foreclose upon or otherwise enforce any Junior Priority Lien; or

(iii)to take any other action whatsoever with regard to any or all of the Junior Priority Liens, Junior Priority Security Documents or Collateral.

57

(c)The Trustee will be accountable only for amounts that it actually receives as a result of the enforcement of the Junior Priority Liens or Junior Priority Security Documents.

Section 12.03.  Authorization of Actions to be Taken.

(a)Each Securityholder, by its acceptance thereof, consents and agrees to the terms of the Noteholder Documents, as originally in effect and as amended, supplemented or replaced from time to time in accordance with its terms, authorizes and directs the Trustee to enter into and deliver the Noteholder Documents to which it is a party, and authorizes and empowers the Trustee to bind the Securityholders as set forth in the Noteholder Documents to which it is a party and to perform its obligations and exercise its rights and powers thereunder.

(b)The Trustee is authorized and empowered to receive for the benefit of the Securityholders any funds collected or distributed under the Noteholder Documents to which the Trustee is a party and to make further distributions of such funds to the Securityholders according to the provisions of this Indenture.

(c)Subject to the provisions of Section 7.01, Section 7.02, Article 11 and the Intercreditor Agreement, the Trustee may, in its sole discretion and without the consent of the Securityholders take all actions it deems necessary or appropriate in order to:

(i)foreclose upon or otherwise enforce any or all of the Junior Priority Liens;

(ii)enforce any of the terms of the Noteholder Documents to which the Trustee is a party; or

(iii)collect and receive payment of any and all Securities.

Subject to the Intercreditor Agreement, the Trustee is authorized and empowered to institute and maintain such suits and proceedings as it may deem expedient to protect or enforce the Junior Priority Liens or the Junior Priority Security Documents to which the Trustee is a party or to prevent any impairment of Collateral by any acts that may be unlawful or in violation of the Junior Priority Security Documents to which Trustee is a party or this Indenture, and such suits and proceedings as the Trustee may deem expedient to preserve or protect its interests and the interests of the Securityholders in the Collateral, including power to institute and maintain suits or proceedings to restrain the enforcement of or compliance with any legislative or other governmental enactment, rule or order that may be unconstitutional or otherwise invalid if the enforcement of, or compliance with, such enactment, rule or order would impair the Security

58

Interests under the Junior Priority Security Documents or be prejudicial to the interests of Securityholders or the Trustee.

Section 12.04.  Release of Junior Priority Liens.

(a)The Junior Priority Liens will be released, with respect to the Securities:

(i)in accordance with Sections 3 and 5(b) of the Intercreditor Agreement;

(ii)in whole, upon payment in full of the principal of, accrued and unpaid interest and premium, if any, on the Securities;

(iii)in whole, upon satisfaction and discharge of this Indenture pursuant to Section 8.01;

(iv)in part, as to any property constituting Collateral that is sold or otherwise disposed of by the Company to any Person other than the Company in a transaction permitted by the Noteholder Documents, at the time of such sale or disposition, to the extent of the interest sold or disposed of.

(b)Upon delivery to the Trustee of an Officers’ Certificate requesting execution of an instrument confirming the release of the Junior Priority Liens pursuant to Section 12.04(a), accompanied by:

(i)an Opinion of Counsel confirming that such release is permitted by Section 12.04(a); and

(ii)all instruments requested by the Company to effectuate or confirm such release.

The Trustee will promptly execute and deliver such instruments.

(c)All instruments effectuating or confirming any release of any Junior Priority Liens will have the effect solely of releasing such Junior Priority Liens as to the Collateral described therein, on customary terms and without any recourse, representation, warranty or liability whatsoever.

(d)The Company will bear and pay all costs and expenses associated with any release of Junior Priority Liens pursuant to this Section 12.04, including all reasonable fees and disbursements of any attorneys or representatives acting for the Trustee.

59

Section 12.05.  Filing, Recording and Opinions.

(a)The Company will comply with the provisions of TIA §314(b) and 314(d), except to the extent not required as set forth in any Commission regulation or interpretation (including any no-action letter issued by the Staff of the Commission, whether issued to the Company or any other Person).  To the extent the Company is required to furnish to the Trustee an Opinion of Counsel pursuant to TIA §314(b)(2), the Company will furnish such opinion not more than 60 but not less than 30 days prior to each December [23].

(b)Any release of Collateral permitted by Section 12.04 hereof will be deemed not to impair the Liens under the Indenture and the Junior Priority Security Documents in contravention thereof and any person that is required to deliver an Officer’s Certificate or Opinion of Counsel pursuant to Section 314(d) of the TIA, shall be entitled to rely upon the foregoing as a basis for delivery of such certificate or opinion.  The Trustee may, to the extent permitted by Section 7.01 and 7.02 hereof, accept as conclusive evidence of compliance with the foregoing provisions the appropriate statements contained in such documents and Opinion of Counsel.

ARTICLE 13
MISCELLANEOUS

Section 13.01.  Conflict with TIA.  If any provision hereof limits, qualifies or conflicts with a provision of the TIA that is required under the TIA to be a part of and govern this Indenture, the latter provision shall control.  If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be.

Section 13.02.  Notices.  Any request, demand, authorization, notice, waiver, consent or communication shall be in writing and delivered in person or mailed by first class mail, postage prepaid, addressed as follows or transmitted by facsimile transmission (confirmed by overnight courier) to the following facsimile numbers:

if to the Company:

Silicon Graphics, Inc.
1600 Amphitheatre Parkway
Mountain View, California 94043
Attn:  General Counsel
Telephone Number:  (415) 960-1980
Facsimile Number:  (415) 969-6289

60

if to the Trustee:

U.S. Bank National Association
633 West Fifth Street, 24^th Floor
Los Angeles, California 90071
Attention:  Corporate Trust Services (Silicon Graphics, Inc.)
Telephone Number:  (213) 615-6043
Telefax Number:  (213) 615-6197
Paula.Oswald@usbank.com

The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications.

Any notice or communication given to a Securityholder shall be mailed to the Securityholder, by first class mail, postage prepaid, at the Securityholder’s address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed.

Failure to mail a notice or communication to a Securityholder or any defect in it shall not affect its sufficiency with respect to other Securityholders.  If a notice or communication is mailed in the manner provided above, it is duly given, whether or not received by the addressee.

If the Company mails a notice or communication to the Securityholders, it shall mail a copy to the Trustee and each Registrar, Paying Agent, Conversion Agent or co-registrar.

Section 13.03.  Communication by Holders with Other Holders.  Securityholders may communicate pursuant to TIA Section 312(b) with other Securityholders with respect to their rights under this Indenture or the Securities.  The Company, the Trustee, the Registrar, the Paying Agent, the Conversion Agent and anyone else shall have the protection of TIA Section 312(c).

Section 13.04.  Certificate And Opinion as to Conditions Precedent.  Upon any request or application by the Company to the Trustee to take any action under this Indenture, the Company shall furnish to the Trustee:

(a)an Officers’ Certificate stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and

(b)an Opinion of Counsel stating that, in the opinion of such counsel, all such conditions precedent have been complied with.

61

Section 13.05.  Statements Required in Certificate or Opinion.  Each Officers’ Certificate or Opinion of Counsel with respect to compliance with a covenant or condition provided for in this Indenture shall include:

(a)a statement that each person making such Officers’ Certificate or Opinion of Counsel has read such covenant or condition,

(b)a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such Officers’ Certificate or Opinion of Counsel are based;

(c)a statement that, in the opinion of each such person, he has made such examination or investigation as is necessary to enable such person to express an informed opinion as to whether or not such covenant or condition has been complied with; and

(d)a statement that, in the opinion of such person, such covenant or condition has been complied with.

Section 13.06.  Separability Clause.  In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Section 13.07.  Rules by Trustee, Paying Agent, Conversion Agent and Registrar.  The Trustee may make reasonable rules for action by or a meeting of Securityholders.  The Registrar, Conversion Agent and the Paying Agent may make reasonable rules for their functions.

Section 13.08.  Legal Holidays.  A “Legal Holiday” is any day other than a Business Day.  If any specified date (including a date for giving notice) is a Legal Holiday, the action shall be taken on the next succeeding day that is not a Legal Holiday, and, to the extent applicable, no interest, if any, shall accrue for the intervening period.

Section 13.09.  Governing Law.  THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE AND THE SECURITIES.

Section 13.10.  No Recourse Against Others.  A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Security, each Securityholder shall waive and release all such liability.  The waiver and release shall be part of the consideration for the issue of the Securities.

62

Section 13.11.  Successors.  All agreements of the Company in this Indenture and the Securities shall bind its successor.  All agreements of the Trustee in this Indenture shall bind its successor.

Section 13.12.  Multiple Originals.  The parties may sign any number of copies of this Indenture.  Each signed copy shall be an original, but all of them together represent the same agreement.  One signed copy is enough to prove this Indenture.

63

IN WITNESS WHEREOF, the undersigned, being duly authorized, have executed this Indenture on behalf of the respective parties hereto as of the date first written above.

	SILICON GRAPHICS, INC.
	By:
		Name:	Jeffrey Zellmer
		Title:	Chief Financial Officer
Attest:
Title:
[SEAL]
	U.S. BANK NATIONAL ASSOCIATION
	By:
		Name:	Paula M. Oswald
		Title:	Vice President

64

EXHIBIT A

[FORM OF FACE OF SECURITY]

[FORM OF LEGEND FOR GLOBAL SECURITY:

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (“DTC”), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]

SILICON GRAPHICS, INC.

$               6.50% SENIOR SECURED CONVERTIBLE NOTE DUE 2009

REGISTERED	CUSIP No. 827056 AE 2
No. 1

Silicon Graphics, Inc., a Delaware corporation, promises to pay to or registered assigns, the principal amount of                   Dollars ($) on June 1, 2009 and to pay interest thereon from  [the date after expiration of the exchange offer], 2003 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, semi-annually on December 1 and December  in each year, commencing June 1, 2004, at the rate of 6.50% per annum until the principal hereof is paid or made available for payment.  The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on the Regular Record Date for such interest, which shall be the November 15 or May 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to the Person in whose name this Security (or one or more Predecessor Securities) is registered at the close of business on a Special Record Date for the payment of such Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities not less than 10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not

A-1

inconsistent with the requirements of any securities exchange or other market on which the Securities may be listed, and upon such notice as may be required by such exchange or market, all as more fully provided in said Indenture.  Payment of the principal of (and premium, if any) and interest on this Security will be made at the Corporate Trust Office or the office or agency of the Company maintained for that purposes in the Borough of Manhattan, The City of New York, New York in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the address of, or by wire transfer to the account of, the Person entitled thereto as such address shall appear in the Security Register.

Additional provisions of this Security are set forth on the other side of this Security.

A-2

IN WITNESS WHEREOF, Silicon Graphics, Inc.  has caused this instrument to be duly executed under its corporate seal.

		SILICON GRAPHICS, INC.
		By:
[SEAL]
Attest:
Dated:
TRUSTEE’S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within mentioned Indenture.
U.S. BANK NATIONAL ASSOCIATION, as Trustee,
By:
	Authorized Signatory

A-3

[FORM OF REVERSE SIDE OF SECURITY]

SILICON GRAPHICS, INC.

6.50% SENIOR SECURED CONVERTIBLE NOTE DUE 2009

1.Interest

This Security shall bear interest at 6.50% per annum in the manner set forth in the Indenture and the face of this Security.  In the event that principal hereof or any portion of such principal is not paid when due (whether upon acceleration pursuant to Section 6.02 of the Indenture, upon the date set for payment of the Redemption Price pursuant to paragraph 5 hereof, upon the date set for payment of a Fundamental Change Redemption Price pursuant to paragraph 6 hereof or upon the Stated Maturity of this Security), then in each such case the overdue amount shall bear interest at the rate of 6.50% per annum, compounded semiannually (to the extent that the payment of such interest shall be legally enforceable), which interest shall accrue from the date such overdue amount was due to the date payment of such amount, including interest thereon, has been made or duly provided for.  All such interest shall be payable on demand.

2.Method of Payment

Subject to the terms and conditions of the Indenture, the Company will make payments in respect of the Securities to the persons who are registered Holders of Securities at the close of business on the Redemption Date, Fundamental Change Repurchase Date or Stated Maturity, as the case may be.  Holders must surrender Securities to a Paying Agent to collect such payments in respect of the Securities.  The Company will pay cash amounts in money of the United States that at the time of payment is legal tender for payment of public and private debts.  However, the Company may make such cash payments by check mailed to the address of, or by wire transfer to the account of, the person entitled to such payment.

3.Paying Agent, Conversion Agent and Registrar

Initially, U.S. Bank National Association, a national banking association (the “Trustee”), will act as Paying Agent, Conversion Agent and Registrar.  The Company may appoint and change any Paying Agent, Conversion Agent, Registrar or co-registrar without notice, other than notice to the Trustee.  The Company or any of its Subsidiaries or any of their Affiliates may act as Paying Agent, Conversion Agent, Registrar or co-registrar.

A-4

4.Indenture

The Company issued the Securities under an Indenture dated as of December     , 2003 (the “Indenture”), between the Company and the Trustee.  Capitalized terms used herein and not defined herein have the meanings ascribed thereto in the Indenture.  The Securities are subject to all such terms, and Securityholders are referred to the Indenture for a statement of those terms.

The Securities are general unsecured obligations of the Company limited to $230,591,000 aggregate principal amount (subject to Sections 2.02 and 2.07 of the Indenture).

5.Redemption at the Option of the Company

Prior to the second anniversary of the original issuance of the Securities, the Securities will not be redeemable at the option of the Company.  Beginning on the second anniversary of the original issuance of the Securities, the Company may redeem the Securities for cash as a whole at any time, or from time to time in part, upon not less than 10 days’ nor more than 60 days’ notice at the a price equal to 100% of the principal amount (the “Redemption Price”) thereof, together with accrued and unpaid interest to, but excluding, the Redemption Date, provided that during the year beginning on the first anniversary of the original issuance of the Securities, the Company may only redeem the Securities if the Closing Price of the Company’s Common Stock has been at least 150% of the then-applicable Conversion Price for the 20 consecutive Trading Days ending two Trading Days prior to the notice of redemption.

If any Redemption Date is an Interest Payment Date, then the interest payable on such date shall be paid to the Holder of the Security on the next preceding Regular Record Date.  No Securities may be redeemed by the Company if an Event of Default with respect to the payment of interest on the Securities has occurred and is continuing.

No sinking fund is provided for the Securities.

Notice of redemption at the option of the Company will be mailed at least 30 days but not more than 60 days before the Redemption Date to each Holder of Securities to be redeemed at the Holder’s registered address.  If money sufficient to pay the Redemption Price, together with accrued interest to, but excluding, the Redemption Date, of all Securities (or portions thereof) to be redeemed on the Redemption Date is deposited with the Paying Agent prior to or on the Redemption Date, on and after such date interest ceases to accrue on such Securities or portions thereof.  Securities in denominations larger than $1,000 of principal amount may be redeemed in part but only in multiples of $1,000 of principal amount.

A-5

6.Redemption at the Option of the Holder Upon a Fundamental Change

(a)At the option of the Holder and subject to the terms and conditions of the Indenture, the Company shall become obligated to redeem the Securities held by such Holder on the date (the “Fundamental Change Repurchase Date”) (or if such date is not a Business Day, the next succeeding Business Day) that is 45 days after the date of the Company’s notice of such Fundamental Change (as defined in the Indenture) occurring on or prior to June 1, 2009 at 100% of the principal amount.  In each case, the Company shall also pay accrued but unpaid interest, if any, on such Securities to, but excluding, the Fundamental Change Repurchase Date; provided that if such Fundamental Change Repurchase Date is an Interest Payment Date, then the interest payable on such date shall be paid to the Holder of the Security on the next preceding Regular Record Date.  Securities in denominations larger than $1,000 of principal amount may be redeemed in part in connection with a Fundamental Change, but only in multiples of $1,000 of principal amount.

(b)Holders have the right to withdraw any Fundamental Change Redemption Notice by delivering to the Paying Agent a written notice of withdrawal in accordance with the provisions of the Indenture.

(c)If cash sufficient to pay the Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, of all Securities or portions thereof to be purchased as of the Fundamental Change Repurchase Date is deposited with the Paying Agent on or prior to the Fundamental Change Repurchase Date, interest ceases to accrue on such Securities (or portions thereof) on and after the Fundamental Change Repurchase Date, and the Holder thereof shall have no other rights as such (other than the right to receive the Fundamental Change Redemption Price, together with accrued interest to, but excluding, the Fundamental Change Repurchase Date, upon surrender of such Security).

7.Conversion

Subject to the next two succeeding sentences, a Holder of a Security may convert it into Common Stock of the Company at any time after issuance and before the close of business on June 1, 2009.  If the Security is called for redemption, the Holder may convert it at any time before the close of the last Trading Day prior to the Redemption Date.  In the event the Security is surrendered during the period from the close of business on any Regular Record Date next preceding any Interest Payment Date to the close of business on the Trading Day immediately preceding the next succeeding Interest Payment Date (except in the case of Security to be redeemed within such period), such Securities must be accompanied by payment in New York Clearing House funds or other funds acceptable to the Company of an amount equal to the interest payable on

A-6

such Interest Payment Date on the principal amount of this Security then being converted.  Subject to the aforesaid requirement for payment and, in the case of a conversion after the Regular Record Date next preceding any Interest Payment Date and on or before such Interest Payment Date, to the right of the Holder of this Security (or any Predecessor Security) of record at such Regular Record Date to receive an installment of interest payable on such Interest Payment Date (except in the case of Securities whose Maturity is prior to such Interest Payment Date), no payment or adjustment is to be made on conversion for interest accrued hereon or for dividends on the Common Stock issued on conversion.  A Security in respect of which a Holder has delivered a notice of exercise of the option to redeem such Security in the event of a Fundamental Change may be converted only if the notice of exercise is withdrawn in accordance with the terms of the Indenture.

The initial Conversion Price is $1.25 per share of Common Stock, subject to adjustment in certain events described in Section 10 of the Indenture.  The Company will deliver cash or a check in lieu of any fractional share of Common Stock.

To convert a Security a Holder must (1) complete and manually sign the conversion notice on the back of the Security (or complete and manually sign a facsimile of such notice) and deliver such notice to the Conversion Agent, (2) surrender the Security to a Conversion Agent, (3) furnish appropriate endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee and (4) pay any transfer or similar tax, if required.

A Holder may convert a portion of a Security if the principal amount of such portion is $1,000 or a multiple of $1,000.  No payment or adjustment will be made for dividends on the Common Stock except as provided in the indenture.

The Conversion Price is subject to adjustment as provided in the Indenture.  In addition, in the case of (i) any reclassification of the Common Stock, or (ii) a consolidation or merger involving the Company or a sale or conveyance to another corporation of the property and assets of the Company as an entirety (or substantially as an entirety), in each case as a result of which holders of Common Stock shall be entitled to receive stock, securities, other property or assets (including cash) with respect to or in exchange for such Common Stock, as set forth in the Indenture, or upon certain distributions described in the Indenture, the right to convert a Security into Common Stock may be changed; as set forth in the Indenture, into a right to convert it into securities, cash or other assets of the Company or another person.

A-7

8.Conversion Arrangement on Call for Redemption

Any Securities called for redemption, unless surrendered for conversion before the close of business on the last Trading Day prior to the Redemption Date, may be deemed to be purchased from the Holders of such Securities at an amount not less than the Redemption Price, together with accrued interest to, but excluding the Redemption Date, by one or more investment bankers or other purchasers who may agree with the Company to purchase such Securities from the Holders, to convert them into Common Stock of the Company and to make payment for such Securities to the Trustee in trust for such Holders.

9.Denominations; Transfer; Exchange

The Securities are in registered form, without coupons, in denominations of $1,000 of principal amount and multiples of $1,000.  A Holder may transfer or exchange Securities in accordance with the Indenture.  The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and to pay any taxes and fees required by law or permitted by the Indenture.  The Registrar need not transfer or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities in respect of which a Fundamental Change Redemption Notice has been given and not withdrawn (except, in the case of a Security to be purchased in part, the portion of the Security not to be purchased) or any Securities for a period of 15 days before a selection of Securities to be redeemed.

10.Persons Deemed Owners

The registered Holder of this Security may be treated as the owner of this Security for all purposes.

11.Unclaimed Money or Securities

The Trustee and the Paying Agent shall return to the Company upon written request any money or securities held by them for the payment of any amount with respect to the Securities that remains unclaimed for two years, provided, however, that the Trustee or such Paying Agent, before being required to make any such return, shall at the expense of the Company cause to be published once in a newspaper of general circulation in The City of New York or mail to each such Holder notice that such money or securities remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication or mailing, any unclaimed money or securities then remaining will be returned to the Company.  After return to the Company, Holders entitled to the money or securities must look to the Company for payment

A-8

as general creditors unless an applicable abandoned property law designates another person.

12.Amendment; Waiver

Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in aggregate principal amount of the Securities at the time outstanding and (ii) certain defaults or noncompliance with certain provisions may be waived with the written consent of the Holders of a majority in aggregate principal amount of the Securities at the time outstanding.  Subject to certain exceptions set forth in the Indenture, without the consent of any Securityholder, the Company and the Trustee may amend the Indenture or the Securities to cure any ambiguity, defect or inconsistency, or to comply with Article 5 or Section 10.14 of the Indenture, to provide for uncertificated Securities in addition to or in place of certificated Securities or to make any change that does not adversely affect the rights of any Securityholder or to comply with any requirement of the SEC in connection with the qualification of the Indenture under the TIA.

13.Defaults and Remedies

Under the Indenture, Events of Default include (i) default in payment of the principal amount, Redemption Price or Fundamental Change Redemption Price, as the case may be, in respect of the Securities when the same becomes due and payable; (ii) default for 30 days in the payment of any installment of interest on the Securities; (iii) failure by the Company to comply with other agreements in the Indenture, the Securities, or the Junior Priority Security Documents subject to notice and lapse of time; (iv) an event of default under the Old Notes Indenture or the New Indenture shall have occurred that results in the principal amount of and accrued interest on that debt becoming immediately due and payable, and (v) certain events of bankruptcy or insolvency.  If an Event of Default occurs and is continuing, the Trustee, or the Holders of at least 25% in aggregate principal amount of the Securities at the time outstanding, may declare all the Securities to be due and payable immediately.  Certain events of bankruptcy or insolvency are Events of Default which will result in the Securities being declared due and payable immediately upon the occurrence of such Events of Default.

Securityholders may not enforce the Indenture or the Securities except as provided in the Indenture.  The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security.  Subject to certain limitations, Holders of a majority in aggregate principal amount of the Securities at the time outstanding may direct the Trustee in its exercise of any trust or power.  The Trustee may withhold from Securityholders notice of any continuing Default (except a Default in payment of amounts specified in clause (i) or (ii) above) if it determines that withholding notice is in their interests.

A-9

14.Lien Subordination and Sharing.  This Security is secured by Junior Priority Liens upon the Collateral pursuant to certain Junior Priority Security Documents.  The Junior Priority Liens upon any and all Collateral are, to the extent and in the manner provided in the Intercreditor Agreement, subordinate in ranking to all present and future Senior Priority Liens as set forth in the Indenture and the Intercreditor Agreement.

15.Trustee Dealings with the Company

The Trustee under the Indenture, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee.

16.No Recourse Against Others

A director, officer, employee or stockholder, as such, of the Company shall not have any liability for any obligations of the Company under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation.  By accepting a Security, each Securityholder waives and releases all such liability.  The waiver and release are part of the consideration for the issue of the Securities.

17.Authentication

This Security shall not be valid until an authorized officer of the Trustee manually signs the Trustee’s Certificate of Authentication on the other side of this Security.

18.Abbreviations

Customary abbreviations may be used in the name of a Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with right of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (Uniform Gift to Minors Act).

19.Governing Law

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE INDENTURE AND THIS SECURITY.

A-10

The Company will furnish to any Securityholder upon written request and without charge a copy of the Indenture which has in it the text of this Security in larger type.  Requests may be made to:

Silicon Graphics, Inc.
1600 Amphitheatre Parkway
Mountain View, California 94043
Attn:  General Counsel

A-11

[FORM OF CONVERSION NOTICE]

CONVERSION NOTICE

To:  Silicon Graphics, Inc.

The undersigned registered holder of this Security hereby irrevocably exercises the option to convert this Security, or portion hereof (which is $1,000 principal amount or a multiple thereof) below designated, into shares of Common Stock of Silicon Graphics, Inc.  in accordance with the terms of the Indenture referred to in this Security, and directs that the shares issuable and deliverable upon such conversion, together with any check in payment for fractional shares and any Securities representing any unconverted principal amount hereof, be issued and delivered to the registered holder hereof unless a different name has been indicated below.  If shares or any portion of this Security not converted are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer taxes payable with respect thereto.

Dated:
	Signature(s)

A-12

Fill in for registration of shares if to be delivered, and Securities if to be issued other than to and in the name of the registered bolder:
(Name)
(Street Address)
(City, State and zip code)
Please print name and address
	principal amount to be converted (if less than all):
	$     ,000
	Social Security or Other Taxpayer Identification Number

A-13

[FORM OF OPTION TO ELECT REDEMPTION
UPON A FUNDAMENTAL CHANGE]

To:Silicon Graphics, Inc.

The undersigned registered holder of this Security hereby acknowledges receipt of a notice from Silicon Graphics, Inc.  (the “Company”) as to the occurrence of a Fundamental Change with respect to the Company and requests and instructs the Company to redeem this Security, or the portion hereof (which is $1,000 principal amount or a multiple thereof) below designated, in accordance with the terms of the Indenture referred to in this Security.

Dated:
	Signature(s)
	principal amount to be redeemed (if less than all):
	$
	Social Security or Other Taxpayer Identification Number

A-14

[FORM OF ASSIGNMENT]

For value received                                                          hereby sell(s), assign(s) and transfer(s) unto                                                  
(Please insert social security or other taxpayer identification number of assignee.)

the within Security and hereby irrevocably constitutes and appoints                                   attorney to transfer the said Security on the books of the Company, with full power of substitution in the premises.

Dated:
	Signature(s)
	Signature(s) must be guaranteed by a commercial bank or trust company or a member firm of a major stock exchange.
	Signature Guarantee

NOTICE:  The above signatures of the holder(s) hereof must correspond with the name as written upon the face of the Security in every particular without alteration or enlargement or any change whatever.

A-15

EX-4.4

Exhibit 4.4

INTERCREDITOR AGREEMENT

THIS INTERCREDITOR AGREEMENT (this “Agreement”), dated as of                      , 2003, is made among SILICON GRAPHICS, INC., a Delaware corporation (“SGI”), U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America (“Trustee”), and WELLS FARGO FOOTHILL, INC., a California corporation, as Administrative Agent for itself and other Lenders (“Agent”).

WHEREAS, SGI, Silicon Graphics Federal, Inc., a Delaware corporation (together with SGI, collectively, “Borrowers”), Agent, and the Lenders named therein are parties to that certain Amended and Restated Loan and Security Agreement, dated as of September 20, 2002 (as amended, modified, renewed, extended, refunded, restructured, refinanced, or replaced from time to time, the “Loan Agreement”), pursuant to which Lenders have agreed to make certain financial accommodations to Borrowers;

WHEREAS, Trustee and SGI are parties to (i) that certain Indenture, dated as of December     , 2003 with respect to 6.50% Senior Secured Convertible Notes due 2009 (“Secured Convertible Note Indenture”); and (ii) that certain Indenture, dated as of December     , 2003 with respect to 11.75% Secured Senior Notes due 2009 (“Secured Note Indenture”) (the Secured Convertible Note Indenture and Secured Note Indenture hereinafter together are referred to as the “Indentures”, and the notes issued under the Indentures are referred to as the “Secured Notes.”  The holders of such Secured Notes are referred to as the “Secured Noteholders”).

WHEREAS, pursuant to the Indentures SGI may incur Indebtedness to the holders of Secured Notes (such Indebtedness is included in the term “Junior Priority Debt” defined below);

WHEREAS, the Secured Notes constitute the consideration issued by Borrowers in exchange for some of Borrowers’ unsecured long-term Indebtedness, pursuant to the partial recapitalization of Borrowers’ Indebtedness effected concurrently herewith;

WHEREAS, the terms of the Indentures require that the Secured Notes be secured by a Lien on the Collateral, which Lien, together with any and all other Liens now or hereafter acquired by Trustee in the Collateral, is referred to herein as the “Junior Priority Security Interest;”

WHEREAS, Agent requires that the Lien securing payment of the Secured Notes be subordinated to the Agent’s Lien on the Collateral, which Lien, together with any and all other Liens now or hereafter acquired by the Lenders in the Collateral, is referred to herein as the “Senior Priority Security Interest;”

NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions, representations, and warranties set forth herein and for other good and valuable consideration, the parties hereto agree as follows:

1

SECTION 1        Definitions; Interpretation

(a)           Terms Defined in Loan Agreement.  All capitalized terms used in this Agreement and not otherwise defined herein shall have the meanings assigned to them in the Loan Agreement.

(b)           Certain Defined Terms.  As used in this Agreement, the following terms shall have the following meanings:

“Agent” (i) has the meaning set forth in the recitals to this Agreement until the indefeasible payment in full of all Senior Priority Debt under the Loan Agreement and the termination of the lending commitments thereunder and (ii) thereafter, the representative of the holders of any then outstanding Senior Priority Debt designated by the Borrowers and the holders of the Senior Priority Debt as the “Agent” hereunder.

“Agreement” has the meaning set forth in the preamble to this Agreement.

“Governmental Authority” means any federal, state, provincial, municipal or other governmental department, commission, board, bureau, agency or instrumentality, or any court, in each case whether of the United States or any other jurisdiction.

“Insolvency Event” means any dissolution, winding up, or total or partial liquidation or reorganization, readjustment, arrangement or similar proceeding relating to any Borrower or its property, whether voluntary or involuntary, or any bankruptcy, insolvency, receivership, arrangement or similar proceedings or any assignment for the benefit of creditors or any other marshalling or composition of the assets and liabilities of any Borrower.

“Junior Priority Debt” means all indebtedness, liabilities, and other obligations of SGI owing to Trustee, in respect of the Secured Notes, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined, including all fees and all other amounts payable by SGI to Trustee under or in connection with any documents or instruments related thereto.

“Loan Agreement” is defined in the first recital; provided that the term “Loan Agreement” shall also include any renewal, extension, refunding, restructuring, replacement or refinancing thereof, so long as Agent remains as the administrative agent; provided that any such renewal, extension, refunding, restructuring, replacement or refinancing does not increase the principal amount thereof beyond the limit set forth in the Indentures.

“Senior Priority Debt” means (i) the Obligations and other indebtedness and liabilities of any Borrower to the Lender Group under or in connection with the Loan Agreement and the other Loan Documents, including all unpaid principal of the Advances, all interest accrued thereon (including all interest that, but for the provisions of the Bankruptcy Code, would have accrued), all fees due under the Loan Agreement and the other Loan Documents (including all fees that, but for the provisions of the Bankruptcy Code, would have accrued), and all other amounts payable by any Borrower to any member of the Lender Group thereunder or in connection therewith, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or undetermined and (ii) any

2

future secured indebtedness incurred by SGI permitted under: (A) the Loan Documents (if in effect at the time), (B) any other agreements then outstanding restricting SGI’s ability to incur additional indebtedness and (C) under Section 4.06(e) of the Indentures, pursuant to which SGI has granted a security interest in the Collateral senior to that granted to the Trustee on behalf of holders of the Secured Notes and has designated such secured indebtedness as “Senior Priority Debt” for purposes hereof.

“Trustee” has the meaning set forth in the preamble to this Agreement.

(c)           Interpretation.  Unless the context of this Agreement clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the term “including” is not limiting, the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or,” and any provision that is set forth herein as part of a list or series is to be construed in a manner that does not result in duplication of any other provision in such list or series.  The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement refer to this Agreement as a whole and not to any particular provision of this Agreement.  Section, subsection, clause, schedule, and exhibit references herein are to this Agreement unless otherwise specified.  Any reference in this Agreement to any agreement, instrument, or document shall include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable (subject to any restrictions on such alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements set forth herein).  References to statutes or regulations are to be construed as including all statutory and regulatory provisions consolidating, amending, or replacing the statute or regulation referred to.  The captions and headings are for convenience of reference only and shall not affect the construction of this Agreement.

SECTION 2        Lien Priorities

(a)           The Junior Priority Security Interest obtained by Trustee in the Collateral and any such Junior Priority Security Interest that heretofore has been, is now, or is hereafter retained or obtained, shall at all times be junior to the Senior Priority Security Interest heretofore, now or hereafter granted to or obtained by the Lender Group or other holder or representative of Senior Priority Debt, and Trustee hereby agrees, whenever requested by the Agent, to execute such documents and instruments, in form reasonably acceptable to the Agent and its counsel, and suitable for filing in the appropriate governmental office, confirming the superiority of the Senior Priority Security Interest in the Collateral to the Junior Priority Security Interest in the Collateral.

(b)           The priorities specified herein are applicable irrespective of the time or order of attachment or perfection of the respective security interests or the time or order of the filing of any Financing Statements or other similar documents, or the time or order of recordation of any mortgage, deed of trust, or other similar document, or the time or order of the giving of value to support the security agreements, any mortgage, deed of trust, or other similar documents, or the giving or failure to give notice of the advance of any sums by the Lender Group or other holder of Senior Priority Debt (the “Priority Lender Group”) to any Borrower after the date hereof, or the giving or failure to give notice of the acquisition of additional

3

security interests or liens, or any statutes, rules of law, or court decisions to the contrary, or the time or order of the giving of value to support the security agreements.

SECTION 3        Exercise of Remedies.  Until the indefeasible payment and performance in full of all of the Senior Priority Debt, the Priority Lender Group may dispose of any or all of the Collateral free and clear of the Junior Priority Security Interest collateralizing obligations due from Borrowers, or any of them, to Trustee, through judicial or non-judicial proceedings, in accordance with applicable law, including taking title in lieu of foreclosure.  Trustee hereby agrees that any such or other disposition by the Priority Lender Group of the Collateral shall be free and clear of the Junior Priority Security Interest granted by Borrowers or any of them, provided the entire proceeds (after deducting reasonable costs, attorneys’ fees and other expenses of sale) are applied first in reduction of the Senior Priority Debt.  Trustee retains all of its rights as a junior priority secured creditor with respect to the surplus, if any, arising from any such disposition of the Collateral.

SECTION 4        Subordination of Remedies.  Until such time as the Trustee has received written notice of the termination of this Agreement, Trustee shall not, without the prior written consent of Agent:

(a)           foreclose upon or otherwise enforce any Junior Priority Security Interest; or

(b)           indirectly or directly collect, or attempt to collect from, or notify or communicate with any of, any Borrower’s Account Debtors or obligors on any Collateral concerning any indebtedness owed to any Borrower without the prior written consent of Agent, nor may Trustee exercise any of its rights with respect to any of the Collateral, including but not limited to the institution of any lawsuits, whether or not any Borrower is then in default of any of its obligations to Trustee or any holder of the Secured Notes.

SECTION 5        Management and Sale of Collateral and Insurance Proceeds.

(a)           Management of Collateral.  Until Trustee has received written notice of termination of this Agreement, Agent shall have the exclusive right to manage, perform and enforce the terms of the Loan Documents or other agreement evidencing or governing the Senior Priority Debt (the “Priority Loan Documents”) with respect to the Collateral and to exercise and enforce all privileges and rights thereunder according to its discretion and the exercise of its business judgment, including, without limitation, the exclusive right to enforce or settle insurance claims, take or retake control or possession of such Collateral and to hold, prepare for sale, process, sell, lease, dispose of, or liquidate such Collateral.  In connection therewith, Trustee waives any and all rights to affect the method or challenge the appropriateness of any action by Agent.

(b)           Sale of Collateral.  Notwithstanding anything to the contrary contained in either of the Indentures, until such time as the Trustee has received written notice of termination of this Agreement, only Agent shall have the right to restrict or permit, or approve or disapprove, the sale, transfer or other disposition of Collateral.  Trustee will, promptly upon the request of Agent, release or otherwise terminate its Liens upon the Collateral, to the extent such Collateral

4

is sold or otherwise disposed of either by Agent, its agents or any Borrower with the consent of Agent, and Trustee will promptly deliver such release documents as Agent may require in connection therewith; provided, however, that Agent and Trustee shall retain its Lien upon the proceeds of such Collateral.

(c)           Insurance Proceeds.  Until Trustee has received written notice of termination of this Agreement, Agent, as the holder of the Senior Priority Security Interest on the Collateral insured, shall have the sole and exclusive right, as against Trustee, to adjust settlement of insurance claims in the event of any covered loss, theft or destruction of such Collateral.  Until Trustee has received written notice of termination of this Agreement, all proceeds of such insurance shall inure to Agent, to the extent of Agent’s claim, and thereafter to Borrowers and Trustee, to the extent of Trustee’s claim, in accordance with the terms of the Indentures.  Trustee shall cooperate (if necessary) in a reasonable manner in effecting the payment of insurance proceeds to Agent.  In the event Agent, in its sole discretion or pursuant to agreement with any Borrower, permits Trustee to utilize the proceeds of insurance to replace Collateral, the consent of Agent thereto shall be deemed to include the consent of Trustee.

SECTION 6        Certain Agreements of Trustee.

(a)           No Interference.  Trustee acknowledges that Borrowers have granted to the Priority Lender Group security interests in certain of Borrowers’ assets, and agrees not to interfere with or in any manner oppose a disposition of any Collateral by the Priority Lender Group in accordance with the Loan Documents and applicable law.

(b)           Prohibition on Contesting Liens.   Each of the Trustee, for itself and on behalf of each Secured Noteholder, and the Agent, for itself and on behalf of the Priority Lender Group, agrees that it shall not (and hereby waives any right to) contest or support any other Person in contesting, in any proceeding (including in connection with any Insolvency Event), the priority, validity or enforceability of a Lien held by the Priority Lender Group in the Collateral or by the Secured Noteholders in the Collateral, as the case may be.  Trustee agrees that it will not contest the validity, perfection, priority or enforceability of the Liens of Agent in the Collateral and that as between Trustee and Agent, the terms of this Agreement shall govern even if part or all of the Senior Priority Debt or the Senior Priority Security Interest securing payment and performance thereof or part or all of the Secured Notes or the Junior Priority Security Interest securing payment and performance thereof, are avoided, disallowed, set aside or otherwise invalidated in any judicial proceeding or otherwise.

(c)           Reliance by Priority Lender Group.  Trustee acknowledges and agrees that the Priority Lender Group will have relied upon and will continue to rely upon the lien priority provisions provided for herein and the other provisions hereof in making or issuing the Advances, the Letters of Credit, or other financial accommodations under the Priority Loan Documents.

(d)           Obligations of Borrowers Not Affected.  Trustee hereby agrees that at any time and from time to time, without notice to or the consent of Trustee, without the Priority Lender Group incurring responsibility to Trustee, and without impairing or releasing the lien priority provided for herein or otherwise impairing the rights of the Priority Lender Group

5

hereunder: (i) the time for Borrowers’ performance of or compliance with any of their agreements contained in the Loan Documents may be extended or such performance or compliance may be waived by the Priority Lender Group; (ii) the agreements of Borrowers with respect to the Loan Documents may from time to time be modified by Borrowers and the Priority Lender Group for the purpose of adding any requirements thereto or changing in any manner the rights and obligations of Borrowers or the Priority Lender Group thereunder; (iii) the manner, place, or terms for payment of Senior Priority Debt or any portion thereof may be altered or the terms for payment extended, or the Senior Priority Debt may be renewed in whole or in part; (iv) the maturity of the Senior Priority Debt may be accelerated in accordance with the terms of any present or future agreement by Borrowers and the Priority Lender Group; (v) any Collateral may be sold, exchanged, released, or substituted and any Lien in favor of the Priority Lender Group may be terminated, subordinated, or fail to be perfected or become unperfected; (vi) any Person liable in any manner for Senior Priority Debt may be discharged, released, or substituted; and (vii) all other rights against any Borrower, any other Person, or with respect to any Collateral may be exercised (or the Priority Lender Group may waive or refrain from exercising such rights).

(e)           Rights of Priority Lender Group Not to Be Impaired.  No right of the Priority Lender Group to enforce the lien priority provided for herein or to exercise its other rights hereunder shall at any time in any way be prejudiced or impaired by any act or failure to act by any Borrowers or the Priority Lender Group hereunder or under or in connection with the other Priority Loan Documents or by any noncompliance by any Borrower with the terms and provisions and covenants herein or in any other Loan Document, regardless of any knowledge thereof the Priority Lender Group may have or otherwise be charged with.

(f)            Financial Condition of Borrower.  Trustee shall not have any right to require the Priority Lender Group to obtain or disclose any information with respect to:  (i) the financial condition or character of any Borrower or the ability of any Borrower to pay and perform Senior Priority Debt; (ii) the Senior Priority Debt; (iii) the Collateral or other security for any or all of the Senior Priority Debt; (iv) the existence or nonexistence of any guarantees of, or any other subordination agreements with respect to, all or any part of the Senior Priority Debt; (v) any action or inaction on the part of the Priority Lender Group or any other Person; or (vi) any other matter, fact, or occurrence whatsoever.

(g)           Acquisition of Liens or Guaranties.   Other than as otherwise permitted under this Agreement, Trustee shall not, without the prior consent of Agent, acquire any right or interest in or to any Collateral.

(h)           Section 9-611 Notice and Waivers.  Trustee acknowledges that this Agreement shall constitute notice of Agent’s interests in the Collateral as provided by Section 9-611 of the Code, and Trustee hereby waives any right to compel any marshaling of any of the Collateral.  Except as provided under the Priority Loan Documents, Trustee hereby waives any and all notice of the incurrence of the Senior Priority Debt or any part thereof.

SECTION 7        Representations and Warranties.  Trustee hereby represents and warrants to Agent that:

6

(a)           Authority.  It has the right, power and authority to execute and deliver, and to perform its obligations under, this Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Agreement;

(b)           Binding Agreement.  This Agreement constitutes a legal, valid and binding obligation of Trustee enforceable in accordance with its terms, except as affected by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar laws relating to or affecting the enforcement of creditors’ rights generally;

(c)           No Violation of Applicable Laws.  The execution, delivery and performance of this Agreement by Trustee will not violate any state or federal statutes, rules, regulations, orders and directives applicable to the banking or trust powers of Trustee or any agreement to which Trustee is a party;

(d)           Consents.  No consent or authorization of, filing with, or other act by or in respect of, any arbitrator or Governmental Authority of the State of California or the United States, in either case governing the banking or trust powers of Trustee, and no consent of any other Person is required under the laws of the State of California or the United States governing the banking or trust powers of Trustee in connection with the execution, delivery, performance, validity or enforceability of this Agreement;

(e)           No Litigation.  No litigation, investigation or proceeding of or before any arbitrator or Governmental Authority is pending or, to the knowledge of Trustee, threatened against Trustee which, in any way, relates to any Borrower, any of the Junior Priority Debt or any Lien securing any of the Junior Priority Debt or could adversely affect the ability of Trustee to perform this Agreement in any respect;

(f)            No Cross-Default.  The Indentures do not and will not provide that any default thereunder is triggered by a default under any other agreement to which any Borrower is a party, except for the Senior Convertible Note relating to the Senior Convertible Notes;

(g)           No Assignments.  Trustee has not assigned: (i) any interest in any of the Junior Priority Debt; (ii) any Lien securing any of the Junior Priority Debt; or (iii) any interest in the Indentures; and

(h)           No Other Secured Parties No Person, other than Trustee, has: (i) any interest in any of the Junior Priority Debt, except the holders of the Secured Notes; or (ii) any Lien securing any of the Junior Priority Debt or the Indentures (whether as joint holders of the Junior Priority Debt, participants or otherwise).  All of the Junior Priority Debt is owing only to Trustee, on behalf of the holders of the Secured Notes.

SECTION 8        Rights As Unsecured Creditors.  Notwithstanding anything to the contrary in this Agreement, the Trustee and the Secured Noteholders may exercise rights and remedies as unsecured creditors against the Borrowers in accordance with the terms of the Indenture and applicable law.  Nothing in this Agreement shall prohibit the receipt by the Trustee or any Secured Noteholders of the required payments of interest and principal on the Secured Notes so long as such receipt is not the direct or indirect result of the exercise by the Trustee or any of the Secured Noteholders of rights and remedies as a secured creditor or enforcement of

7

any Lien held by any of them in contravention of this Agreement.  In the event that the Trustee or any Secured Noteholders becomes a judgment lien creditor in respect of Collateral as a result of its enforcement of its rights as an unsecured creditor, such judgment lien shall be subject to the terms of this Agreement for all purposes (including in relation to the Priority Lender Group Liens) as the other Liens securing the claims of the Secured Noteholders subject to this Agreement.  Nothing in this Agreement modifies any rights or remedies the Priority Lender Group may have with respect to the Collateral.

SECTION 9        Continuing Agreement; Reinstatement.

(a)           Continuing Agreement.  This Agreement is a continuing agreement of lien priority and shall continue in effect and be binding upon Trustee until payment and performance in full in cash of the Senior Priority Debt.  The subordinations, agreements, and priorities set forth herein shall remain in full force and effect regardless of whether any party hereto in the future seeks to rescind, amend, terminate, or reform, by litigation or otherwise, its respective agreements with any Borrower.

(b)           Reinstatement.  This Agreement shall continue to be effective or shall be reinstated, as the case may be, if, for any reason, any payment of the Senior Priority Debt by or on behalf of any Borrower shall be rescinded or must otherwise be restored by the Priority Lender Group, whether as a result of an Insolvency Event or otherwise.

(c)           Bankruptcy Financing Issues.  This Agreement shall continue in full force and effect after the filing of any petition (“Petition”) by or against any Borrower under the Bankruptcy Code and all converted or succeeding cases in respect thereof.  All references herein to any Borrower shall be deemed to apply to such Borrower as debtor-in-possession and to a trustee for any Borrower.  If any Borrower shall become subject to a proceeding under the Bankruptcy Code:

(i)            If Agent shall desire to permit the use of cash collateral or to provide post-Petition financing from Agent to any Borrower under the Bankruptcy Code, Trustee agrees as follows:  (1) adequate notice to Trustee shall be deemed to have been provided for such post-Petition financing if Trustee receives notice thereof at least three (3) business days (or such shorter notice as is given to Agent) prior to the earlier of (a) any hearing on a request to approve such post-Petition financing or (b) the date of entry of an order approving the same; and (2) no objection will be raised by Trustee to any such use of cash collateral or such post-Petition financing from Agent.

(ii)           Trustee shall not extend credit or otherwise provide any post-Petition financing to any Borrower pursuant to which, or as a result of which, Trustee’s Lien on any Borrower’s assets would be equal or superior to, or have priority over, Agent’s Lien, in contravention of this Agreement. Trustee shall not on behalf of itself or the holders of the Secured Notes propose or approve a plan of reorganization of any Borrower that will conflict with any plan of reorganization proposed by Agent or the terms of this Agreement.

SECTION 10      Successor Trustee.  Each successor Trustee under the Indentures shall execute and deliver a counterpart of and become a party to this Agreement, and no

8

replacement or resignation of the Trustee shall be effective until its successor has delivered an executed counterpart of this Agreement.

SECTION 11      Obligations of Borrowers Not Affected.  The provisions of this Agreement are intended solely for the purpose of defining the relative rights of Trustee against Borrowers, on the one hand, and of the Priority Lender Group against Trustee, on the other hand.  Nothing contained in this Agreement shall (i) impair, as between Trustee and Borrowers, the obligation of Borrowers to pay their obligations with respect to the Junior Priority Debt as and when the same shall become due and payable, or (ii) otherwise affect the relative rights of Trustee against Borrowers, on the one hand, and of the creditors (other than the Priority Lender Group) of Borrowers against Borrowers, on the other hand.

SECTION 12      Receipt of Agreements.  Trustee hereby acknowledges that it has delivered to Agent a correct and complete copy of the Indentures as in effect on the date hereof.  Agent hereby acknowledges that it has delivered to Trustee receipt of a correct and complete copy of the Loan Agreement as in effect on the date hereof.

SECTION 13      No Amendment of Indentures.  So long as the Loan Agreement remains in effect, neither Borrowers nor Trustee shall enter into any amendment to or modification of either of the Indentures or the Junior Priority Debt which is inconsistent with the terms of this Agreement.

SECTION 14      Notice of Default and Certain Events.  Until the Senior Priority Debt is paid in full in cash, Trustee shall undertake in good faith to notify Agent of the occurrence of any of the following as applicable:

(a)           the obtaining of actual knowledge of the occurrence of any default under any of the Indentures;

(b)           the acceleration of any Junior Priority Debt or any of the indebtedness payable under either of the Indentures;

(c)           the granting by Trustee of any waiver of any “default” or “event of default” under any of the Indentures; or

(d)           The payment in full by Borrowers (whether as a result of refinancing or otherwise) of all Junior Priority Debt.

SECTION 15      Endorsement of Trustee Documents; Further Assurances and Additional Acts.

(a)           Endorsement of Trustee Documents.  At the request of Agent, all documents and instruments evidencing any of the Junior Priority Debt, if any, shall be endorsed with a legend noting that such documents and instruments are subject to this Agreement, and Trustee shall promptly deliver to Agent evidence of the same.

(b)           Further Assurances and Additional Acts.  Trustee shall execute, acknowledge, deliver, file, notarize, and register at its own expense all such further agreements,

9

instruments, certificates, financing statements, documents, and assurances, and perform such acts as Agent reasonably shall deem necessary or appropriate to effectuate the purposes of this Agreement, and promptly provide Agent with evidence of the foregoing reasonably satisfactory in form and substance to Agent.

SECTION 16      Notices.  Unless otherwise provided in this Agreement, all notices or demands by the parties hereunder shall be in writing and shall be personally delivered, or sent by registered or certified mail (postage prepaid, return receipt requested), overnight courier, electronic mail (at such email addresses as any party hereto, as applicable, may designate to each other in accordance herewith), or telefacsimile to any party hereto as the case may be, at its address set forth below:

Borrowers:	c/o Silicon Graphics, Inc. 1600 Amphitheatre Parkway Mountain View, California 94043 Attn: Jean Furter, Vice President and Treasurer Fax No.: (650) 932-0660 Telephone No.: (650) 980-1860 Email address: jean@sgi.com
If to Agent:	c/o Wells Fargo Foothill, Inc. 2450 Colorado Avenue, Suite 3000 West Santa Monica, California  90404 Attn:  Business Finance Division Manager and Tom Shughrue Fax No.: (310) 478-9788 Telephone No.: (310) 453-7300 Email address: Tshughrue@wffoothill.com
with a copy to:	Jeffer, Mangels, Butler & Marmaro LLP 1900 Avenue of the Stars, 7th Floor Los Angeles, California  90067 Attn:  Joel J. Berman, Esq. Fax No.: (310) 203-0567 Telephone No.: (310) 203-8080 Email address:  jjb@jmbm.com

10

If to Trustee: U.S. Bank National Association
633 West Fifth Street, 24^th Floor,
LM-CA-T24T
Los Angeles, California  90071
Attn: Corporate Trust Services (Silicon
Graphics, Inc.)
Fax No.: (213) 615-6197
Telephone No.: (213) 615-6043
Email address:  paula.oswald@usbank.com

Any party may change the address at which it is to receive notices hereunder, by notice in writing in the foregoing manner to the other parties.  All notices or demands sent in accordance with this Section 16, other than notices by Agent in connection with enforcement rights against the Collateral under the provisions of the Code, shall be deemed received on the earlier of the date of actual receipt or 3 Business Days after the deposit thereof in the mail.  Borrowers and Trustee each acknowledge and agree that notices sent by the Priority Lender Group in connection with the exercise of enforcement rights against Collateral under the provisions of the Code shall be deemed sent when deposited in the mail or personally delivered, or, where permitted by law, transmitted by telefacsimile or any other method set forth above.  Notwithstanding the foregoing, notices to the Trustee shall be effective upon receipt.

SECTION 17      No Waiver; Cumulative Remedies.  No failure on the part of the Priority Lender Group to exercise, and no delay in exercising, any right, remedy, power, or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, remedy, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, remedy, power, or privilege.  The rights and remedies under this Agreement are cumulative and not exclusive of any rights, remedies, powers, and privileges that may otherwise be available to the Priority Lender Group.

SECTION 18      Costs and Expenses.

(a)           Payments by Borrowers.  Borrowers agree to pay to Agent on demand the costs and expenses of the Priority Lender Group, and the fees and disbursements of counsel to Agent, in connection with the negotiation, preparation, execution, delivery, and administration of this Agreement, and any amendments, modifications, or waivers of the terms thereof.

(b)           Payment of Fees and Costs of Agent and Trustee.  If either Agent or Trustee institutes any legal proceeding arising from or relating to this Agreement, the prevailing party in such legal proceeding shall be entitled to recover all of its expenses from the non-prevailing party, including without limitation all of its expenses and the fees and disbursements of counsel, in connection with such proceeding and the enforcement or attempted enforcement of, and preservation of rights or interests under, this Agreement.

SECTION 19      Survival.  All covenants, agreements, representations and warranties made in this Agreement shall, except to the extent otherwise provided herein, survive the execution and delivery of this Agreement, and shall continue in full force and effect so long

11

as any Senior Priority Debt remains unpaid.  Without limiting the generality of the foregoing, the obligations of Trustee under Section 18 shall survive the satisfaction of the Senior Priority Debt.

SECTION 20      Benefits of Agreement.  This Agreement is entered into for the sole protection and benefit of the parties hereto and their successors and assigns, and no other Person shall be a direct or indirect beneficiary of, or shall have any direct or indirect cause of action or claim in connection with, this Agreement.

SECTION 21      Binding Effect.  This Agreement shall be binding upon, inure to the benefit of and be enforceable by Trustee and the Priority Lender Group and their respective successors and permitted assigns.

SECTION 22      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF CALIFORNIA.

SECTION 23      SUBMISSION TO JURISDICTION.  BORROWERS AND TRUSTEE EACH HEREBY (i) SUBMITS TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF CALIFORNIA AND THE FEDERAL COURTS OF THE UNITED STATES SITTING IN THE COUNTY OF LOS ANGELES, STATE OF CALIFORNIA, FOR THE PURPOSE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT, (ii) AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH COURTS, OR AT THE SOLE OPTION OF AGENT, IN ANY OTHER COURT IN WHICH AGENT SHALL INITIATE LEGAL OR EQUITABLE PROCEEDINGS AND WHICH HAS SUBJECT MATTER JURISDICTION OVER THE MATTER IN CONTROVERSY, (iii) IRREVOCABLY WAIVES (TO THE EXTENT PERMITTED BY APPLICABLE LAW) ANY OBJECTION WHICH IT NOW OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY OF THE FOREGOING COURTS, AND ANY OBJECTION ON THE GROUND THAT ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM AND (iv) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PERMITTED BY LAW.

SECTION 24      WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF AGENT, TRUSTEE OR SGI OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENTS OR AGREEMENT EXECUTED OR DELIVERED BY THEM IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE AND EACH PARTY HERETO

12

HEREBY AGREES AND CONSENTS THAT ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT JURY, AND THAT ANY OF THEM MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THEIR CONSENT TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

SECTION 25      Entire Agreement; Amendments and Waivers.

(a)           Entire Agreement.  This Agreement constitutes the entire agreement of each of the parties hereto with respect to the matters set forth herein and supersedes any prior agreements, commitments, drafts, communications, discussions, and understandings, oral or written, with respect thereto.

(b)           Amendments and Waivers.  No amendment to any provision of this Agreement shall in any event be effective unless the same shall be in writing and signed by each of the parties hereto; and no waiver of any provision of this Agreement, or consent to any departure by Agent therefrom, shall in any event be effective unless the same shall be in writing and signed by Agent.  Any such amendment, waiver, or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 26      Conflicts.  In case of any conflict or inconsistency between any terms of this Agreement, on the one hand, and any documents or instruments in respect of the Senior Priority Debt or the Junior Priority Debt, on the other hand, then the terms of this Agreement shall control.

SECTION 27      Severability.  Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under all applicable laws and regulations.  If, however, any provision of this Agreement shall be prohibited by or invalid under any such law or regulation in any jurisdiction, it shall, as to such jurisdiction, be deemed modified to conform to the minimum requirements of such law or regulation, or, if for any reason it is not deemed so modified, it shall be ineffective and invalid only to the extent of such prohibition or invalidity without affecting the remaining provisions of this Agreement or the validity or effectiveness of such provision in any other jurisdiction.

SECTION 28      Interpretation.  This Agreement is the result of negotiations among, and has been reviewed by the respective counsel to, each of the parties hereto and is the product of all parties hereto.  Accordingly, this Agreement shall not be construed against the Priority Lender Group merely because of the Priority Lender Group’s involvement in the preparation hereof.  The obligations of each Borrower hereunder shall be joint and several.

SECTION 29      Counterparts; Telefacsimile Execution.  This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which, when so executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same agreement.  Delivery of an executed counterpart of this Agreement by telefacsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpart of this Agreement by telefacsimile also shall deliver an original executed counterpart

13

of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

SECTION 30      Rights to Specific Performance.  Agent absolutely, irrevocably and unconditionally hereby is authorized to demand, receive and obtain specific performance of this Agreement at any time when Trustee has failed to comply with any of the provisions of this Agreement. Trustee absolutely, irrevocably and unconditionally hereby waives and relinquishes any defense based on the adequacy of a remedy at law which might be asserted as a bar to such remedy of specific performance.

SECTION 31      Termination of Agreement.  Upon payment and performance in full in cash of the Senior Priority Debt, this Agreement shall terminate and Agent shall promptly execute and deliver to Trustee such documents and instruments as shall be reasonably necessary to evidence such termination; provided, however, that the obligations of Trustee under Section 18 shall survive such termination.

14

IN WITNESS WHEREOF, the undersigned have caused their respective duty authorized officers to execute and deliver this Agreement as of the date first written above.

TRUSTEE:

U.S. BANK NATIONAL ASSOCIATION, a national
banking association organized and existing under the
laws of the United States of America

By:

Title: Vice President

AGENT:

WELLS FARGO FOOTHILL, INC,

a California corporation, as Administrative Agent

By:

Title:

CONSENTED AND AGREED TO:

BORROWERS:

SILICON GRAPHICS, INC., a Delaware corporation

By:

Title:

SILICON GRAPHICS FEDERAL, INC.,

a Delaware corporation

By:

Title:

15

EX-4.5

Exhibit 4.5

SECURITY AGREEMENT

This SECURITY AGREEMENT, dated as of December [    ], 2003 (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Agreement”), is made by SILICON GRAPHICS, INC., a Delaware corporation (the “Grantor”), in favor of U.S. BANK NATIONAL ASSOCIATION, in its capacity as Trustee and  for the benefit of the Noteholders (such capitalized terms to have the meanings set forth in Article I).

W I T N E S S E T H :

WHEREAS, the Grantor, Wells Fargo Foothill, Inc. (as successor in interest to Foothill Capital Corporation), as Arranger and Administrative Agent (and together with any successor(s) thereto in such capacity, the “Administrative Agent”) and certain financial institutions (collectively, the “Lender Group”), are parties to the Amended and Restated Loan and Security Agreement, dated as of September 24, 2002 and amended on April 11, 2003 and September 17, 2003 (as further amended, supplemented, amended and restated or otherwise modified from time to time, the “Loan Agreement”), among the Grantor, its subsidiaries signatory thereto, the Lender Group, the Administrative Agent and Bank of America, N.A., as the Documentation Agent;

WHEREAS, the Grantor and U.S. Bank National Association, as Trustee (in such capacity, the “Trustee”) are parties to (i) that certain indenture, dated as of the date hereof (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Secured Convertible Note Indenture”), pursuant to which the Grantor is issuing 6.50% Senior Secured Notes due 2009 (the “Secured Convertible Notes”), and (ii) that certain Indenture, dated as of the date hereof (as amended, supplemented, amended and restated or otherwise modified from time to time, the “Secured Note Indenture”, and, together with the Secured Convertible Note Indenture, the “Indentures”), pursuant to which the Grantor is issuing 11.75% Senior Secured Notes due 2009 (the “Secured Notes” and, together with the Secured Convertible Notes, the “Notes”) in an aggregate principal amount of up to $230,591,000;

WHEREAS, pursuant to the Indentures, the Grantor is required to execute and deliver this Agreement;

WHEREAS, the Grantor, the Trustee and the Administrative Agent have entered into an Intercreditor Agreement, dated as of the date hereof (as further

amended, supplemented, amended and restated or otherwise modified from time to time, the “Foothill Intercreditor Agreement”); and

WHEREAS pursuant to the terms of the Indentures and subject to the terms of the Intercreditor Agreement, U.S. Bank National Association, in its capacity as Trustee has agreed to accept the pledge and assignment and the grant of a security interest in the Collateral under this Agreement as security for the Notes.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Trustee to enter into the Indentures and to induce holders of the Grantor’s 5.25% Senior Convertible Notes due 2004 (the “Old Notes”) to exchange the Old Notes for the Notes, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

SECTION 1.1.  Certain Terms.  The following terms when used in this Agreement, including its preamble and recitals, shall have the following meanings (such definitions to be equally applicable to the singular and plural forms thereof):

“Account Debtor” means any Person who is or who may become obligated under, with respect to, or on account of, any Account, General Intangible Collateral or Negotiable Property Collateral.

“Accounts” means all of the Grantor’s now owned or hereafter acquired right, title, and interest with respect to “accounts” (as that term is defined in the Code), and any and all supporting obligations in respect thereof, and as for which the Account Debtor obligated thereon maintains its chief executive office in the United States or is organized under the laws of the United States or any state thereof.

“Additional Documents” has the meaning set forth in Section 3.6.

“Administrative Agent” is defined in the first recital to this Agreement and includes any successor thereto exercising substantially the same rights and powers and any representative of lenders to whom the Grantor has granted a Senior Priority Lien on the Collateral as permitted under the Indentures .

“Agreement” is defined in the preamble to this Agreement.

“Books” means all of the Grantor’s now owned or hereafter acquired books and records (including all of its Records indicating, summarizing, or

2

evidencing its assets (including the Collateral) or liabilities, all of its Records relating to its business operations or financial condition, and all of its goods or General Intangibles related to such information), excluding (y) books and records relating to (i) General Intangibles other than General Intangibles described above in this definition or in clause (f) of the definition of “Collateral” or (ii) Real Property, or (z) any of the foregoing which is located outside of the United States.

“Code” means the New York Uniform Commercial Code, as in effect from time to time.

“Collateral” means, except for the Excluded Intellectual Property, all of the Grantor’s now owned or hereafter acquired right, title, and interest in and to each of the following:

(a)Accounts,

(b)Books,

(c)Equipment,

(d)IP Collateral,

(e)Inventory,

(f)Negotiable Property,

(g)money of the Grantor that now or hereafter comes into the possession, custody or control of the Trustee,

(h)the proceeds and products, whether tangible or intangible, of any of the foregoing described in clauses (a) through (g) above, including (x) proceeds of insurance covering any or all of the foregoing, and (y) any and all Accounts, Books, Equipment, IP Collateral, General Intangibles, Inventory, Investment Property, Negotiable Property, Real Property, money, deposit accounts, or other tangible or intangible property, solely to the extent, in the case of each of the foregoing clauses (x) and (y), resulting from the sale, exchange, collection, or other disposition of any of the foregoing described in clauses (a) through (g) above, or any portion thereof or interest therein, and the proceeds thereof; provided, however, that Collateral shall not include (A) such General Intangibles:  (i) which cannot be subject to a consensual security interest in favor of Trustee without the consent of the licensor or other party thereto, (ii) as to which any such restriction described in clause (i) is effective and enforceable under applicable law including Section 9-318(4) of the Code or Section 9-408 of Article 9 of the Code, and (iii) to which such consent described in clause (i) has not been obtained by the party granting the security interest and (B) anyproperty not subject to a Senior Priority Lien, other

3

than any such property that was, immediately prior to the discharge of such Senior Priority Lien Obligations, subject to a Senior Priority Lien, except to the extent that such property, or any portion thereof, was disposed of in order to repay Senior Priority Lien Obligations.

“Collections” means all cash, checks, notes, instruments, and other items of payment (including insurance proceeds, proceeds of cash sales, rental proceeds, and tax refunds) of Grantor, but excluding any of the foregoing directly arising out of the disposition of Real Property or any patent, trademark or copyright of the Grantor.

“Copyrights” means all of the Grantor’s right, title and interest in and to copyrights in works of authorship of any kind, and all registration applications, registrations and recordings thereof in the Office of the United States Register of Copyrights, Library of Congress, or in any similar office or agency of any country or political subdivision thereof throughout the world, whether now owned or hereafter acquired by such Grantor, including those described in Schedule 5.16A annexed hereto and made a part hereof, together with all extensions, renewals, reversionary rights, and corrections thereof and all licenses thereof or pertaining thereto.

“Equipment” means all of the Grantor’s now owned or hereafter acquired right, title, and interest with respect to equipment, machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles (including motor vehicles), tools, parts, spare parts, goods (other than consumer goods, farm products, or Inventory), including all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, in each case to the extent that any of the foregoing is located anywhere within the United States.

“Excluded Intellectual Property” means each Patent, Trademark and Copyright presently owned by the Grantor and listed on Schedule 5.16B.

“General Intangibles” means all of the Grantor’s now owned or hereafter acquired right, title, and interest with respect to general intangibles (including payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill, patents, trade names, trademarks, servicemarks, copyrights, blueprints, drawings, purchase orders, customer lists, monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, money, deposit accounts, insurance premium rebates, tax refunds, and tax refund claims), and any and all supporting obligations in respect thereof, and any other personal property other than goods, Accounts, Books, Inventory, Equipment Investment Property, and Negotiable Property.

4

“General Intangibles Collateral” means that portion of the General Intangibles which is included in the Collateral as proceeds of other Collateral.

“Grantor” is defined in the preamble to this Agreement.

“Intellectual Property Security Agreement” means an intellectual property security agreement executed and delivered by the Grantor and Trustee, the form and substance of which is satisfactory to the Trustee.

“Intercreditor Agreement” means (i) the Foothill Intercreditor Agreement defined in the fourth recital to this Agreement and (ii) any agreement entered into among Grantor, the Trustee and any lender or holder of Senior Priority Debt (or its representative) to whom the Grantor has granted a senior security interest in the Collateral pursuant of Section 4.06(e) of the Indentures.

“Inventory” means all Grantor’s now owned or hereafter acquired right, title, and interest with respect to inventory, including goods (and any software embedded therein or otherwise included therewith and all rights to such software) held for sale or lease or to be furnished under a contract of service, goods that are leased by the Grantor as lessor, goods that are furnished by the Grantor under a contract of service, and raw materials, work in process, or materials used or consumed in the Grantor’s business, in each case to the extent that any of the foregoing is located anywhere in the United States.

“Investment Property” means all of the Grantor’s now owned or hereafter acquired right, title, and interest with respect to “investment property” as that term is defined in the Code, and any and all supporting obligations in respect thereof.

“IP Collateral” means collectively, the Patent Collateral, Trademarks and Copyrights.

“Junior Priority Debt” means all indebtedness, liabilities and other obligations of Grantor owing to Trustee, in respect of the Notes, whether now existing or hereafter arising, and whether due or to become due, absolute or contingent, liquidated or unliquidated, determined or underdetermined, including all fees and all other amounts payable by Grantor to Trustee under or in connection with any documents or instruments related thereto.

“Junior Priority Security Documents” means, collectively, this Agreement, the Intellectual Property Security Agreement, and all other security agreements, pledges, collateral assignments, mortgages or other instruments evidencing or creating any security interests in favor of the Trustee, for the benefit of the Noteholders, in all or any portion of the Collateral, in each case, as

5

amended, amended and restated, supplemented, replaced or otherwise modified from time to time, in accordance with the terms thereof.

“Negotiable Property Collateral” means that portion of the Negotiable Property which is included in the Collateral as proceeds of other Collateral.

“Noteholder” means any holder of the Secured Notes or Secured Convertible Notes.

“Noteholder Documents” means the Indentures, the Notes, this Agreement, the other Junior Priority Security Documents and the Intercreditor Agreement.

“Patent Collateral” means all of the Grantor’s right, title and interest in and to all registrations and recordings in the United States Patent and Trademark Office described in Schedule 5.16A, together with all re-examinations, reissues, continuations, continuations-in-part, divisions, improvements and extensions thereof and all licenses thereof or pertaining thereto and all licenses of patent rights to the Grantor now in effect or entered into during the term of this Agreement and the rights to make, use and sell, and all other rights with respect to, the inventions disclosed or claimed therein, all inventions, designs, proprietary or technical information, know-how, other data or information, software, databases, all embodiments or fixations thereof and related documentation, all information pertaining to the foregoing having value in connection with the Grantor’s business and all other trade secret pertaining to the foregoing rights not described above.

“Person” means natural persons, corporations, limited liability companies, limited partnerships, general partnerships, limited liability partnerships, joint ventures, trusts, land trusts, business trusts, or other organizations, irrespective of whether they are legal entities, and governments and agencies and political subdivisions thereof.

“Real Property” means any estates or interests in real property now owned or hereafter acquired by the Grantor and the improvements thereto.

“Record” 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.

“Senior Priority Debt” means any indebtedness incurred by the Grantor as permitted under Section 4.06(e) of the Indentures that is secured by a security interest in the Collateral senior to that granted to the Trustee on behalf of the Noteholders, including, but not limited to indebtedness incurred under the Loan Agreement.

6

“Trademarks” means all of the Grantor’s right, title and interest in and to trademarks, trade names, trade styles, service marks, logos, emblems, prints and labels, all elements of package or trade dress of goods, and all general intangibles of like nature, now existing or hereafter adopted or acquired by the Grantor, together with the goodwill of the Grantor’s business connected with the use thereof and symbolized thereby, and all registration applications, registrations and recordings thereof, including, without limitation, registration applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States or in any office of the Secretary of State (or equivalent) of any state thereof, or in any similar office or agency of any country or political subdivision thereof throughout the world, whether now owned or hereafter acquired by the Grantor, including those described in Schedule 5.16A annexed hereto and made a part hereof, together with all extensions, renewals and corrections thereof and all licenses thereof or pertaining thereto.

“Trustee” means U.S. Bank National Association and shall include any additional or successor representative of any then outstanding Notes.

SECTION 1.2.  Definitions.  Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Indentures, or, if not defined in the Indentures, the Intercreditor Agreement.

SECTION 1.3.  Code Definitions.  Unless otherwise defined herein, in the Indentures or, if not defined in the Indentures, the Intercreditor Agreement, or the context otherwise requires, terms for which meanings are provided in the Code are used in this Agreement (whether or not capitalized herein), including its preamble and recitals, with such meanings.

ARTICLE II
SECURITY INTEREST

SECTION 2.1.  Grant of Security Interest.  The Grantor hereby grants to the Trustee, for the benefit of each Noteholder, a continuing security interest in all of the Grantor’s right, title and interest in all currently existing and hereafter acquired or arising Collateral.

SECTION 2.2.  Security for Noteholder Claims.  This Security Agreement and the Collateral in which the Trustee is granted a security interest hereunder secures the payment of the Junior Priority Debt.

7

SECTION 2.3.  Grantor Remains Liable.  Anything herein to the contrary notwithstanding,

(a)the Grantor will remain liable under the contracts and agreements included in the Collateral to the extent set forth therein, and will perform all of its duties and obligations under such contracts and agreements to the same extent as if this Agreement had not been executed;

(b)the exercise by the Trustee of any of its rights hereunder will not release the Grantor from any of its duties or obligations under any such contracts or agreements included in the Collateral; and

(c)none of the Trustee or any Noteholder will have any obligation or liability under any contracts or agreements included in the Collateral by reason of this Agreement, nor will the Trustee or any Noteholder be obligated to perform any of the obligations or duties of the Grantor thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.

ARTICLE III
COVENANTS

The Grantor covenants and agrees that, at all times prior to the discharge of the Indentures or earlier release of Liens on all Collateral pursuant to Section 6.10 of this Agreement, the Grantor will perform, comply with and be bound by the obligations set forth in the Indentures and as follows:

8

SECTION 3.1.  Senior Priority Debt.  The Grantor shall furnish to the Trustee, as long as any Senior Priority Debt is outstanding, with copies of all agreements or instruments evidencing or governing the Senior Priority Debt, including copies of all schedules thereto relating to the Collateral, and all amendments, restatements, modifications, renewals, extensions or replacements thereof ; provided that documents reflecting modifications or other alterations to such agreements need only be provided to Trustee to the extent that they relate to or affect the Collateral.  Such documents shall be furnished to Trustee within five Business Days of the execution of such documents.

SECTION 3.2.  Collateral Reporting.  The Grantor shall furnish to the Trustee (i) as long as any Senior Priority Debt is outstanding, copies of any statements, schedules and reports relating to and describing the Collateral that it is required to furnish to holders of Senior Priority Debt and (ii) thereafter, such statements and schedules identifying and describing the Collateral and such other reports in connection with the Collateral as Trustee shall reasonably request.

SECTION 3.3.  Intellectual Property; IP Collateral.  The Grantor shall enter into and comply with the Intellectual Property Security Agreement in the form of Exhibit A hereto, with respect to all of the IP Collateral owned on the date hereof, and shall execute and deliver to the Trustee any other document requested by the Trustee required to acknowledge or register or perfect the Trustee’s interest in the United States in any part of such IP Collateral.

SECTION 3.4.  Assignment of Proceeds.  The Grantor shall execute and deliver to the Trustee any and all additional documents that the Trustee may reasonably request, in form and substance reasonably satisfactory to the Trustee, providing for the assignment of all proceeds to the Trustee arising from any license or royalty agreement entered into by the Grantor with respect to Grantor’s General Intangibles.

SECTION 3.5.  Collection of Accounts, etc.  At any time after the Trustee has received notice of full and indefeasible payment of all Senior Priority Debt, and after occurrence and during the continuation of an Event of Default under the Indentures, the Trustee may (i) notify Account Debtors of Grantor that the Accounts, Negotiable

9

Property Collateral and General Intangibles Collateral have been assigned to or that the Trustee has a security interest therein, or (ii) collect the Accounts, Negotiable Property Collateral and General Intangibles Collateral directly.

SECTION 3.6.  Further Assurances.  At any time upon the request of the Trustee, Grantor shall execute and deliver to the Trustee, any and all financing statements, original financing statements in lieu of continuation statements, fixture filings, security agreements, pledges, assignments, endorsements of certificates of title, and all other documents (the “Additional Documents”) that the Trustee may reasonably request, in form and substance reasonably satisfactory to the Trustee, to perfect and continue perfected or better perfect the Trustee’s Liens in the Collateral (whether now owned or hereafter arising or acquired).  To the maximum extent permitted by applicable law, Grantor authorizes the Trustee to execute any such Additional Documents in Grantor’s name and authorizes the Trustee to file such executed Additional Documents in any appropriate filing office.

SECTION 3.7.  Trustee Appointed Attorney-in-Fact.  The Grantor hereby irrevocably appoints the Trustee the Grantor’s attorney-in-fact, with full authority in the place and stead of the Grantor and in the name of the Grantor or otherwise, to (a) if Grantor refuses to, or fails timely to execute and deliver any of the documents described in Section 3.6, sign the name of Grantor on any of the documents described in Section 3.6, (b) at any time that an Event of Default has occurred and is continuing, sign Grantor’s name on any invoice or bill of lading relating to the Collateral, drafts against Account Debtors, or notices to Account Debtors, (c) send requests for verification of Accounts; provided, however, that so long as no Event of Default has occurred which is continuing, Trustee will coordinate any such verification activities with Grantor, (d) endorse Grantor’s name on any Collection item that may come into the Trustee’s possession, (e) at any time that an Event of Default has occurred and is continuing, make, settle, and adjust all claims under such Grantor’s policies of insurance and make all determinations and decisions with respect to such policies of insurance, and (f) at any time that an Event of Default has occurred and is continuing, settle and adjust disputes and claims respecting the Accounts, General Intangibles Collateral or Negotiable Property Collateral directly with Account Debtors, for amounts and upon terms that Trustee determines to be reasonable, and Trustee may cause to be executed and delivered any documents and releases that Trustee determines to be necessary.

The Grantor hereby acknowledges, consents and agrees that the power of attorney granted pursuant to this Section 3.7 is irrevocable and coupled with an interest.

SECTION 3.8.  Disposition of Collateral.  Subject to the terms of agreements and instruments governing the Senior Priority Debt, Grantor may sell, exchange, assign, lease, license or otherwise dispose of any of the Collateral; and

10

concurrently with any such sale or other disposition, the liens granted under this Agreement on the assets sold or disposed of (but not in any proceeds arising from such sale or disposition) will cease immediately without any action by the Trustee or any other secured party.  The Trustee will, at the Grantor’s expense, execute and deliver to Grantor such documents as Grantor shall reasonably request to evidence the fact that any asset so sold or disposed of is no longer subject to the security interest created by the Junior Priority Security Documents.

ARTICLE IV
SUCCESSOR TRUSTEE

(a)The Trustee has been appointed to act as such pursuant to the Noteholder Documents, with such powers, rights and obligations as are expressly delegated to it by the terms of such Noteholder Documents.  The Trustee may, subject to the terms of the Intercreditor Agreement, resign its position hereunder and under the Indentures by notifying the Grantor in accordance with the procedures set forth in Section 7.08 of  the Indentures and a successor Trustee will be appointed in accordance with the procedures set forth in the Indentures; provided that, if  Trustee resigns or is removed from its position pursuant to Section 7.08 of the Indentures, then it will also be deemed to have resigned as Trustee under this Agreement;

(b)Upon the acceptance of its appointment as Trustee hereunder and under the Indentures, (i) a successor Trustee shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Trustee, and the retiring Trustee shall be discharged from its duties and obligations hereunder, and (ii) the retiring Trustee shall promptly transfer all Collateral within its possession or control to the possession or control of the successor Trustee and shall execute and deliver such notices, instructions and assignments as may be necessary or desirable to transfer the rights of the Trustee in respect of the Collateral to the successor Trustee.

ARTICLE V
REMEDIES

SECTION 5.1.  Certain Remedies.  Subject to the Intercreditor Agreement, if any Event of Default under the Indentures shall have occurred and be continuing, the Trustee may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the

11

rights and remedies of a secured party on default under the Code (whether or not the Code applies to the affected Collateral) and also may

(a)without notice to or demand upon Grantor, make such payments and do such acts as Trustee considers necessary or reasonable to protect its security interests in the Collateral.  Grantor agrees to assemble the Collateral if Trustee so requires, and to make the Collateral available to Trustee at a place that Trustee may designate which is reasonably convenient to both parties.  Grantor authorizes Trustee to enter the premises where the Collateral is located, to take and maintain possession of the Collateral, or any part of it, and to pay, purchase, contest, or compromise any Lien that in Grantor’s determination appears to conflict with the Trustee’s Liens (other than the Liens securing Senior Priority Debt) and to pay all expenses incurred in connection therewith.  With respect to any of Grantors’ owned or leased premises, Grantor hereby grants Trustee a license to enter into possession of such premises and to occupy the same, without charge, in order to exercise the Noteholder’s rights or remedies provided herein, at law, in equity, or otherwise;

(b)Trustee may (a) notify Account Debtors of Grantor that the Accounts, General Intangibles Collateral and Negotiable Property Collateral of Grantor have been assigned to Trustee or that Trustee has a security interest therein, or (b) collect such Accounts, General Intangibles Collateral and Negotiable Property Collateral directly and charge the collection costs and expenses to the Grantor.  Grantor agrees that it will hold in trust for Trustee any Collections that it receives and immediately will deliver said Collections to Trustee in their original form as received by Grantor;

(c)hold, as cash collateral, any and all balances and deposits of Grantor held by the Trustee to secure the full and final repayment of all of the Junior Priority Debt;

(d)ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for sale, and sell (in the manner provided for herein) the Collateral.  Grantor hereby grants to Trustee a license or other right to use, without charge, Grantor’s software (including all rights thereto as owner or licensee thereof), labels, patents, copyrights, trade secrets, trade names, trademarks, service marks, and advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and Grantor’s rights under all licenses and all franchise agreements shall inure to the Trustee and the Noteholders’ benefit;

12

(e)sell the Collateral at either a public or private sale, or both, by way of one or more contracts or transactions, for cash or on terms, in such manner and at such places (including Grantors’ premises) as Trustee determines is commercially reasonable.  It is not necessary that the Collateral be present at any such sale;

(f)Trustee shall give notice of the disposition of the Collateral as follows:

(i)Trustee shall give Grantor a notice in writing of the time and place of public sale, or, if the sale is a private sale or some other disposition other than a public sale is to be made of the Collateral, the time on or after which the private sale or other disposition is to be made; and

(ii)The notice shall be personally delivered or mailed, postage prepaid, to Grantor as provided in Section 6.4, at least 10 days before the earliest time of disposition set forth in the notice; no notice needs to be given prior to the disposition of any portion of the Collateral that is perishable or threatens to decline speedily in value or that is of a type customarily sold on a recognized market;

(g)Trustee, on behalf of the Noteholders may credit bid and purchase at any public sale;

(h)Trustee may seek the appointment of a receiver or keeper to take possession of all or any portion of the Collateral or to operate same and, to the maximum extent permitted by law, may seek the appointment of such a receiver without the requirement of prior notice or a hearing;

(i)The Trustee and Noteholders shall have all other rights and remedies available to them at law or in equity pursuant to any other Noteholder Documents; and

(j)Any deficiency that exists after disposition of the Collateral as provided above will be paid immediately by Grantor.  Any excess will be returned, without interest and subject to the rights of third Persons, by Trustee to Grantor.

SECTION 5.2.  Remedies Cumulative.  The rights and remedies of the Trustee under this Agreement, the other Noteholder Documents and all other agreements are cumulative.  The Trustee shall have all other rights and remedies not inconsistent with the Noteholder Documents as provided under the Code, by law, or in equity.  No exercise by the Trustee of one right or remedy shall be

13

deemed an election, and no waiver by the Trustee of any Event of Default shall be deemed a continuing waiver.  No delay by the Trustee shall constitute a waiver, election, or acquiescence by it.

SECTION 5.3.  Expenses.  The Grantor will, upon demand, pay to the Trustee the amount of any and all reasonable expenses, including the reasonable fees and disbursements of its counsel and of any experts and agents, which the Trustee may incur in connection with (i) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral and (ii)  the exercise or enforcement of any of the rights of the Trustee or the Noteholders under the Noteholder Documents.

ARTICLE VI
MISCELLANEOUS PROVISIONS

SECTION 6.1.  Relationship of this Agreement with Loan Agreement and Intercreditor Agreement.  Notwithstanding anything herein to the contrary, the lien and security interest granted to the Trustee pursuant to this Agreement and the exercise of any right or remedy by the Trustee hereunder are subject to the provisions of the Intercreditor Agreement and the agreements evidencing Senior Priority Debt (including, without limitation, the Loan Agreement) during such periods as the Intercreditor Agreement is in effect and any Senior Priority Debt is outstanding.  In the event of any conflict between the terms of the Intercreditor Agreement or the agreements evidencing Senior Priority Debt (including, without limitation, the Loan Agreement) and this Agreement, the terms of the Intercreditor Agreement or agreements evidencing Senior Priority Debt (including, without limitation, the Loan Agreement), as applicable, shall govern.

SECTION 6.2.  Binding on Successors, Transferees and Assigns; Assignment.  This Agreement shall be binding upon the Grantor and its successors, transferees and assigns and shall inure to the benefit of and be subject to the terms of the Noteholder Documents, enforceable by the Trustee and each Noteholder (subject to the limitations set forth in the applicable Noteholder Documents) and their respective successors, transferees and assigns.

SECTION 6.3.  Amendments, etc.  Subject to the Intercreditor Agreement, no amendment to or waiver of any provision of this Agreement, nor consent to any departure by the Grantor from its obligations under this Agreement, shall in any event be effective unless the same shall be in writing and signed by the Trustee and is permitted by Section 13 of the Intercreditor Agreement and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which it is given.

14

SECTION 6.4.  Notices.  All notices and other communications provided to any party under this Agreement shall be in writing (including facsimile communication) and mailed, telecopied or delivered to the appropriate party at the address or facsimile number of such party set forth in or specified pursuant to the Indentures.  All such notices and other communications, when mailed and properly addressed with postage prepaid or if properly addressed and sent by pre-paid courier service, shall be deemed given when received; any such notice or communication, if transmitted by facsimile, shall be deemed given when transmitted and electronically confirmed.

SECTION 6.5.  No Waiver.  No failure on the part of the Trustee or any Noteholder to exercise, and no delay in exercising, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right hereunder preclude any other or further exercise thereof or the exercise of any other right.

SECTION 6.6.  Captions.  Section captions used in this Agreement are for convenience of reference only, and shall not affect the construction of this Agreement.

SECTION 6.7.  Severability.  Wherever possible each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under such law, such provision shall be ineffective to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement.

SECTION 6.8.  Governing Law, Entire Agreement, etc.  THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.

SECTION 6.9.  Counterparts.  This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement.  Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 6.10.  Release of Liens.  The security interests granted hereunder in any Collateral shall be released by the Trustee in the manner, at the

15

times and to the extent specified in Section 3 or Section 5(b) of the Intercreditor Agreement or as may be permitted by the Indentures and any other Noteholder Documents.  In addition, upon the discharge of the Indentures, the security interests granted hereunder shall automatically terminate.  Upon any such release or termination, the Trustee will, at the Grantor’s sole expense, deliver to the Grantor all Collateral held by the Trustee hereunder in which the security interest granted hereunder is released or terminated, and execute and deliver to the Grantor such documents as the Grantor shall reasonably request to evidence such release or termination.

[THE REMAINDER OF PAGE IS INTENTIONALLY LEFT BLANK.]

16

IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed and delivered by its officer thereunto duly authorized as of the date first written above.

SILICON GRAPHICS, INC.
By
	Name:
	Title:
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By
	Name:
	Title:

17

Exhibit A

INTELLECTUAL PROPERTY SECURITY AGREEMENT

This Intellectual Property Security Agreement (the “Agreement”), is made as of December      , 2003, by and among U.S. BANK NATIONAL ASSOCIATION, as trustee for the Noteholders (“Trustee”), SILICON GRAPHICS, INC., a Delaware corporation (the “Grantor”), with reference to the following facts:

A.The Grantor has adopted certain trademarks and service marks, as identified herein and in Schedule A annexed hereto and made a part hereof, and

B.The Grantor is the owner and holder of certain patents, patent applications, inventions and trade secret information, as identified herein and in Schedule B annexed hereto and made a part hereof.

C.The Grantor is the owner of the copyrights in certain works of authorship, as described herein and in Schedule C annexed hereto and made a part hereof.

WHEREAS, the Grantor and U.S. Bank National Association, as Trustee are parties to (1) certain  indentures, pursuant to which the Grantor is issuing notes in an aggregate principal amount of up to $230,591,000 (the “Notes”) and (2) a security agreement (the “Security Agreement”) dated as of the date hereof, pursuant to which Grantor has granted the Trustee a security interest in certain collateral, including the intellectual property collateral set forth in Schedules A, B and C hereto (the “ IP Collateral”);

WHEREAS, pursuant to the Security Agreement, the Grantor is required to execute and deliver this Agreement;

WHEREAS, the Grantor, the Trustee and the Wells Fargo Foothill, Inc. have entered into an Intercreditor Agreement, dated as of the date hereof setting forth the relative priorities of the parties’ security interests in the IP Collateral and other collateral in which the Trustee has been granted a security interest pursuant to the Security Agreement; and

WHEREAS, pursuant to the terms of the Indentures and the Security Agreement and subject to the terms of the Intercreditor Agreement, U.S. Bank National Association, in its capacity as Trustee has agreed to accept the pledge and assignment and the grant of a security interest in the IP Collateral under this Agreement as security for the Notes.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and in order to induce the Trustee to enter into the Indentures and to induce holders of the Grantor’s 5.25% Senior Convertible Notes due 2004 (the “Old Notes”) to exchange the Old Notes for the Notes, the parties hereto agree as follows:

D.This Agreement is the Intellectual Property Security Agreement as defined and described in the Security Agreement.  Capitalized terms used herein and not otherwise defined shall have the meaning set forth in the Security Agreement.

A-1

NOW, THEREFORE, IT IS AGREED that, for and in consideration of the premises set forth above, the terms and conditions contained herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and as collateral security for the prompt payment in full when due (whether at stated maturity, by acceleration or otherwise) of the Notes, the Grantor hereby grants to Trustee, subject to the Intercreditor Agreement and any other agreement or instrument evidencing Senior Priority Debt, for the benefit of the Noteholders, a continuing security interest in all of the Grantor’s right, title and interest in and to the IP Collateral, except for the Excluded Intellectual Property described in Schedule D annexed hereto and made a part hereof, including:

(a)all of the Grantor’s customer lists and other records of the Grantor relating to the distribution of products bearing, constituting or incorporating the Trademarks, Patent Collateral and Copyrights; and

(b)the proceeds and products, whether tangible or intangible, of any of the foregoing, including (w) proceeds from any claims by the Grantor against third parties for past, present or future infringement of the Trademarks, Patent Collateral or Copyrights and any royalties from licenses to third parties of the Trademarks, Patent Collateral or Copyrights, (x) proceeds of insurance covering any or all of the foregoing, and (y) any and all money, deposit accounts, or other tangible or intangible property, solely to the extent, in the case of each of the foregoing clauses (w), (x) and (y), resulting from the sale, exchange, collection, or other disposition of any of the foregoing, or any portion thereof or interest therein, and the proceeds thereof; provided, however, that the IP Collateral shall not include (A) such General Intangibles: (i) which cannot be subject to a consensual security interest in favor of Trustee without the consent of the licensor or other party thereto, (ii) as to which any such restriction described in clause (i) is effective and enforceable under applicable law including Section 9318(4) of the Code or, from and after the effective date thereof, Section 9408 of the revised Article 9 of the Code, and (iii) to which such consent described in clause (i) has not been obtained by the party granting the security interest and (B) any property not subject to a Senior Priority Lien, other than any such property that was, immediately prior to the discharge of such Senior Priority Lien Obligations, subject to a Senior Priority Lien, except to the extent that such property, or any portion thereof, was disposed of in order to repay Senior Priority Lien Obligations.

1.The Grantor hereby represents, warrants, covenants and agrees as follows, except with respect to the Excluded Intellectual Property:

(a)The Grantor will promptly perform all acts and execute all documents, including, without limitation, grants of security in forms acceptable to Trustee and suitable for recording with (i) the United States Patent and Trademark Office and the United States Register of Copyrights, and (ii) the appropriate offices and agencies of foreign jurisdictions reasonably requested by the Trustee at any time to evidence, perfect, maintain, record or enforce Noteholders’ security interest in the IP Collateral or otherwise in furtherance of the provisions of this Agreement.  The Grantor hereby authorizes the Trustee to execute and file one or

A-2

more financing statements (and any similar documents) or copies thereof or of this Agreement with respect to the IP Collateral signed only by Trustee (with a copy sent to the Grantor).

(b)In the event that either the Grantor, either itself or through any subsidiary, affiliate, trustee, employee, licensee or designee, shall file an application for the registration of any trademark with the United States Patent and Trademark Office, or any similar office of the United States or in any office of the Secretary of State (or equivalent) of any state thereof, or for the registration of any copyright with the United States Register of Copyrights, or for the registration of any Trademark or Copyright in any similar office or agency of any country or political subdivision thereof throughout the world, or shall obtain registration of any Trademark or Copyright previously applied for, or shall adopt, acquire or obtain rights to any new trademark, or work for which a copyright application has been or is expected to be filed, the Grantor shall (i) inform the Trustee of any such event or action in reports which the Grantor is required to deliver to Trustee pursuant to the Security Agreement and, (ii) execute and deliver any and all assignments, agreements, instruments, documents and papers as are necessary or appropriate or as the Trustee may reasonably request to evidence the Noteholders’ security interest in such Trademark, or Copyright and the goodwill and general intangibles of the Grantor’s relating thereto or represented thereby.  The Grantor hereby constitutes the Trustee, or its Trustee, its attorney-in-fact to execute and file all such writings for the foregoing purposes, all acts of such attorney being hereby ratified and confirmed; such power being coupled with an interest is irrevocable until the Notes are paid in full.  The Grantor authorizes the amendment of the schedules hereto to include any future Trademark, or Copyright registrations or applications which may be acquired or made by the Grantor.

2.Upon the occurrence and during the continuance of an Event of Default (as defined in the Indentures), the Trustee may, subject to the Intercreditor Agreement and except with respect to the Excluded Intellectual Property and except to the extent otherwise expressly provided or required below, do any one or more of the following, all of which are authorized by the Grantor, in addition to all other rights and remedies provided for in the Security Agreement, all such rights and remedies being cumulative, not exclusive, and enforceable alternatively, successively or concurrently, without (except as provided herein or in the Security Agreement) notice to, or consent by the Grantor:

(a)Trustee may (without assuming any obligations or liability thereunder), at any time, enforce (and shall have the exclusive right to enforce) against any licensee or sublicensee all rights and remedies of the Grantor in, to and under any one or more license agreements with respect to the IP Collateral, and take or refrain from taking any action under any thereof, and the Grantor hereby releases Noteholders from, and agrees to hold the Noteholders free and harmless from and against any claims arising out of, any action taken or omitted to be taken with respect to any such license agreement;

A-3

(b)The Trustee, for the benefit of the Noteholders, may, at any time and from time to time, upon ten (10) days’ prior notice to the Grantor, assign, sell, or otherwise dispose of the IP Collateral or any of it, either with or without special or other conditions or stipulations, with power to buy the IP Collateral or any part of it, and do all other acts and things for completing the assignment, sale or disposition which Trustee shall, in its sole discretion, deem appropriate or proper;

(c)In addition to the foregoing, in order to implement the assignment, sale, license or other disposal of any of the IP Collateral pursuant to subparagraphs 2(b) hereof, the Trustee may, at any time, pursuant to the authority granted in the Powers of Attorney described in paragraph 3 hereof (such authority becoming effective upon an Event of Default), execute and deliver on behalf of the Grantor one or more instruments of assignment sale, license or other disposition of the IP Collateral.  The Grantor agrees to pay when due all reasonable costs incurred in any such transfer of the IP Collateral, including any taxes, fees and reasonable attorneys’ fees.  The Trustee may apply the proceeds actually received from any such license, assignment, sale or other disposition in accordance with paragraph (d) of this Section 2; and the Grantor shall remain liable and will pay the Trustee on demand any deficiency remaining, together with interest thereon at a rate equal to the rate then payable on the Notes and the balance of any expenses unpaid.  Nothing herein contained shall be construed as requiring the Trustee to take any such action at any time; and

(d)Except as otherwise herein expressly provided, the proceeds of any collection, sale or other realization of all or any part of the IP Collateral pursuant hereto, shall be applied to the Notes until the Notes shall have been paid in full in cash.  The application of proceeds hereunder to the Notes shall be made by the Trustee in accordance with the provisions of Article 6 of the Indentures.

3.The following documents will be concurrently executed and delivered to the Trustee as conditions precedent to the execution and delivery of this Agreement:

(a)Three original Powers of Attorney,  in the form of Exhibit A, Exhibit B, and Exhibit C hereto, respectively, executed by the Grantor, for the implementation of any assignment, sale or other disposition of the Trademarks, Patent Collateral or Copyrights, respectively, pursuant to paragraphs 2(a) and (b) hereof;

4.No provision hereof shall be modified, altered or limited except by a written instrument expressly referring to this Agreement and executed by the party to be charged.  This Agreement shall be binding upon the successors, permitted assigns or other legal representatives of the Grantor, and shall, together with the rights and remedies of the Noteholders hereunder inure to the benefit of the Noteholders, its successors, permitted assigns or other legal representatives.  This Agreement and the IP Collateral, except for the Excluded Intellectual Property, shall be governed in all respects by the laws of the United States and the laws of the State of New York.  If any term of this

A-4

Agreement shall be held to be invalid, illegal or unenforceable, the validity of all other terms hereof shall in no way be affected thereby.

5.This Agreement shall continue to be effective and shall be reinstated in the event that at any time after the Notes have been paid in full, any payment of the Notes is rescinded or must otherwise be restored or returned by the Noteholders.

6.Upon payment and performance in full in cash by the Grantor of all of the obligations with respect to the Notes under the Indentures (other than indemnification obligations for which no claim has been made) and upon the termination of the Indentures, this Agreement shall terminate and the Trustee shall execute, file and record in each office in which any financing statement or assignment relative to the IP Collateral, or any part thereof, shall have been filed, a termination statement, assignment or other appropriate instrument releasing its interest therein, all without recourse to or warranty by the Noteholders and at the sole cost and expense of the Grantor.

7.This Agreement 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 Agreement by signing any such counterpart.

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed and delivered on the day and year first above written.

SILICON GRAPHICS, INC.,
a Delaware corporation
By:
Its:	Vice President and Treasurer
US BANK NATIONAL ASSOCIATION,
a California corporation, as Trustee
By:
Its:

A-5

EX-5.1

Exhibit 5.1

[Davis Polk & Wardwell Letterhead]

December 8, 2003

Silicon Graphics, Inc.

1600 Amphitheatre Parkway

Mountain View, California  94043

Ladies and Gentlemen:

We have acted as counsel to Silicon Graphics, Inc., a Delaware corporation (the “Company”), in connection with the Registration Statement on Form S-4 (the “Registration Statement”) filed by the Company on November 21, 2003 with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended.  The Registration Statement relates to the Company’s offer to exchange (the “Exchange Offer”) any and all of its $230,591,000 in outstanding aggregate principal amount of 5.25% Senior Convertible Notes Due 2004 for a like principal amount of either its 11.75% Senior Secured Notes Due 2009 (the “New Secured Notes”) or its 6.50% Senior Secured Convertible Notes Due 2009 (the “New Secured Convertible Notes” and together with the New Notes, the “2009 Secured Notes”), and such indeterminate number of shares (the “Conversion Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”), as may be required for issuance upon conversion of the New Convertible Notes.  The New Secured Notes and New Secured Convertible Notes are to be issued under separate indentures to be entered into between the Company and the Trustee (the “New Indenture” and the “New Convertible Indenture”, respectively).

We have examined originals or copies, certified or otherwise identified to our satisfaction, of such documents, corporate records, certificates of public officials and other instruments as we have deemed necessary for the purposes of rendering this opinion.

On the basis of the foregoing, we are of the opinion that:

(1)           upon the due authorization, execution and delivery of the New Indenture, and the due authorization, execution, authentication, issuance and delivery of the New Secured Notes in accordance with the terms of the New Indenture, the New Secured Notes will be valid and binding obligations of the Company enforceable in accordance with their terms, subject as to enforcement of remedies to applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors’ rights generally from time to time in effect and to equitable principles of general applicability; and

(2)           upon the due authorization, execution and delivery of the New Secured Convertible Indenture, and the due authorization, execution, authentication, issuance and delivery of the New Secured Convertible Notes in accordance with the terms of the New Convertible Indenture, the New Secured Convertible Notes will be valid and binding obligations of the Company enforceable in accordance with their terms, subject as to enforcement of remedies to applicable bankruptcy, reorganization, insolvency, moratorium or other similar laws affecting creditors’ rights generally from time to time in effect and to equitable principles of general applicability; and

(3)           the Conversion Shares have been duly authorized, and upon the due authorization, execution and delivery of the New Convertible Indenture, the due authorization, execution, authentication, issuance and delivery of the New Convertible Notes in accordance with the terms of the New Secured Convertible Indenture, and the issuance of Conversion Shares by the Company upon conversion of the New Secured Convertible Notes in accordance with the New Convertible Indenture, such Conversion Shares will be validly issued, fully paid and nonassessable.

In connection with the opinions expressed above, we have assumed (i) the execution and delivery of the New

Indenture and the New Convertible Indenture by the Trustee, (ii) the New Indenture and the New Convertible Indenture shall have been qualified under the Trust Indenture Act of 1939, as amended, (iii) the authentication and delivery of the New Secured Notes in accordance with the terms of the New Indenture by the Trustee, (iv) the due authentication  and delivery of the New Convertible Notes in accordance with the terms of the New Convertible Indenture by the Trustee, (v) a sufficient number of shares of Common Stock shall have been authorized or reserved by the Company and be available for issuance upon conversion of the New Secured Convertible Notes and the holders of the Company’s Common Stock shall have approved the Company’s authorization or reservation of such shares of Common Stock, (vi) the conversion of the New Secured Convertible Notes in accordance with the New Convertible Indenture, (vii) the consideration for the issuance of shares of Common Stock upon conversion of New Convertible Notes shall not be less than the par value of the Common Stock, (viii) there will not have occurred any change in law affecting the validity or enforceability of the New Secured Notes or the New Secured Convertible Notes, and (ix) none of the terms of the 2009 Secured Notes, the issuance and delivery of the 2009 Secured Notes, nor the compliance by the Company with the terms of the 2009 Secured Notes will violate any applicable law or will result in a violation of any provision of any instrument or agreement then binding upon the Company, or any restriction imposed by any court or governmental body having jurisdiction over the Company.

We express no opinion as to (1) the creation, attachment, perfection or priority of any security interest granted in the collateral securing the 2009 Secured Notes, and (2) the validity, binding nature or enforceability of any of the agreements pursuant to which any such security interest is granted and (3) the applicability of the obligations of the Company under the New Secured Convertible Indenture, the New Secured Indenture and the 2009 Secured Notes of Section 548 of the United States Bankruptcy Code or applicable state law relating to fraudulent transfers.

The foregoing opinion is limited to the laws of the State of New York, the General Corporation Law of the State of Delaware and the federal laws of the United States of America.

We consent to the use of this opinion as an exhibit to the Registration Statement and to the reference to Davis Polk & Wardwell under the caption “Legal Matters” in the prospectus incorporated by reference therein.

Very truly yours,

/s/ DAVIS POLK & WARDWELL

Davis Polk & Wardwell

2

EX-10.1

Exhibit 10.1

November 11, 2003

SILICON GRAPHICS, INC.

SILICON GRAPHICS FEDERAL, INC.

1600 Amphitheatre Parkway

Mountain View, California 94043

Attn:  Jean Furter, Vice President and Treasurer

Re:Amended and Restated Loan and Security Agreement

Dear Jean:

Reference is made 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”), entered into among Silicon Graphics, Inc., a Delaware corporation (“Parent”), Silicon Graphics Federal, Inc., a Delaware corporation (together with Parent, “Borrowers”), the Lenders signatory thereto (the ‘Lenders”), and Wells Fargo Foothill, Inc., a California corporation, as the arranger and administrative agent for the Lenders (“Agent”). Capitalized terms, which are used herein but not defined herein, shall have the meanings ascribed to them in the Loan Agreement.

Borrowers have requested that (a) the Loan Agreement be amended to provide for a revised percentage of the aggregate principal amount of Senior Convertible Notes for which Parent is required to cause the extension of the Current Senior Convertible Note Maturity Date and (b) Agent consent to the creation of a junior priority Lien on certain of the assets of Parent.

Subject to the satisfaction of the terms and conditions set forth in this letter agreement, Agent is willing to grant the amendment and consent requested by Borrowers as described in the preceding sentence.

NOW, THEREFORE, Agent and Borrowers hereby agree to the following:

1.Section 1.1 of the Loan Agreement is hereby amended by adding the following defined terms in proper alphabetical order or amending and restating the following definition in its entirety, as the case may be:

“Exchange Commitments’ means the commitment by holders of Senior Convertible Notes of not less than 80% of the outstanding principal amount of Senior Convertible Notes to exchange said Senior Convertible Notes pursuant to the Exchange Offer.”

“Exchange Offer’ means the offer by Parent to exchange Parent’s 6.5% Senior Secured Convertible Notes due 2009 and 11.75% Secured Senior Notes due 2009 for Senior Convertible Notes, in accordance with Parent’s filings with the SEC.”

“New Indentures’ means (a) the Indenture, with respect to 6.5% Senior Secured Convertible Notes due 2009, and (b) the Indenture, with respect to 11.75% Secured Senior Notes due 2009, each proposed to be entered into between Parent and Trustee.”

“Permitted Liens’ means (a) Liens held by Agent for the benefit of Agent and the Lenders, (b) Liens for unpaid taxes that either (i) are not yet delinquent, or (ii) do not constitute an Event of Default hereunder and are the subject of Permitted Protests, (c) Liens set forth on Schedule P-1, (d) the interests of lessors under operating leases, (e) purchase money Liens or the interests of lessors under Capital Leases to the extent that such Liens or interests secure Permitted Purchase Money Indebtedness and so long as such Lien attaches only to the asset purchased or acquired and the proceeds thereof, (f) Liens arising by operation of law in favor of warehousemen, landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurred in the ordinary course of Borrowers’ business and not in connection with the borrowing of money, and which Liens either (i) are for sums not yet delinquent, or (ii) are the subject of Permitted Protests, (g) Liens arising from deposits made in connection with obtaining worker’s compensation or other unemployment insurance, (h) Liens or deposits to secure performance of bids, tenders, or leases incurred in the ordinary course of Borrowers’ business and not in connection with the borrowing of money, (i) Liens granted as security for surety or appeal bonds in connection with obtaining such bonds in the ordinary course of Borrowers’ business, (j) Liens resulting from any judgment or award that is not an Event of Default hereunder, (k) any Lien with respect to any Real Property, and (l) provided that all of the conditions precedent set forth in Section 3 of the letter agreement, dated November 11, 2003, among the parties hereto are satisfied prior to March 5, 2004.  Liens in favor of Trustee pursuant to the terms of the New Indentures.”

“Required Exchange Approvals’ means, collectively, the valid tender by holders of Senior Convertible Notes of not less than 80% of the outstanding principal amount of Senior Convertible Notes pursuant to the Exchange Offer and the majority vote of the shareholders of the common stock of Parent approving the reservation of shares to be issued on conversion of the notes issued in the Exchange Offer.”

“Trustee’ means U.S. Bank National Association, a national banking association organized and existing under the laws of the United States of America.”

2.Section 3.4 of the Loan Agreement is hereby amended and restated in its entirety as follows:

“Term.  This Agreement shall become effective upon the execution and delivery hereof by Borrowers, Agent, and the Lenders, and shall continue in full force and effect for a term ending on April 13, 2005 (the ‘Maturity Date”); provided, however, that, if on or before March 5, 2004 Parent has not (i) extended the Current Senior Convertible Note Maturity Date to a date no earlier than October 10, 2005 for not less than 80% of the principal amount of the Senior Convertible Notes (including by way of an exchange offer), or (ii) in a manner satisfactory to Agent in its sole discretion, made adequate alternative provisions for extension of the Current Senior Convertible Note Maturity Date, then the Maturity Date will accelerate to June 2, 2004.  The foregoing

2

notwithstanding, the Lender Group, upon the election of the Required Lenders, shall have the right to terminate its obligations under this Agreement pursuant to Section 9.1.”

3.The satisfaction of each of the following shall constitute conditions precedent to the effectiveness of this letter agreement 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.No Event of Default shall have occurred between the date hereof and the date of the effectiveness of this letter agreement;

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 Government Authority against any Borrower or Agent;

d.Agent shall have received from Borrowers an amendment fee (the “Amendment Fee”) in the amount of $90,000.  The Amendment Fee shall be payable on the earlier to occur of: (i) the date of receipt of the Exchange Commitments; and (ii) the date of the Required Exchange Approvals. When the Amendment Fee is payable as aforesaid, Agent shall be authorized to charge Borrowers’ Loan Account the Amendment Fee, which Amendment Fee shall be non-refundable when charged;

e.Agent, Trustee and Borrowers shall have entered into an Intercreditor Agreement, substantially in the form of Exhibit A attached hereto and incorporated by reference herein, and with such changes as shall be in form and substance satisfactory to Agent in its sole and absolute discretion; and

f.Agent shall have received from Parent an officer’s certificate certifying the occurrence of the Required Exchange Approvals (and, if applicable, receipt of the Exchange Commitments), in form and substance satisfactory to Agent.

4.Notwithstanding the terms of Section 3 above, upon Agent’s receipt of a copy of this letter agreement executed by Borrowers, Agent shall be authorized to charge Borrowers’ Loan Account a negotiation fee (the “Negotiation Fee”) in the amount of $10,000; the Negotiation Fee shall be non-refundable when charged.

5.This letter agreement constitutes an amendment to the Loan Agreement. Except as expressly set forth herein, the Loan Documents shall remain in full force and effect.

6.Borrowers agree that all of Agent’s attorney’s fees and costs in drafting and negotiating this letter agreement are part of the Lender Group Expenses and are payable on demand.

3

7.             This letter agreement may be executed in any number of counterparts and by different parties on separate counterparts. Each of such counterparts shall be deemed to be an original, and all of such counterparts, taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this letter agreement by telefacsimile shall be equally effective as delivery of a manually executed counterpart.

Please indicate your agreement with the foregoing by signing in the space provided below and returning the same to the undersigned.

						WELLS FARGO FOOTHILL, INC., a California corporation, as Agent
						By:	/s/ Thomas P. Shughrue
						Name:			Thomas P. Shughrue
						Title:		Vice President
Acknowledged and Agreed:
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

4

EX-12.1

QuickLinks -- Click here to rapidly navigate through this document

Exhibit 12.1

		Fiscal Years Ended														Three Months Ended
		June 27, 2003			June 28, 2002			June 30, 2001			June 30, 2000			June 30, 1999		September 26, 2003			September 28, 2002
		(in thousands)
(Loss) Income from continuing operations before income taxes		$	(155,967	)	$	(82,259	)	$	(466,155	)	$	(381,884	)	$	125,721	$	(50,510	)	$	(40,985	)
Add Fixed Charges			35,079			33,082			31,659			31,627			38,506		8,594			8,400
Earnings (as defined)		$	(120,888	)	$	(49,177	)	$	(434,496	)	$	(350,257	)	$	164,227	$	(41,916	)	$	(32,585	)
Fixed Charges:
	Interest expense	$	25,433		$	21,206		$	18,417		$	15,760		$	18,343	$	6,529		$	5,771
	Amortization of debt discount		727			668			613			2,545			3,544		192			177
	Amortization of debt issuance costs		982			1,085			777			675			675		169			271
	Estimated interest component of rent expenses		7,936			10,123			11,852			12,647			15,944		1,704			2,182
Total Fixed Charges:		$	35,079		$	33,082		$	31,659		$	31,627		$	38,506	$	8,594		$	8,400
Ratio of Earnings to Fixed Charges(1)			—			—			—			—			4.3x		—			—

(1)

For the fiscal years ended June 27, 2003, June 28, 2002, June 30, 2001, and June 30, 2000, and for the three months ended September 26, 2003 and September 27, 2002, earnings were insufficient to cover fixed charges by $156.0 million, $82.3 million, $466.2 million, $381.9 million, and $50.5 million, respectively. For this reason, no ratios are provided for these periods.

Pro Forma Ratio of Earnings to Fixed Charges

        The unaudited information below is presented pro forma to reflect the effects of the exchange offer, assuming in case (A) that 100% of holders of the Old Notes participate in the exchange offer and in case (B) that 80% of the holders of the Old Notes participate in the exchange offer. In both case (A) and case (B), we have presented the information under two scenarios; under alternative (1) below, we have assumed that all exchanging holders of Old Notes exchanged for New Secured Notes, and under alternative (2) that all exchanging holders of Old Notes exchanged for New Secured Convertible Notes.

	Fiscal Year Ended June 27, 2003			Three Months Ended September 26, 2003
(Loss) Income from continuing operations before income taxes	$	(155,967	)	$	(50,510	)
Less: Interest Expense on current bonds		(12,075	)		(3,019	)
Earnings excluding actual interest expense	$	(143,892	)	$	(47,491	)

CASE A
Alternative 1:
Earnings excluding actual interest expense		$	(143,892	)	$	(47,491	)
Add: Pro Forma Interest			(27,025	)		(6,756	)
Add: Pro Forma Fixed Charges			36,670			8,821
Pro Forma Earnings		$	(134,247	)	$	(45,426	)
Pro Forma Fixed Charges:
	Interest Expense	$	27,025		$	6,756
	Amortization of debt discount		727			192
	Amortization of debt issuance costs		982			169
	Estimated interest component of rent expenses		7,936			1,704
Total Pro Forma Fixed Charges under Alternative 1:		$	36,670		$	8,821
Pro Forma Ratio of Earnings to Fixed Charges under Alternative 1(a)			—			—
Alternative 2:
Earnings excluding actual interest expense		$	(143,892	)	$	(47,491	)
Add: Pro Forma Interest			(14,950	)		(3,738	)
Add: Pro Forma Fixed Charges			24,595			5,803
Pro Forma Earnings		$	(134,247	)	$	(45,426	)
Pro Forma Fixed Charges:
	Interest Expense	$	14,950		$	3,738
	Amortization of debt discount		727			192
	Amortization of debt issuance costs		982			169
	Estimated interest component of rent expenses		7,936			1,704
Total Pro Forma Fixed Charges under Alternative 2:		$	24,595		$	5,803
Pro Forma Ratio of Earnings to Fixed Charges under Alternative 2(b)			—			—
CASE B
Alternative 1:
Earnings excluding actual interest expense		$	(143,892	)	$	(47,491	)
Add: Pro Forma Interest			(24,035	)		(6,008	)
Add: Pro Forma Fixed Charges			33,680			8,073
Pro Forma Earnings		$	(134,247	)	$	(45,426	)
Pro Forma Fixed Charges:
	Interest Expense	$	24,035		$	6,008
	Amortization of debt discount		727			192
	Amortization of debt issuance costs		982			169
	Estimated interest component of rent expenses		7,936			1,704
Total Pro Forma Fixed Charges under Alternative 1:		$	33,680		$	8,073
Pro Forma Ratio of Earnings to Fixed Charges under Alternative 1(c)			—			—

Alternative 2:
Earnings excluding actual interest expense		$	(143,892	)	$	(47,491	)
Add: Pro Forma Interest			(14,375	)		(3,593	)
Add: Pro Forma Fixed Charges			24,020			5,658
Pro Forma Earnings		$	(134,247	)	$	(45,426	)
Pro Forma Fixed Charges:
	Interest Expense	$	14,375		$	3,593
	Amortization of debt discount		727			192
	Amortization of debt issuance costs		982			169
	Estimated interest component of rent expenses		7,936			1,704
Total Pro Forma Fixed Charges under Alternative 2:		$	24,020		$	5,658
Pro Forma Ratio of Earnings to Fixed Charges under Alternative 2(d)			—			—

(a)

For the fiscal years ended June 27, 2003, and for the three months ended September 26, 2003, earnings were insufficient to cover fixed charges by $170.9 million and $54.2 million, respectively. For this reason, no ratios are provided for these periods.

(b)

For the fiscal years ended June 27, 2003, and for the three months ended September 26, 2003, earnings were insufficient to cover fixed charges by $158.8 million and $51.2 million, respectively. For this reason, no ratios are provided for these periods.

(c)

For the fiscal years ended June 27, 2003, and for the three months ended September 26, 2003, earnings were insufficient to cover fixed charges by $167.9 million and $53.5 million, respectively. For this reason, no ratios are provided for these periods.

(d)

For the fiscal years ended June 27, 2003, and for the three months ended September 26, 2003, earnings were insufficient to cover fixed charges by $158.3 million and $51.1 million, respectively. For this reason, no ratios are provided for these periods.

QuickLinks

Exhibit 12.1

EX-25.1

exhibit 25.1

securities and exchange commission

Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER

THE TRUST INDENTURE ACT OF 1939 OF A

CORPORATION DESIGNATED TO ACT AS TRUSTEE

Check if an Application to Determine Eligibility of

a Trustee Pursuant to Section 305(b)(2)

U.S. BANK NATIONAL ASSOCIATION

(Exact name of Trustee as specified in its charter)

31-0841368
I.R.S. Employer Identification No.

800 Nicollet Mall  Minneapolis, Minnesota	55402
(Address of principal executive offices)	(Zip Code)

Paula Oswald

U.S. Bank National Association

633 W. 5^TH Street, 24^th Floor

Los Angeles, CA  90071

(213) 615-6043

(Name, address and telephone number of agent for service)

SILICON GRAPHICS, INC.

(Issuer with respect to the Securities)

DELAWARE	94-2789662
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1600 Amphitheatre Pkwy, Mountain View, CA	94043-1351
(Address of Principal Executive Offices)	(Zip Code)

11.75% Senior Secured Notes Due 2009

(Title of the Indenture Securities)

FORM T-1

Item 1.            GENERAL INFORMATION.  Furnish the following information as to the Trustee.

a)Name and address of each examining or supervising authority to which it is subject.

Comptroller of the Currency
Washington, D.C.

b)        Whether it is authorized to exercise corporate trust powers.

Trustee is authorized to exercise corporate trust powers.

Item 2.            AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation.

None

In answering this item, the trustee has relied, in part, upon information furnished by the obligor and the underwriters, and has also examined its own books and records for the purpose of answering this item.

Items 3-15Items 3-15 are not applicable because to the best of the Trustee’s knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee.

Item 16.         LIST OF EXHIBITS:  List below all exhibits filed as a part of this statement of eligibility and qualification.

1.              A copy of the Articles of Association of the Trustee.*

2.              A copy of the certificate of authority of the Trustee to commence business.*

3.              A copy of the certificate of authority of the Trustee to exercise corporate trust powers.*

4.              A copy of the existing bylaws of the Trustee.*

5.              A copy of each Indenture referred to in Item 4.  Not applicable.

6.              The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6.

7.              A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority.

*          Incorporated by reference to Registration Number 333-67188.

A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as an Exhibit with corresponding exhibit number to the Form T-1 of Structured Obligations Corporation, filed pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939, as amended (the “Act”), on November 16, 2001 (Registration No. 333-67188), and is incorporated herein by reference.

NOTE

                The answers to this statement insofar as such answers relate to what persons have been underwriters for any securities of the obligors within three years prior to the date of filing this statement, or what persons are owners of 10% or more of the voting securities of the obligors, or affiliates, are based upon information furnished to the Trustee by the obligors.

SIGNATURE

                Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Los Angeles, State of California on the 20th day of November, 2003.

U.S. BANK NATIONAL ASSOCIATION
By:	/s Paula Oswald
	Paula Oswald
	Vice President

2

Exhibit 6

CONSENT

                In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.

Dated:  November 20, 2003

U.S. BANK NATIONAL ASSOCIATION
By:	/s Paula Oswald
	Paula Oswald
	Vice President

3

Exhibit 7

U.S. Bank National Association
Statement of Financial Condition
As of 9/30/2003

($000’s)

	9/30/2003
Assets
Cash and Due From Depository Institutions	$	9,363,408
Federal Reserve Stock	0
Securities	34,719,100
Federal Funds	2,322,794
Loans & Lease Financing Receivables	118,943,010
Fixed Assets	1,915,381
Intangible Assets	9,648,952
Other Assets	9,551,844
Total Assets	$	186,464,489
Liabilities
Deposits	$	122,910,311
Fed Funds	6,285,092
Treasury Demand Notes	3,226,368
Trading Liabilities	246,528
Other Borrowed Money	21,879,472
Acceptances	145,666
Subordinated Notes and Debentures	6,148,678
Other Liabilities	5,383,119
Total Liabilities	$	166,225,234
Equity
Minority Interest in Subsidiaries	$	1,003,166
Common and Preferred Stock	18,200
Surplus	11,676,398
Undivided Profits	7,541,491
Total Equity Capital	$	20,239,255
Total Liabilities and Equity Capital	$	186,464,489

4

EX-25.2

EXHIBIT 25.2

securities and exchange commission
Washington, D.C. 20549

FORM T-1

STATEMENT OF ELIGIBILITY UNDER

THE TRUST INDENTURE ACT OF 1939 OF A

CORPORATION DESIGNATED TO ACT AS TRUSTEE

Check if an Application to Determine Eligibility of

a Trustee Pursuant to Section 305(b)(2)

U.S. BANK NATIONAL ASSOCIATION
(Exact name of Trustee as specified in its charter)

31-0841368
I.R.S. Employer Identification No.

800 Nicollet Mall Minneapolis, Minnesota	55402
(Address of principal executive offices)	(Zip Code)

Paula Oswald
U.S. Bank National Association
633 W. 5^TH Street, 24^th Floor
Los Angeles, CA  90071
(213) 615-6043
(Name, address and telephone number of agent for service)

SILICON GRAPHICS, INC.
(Issuer with respect to the Securities)

DELAWARE	94-2789662
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1600 Amphitheatre Pkwy, Mountain View, CA	94043-1351
(Address of Principal Executive Offices)	(Zip Code)

6.50% Senior Secured Convertible Notes Due 2009
(Title of the Indenture Securities)

FORM T-1

Item 1.GENERAL INFORMATION.  Furnish the following information as to the Trustee.

a)Name and address of each examining or supervising authority to which it is subject.

Comptroller of the Currency
Washington, D.C.

b)Whether it is authorized to exercise corporate trust powers.

Trustee is authorized to exercise corporate trust powers.

Item 2.AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the Trustee, describe each such affiliation.

None

In answering this item, the trustee has relied, in part, upon information furnished by the obligor and the underwriters, and has also examined its own books and records for the purpose of answering this item.

Items 3-15Items 3-15 are not applicable because to the best of the Trustee’s knowledge, the obligor is not in default under any Indenture for which the Trustee acts as Trustee.

Item 16.LIST OF EXHIBITS:  List below all exhibits filed as a part of this statement of eligibility and qualification.

1.A copy of the Articles of Association of the Trustee.*

2.A copy of the certificate of authority of the Trustee to commence business.*

3.A copy of the certificate of authority of the Trustee to exercise corporate trust powers.*

4.A copy of the existing bylaws of the Trustee.*

5.A copy of each Indenture referred to in Item 4.  Not applicable.

6.The consent of the Trustee required by Section 321(b) of the Trust Indenture Act of 1939, attached as Exhibit 6.

7.A copy of the latest report of condition of the trustee published pursuant to law or the requirements of its supervising or examining authority.

*Incorporated by reference to Registration Number 333-67188.

A copy of the Articles of Association of the trustee, as now in effect, is on file with the Securities and Exchange Commission as an Exhibit with corresponding exhibit number to the Form T-1 of Structured Obligations Corporation, filed pursuant to Section 305(b)(2) of the Trust Indenture Act of 1939, as amended (the “Act”), on November 16, 2001 (Registration No. 333-67188), and is incorporated herein by reference.

NOTE

                The answers to this statement insofar as such answers relate to what persons have been underwriters for any securities of the obligors within three years prior to the date of filing this statement, or what persons are owners of 10% or more of the voting securities of the obligors, or affiliates, are based upon information furnished to the Trustee by the obligors.

SIGNATURE

                Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the Trustee, U.S. BANK NATIONAL ASSOCIATION, a national banking association organized and existing under the laws of the United States of America, has duly caused this statement of eligibility and qualification to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of Los Angeles, State of California on the 20th day of November, 2003.

U.S. BANK NATIONAL ASSOCIATION
By:	/s/ Paula Oswald
	Paula Oswald
	Vice President

2

Exhibit 6

CONSENT

                In accordance with Section 321(b) of the Trust Indenture Act of 1939, the undersigned, U.S. BANK NATIONAL ASSOCIATION hereby consents that reports of examination of the undersigned by Federal, State, Territorial or District authorities may be furnished by such authorities to the Securities and Exchange Commission upon its request therefor.

Dated:  November 20, 2003

U.S. BANK NATIONAL ASSOCIATION
By:	/s/ Paula Oswald
	Paula Oswald
	Vice President

3

Exhibit 7

U.S. Bank National Association
Statement of Financial Condition
As of 9/30/2003

($000’s)

	9/30/2003
Assets
Cash and Due From Depository Institutions	$	9,363,408
Federal Reserve Stock	0
Securities	34,719,100
Federal Funds	2,322,794
Loans & Lease Financing Receivables	118,943,010
Fixed Assets	1,915,381
Intangible Assets	9,648,952
Other Assets	9,551,844
Total Assets	$	186,464,489
Liabilities
Deposits	$	122,910,311
Fed Funds	6,285,092
Treasury Demand Notes	3,226,368
Trading Liabilities	246,528
Other Borrowed Money	21,879,472
Acceptances	145,666
Subordinated Notes and Debentures	6,148,678
Other Liabilities	5,383,119
Total Liabilities	$	166,225,234
Equity
Minority Interest in Subsidiaries	$	1,003,166
Common and Preferred Stock	18,200
Surplus	11,676,398
Undivided Profits	7,541,491
Total Equity Capital	$	20,239,255
Total Liabilities and Equity Capital	$	186,464,489

4