8-K12G3

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): October 17, 2006

SILICON GRAPHICS, INC.

(Exact Name of Registrant as Specified in Charter)

Delaware	001-10441	94-2789662
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1200 Crittenden Lane Mountain View, CA	94043-1351
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (650) 960-1980

N/A

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory note

As previously disclosed, on May 8, 2006, Silicon Graphics, Inc. (the “Company”) and certain of its subsidiaries (collectively with the Company, the “Debtors”) filed voluntary petitions for reorganization under chapter 11 of title 11, United States Code (the “Bankruptcy Code”), in the United States Bankruptcy Court for the Southern District of New York (the “Court”) (Case Nos. 06-10977 (BRL) through 06-10990 (BRL)) (the “Reorganization”). On September 19, 2006, the Debtors’ First Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as Modified (the “Plan”) was confirmed by the Court and on October 17, 2006 (the “Effective Date”), the Plan became effective under the Bankruptcy Code.

Information regarding the Plan is contained in the Company’s Current Report on Form 8-K filed September 19, 2006, which is incorporated herein by reference.

Item 1.01 Entry into a Material Definitive Agreement.

Registration Rights Agreement

On the Effective Date, in connection with and as contemplated by the Plan, the Company entered into a Registration Rights Agreement (the “Registration Rights Agreement”), dated as of October 17, 2006, with certain stockholders of the Company, including Watershed Capital Partners, L.P., Watershed Capital Institutional Partners, L.P., Watershed Capital Partners (Offshore), Ltd., QDRF Master Ltd., Quadrangle Debt Recovery Income Fund Master Ltd., Quadrangle Debt Opportunities Fund Master Ltd., and Encore Fund, L.P. Pursuant to the Plan, each holder (“Holder”) of an Allowed Secured Note Claim or Allowed Cray Unsecured Debenture Claim, as such terms are defined in the Plan, that received a distribution pursuant to the Plan of 7.5% or greater of the common stock of the Company (the “Registrable Securities”) is entitled to receive certain registration rights under the Registration Rights Agreement (each such Holder and any future holder of Registrable Securities who becomes a party to the Registration Rights Agreement, a “Registration Rights Holder”). Pursuant to the Registration Rights Agreement, in addition to certain “piggy-back” registration rights granted to the Registration Rights Holders, certain Registration Rights Holders can also demand (each, a “Demand Registration”) under certain circumstances that the Registrable Securities be registered under the Securities Act of 1933, as amended (the “Securities Act”), in each case subject to the terms and conditions of the Registration Rights Agreement. The Registration Rights Holders on the date the Registration Rights Agreement was entered into are entitled to request no more than six (and no more than two per Registration Rights Holder) fully marketed underwritten offerings pursuant to Demand Registrations.

The Company is also required to file a shelf registration statement (the “Shelf Registration Statement”) within ten days after the Company becomes eligible to file a registration statement on Form S-3. Upon the Shelf Registration Statement being declared effective by the Securities and Exchange Commission, the rights of the Registration Rights Holders to Demand Registrations will be suspended, and such rights to Demand Registrations will cease if the Shelf Registration Statement remains effective for three years, subject to certain exceptions.

The Registration Rights Agreement will terminate upon the earliest to occur of (i) the ten-year anniversary of the Registration Rights Agreement, (ii) when all shares of Registrable Securities have been sold, (iii) when, in the opinion of counsel to the Registration Rights Holders,

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all outstanding Registrable Securities may be resold without registration under the Securities Act pursuant to Rule 144(k) under the Securities Act or any successor provision thereto, or (iv) Registrable Securities representing 50% of the Registrable Securities agree, by written consent, to terminate the Registration Rights Agreement.

The foregoing description of the Registration Rights Agreement is qualified in its entirety by reference to the Registration Rights Agreement, which is incorporated herein by reference and attached hereto as Exhibit 10.1.

Credit Agreement

On the Effective Date, the Company, Silicon Graphics Federal, Inc. and Silicon Graphics World Trade Corporation (collectively, the “Borrowers”) entered into a Senior Secured Credit Agreement, dated as of October 17, 2006 (the “Credit Agreement”), with the lenders from time to time party thereto (collectively, the “Lenders”), Morgan Stanley Senior Funding, Inc., as administrative agent, bookrunner and lead arranger and General Electric Capital Corporation, as revolving agent, syndication agent and collateral agent (in such capacity, the “Revolving Agent”). The Credit Agreement provides for a term loan to the Borrowers in the aggregate amount of $85,000,000 and a revolving credit facility with availability in an amount not to exceed $30,000,000, and is secured by certain assets of the Borrowers. The interest rate under the Credit Agreement with respect to the term loan is a rate equal to, at the Company’s option, (i) the LIBOR Rate (as determined by the Revolving Agent) plus 700 basis points or (ii) the higher of (x) the rate of interest quoted by the Wall Street Journal as the “base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks” and (y) the rate that is 50 basis points in excess of the Federal Funds Rate, in either case plus 575 basis points. The interest rate under the Credit Agreement with respect to the revolving advances is a rate equal to, at the Company’s option, (i) the LIBOR Rate (as determined by the Revolving Agent) plus 300 basis points or (ii) the higher of (x) the rate of interest quoted by the Wall Street Journal as the “base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks” and (y) the rate that is 50 basis points in excess of the Federal Funds Rate, in either case plus 175 basis points. Upon an event of default, the then current interest rate for all loans and advances under the Credit Agreement is increased by two percentage points.

The Credit Agreement contains customary affirmative and negative covenants and certain financial covenants binding on the Company and its subsidiaries, including, without limitation, a limitation on incurring indebtedness other than certain specified types and amounts, as more fully described in the Credit Agreement.

In any fiscal year in which any sale or disposition by the Borrowers or any of their subsidiaries of property or assets (other than sales of inventory or equipment in the ordinary course of business) exceeds $3,000,000, the Borrowers are required to pay 100% of the net proceeds from any such sale or disposition to the Lenders as a prepayment on the outstanding obligations under the Credit Agreement, provided that (i) any unused portion of the $3,000,000 available in any fiscal year may carry forward into succeeding fiscal years and (ii) any proceeds from any such sale or disposition that are reinvested in the Borrowers’ business or committed to be so reinvested within 180 days after receipt shall not require a prepayment. If the Borrowers or any of their subsidiaries shall receive insurance proceeds or awards in connection with a casualty or condemnation of any of their properties, the Borrowers are required to pay 100% of the net proceeds from any such occurrence to the Lenders as prepayment on the outstanding obligations under the Credit Agreement, provided that any such proceeds, not to exceed $250,000 per

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occurrence or $2,500,000 in the aggregate, that are reinvested in the Borrowers’ business or committed to be so reinvested within 180 days after receipt shall not require a prepayment. The Borrowers are additionally required to pay 100% of any extraordinary receipts to the Lenders as prepayment on the outstanding obligations under the Credit Agreement, provided that any such proceeds that are reinvested in the Borrowers’ business or committed to be so reinvested within 180 days after receipt shall not require a prepayment.

The Credit Agreement shall mature and all outstanding borrowed amounts under the Credit Agreement become due on the earliest to occur of (i) October 17, 2011, or (ii) the date the Borrowers pay all of the required Lenders in full, unless terminated earlier in accordance with the terms of the Credit Agreement.

The Borrowers have also entered into a Security Agreement and Pledge Agreement, each dated as of October 17, 2006, under which the obligations of the Borrowers under the Credit Agreement are secured by certain intellectual property and other assets of the Borrowers.

The foregoing descriptions of the Credit Agreement, Security Agreement and Pledge Agreement are qualified in their entirety by reference to the Credit Agreement, Security Agreement and Pledge Agreement, which are incorporated herein by reference and attached hereto as Exhibits 10.2, 10.3 and 10.4, respectively.

Management Incentive Plan

On the Effective Date, the Silicon Graphics, Inc. Management Incentive Plan (“MIP”) became effective pursuant to the Plan. The MIP is designed to permit a committee of the Board of Directors of the Company (the “Committee”) to grant a full range of equity and cash incentive awards, including restricted stock and option awards. The purpose of the MIP is to attract, retain and motivate officers and employees of, consultants to, and non-employee directors providing services to the Company and its subsidiaries by providing them with the opportunity to acquire shares of the Company’s common stock, to receive monetary payments based on the value of such shares or to receive other equity or cash incentive compensation. The MIP will terminate ten years after the Effective Date unless sooner terminated.

Plan and Participant Share Limits

The maximum number of shares of common stock of the Company issuable under the MIP is 1,250,000 shares, all of which if the Committee so elects, may be issued as “incentive stock options”. Of the shares reserved, only 312,500 may be issued for “full value benefits”. Full value benefits are stock awards designed to provide equity compensation based on the full value of a share of stock. Full value benefits are distinguished from “appreciation benefits” which are designed to provide equity compensation based only on the appreciation of the value of a share of stock from the date of grant.

Shares are counted against the authorization only to the extent they are actually issued. Thus, awards for shares which terminate by expiration, forfeiture, cancellation, or otherwise, or are settled in cash in lieu of shares, shall result in shares being again available for grant. Also, if the exercise price or tax withholding requirements of any award are satisfied by tendering shares to the Company, or if a stock appreciation right is exercised, only the number of shares issued, net of the shares tendered, will be deemed issued under the MIP. The maximum number of shares will not be reduced to reflect (i) dividends or dividend equivalents that are reinvested into

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additional shares or credited as additional benefits, or (ii) shares issued in satisfaction of awards that are assumed or substituted, in connection with any merger, consolidation, acquisition of property or stock or reorganization, for awards made under another plan.

The MIP also imposes per-participant award limits. The maximum number of shares of common stock that may be granted to any person with respect to any appreciation benefits denominated in shares in any consecutive twelve month period is 250,000 shares. The maximum number of shares of common stock that may be granted to any person with respect to full value benefits denominated in shares in any consecutive thirty-six-month period is 100,000 shares. The maximum grant denominated in cash to any person in any consecutive twelve-month period is $3,000,000.

If there is a change in the Company’s common stock or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, (i) stock options and stock appreciation rights will become exercisable for the securities, cash or property they would have received had they exercised prior to such change, and (ii) to prevent dilution or enlargement of participants’ rights under the Plan, the Committee shall adjust, in an equitable manner, the number and kind of shares that may be issued and granted under the Plan, the number and kind of shares subject to outstanding awards, the exercise price applicable to outstanding awards, and the fair market value of the Common Stock and other value determinations or affected terms applicable to outstanding awards. The Committee shall also make appropriate adjustment to awards under the Plan to reflect, or relate to, such changes and to modify any other terms of outstanding awards, such as modification of performance targets. The Committee shall also make adjustments in recognition of unusual or nonrecurring events affecting the Company or its financial statements, or in response to changes in applicable law, regulations or accounting principles.

Administration

The Committee is responsible for administering the MIP and has the authority to establish rules for administration consistent with the terms of the MIP. The Committee has the sole discretion to make determinations and interpretations under the MIP and to take such action in connection with the MIP and any awards granted thereunder it deems necessary or advisable. The Committee establishes the terms and conditions of awards and has the authority to cancel awards upon a change of control of the Company.

The Committee may delegate administrative duties and powers to one or more of its members or to one or more officers, agents, or advisors. To the extent permitted by law, the Committee may also delegate to one or more officers the authority to designate employees and consultants to receive awards and determine the terms and conditions of such awards. If such authority is delegated, (i) the officer(s) shall have no authority to make awards to Section 16 insiders, (ii) the delegation shall set forth the amount of shares authorized, and (iii) the officer(s) shall report back to the Committee periodically regarding the scope and nature of awards granted.

Eligibility

Employees, non-employee directors, and consultants of the Company and its subsidiaries who are selected by the Committee are eligible to participate in the MIP. In addition, benefits awarded to non-employee directors of the Company under the MIP may be assigned, at the discretion of the Committee, to the entity that employs such non-employee director or to any of its affiliates.

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Types of Awards

The Committee is authorized to grant stock options, stock appreciation rights (“SARs”), stock awards, stock units, other stock based awards, dividend equivalents and cash awards. Awards are referred to in the MIP as “Benefits”. Stock awards, stock units, other stock based awards and cash awards may be designed as “performance-based awards,” that comply with requirements of Section 162(m) of the Internal Revenue Code of 1986, as amended.

Termination of Employment

Each award agreement will specify the effect of a holder’s termination of employment with, or service for, the Company, including the extent to which unvested portions of the award will be forfeited and the extent to which options, SARs, or other awards requiring exercise will remain exercisable. Such provisions will be determined in the Committee’s sole discretion.

Treatment of Awards upon a Change of Control

If there is a change in control of the Company, the Committee, in its discretion, may take such actions as it deems appropriate with respect to outstanding awards, including, without limitation, accelerating the exercisability or vesting of such awards, or such other actions provided in an agreement approved by the Board of Directors in connection with a change in control and such awards shall be subject to the terms of such agreement as the Committee, in its discretion, shall determine.

Under the MIP, a change in control generally is triggered if there is an acquisition of 35% or more of the voting power of all of the Company’s capital stock entitled to vote in the election of the Board of Directors, individuals on the Board cease to constitute a majority of the board, there is consummation of a merger or consolidation in which the Company or any of its subsidiaries is not the continuing or surviving corporation or pursuant to which all shares of common stock are exchanged for cash securities or other property, consummation of a complete plan of liquidation of the Company or the consummation of a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company.

Amendment of Awards or Plan and Awards

The Committee may at any time alter, amend, modify, suspend, or terminate the MIP or any outstanding award in whole or in part. No amendment of the MIP will be made without shareholder approval if shareholder approval is required by law. The Committee may amend the terms of any existing award provided the terms of the award so permit.

Initial Awards

Within 60 days after emergence, the Company intends to grant a portion of the authorized shares to its executive officers and other management employees, leaving the remainder of the shares to make comparable grants to incoming executive and management employees and awards to non-employee directors. Awards will be conditioned upon compliance with restrictive covenants.

Initial Stock Option Awards. The stock options will have a seven-year term and vest with respect to 25% of the grant on the first anniversary of the date of grant, and thereafter with respect to an additional 6.25% of the grant on the completion of each three month period thereafter so that the entire grant is fully vested 48 months after the date of grant.

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Initial Restricted Stock Awards. The restricted stock will vest with respect to 33.4% of the award on the first anniversary of the date of grant and with respect to an additional 8.325% on the completion of each three month period thereafter so that the entire grant is fully vested 48 months after the date of grant. Any shares not vested upon termination of employment are forfeited.

Effect of Change in Control; Employment Termination. Upon a change in control, options and restricted stock become 100% vested unless the awards are assumed, converted or replaced by continuing entity. However, replacement awards are 100% vested if the grantee’s employment is terminated without cause within 12 months following the change in control.

Absent a change of control, upon a termination of employment for any reason, the awards will be treated as follows.

• Death or Disability – Awards will be 100% vested; options may be exercised for one year following employment termination.

• Retirement – Awards will continue to vest during the post termination period provided the grantee continues to comply with the restrictive covenants; option holders have three years following the later of retirement or vesting to exercise.

• Termination without Cause – Awards continue to vest during any severance period; options remain exercisable for 90 days following the later of vesting or termination of employment.

• Voluntary Resignation – Restricted stock awards are forfeited; vested options remain exercisable for 30 days or if later the expiration of any blackout period.

• Termination for Cause – Awards are cancelled immediately upon such employment termination.

With respect to future awards, the benefits or amounts that would be received under the MIP by executive officers, nonexecutive directors and nonexecutive officer employees are discretionary and are therefore not determinable at this time. In addition, the benefits or amounts that would have been received by or allocated to such persons for the last completed fiscal year if the plan had been in effect cannot be determined.

The foregoing description of the MIP is qualified in its entirety by reference to the MIP, which is incorporated herein by reference and attached hereto as Exhibit 10.5.

Item 1.02 Termination of a Material Definitive Agreement

Pursuant to the Plan, on the Effective Date, the following material agreements were terminated: (i) Indenture dated as of December 24, 2003 between the Company and U.S. Bank National Association, as Trustee, (ii) Indenture dated as of December 24, 2003 between the Company and U.S. Bank National Association, as Trustee, (iii) Indenture dated February 1, 1986 between Cray Research, Inc. and Manufacturers Hanover Trust Company, as Trustee, (iv) First Supplemental Indenture dated June 30, 1996 between the Company, Cray Research, Inc., and Chemical Bank, (v) Security Agreement dated December 24, 2003 between the Company and U.S. Bank National Association, as Trustee, (vi) Intellectual Property Security Agreement dated December 24, 2003 between the Company and U.S. Bank National Association, as Trustee, (vii) First Supplemental Indenture, dated September 18, 2006, between SGI and U.S. Bank National Association, as Trustee, (viii) Second Supplemental Indenture, dated September 18, 2006, between SGI and U.S. Bank National Association, as Trustee, (ix) 1985 Stock Incentive

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Program, as amended and restated, (x) Amended and Restated 1993 Long-Term Incentive Stock Plan, (xi) Amended and Restated 1996 Supplemental Non-Executive Equity Incentive Plan, and (xii) Amended and Restated 1998 Employee Stock Purchase Plan, (xiii) Employment Agreement between Silicon Graphics, Inc. and Dennis McKenna, as amended, and (xiv) Restricted Stock Agreement between Silicon Graphics, Inc. and Dennis McKenna, as amended.

In addition, on October 18, 2006, the Board of Directors of the Company terminated the Non Qualified Deferred Compensation Plan dated as of September 9, 1994.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

See “Item 1.01 Entry Into a Material Definitive Agreement” above for information regarding the Credit Agreement, Security Agreement and Pledge Agreement, which is incorporated herein by reference.

Item 3.02 Unregistered Sales of Equity Securities.

Pursuant to the Plan, as of the Effective Date, all of the shares of Company’s common stock which had been outstanding prior to the Effective Date (the “Old Common Stock”), were extinguished and deemed cancelled. In accordance with the Plan, the Company issued 11,125,000 shares of common stock, par value $0.01 per share (the “Common Stock”) on the Effective Date, which shares will be distributed in accordance with the Plan. All of the above shares of Common Stock were issued pursuant to the exemption from the registration requirements of the Securities Act afforded by (i) Section 1145 of the United States Bankruptcy Code or (ii) Section 4(2) of the Securities Act. Before the Effective Date, the Old Common Stock was registered pursuant to Section 12(g) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). On the Effective Date, the Common Stock, as issued in accordance with the Plan, was deemed registered under Section 12(g) of the Exchange Act as a successor issue, and the Company as reorganized was deemed a successor issuer, in relation to the previously registered Old Common Stock in accordance with SEC Rule 12g-3(a).

Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

As of the Effective Date, the following persons ceased being directors of the Company: Lewis S. Edelheit, Robert M. White, Anthony R. Muller and Robert R. Bishop.

As of the Effective Date, the following persons became members of the Board of Directors pursuant to and by operation of the Plan: Eugene I. Davis, Anthony Grillo, Kevin D. Katari, and Chun Won Yi . Dennis McKenna and James A. McDivitt remained as directors of the Company. On October 18, 2006, the Board of Directors elected Kevin D. Katari as Chairman of the Board.

Pursuant to the Company’s Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate”), the Company’s Board is staggered such that two directors are up for reelection each year. Class I Directors, whose initial term shall expire at the annual meeting of stockholders to be held in 2007, are James A. McDivitt and Dennis McKenna; Class II Directors, whose initial term shall expire at the annual meeting of stockholders to be held in 2008, are Anthony Grillo and Kevin D. Katari; and Class III Directors, whose initial term shall expire at the annual meeting of stockholders to be held in 2009, are Eugene I. Davis and Chun Won Yi. At

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each annual meeting of stockholders, directors elected to succeed those directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election.

The following is biographical information regarding the members of the Company’s Board of Directors as of the Effective Date:

Eugene I. Davis, 51, is Chairman and Chief Executive Officer of Pirinate Consulting Group, L.L.C., a privately-held consulting firm specializing in crisis and turn-around management, liquidation and sales management, merger and acquisition consulting, hostile and friendly takeovers, proxy contests, and strategic planning advisory services for public and private business entities. Mr. Davis is also a director of Knology, Inc., Haights Cross Communications, Inc., PRG-Schultz International, Inc., Atlas Air Worldwide and Medicor Ltd.

Anthony Grillo, 51, has been serving since 2005 as the Chief Executive Officer of American Securities Advisors, LLC and American Securities Distressed Partners, LLC, both of which he founded and which focus on providing advisory services to and making investments in companies in transition. From January 2005 through September 2005, Mr. Grillo served as Chief Executive Officer of CricketHill Associates, LLC, a boutique advisory firm providing financial advisory services to distressed companies. From March 2001 through December 2004, Mr. Grillo served as the Senior Managing Director of Evercore Partners, an investment banking boutique providing advisory services to multinational corporations on significant mergers, acquisitions, divestitures, restructurings and other strategic corporate transactions. From 1999 through March 2001, Mr. Grillo was a Senior Managing Director of JLL Partners, a private equity investment firm. Mr. Grillo is also a director of Littelfuse, Inc.

Kevin D. Katari, 37, is a Managing Member of Watershed Asset Management, L.L.C., a manager of discretionary capital for institutional investors (“Watershed”). He is also a Managing Member of its affiliate, WS Partners, L.L.C. Mr. Katari joined Watershed in April 2002 and has served as a Managing Member of Watershed and WS Partners, L.L.C. since March 2004. From 1999 to 2002, Mr. Katari was a co-founder, Vice President and member of the Board of Directors of Bluefire Systems, Inc., a startup retail consulting and software firm Mr. Katari is also a member of the Board of Directors of Carmike Cinemas, Inc. Affiliates of Watershed are Lenders under the Credit Agreement. As such, they received a pro rata portion of the facility fee paid to the Lenders at the closing of the term loan under the Credit Agreement. As part of the Reorganization, the Company entered into the Liquidating Trust Agreement, dated as of October 17, 2006 (the “Liquidating Trust Agreement”), with a trustee to establish a liquidating trust (the “Liquidating Trust”) with respect to certain assets, including litigation claims, transferred to the Liquidating Trust from the Debtors’ Chapter 11 estate. Affiliates of Watershed are beneficial holders of the Liquidating Trust and Mr. Katari is a member of the Trust Advisory Board. Prior to the Effective Date, affiliates of Watershed also received their pro rata portion of the backstop fees payable in connection with certain Backstop Commitment Agreements, dated July 31, 2006 (the “Backstop Commitment Agreements”). For more information regarding the Liquidating Trust Agreement and the Backstop Commitment Agreements, see the copy of the Plan attached as an exhibit to the Form 8-K filed by the Company with the Securities and Exchange Commission on September 19, 2006. Any description of the Credit Agreement, the Liquidating Trust Agreement or the Backstop Commitment Agreements is qualified in its entirety by the full terms and conditions thereof.

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James A. McDivitt, 77, was Senior Vice President, Government Operations and International, of Rockwell International Corporation until his retirement in March 1995. Mr. McDivitt also serves as a director of Ionatron, Inc.

Dennis McKenna, 57, was appointed as the President and Chief Executive Officer of the Company in January 2006. On February 1, 2006, the Board of Directors appointed Mr. McKenna as a director and Chairman of the Board and Mr. McKenna served as Chairman until October 2006. Prior to joining the Company, Mr. McKenna served as the President and Chief Executive Officer of SCP Global Technologies, a private company that is a supplier of semiconductor capital equipment, from March to August 2005. From October 1997 to August 2004, Mr. McKenna served initially as President and Chief Executive Officer, and subsequently as President and Chief Executive Officer and Chairman, of ChipPAC, Inc., a public global semiconductor manufacturing and services company.

Chun Won Yi, 29, has been serving since May 2003 as an Associate and Research Analyst of Quadrangle Group LLC, a private investment firm (“Quadrangle”), focused on the firm’s distressed debt business. From June 2002 to May 2003, Mr. Yi was an Associate in the Diversified Industries Group at JPMorgan, and from June 1999 to June 2002 served as an Analyst for JPMorgan. Affiliates of Quadrangle are Lenders under the Credit Agreement. As such, they received a pro rata portion of the facility fee paid to the Lenders at the closing of the term loan under the Credit Agreement. Affiliates of Quadrangle are beneficial holders of the Liquidating Trust and Mr. Yi is a member of the Trust Advisory Board. Prior to the Effective Date, affiliates of Quadrangle also received their pro rata portion of the backstop fees payable in connection with the Backstop Commitment Agreements. For more information regarding the Liquidating Trust Agreement and the Backstop Commitment Agreements, see the copy of the Plan attached as an exhibit to the Form 8-K filed by the Company with the Securities and Exchange Commission on September 19, 2006. Any description of the Credit Agreement, the Liquidating Trust Agreement or the Backstop Commitment Agreements is qualified in its entirety by the full terms and conditions thereof.

The following directors will be members of the Audit Committee of the Board of Directors: Eugene I. Davis (Chairman), Anthony Grillo and James A. McDivitt. The following directors will be members of the Compensation and Human Resources Committee of the Board of Directors: Anthony Grillo (Chairman), Eugene I. Davis and James A. McDivitt . The following directors will be members of the Corporate Governance and Nominating Committee of the Board of Directors: Chun Won Yi (Chairman) and Kevin D. Katari .

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

By operation of the Plan, on the Effective Date, the Company adopted the Amended and Restated Certificate and the amended and restated Bylaws (the “Bylaws”). The Amended and Restated Certificate provides, among other things, that (i) the total authorized capital stock of the Company is 30,000,000 shares of capital stock consisting of (a) 25,000,000 shares of Common Stock and (b) 5,000,000 shares of undesignated preferred stock, $0.01 par value per share, (ii) pursuant to Section 1123(a) of the Bankruptcy Code, the issuance of non-voting equity securities is prohibited, and (iii) action may not be taken by stockholders by written consent and may be taken only at a duly called annual or special meeting of stockholders. The Bylaws provide, among other things, that (i) a special meeting of the stockholders may be called only by a majority of the board of directors of the Company and (ii) the Bylaws may be amended or repealed only by (a) the affirmative vote of a majority of the board of directors of the Company or (b) the affirmative vote of at least 75% of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class; provided, however, that if the board of

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directors of the Company recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of the majority of the outstanding shares.

The Amended and Restated Certificate and the Bylaws are attached hereto as Exhibits 3.1 and 3.2, respectively, and are incorporated herein by reference. The foregoing summary does not purport to be complete and is qualified in its entirety by reference to the Amended and Restated Certificate and the Bylaws.

Item 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Silicon Graphics, Inc.
3.2	Amended and Restated Bylaws of Silicon Graphics, Inc.
10.1	Registration Rights Agreement, dated October 17, 2006, by and among Silicon Graphics, Inc. and certain stockholders of Silicon Graphics, Inc., including Watershed Capital Partners, L.P., Watershed Capital Institutional Partners, L.P., Watershed Capital Partners (Offshore), Ltd., QDRF Master Ltd., Quadrangle Debt Recovery Income Fund Master Ltd., Quadrangle Debt Opportunities Fund Master Ltd., and Encore Fund, L.P.
10.2	Senior Secured Credit Facility, dated October 17, 2006, by and among Silicon Graphics, Inc., certain of its subsidiaries Inc., Morgan Stanley Senior Funding, Inc., General Electric Capital Corporation and the lenders party thereto.
10.3	Security Agreement, dated October 17, 2006, by and among Silicon Graphics, Inc., certain of its subsidiaries and General Electric Capital Corporation, in its capacity as the Collateral Agent under the Credit Agreement.
10.4	Pledge Agreement, dated October 17, 2006, by and among Silicon Graphics, Inc., certain of its subsidiaries and General Electric Capital Corporation, in its capacity as the Collateral Agent under the Credit Agreement.
10.5	Silicon Graphics, Inc. Management Incentive Plan.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Silicon Graphics, Inc.
Dated: October 20, 2006	By:	/s/ Barry Weinert
		Barry Weinert
		Vice President and General Counsel

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Exhibit Index

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Silicon Graphics, Inc.
3.2	Amended and Restated Bylaws of Silicon Graphics, Inc.
10.1	Registration Rights Agreement, dated October 17, 2006, by and among Silicon Graphics, Inc. and certain stockholders of Silicon Graphics, Inc. , including Watershed Capital Partners, L.P., Watershed Capital Institutional Partners, L.P., Watershed Capital Partners (Offshore), Ltd., QDRF Master Ltd., Quadrangle Debt Recovery Income Fund Master Ltd., Quadrangle Debt Opportunities Fund Master Ltd., and Encore Fund, L.P.
10.2	Senior Secured Credit Facility, dated October 17, 2006, by and among Silicon Graphics, Inc., certain of its subsidiaries, Morgan Stanley Senior Funding, Inc., General Electric Capital Corporation and the lenders party thereto.
10.3	Security Agreement, dated October 17, 2006, by and among Silicon Graphics, Inc., certain of its subsidiaries and General Electric Capital Corporation, in its capacity as the Collateral Agent under the Credit Agreement.
10.4	Pledge Agreement, dated October 17, 2006, by and among Silicon Graphics, Inc., certain of its subsidiaries and General Electric Capital Corporation, in its capacity as the Collateral Agent under the Credit Agreement.
10.5	Silicon Graphics, Inc. Management Incentive Plan.

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EX-3.1

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

SILICON GRAPHICS, INC.

Silicon Graphics, Inc., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

1. The name of the Corporation is Silicon Graphics, Inc. The date of the filing of the original Certificate of Incorporation with the Secretary of State of the State of Delaware was September 5, 1986 (the “Original Certificate”).

2. On May 8, 2006, the Corporation and certain of its subsidiaries (collectively, the “Debtors”) filed voluntary petitions for relief under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”) (Case Nos. 06-10977 (BRL) through 06-10990 (BRL)). This Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) amends and restates the Original Certificate, as amended to date, and has been duly adopted in accordance with Sections 242, 245 and 303 of the General Corporation Law of the State of Delaware (the “DGCL”), pursuant to the authority granted to the Corporation under Section 303 of the DGCL to put into effect and carry out the Debtors’ First Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, as confirmed on September 19, 2006 by order (the “Order”) of the Bankruptcy Court. Provision for amending the Original Certificate is contained in the Order of the Bankruptcy Court having jurisdiction under the Bankruptcy Code for the reorganization of the Corporation.

3. The Original Certificate is hereby amended and restated in its entirety to read as follows:

ARTICLE I

The name of the Corporation is Silicon Graphics, Inc.

ARTICLE II

The address of the Corporation’s registered office in the State of Delaware is c/o The Corporation Trust Company, 1209 Orange Street in the City of Wilmington, County of New Castle. The name of its registered agent at such address is The Corporation Trust Company.

ARTICLE III

The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the DGCL.

ARTICLE IV

CAPITAL STOCK

The total number of shares of capital stock which the Corporation shall have authority to issue is 30,000,000 shares, of which (i) 25,000,000 shares shall be a class designated as common stock, par value $0.01 per share (the “Common Stock”), and (ii) 5,000,000 shares shall be a class designated as undesignated preferred stock, par value $0.01 per share (the “Undesignated Preferred Stock”).

The number of authorized shares of the class of Undesignated Preferred Stock may from time to time be increased or decreased (but not below the number of shares outstanding) by the affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote, without a vote of the holders of the Undesignated Preferred Stock (except as otherwise provided in any certificate of designations of any series of Undesignated Preferred Stock).

The powers, preferences and rights of, and the qualifications, limitations and restrictions upon, each class or series of stock shall be determined in accordance with, or as set forth below in, this Article IV.

A.     COMMON STOCK

Subject to all the rights, powers and preferences of the Undesignated Preferred Stock and except as provided by law or in this Article IV (or in any certificate of designations of any series of Undesignated Preferred Stock):

(a) the holders of the Common Stock shall have the exclusive right to vote for the election of directors of the Corporation (the “Directors”) and on all other matters requiring stockholder action, each outstanding share entitling the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock, as such, shall not be entitled to vote on any amendment to this Certificate of Incorporation (or on any amendment to a certificate of designations of any series of Undesignated Preferred Stock) that alters or changes the powers, preferences, rights or other terms of one or more outstanding series of Undesignated Preferred Stock if the holders of such affected series are entitled to vote, either separately or together with the holders of one or more other such series, on such amendment pursuant to this Certificate of Incorporation (or pursuant to a certificate of designations of any series of Undesignated Preferred Stock) or pursuant to the DGCL;

(b) dividends may be declared and paid or set apart for payment upon the Common Stock out of any assets or funds of the Corporation legally available for the payment of dividends, but only when and as declared by the Board of Directors or any authorized committee thereof; and

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(c) upon the voluntary or involuntary liquidation, dissolution or winding up of the Corporation, the net assets of the Corporation shall be distributed pro rata to the holders of the Common Stock.

B.     UNDESIGNATED PREFERRED STOCK

The Board of Directors or any authorized committee thereof is expressly authorized, to the fullest extent permitted by law, to provide for the issuance of the shares of Undesignated Preferred Stock in one or more series of such stock, and by filing a certificate pursuant to applicable law of the State of Delaware, to establish or change from time to time the number of shares of each such series, and to fix the designations, powers, including voting powers, full or limited, or no voting powers, preferences and the relative, participating, optional or other special rights of the shares of each series and any qualifications, limitations and restrictions thereof.

C.     NONVOTING EQUITY SECURITIES

The Corporation shall not issue any nonvoting equity securities to the extent prohibited by section 1123(a)(6) of Title 11 of the United States Code (the “Bankruptcy Code”) as in effect on the date of the filing of this Certificate of Incorporation with the Secretary of State of the State of Delaware; provided, however, that this Section C of Article IV (i) will have no further force and effect beyond that required under Section 1123(a)(6) of the Bankruptcy Code, (ii) will have such force and effect, if any, only for so long as Section 1123(a)(6) of the Bankruptcy Code is in effect and applicable to the Corporation, and (iii) in all events may be amended or eliminated in accordance with such applicable law as from time to time may be in effect.

ARTICLE V

STOCKHOLDER ACTION

1. Action without Meeting. Except as otherwise provided herein, any action required or permitted to be taken by the stockholders of the Corporation at any annual or special meeting of stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders and may not be taken or effected by a written consent of stockholders in lieu thereof.

2. Special Meetings. Except as otherwise required by statute and subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the Directors then in office. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.

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ARTICLE VI

DIRECTORS

1. General. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided herein or required by law.

2. Election of Directors. Election of Directors need not be by written ballot unless the Bylaws of the Corporation (the “Bylaws”) shall so provide.

3. Number of Directors; Term of Office. The number of Directors of the Corporation shall be fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors. The Directors, other than those who may be elected by the holders of any series of Undesignated Preferred Stock, shall be classified, with respect to the term for which they severally hold office, into three classes, as nearly equal in number as reasonably possible. The initial Class I Directors of the Corporation shall be James A. McDivitt and Dennis McKenna; the initial Class II Directors of the Corporation shall be Anthony Grillo and Kevin D. Katari; and the initial Class III Directors of the Corporation shall be Eugene I. Davis and Chun Won Yi. The initial Class I Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2007, the initial Class II Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2008, and the initial Class III Directors shall serve for a term expiring at the annual meeting of stockholders to be held in 2009. At each annual meeting of stockholders, Directors elected to succeed those Directors whose terms expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. Notwithstanding the foregoing, the Directors elected to each class shall hold office until their successors are duly elected and qualified or until their earlier resignation, death or removal.

Notwithstanding the foregoing, whenever, pursuant to the provisions of Article IV of this Certificate of Incorporation, the holders of any one or more series of Undesignated Preferred Stock shall have the right, voting separately as a series or together with holders of other such series, to elect Directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Certificate of Incorporation and any certificate of designations applicable thereto.

4. Vacancies. Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect Directors and to fill vacancies in the Board of Directors relating thereto, any and all vacancies in the Board of Directors, however occurring, including, without limitation, by reason of an increase in size of the Board of Directors, or the death, resignation, disqualification or removal of a Director, shall be filled solely and exclusively by the affirmative vote of a majority of the remaining Directors then in office, even if less than a quorum of the Board of Directors, and not by the stockholders. Any Director appointed in accordance with the preceding sentence shall hold office for the remainder of the full term of the class of Directors in which the new directorship was created or the vacancy occurred and until such Director’s successor shall have been duly elected and qualified or until his or her earlier resignation, death or removal. Subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect Directors, when the number of Directors is increased or decreased, the Board of Directors shall, subject to Article VI.3 hereof, determine the class or classes to which the increased or decreased number of Directors shall be apportioned; provided, however, that no decrease in the number of Directors shall shorten the term of any incumbent

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Director. In the event of a vacancy in the Board of Directors, the remaining Directors, except as otherwise provided by law, shall exercise the powers of the full Board of Directors until the vacancy is filled.

5. Removal. Subject to the rights, if any, of any series of Undesignated Preferred Stock to elect Directors and to remove any Director whom the holders of any such stock have the right to elect, any Director (including persons elected by Directors to fill vacancies in the Board of Directors) may be removed from office (i) only with cause and (ii) only by the affirmative vote of the holders of 75% or more of the shares then entitled to vote at an election of Directors. At least forty-five (45) days prior to any meeting of stockholders at which it is proposed that any Director be removed from office, written notice of such proposed removal and the alleged grounds thereof shall be sent to the Director whose removal will be considered at the meeting.

ARTICLE VII

LIMITATION OF LIABILITY

A Director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a Director, except for liability (a) for any breach of the Director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under Section 174 of the DGCL or (d) for any transaction from which the Director derived an improper personal benefit. If the DGCL is amended after the effective date of this Certificate of Incorporation to authorize corporate action further eliminating or limiting the personal liability of Directors, then the liability of a Director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.

Any repeal or modification of this Article VII by either (i) the stockholders of the Corporation or (ii) an amendment to the DGCL, shall not adversely affect any right or protection existing at the time of such repeal or modification with respect to any acts or omissions occurring before such repeal or modification of a person serving as a Director at the time of such repeal or modification.

ARTICLE VIII

AMENDMENT OF BYLAWS

1. Amendment by Directors. Except as otherwise provided by law, the Bylaws of the Corporation may be amended or repealed by the Board of Directors by the affirmative vote of a majority of the Directors then in office.

2. Amendment by Stockholders. The Bylaws of the Corporation may be amended or repealed at any annual meeting of stockholders, or special meeting of stockholders called for such purpose as provided in the Bylaws, by the affirmative vote of at least 75% of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class; provided, however, that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only

5

require the affirmative vote of the majority of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class.

ARTICLE IX

AMENDMENT OF CERTIFICATE OF INCORPORATION

The Corporation reserves the right to amend or repeal this Certificate of Incorporation in the manner now or hereafter prescribed by statute and this Certificate of Incorporation, and all rights conferred upon stockholders herein are granted subject to this reservation. Whenever any vote of the holders of voting stock is required to amend or repeal any provision of this Certificate of Incorporation, and in addition to any other vote of holders of voting stock that is required by this Certificate of Incorporation or by law, such amendment or repeal shall require the affirmative vote of the majority of the outstanding shares entitled to vote on such amendment or repeal, and the affirmative vote of the majority of the outstanding shares of each class entitled to vote thereon as a class, at a duly constituted meeting of stockholders called expressly for such purpose; provided, however, that the affirmative vote of not less than 75% of the outstanding shares entitled to vote on such amendment or repeal, and the affirmative vote of not less than 75% of the outstanding shares of each class entitled to vote thereon as a class, shall be required to amend or repeal any provision of Article V, Article VI, Article VII, Article VIII or Article IX of this Certificate.

ARTICLE X

BUSINESS OPPORTUNITIES

(a) In anticipation that Watershed Capital Partners, L.P., Watershed Capital Institutional Partners, L.P., Watershed Capital Partners (Offshore), Ltd., Quadrangle Debt Recovery Income Fund Master Ltd., Quadrangle Debt Opportunities Fund Master Ltd., QDRF Master Ltd. and/or their respective affiliates (collectively, the “Substantial Holders”) will each be, indirectly or directly, a substantial stockholder of the Corporation, and in recognition of the benefits to be derived by the Corporation through its continued contractual, corporate and business relations with the Substantial Holders (including service of the respective officers, directors, partners, managers, employees or affiliates of the Substantial Holders (collectively, “Substantial Persons”) to the Corporation) the provisions of this Article X are set forth to regulate, define and guide the conduct of certain affairs of the Corporation as they may involve Substantial Holders and any Substantial Persons, and the powers, rights, duties and liabilities of the Corporation and its officers, directors and stockholders in connection therewith.

(b) Except as any Substantial Holder may otherwise agree in writing, such Substantial Holder shall have the right to (i) engage, directly or indirectly, in the same or similar business activities or lines of business as the Corporation and (ii) do business with any client, competitor or customer of the Corporation, with the result that the Corporation shall have no right in or to such activities or any proceeds or benefits therefrom, and neither a Substantial Holder nor any Substantial Person shall be liable to the Corporation or its stockholders for breach of any fiduciary duty by reason of any such activities of such Substantial Holder or of such Substantial Person’s participation therein. In the event that a Substantial Holder or any

6

Substantial Person acquires knowledge of a potential transaction or matter that may be a corporate opportunity for both such Substantial Holder and the Corporation, the Substantial Holder and such Substantial Person shall have no duty to communicate or present such corporate opportunity to the Corporation and the Corporation hereby renounces any interest or expectancy it may have in such corporate opportunity, with the result that the Substantial Holder or such Substantial Person shall not be liable to the Corporation or its stockholders for breach of any fiduciary duty, including for breach of any fiduciary duty as a stockholder of the Corporation by reason of the fact that such Substantial Holder pursues or acquires such corporate opportunity for itself, directs such corporate opportunity to another person or entity, or does not present such corporate opportunity to the Corporation, unless such transaction or corporate opportunity is presented to, or acquired, created or developed by, or otherwise comes into the possession of, a Substantial Person expressly and solely in such Substantial Person’s capacity as a Director of the Corporation.

(c) For the purposes of this Article X only, “corporate opportunities” shall not include any business opportunities that the Corporation is not financially or contractually able to undertake, or that are, from their nature, not in the line of the Corporation’s business or that are ones in which the Corporation has no interest; and the “Corporation” shall mean the Corporation and all corporations, partnerships, joint ventures, associations and other entities in which the Corporation beneficially owns (directly or indirectly) fifty percent or more of the outstanding voting stock, voting power or similar voting interests.

(d) Any person or entity purchasing or otherwise acquiring any interest in any shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article X.

Notwithstanding anything in this Certificate of Incorporation to the contrary and in addition to any vote of the Board of Directors required by this Certificate of Incorporation, the affirmative vote of the holders of 75% of the shares of capital stock of the Corporation held by the Substantial Holders shall be required to alter, amend or repeal in a manner adverse to the interests of a Substantial Holder or any Substantial Person, or adopt any provision adverse to the interests of a Substantial Holder or any Substantial Person and inconsistent with, any provision of this Article X.

[End of Text]

7

THIS AMENDED AND RESTATED CERTIFICATE OF INCORPORATION is executed as of this 17th day of October, 2006.

SILICON GRAPHICS, INC.
By:	/s/ DENNIS MCKENNA
	Dennis McKenna
	Chief Executive Officer and President

8

EX-3.2

Exhibit 3.2

SECOND AMENDED AND RESTATED

BYLAWS

OF

SILICON GRAPHICS, INC.

a Delaware corporation

Adopted: October 17, 2006

TABLE OF CONTENTS

	Page
ARTICLE I - Stockholders	1
SECTION 1. Annual Meeting	1
SECTION 2. Notice of Stockholder Business and Nominations	1
SECTION 3. Special Meetings	3
SECTION 4. Notice of Meetings; Adjournments	3
SECTION 5. Quorum	4
SECTION 6. Voting and Proxies	5
SECTION 7. Action at Meeting	5
SECTION 8. Stockholder Lists	5
SECTION 9. Presiding Officer	5
SECTION 10. Inspectors of Elections	6
ARTICLE II - Directors	6
SECTION 1. Powers	6
SECTION 2. Number and Terms	6
SECTION 3. Qualification	6
SECTION 4. Vacancies	6
SECTION 5. Removal	6
SECTION 6. Resignation	6
SECTION 7. Regular Meetings	6
SECTION 8. Special Meetings	7
SECTION 9. Notice of Meetings	7
SECTION 10. Quorum	7
SECTION 11. Action at Meeting	7
SECTION 12. Action by Consent	8
SECTION 13. Manner of Participation	8
SECTION 14. Committees	8
SECTION 15. Compensation of Directors	8
ARTICLE III - Officers	8
SECTION 1. Enumeration	8
SECTION 2. Election	9
SECTION 3. Qualification	9
SECTION 4. Tenure	9
SECTION 5. Resignation	9
SECTION 6. Removal	9
SECTION 7. Absence or Disability	9
SECTION 8. Vacancies	9
SECTION 9. Chief Executive Officer	9
SECTION 10. Chairman of the Board	9
SECTION 11. President	9
SECTION 12. Chief Financial Officer	10
SECTION 13. Chief Operating Officer	10
SECTION 14. Vice Presidents and Assistant Vice Presidents	10
SECTION 15. Treasurer and Assistant Treasurers	10

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TABLE OF CONTENTS

SECTION 16. Secretary and Assistant Secretaries	10
SECTION 17. Other Powers and Duties	10
ARTICLE IV - Capital Stock	11
SECTION 1. Certificates of Stock	11
SECTION 2. Transfers	11
SECTION 3. Record Holders	11
SECTION 4. Record Date	11
SECTION 5. Replacement of Certificates	12
ARTICLE V - Indemnification	12
SECTION 1. Definitions	12
SECTION 2. Indemnification of Directors and Officers	13
SECTION 3. Indemnification of Non-Officer Employees	14
SECTION 4. Good Faith	14
SECTION 5. Advancement of Expenses to Directors Prior to Final Disposition	15
SECTION 6. Advancement of Expenses to Officers and Non-Officer Employees Prior to Final Disposition	15
SECTION 7. Contractual Nature of Rights	16
SECTION 8. Non-Exclusivity of Rights	16
SECTION 9. Insurance	16
SECTION 10. Other Indemnification	16
ARTICLE VI - Miscellaneous Provisions	17
SECTION 1. Fiscal Year	17
SECTION 2. Seal	17
SECTION 3. Execution of Instruments	17
SECTION 4. Voting of Securities	17
SECTION 5. Resident Agent	17
SECTION 6. Corporate Records	17
SECTION 7. Certificate	17
SECTION 8. Amendment of Bylaws	18
SECTION 9. Notices	18
SECTION 10. Waivers	18

ii

SECOND AMENDED AND RESTATED

BYLAWS

OF

SILICON GRAPHICS, INC.

a Delaware corporation

(the “Corporation”)

ARTICLE I

Stockholders

SECTION 1. Annual Meeting. The annual meeting of stockholders (any such meeting being referred to in these Bylaws as an “Annual Meeting”) shall be held at the hour, date and place within or outside of the United States which is fixed by the Board of Directors, which time, date and place may subsequently be changed at any time by vote of the Board of Directors. If no Annual Meeting has been held for a period of thirteen months after the Corporation’s last Annual Meeting, a special meeting in lieu thereof may be held, and such special meeting shall have, for the purposes of these Bylaws or otherwise, all the force and effect of an Annual Meeting. Any and all references hereafter in these Bylaws to an Annual Meeting or Annual Meetings also shall be deemed to refer to any special meeting(s) in lieu thereof.

SECTION 2. Notice of Stockholder Business and Nominations.

(a) Annual Meetings of Stockholders.

(i) Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an Annual Meeting (a) pursuant to the Corporation’s notice of meeting, (b) by or at the direction of the Board of Directors or (c) by any stockholder of the Corporation who was a stockholder of record at the time of giving of notice provided for in this Bylaw, who is entitled to vote at the meeting, who is present (in person or by proxy) at the meeting and who complies with the notice procedures set forth in this Bylaw. In addition to the other requirements set forth in this Bylaw, for any proposal of business to be considered at an Annual Meeting, it must be a proper subject for action by stockholders of the Corporation under Delaware law.

(ii) For nominations or other business to be properly brought before an Annual Meeting by a stockholder pursuant to clause (c) of paragraph (a)(1) of this Bylaw, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 90^th day nor earlier than the close of business on the 120^th day prior to the first anniversary of the preceding year’s Annual Meeting; provided, however, that in the event that the date of the Annual Meeting is advanced by

more than 30 days before or delayed by more than 60 days after such anniversary date, notice by the stockholder to be timely must be so delivered not later than the close of business on the later of the 90^th day prior to such Annual Meeting or the 10th day following the day on which Public Announcement of the date of such meeting is first made. Such stockholder’s notice shall set forth: (a) as to each person whom the stockholder proposes to nominate for election or reelection as a director, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors in an election contest, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (including such person’s written consent to being named in the proxy statement as a nominee and serving as a director if elected); (b) as to any other business that the stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, any material interest in such business of such stockholder and the beneficial owner, if any, on whose behalf the proposal is made, and the names and addresses of other stockholders known by the stockholder proposing such business to support such proposal, and the class and number of shares of the Corporation’s capital stock beneficially owned by such other stockholders; and (c) as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (1) the name and address of such stockholder, as they appear on the Corporation’s books, and of such beneficial owner, (2) the class and number of shares of the Corporation which are owned beneficially and of record by such stockholder and such beneficial owner, (3) a description of all arrangements or understandings between such beneficial owner and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made, and (4) a representation whether the beneficial owner intends or is part of a group that intends (A) to deliver a proxy statement and/or form of proxy to holders of at least the percentage of the Corporation’s outstanding capital stock required to elect the nominee and/or (B) otherwise to solicit proxies from stockholders in support of such nomination.

(iii) Notwithstanding anything in the second sentence of paragraph (a)(2) of this Section 2 to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no Public Announcement naming all of the nominees for director or specifying the size of the increased Board of Directors made by the Corporation at least 85 days prior to the first anniversary of the preceding year’s Annual Meeting, a stockholder’s notice required by this Bylaw shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the 10^th day following the day on which such Public Announcement is first made by the Corporation.

(b) General.

(i) Only such persons who are nominated in accordance with the provisions of this Bylaw shall be eligible for election and to serve as directors and only such business shall be conducted at an Annual Meeting as shall have been brought before the meeting in accordance with the provisions of this Bylaw. The Board of Directors or a designated committee thereof shall have the power to determine whether a nomination or any business proposed to be brought before the meeting was made in accordance with the provisions of this Bylaw. If neither the

2

Board of Directors nor such designated committee makes a determination as to whether any stockholder proposal or nomination was made in accordance with the provisions of this Bylaw, the presiding officer of the Annual Meeting shall have the power and duty to determine whether the stockholder proposal or nomination was made in accordance with the provisions of this Bylaw. If the Board of Directors or a designated committee thereof or the presiding officer, as applicable, determines that any stockholder proposal or nomination was not made in accordance with the provisions of this Bylaw, such proposal or nomination shall be disregarded and shall not be presented for action at the Annual Meeting.

(ii) Except as otherwise required by law, nothing in this Section 2 shall obligate the Corporation or the Board of Directors to include in any proxy statement or other stockholder communication distributed on behalf of the Corporation or the Board of Directors information with respect to any nominee for director submitted by a stockholder.

(iii) Notwithstanding the foregoing provisions of this Section 2, if the stockholder (or a qualified representative of the stockholder) does not appear at the Annual or special meeting of stockholders of the Corporation to present a nomination, such nomination shall be disregarded, notwithstanding the proxies in respect of such vote that may have been received by the Corporation. For purposes of this Section 2, to be considered a qualified representative of the stockholder, a person must be authorized by a written instrument executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as proxy at the Annual or special meeting of stockholders and such person must produce such written instrument or electronic transmission, or a reliable reproduction of the written instrument or electronic transmission, at the Annual or special meeting of stockholders.

(iv) For purposes of this Bylaw, “Public Announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

(v) Notwithstanding the foregoing provisions of this Bylaw, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth in this Bylaw. Nothing in this Bylaw shall be deemed to affect any rights of (a) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) the holders of any series of Undesignated Preferred Stock to elect directors under specified circumstances.

SECTION 3. Special Meetings. Except as otherwise required by statute and subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock, special meetings of the stockholders of the Corporation may be called only by the Board of Directors acting pursuant to a resolution approved by the affirmative vote of a majority of the directors then in office. Only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders of the Corporation.

SECTION 4. Notice of Meetings; Adjournments. A notice of each Annual Meeting stating the hour, date and place, if any, of such Annual Meeting shall be given not less than 10

3

days nor more than 60 days before the Annual Meeting, to each stockholder entitled to vote thereat by delivering such notice to such stockholder or by mailing it, postage prepaid, addressed to such stockholder at the address of such stockholder as it appears on the Corporation’s stock transfer books.

Notice of all special meetings of stockholders shall be given in the same manner as provided for Annual Meetings, except that the notice of all special meetings shall state the purpose or purposes for which the meeting has been called.

Notice of an Annual Meeting or special meeting of stockholders need not be given to a stockholder if a waiver of notice is executed before or after such meeting by such stockholder or if such stockholder attends such meeting, unless such attendance is for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting was not lawfully called or convened.

The Board of Directors may postpone and reschedule any previously scheduled Annual Meeting or special meeting of stockholders and any record date with respect thereto, regardless of whether any notice or public disclosure with respect to any such meeting has been sent or made pursuant to Section 2 of this Article I of these Bylaws or otherwise. In no event shall the Public Announcement of an adjournment, postponement or rescheduling of any previously scheduled meeting of stockholders commence a new time period for the giving of a stockholder’s notice under Section 2 of this Article I of these Bylaws.

When any meeting is convened, the presiding officer may adjourn the meeting if (a) no quorum is present for the transaction of business, (b) the Board of Directors determines that adjournment is necessary or appropriate to enable the stockholders to consider fully information which the Board of Directors determines has not been made sufficiently or timely available to stockholders, or (c) the Board of Directors determines that adjournment is otherwise in the best interests of the Corporation. When any Annual Meeting or special meeting of stockholders is adjourned to another hour, date or place, notice need not be given of the adjourned meeting other than an announcement at the meeting at which the adjournment is taken of the hour, date and place, if any, to which the meeting is adjourned and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting; provided, however, that if the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, notice of the adjourned meeting and the means of remote communications, if any, by which stockholders and proxyholders may be deemed to be present in person and vote at such adjourned meeting shall be given to each stockholder of record entitled to vote thereat and each stockholder who, by law or under the Certificate of Incorporation of the Corporation (as the same may hereafter be amended and/or restated, the “Certificate”) or these Bylaws, is entitled to such notice.

SECTION 5. Quorum. A majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at any meeting of stockholders. If less than a quorum is present at a meeting, the holders of voting stock representing a majority of the voting power present at the meeting or the presiding officer may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 4 of this Article I. At such adjourned meeting at which a quorum is present, any business may be

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transacted which might have been transacted at the meeting as originally noticed. The stockholders present at a duly constituted meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum.

SECTION 6. Voting and Proxies. Stockholders shall have one vote for each share of stock entitled to vote owned by them of record according to the stock ledger of the Corporation, unless otherwise provided by law or by the Certificate. Stockholders may vote either (a) in person, (b) by written proxy or (c) by a transmission permitted by §212(c) of the Delaware General Corporation Law (“DGCL”). Any copy, facsimile telecommunication or other reliable reproduction of the writing or transmission permitted by §212(c) of the DGCL may be substituted for or used in lieu of the original writing or transmission for any and all purposes for which the original writing or transmission could be used, provided that such copy, facsimile telecommunication or other reproduction shall be a complete reproduction of the entire original writing or transmission. Proxies shall be filed in accordance with the procedures established for the meeting of stockholders. Except as otherwise limited therein or as otherwise provided by law, proxies authorizing a person to vote at a specific meeting shall entitle the persons authorized thereby to vote at any adjournment of such meeting, but they shall not be valid after final adjournment of such meeting. A proxy with respect to stock held in the name of two or more persons shall be valid if executed by or on behalf of any one of them unless at or prior to the exercise of the proxy the Corporation receives a specific written notice to the contrary from any one of them.

SECTION 7. Action at Meeting. When a quorum is present at any meeting of stockholders, any matter before any such meeting (other than an election of a director or directors) shall be decided by a majority of the votes properly cast for and against such matter, except where a larger vote is required by law, by the Certificate or by these Bylaws. Any election of directors by stockholders shall be determined by a plurality of the votes properly cast on the election of directors.

SECTION 8. Stockholder Lists. The Secretary or an Assistant Secretary (or the Corporation’s transfer agent or other person authorized by these Bylaws or by law) shall prepare and make, at least 10 days before every Annual Meeting or special meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for a period of at least 10 days prior to the meeting in the manner provided by law. The list shall also be open to the examination of any stockholder during the whole time of the meeting as provided by law.

SECTION 9. Presiding Officer. The Chairman of the Board, if one is elected, or if not elected or in his or her absence, the President shall preside at all Annual Meetings or special meetings of stockholders and shall have the power, among other things, to adjourn such meeting at any time and from time to time, subject to Sections 4 and 5 of this Article I. The order of business and all other matters of procedure at any meeting of the stockholders shall be determined by the presiding officer.

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SECTION 10. Inspectors of Elections. The Corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors to act at the meeting and make a written report thereof. The Corporation may designate one or more persons as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the presiding officer shall appoint one or more inspectors to act at the meeting. Any inspector may, but need not, be an officer, employee or agent of the Corporation. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability. The inspectors shall perform such duties as are required by the DGCL, including the counting of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors. The presiding officer may review all determinations made by the inspectors, and in so doing the presiding officer shall be entitled to exercise his or her sole judgment and discretion and he or she shall not be bound by any determinations made by the inspectors. All determinations by the inspectors and, if applicable, the presiding officer, shall be subject to further review by any court of competent jurisdiction.

ARTICLE II

Directors

SECTION 1. Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors except as otherwise provided by the Certificate or required by law.

SECTION 2. Number and Terms. The number of directors of the Corporation shall be fixed solely and exclusively by resolution duly adopted from time to time by the Board of Directors. The directors shall hold office in the manner provided in the Certificate.

SECTION 3. Qualification. No director need be a stockholder of the Corporation.

SECTION 4. Vacancies. Vacancies in the Board of Directors shall be filled in the manner provided in the Certificate.

SECTION 5. Removal. Directors may be removed from office only in the manner provided in the Certificate.

SECTION 6. Resignation. A director may resign at any time by giving written notice to the Chairman of the Board, if one is elected, the President or the Secretary. A resignation shall be effective upon receipt, unless the resignation otherwise provides.

SECTION 7. Regular Meetings. The regular annual meeting of the Board of Directors shall be held, without notice other than this Section 7, on the same date and at the same place as the Annual Meeting following the close of such meeting of stockholders. Other regular meetings

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of the Board of Directors may be held at such hour, date and place as the Board of Directors may by resolution from time to time determine and publicize by means of reasonable notice given to any director who is not present at the meeting at which such resolution is adopted.

SECTION 8. Special Meetings. Special meetings of the Board of Directors may be called, orally or in writing, by or at the request of a majority of the directors, the Chairman of the Board, if one is elected, or the President. The person calling any such special meeting of the Board of Directors may fix the hour, date and place thereof.

SECTION 9. Notice of Meetings. Notice of the hour, date and place of all special meetings of the Board of Directors shall be given to each director by the Secretary or an Assistant Secretary, or in case of the death, absence, incapacity or refusal of such persons, by the Chairman of the Board, if one is elected, or the President or such other officer designated by the Chairman of the Board, if one is elected, or the President. Notice of any special meeting of the Board of Directors shall be given to each director in person, by telephone, or by facsimile, electronic mail or other form of electronic communication, sent to his or her business or home address, at least 24 hours in advance of the meeting, or by written notice mailed to his or her business or home address, at least 48 hours in advance of the meeting. Such notice shall be deemed to be delivered when hand delivered to such address, read to such director by telephone, deposited in the mail so addressed, with postage thereon prepaid if mailed, dispatched or transmitted if faxed, telexed or telecopied, or sent by electronic mail or other form of electronic communication, or when delivered to the telegraph company if sent by telegram.

A written waiver of notice signed before or after a meeting by a director and filed with the records of the meeting shall be deemed to be equivalent to notice of the meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because such meeting is not lawfully called or convened. Except as otherwise required by law, by the Certificate or by these Bylaws, neither the business to be transacted at, nor the purpose of, any meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting.

SECTION 10. Quorum. At any meeting of the Board of Directors, a majority of the total number of directors shall constitute a quorum for the transaction of business, but if less than a quorum is present at a meeting, a majority of the directors present may adjourn the meeting from time to time, and the meeting may be held as adjourned without further notice, except as provided in Section 9 of this Article II. Any business which might have been transacted at the meeting as originally noticed may be transacted at such adjourned meeting at which a quorum is present. For purposes of this Section 10, the total number of directors includes any unfilled vacancies on the Board of Directors.

SECTION 11. Action at Meeting. At any meeting of the Board of Directors at which a quorum is present, the vote of a majority of the directors present shall constitute action by the Board of Directors, unless otherwise required by law, by the Certificate or by these Bylaws.

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SECTION 12. Action by Consent. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board of Directors consent thereto in writing or by electronic transmission and the writing or writings or electronic transmission or transmissions are filed with the records of the meetings of the Board of Directors. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Such consent shall be treated as a resolution of the Board of Directors for all purposes.

SECTION 13. Manner of Participation. Directors may participate in meetings of the Board of Directors by means of conference telephone or other communications equipment by means of which all directors participating in the meeting can hear each other, and participation in a meeting in accordance herewith shall constitute presence in person at such meeting for purposes of these Bylaws.

SECTION 14. Committees. The Board of Directors, by vote of a majority of the directors then in office, may elect one or more committees, including, without limitation, a Compensation and Human Resources Committee, a Corporate Governance and Nominating Committee and an Audit Committee, and may delegate thereto some or all of its powers except those which by law, by the Certificate or by these Bylaws may not be delegated. Except as the Board of Directors may otherwise determine, any such committee may make rules for the conduct of its business, but unless otherwise provided by the Board of Directors or in such rules, its business shall be conducted so far as possible in the same manner as is provided by these Bylaws for the Board of Directors. All members of such committees shall hold such offices at the pleasure of the Board of Directors. The Board of Directors may abolish any such committee at any time. Any committee to which the Board of Directors delegates any of its powers or duties shall keep records of its meetings and shall report its action to the Board of Directors.

SECTION 15. Compensation of Directors. Directors shall receive such compensation for their services as shall be determined by a majority of the Board of Directors, or a designated committee thereof, provided that directors who are serving the Corporation as employees and who receive compensation for their services as such, shall not receive any salary or other compensation for their services as directors of the Corporation.

ARTICLE III

Officers

SECTION 1. Enumeration. The officers of the Corporation shall consist of a President, a Treasurer, a Secretary and such other officers, including, without limitation, a Chairman of the Board of Directors, a Chief Executive Officer and one or more Vice Presidents (including Executive Vice Presidents or Senior Vice Presidents), Assistant Vice Presidents, Assistant Treasurers and Assistant Secretaries, as the Board of Directors may determine.

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SECTION 2. Election. At the regular annual meeting of the Board of Directors following the Annual Meeting, the Board of Directors shall elect the Chief Executive Officer, the President, the Treasurer and the Secretary. Other officers may be elected by the Board of Directors at such regular annual meeting of the Board of Directors or at any other regular or special meeting.

SECTION 3. Qualification. No officer need be a stockholder or a director. Any person may occupy more than one office of the Corporation at any time.

SECTION 4. Tenure. Except as otherwise provided by the Certificate or by these Bylaws, each of the officers of the Corporation shall hold office until the regular annual meeting of the Board of Directors following the next Annual Meeting and until his or her successor is elected and qualified or until his or her earlier resignation or removal.

SECTION 5. Resignation. Any officer may resign by delivering his or her written resignation to the Corporation addressed to the President or the Secretary, and such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

SECTION 6. Removal. Except as otherwise provided by law, the Board of Directors may remove any officer with or without cause by the affirmative vote of a majority of the directors then in office.

SECTION 7. Absence or Disability. In the event of the absence or disability of any officer, the Board of Directors may designate another officer to act temporarily in place of such absent or disabled officer.

SECTION 8. Vacancies. Any vacancy in any office may be filled for the unexpired portion of the term by the Board of Directors.

SECTION 9. Chief Executive Officer. The Chief Executive Officer shall, subject to the direction of the Board of Directors, have such powers and shall perform such duties as the Board of Directors may from time to time designate. If there is no Chairman of the Board or if he or she is absent, the Chief Executive Officer shall preside, when present, at all meetings of stockholders and of the Board of Directors.

SECTION 10. Chairman of the Board. The Chairman of the Board, if one is elected, shall preside, when present, at all meetings of the stockholders and of the Board of Directors. The Chairman of the Board shall have such other powers and shall perform such other duties as the Board of Directors may from time to time designate.

SECTION 11. President. The President, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

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SECTION 12. Chief Financial Officer. The Chief Financial Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

SECTION 13. Chief Operating Officer. The Chief Operating Officer, if one is elected, shall have such powers and shall perform such duties as the Board of Directors may from time to time designate.

SECTION 14. Vice Presidents and Assistant Vice Presidents. Any Vice President (including any Executive Vice President or Senior Vice President) and any Assistant Vice President shall have such powers and shall perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

SECTION 15. Treasurer and Assistant Treasurers. The Treasurer shall, subject to the direction of the Board of Directors and except as the Board of Directors or the Chief Executive Officer may otherwise provide, have general charge of the financial affairs of the Corporation and shall cause to be kept accurate books of account. The Treasurer shall have custody of all funds, securities, and valuable documents of the Corporation. He or she shall have such other duties and powers as may be designated from time to time by the Board of Directors or the Chief Executive Officer. Any Assistant Treasurer shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

SECTION 16. Secretary and Assistant Secretaries. The Secretary shall record all the proceedings of the meetings of the stockholders and the Board of Directors (including committees of the Board) in books kept for that purpose. In his or her absence from any such meeting, a temporary secretary chosen at the meeting shall record the proceedings thereof. The Secretary shall have charge of the stock ledger (which may, however, be kept by any transfer or other agent of the Corporation). The Secretary shall have custody of the seal of the Corporation, and the Secretary, or an Assistant Secretary, shall have authority to affix it to any instrument requiring it, and, when so affixed, the seal may be attested by his or her signature or that of an Assistant Secretary. The Secretary shall have such other duties and powers as may be designated from time to time by the Board of Directors or the Chief Executive Officer. In the absence of the Secretary, any Assistant Secretary may perform his or her duties and responsibilities. Any Assistant Secretary shall have such powers and perform such duties as the Board of Directors or the Chief Executive Officer may from time to time designate.

SECTION 17. Other Powers and Duties. Subject to these Bylaws and to such limitations as the Board of Directors may from time to time prescribe, the officers of the Corporation shall each have such powers and duties as generally pertain to their respective offices, as well as such powers and duties as from time to time may be conferred by the Board of Directors or the Chief Executive Officer.

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ARTICLE IV

Capital Stock

SECTION 1. Certificates of Stock. Each stockholder shall be entitled to a certificate of the capital stock of the Corporation in such form as may from time to time be prescribed by the Board of Directors. Such certificate shall be signed by the Chairman of the Board of Directors, the Chief Executive Officer, the President or a Vice President and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary. The Corporation seal and the signatures by the Corporation’s officers, the transfer agent or the registrar may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed on such certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he or she were such officer, transfer agent or registrar at the time of its issue. Every certificate for shares of stock which are subject to any restriction on transfer and every certificate issued when the Corporation is authorized to issue more than one class or series of stock shall contain such legend with respect thereto as is required by law.

SECTION 2. Transfers. Subject to any restrictions on transfer and unless otherwise provided by the Board of Directors, shares of stock may be transferred only on the books of the Corporation by the surrender to the Corporation or its transfer agent of the certificate theretofore properly endorsed or accompanied by a written assignment or power of attorney properly executed, with transfer stamps (if necessary) affixed, and with such proof of the authenticity of signature as the Corporation or its transfer agent may reasonably require.

SECTION 3. Record Holders. Except as may otherwise be required by law, by the Certificate or by these Bylaws, the Corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes, including the payment of dividends and the right to vote with respect thereto, regardless of any transfer, pledge or other disposition of such stock, until the shares have been transferred on the books of the Corporation in accordance with the requirements of these Bylaws.

SECTION 4. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date: (a) in the case of determination of stockholders entitled to vote at any meeting of stockholders, shall, unless otherwise required by law, not be more than sixty nor less than ten days before the date of such meeting; and (b) in the case of any other action, shall not be more than sixty days prior to such other action. If no record date is fixed: (i) the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding

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the day on which the meeting is held; and (ii) the record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

SECTION 5. Replacement of Certificates. In case of the alleged loss, destruction or mutilation of a certificate of stock, a duplicate certificate may be issued in place thereof, upon such terms as the Board of Directors may prescribe.

ARTICLE V

Indemnification

SECTION 1. Definitions. For purposes of this Article V, the following terms shall have the respective meanings set forth below:

(a) “Corporate Status” describes the status of a person who is serving or has served (i) as a Director of the Corporation, (ii) as an Officer of the Corporation, or (iii) as a director, partner, trustee, officer, employee or agent of any other corporation, partnership, limited liability company, joint venture, trust, employee benefit plan, foundation, association, organization or other legal entity which such person is or was serving at the request of the Corporation. For purposes of this Section 1(a), an Officer or Director of the Corporation who is serving or has served as a director, partner, trustee, officer, employee or agent of a Subsidiary shall be deemed to be serving at the request of the Corporation. Notwithstanding the foregoing, “Corporate Status” shall not include the status of a person who is serving or has served as a director, officer, employee or agent of a constituent corporation absorbed in a merger or consolidation transaction with the Corporation with respect to such person’s activities prior to said transaction, unless specifically authorized by the Board of Directors or the stockholders of the Corporation.

(b) “Director” means any person who serves or has served the Corporation as a director on the Board of Directors of the Corporation.

(c) “Disinterested Director” means, with respect to each Proceeding in respect of which indemnification is sought hereunder, a Director of the Corporation who is not and was not a party to such Proceeding.

(d) “Expenses” means all attorneys’ fees, retainers, court costs, transcript costs, fees of expert witnesses, private investigators and professional advisors (including, without limitation, accountants and investment bankers), travel expenses, duplicating costs, printing and binding costs, costs of preparation of demonstrative evidence and other courtroom presentation aids and devices, costs incurred in connection with document review, organization, imaging and computerization, telephone charges, postage, delivery service fees, and all other disbursements, costs or expenses of the type customarily incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settling or otherwise participating in, a Proceeding.

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(e) “Liabilities” means judgments, damages, liabilities, losses, penalties, excise taxes, fines and amounts paid in settlement.

(f) “Non-Officer Employee” means any person who serves or has served as an employee or agent of the Corporation, but who is not or was not a Director or Officer.

(g) “Officer” means any person who serves or has served the Corporation as an officer of the Corporation appointed by the Board of Directors of the Corporation.

(h) “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, inquiry, investigation, administrative hearing or other proceeding, whether civil, criminal, administrative, arbitrative or investigative.

(i) “Subsidiary” shall mean any corporation, partnership, limited liability company, joint venture, trust or other entity of which the Corporation owns (either directly or through or together with another Subsidiary of the Corporation) either (i) a general partner, managing member or other similar interest or (ii) (a) 50% or more of the voting power of the voting capital equity interests of such corporation, partnership, limited liability company, joint venture or other entity, or (b) 50% or more of the outstanding voting capital stock or other voting equity interests of such corporation, partnership, limited liability company, joint venture or other entity.

SECTION 2. Indemnification of Directors and Officers. Subject to the operation of Section 4 of this Article V of these Bylaws, each Director and Officer shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than such law permitted the Corporation to provide prior to such amendment) and to the extent authorized in this Section 2.

(a) Actions, Suits and Proceedings Other than By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses and Liabilities that are incurred or paid by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein (other than an action by or in the right of the Corporation), which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful.

(b) Actions, Suits and Proceedings By or In the Right of the Corporation. Each Director and Officer shall be indemnified and held harmless by the Corporation against any and all Expenses that are incurred by such Director or Officer or on such Director’s or Officer’s behalf in connection with any Proceeding or any claim, issue or matter therein by or in the right of the Company, which such Director or Officer is, or is threatened to be made, a party to or participant in by reason of such Director’s or Officer’s Corporate Status, if such Director or Officer acted in good faith and in a manner such Director or Officer reasonably believed to be in

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or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful; provided, however, that no indemnification shall be made under Section 2(a) in respect of any claim, issue or matter as to which such Director or Officer shall have been finally adjudged by a court of competent jurisdiction to be liable to the Company, unless, and only to the extent that, the Court of Chancery or another court in which such Proceeding was brought shall determine upon application that, despite adjudication of liability, but in view of all the circumstances of the case, such Director or Officer is fairly and reasonably entitled to indemnification for such Expenses that such court deems proper.

(c) Rights of Indemnification. The rights of indemnification provided by this Section 2 shall continue as to a Director or Officer after he or she has ceased to be a Director or Officer and shall inure to the benefit of his or her heirs, executors, administrators and personal representatives. Notwithstanding the foregoing, the Corporation shall indemnify any Director or Officer seeking indemnification in connection with a Proceeding initiated by such Director or Officer only if such Proceeding was authorized in advance by the Board of Directors of the Corporation, unless such Proceeding was brought to enforce an Officer or Director’s rights to indemnification or, in the case of Directors, advancement of Expenses under these Bylaws in accordance with the provisions set forth herein.

SECTION 3. Indemnification of Non-Officer Employees. Subject to the operation of Section 4 of this Article V of these Bylaws, each Non-Officer Employee may, in the discretion of the Board of Directors of the Corporation, be indemnified by the Corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, against any or all Expenses and Liabilities that are incurred by such Non-Officer Employee or on such Non-Officer Employee’s behalf in connection with any threatened, pending or completed Proceeding, or any claim, issue or matter therein, which such Non-Officer Employee is, or is threatened to be made, a party to or participant in by reason of such Non-Officer Employee’s Corporate Status, if such Non-Officer Employee acted in good faith and in a manner such Non-Officer Employee reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal proceeding, had no reasonable cause to believe his or her conduct was unlawful. The rights of indemnification provided by this Section 3 shall exist as to a Non-Officer Employee after he or she has ceased to be a Non-Officer Employee and shall inure to the benefit of his or her heirs, personal representatives, executors and administrators. Notwithstanding the foregoing, the Corporation may indemnify any Non-Officer Employee seeking indemnification in connection with a Proceeding initiated by such Non-Officer Employee only if such Proceeding was authorized in advance by the Board of Directors of the Corporation.

SECTION 4. Good Faith. Unless ordered by a court, no indemnification shall be provided pursuant to this Article V to a Director, to an Officer or to a Non-Officer Employee unless a determination shall have been made that such person acted in good faith and in a manner such person reasonably believed to be in or not opposed to the best interests of the Corporation and, with respect to any criminal Proceeding, such person had no reasonable cause to believe his or her conduct was unlawful. Such determination shall be made by (a) a majority vote of the Disinterested Directors, even though less than a quorum of the Board of Directors, (b) a

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committee comprised of Disinterested Directors, such committee having been designated by a majority vote of the Disinterested Directors (even though less than a quorum), (c) if there are no such Disinterested Directors, or if a majority of Disinterested Directors so directs, by independent legal counsel in a written opinion, or (d) by the stockholders of the Corporation.

SECTION 5. Advancement of Expenses to Directors Prior to Final Disposition. The Corporation shall advance all Expenses incurred by or on behalf of any Director in connection with any Proceeding in which such Director is involved by reason of such Director’s Corporate Status within 30 days after the receipt by the Corporation of a written statement from such Director requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Director and shall be preceded or accompanied by an undertaking by or on behalf of such Director to repay any Expenses so advanced if it shall ultimately be determined that such Director is not entitled to be indemnified against such Expenses. Notwithstanding the foregoing, the Corporation shall advance all Expenses incurred by or on behalf of any Director seeking advancement of expenses hereunder in connection with a Proceeding initiated by such Director only if such Proceeding was (i) authorized by the Board of Directors of the Corporation, or (ii) brought to enforce such Director’s rights to indemnification or advancement of Expenses under these Bylaws.

(a) If a claim for advancement of Expenses hereunder by a Director is not paid in full by the Corporation within 30 days after receipt by the Corporation of documentation of Expenses and the required undertaking, such Director may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and if successful in whole or in part, such Director shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such advancement of Expenses under this Article V shall not be a defense to the action and shall not create a presumption that such advancement is not permissible. The burden of proving that a Director is not entitled to an advancement of expenses shall be on the Corporation.

(b) In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Director has not met any applicable standard for indemnification set forth in the DGCL.

SECTION 6. Advancement of Expenses to Officers and Non-Officer Employees Prior to Final Disposition. The Corporation may, at the discretion of the Board of Directors of the Corporation, advance any or all Expenses incurred by or on behalf of any Officer or any Non-Officer Employee in connection with any Proceeding in which such is involved by reason of the Corporate Status of such Officer or Non-Officer Employee upon the receipt by the Corporation of a statement or statements from such Officer or Non-Officer Employee requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding. Such statement or statements shall reasonably evidence the Expenses incurred by such Officer or Non-Officer Employee and shall be preceded or accompanied by an undertaking by or on behalf of such to repay any Expenses so advanced if it shall ultimately be determined

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that such Officer or Non-Officer Employee is not entitled to be indemnified against such Expenses.

In any suit brought by the Corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Corporation shall be entitled to recover such expenses upon a final adjudication that the Officer or Non-Officer Employee has not met any applicable standard for indemnification set forth in the DGCL.

SECTION 7. Contractual Nature of Rights. The foregoing provisions of this Article V shall be deemed to be a contract between the Corporation and each Director and Officer entitled to the benefits hereof at any time while this Article V is in effect, and any repeal or modification thereof shall not affect any rights or obligations then existing with respect to any state of facts then or theretofore existing or any Proceeding theretofore or thereafter brought based in whole or in part upon any such state of facts.

(a) If a claim for indemnification hereunder by a Director or Officer is not paid in full by the Corporation within 60 days after receipt by the Corporation of a written claim for indemnification, such Director or Officer may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim, and if successful in whole or in part, such Director or Officer shall also be entitled to be paid the expenses of prosecuting such claim. The failure of the Corporation (including its Board of Directors or any committee thereof, independent legal counsel, or stockholders) to make a determination concerning the permissibility of such indemnification under this Article V shall not be a defense to the action and shall not create a presumption that such indemnification is not permissible. The burden of proving that a Director or Officer is not entitled to indemnification shall be on the Corporation.

(b) In any suit brought by a Director or Officer to enforce a right to indemnification hereunder, it shall be a defense that such Director or Officer has not met any applicable standard for indemnification set forth in the DGCL.

SECTION 8. Non-Exclusivity of Rights. The rights to indemnification and to advancement of Expenses set forth in this Article V shall not be exclusive of any other right which any Director, Officer, or Non-Officer Employee may have or hereafter acquire under any statute, provision of the Certificate or these Bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise.

SECTION 9. Insurance. The Corporation may maintain insurance, at its expense, to protect itself and any Director, Officer or Non-Officer Employee against any liability of any character asserted against or incurred by the Corporation or any such Director, Officer or Non-Officer Employee, or arising out of any such person’s Corporate Status, whether or not the Corporation would have the power to indemnify such person against such liability under the DGCL or the provisions of this Article V.

SECTION 10. Other Indemnification. The Corporation’s obligation, if any, to indemnify any person under this Article V as a result of such person serving, at the request of the

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Corporation, as a director, partner, trustee, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise shall be reduced by any amount such person may collect as indemnification from such other corporation, partnership, joint venture, trust, employee benefit plan or enterprise.

ARTICLE VI

Miscellaneous Provisions

SECTION 1. Fiscal Year. The fiscal year of the Corporation shall be determined by the Board of Directors and may be amended by the Board of Directors.

SECTION 2. Seal. The Board of Directors shall have power to adopt and alter the seal of the Corporation.

SECTION 3. Execution of Instruments. All deeds, leases, transfers, contracts, bonds, notes and other obligations to be entered into by the Corporation in the ordinary course of its business without director action may be executed on behalf of the Corporation by the Chief Executive Officer, Chairman of the Board, if one is elected, the President, the Chief Operating Officer, or the Chief Financial Officer, or the Treasurer or any other officer, employee or agent of the Corporation as the Board of Directors may authorize.

SECTION 4. Voting of Securities. Unless the Board of Directors otherwise provides, the Chairman of the Board, if one is elected, the President or the Treasurer may waive notice of and act on behalf of this Corporation, or appoint another person or persons to act as proxy or attorney in fact for this Corporation with or without discretionary power and/or power of substitution, at any meeting of stockholders of any other corporation or organization, any of whose securities are held by this Corporation.

SECTION 5. Resident Agent. The Board of Directors may appoint a resident agent upon whom legal process may be served in any action or proceeding against the Corporation.

SECTION 6. Corporate Records. The original or attested copies of the Certificate, Bylaws and records of all meetings of the incorporators, stockholders and the Board of Directors and the stock transfer books, which shall contain the names of all stockholders, their record addresses and the amount of stock held by each, may be kept outside the State of Delaware and shall be kept at the principal office of the Corporation, at the office of its counsel or at an office of its transfer agent or at such other place or places as may be designated from time to time by the Board of Directors.

SECTION 7. Certificate. All references in these Bylaws to the Certificate shall be deemed to refer to the Certificate of Incorporation of the Corporation, as amended and in effect from time to time.

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SECTION 8. Amendment of Bylaws.

(a) Amendment by Directors. Except as provided otherwise by law, these Bylaws may be amended or repealed by the Board of Directors by the affirmative vote of a majority of the directors then in office.

(b) Amendment by Stockholders. These Bylaws may be amended or repealed at any Annual Meeting, or special meeting of stockholders called for such purpose, by the affirmative vote of at least 75% of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class; provided, however, that if the Board of Directors recommends that stockholders approve such amendment or repeal at such meeting of stockholders, such amendment or repeal shall only require the affirmative vote of the majority of the outstanding shares entitled to vote on such amendment or repeal, voting together as a single class. Notwithstanding the foregoing, stockholder approval shall not be required unless mandated by the Certificate, these Bylaws, or other applicable law.

SECTION 9. Notices. If mailed, notice to stockholders shall be deemed given when deposited in the mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Without limiting the manner by which notice otherwise may be given to stockholders, any notice to stockholders may be given by electronic transmission in the manner provided in Section 232 of the DGCL.

SECTION 10. Waivers. A written waiver of any notice, signed by a stockholder or director, or waiver by electronic transmission by such person, whether given before or after the time of the event for which notice is to be given, shall be deemed equivalent to the notice required to be given to such person. Neither the business nor the purpose of any meeting need be specified in such a waiver.

[End of Text]

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EX-10.1

Exhibit 10.1

REGISTRATION RIGHTS AGREEMENT

REGISTRATION RIGHTS AGREEMENT dated as of October 17, 2006, by and between Silicon Graphics, Inc., a Delaware corporation (as debtor in possession and reorganized debtor, as applicable, the “Company”), and the investors listed in Exhibit C hereto (collectively, the “Investors” and individually an “Investor”).

WHEREAS, on May 8, 2006, the Company and certain of its subsidiaries (as debtors in possession and reorganized debtors, as applicable, together with the Company, collectively, the “Debtors”) commenced cases under chapter 11 of the United States Bankruptcy Code, 11 U.S.C. § 101, et seq. (the “Bankruptcy Code”) (collectively, the “Chapter 11 Cases”) in the United States Bankruptcy Court for the Southern District of New York (the “Bankruptcy Court”).

WHEREAS, the Company issued shares of common stock, par value $.01 per share (the “Common Stock”), of the reorganized Company (the “New Common Stock”) and offered and sold shares of New Common Stock (the “Rights Offering Shares”) pursuant to a rights offering (the “Rights Offering”) in connection with the Debtors’ First Amended Joint Plan of Reorganization Under Chapter 11 of the Bankruptcy Code, dated July 27, 2006 (as modified, the “Plan”), which Plan was confirmed pursuant to an order of the Bankruptcy Court dated September 19, 2006.

WHEREAS, in connection with the consummation of the transactions contemplated by those certain Backstop Commitment Agreements, each dated as of July 31, 2006 (the “Backstop Commitment Agreements”), by and between the Company and each of the Investors, the Investors acquired shares of Common Stock in accordance with the provisions of the Backstop Commitment Agreements (the “Backstop Shares”, and together with the New Common Stock and the Rights Offering Shares, the “Investor Shares”).

WHEREAS, in consideration of the Investors’ commitment to purchase the Investor Shares pursuant to and on the terms and conditions set forth in the Plan and in the Backstop Commitment Agreements, the Company has agreed to enter into a registration rights agreement with respect to the securities held by Investors.

NOW THEREFORE, in consideration of the foregoing and the covenants and agreements contained herein, in the Plan and in the Backstop Commitment Agreements, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Certain Definitions.

In addition to the terms defined elsewhere in this Agreement, the following terms shall have the following meanings:

“Affiliate” of any Person means any other Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such Person. The term “control” (including the terms “controlling,” “controlled by” and “under common control with”) as used with respect to any Person means the possession, direct or

indirect, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Aggregate Value” has the meaning set forth in Section 11 hereof.

“Agreement” means this Registration Rights Agreement, including all amendments, modifications and supplements and any exhibits or schedules to any of the foregoing, and shall refer to this Registration Rights Agreement as the same may be in effect at the time such reference becomes operative.

“Backstop Commitment Agreements” has the meaning set forth in the recitals.

“Backstop Shares” has the meaning set forth in the recitals.

“Bankruptcy Code” has the meaning set forth in the recitals.

“Bankruptcy Court” has the meaning set forth in the recitals.

“Business Day” means any day, except a Saturday, Sunday or legal holiday on which banking institutions in The City of New York are authorized or obligated by law or executive order to close.

“Chapter 11 Cases” has the meaning set forth in the recitals.

“Common Stock” has the meaning set forth in the recitals.

“Company” has the meaning set forth in the introductory paragraph and includes any other person referred to in the second sentence of Section 16(c) hereof.

“Debtors” has the meaning set forth in the recitals.

“Defaulting Holder” has the meaning set forth in Section 11 hereof.

“Demanding Key Holder” means a Key Holder requesting a Demand Registration pursuant to Section 2(a) hereof.

“Demand Registration” has the meaning set forth in Section 2(a) hereof.

“Demand Registration Delay Period” has the meaning set forth in Section 2(f) hereof.

“Demand Registration Statement” has the meaning set forth in Section 2(b) hereof.

“Demand Registration Statement Filing Date” has the meaning set forth in Section 2(a) hereof.

“Demand Rights” has the meaning set forth in Section 12(a) hereof.

“Effectiveness Default” has the meaning set forth in Section 11 hereof.

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“Exchange Act” means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations of the SEC thereunder.

“Filing Default” has the meaning set forth in Section 11 hereof.

“Free Writing Prospectus” means a free writing prospectus as defined in Rule 405 under the Securities Act.

“Full Cooperation” means, in connection with any underwritten offering, where, in addition to the cooperation otherwise required by this Agreement, (a) members of senior management of the Company (including the chief executive officer and chief financial officer) fully cooperate with the underwriter(s) in connection therewith and make themselves available to participate in “road-shows” and other customary marketing activities in such locations (domestic and foreign) as reasonably recommended by the underwriter(s) (including one-on-one meetings with prospective purchasers of the Registrable Common Stock) and (b) the Company prepares preliminary and final prospectuses (preliminary and final prospectus supplements in the case of an offering pursuant to a Shelf Registration Statement) for use in connection therewith containing such additional information as reasonably requested by the underwriter(s) (in addition to the minimum amount of information required by law, rule or regulation).

“Fully Marketed Underwritten Offering” means an underwritten offering in which there is Full Cooperation but shall not include a “registered direct” or other agented transaction that does not involve the preparation of a preliminary prospectus or preliminary prospectus supplement in the case of the offering pursuant to a Shelf Registration Statement.

“Governmental Entity” means any national, federal, state, municipal, local, territorial, foreign or other government or any department, commission, board, bureau, agency, regulatory authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or public or private tribunal.

“Investor” and “Investors” have the meanings set forth in the introductory paragraph.

“Investor Shares” has the meaning set forth in the recitals.

“Issuer Free Writing Prospectus” means an issuer free writing prospectus as defined in Rule 433 under the Securities Act.

“Key Holder” means any Investor, together with its Affiliates, holding at least seven and one-half percent (7.5%) of the outstanding Common Stock as of the Effective Date of the Plan (as defined in the Plan) and such transferees as provided in Section 14 hereof.

“Liquidated Damages” has the meaning set forth in Section 11 hereof.

“New Common Stock” has the meaning set forth in the recitals.

“Permitted Free Writing Prospectus” has the meaning set forth in Section 13 hereof.

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“Person” means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, Governmental Entity or any other entity.

“Piggyback Registration” has the meaning set forth in Section 4(a) hereof.

“Piggyback Registration Statement” has the meaning set forth in Section 4(a) hereof.

“Plan” has the meaning set forth in the recitals.

“Prospectus” means the prospectus or prospectuses included in any Registration Statement, all amendments and supplements to the prospectus, including post-effective amendments, and all material incorporated by reference in such prospectus or prospectuses.

“Registrable Common Stock” means (i) the Investor Shares, (ii) any other shares of Common Stock held by any of the Key Holders now or in the future, and (iii) any other securities into or for which the Common Stock referred to in clauses (i) or (ii) has been converted, substituted or exchanged, and any securities issued or issuable with respect thereto upon any stock dividend or stock split or in connection with a combination of shares, reclassification, recapitalization, merger, consolidation or other reorganization or otherwise ; provided, however, that a share of Common Stock will cease to be Registrable Common Stock if (a) a registration statement covering such share of Common Stock has been declared effective by the SEC and such share of Common Stock has been sold or disposed of pursuant to such effective registration statement, or (b) such share of Common Stock has been sold or disposed of pursuant to Rule 144 (or any successor rule) under the Securities Act; or (c) such share of Common Stock has been transferred to a Person who is not (and does not become as a result of such transfer) a Key Holder; or (d) such share of Common Stock ceases to be outstanding.

“Registration Default” has the meaning set forth in Section 11 hereof.

“Registration Expenses” has the meaning set forth in Section 9(a) hereof.

“Registration Statement” means any registration statement of the Company that covers any of the Registrable Common Stock pursuant to the provisions of this Agreement, including the Prospectus, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all materials incorporated by reference in such Registration Statement.

“Rights Offering” has the meaning set forth in the recitals.

“Rights Offering Shares” has the meaning set forth in the recitals.

“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC as a replacement thereto having substantially the same effect as such rule.

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“Rule 415” means Rule 415 promulgated by the SEC pursuant to the Securities Act, as such rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC as a replacement thereto having substantially the same effect as such rule.

“SEC” means the Securities and Exchange Commission.

“Securities Act” means the Securities Act of 1933, as amended, or any successor statute and the rules and regulations of the SEC thereunder.

“Shelf Registration” has the meaning set forth in Section 3(a) hereof.

“Shelf Registration Statement” has the meaning set forth in Section 3(a) hereof.

“Shelf Registration Statement Filing Date” has the meaning set forth in Section 3(a) hereof.

“Suspension Default” has the meaning set forth in Section 11 hereof.

“Takedown Default” has the meaning set forth in Section 11 hereof.

“transferee” has the meaning set forth in Section 14 hereof.

“underwritten registration or underwritten offering” means an offering in which securities of the Company are sold to one or more underwriter (as defined in Section 2(a)(11) of the Securities Act) for resale to the public.

“Underwritten Shelf Takedown” has the meaning set forth in Section 3(b) hereof.

“Underwritten Shelf Takedown Delay Period” has the meaning set forth in Section 3(f) hereof.

2. Demand Registrations.

(a) Demand Registration on Form S-1. At any time and from time to time, any Key Holder may request, in writing, that the Company effect the registration on Form S-1 (or any successor form) providing for the resale pursuant to Rule 415 from time to time of Registrable Common Stock owned by such Key Holder (a “Demand Registration”), in accordance with the methods of distribution set forth in such Demand Registration Statement (which plan of distribution is attached hereto as Exhibit A, modified to be consistent with then current market practice and in accordance with then applicable securities laws, rules and regulations); provided, however, that if the Key Holder requesting a Demand Registration pursuant to this Section 2(a) intends to distribute the Registrable Common Stock by means of an underwritten offering, the Demand Registration shall not provide for resale pursuant to Rule 415 and the plan of distribution shall be that plan of distribution provided by the lead underwriter for the underwritten offering. As promptly as practicable after such request, but in any event within sixty (60) days after the Company’s receipt of such request by the Key Holder (the “Demand Registration Statement Filing Date”), the Company shall file a registration statement on Form S-1 or such other form under the Securities Act then available to the Company. The Company

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shall use its commercially reasonable best efforts to cause a Demand Registration Statement to be declared effective by the SEC as promptly as practicable following such filing. Notwithstanding anything to the contrary herein, (i) the right to request a Demand Registration pursuant to this Section 2(a) shall be suspended upon the Company becoming eligible to file a Registration Statement on Form S-3 (or any successor form), provided that the Company has filed a Shelf Registration Statement (as defined below) and such Shelf Registration Statement has been declared effective by the SEC, and (ii) the right to request a Demand Registration pursuant to this Section 2(a) shall terminate if none of the events specified in clauses (i), (ii) or (iii) in the immediately following sentence occurs. The foregoing notwithstanding, the Key Holders shall be entitled to exercise their Demand Registration rights during the term of this Agreement in the event (i) the Company, after filing the Shelf Registration Statement, is no longer eligible to use Form S-3 prior to the expiration of the time period specified in Section 3(g), (ii) the Shelf Registration is withdrawn prior to the expiration of the time period specified in Section 3(g) or (iii) sales under the Shelf Registration Statement are suspended for periods in excess of those set forth in the last sentence of Section 3(f).

(b) Notice of Demand Registration on Form S-1. Upon receipt of any request for a Demand Registration, the Company shall promptly, but in any event within five (5) Business Days after the Company’s receipt of such request by the Key Holder, give written notice of such proposed registration to all other Key Holders. Such Key Holders shall have the right, by giving written notice to the Company within ten (10) days after the Company provides its notice, to elect to have included in such registration such shares of their Registrable Common Stock as such Key Holders may request in such notice of election, subject in the case of an underwritten offering to the terms of Section 2(e). Thereupon, the Company shall, as expeditiously as possible, use commercially reasonable best efforts to effect the registration of all Registrable Common Stock which the Company has been requested to so register (the “Demand Registration Statement”).

(c) Number of Demand Registrations. Each Key Holder on the date hereof shall be entitled to request two (2) Demand Registrations pursuant to Section 2(a). For purposes of Section 2, a request for registration shall not be counted as a Demand Registration (i) until such time as the Demand Registration Statement has been declared effective by the SEC (provided that the requesting Key Holder may withdraw its request for such registration and such request shall not count as a Demand Registration if (X) such withdrawal is as a result of information concerning the business or financial condition of the Company which is made known to the Key Holders after the date on which such registration was requested or (Y) the Demanding Key Holder agrees to pay the Registration Expenses therefor pursuant to Section 9); or (ii) if, as a result of an exercise of the underwriter’s cut-back provisions, less than 75% of the total amount of Registrable Common Stock that the Demanding Key Holder has requested to be included in such Demand Registration Statement are included therein.

(d) Number of Fully Marketed Underwritten Offerings. The Key Holders shall be entitled to request no more than six (6) (and no more than two (2) per Key Holder) Fully Marketed Underwritten Offerings pursuant to all of the Demand Registration Statements and Shelf Registration Statements and no more than two (2) Fully Marketed Underwritten Offerings pursuant to all of the Demand Registration Statements and Shelf Registration Statements in any 12 month period. If the Demanding Key Holder intends to distribute the Registrable Common

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Stock covered by its request by means of a Fully Marketed Underwritten Offering, it shall so advise the Company as a part of its request made pursuant to Section 2(a) and the Company shall include such information in its written notice referred to in Section 2(b). In such event, (i) the right of any other Key Holder to include its Registrable Common Stock in such registration pursuant to Section 2(a) shall be conditioned upon such other Key Holder’s participation in such Fully Marketed Underwritten Offering on the terms set forth herein, and (ii) all Key Holders including Registrable Common Stock in such registration shall enter into an underwriting agreement upon customary terms with the underwriter or underwriters managing the offering; provided that such underwriting agreement shall not provide for indemnification or contribution obligations on the part of the Key Holders greater than the obligations of the Key Holders pursuant to Section 10. If a Key Holder requests a Fully Marketed Underwritten Offering, the Company shall cause there to occur Full Cooperation in connection therewith. An underwritten offering shall not count as one of the permitted Fully Marketed Underwritten Offerings if there is not Full Cooperation in connection therewith.

(e) Priority on Demand Registrations. If, in connection with a Demand Registration pursuant to Section 2(a) commenced as an underwritten offering, the managing underwriter shall advise the Company that in its opinion the number of shares requested to be included in such registration exceeds the number that can be sold in such offering without having an adverse effect on such offering, including the price at which such shares can be sold, then the Company shall include in such registration the maximum number of shares that such underwriter advises can be so sold without having such effect, allocated (i) first, to Registrable Common Stock requested by the Key Holders to be included in such registration on a pro rata basis, (ii) second, to the shares of Common Stock to be sold for the account of Company, and (iii) third, among all shares of Common Stock requested to be included in such registration by any other Persons allocated among such Persons in such manner as they may agree.

(f) Restrictions on Demand Registrations. If at the time of any request to register Registrable Common Stock by a Key Holder pursuant to Section 2(a), the Company is engaged or has plans to engage in a registered public offering or is engaged in any other activity which, in the good faith determination of the Company’s Board of Directors, would be adversely affected by the requested registration, then the Company may at its option direct that such request be delayed for a period not in excess of forty-five (45) days from the date of such request, such right to delay a request to be exercised by the Company not more than twice in any 365-day period but in no event may such two 45-day periods be consecutive or so close in proximity as to cause a delay with respect to the filing of a Demand Registration Statement to be longer than sixty (60) days. The period during which any filing is so delayed hereunder is referred to as a “Demand Registration Delay Period”. In the event that, in the judgment of the Company, it is advisable to suspend use of a Prospectus included in a Demand Registration Statement due to pending material developments or other events that have not yet been publicly disclosed and as to which the Company believes public disclosure would be detrimental to the Company, the Company shall notify all Key Holders to such effect, and, upon receipt of such notice, each of the Key Holders shall immediately discontinue any sales of Registrable Common Stock pursuant to such Demand Registration Statement until each of the Key Holders has received copies of a supplemented or amended Prospectus or until each of the Key Holders is advised in writing by the Company that the then current Prospectus may be used and has received copies of any additional or supplemental filings that are incorporated or deemed

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incorporated by reference in such Prospectus. Notwithstanding anything to the contrary herein, the Company shall not exercise its rights under the preceding sentence to suspend sales of Registrable Common Stock for a period in excess of forty-five (45) days consecutively or ninety (90) days in any 365-day period.

(g) Effective Period of Demand Registrations. After any Demand Registration filed pursuant to this Agreement has become effective, the Company shall use commercially reasonable best efforts to keep such Demand Registration Statement effective for a period of at least eighteen (18) months from the date on which the SEC declares such Demand Registration Statement effective plus the duration of any Demand Registration Statement Delay Period and any period during which the use of a Prospectus is suspended pursuant to Section 2(f), or such shorter period that shall terminate on the earliest of (x) when all of the Registrable Common Stock covered by such Demand Registration Statement have been sold pursuant to such Demand Registration Statement in accordance with the plan of distribution set forth therein, and (y) when, in the opinion of counsel to the Key Holders, all outstanding Registrable Common Stock may be resold without registration under the Securities Act pursuant to Rule 144(k) under the Securities Act or any successor provision thereto.

3. Shelf Registrations.

(a) Shelf Registration on Form S-3. As soon as the Company becomes eligible to file a Registration Statement on Form S-3 (or any successor form relating to secondary offerings), the Company shall prepare and file or cause to be prepared and filed with the SEC, as soon as practicable, but in any event within ten (10) days of the Company becoming eligible to file a Registration Statement on Form S-3 (the “Shelf Registration Statement Filing Date”) a Registration Statement on Form S-3 (or any successor thereto) relating to the offering on a continuous or delayed basis pursuant to Rule 415 from time to time by the Key Holders of all then outstanding Registrable Common Stock (a “Shelf Registration” and any such Registration Statement filed on Form S-3 (or any successor thereto) a “Shelf Registration Statement”), in each case, in accordance with the methods of distribution set forth in such Shelf Registration Statement (which plan of distribution is attached as hereto as Exhibit A modified to be consistent with then current market practice and in accordance with then applicable securities laws, rules and regulations) and, thereafter, shall use its commercially reasonable best efforts to cause such Shelf Registration Statement to be declared effective under the Securities Act as promptly as practicable thereafter. Notwithstanding the foregoing, the Company may be able combine a Shelf Registration Statement from primary and/or secondary offerings. Furthermore, the Company shall not be required to prepare and file a Shelf Registration Statement if all Registrable Common Stock shall have been sold or if, in the opinion of counsel to the Key Holders, all outstanding Registrable Common Stock may be resold without registration under the Securities Act pursuant to Rule 144(k) under the Securities Act or any successor provision thereto.

(b) Underwritten Shelf Takedowns. At any time and from time to time, any Key Holder may request, in writing (an “Underwritten Takedown Request”), that the Company effect on underwritten shelf takedown (other than a “registered direct” or other agented transaction that does not involve the preparation of a preliminary prospectus or a preliminary prospectus supplement in the case of any offering pursuant to a Shelf Registration Statement) of

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all or a portion of such Key Holder’s Registrable Common Stock (an “Underwritten Shelf Takedown”), in accordance with the terms specified in such Underwritten Takedown Request. In connection with each such Underwritten Shelf Takedown, the Company shall cause there to occur Full Cooperation.

(c) Notice of Underwritten Shelf Takedowns. Upon receipt of any request for an Underwritten Shelf Takedown, the Company shall promptly, but in any event within five (5) Business Days after the Company’s receipt of an Underwritten Takedown Request from a Key Holder, give written notice of such proposed Underwritten Shelf Takedown to all other Key Holders. Such other Key Holders shall have the right, by giving written notice to the Company within five (5) days after the Company provides its notice, to elect to have included in such Underwritten Shelf Takedown such shares of their Registrable Common Stock as such other Key Holders may request in such notice of election, subject to the terms of Section 3(e). In such event, (i) the right of any other Key Holder to include its Registrable Common Stock in such Underwritten Shelf Takedown pursuant to this Section 3 shall be conditioned upon such other Key Holder’s participation in such Underwritten Shelf Takedown on the terms set forth herein, and (ii) all Key Holders including Registrable Common Stock in such Underwritten Shelf Takedown shall enter into an underwriting agreement upon customary terms with the underwriter or underwriters managing the offering; provided that such underwriting agreement shall not provide for indemnification or contribution obligations on the part of the Key Holders greater than the obligations of the Key Holders pursuant to Section 10. Thereupon, the Company shall, as expeditiously as possible, use its commercially reasonable best efforts to effect the Underwritten Shelf Takedown covering all of the Registrable Common Stock which the Company has been requested to include in such Underwritten Shelf Takedown.

(d) Limitations on Takedowns. There shall be no limit on the aggregate number of takedowns off such Shelf Registration Statement; provided, however, that the Company shall not be obligated to effect (i) more than six (6) (and no more than two (2) per Key Holder) Fully Marketed Underwritten Offerings pursuant to all Demand Registration Statements and Shelf Registration Statements, (ii) two (2) Fully Marketed Underwritten Offerings pursuant to all Demand Registration Statements and Shelf Registration Statements in any 12-month period. For purposes of this Section 3(d), an Underwritten Shelf Takedown shall not be counted as a Fully Marketed Underwritten Offering (i) if the requesting Key Holder withdraws its request and (X) such withdrawal is as a result of information concerning the business or financial condition of the Company which is made known to the Key Holders after the date on which such Underwritten Shelf Takedown was requested or (Y) the Key Holder making such demand agrees to pay the Registration Expenses therefore pursuant to Section 9; (ii) if, as a result of an exercise of the underwriter’s cut-back provisions, less than 75% of the total amount of Registrable Common Stock that Key Holders have requested to be included in such Underwritten Shelf Takedown are sold or (iii) there is not Full Cooperation by the Company in connection therewith.

(e) Priority of Underwritten Shelf Registration Takedowns. If, in connection with an Underwritten Shelf Takedown pursuant to this Section 3, the managing underwriter shall advise the Company that in its opinion the number of shares requested to be included in such registration exceeds the number that can be sold in such offering without having an adverse effect on such offering, including the price at which such shares can be sold, then the Company shall include in such registration the maximum number of shares that such underwriter advises

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can be so sold without having such effect, allocated (i) first, to Registrable Common Stock requested by the Key Holders to be included in such Underwritten Shelf Takedown on a pro rata basis, (ii) second, to securities to be sold on account of the Company and (iii) third, among all shares of Common Stock requested to be included in such registration by any other Persons allocated among such Persons in such manner as they may agree.

(f) Restrictions on Underwritten Shelf Takedowns. If at the time of any request to effect an Underwritten Shelf Takedown by a Key Holder pursuant to Section 3(b), the Company is engaged or has plans to engage in a registered public offering or is engaged in any other activity which, in the good faith determination of the Company’s Board of Directors, would be adversely affected by the requested Underwritten Shelf Takedown, then the Company may at its option direct that such request be delayed for a period not in excess of forty-five (45) days from the date of such request, such right to delay a request to be exercised by the Company not more than twice in any 365-day period but in no event may such two 45-day periods be consecutive or so close in proximity as to cause a delay with respect to such Underwritten Shelf Takedown to be longer than sixty (60) days. The period during which any filing is so delayed hereunder is referred to as an “Underwritten Shelf Takedown Delay Period”. In the event that, in the judgment of the Company, it is advisable to suspend use of a Prospectus included in a Shelf Registration Statement due to pending material developments or other events that have not yet been publicly disclosed and as to which the Company believes public disclosure would be detrimental to the Company, the Company shall notify all Key Holders to such effect, and, upon receipt of such notice, each of the Key Holders shall immediately discontinue any sales of Registrable Common Stock pursuant to such Shelf Registration Statement until each of the Key Holders has received copies of a supplemented or amended Prospectus or until the Key Holders are advised in writing by the Company that the then current Prospectus may be used and has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in such Prospectus. Notwithstanding anything to the contrary herein, the Company shall not exercise its rights under the preceding sentence to suspend sales of Registrable Common Stock for a period in excess of forty-five (45) days consecutively or ninety (90) days in any 365-day period.

(g) Effective Period of Shelf Registration. The Company shall use its commercially reasonable best efforts to keep any Shelf Registration Statement filed pursuant to Section 3(a) continuously effective (including by filing supplements and amendments) in order to permit the Prospectus forming part thereof to be usable by the Key Holders for such period that will terminate upon the earliest to occur of the following: (i) when all Registrable Common Stock have been sold pursuant to such Shelf Registration Statement, (ii) when, in the opinion of counsel to the Key Holders, all outstanding Registrable Common Stock may be resold without registration under the Securities Act pursuant to Rule 144(k) under the Securities Act or any successor provision thereto and (iii) three (3) years from the date on which the SEC declares such Shelf Registration Statement effective plus the duration of any Underwritten Shelf Registration Delay Period and any period during which the use of a Prospectus is suspended pursuant to Section 3(f).

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4. Piggyback Registrations.

(a) Right to Piggyback. Whenever the Company proposes to publicly sell or register for sale any of its common equity securities pursuant to a registration statement (a “Piggyback Registration Statement”) under the Securities Act (other than a registration statement on Form S-8 or on Form S-4 or any similar successor forms thereto), for its own account (a “Piggyback Registration”), the Company shall give prompt written notice, in any event within five (5) Business Days of the Company’s decision to effect a sale or registration, to the Key Holders of its intention to effect such sale or registration and, subject to Section 4(b), shall include in such registration all Registrable Common Stock with respect to which the Company has received a written request from the Key Holders for inclusion therein within ten (10) days after the receipt of the Company’s notice. The Company may postpone or withdraw the filing or the effectiveness of a Piggyback Registration at any time in its sole discretion, without prejudice to the Key Holders’ right to immediately request a Demand Registration hereunder. A Piggyback Registration shall not be considered a Demand Registration for purposes of Section 2 of this Agreement or an Underwritten Shelf Takedown for purposes of Section 3 of this Agreement.

(b) Priority on Piggyback Registrations. If a Piggyback Registration is initiated as an underwritten primary registration or Underwritten Shelf Takedown on behalf of the Company, and the managing underwriter advises the Company in writing that in its opinion the number of securities requested to be included in such registration exceeds the number that can be sold in such offering without having an adverse effect on such offering, including the price at which such securities can be sold, then the Company shall include in such registration the maximum number of shares that such underwriter advises can be so sold without having such effect, allocated (i) first, to the securities the Company proposes to sell, (ii) second, to the Registrable Common Stock requested to be included therein by the Key Holders, and (iii) third, among other securities requested to be included in such registration by other security holders of the Company on such basis as such holders may agree among themselves and the Company.

5. Other Registrations.

The Company shall not grant to any Person the right, other than as set forth herein and except to employees of the Company with respect to registrations on Form S-8 and with respect to registrations on Form S-4 (or any successor forms thereto), to request the Company to register any securities of the Company except such rights as are (a) not more favorable than or inconsistent with the rights granted to the Key Holders, and (b) that do not adversely affect the priorities set forth herein of the Key Holders.

6. Selection of Underwriters.

If any of the Registrable Common Stock covered by a Demand Registration Statement or a Shelf Registration Statement is to be sold in an underwritten offering, the Key Holder making the demand or requesting the Underwritten Shelf Takedown shall have the right to select the managing underwriter(s) to administer the offering subject to the prior approval of the Company, which approval shall not be unreasonably withheld.

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7. Holdback Agreements.

Each of the Key Holders (regardless of whether or not such Key Holder is a selling stockholder in any underwritten Demand Registration, Underwritten Shelf Takedown or underwritten Piggyback Registration, and, in each case, with respect to the Registrable Common Stock not included in such underwritten offering) and the Company agrees not to, and the Company, if requested by the lead managing underwriter, shall obtain from its directors and executive officers (other than with respect to shares deemed to be beneficially owned by such officer or director or an Affiliate of such officer or director which are included in the underwritten offering), and use its commercially reasonable best efforts to obtain from its beneficial owners of 5% or more of the Company’s outstanding voting stock, agreements (in the underwriters’ customary form) not to, directly or indirectly offer, sell, pledge, contract to sell, (including any short sale), grant any option to purchase or otherwise dispose of any equity securities of the Company or enter into any hedging transaction relating to any equity securities of the Company during the 90 days beginning on the effective date of any underwritten Demand Registration Statement or any underwritten Piggyback Registration Statement or the pricing date of any Underwritten Shelf Registration Takedown (except as part of such underwritten registration or pursuant to registrations on Form S-8 or S-4 or any successor forms thereto) unless the underwriter managing the offering otherwise agrees to a shorter period, provided, however, that (i) the lock-up agreements, if any, with the Company’s officers and directors shall be on terms no less favorable than those of the Key Holders; and (ii) if (A) the Company issues an earnings release or material news, or a material event relating to the Company occurs, during the last 17 days of the lock-up period, or (B) prior to the expiration of the holdback period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the holdback period, the restrictions imposed by this Section 7 shall continue to apply until the expiration of the 18-day period beginning on the issuance of the earnings release or the occurrence of the material news or material event; provided, however, that this sentence shall not apply if any research published or distributed by any underwriter on the Company would be compliant under Rule 139 of the Securities Act and the Company’s securities are actively traded as defined in Rule 101(c)(1) of Regulation M of the Exchange Act.

The Company may impose stop-transfer instructions with respect to the Registrable Common Stock not included in the underwritten offering or other securities subject to the foregoing restriction until the end of the applicable holdback period.

8. Procedures.

(a) Whenever a Key Holder requests that any Registrable Common Stock be registered or sold pursuant to this Agreement, the Company shall use commercially reasonable best efforts to effect the registration and the sale of such Registrable Common Stock in accordance with the intended methods of disposition thereof, and pursuant thereto the Company shall as expeditiously as possible:

(i) prepare and file with the SEC a Registration Statement with respect to such Registrable Common Stock and use commercially reasonable best efforts to cause such Registration Statement to become effective as soon as practicable thereafter; and at least three (3) Business Days before filing a Registration Statement or

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Prospectus or any amendments or supplements thereto (including any prospectus supplement for a shelf takedown), furnish to the selling Key Holders and the underwriter or underwriters, if any, copies of all such documents proposed to be filed, including documents incorporated by reference in the Prospectus and, if requested by the selling Key Holders, the exhibits incorporated by reference, and the selling Key Holders (and the underwriter(s), if any) shall have the opportunity to review and comment thereon, and the Company will make such changes and additions thereto as reasonably requested by the selling Key Holders (and the underwriter(s), if any) prior to filing any Registration Statement or amendment thereto or any Prospectus or any supplement thereto;

(ii) prepare and file with the SEC such amendments and supplements to such Registration Statement and the Prospectus used in connection therewith as may be necessary to keep such Registration Statement effective as set forth in Section 2 or 3, as applicable, hereof, or such shorter period as is necessary to complete the distribution of the securities covered by such Registration Statement and comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the Key Holders thereof set forth in such Registration Statement and, in the case of the Shelf Registration Statement, prepare such prospectus supplements containing such disclosures as may be reasonably requested by the Key Holders or any underwriter(s) in connection with each shelf takedown;

(iii) furnish to the selling Key Holders such number of copies of such Registration Statement, each amendment and supplement thereto, the Prospectus included in such Registration Statement (including each preliminary Prospectus) and such other documents as the selling Key Holders and any underwriter(s) may reasonably request in order to facilitate the disposition of the Registrable Common Stock, provided, however, that the Company shall have no such obligation to furnish copies of a final prospectus if the conditions of Rule 172(c) under the Securities Act are satisfied by the Company;

(iv) use commercially reasonable best efforts to register or qualify such Registrable Common Stock under such other securities or blue sky laws of such jurisdictions (domestic or foreign) as any underwriter(s) reasonably requests to enable the Key Holders and any underwriter(s) to consummate the disposition in such jurisdictions of the Registrable Common Stock (provided, that the Company will not be required to (1) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph (iv), (2) subject itself to taxation in any such jurisdiction or (3) consent to general service of process in any such jurisdiction);

(v) promptly notify the selling Key Holders and any underwriter(s), at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the occurrence of any event as a result of which the Prospectus included in such Registration Statement contains an untrue statement of a material fact or omits any material fact necessary to make the statements therein not misleading, and, at the request of the selling Key Holders or any underwriter(s), the Company shall prepare a supplement or amendment to such Prospectus so that, as thereafter delivered to the purchasers of such Registrable Common Stock, such Prospectus shall not contain an

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untrue statement of a material fact or omit to state any material fact necessary to make the statements therein not misleading;

(vi) in the case of an underwritten offering, (i) enter into such agreements (including underwriting agreements in customary form), (ii) take all such other actions as the selling Key Holders or the underwriter(s) reasonably request in order to expedite or facilitate the disposition of such Registrable Common Stock (including, without limitation, causing senior management and other Company personnel to cooperate with the Key Holders and the underwriter(s) in connection with performing due diligence), (iii) cause its counsel to issue opinions of counsel in form, substance and scope as are customary in underwritten offerings, addressed and delivered to the underwriter(s) and the selling Key Holders and (iv) cause its independent certified public accountants to issue “comfort letters” in form, substance and scope as are customary in underwritten offerings, addressed and delivered to the underwriter, if any, and the Company shall request for such “comfort letters” to also be addressed and delivered to each selling Key Holders;

(vii) in connection with each Fully Marketed Underwritten Offering requested by the Key Holders under Section 2 or 3, cause there to occur Full Cooperation and, in all other cases, cause members of senior management of the Company to be available to participate in, and to cooperate with the underwriter(s) in connection with customary marketing activities (including select conference calls and one-on-one meetings with prospective purchasers);

(viii) make available for inspection by the Key Holders, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by the Key Holders or underwriter, all financial and other records, pertinent corporate documents and properties of the Company, and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by the selling Key Holders, underwriter, attorney, accountant or agent in connection with such Registration Statement;

(ix) use commercially reasonable best efforts to cause all such Registrable Common Stock to be listed or qualified on each securities exchange, if any, on which securities of the same class issued by the Company are then listed or traded;

(x) provide a transfer agent and registrar for all such Registrable Common Stock not later than the effective date of such Registration Statement;

(xi) if requested, cause to be delivered, immediately prior to the pricing of any underwritten offering, immediately prior to effectiveness of each Registration Statement (and, in the case of an underwritten offering, at the time of closing of the sale of Registrable Common Stock pursuant thereto), letters from the Company’s independent registered public accountants addressed to each underwriter, if any, and request such letters to be addressed to the selling Key Holders, stating that such accountants are independent public accountants within the meaning of the Securities Act and the

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applicable rules and regulations adopted by the SEC thereunder, and otherwise in customary form and covering such financial and accounting matters as are customarily covered by letters of the independent registered public accountants delivered in connection with primary underwritten public offerings; and

(xii) promptly notify the selling Key Holders and the underwriter or underwriters, if any:

(1) when the Registration Statement, any pre-effective amendment, the Prospectus or any Prospectus supplement or post-effective amendment to the Registration Statement has been filed and, with respect to the Registration Statement or any post-effective amendment, when the same has become effective;

(2) of any written request by the SEC for amendments or supplements to the Registration Statement or Prospectus;

(3) of the notification to the Company by the SEC of its initiation of any proceeding with respect to the issuance by the SEC of any stop order suspending the effectiveness of the Registration Statement; and

(4) of the receipt by the Company of any notification with respect to the suspension of the qualification of any Registrable Common Stock for sale under the applicable securities or blue sky laws of any jurisdiction.

(b) The Company represents and warrants that no Registration Statement (including any amendments or supplements thereto and Prospectuses contained therein) shall contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary to make the statements therein not misleading (except that the Company makes no representation or warranty with respect to information relating to the Key Holders furnished to the Company by or on behalf of the Key Holders specifically for use therein).

(c) The Company shall make available to the selling Key Holders (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company, one copy of each Registration Statement and any amendment thereto, each preliminary Prospectus and Prospectus and each amendment or supplement thereto, each letter written by or on behalf of the Company to the SEC or the staff of the SEC (or other governmental agency or self-regulatory body or other body having jurisdiction, including any domestic or foreign securities exchange), and each item of correspondence from the SEC or the staff of the SEC (or other governmental agency or self-regulatory body or other body having jurisdiction, including any domestic or foreign securities exchange), in each case relating to such Registration Statement, and (ii) such number of copies of a Prospectus, including a preliminary Prospectus, and all amendments and supplements thereto and such other documents as the selling Key Holders or any underwriter may reasonably request in order to facilitate the disposition of the Registrable Common Stock. The Company will promptly notify the selling Key Holders of the effectiveness of each Registration Statement or any post-effective amendment. The

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Company will promptly respond to any and all comments received from the SEC, with a view towards causing each Registration Statement or any amendment thereto to be declared effective by the SEC as soon as practicable and shall file an acceleration request as soon as practicable following the resolution or clearance of all SEC comments or, if applicable, following notification by the SEC that any such Registration Statement or any amendment thereto will not be subject to review.

(d) The Company shall not permit any officer, director, underwriter, broker or any other person acting on behalf of the Company to use any Free Writing Prospectus in connection with any registration statement covering Registrable Common Stock, without the prior written consent of the selling Key Holder and any underwriter which consent shall not be unreasonably withheld or delayed. Any consent to the use of a free writing prospectus included in an underwriting agreement to which the Key Holders are parties shall be deemed to satisfy the requirement for such consent.

(e) The Company may require the Key Holders to furnish to the Company any other information regarding the Key Holders and the distribution of such securities as the Company reasonably determines, based on the advice of counsel, is required to be included in any Registration Statement.

9. Registration Expenses.

(a) All expenses incident to the Company’s performance of or compliance with this Agreement, including, without limitation, all registration and filing fees (including SEC registration fees and NASD filing fees), fees and expenses of compliance with securities or “blue sky” laws, listing application fees, printing expenses, transfer agent’s and registrar’s fees, cost of printing and distributing Prospectuses in preliminary and final form as well as any amendments or supplements thereto, and fees and disbursements of counsel for the Company and all accountants and other Persons retained by the Company (all such expenses being herein called “Registration Expenses”) (but not including any underwriting discounts or commissions) shall be borne by the Company. In addition, the Company shall pay its internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expense of any annual audit or quarterly review, the expense of any liability insurance and the expenses and fees for listing the securities to be registered on each securities exchange on which they are to be listed.

(b) In connection with each registration initiated hereunder (whether a Demand Registration, Shelf Registration, Piggyback Registration or any Fully Marketed Underwritten Offering under each of the foregoing), the Company shall pay, or shall reimburse the Key Holders for, the reasonable fees and disbursements of one law firm chosen by the Key Holders as their counsel.

(c) The obligation of the Company to bear the expenses described in Section 9(a) and to pay or reimburse the Key Holders for the expenses described in Section 9(b) shall apply irrespective of whether a registration, once properly demanded, if applicable, becomes effective, is withdrawn or suspended, is converted to another form of registration and irrespective of when any of the foregoing shall occur.

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10. Indemnification.

(a) The Company shall indemnify, to the fullest extent permitted by law, the Key Holders and their respective officers, directors, employees and Affiliates and each Person who controls the Key Holders (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any Issuer Free Writing Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading or any violation or alleged violation by the Company of the Securities Act, the Exchange Act or applicable “blue sky” laws; provided, however that the Company shall not be liable in any case to the extent any such loss, claim, damage, liability or expense arises out of or is based upon an untrue statement or allegedly untrue statement or omission or alleged omission contained in the Registration Statement, Prospectus or preliminary prospectus or any Issuer Freewriting Prospectus or any amendment thereto or supplement thereof in reliance upon and in conformity with information relating to the Key Holders furnished in writing to the Company by the Key Holders expressly for use therein. In connection with an underwritten offering, the Company shall indemnify such underwriter(s), their officers, employees and directors and each Person who controls such underwriter(s) (within the meaning of the Securities Act) to the same extent as provided above with respect to the indemnification of the Key Holders.

(b) In connection with any Registration Statement in which the Key Holders are participating, the Key Holders shall furnish to the Company, in writing, such information as the Company reasonably determines, based on the advice of counsel, is required to be included in any such Registration Statement or Prospectus and shall indemnify, to the fullest extent permitted by law, the Company, its officers, employees, directors, Affiliates, and each Person who controls the Company (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses arising out of or based upon any untrue or alleged untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that the same are made in reliance and in conformity with information relating to the Key Holders furnished in writing to the Company by the Key Holders expressly for use therein.

(c) Any Person entitled to indemnification hereunder shall (i) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent will not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel (in addition to any local counsel) for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable

17

judgment of any indemnified party there may be one or more legal or equitable defenses available to such indemnified party that are in addition to or may conflict with those available to another indemnified party with respect to such claim. Failure to give prompt written notice shall not release the indemnifying party from its obligations hereunder.

(d) The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling Person of such indemnified party and shall survive the transfer of securities.

(e) If the indemnification provided for in or pursuant to this Section 10 is due in accordance with the terms hereof, but is held by a court to be unavailable or unenforceable in respect of any losses, claims, damages, liabilities or expenses referred to herein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified Person as a result of such losses, claims, damages, liabilities or expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that result in such losses, claims, damages, liabilities or expenses as well as any other relevant equitable considerations. The relative fault of the indemnifying party on the one hand and of the indemnified Person on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party, and by such party’s relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. In no event shall the liability of the Key Holders be greater in amount than the amount of net proceeds received by the Key Holders upon such sale.

11. Liquidated Damages.

The Company and each Investor agrees that each Investor will suffer damages if the Company fails to fulfill its obligations pursuant to this Agreement and that it would not be possible to ascertain the extent of such damages with precision. Accordingly, the Company hereby agrees to pay partial liquidated damages and not a penalty (“Liquidated Damages”) to each Key Holder whose Registrable Common Stock are included in a Demand Registration Statement filed pursuant to Section 2 or in a Shelf Registration Statement filed pursuant to Section 3 if: (a) such registration statement is not filed by the Company on or before the Demand Registration Filing Date, in the case of a Demand Registration Statement, or on or before the Shelf Registration Statement Filing Date, in the case of a Shelf Registration Statement (such an event, a “Filing Default”); (b) such registration statement is not declared effective by the SEC on or prior to the earlier of (i) the forty-five (45) calendar days following the Demand Registration Statement Filing Date or Shelf Registration Statement Filing Date, as applicable, ninety (90) calendar days in the event of a full review by the SEC) and (ii) the fifth Business Day after the SEC advises the Company that the Demand Registration Statement or Shelf Registration Statement, as applicable, will not be reviewed or that the SEC has no further comments on the Demand Registration Statement or Shelf Registration Statement, as applicable (such an event, an “Effectiveness Default”); (c) such Demand Registration Statement providing for resale pursuant to Rule 415 or Shelf Registration Statement, as applicable, after its

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effectiveness date ceases to be effective and available to such Key Holder for any continuous period that exceeds forty-five (45) days or for one or more period that exceeds in the aggregate ninety (90) days in a twelve (12) month period (such an event, a “Suspension Default”) or (d) the Company delays a Key Holder’s request for an Underwritten Shelf Takedown for a period that exceeds sixty (60) days (such an event, a “Takedown Default” and together with a Filing Default, Effectiveness Default and Suspension Default, a “Registration Default”). The foregoing notwithstanding, during any periods that the Company is unable to meet its obligations under this Section 11 with respect to the registration of the Registrable Common Stock because any Key Holder fails to furnish information regarding such Key Holder required to be included in any Demand Registration Statement or Shelf Registration Statement within five (5) Business Days after receipt by the Key Holder of the Company’s request for such information (a “Defaulting Holder”), the time periods set forth in clauses (a) through (d) above shall be extended solely with respect to such Defaulting Holder by the number of days of any such delay in providing the required information and any Liquidated Damages accruing solely with respect to such Defaulting Holder at such time shall be tolled and the Registration Default that may otherwise occur as a result of such delay solely with respect to such Defaulting Holder shall be suspended, until such required information is delivered by the Defaulting Holder to the Company. For further clarification, the Company shall remain obligated to pay Liquidated Damages with respect to Registration Defaults to any Key Holder that is not a Defaulting Holder. In the event of a Registration Default, the Company shall as Liquidated Damages pay to each of the requesting Key Holders, for each 30-day period of a Registration Default, an amount in cash equal to one percent (1%) of the aggregate value of each such requesting Key Holder’s Registrable Common Stock on the date hereof calculated in accordance with Exhibit B hereto (the “Aggregate Value”) up to a maximum of seven and one-half percent (7.5%) of the Aggregate Value provided that Liquidation Damages in respect of a Suspension Default or a Takedown Default shall not be payable in relation to Registrable Common Stock not owned by such Key Holder at the time of the Suspension Default or Takedown Default. The Company shall pay the Liquidated Damages the date of each such Registration Default and in each monthly anniversary thereof until the applicable Registration Default is cured. The Liquidated Damages payable herein shall apply on a pro rata basis for any portion of a thirty (30) day period of a Registration Default. The Liquidated Damages payable herein shall be in addition to any other rights the Key Holders have hereunder or under applicable law.

12. Rule 144.

So long as the Company is subject to Section 13 or 15(d) of the Exchange Act, the Company covenants that it will file the reports required to be filed by it under the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder, and it will take such further action as the Key Holders may reasonably request to make available adequate current public information with respect to the Company meeting the current public information requirements of Rule 144(c) under the Securities Act, to the extent required to enable the Key Holders to sell Registrable Common Stock without registration under the Securities Act within the limitation of the exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (ii) any similar rule or regulation hereafter adopted by the SEC. Upon the request of the Key Holders, the Company will deliver to the Key Holders a written statement within two (2) Business Days of such request as to whether it has complied with such information and requirements.

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13. Free Writing Prospectuses.

Each Key Holder represents that it has not prepared or had prepared on its behalf or used or referred to, and agrees that it will not prepare or have prepared on its behalf or use or refer to, and agrees that it will not prepare or have prepared on its behalf or use or refer to, any Free Writing Prospectus, and has not distributed and will not distribute any written materials in connection with the offer or sale of Common Stock without the prior written consent of the Company and, in connection with any underwritten offering, the underwriters. Any such Free Writing Prospectus consented to by the Company and the underwriters, as the case may be, is hereinafter referred to as a “Permitted Free Writing Prospectus.” The Company represents and agrees that it has treated and will treat, as the case may be, each Permitted Free Writing Prospectus as an Issuer Free Writing Prospectus, including in respect of timely filing with the SEC, legending and record keeping.

14. Transfer of Registration Rights.

(a) The Key Holders may transfer all or any portion of their then-remaining rights under this Agreement to any transferee who acquires at least 15% of the Registrable Common Stock initially received by the Key Holders pursuant to the Plan (each, a “transferee”). Any transfer of registration rights pursuant to this Section 14 shall be effective upon receipt by the Company of (i) written notice from the Key Holders stating the name and address of any transferee and identifying the amount of Registrable Common Stock with respect to which the rights under this Agreement are being transferred and the nature of the rights so transferred and (ii) a written agreement from the transferee to be bound by all of the terms of this Agreement. In connection with any such transfer, the term “Key Holders” as used in this Agreement shall, where appropriate to assign such rights to such transferees, be deemed to refer to the transferee holders of such Registrable Common Stock. The Key Holders and such transferees may exercise the registration rights hereunder in such proportion (not to exceed the then-remaining rights hereunder) as they shall agree among themselves. For further clarification, (i) in no event shall the aggregate number of rights to request a Demand Registration hereunder (the “Demand Rights”) be greater than the number of Demand Rights granted on the date hereof and (ii) the initial Key Holders and their transferees shall not have in the aggregate a greater number of Demand Rights than such number of Demand Rights remaining at the time of any such transfer.

(b) After such transfer, the Key Holders shall retain their rights under this Agreement with respect to all other Registrable Common Stock owned by the Key Holders. Upon the request of the Key Holders, the Company shall execute a Registration Rights Agreement with such transferee or a proposed transferee substantially similar to the applicable sections of this Agreement.

15. Termination.

This Agreement shall terminate upon the earliest to occur of (i) ten (10) years from the date hereof, (ii) when all shares of Registrable Common Stock have been sold, (iii) when, in the opinion of counsel to the Key Holders, all outstanding Registrable Common Stock may be resold without registration under the Securities Act pursuant to Rule 144(k) under the Securities Act or

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any successor provision thereto, or (iv) Key Holders representing fifty percent (50%) of the Registrable Shares agree, by written consent, to terminate this Agreement.

16. Miscellaneous.

(a) Notices. All notices, requests, consents and other communications required or permitted hereunder shall be in writing and shall be hand delivered or mailed postage prepaid by registered or certified mail or by facsimile transmission (with immediate telephone confirmation thereafter) and, in the case of the Key Holders, shall also be sent via e-mail,

If to the Company, to:

Silicon Graphics, Inc.

1200 Crittendon Lane

Mountain View, CA 94043

Attention: Mr. Barry Weinert

Vice President and General Counsel

Fax: (650) 933-0203

- with a copy to -

Weil, Gotshal & Manges, LLP

767 Fifth Avenue

New York, NY 10153

Attention: Gary T. Holtzer, Esq.

Fax: (212) 310-8007

If to the Key Holders to the address set forth in Exhibit C and if to any transferee Key Holders, to the address of such transferee Key Holders set forth in the transfer documentation provided to the Company, in each case with copies to (which shall not constitute notice) their respective counsel at the address set forth in Exhibit C, or at such other address as such party each may specify by written notice to the others, and each such notice, request, consent and other communication shall for all purposes of the Agreement be treated as being effective or having been given when delivered personally, upon one Business Day after being deposited with a courier if delivered by courier, upon receipt of facsimile confirmation if transmitted by facsimile, or, if sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a regularly maintained receptacle for the deposit of United States mail, addressed and postage prepaid as aforesaid.

(b) No Waivers. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

21

(c) Successors and Assigns. The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. If the outstanding Common Stock is converted into or exchanged or substituted for other securities issued by any other Person, as a condition to the effectiveness of the merger, consolidation, reclassification, share exchange or other transaction pursuant to which such conversion, exchange, substitution or other transaction takes place, such other Person shall automatically become bound hereby with respect to such other securities constituting Registrable Common Stock and, if requested by the Key Holders or a permitted transferee, shall further evidence such obligation by executing and delivering to the Key Holders and such transferee a written agreement to such effect in form and substance satisfactory to the Key Holders.

(d) Governing Law. The internal laws of the State of Delaware shall govern the enforceability and validity of this Agreement, the construction of its terms and the interpretation of the rights and duties of the parties, without regard to its principles of conflicts of laws that would implicate the substantive or procedural laws of any other jurisdiction.

(e) Jurisdiction. Any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in any federal or state court located in the County and State of New York, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 16(a) shall be deemed effective service of process on such party.

(f) Waiver of Jury Trial. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(g) Counterparts; Effectiveness. This Agreement may be executed in any number of counterparts (including by facsimile) and by different parties hereto in separate counterparts, with the same effect as if all parties had signed the same document. All such counterparts shall be deemed an original, shall be construed together and shall constitute one and the same instrument. This Agreement shall become effective when each party hereto shall have received counterparts hereof signed by all of the other parties hereto.

(h) Entire Agreement. This Agreement contains the entire agreement between the parties hereto with respect to the subject matter hereof and supersedes and replaces all other prior agreements, written or oral, among the parties hereto with respect to the subject matter hereof.

22

(i) Captions. The headings and other captions in this Agreement are for convenience and reference only and shall not be used in interpreting, construing or enforcing any provision of this Agreement.

(j) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such a determination, the parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

(k) Amendments. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given, without the written consent of the Company and the Key Holders holding fifty percent (50%) of the Registrable Common Stock.

(l) Aggregation of Stock. All Registrable Common Stock held by or acquired by any Person who is an Affiliate of any of the Key Holders will be aggregated together for the purpose of determining the availability of any rights under this Agreement.

(m) Equitable Relief. The parties hereto agree that legal remedies may be inadequate to enforce the provisions of this Agreement and that equitable relief, including specific performance and injunctive relief, may be used to enforce the provisions of this Agreement.

[Execution Page Follows]

23

IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by each of the parties hereto as of the date first written above.

SILICON GRAPHICS, INC.
By:	/s/ Kathy Lanterman
Name:	Kathy Lanterman
Title:	Senior Vice President and Chief Financial Officer

IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by each of the parties hereto as of the date first written above.

WATERSHED CAPITAL PARTNERS, L.P.
By:	WS Partners, L.L.C., its General Partner
By:	/s/ Meridee A. Moore
Name:	Meridee A. Moore
Title:	Senior Managing Member
WATERSHED CAPITAL INSTITUTIONAL PARTNERS, L.P.
By:	WS Partners, L.L.C., its General Partner
By:	/s/ Meridee A. Moore
Name:	Meridee A. Moore
Title:	Senior Managing Member
WATERSHED CAPITAL PARTNERS (OFFSHORE), LTD.
By:	Watershed Asset Management, L.L.C., its Investment Manager
By:	/s/ Meridee A. Moore
Name:	Meridee A. Moore
Title:	Senior Managing Member

IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by each of the parties hereto as of the date first written above.

QDRF MASTER LTD.
By:	Quadrangle Debt Recovery Advisors LLC
Its:	Advisor
By:	/s/ Christopher Santana
Name:	Christopher Santana
Title:	Member
QUADRANGLE DEBT OPPORTUNITIES FUND MASTER LTD.
By:	Quadrangle Debt Recovery Advisors LLC
Its:	Advisor
By:	/s/ Christopher Santana
Name:	Christopher Santana
Title:	Member
QUADRANGLE DEBT RECOVERY INCOME FUND MASTER LTD.
By:	Quadrangle Debt Recovery Advisors LLC
Its:	Advisor
By:	/s/ Christopher Santana
Name:	Christopher Santana
Title:	Member

IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by each of the parties hereto as of the date first written above.

ADAGIO FUND
By:	Symphony Asset Management LLC, as its General Partner
By:	/s/ Neil L. Rudolph
Name:	Neil L. Rudolph
Title:	Chief Operating Officer
ANDANTE FUND, L.P.
By:	Symphony Asset Management LLC, as its General Partner
By:	/s/ Neil L. Rudolph
Name:	Neil L. Rudolph
Title:	Chief Operating Officer
ARPEGGIO FUND
By:	Symphony Asset Management LLC, as its General Partner
By:	/s/ Neil L. Rudolph
Name:	Neil L. Rudolph
Title:	Chief Operating Officer
ENCORE FUND, L.P.
By:	Symphony Asset Management LLC, its General Partner
By:	/s/ Neil L. Rudolph
Name:	Neil L. Rudolph
Title:	Chief Operating Officer

RHAPSODY FUND, L.P.
By:	Symphony Asset Management LLC, as its General Partner
By:	/s/ Neil L. Rudolph
Name:	Neil L. Rudolph
Title:	Chief Operating Officer
“SEPARATE ACCOUNT A”
By:	Symphony Asset Management LLC as its Investment Manager
By:	/s/ Neil L. Rudolph
Name:	Neil L. Rudolph
Title:	Chief Operating Officer
“SEPARATE ACCOUNT B”
By:	Symphony Asset Management LLC as its Investment Manager
By:	/s/ Neil L. Rudolph
Name:	Neil L. Rudolph
Title:	Chief Operating Officer
TEMPO 05 FUND
By:	Symphony Asset Management LLC, as its General Partner
By:	/s/ Neil L. Rudolph
Name:	Neil L. Rudolph
Title:	Chief Operating Officer

Exhibit A

PLAN OF DISTRIBUTION

Silicon Graphics, Inc. [or such defined term] is registering the shares of common stock covered by this prospectus for the selling stockholders. As used in this prospectus, “selling stockholders” includes the donees, transferees, pledgees or others who may later hold the selling stockholders’ interests. Pursuant to a registration rights agreement, dated as of October 17, 2006, Silicon Graphics agreed to register the common stock owned by the selling stockholders and to indemnify the selling stockholders against certain liabilities related to the selling of the common stock, including liabilities arising under the Securities Act. Under the registration rights agreement, Silicon Graphics also agreed to pay the costs and fees of registering the shares of common stock; however, the selling stockholders will pay any brokerage commissions or underwriting discounts relating to the sale of the shares of common stock.

The selling stockholders may sell the common stock being offered hereby in one or more of the following ways at various times:

• to underwriters for resale to the public or to institutional investors;

• directly to institutional investors; or

• through agents to the public or to institutional investors.

The selling stockholder may offer its shares of common stock in one or more offerings pursuant to one or more prospectus supplements, if required by applicable law, and any such prospectus supplement will set forth the terms of the relevant offering to the extent required. To the extent the shares of common stock offered pursuant to a prospectus supplement remain unsold, the selling stockholders may offer those shares of common stock on different terms pursuant to another prospectus supplement.

The selling stockholders will act independently of Silicon Graphics in making decisions with respect to the timing, manner and size of each sale. The selling stockholders may sell the common stock on any national securities exchange on which the common stock may be listed and traded or otherwise, at market prices prevailing at the time of sale, at prices related to the prevailing market prices, or at negotiated prices. If underwriters are used in the sale, the common stock will be acquired by the underwriters for their own account and may be resold at various times in one or more transactions, including negotiated transactions, at a fixed public offering price or prices, which may be changed, at market prices prevailing at the time of sale, at prices related to such prevailing market prices, or at negotiated prices. A distribution of the common stock by the selling stockholders may also be effected through the issuance by the selling stockholders or others of derivative securities, including without limitation, warrants, exchangeable securities, forward delivery contracts and the writing of options.

In addition, the selling stockholders may sell some or all of the shares of common stock covered by this prospectus through:

• a block trade in which a broker-dealer will attempt to sell as agent, but may position or resell a portion of the block, as principal, in order to facilitate the transaction;

• purchases by a broker-dealer, as principal, and resale by the broker-dealer for its account;

• ordinary brokerage transactions and transactions in which a broker solicits purchasers; or

• privately negotiated transactions.

The selling stockholders may also enter into hedging transactions. For example, the selling stockholders may:

• enter into transactions with a broker-dealer or affiliate thereof in connection with which such broker-dealer or affiliate will engage in short sales of the common stock pursuant to this prospectus, in which case such broker-dealer or affiliate may use shares of common stock received from the selling stockholders to close out its short positions;

• sell common stock short itself and redeliver such shares to close out its short positions;

• enter into option or other types of transactions that require the selling stockholders to deliver common stock to a broker-dealer or an affiliate thereof, who will then resell or transfer the common stock under this prospectus; or

• loan or pledge the common stock to a broker-dealer or an affiliate thereof, who may sell the loaned shares or, in an event of default in the case of a pledge, sell the pledged shares pursuant to this prospectus.

In addition,                                  may enter into derivative or hedging transactions with third parties, or sell securities not covered by this prospectus to third parties in privately negotiated transactions. In connection with such a transaction, the third parties may sell securities covered by and pursuant to this prospectus and an applicable prospectus supplement. If so, the third party may use securities borrowed from                                  or others to settle such sales and may use securities received from                                  to close out any related short positions.                                  may also loan or pledge securities covered by this prospectus and an applicable prospectus supplement to third parties, who may sell the loaned securities or, in an event of default in the case of a pledge, sell the pledged securities pursuant to this prospectus and the applicable prospectus supplement.

The applicable prospectus supplement will set forth the terms of the offering of the common stock covered by this prospectus, including:

• the name or names of any underwriters, dealers or agents and the amounts of securities underwritten or purchased by each of them, if any; and

• the public offering price of the common stock and the proceeds to the selling stockholders and any discounts, commissions or concessions or other items constituting compensation allowed, reallowed or paid to underwriters, dealers or agents, if any.

Any public offering price and any discounts, commissions, concessions or other items constituting compensation allowed or reallowed or paid to underwriters, dealers or agents may be changed from time to time.

The selling stockholders may negotiate and pay broker-dealers’ commissions, discounts or concessions for their services. Broker-dealers engaged by the selling stockholders may allow other broker-dealers to participate in resales. The selling stockholders and any broker-dealers involved in the sale or resale of the common stock may qualify as “underwriters” within the meaning of Section 2(a)(11) of the Securities Act. In addition, the broker-dealers’ commissions, discounts or concessions may qualify as underwriters’ compensation under the Securities Act. If any the selling stockholders qualifies as an “underwriter,” it will be subject to the prospectus delivery requirements of Section 5(b)(2) of the Securities Act.

In addition to selling its common stock under this prospectus, the selling stockholders may:

• agree to indemnify any broker-dealer or agent against certain liabilities related to the selling of the common stock, including liabilities arising under the Securities Act;

• transfer its common stock in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer;

• sell its common stock under Rule 144 of the Securities Act rather than under this prospectus, if the transaction meets the requirements of Rule 144; or

• sell its common stock by any other legally available means.

Exhibit B

Silicon Graphics, Inc.

Liquidated Damages Calculation

(US Dollars)

Share Price Calculations
Disclosure Statement Equity Value	$	179,100,000
Shares Outstanding (1)		11,125,000
Share Price	$	16.10
Aggregate Consideration
Total Shares Received by Backstop Providers		5,632,194
Total Value of Shares Received	$	90,671,995.09
Liquidated Damages at 1.0%	$	906,719.95
Liquidated Damages at 7.5%	$	6,800,399.63

(1) Assumes full exercise of the Over-Allotment by the Backstop Providers.

WATERSHED CAPITAL PARTNERS, L.P.

c/o Watershed Asset Management, L.L.C.

One Maritime Plaza

Suite 1525

San Francisco, CA 94111

Attention: Kevin Katari

Fax: (415) 391-3919

WATERSHED CAPITAL INSTITUTIONAL PARTNERS, L.P.

c/o Watershed Asset Management, L.L.C.

One Maritime Plaza

Suite 1525

San Francisco, CA 94111

Attention: Kevin Katari

Fax: (415) 391-3919

WATERSHED CAPITAL PARTNERS (OFFSHORE), LTD.

c/o Watershed Asset Management, L.L.C.

One Maritime Plaza

Suite 1525

San Francisco, CA 94111

Attention: Kevin Katari

Fax: (415) 391-3919

QDRF MASTER LTD.

c/o Quadrangle Debt Recovery Advisors LLC

375 Park Avenue

New York, NY 10152

Attention: Chun Won Yi

Fax: (866) 648-6526

QUADRANGLE DEBT OPPORTUNITIES FUND MASTER LTD.

c/o Quadrangle Debt Recovery Advisors LLC

375 Park Avenue

New York, NY 10152

Attention: Chun Won Yi

Fax: (866) 648-6526

QUADRANGLE DEBT RECOVERY INCOME FUND MASTER LTD.

c/o Quadrangle Debt Recovery Advisors LLC

375 Park Avenue

New York, NY 10152

Attention: Chun Won Yi

Fax: (866) 648-6526

ADAGIO FUND

c/o Symphony Asset Management LLC

555 California Street, Suite 2975

San Francisco, CA 94104-1503

Attention: Neil L. Rudolph

Fax: (415) 676-2480

ANDANTE FUND, L.P.

c/o Symphony Asset Management LLC

555 California Street, Suite 2975

San Francisco, CA 94104-1503

Attention: Neil L. Rudolph

FAX: (415) 676-2480

ARPEGGIO FUND

c/o Symphony Asset Management LLC

555 California Street, Suite 2975

San Francisco, CA 94104-1503

Attention: Neil L. Rudolph

Fax: (415) 676-2480

ENCORE FUND, L.P.

c/o Symphony Asset Management LLC

555 California Street, Suite 2975

San Francisco, CA 94104-1503

Attention: Neil L. Rudolph

Fax: (415) 676-2480

RHAPSODY FUND, L.P.

c/o Symphony Asset Management LLC

555 California Street, Suite 2975

San Francisco, CA 94104-1503

Attention: Neil L. Rudolph

Fax: (415) 676-2480

“SEPARATE ACCOUNT A”

c/o Symphony Asset Management LLC

555 California Street, Suite 2975

San Francisco, CA 94104-1503

Attention: Neil L. Rudolph

Fax: (415) 676-2480

“SEPARATE ACCOUNT B”

c/o Symphony Asset Management LLC

555 California Street, Suite 2975

San Francisco, CA 94104-1503

Attention: Neil L. Rudolph

Fax: (415) 676-2480

TEMPO 05 FUND

c/o Symphony Asset Management LLC

555 California Street, Suite 2975

San Francisco, CA 94104-1503

Attention: Neil L. Rudolph

Fax: (415) 676-2480

IN EACH CASE WITH A COPY TO:

Goodwin Procter LLP

599 Lexington Avenue

New York, NY 10022

Attention: Allan S. Brilliant, Esq.

Fax: (212) 355-3333

EX-10.2

Exhibit 10.2

$115,000,000

SENIOR SECURED CREDIT AGREEMENT

by and among

SILICON GRAPHICS, INC.,

together with the Subsidiaries that are signatories hereto,

as Borrowers,

and

the other Credit Parties hereto from time to time,

as Guarantors

and

the LENDERS party hereto from time to time,

and

MORGAN STANLEY SENIOR FUNDING, INC.,

as Administrative Agent, Bookrunner and Lead Arranger,

and

GENERAL ELECTRIC CAPITAL CORPORATION,

as Revolving Agent, Syndication Agent and Collateral Agent.

Dated as of October 17, 2006

TABLE OF CONTENTS

		Page
Article I THE FACILITY		2
Section 1.01.	Revolving Advances	2
Section 1.02.	Letter of Credit Facility	4
Section 1.03.	Term Loans	4
Section 1.04.	Use of Proceeds	7
Section 1.05.	Protective Advances	7
Section 1.06.	Promise to Pay	7
Section 1.07.	Notes	7
Section 1.08.	Authorized Officers and Revolving Agent	8
Section 1.09.	Joint and Several Liability of Borrowers	9
Section 1.10.	Allocation of Payments and Proceeds of Collateral	9
Section 1.11.	Limitations on LIBOR Loans	11
Section 1.12.	Swap Related Reimbursement Obligations	11
Article II PAYMENTS AND OTHER COMPENSATION		12
Section 2.01.	Voluntary Prepayments/Reductions of Commitments	12
Section 2.02.	Mandatory Prepayments	13
Section 2.03.	Prepayment Premiums	15
Section 2.04.	Payments	16
Section 2.05.	Taxes	17
Article III INTEREST		20
Section 3.01.	Interest on the Loans and Other Obligations	20
Section 3.02.	Conversion or Continuation	21
Section 3.03.	Break Funding Payments	22
Section 3.04.	Increased Costs; Illegality	22
Section 3.05.	Mitigation Obligations	24
Section 3.06.	Fees	24
Article IV CONDITIONS TO LOANS		25
Section 4.01.	Conditions Precedent to the Initial Loans	25
Section 4.02.	Conditions Precedent to Revolving Advances and Issuances of Letters of Credit	32
Article V REPRESENTATIONS AND WARRANTIES		33
Section 5.01.	Representations and Warranties	33
Article VI REPORTING COVENANTS		43
Section 6.01.	Financial Statements	43
Section 6.02.	Other Financial Information	45
Section 6.03.	Defaults, Events of Default	46
Section 6.04.	Lawsuits	46
Section 6.05.	Insurance	46
Section 6.06.	Environmental Notices	46
Section 6.07.	Labor Matters	47
Section 6.08.	Other Information	47

- i -

TABLE OF CONTENTS

(continued)

		Page
Article VII AFFIRMATIVE COVENANTS		48
Section 7.01.	Compliance with Laws and Contractual Obligations	48
Section 7.02.	Payment of Taxes and Claims	48
Section 7.03.	Conduct of Business and Preservation of Corporate Existence	48
Section 7.04.	Field Examination; Real Estate Asset Appraisal; Other Appraisals; Lender Meeting	49
Section 7.05.	Maintenance of Properties	50
Section 7.06.	Transactions with Related Parties	50
Section 7.07.	Further Assurances	50
Section 7.08.	Additional Security; Additional Guaranties; Further Assurances	51
Section 7.09.	Powers; Conduct of Business	53
Section 7.10.	Use of Proceeds	53
Section 7.11.	Obtaining of Permits, Etc.	53
Section 7.12.	Environmental	53
Section 7.13.	Fiscal Year	53
Section 7.14.	Condemnation	53
Section 7.15.	Maintenance of Insurance	54
Section 7.16.	Change in Collateral; Collateral Records	54
Section 7.17.	Payment of Contractual Obligations	54
Section 7.18.	Formation of Subsidiaries	55
Section 7.19.	Cash Management.	55
Section 7.20.	Location of Inventory and Equipment	56
Section 7.21.	Post-Closing Matters	56
Section 7.22.	Threshold Inventory	56
Article VIII NEGATIVE COVENANTS		56
Section 8.01.	Liens	56
Section 8.02.	Indebtedness	57
Section 8.03.	Restrictions on Fundamental Changes	57
Section 8.04.	Asset Dispositions, Etc.	57
Section 8.05.	Limitation on Issuance of Capital Stock	58
Section 8.06.	Limitations on Dividends and Distributions and Other Payment Restrictions Affecting Subsidiaries	58
Section 8.07.	Investments	59
Section 8.08.	Sale and Leaseback	59
Section 8.09.	Negative Pledges	59
Section 8.10.	Change in Nature of Business	60
Section 8.11.	Change Name	60
Section 8.12.	Restricted Payments	60
Section 8.13.	Change of Control	60
Section 8.14.	Modifications of Indebtedness, Organizational Documents and Certain Other Agreements	60
Section 8.15.	Federal Reserve Regulations	61
Section 8.16.	Investment Company Act of 1940	61
Section 8.17.	Securities Accounts; Deposit Accounts	61

- ii -

TABLE OF CONTENTS

(continued)

		Page
Section 8.18.	Impairment of Security Interests	61
Section 8.19.	Inactive Subsidiaries	61
Section 8.20.	Foreign Deposit Accounts	61
Section 8.21.	Program Agreements	61
Article IX FINANCIAL COVENANTS		62
Section 9.01.	Total Leverage Ratio	62
Section 9.02.	Minimum Levels of Consolidated EBITDA	63
Section 9.03.	Minimum Liquidity	63
Section 9.04.	Capital Expenditures	63
Article X EVENTS OF DEFAULT, RIGHTS AND REMEDIES		64
Section 10.01.	Events of Default	64
Section 10.02.	Remedies	67
Section 10.03.	Waivers by the Credit Parties	67
Article XI GUARANTY OF OBLIGATIONS OF BORROWER		67
Section 11.01.	Guaranty	67
Section 11.02.	Nature of Liability	68
Section 11.03.	Independent Obligation	69
Section 11.04.	Demand by the Administrative Agent, the Revolving Agent or the Secured Creditors	69
Section 11.05.	Enforcement of Guaranty	69
Section 11.06.	Waiver	70
Section 11.07.	Benefit of Guaranty	70
Section 11.08.	Modification of Guaranteed Obligations, Etc.	70
Section 11.09.	Reinstatement	71
Section 11.10.	Waiver of Subrogation, Etc.	72
Section 11.11.	Election of Remedies	72
Section 11.12.	Further Assurances	73
Section 11.13.	Limitation on Amount Guarantied; Contribution by Guarantors	73
Section 11.14.	Additional Waivers	73
Article XII THE AGENTS		74
Section 12.01.	Appointment of Agents	74
Section 12.02.	Agents’ Reliance, Etc.	75
Section 12.03.	Agents in Individual Capacities	75
Section 12.04.	Lender Credit Decision	76
Section 12.05.	Costs and Expenses; Indemnification	76
Section 12.06.	Successor Agents	77
Section 12.07.	Collateral Matters	79
Section 12.08.	Collateral Restrictions on Actions by the Agents and the Participating Lenders; Sharing Payments	80
Section 12.09.	Several Obligations; No Liability	80

- iii -

TABLE OF CONTENTS

(continued)

		Page
Article XIII MISCELLANEOUS		81
Section 13.01.	Notices, Etc.	81
Section 13.02.	Amendments, Etc.	83
Section 13.03.	Non-Consenting Lenders; Replacement Lenders	84
Section 13.04.	No Waiver; Remedies, Etc.	85
Section 13.05.	Expenses; Taxes; Attorneys’ Fees	85
Section 13.06.	Right of Set-Off	86
Section 13.07.	Severability	87
Section 13.08.	Complete Agreement; Sale of Interest	87
Section 13.09.	Assignment; Register	87
Section 13.10.	Counterparts	89
Section 13.11.	GOVERNING LAW	90
Section 13.12.	CONSENT TO JURISDICTION, SERVICE OF PROCESS AND VENUE	90
Section 13.13.	WAIVER OF JURY TRIAL, ETC.	90
Section 13.14.	Consent	91
Section 13.15.	Interpretation	91
Section 13.16.	Reinstatement; Certain Payments	91
Section 13.17.	Indemnification	91
Section 13.18.	Interest	92
Section 13.19.	Records	93
Section 13.20.	Binding Effect	94
Section 13.21.	Confidentiality	94
Section 13.22.	Lender Advertising	94
Section 13.23.	Common Enterprise	95
Section 13.24.	USA PATRIOT ACT	95
Article XIV DEFINITIONS; CERTAIN TERMS		95
Section 14.01.	Definitions	95
Section 14.02.	Terms Generally	127
Section 14.03.	Accounting and Other Terms	127
Section 14.04.	Time References	128

- iv -

SCHEDULES

Schedule 1.03(a) - Term Loans

Schedule 4.01(v) - Real Estate Assets/Closing Date Mortgaged Property

Schedule 4.01(w) - Cash Management Banks

Schedule 5.01(e) - Capitalization

Schedule 5.01(f) - Subsidiaries

Schedule 5.01(g) - Litigation

Schedule 5.01(o) - Real Property

Schedule 5.01(q) - Environmental Matters

Schedule 5.01(r) - Insurance

Schedule 5.01(t) - Accounts

Schedule 5.01(u) - Scheduled Intellectual Property Collateral

Schedule 5.01(u)(1) - Non-exclusive Licenses

Schedule 5.01(v) - Material Contracts

Schedule 5.01(y) - Place of Business; Chief Executive Office; OIN; FEIN; Etc.

Schedule 5.01(y)(1) - Threshold Inventory Locations

Schedule 5.01(y)(2) - Threshold Equipment Locations

Schedule 5.01(z) - Commercial Tort Claims

Schedule 5.01(dd) - Inactive Subsidiaries

Schedule 7.21 - Post-Closing Matters

Schedule 8.01 - Liens

Schedule 8.02 - Permitted Indebtedness

Schedule 8.05 - Plans

Schedule 8.07(b) - Investments

Schedule B - Initial Pro Rata Shares; Initial Commitments

EXHIBITS

Exhibit A - Letter of Credit Terms and Conditions

Exhibit B - Form of Notice of Borrowing

Exhibit C - Form of Revolving Note

Exhibit D - Form of Term Note

Exhibit E - Form of Notice of Conversion/Continuation

Exhibit F - Form of Officer’s Certificate

Exhibit G - Form of Compliance Certificate

Exhibit H - Form of Assignment & Acceptance

Exhibit I - Form of Joinder Agreement

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$115,000,000 SENIOR SECURED CREDIT AGREEMENT

This Senior Secured Credit Agreement, dated as of October 17, 2006 (as it may be amended, restated, modified, supplemented or extended from time to time, including all exhibits and schedules thereto, or otherwise modified, the “Agreement”), by and among SILICON GRAPHICS, INC., a corporation formed under the laws of Delaware (the “Parent”), and certain of the Parent’s Subsidiaries identified on the signature pages hereof, as borrowers (such Subsidiaries, together with Parent, are referred to hereinafter each individually as a “Borrower”, and collectively, jointly and severally, as the “Borrowers”), and the other Credit Parties hereto from time to time, as Guarantors, the lenders party hereto from time to time (the “Lenders”), MORGAN STANLEY SENIOR FUNDING, INC., a corporation formed under the laws of Delaware, as administrative agent for the Lenders (in such capacity, together with its successors and assigns, if any, the “Administrative Agent”) and as bookrunner and lead arranger (in such capacity, the “Lead Arranger”), and GENERAL ELECTRIC CAPITAL CORPORATION, a corporation formed under the laws of Delaware, as revolving agent for the Revolving Lenders (in such capacity, together with its successors and assigns, if any, the “Revolving Agent”), as collateral agent for the Secured Creditors (in such capacity, together with its successors and assigns, if any, the “Collateral Agent”) and as syndication agent (in such capacity, the “Syndication Agent”).

RECITALS

WHEREAS, on May 8, 2006 (the “Petition Date”), the Borrowers filed a voluntary petition for relief in a bankruptcy court under chapter 11 of title 11 of the United States Code (the “Bankruptcy Petition”) and entered into a credit facility to obtain debtor-in-possession financing (the “Junior Lien DIP Facility”), which was approved by the bankruptcy court on May 10, 2006;

WHEREAS, on June 28, 2006, the Borrowers entered into a post-petition loan and security agreement (the “Post-Petition Loan Agreement”) with the parties thereto to refinance the Junior Lien DIP Facility;

WHEREAS, the Borrowers now seek to obtain additional funds to exit from the Chapter 11 Cases and have requested that the Lenders make available to them the Commitments, on the terms and conditions set forth herein, to, among other things, refinance existing debt, and fund working capital requirements and other general corporate purposes of the Borrowers; and

WHEREAS, the Administrative Agent and the Lenders are willing to make the Loans to the Borrowers upon the terms and conditions set forth herein;

NOW THEREFORE, in consideration of the premises and the covenants and agreements contained herein and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

THE FACILITY

Section 1.01. Revolving Advances.

(a) Revolving Commitments. Subject to the terms and conditions set forth herein, each Revolving Lender hereby severally agrees to make loans (each a “Revolving Advance”) to the Borrowers from time to time on any Business Day during the Availability Period in an aggregate principal amount not to exceed at any time such Revolving Lender’s Pro Rata Share of the Available Commitments; provided, that such aggregate principal amount does not result in such Revolving Lender’s Pro Rata Share of the Aggregate Exposure exceeding such Revolving Lender’s Revolving Commitment or the Aggregate Exposure of all Revolving Lenders exceeding the Total Revolving Commitment of all Revolving Lenders; provided, further, that the Revolving Agent shall have the right from time to time to impose and adjust the amount of reserves against availability in its reasonable credit judgment based upon a change in circumstance. Within the foregoing limits and subject to the terms and conditions set forth herein, the Borrowers may borrow, repay and reborrow Revolving Advances.

(b) Notice of Borrowing. If any Borrower desires to borrow under Section 1.01(a), the Borrower Representative shall deliver to the Revolving Agent a Notice of Borrowing substantially in the form attached as Exhibit B, signed by the Borrower Representative on behalf of such Borrower, not later than 12:00 noon (i) in the case of a request for an Alternate Base Rate Loan, on the proposed Funding Date or (ii) in the case of a request for a LIBOR Rate Loan, at least two (2) Business Days prior to the proposed Funding Date. Such Notice of Borrowing shall specify: (A) the aggregate principal amount of Revolving Advances to be made on the Funding Date; (B) whether such Revolving Advances shall be comprised of LIBOR Rate Loans or Alternate Base Rate Loans; (C) the proposed Funding Date, which must be a Business Day; and (D) if applicable, the LIBOR Period for such Revolving Advances. In lieu of delivering such a Notice of Borrowing, the Borrower Representative may give the Revolving Agent telephonic notice of any proposed borrowing by the time required under this Section 1.01(b) if the Borrower Representative confirms such notice by delivery of the Notice of Borrowing to the Revolving Agent promptly, but in no event later than 2:00 p.m. on the same day. Each Notice of Borrowing (or telephonic notice in lieu thereof) given pursuant to this Section 1.01(b) shall be irrevocable and binding on the applicable Borrower.

(c) Making the Revolving Advances.

(i) The Revolving Agent shall promptly notify each Revolving Lender of the amount of each borrowing of Revolving Advances. Each Revolving Lender shall deposit with the Revolving Agent an amount equal to its Pro Rata Share of the amount of such borrowing in immediately available funds, not later than 1:00 p.m. on the Funding Date applicable thereto. Subject to the satisfaction of the conditions precedent set forth in Article IV, the Revolving Agent shall make the proceeds of such amounts received by it available to the applicable Borrower on such Funding Date.

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(ii) Except as otherwise provided in this Section 1.01(c)(ii), all Revolving Advances under this Agreement shall be made by the Revolving Lenders simultaneously and proportionately to their Pro Rata Shares. The failure of any Revolving Lender to deposit the amount described in clause (i) above with the Revolving Agent on the applicable Funding Date shall not relieve any other Revolving Lender of its obligations hereunder to make its Revolving Advance on such Funding Date. No Revolving Lender shall be responsible for any failure by any other Revolving Lender to perform its obligation to make a Revolving Advance hereunder nor shall the Revolving Commitment of any Revolving Lender be increased or decreased as a result of any such failure, and each Revolving Lender shall be obligated to make the Revolving Advances required to be made by it by the terms of this Agreement regardless of the failure by any other Revolving Lender.

(d) Funding of Revolving Advances. Unless the Revolving Agent shall have received notice from a Revolving Lender, prior to the requested Funding Date, that such Revolving Lender will not make available to the Revolving Agent such Revolving Lender’s Pro Rata Share of such Loans, the Revolving Agent may, but shall not be required to, assume that such Revolving Lender has made such share available on such date in accordance with Section 1.01(c) and may in its sole discretion, but shall not be required to, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. If any Lender either does not make its share of the applicable Loans available to the Revolving Agent or delays in doing so past 4:00 p.m. on the Funding Date (such Revolving Lender (until it makes such share available) shall be hereinafter referred to as a “Revolving Defaulting Lender”), then the Revolving Agent shall notify the Administrative Agent and the applicable Borrower of such default. If the Revolving Agent has, in its sole discretion, made available to the applicable Borrower an amount corresponding to such Revolving Defaulting Lender’s Pro Rata Share of the Loans, then the Revolving Defaulting Lender and the applicable Borrower jointly and severally agree to pay to the Revolving Agent forthwith on demand such corresponding amount with interest thereon, on each day from and including the date such amount is made available to the applicable Borrower to but excluding the date of payment to the Revolving Agent, at:

(i) in the case of the Revolving Defaulting Lender, the Federal Funds Rate; or

(ii) in the case of the Borrowers, the interest rate applicable to Alternate Base Rate Loans.

If, with respect to the immediately preceding sentence, the applicable Borrower pays such amount and interest thereon to the Revolving Agent, then the Revolving Defaulting Lender shall indemnify and hold harmless the applicable Borrower from and against such amount and interest thereon, and if such Revolving Defaulting Lender pays such amount to the Revolving Agent, then such amount shall constitute such Revolving Defaulting Lender’s Revolving Advance. If the Revolving Agent, in its discretion, does not make available to the applicable Borrower an amount corresponding to the Revolving Defaulting Lender’s Pro Rata Share of the applicable Revolving Advance, then (A) the Revolving Defaulting Lender shall indemnify and hold harmless the applicable Borrower from and against such amount as well as any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, costs, and

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expenses (including reasonable fees and disbursements for counsel including allocated cost of internal counsel) resulting from any failure on the part of the Revolving Defaulting Lender to provide, or from any delay in providing, the Revolving Agent with such Revolving Defaulting Lender’s Pro Rata Share of the applicable Revolving Advance, but no Revolving Lender shall be so liable for any such failure on the part of or caused by any other Revolving Lender or the Revolving Agent or the applicable Borrower and (B) such Pro Rata Share of the applicable Revolving Advance that was not made available shall (until made available) be deemed not to be outstanding for purposes of calculating the Unused Commitment Fee pursuant to Section 3.06(b) and, in the event such Pro Rata Share has not been disregarded for such purposes, any amount paid by the Borrowers in respect of such Pro Rata Share shall be reimbursed to the applicable Borrower by the applicable Revolving Defaulting Lender with interest thereon at the Federal Funds Rate for each day from and including the date such Pro Rata Share of the Unused Commitment Fee was paid by the applicable Borrower to but excluding the date of reimbursement by the Revolving Defaulting Lender. The Revolving Agent, upon notice by the applicable Borrower that such reimbursement is due from the applicable Revolving Defaulting Lender, shall notify such Revolving Defaulting Lender of the amount of the reimbursement due, including interest thereon, and shall forward such amount to the applicable Borrower upon receipt from the Revolving Defaulting Lender. The Revolving Agent shall not, however, be liable to the applicable Borrower for any failure by any Revolving Defaulting Lender to reimburse the applicable Borrower for any amounts in respect of such Unused Commitment Fee.

(e) Repayment of Revolving Advances; Termination of Revolving Commitments. The principal amount of, interest on and fees related to all outstanding Revolving Advances shall be repaid in full on the Maturity Date. The Revolving Commitments shall terminate on the Maturity Date.

Section 1.02. Letter of Credit Facility. Subject to and in accordance with the terms and conditions contained herein and in Exhibit A, any Borrower shall have the right to request, and the L/C Issuer agrees to issue, Letters of Credit and the Revolving Lenders agree to incur, or purchase participations in, Letter of Credit Obligations in respect of such Borrower.

Section 1.03. Term Loans.

(a) Loan Commitment. Subject to the terms and conditions set forth herein, each Term Lender hereby severally agrees to make a term loan (each, a “Term Loan”) in the principal amount set forth opposite each such Term Lender’s name on Schedule B hereto to the Borrower on the Closing Date, in accordance with this Section 1.03. The aggregate principal amount of the Term Loans to be advanced shall not exceed eighty-five million Dollars ($85,000,000). Amounts repaid or prepaid under this Section 1.03 may not be reborrowed.

(b) Notice of Borrowing. If any Borrower desires to borrow under Section 1.03(a), the Borrower Representative shall deliver to the Administrative Agent a Notice of Borrowing signed by the Borrower Representative on behalf of such Borrower in substantially the form attached as Exhibit B (i) not later than 2:00 p.m. at least one (1) Business Day in advance of the Closing Date, in the case of LIBOR Rate Loans and (ii) not later than 9:00 a.m. on the Closing Date, in the case of Alternate Base Rate Loans. Such Notice of Borrowing shall specify: (A) the amount of the proposed Term Loans; (B) the proposed Closing Date, which

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must be a Business Day; and (C) in the case of LIBOR Rate Loans, the LIBOR Period applicable to such Term Loan. The Notice of Borrowing given pursuant to this Section 1.03(b) shall be irrevocable and binding on the applicable Borrower.

(c) Making the Term Loans. (i) The Administrative Agent shall promptly notify each Term Lender of the amount of Term Loans requested by the applicable Borrower. Each Term Lender shall deposit in the Administrative Agent Account an amount equal to its Pro Rata Share of the Term Loan Commitments, in immediately available funds, not later than 12:00 noon on the Closing Date. Subject to the satisfaction of the conditions precedent set forth in Article IV, the Administrative Agent shall make the proceeds of the Term Loans received by it available to the Borrowers on the Closing Date.

(ii) Except as otherwise provided in this Section 1.03(c), all Term Loans under this Agreement shall be made by the Term Lenders simultaneously and proportionately to their Pro Rata Shares. The failure of any Term Lender to deposit the amount described in clause (i) above with the Administrative Agent on the Closing Date shall not relieve any other Term Lender of its obligations hereunder to make its Term Loan on the Closing Date. No Lender shall be responsible for any failure by any other Term Lender to perform its obligation to make a Term Loan hereunder nor shall the Term Loan Commitment of any Term Lender be increased or decreased as a result of any such failure, and each Term Lender shall be obligated to make the Term Loans required to be made by it by the terms of this Agreement regardless of the failure by any other Term Lender.

(d) Funding of Term Loans. Unless the Administrative Agent shall have received notice from a Term Lender, prior to the Closing Date, that such Term Lender will not make available to the Administrative Agent such Term Lender’s Pro Rata Share of such Term Loans, the Administrative Agent may, but shall not be required to, assume that such Term Lender has made such Pro Rata Share available on such date in accordance with Section 1.03(c) and may in its sole discretion, but shall not be required to, in reliance upon such assumption, make available to the applicable Borrower a corresponding amount. If any Term Lender either does not make its Pro Rata Share of the Term Loans available to the Administrative Agent or delays in doing so past 4:00 p.m. on the Closing Date (such Term Lender (until it makes such Pro Rata Share available) hereinafter referred to as a “Term Defaulting Lender”), then the Administrative Agent shall immediately notify the applicable Borrower of such default. If the Administrative Agent has, in its sole discretion, made available to the applicable Borrower an amount corresponding to such Term Defaulting Lender’s Pro Rata Share of the Term Loans, then the Term Defaulting Lender and the applicable Borrower jointly and severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, on each day from and including the date such amount is made available to the applicable Borrower to but excluding the date of payment to the Administrative Agent, at:

(i) in the case of the Term Defaulting Lender, the Federal Funds Rate; or

(ii) in the case of the Borrowers, the interest rate applicable to Alternate Base Rate Loans.

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If, with respect to the immediately preceding sentence, the applicable Borrower pays such amount and interest thereon to the Administrative Agent, then the Term Defaulting Lender shall indemnify and hold harmless the applicable Borrower from and against such amount and interest thereon, and if such Term Defaulting Lender pays such amount to the Administrative Agent, then such amount shall constitute such Term Defaulting Lender’s Pro Rata Share of the Term Loans. If the Administrative Agent, in its discretion, does not make available to the applicable Borrower an amount corresponding to the Term Defaulting Lender’s Pro Rata Share of the Term Loans, then the Term Defaulting Lender shall indemnify and hold harmless the applicable Borrower from and against such amount as well as any and all losses, liabilities (including liabilities for penalties), actions, suits, judgments, demands, costs, and expenses (including reasonable fees and disbursements for counsel including allocated cost of internal counsel) resulting from any failure on the part of the Term Defaulting Lender to provide, or from any delay in providing, the Administrative Agent with such Defaulting Lender’s Pro Rata Share of the Term Loans, but no Term Lender shall be so liable for any such failure on the part of or caused by any other Term Lender or the Administrative Agent or the applicable Borrower. The Administrative Agent, upon notice by the applicable Borrower that such reimbursement is due from the applicable Term Defaulting Lender, shall notify such Term Defaulting Lender of the amount of the reimbursement due, including interest thereon, and shall forward such amount to the applicable Borrower upon receipt from the Term Defaulting Lender.

(e) Repayment of Term Loans. The aggregate principal amount of the Term Loans shall be payable in Dollars in installments on the dates and in the amounts set forth below:

Date	Term Loan Scheduled Repayment
December 26, 2008	$	4,250,000
March 27, 2009	$	4,250,000
June 26, 2009	$	4,250,000
September 25, 2009	$	4,250,000
December 25, 2009	$	4,250,000
March 26, 2010	$	4,250,000
June 25, 2010	$	4,250,000
September 24, 2010	$	4,250,000
December 24, 2010	$	4,250,000
March 25, 2011	$	4,250,000
June 24, 2011	$	4,250,000
Maturity Date	$	38,250,000
Total	$	85,000,000

; provided, that the final installment payable by the applicable Borrower on the Maturity Date in respect of the Term Loans shall be in an amount, if such amount is different from that specified above, sufficient to repay the aggregate outstanding principal amount of all Term Loans.

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Section 1.04. Use of Proceeds. Proceeds of the Loans shall be utilized to (a) replace existing letters of credit, (b) refinance existing debt under the Post-Petition Loan Agreement, (c) pay fees and expenses incurred in connection with the transactions contemplated by this Agreement and (d) provide for working capital requirements and other general corporate purposes of the Borrowers and their Subsidiaries.

Section 1.05. Protective Advances. The Revolving Agent hereby is authorized by the Borrowers and the Participating Lenders, from time to time in the Revolving Agent’s sole discretion, (a) after the occurrence and during the continuance of a Default or Event of Default, or (b) at any time that any of the other applicable conditions precedent set forth in Section 4.02 are not satisfied, to make loans to the Borrowers (“Protective Advances”) in an aggregate amount not to exceed three million Dollars ($3,000,000) that the Revolving Agent, in its sole discretion, deems necessary or desirable (i) to preserve or protect the Collateral, or any portion thereof, (ii) to enhance the likelihood of repayment of the Obligations or (iii) to pay any other amount chargeable to the Borrowers pursuant to the terms of this Agreement, including Participating Lender Expenses and the costs, fees and expenses pursuant to this Agreement. The Revolving Agent shall promptly notify the Borrower Representative of any Protective Advances made to any Borrower.

Each Protective Advance shall be deemed to be a Loan hereunder, except that no Protective Advance shall be eligible to be a LIBOR Rate Loan and all payments on the Protective Advances shall be payable to the Revolving Agent solely for its own account. The Protective Advances shall be repayable on demand and shall be secured Obligations pursuant to the Security Documents, and shall bear interest at the rate applicable from time to time to Loans that are Alternate Base Rate Loans. The provisions of this Section 1.05 are for the exclusive benefit of the Agents and the Participating Lenders and the Revolving Agent has no obligation to make Protective Advances.

Section 1.06. Promise to Pay. The Borrower agrees to pay the principal amount of the Term Loans on the dates and in the amounts set forth in Section 1.03(e) and further agrees to pay all unpaid interest accrued thereon in accordance with the terms of this Agreement and any applicable Note.

Section 1.07. Notes.

(a) The Borrowers’ obligation to pay the principal of, and interest on, the Loans made to the Borrowers by each Lender shall be set forth (i) with respect to the Term Loans, on the Term Register maintained by the Administrative Agent and (ii) with respect to Revolving Advances, on the Revolving Register maintained by the Revolving Agent and, subject to the provisions of Sections 1.07(b), (c) and (d), shall be evidenced by, at the request of the Revolving Agent or the Administrative Agent, as the case may be, a promissory note substantially in the form of Exhibit C for the Revolving Note and Exhibit D for the Term Note, with blanks appropriately completed in conformity herewith (each, as the same may be amended, supplemented or otherwise modified from time to time, a “Note”).

(b) The Revolving Note issued to each Revolving Lender shall (i) be executed jointly by each of the Borrowers, (ii) be payable to such Revolving Lender or its registered

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assigns and be dated the Closing Date (or in the case of any Revolving Note issued after the Closing Date, the date of Issuance thereof), (iii) be in a stated principal amount equal to such Revolving Lender’s Revolving Commitment on the date of the issuance thereof and be payable in the principal amount of Revolving Advances evidenced thereby from time to time, (iv) mature on the Maturity Date, (v) bear interest as provided herein and (vi) be entitled to the benefits of this Agreement and the other Loan Documents.

(c) The Term Note issued to each Term Lender shall (i) be executed jointly by each of the Borrowers, (ii) be payable to such Term Lender or its registered assigns and be dated the Closing Date (or, in the case of any Term Note issued after the Closing Date, the date of issuance thereof), (iii) be in a stated principal amount equal to the principal amount of the Term Loan of such Term Lender on the date of the issuance thereof and be payable in the principal amount of the Term Loan evidenced thereby from time to time, (iv) mature on the Maturity Date, (v) bear interest as provided for herein and (vi) be entitled to the benefits of this Agreement and the other Loan Documents.

(d) Notwithstanding anything to the contrary contained above or elsewhere in this Agreement, Notes shall only be delivered to Lenders which at any time specifically request the delivery of such Notes. No failure of any Lender to request or obtain a Note evidencing its Loans to the Borrowers shall affect or in any manner impair the obligations of the Borrowers to pay the Loans (and all related Obligations) which would otherwise be evidenced thereby in accordance with the requirements of this Agreement, and shall not in any way affect the security or Guaranties therefor provided pursuant to the Loan Documents. At any time when any Lender requests the delivery of a Note to evidence any of its Loans, each of the Borrowers shall promptly jointly execute and deliver to that Lender the requested Note in the appropriate amount or amounts to evidence such Loans.

Section 1.08. Authorized Officers and Revolving Agent.

(a) On the Closing Date and from time to time thereafter as necessary to reflect changes in the Authorized Officers, the Borrowers shall deliver to the Revolving Agent a secretary’s certificate setting forth the names of the officers of the Borrowers authorized to request Revolving Advances and containing a specimen signature of each such officer or agent. The Revolving Agent shall be entitled to rely conclusively on such officer’s or agent’s authority to request Revolving Advances until the Revolving Agent receives written notice to the contrary. In addition, the Revolving Agent shall be entitled to rely conclusively on any written notice sent to it by telecopy. The Revolving Agent shall have no duty to verify the authenticity of the signature appearing on, or any telecopy or facsimile of, any written Notice of Borrowing, or any other document, and, with respect to an oral request for such a Loan, the Revolving Agent shall have no duty to verify the identity of any person representing himself or herself as one of the officers or agents authorized to make such request or otherwise to act on behalf of the applicable Borrower. Neither the Revolving Agent nor the Revolving Lenders shall incur any liability to the Borrowers, or any other Person in acting upon any telecopy or facsimile or telephonic notice referred to above which the Revolving Agent in good faith reasonably believes to have been given by a duly Authorized Officer or other person authorized to borrow on behalf of the Borrowers except in the case of gross negligence or willful misconduct by the Revolving Agent or any Revolving Lender as determined in a final judgment by a court of competent jurisdiction.

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(b) Each Borrower hereby designates Silicon Graphics, Inc. as its representative and agent (in such capacity, “Borrower Representative”) on its behalf for the purposes of issuing Notices of Borrowing and Notices of Conversion/Continuation, giving instructions with respect to the disbursement of the proceeds of the Loans, selecting interest rate options, requesting Letters of Credit, giving and receiving all other notices and consents hereunder or under any of the other Loan Documents and taking all other actions (including in respect of compliance with covenants) on behalf of any Borrower or Borrowers under the Loan Documents. The Borrower Representative hereby accepts such appointment. Each Agent and each Participating Lender may regard any notice or other communication pursuant to any Loan Document from the Borrower Representative as a notice or communication from all Borrowers, and may give any notice or communication required or permitted to be given to any Borrower or Borrowers hereunder to Borrower Representative on behalf of such Borrower or the Borrowers. Each Borrower agrees that each notice, election, representation and warranty, covenant, agreement and undertaking made on its behalf by the Borrower Representative shall be deemed for all purposes to have been made by such Borrower and shall be binding upon and enforceable against such Borrower to the same extent as if the same had been made directly by such Borrower.

Section 1.09. Joint and Several Liability of Borrowers. Each Borrower shall be jointly and severally liable for the repayment of, and agrees to pay when due, all Loans and all interest, fees, Participating Lender Expenses and other Obligations.

Section 1.10. Allocation of Payments and Proceeds of Collateral. Except as otherwise provided in this Agreement with respect to Defaulting Lenders, at any time (a) that an Event of Default has occurred and is continuing, (b) that proceeds of the Collateral are received in connection with the exercise of remedies by any Agent, or (c) after the Commitments have terminated, whether at their stated maturity, by acceleration, automatically or otherwise in accordance with the terms hereof, all amounts collected or received by any Agent or any Participating Lender on account of the Borrowers’ Obligations or any other amounts due or outstanding under any of the Loan Documents shall be paid over or delivered to the Collateral Agent for distribution as follows:

FIRST, on a pro rata basis, to the payment of all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of the Administrative Agent, the Revolving Agent and the Collateral Agent constituting Participating Lender Expenses, and to the payment of any fees then due to the Administrative Agent, the Revolving Agent or the Collateral Agent, each in its capacity as such;

SECOND, to the payment of all of the Borrowers’ Obligations to the Revolving Agent consisting of accrued fees and interest then due with respect to Protective Advances;

THIRD, to the payment of the outstanding principal amount then due of the Borrowers’ Obligations with respect to Protective Advances;

FOURTH, on a pro rata basis, to the payment of all of the Borrowers’ Obligations to the Revolving Lenders and the L/C Issuer consisting of accrued fees and interest then due with respect to Revolving Advances and Letters of Credit (including interest (other than Default

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Interest) that, but for the filing of a petition in bankruptcy with respect to the Parent or any of its Subsidiaries, would have accrued on the Revolving Advances and Letters of Credit (including any refinancing of such Obligations), whether or not a claim is allowed against such Person for such interest in the related bankruptcy proceeding);

FIFTH, on a pro rata basis, to the payment of interest and accrued fees and all reasonable out-of-pocket costs and expenses (including reasonable attorneys’ fees) of each Hedging Agreement Provider and GE Capital then due in connection with obligations of the Credit Parties under Hedging Agreements and Swap Related Reimbursement Obligations;

SIXTH, on a pro rata basis, (i) to the payment of the outstanding principal amount then due of the Revolving Advances and the principal amount of any unreimbursed drawings under Letters of Credit then due, (ii) to fund the cash collateralization of all outstanding Letters of Credit then due in an amount equal to 105% of the face amount thereof, (iii) to the payment of all obligations then due of the Credit Parties to the Hedging Agreement Providers under Hedging Agreements in an amount not to exceed two million five hundred thousand Dollars ($2,500,000), and (iv) to the payment of principal amount then due to GE Capital of the unpaid Swap Related Reimbursement Obligations in an amount not to exceed five million Dollars ($5,000,000);

SEVENTH, on a pro rata basis, to the payment of all of the Borrowers’ Obligations to the Term Lenders consisting of accrued fees and interest then due with respect to the Term Loans;

EIGHTH, on a pro rata basis, to the payment of the outstanding principal amount then due of the Term Loans;

NINTH, on a pro rata basis, (i) to the payment of all remaining obligations then due of the Credit Parties to the Hedging Agreement Providers under Hedging Agreements and (ii) to the payment of the remaining principal amount then due to GE Capital of the unpaid Swap Related Reimbursement Obligations.

TENTH, to all other Obligations, if any, which shall have become due and payable under the Loan Documents or otherwise and not otherwise repaid; and

ELEVENTH, to the payment of the surplus, if any, to the Borrowers or whoever may be lawfully entitled to receive such surplus.

In carrying out the foregoing, (A) amounts received shall be applied equally and ratably in the numerical order provided until exhausted prior to the application to the next succeeding category; (B) amounts payable to each of the Revolving Lenders or Term Lenders, as the case may be, shall be applied in accordance with their Pro Rata Share; (C) amounts payable to each of the Hedging Agreement Providers shall be applied on a pro rata basis; and (D) to the extent that any amounts pursuant to clause “SIXTH” above are attributable to the cash collateralization of issued but undrawn amount of outstanding Letters of Credit and Swap Related Reimbursement Obligations, such amounts shall be paid to the Collateral Agent and applied (1) first, to all ongoing fees and expenses of the L/C Issuer and the Collateral Agent in connection with the outstanding Letters of Credit and Swap Related Reimbursement Obligations, (2) second, to reimburse the L/C Issuer from time to time for any drawings under such Letters of Credit and

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Swap Related Reimbursement Obligations, and (3) third, following the expiration of all Letters of Credit and Swap Related Reimbursement Obligations, to all other obligations of the types described in clauses “SEVENTH” through “ELEVENTH” above in the manner provided in this Section 1.10.

Section 1.11. Limitations on LIBOR Loans. No more than twelve (12) LIBOR Rate Loans may be in effect at any time. For purposes hereof, LIBOR Rate Loans with different LIBOR Periods shall be considered as separate LIBOR Rate Loans, even if they shall begin on the same date or have the same duration, although borrowings, extensions and conversions may, in accordance with the provisions hereof, be combined at the end of existing LIBOR Periods to constitute a new LIBOR Rate Loan with a single LIBOR period. The Borrowers may only exercise the LIBOR option for LIBOR Rate Loans of at least five million Dollars ($5,000,000) and integral multiples of one million Dollars ($1,000,000) in excess thereof.

Section 1.12. Swap Related Reimbursement Obligations.

(a) Each Borrower agrees to reimburse GE Capital in immediately available funds in the amount of any payment made by GE Capital under a Swap Related L/C (such reimbursement obligation, whether contingent upon payment by GE Capital under the Swap Related L/C or otherwise, being herein called a “Swap Related Reimbursement Obligation”). No Swap Related Reimbursement Obligation for any Swap Related L/C may exceed the amount of the payment obligations owed by the relevant Borrower under the interest rate protection or hedging agreement or transaction supported by the Swap Related L/C.

(b) A Swap Related Reimbursement Obligation shall be due and payable by a Borrower within one (1) Business Day after the date on which the related payment is made by GE Capital under the Swap Related L/C.

(c) Any Swap Related Reimbursement Obligation shall, during the period in which it is unpaid, bear interest at the rate per annum equal to the LIBOR Rate plus one percent (1%), as if the unpaid amount of the Swap Related Reimbursement Obligation were a LIBOR Loan, and not at any otherwise applicable Default Rate. Such interest shall be payable upon demand. The following additional provisions apply to the calculation and charging of interest on Swap Related Reimbursement Obligations by reference to the LIBOR Rate:

(i) The LIBOR Rate shall be determined for each successive one-month LIBOR Period during which the Swap Related Reimbursement Obligation is unpaid, notwithstanding the occurrence of any Event of Default and even if the LIBOR Period were to extend beyond the Maturity Date.

(ii) If a Swap Related Reimbursement Obligation is paid during a monthly period for which the LIBOR Rate is determined, interest shall be pro-rated and charged for the portion of the monthly period during which the Swap Related Reimbursement Obligation was unpaid. Section 3.03 shall not apply to any payment of a Swap Related Reimbursement Obligation during the monthly period.

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(iii) Notwithstanding the last paragraph of the definition of “LIBOR Rate”, if the LIBOR Rate is no longer available from Telerate News Service, the LIBOR Rate with respect to Swap Related Reimbursement Obligations shall be determined by GE Capital from such financial reporting service or other information available to GE Capital as in GE Capital’s reasonable discretion indicates GE Capital’s cost of funds.

(d) Except as provided in the foregoing provisions of this Section 1.12 and in Section 13.05, Borrowers shall not be obligated to pay to GE Capital or any of its Affiliates any Letter of Credit Fee, or any other fees, charges or expenses, in respect of a Swap Related L/C or arranging for any interest rate protection or hedging agreement or transaction supported by the Swap Related L/C. GE Capital and its Affiliates shall look to the beneficiary of a Swap Related L/C for payment of any such letter of credit fees or other fees, charges or expenses and such beneficiary may factor such fees, charges, or expenses into the pricing of any interest rate protection or hedging arrangement or transaction supported by the Swap Related L/C.

(e) If any Swap Related L/C is revocable prior to its scheduled expiry date, GE Capital agrees not to revoke the Swap Related L/C unless the Maturity Date or an Event of Default has occurred.

(f) GE Capital or any of its Affiliates shall be permitted to (i) provide confidential or other information furnished to it by any of the Credit Parties (including, without limitation, copies of any documents and information in or referred to in the closing checklist, financial statements and Compliance Certificates) to a beneficiary or potential beneficiary of a Swap Related L/C and (ii) receive confidential or other information from the beneficiary or potential beneficiary relating to any agreement or transaction supported or to be supported by the Swap Related L/C. However, no confidential information shall be provided to any Person under this paragraph unless the Person is an Eligible Assignee or a swap counterparty approved by the Borrower Representative and has agreed to comply with the covenant substantially as contained in Section 13.21 of this Agreement.

ARTICLE II

PAYMENTS AND OTHER COMPENSATION

Section 2.01. Voluntary Prepayments/Reductions of Commitments. (a) Optional Prepayment of Term Loans. So long as the Credit Parties meet the Minimum Liquidity requirements set forth in Section 9.03 (calculated on a pro forma basis after giving effect to the prepayment contemplated under this Section 2.01(a)), the Borrowers shall have the right, upon at least three (3) Business Days’ prior written notice by the Borrower Representative to each of the Administrative Agent and the Revolving Agent, to voluntarily prepay all or any portion (in a minimum amount of two million Dollars ($2,000,000) or such lesser amount as may then remain outstanding or integral multiples of one million Dollars ($1,000,000) in excess thereof) of the Term Loans on any Business Day upon payment of the applicable Prepayment Premium pursuant to Section 2.03(a). Any prepayment of any Term Loan shall be accompanied by the payment of all accrued and unpaid interest with respect to the principal being prepaid through the date of prepayment and any applicable Prepayment Premium pursuant to Section 2.03(a). Subject to Section 1.10, any partial prepayment of any Term Loans shall be

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applied to the remaining installments of the Term Loans in the inverse order of maturity thereof until all Term Loans are repaid in full.

(b) Optional Prepayment of Revolving Advances. As set forth in Section 1.01(a), at any time after the Closing Date, the Borrowers may prepay, without regard to the Minimum Liquidity requirements set forth in Section 9.03 and with no corresponding reduction in Revolving Commitments, and thereafter reborrow, subject to the terms and conditions set forth herein (including Section 3.03), all or any portion of the Revolving Advances then outstanding.

(c) Optional Reduction of Revolving Commitments. So long as the Credit Parties, on a consolidated basis, meet the Minimum Liquidity requirements set forth in Section 9.03 (calculated on a pro forma basis after giving effect to the reduction contemplated under this Section 2.01(c)), the Borrowers shall have the right, upon at least five (5) Business Days’ prior written notice by the Borrower Representative to each of the Administrative Agent and the Revolving Agent and upon payment of the applicable Commitment Reduction Fee pursuant to Section 2.03(b) to cancel the Total Revolving Commitment in full or to reduce the amount thereof; provided, that the amount of the Total Revolving Commitment shall at no time be less than the sum of (i) the outstanding principal amount of all Revolving Advances plus (ii) the Letter of Credit Exposure. Partial reductions of the Total Revolving Commitment shall be in a minimum amount of two million Dollars ($2,000,000) or such lesser amount as may then remain outstanding or integral multiples of one million Dollars ($1,000,000) in excess thereof and shall reduce each Revolving Lender’s Revolving Commitment on a pro rata basis based upon such Revolving Lender’s Pro Rata Share. All cancellations or reductions shall be permanent. Any such notice of reduction shall be accompanied by the payment of the Unused Commitment Fee accrued through the date of such cancellation or reduction and the applicable Commitment Reduction Fee pursuant to Section 2.03(b).

Section 2.02. Mandatory Prepayments.

(a) Prepayments from Asset Dispositions. Subject to Section 2.02(e), (i) Except as set forth below, within five (5) Business Days after the receipt by a Credit Party or any Subsidiary of a Credit Party of any Net Cash Proceeds (other than from an Excluded Asset Disposition), the Borrowers shall cause 100% of such Net Cash Proceeds to be applied to prepay the Loans; provided, however, that if the Borrower Representative notifies each of the Administrative Agent and the Revolving Agent in writing within such five (5) Business Day period that the applicable Credit Party or Subsidiary has applied or intends to apply such Net Cash Proceeds to acquire, maintain, develop, construct, improve, upgrade, repair or invest in assets used or useful in the business of such Credit Party or such applicable Subsidiary or any other Credit Party, then the applicable Credit Party or Subsidiary, shall, so long as no Event of Default shall have occurred and be continuing, be permitted to use such proceeds as notified to the Administrative Agent and the Revolving Agent within one hundred eighty (180) days of the receipt thereof; provided further, that to the extent such proceeds (1) have not been used or irrevocably committed to be used for such a replacement or restoration within one hundred eighty (180) days of the receipt thereof or (2) have not been used for such replacement within 180 days of such irrevocable commitment, such Net Cash Proceeds shall be applied to prepay the Loans, on a pro rata basis. It is agreed that any Net Cash Proceeds of any Disposition consisting

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of any of the Borrowers’ equity interest in, or a material portion of the assets of, any Foreign Subsidiary not reinvested within the applicable time will be used to prepay the Loans. All prepayments under this Section 2.02(a)(i) shall be accompanied by all accrued and unpaid interest on the Loans being prepaid and, in the case of any prepayment under this Section 2.02(a)(i) that results in a prepayment in full, any applicable Prepayment Premium.

(ii) Except as set forth below, within five (5) Business Days after the receipt by a Credit Party or any Subsidiary of a Credit Party of Net Casualty/Condemnation Proceeds, the Borrowers shall cause 100% of such Net Casualty/Condemnation Proceeds to be applied to prepay the Loans; provided, however, that if the Borrower Representative notifies each of the Administrative Agent and the Revolving Agent in writing within such five (5) Business Day period that the applicable Credit Party or Subsidiary has applied or intends to apply such Net Casualty/Net Condemnation proceeds to acquire, maintain, develop, construct, improve, upgrade, repair or invest in assets used or useful in the business of such Credit Party or such applicable Subsidiary or any other Credit Party, then the applicable Credit Party or Subsidiary, shall, so long as no Event of Default shall have occurred and be continuing, be permitted to use such proceeds in an amount not to exceed two hundred fifty thousand Dollars ($250,000) per occurrence or two and a half million Dollars ($2,500,000) in the aggregate as so notified to the Administrative Agent and the Revolving Agent within one hundred eighty (180) days of the receipt thereof; provided further, that to the extent such Net Proceeds (1) have not been used or irrevocably committed to be used for such a replacement or restoration within one hundred eighty (180) days of the receipt thereof or (2) have not been used for such replacement within 180 days of such irrevocable commitment, such Net Casualty/Condemnation Proceeds shall be applied to prepay the Loans, on a pro rata basis. All prepayments under this Section 2.02(a)(ii) shall be accompanied by all accrued and unpaid interest on the Loans being prepaid and, in the case of any prepayment under this Section 2.02(a)(ii) that results in a prepayment in full, any applicable Prepayment Premium.

(b) Prepayments from Incurrence of Indebtedness. Within one (1) Business Day following the receipt by any Credit Party or any Subsidiary of a Credit Party of cash proceeds from the issuance or incurrence of any Indebtedness (other than Permitted Indebtedness), the Borrowers shall prepay the Loans in an amount equal to 100% of the proceeds from such issuance or incurrence, underwriting discounts and commissions and other reasonable, out-of-pocket costs and expenses associated therewith. All such prepayments shall be accompanied by (i) all accrued and unpaid interest on the Loans being prepaid and (ii) the applicable Prepayment Premium.

(c) Cash Proceeds of Extraordinary Receipts. Within five (5) Business Days following the receipt by any Credit Party or any Subsidiary of a Credit Party of any Extraordinary Receipts, the Borrowers shall prepay the Loans in an amount equal to 100% of such Extraordinary Receipts, net of any reasonable costs, fees and expenses incurred in collecting such Extraordinary Receipts and a reserve for any Taxes expected to be paid in connection therewith; provided, however, that if the Borrower Representative notifies each of the Administrative Agent and the Revolving Agent within five (5) Business Days that the applicable Credit Party or Subsidiary has applied or intends to apply such Extraordinary Receipts to

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acquire, maintain, develop, construct, improve, upgrade, repair or invest in assets used or useful in the business of any Credit Party or the applicable Subsidiary, then such Credit Party or Subsidiary, as applicable, shall, so long as no Event of Default shall have occurred and be continuing, be permitted to use such Extraordinary Receipts as notified to the Administrative Agent and the Revolving Agent within one hundred eighty (180) days of the receipt thereof. All such prepayments shall be accompanied by all accrued and unpaid interest on the Loans being prepaid and the applicable Prepayment Premium.

(d) Application of Proceeds. Subject to Section 1.10, all prepayments under this Section 2.02 shall be applied to the remaining installments of the Term Loans in the inverse order of maturity thereof until all of the Term Loans are repaid in full on a pro rata basis according to each Term Lender’s Pro Rata Share, or, if no Term Loans are outstanding at the time of the relevant prepayment, to the Revolving Advances on a pro rata basis according to each Revolving Lender’s Pro Rata Share without any reduction of the Revolving Commitments and shall be accompanied by the payment of all accrued and unpaid interest and fees with respect to the principal being prepaid through the date of prepayment. All voluntary prepayments under Section 2.01(b) shall be applied to the repayment of outstanding Revolving Advances with no reduction in the Revolving Commitments.

(e) Repatriation. Section 2.02(a) and Section 2.02(c) shall apply only to the extent that the repatriation of such Net Cash Proceeds, Net Casualty/Condemnation Proceeds or Extraordinary Receipts, as the case may be, by a Foreign Subsidiary is not prohibited by any Governmental Authority. In addition, to the extent that the repatriation of such Net Cash Proceeds, Net Casualty/Condemnation Proceeds or Extraordinary Receipts, as the case may be, by a Foreign Subsidiary would result in a material adverse tax consequence or is subject to any material adverse currency restriction, such Net Cash Proceeds, Net Casualty/Condemnation Proceeds or Extraordinary Receipts, as the case may be, shall be applied in accordance with Section 2.02(a) as promptly as practicable, but in any event no later than 210 days following the receipt of such Net Cash Proceeds, Net Casualty/Condemnation Proceeds or Extraordinary Receipts by such Foreign Subsidiary.

Section 2.03. Prepayment Premiums.

(a) In connection with (i) any repayments of Term Loans made pursuant to Section 1.10, (ii) any prepayments of Term Loans made pursuant to Section 2.01(a) in excess of five million Dollars ($5,000,000), (iii) any prepayment of Term Loans pursuant to Sections 2.02(a) or (c) that results in a prepayment in full of the Term Loans and (iv) any prepayments pursuant to Section 2.02(b), the Borrowers shall pay to the Administrative Agent a prepayment premium (the “Prepayment Premium”) for the benefit of the Term Lenders in an amount equal to the aggregate principal amount to be repaid multiplied by the percentage set forth below:

Prepayment Date	Percentage
On or prior to September 28, 2007	2.0	%
After September 28, 2007 and on or prior to September 26, 2008	1.0	%
After September 26, 2008	0	%

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(b) Revolving Commitment Reductions. In connection with any reductions of Revolving Commitments made pursuant to Section 1.10, Section 2.01(c) and Section 10.02(a), the Borrowers shall pay to the Revolving Agent a prepayment premium (the “Commitment Reduction Fee”) for the benefit of the Revolving Lenders in an amount equal to the aggregate principal amount to be repaid multiplied by the percentage set forth below:

Prepayment Date	Percentage
On or prior to September 28, 2007	1.0	%
After September 28, 2007	0	%

Section 2.04. Payments.

(a) General Provisions. All payments to be made by a Credit Party shall be made without set-off, counterclaim or other defense. Except as otherwise expressly provided herein, all payments by a Credit Party shall be made to the Revolving Agent for the ratable account of the relevant Participating Lender or Agent, as the case may be, at the payment office identified by the Revolving Agent, and shall be made in and in immediately available funds, no later than 2:00 p.m., on the dates specified herein, as the case may be, to be reimbursed. The Revolving Agent will promptly distribute to the relevant Participating Lender or Agent its Pro Rata Share or other applicable share as expressly provided herein, of each such payment in like funds as received. Any payment received by the Revolving Agent later than 2:00 p.m. on any Business Day shall be deemed to have been received on the following Business Day and any applicable interest or fee shall continue to accrue until such following Business Day.

(b) Sharing of Payments. Except as otherwise provided herein, if any Lender shall obtain any payment (whether voluntary, involuntary, through the exercise of any right of set-off, or otherwise) on account of any Obligation in excess of its ratable share of payments on account of similar obligations obtained by all the Lenders, such Lender shall (i) notify the Administrative Agent or the Revolving Agent of such fact and (ii) forthwith purchase from the other Lenders such participations in such similar obligations held by them as shall be necessary to cause such purchasing Lender to share the excess payment ratably with each of them; provided, however, that if all or any portion of such excess payment is thereafter recovered from such purchasing Lender, such purchase from each other Lender shall be rescinded and such other Lender shall repay to the purchasing Lender the purchase price to the extent of such recovery together with an amount equal to such other Lender’s ratable share (according to the proportion of (i) the amount of such Lender’s required repayment to (ii) the total amount so recovered from the purchasing Lender of any interest or other amount paid by the purchasing Lender in respect

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of the total amount so recovered). Each Credit Party agrees that any Lender so purchasing a participation from another Lender pursuant to this Section 2.04(b) may, to the fullest extent permitted by law, exercise all of its rights (including the Lender’s right of set-off) with respect to such participation as fully as if such Lender were the direct creditor of such Credit Party in the amount of such participation.

(c) Apportionment of Payments. Subject to the provisions of Section 2.01, Section 2.02 and this Section 2.04, all payments of principal and interest in respect of outstanding Loans, and all payments of fees and all other payments in respect of any other Obligation, shall be allocated among the Lenders in proportion to their respective Pro Rata Shares of such Obligations owing to them or otherwise as provided herein or, in respect of payments not made on account of Loans, as designated by the Person making payment at the time when such payment is made.

(d) Payments on Non-Business Days. Whenever any payment to be made by the Borrower hereunder or under the Notes is stated to be due on a day which is not a Business Day, the payment shall instead be due on the next succeeding Business Day.

Section 2.05. Taxes.

(a) Payment of Taxes. Except as set forth below, any and all payments by a Credit Party hereunder, under the Notes or under any other Loan Document shall be made free and clear of and without deduction for any and all Indemnified Taxes. If a Credit Party shall be required by law to withhold or deduct any Indemnified Taxes from or in respect of any sum payable hereunder, under the Notes or under any other Loan Document to any Lender or Agent, (A) such sum payable shall be increased by an additional amount so that after making all such required withholdings or deductions (including such withholdings or deductions applicable to additional amounts payable under this Section 2.05(a)), such Lender or Agent receives an amount equal to the sum it would have received had no such withholdings or deductions been made, (B) such Credit Party shall make such withholdings or deductions, and (C) such Credit Party shall pay the full amount withheld or deducted to the relevant taxation authority or other authority in accordance with Applicable Law. Notwithstanding the foregoing, a Credit Party shall not be required to pay any such additional amounts to any Agent or any Lender with respect to any Indemnified Taxes or Other Taxes to the extent such Indemnified Taxes or Other Taxes (1) are attributable to such Agent’s or Lender’s failure to comply with the requirements of Sections 2.05(e) or (f) or (2) in the case of a Lender that becomes a Lender pursuant to Section 3.05(b), are United States federal withholding taxes imposed on amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to the extent that such Lender’s assignor was entitled, at the time of assignment, to receive additional amounts from a Credit Party with respect to such Indemnified Taxes or Other Taxes pursuant to this paragraph. In no case shall an Eligible Assignee or purchaser of a Participation be entitled to indemnity for Taxes exceeding such indemnity as to which the assignor or seller would have been entitled under this section for Taxes in the absence of such assignment or sale of a Participation (as the case may be).

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(b) Other Taxes. In addition, the Credit Parties agree to pay any present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made hereunder or under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, this Agreement or any other Loan Document (hereinafter referred to as “Other Taxes”).

(c) Indemnification. The Credit Parties will indemnify each Participating Lender and each Agent that has complied with the requirements of Section 2.05(e) or (f), as the case may be, against, and reimburse each, within twenty (20) days of a receipt of written demand therefor, for the full amount of all Indemnified Taxes and Other Taxes (including any Indemnified Taxes or Other Taxes imposed by any Governmental Authority on amounts payable to such Agent or Lender under this Section 2.05(c) incurred or paid by such Participating Lender or such Agent (as the case may be), or any Affiliate of such Participating Lender or Agent on or with respect to any payment by or on account of any obligation of the Credit Parties hereunder, and any penalties, interest, and reasonable out-of-pocket expenses paid to third parties arising therefrom or with respect thereto. For the avoidance of doubt, the Credit Parties shall not be required to indemnify a Participating Lender or Agent pursuant to this Section 2.05(c) with respect to any Taxes in respect of which the Credit Parties would not be required to pay any additional amount pursuant to Section 2.05(a) if such Taxes were withheld or deducted by the Credit Parties.

(d) Receipts. Within thirty (30) days after a request from the Administrative Agent or the Revolving Agent, each Credit Party will furnish to the Administrative Agent the original or a certified copy of a receipt, if available, or other reasonably available documentation reasonably satisfactory to the Administrative Agent evidencing payment of such Indemnified Taxes or Other Taxes (including in respect of payments of additional amounts) required to be paid by such Credit Party pursuant to this Section 2.05. The Borrowers will furnish to the Administrative Agent and the Revolving Agent upon the Administrative Agent’s or the Revolving Agent’s request, an Officer’s Certificate stating that all Indemnified Taxes and Other Taxes of which it is aware that are due have been paid and that no additional Indemnified Taxes or Other Taxes of which it is aware are due.

(e) Nonresident Certifications.

(i) Each Participating Lender that is not a United States Person (as defined in Section 7701(a)(30) of the Code) (a “Non-U.S. Lender”) shall deliver to the Administrative Agent on or prior to the Closing Date, or, in the case of a Participating Lender that becomes a Participating Lender pursuant to Section 3.05(b) hereof, on or prior to the date on which such Participating Lender becomes a Participating Lender pursuant to Section 3.05(b), a true and accurate IRS Form W-8BEN, W-8IMY (with the necessary attachments), W-8EXP, W-8ECI or any subsequent version thereof or successors thereto and such other documentation prescribed by Applicable Law executed in duplicate by a duly authorized officer of such Participating Lender to the effect that such Participating Lender is eligible as of such date to receive payments hereunder and under the Notes free and clear or at a reduced rate of United States federal withholding tax or, in the case of a Lender that becomes a Participating Lender pursuant to Section 3.05(b), that such Participating Lender is subject to United States federal

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withholding tax at a rate not in excess of the rate to which the assignor was subject as a result of a Change in Law, as described in Section 2.05(e)(ii)(B).

(ii) Each Non-U.S. Participating Lender further agrees to deliver to the Administrative Agent from time to time a true and accurate certificate executed in duplicate by a duly authorized officer of such Participating Lender before or promptly upon the occurrence of any event requiring a change in the most recent certificate previously delivered by it to the Administrative Agent pursuant to this Section 2.05(e) (including upon the expiration, obsolescence or invalidity of such form, upon the designation of a new lending office and at such other times as may be necessary in the determination of the Administrative Agent (in the reasonable exercise of its discretion)). Each certificate required to be delivered pursuant to this Section 2.05(e)(ii) shall certify as to one of the following:

(A) that such Participating Lender can receive payments hereunder and under the Notes free and clear or at a reduced rate of United States federal withholding tax (in which case the certificate shall be accompanied by two true and accurate originals of IRS Form W-8BEN, W-8IMY (with the necessary attachments), W-8EXP or W-8ECI, as applicable (or any successor form));

(B) that such Participating Lender is no longer capable of receiving payments hereunder or under the Notes free and clear or at a reduced rate of United States federal withholding tax by reason of a Change in Law (including the Code or any applicable tax treaty) after the later of the Closing Date, or in the case of a Participating Lender that becomes a Participating Lender pursuant to Section 3.05(b) hereof, after the date on which the Participating Lender became a Participating Lender pursuant to Section 3.05(b); or

(C) that such Participating Lender is not capable of receiving payments hereunder free and clear or at a reduced rate of United States federal withholding tax other than by reason of a Change in Law (including the Code or applicable tax treaty) after the later of the Closing Date, or in the case of a Lender that becomes a Participating Lender pursuant to Section 3.05(b) hereof, after the date on which the Participating Lender became a Participating Lender pursuant to Section 3.05(b).

(f) Resident Certifications. Each Participating Lender that is a United States Person (as defined in Section 7701(a)(30) of the Code) and is not an “exempt recipient” (as such term is defined in Section 1.6049-4(c)(1)(ii) of the United States Treasury Regulations) shall deliver to the Administrative Agent on or prior to the Closing Date, or, in the case of a Participating Lender that becomes a Participating Lender pursuant to Section 3.05(b) hereof, on or prior to the date on which such Participating Lender becomes a Participating Lender pursuant to Section 3.05(b) hereof, two original copies of IRS Form W-9 (or any successor forms), properly completed and duly executed by such Lender, and such other documentation reasonably requested by the Administrative Agent.

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(g) Refunds and Tax Benefits. If a Participating Lender or Agent becomes aware that it is entitled to claim a refund from a Governmental Authority in respect of Indemnified Taxes or Other Taxes as to which it has been indemnified by the Credit Parties or with respect to which a Credit Party has paid additional amounts pursuant to Section 2.05(a), it shall make reasonable efforts to timely claim to such Governmental Authority for such refund at the Credit Parties’ expense. If a Participating Lender or Agent actually receives a payment of a refund (including pursuant to a claim for refund made pursuant to the preceding sentence) in respect of any Tax or Other Tax as to which it has been indemnified by the Credit Parties or with respect to which a Credit Party has paid additional amounts pursuant to Section 2.05(a), it shall within thirty (30) days from the date of such receipt pay over the amount of such refund to a Credit Party, net of all reasonable out-of-pocket expenses of such Lender or Agent and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund); provided that the Borrower, upon the request of such Participating Lender or Agent, agrees to repay the amount paid over to a Credit Party (plus penalties, interest or other reasonable charges) to such Participating Lender or Agent in the event such Participating Lender or Agent is required to repay such refund to such Governmental Authority.

(h) Change in Lender Circumstances. The Credit Parties shall not be required pursuant to this Section 2.05 to pay any additional amount to, or to indemnify, any Participating Lender, to the extent that such Participating Lender becomes subject to Taxes subsequent to the Closing Date or subsequent to the date such Participating Lender becomes a party to this Agreement as a result of a change in the business activities, place of residence, place of incorporation, principal place of business, branch or lending office of such Participating Lender. For the avoidance of any doubt, this clause (h) shall not apply if a Participating Lender becomes subject to Taxes as a result of any Change in Law.

ARTICLE III

INTEREST

Section 3.01. Interest on the Loans and Other Obligations.

(a) Interest on Loans. The Borrowers agree to pay interest on the unpaid principal amount of each Loan on each Interest Payment Date from the date of such Loan until such Loan is repaid in full at a rate equal to the Interest Rate for such Loan. The Borrowers shall pay accrued interest on the Loans in cash on each Interest Payment Date. All computations of interest hereunder shall be made on the actual number of days elapsed over a year of, with respect to LIBOR Rate Loans, 360 days or, with respect to Alternate Base Rate Loans only, 365/366 days.

(b) Default Interest. Upon the occurrence, and during the continuance, of an Event of Default, the principal of and, to the extent permitted by law, interest on the Term Loans or Revolving Advances and any other amounts owing hereunder or under the other Loan Documents shall bear interest, at the request of the Required Term Lenders or the Required Revolving Lenders, as the case may be, payable on demand, at a per annum rate that is 2% greater than the rate which would otherwise be applicable (or if no rate is applicable, whether in respect of interest, fees or other amounts, then the Alternate Base Rate plus the Applicable Margin for Revolving Advances plus 2%).

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(c) Maximum Interest. Notwithstanding anything to the contrary set forth in Sections 3.01(a) or (b) above, if at any time until payment in full of the Loans, the interest rate payable on any Loans exceeds the highest rate of interest permissible under any law which a court of competent jurisdiction shall deem applicable hereto (the “Highest Lawful Rate”), then in such event and so long as the Highest Lawful Rate would be so exceeded, the rate of interest payable on such Loans shall be equal to the Highest Lawful Rate. Thereafter, the interest rate payable on such Loans shall be the applicable interest rate pursuant to Sections 3.01(a) and (b) above unless and until such rate again exceeds the Highest Lawful Rate, in which event this Section 3.01(c) shall again apply. In no event shall the total interest received by any Lender for any Loans pursuant to the terms hereof exceed the amount which it could lawfully have received for such Loans had the interest due hereunder for such Loans been calculated for the full term thereof at the Highest Lawful Rate. Interest on the Loans at the Highest Lawful Rate shall be calculated at a daily rate equal to the Highest Lawful Rate divided by the number of days in the year in which such calculation is made. In the event that a court of competent jurisdiction, notwithstanding the provisions of this Section 3.01(c), shall make a determination that a Lender has received interest hereunder or under any of the Loan Documents in excess of the Highest Lawful Rate, such Lender shall, to the extent permitted by Applicable Law, promptly apply such excess first to any interest due or accrued and not yet paid under the Loans, then to the outstanding principal of the Loans, then to other unpaid Obligations and thereafter shall refund any excess to the Borrower or as a court of competent jurisdiction may otherwise order.

Section 3.02. Conversion or Continuation. The Borrowers shall have the option (a) to convert all or any part of the outstanding LIBOR Rate Loans to Alternate Base Rate Loans, (b) to convert Alternate Base Rate Loans to LIBOR Rate Loans or (c) to change or continue the LIBOR Period applicable to all or a portion of the LIBOR Rate Loans; provided, however, that (i) except as provided in Section 3.04, LIBOR Rate Loans may be converted into Alternate Base Rate Loans only on the last day of the LIBOR Period applicable thereto unless the Borrowers agree to pay all amounts due pursuant to Section 3.03, (ii) Loans extended as, or converted into, LIBOR Rate Loans shall be subject to the terms of the definition of “LIBOR Period” and (iii) any request for extension or conversion of a LIBOR Rate Loan that shall fail to specify a LIBOR Period shall be deemed to be a request for a LIBOR Period of one month. Each such extension or conversion shall be effected by the Borrower Representative, on behalf of the applicable Borrower, to give a written notice (or telephone notice promptly confirmed in writing) (a “Notice of Conversion/Continuation”) to the Revolving Agent prior to 12:00 noon on the third Business Day prior to the date of the proposed extension or conversion, substantially in the form of Exhibit E hereto, specifying (A) the date of the proposed extension or conversion, (B) the Loans to be so extended or converted, (C) the types of Loans into which such Loans are to be converted, and, if appropriate, (D) the applicable LIBOR Periods with respect thereto. So long as there is no Default or Event of Default, in the event the Borrowers do not request extension or conversion of any LIBOR Rate Loan in accordance with this Section 3.02, or any such conversion or extension is not required by this Section 3.02, then such LIBOR Rate Loan shall be continued as a LIBOR Rate Loan (with a LIBOR Period of one month) at the end of each LIBOR Period applicable thereto, until the Borrowers select an alternate LIBOR Period or convert such Loans to Alternate Base Rate Loans. In the event any LIBOR Rate Loans are not permitted to be converted into another LIBOR Rate Loan hereunder, such LIBOR Rate Loans shall automatically be converted to Alternate Base Rate Loans at the end of the applicable LIBOR Period with respect thereto. The Revolving Agent shall give each Lender notice as

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promptly as practicable of any such proposed extension or conversion affecting any Loan. Promptly after receipt of a Notice of Conversion/Continuation under this Section 3.02, the Revolving Agent shall notify each Lender by telex or telecopy, or other similar form of transmission, of the proposed conversion/continuation. Any Notice of Conversion/Continuation for conversion to, or continuation of, a Loan shall be irrevocable, and the Borrowers shall be bound to convert or continue in accordance therewith.

Section 3.03. Break Funding Payments. In the event of the payment of any principal of any LIBOR Rate Loan other than on the last day of the LIBOR Period applicable thereto (including as a result of an Event of Default), or the failure to borrow or prepay any Loan on the date specified in any notice delivered pursuant hereto, then, in any such event, the Borrowers shall compensate each applicable Lender for the loss, cost and expense (excluding in any event any Applicable Margin or other lost profit) attributable to such event. A certificate of any Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this Section 3.03 shall be delivered to the Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay such Lender the amount shown as due on any such certificate within ten (10) Business Days after receipt thereof.

Section 3.04. Increased Costs; Illegality.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Participating Lender;

(ii) subject any Participating Lender to any tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any LIBOR Rate Loan made by it, or change the basis of taxation of payments to such Participating Lender in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 2.05 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Participating Lender); or

(iii) impose on any Participating Lender or the London interbank market any other condition, cost or expense affecting this Agreement or LIBOR Rate Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such Participating Lender of making or maintaining any LIBOR Rate Loan (or of maintaining its obligation to make any such Loan), or to increase the cost to such Participating Lender of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Participating Lender hereunder (whether of principal, interest or any other amount) then, upon request of such Participating Lender, the Borrowers will pay to such Participating Lender, as the case may be, such additional amount or amounts as will compensate such Participating Lender, as the case may be, for such additional costs incurred or reduction suffered.

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(b) Capital Requirements. If any Participating Lender determines that any Change in Law affecting such Participating Lender or any lending office of such Participating Lender or such Participating Lender’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Participating Lender’s capital or on the capital of such Participating Lender’s holding company, if any, as a consequence of this Agreement, the Commitments of such Participating Lender or the Loans made by, or participations in Letters of Credit held by, such Participating Lender, to a level below that which such Participating Lender or such Participating Lender’s holding company could have achieved but for such Change in Law (taking into consideration such Participating Lender’s policies and the policies of such Participating Lender’s holding company with respect to capital adequacy), then from time to time the Borrowers will pay to such Participating Lender, as the case may be, such additional amount or amounts as will compensate such Participating Lender or such Participating Lender’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Participating Lender setting forth the amount or amounts necessary to compensate such Participating Lender or its holding company, as the case may be, as specified in paragraph (a) or (b) of this Section 3.04 and delivered to the Borrower Representative shall be conclusive absent manifest error. The Borrowers shall pay such Participating Lender, as the case may be, the amount shown as due on any such certificate within ten (10) Business Days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Participating Lender to demand compensation pursuant to this Section 3.04 shall not constitute a waiver of such Participating Lender’s right to demand such compensation; provided that the Borrowers shall not be required to compensate a Participating Lender pursuant to this Section 3.04 for any increased costs incurred or reductions suffered more than nine (9) months prior to the date that such Participating Lender notifies the Borrowers of the Change in Law giving rise to such increased costs or reductions and of such Participating Lender’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

(e) Illegality. Notwithstanding anything to the contrary contained herein, if any Change in Law shall make it unlawful, or any central bank or other Governmental Authority shall assert that it is unlawful, for any Lender to agree to make or to continue to fund or maintain any LIBOR Rate Loan, then, unless that Lender is able to make or to continue to fund or to maintain such LIBOR Rate Loan at another branch or office of that Lender without, in that Lender’s opinion, adversely affecting it or its LIBOR Rate Loans or the income obtained therefrom, on notice thereof and demand therefor by such Lender to the Borrowers through the Administrative Agent or the Revolving Agent, (i) the obligation of such Lender to make, to continue to fund or maintain LIBOR Rate Loans shall terminate and (ii) the Borrowers shall forthwith prepay in full, without any premium or penalty, all outstanding LIBOR Rate Loans owing by the Borrowers to such Lender, together with interest accrued thereon and any amounts due pursuant to Section 3.03.

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Section 3.05. Mitigation Obligations.

(a) Designation of a Different Lending Office. If any Participating Lender requests compensation under Section 3.04, or requires the Borrowers to pay any amount to any Participating Lender or any Governmental Authority for the account of any Participating Lender pursuant to Section 2.05, then such Participating Lender shall use reasonable efforts to designate a different lending office for funding or booking its Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or Affiliates, if, in the reasonable judgment of such Participating Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 2.05 or Section 3.04, as the case may be, in the future and (ii) would not subject such Participating Lender to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Participating Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Participating Lender in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under Section 3.04, or if the Borrowers are required to pay any additional amount to any Lender or any Governmental Authority for the account of any Lender pursuant to Section 2.05, then the Borrowers may, at their sole expense and effort, upon notice to such Lender and the Administrative Agent and Revolving Agent, require such Lender to assign and delegate (in accordance with the procedures of Section 13.09), without recourse, all of its interests, rights and obligations under this Agreement and the related Loan Documents to an assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment); provided that:

(i) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and participations in drawings under any Letter of Credit, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 3.03) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts);

(ii) in the case of any such assignment resulting from a claim for compensation under Section 3.04 or payments required to be made pursuant to Section 2.05, such assignment will result in a reduction in such compensation or payments thereafter; and

(iii) such assignment does not conflict with Applicable Law.

A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply.

Section 3.06. Fees. The Borrowers agree to pay to:

(a) each Agent such fees as are set forth in the Fee Letter in accordance with the terms thereof;

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(b) the Revolving Agent for the account of the Revolving Lenders in accordance with their respective Pro Rata Shares, a fee (the “Unused Commitment Fee”) in an amount equal to 0.50% per annum times the Available Commitments. The Unused Commitment Fee shall be non-refundable and paid monthly in arrears and on the date of the termination or expiration of the Revolving Commitments;

(c) the Revolving Agent, for the account of the Revolving Lenders, a Letter of Credit fee in an amount equal to 3.00% times the undrawn amount of all outstanding Letters of Credit, payable monthly in arrears; and

(d) to the Revolving Agent for the benefit of the L/C Issuer, upon the issuance of each Letter of Credit by the L/C Issuer, an additional fee (the “Letter of Credit Issuance Fee”), plus applicable bank issuance charges, in an amount equal to 0.25% times the face amount of the Letter of Credit issued.

ARTICLE IV

CONDITIONS TO LOANS

Section 4.01. Conditions Precedent to the Initial Loans. The obligation of each Lender to make the Loans requested, and the Obligation of the L/C Issuer to issue Letters of Credit to be made by it on the Closing Date or a Funding Date shall be subject to the satisfaction, or waiver by each of the Agents, of each of the following conditions precedent:

(a) Authority. Each of the Administrative Agent and the Revolving Agent shall have received certified copies of all resolutions, certificates or other documents evidencing other necessary corporate action and governmental approvals, if any, with respect to the authorization for the execution, delivery and performance of (i) each Loan Document by a Credit Party and for the consummation of the transactions contemplated thereby and (ii) the Plan of Reorganization. All certificates shall state that the resolutions or other information referred to in such certificates have not been amended, modified, revoked or rescinded as of the Closing Date.

(b) Loan Documents. Each of the Administrative Agent and the Revolving Agent shall have received, on the Closing Date, counterparts of each of the following documents duly executed and delivered by each party thereto, and in full force and effect and in form and substance reasonably satisfactory to the Administrative Agent and the Revolving Agent:

(i) this Agreement;

(ii) the Notes, if any;

(iii) the Security Documents;

(iv) such corporate resolutions, certificates and other documents as the Administrative Agent reasonably requests;

(v) each other Loan Document, in each case duly executed and delivered by the parties thereto and dated no later than the Closing Date, except for those

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Loan Documents that are dated prior to the Closing Date and have been delivered prior to the Closing Date to the Agents by the Credit Parties;

(vi) copies of all orders entered or requested by the Borrowers to be entered in the Bankruptcy Court with respect to this Agreement and the Plan of Reorganization; and

(vii) all other documents and legal matters in connection with the transactions contemplated by the Agreement shall have been delivered, executed, or recorded.

(c) No Material Adverse Effect. There shall not have occurred any event, circumstance, change or condition since March 31, 2006, other than the filing of the Bankruptcy Petition, which could reasonably be expected to have a Material Adverse Effect.

(d) Litigation. Except as set forth in Schedule 5.01(g), there shall exist no action, suit, claim, investigation, arbitration, litigation or proceeding or any judgments, decrees, injunctions, rules or orders of any governmental or regulatory agency or authority pending or, to the knowledge of the Credit Parties, threatened against or affecting any Credit Party or its property or assets, except for (i) the Chapter 11 Cases and (ii) any of the foregoing that could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(e) Consents, Etc. Each Credit Party shall have received all material consents and authorizations required pursuant to any material contract with any other Person and shall have obtained all material Permits of, or approvals from, and effected all notices to and filings with, any Governmental Authority as may be necessary to allow such Credit Party lawfully (A) to execute, deliver and perform, in all material respects, their respective obligations under the Loan Documents to which each of them is, or shall be, a party and each other agreement or instrument to be executed and delivered by each of them pursuant thereto or in connection therewith, (B) consummate the transactions contemplated hereunder and under the other Loan Documents and (C) create and perfect the Liens on the Collateral to be owned by each of them to the extent, in the manner and for the purpose contemplated by the Loan Documents. Each Credit Party shall have received all shareholder, governmental and material third-party consents, licenses, approvals or evidence of other actions, necessary in connection with the execution and delivery of the Loan Documents, and the performance thereunder and the transactions contemplated by the Loan Documents, and any applicable waiting period shall have expired without any action being taken by any Governmental Authority that could restrain, prevent or impose any material adverse conditions on such Credit Party or such transactions or that could seek to restrain or threaten any of the foregoing, and no law or regulation shall be applicable which in the reasonable judgment of the Administrative Agent and Revolving Agent could have such effect.

(f) Bankruptcy Approval.

(i) The Bankruptcy Court shall have approved, and shall have entered an order confirming, the Plan of Reorganization (including with respect to corporate structure and capital structure) in connection with the Chapter 11 Cases, such order to

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have been entered upon proper notice to all parties to be bound by such plan in compliance with the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure and any other applicable federal or local bankruptcy rules, and such order shall be in full force and effect and shall not have been reversed, vacated or stayed or amended, supplemented or otherwise modified without the prior written consent of the Required Lenders (which consent shall be in their sole discretion).

(ii) All conditions to the effectiveness of the Plan of Reorganization, as approved by the Bankruptcy Court shall have been (or, in the case of the condition relating to this Agreement, will be simultaneously herewith) satisfied without waiver.

(g) Capital Contribution. The Parent shall have received new cash equity of at least fifty million Dollars ($50,000,000).

(h) Solvency. After giving effect to the transactions effected by the Plan of Reorganization, immediately after the incurrence of the Loans on the Closing Date, and after giving effect to such Loans, and use of the proceeds of the Loans, the Credit Parties, taken as a whole, shall be Solvent.

(i) Insurance. Each of the Agents shall be satisfied with the amounts, types and terms and conditions of all insurance maintained by the Borrowers. The Collateral Agent shall have received evidence that all insurance policies required to be maintained pursuant to Section 7.15, including any insurance policies with respect to the properties of each Credit Party forming part of the Collateral, are in full force and effect, including endorsements in form and substance reasonably acceptable to each of the Agents naming the Collateral Agent as an additional insured and loss payee, as applicable.

(j) Opinions of Borrower’s Counsel. The Lenders shall have received the opinion of Weil, Gotshal and Manges LLP, special counsel to the Borrowers and the Guarantors and the opinion of Dutch counsel, in each case in form and substance satisfactory to each of the Agents.

(k) Fees and Expenses Paid. There shall have been paid to the Agents all fees and, to the extent documented, expenses (including the reasonable legal fees of counsel to each of the Agents and any local counsel to the Agents) due and payable on or before the Closing Date.

(l) Collateral. (i) The Collateral Agent shall have received a letter duly executed by each Credit Party authorizing the Collateral Agent to file appropriate financing statements in such offices as may be necessary or, in the opinion of the Collateral Agent, desirable to perfect the security interests on the Collateral to be created by the Loan Documents;

(ii) The Collateral Agent shall have received, on or before the Closing Date, all of the certificated pledged Securities then owned by each of the Credit Parties, together with (A) executed and undated transfer powers in the case of certificated pledged Securities and (B) all other items required to be delivered pursuant to the Security Documents; and

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(iii) The Collateral Agent, on behalf of the Secured Creditors, shall have a perfected first priority lien and security interest in the Collateral, subject only to Permitted Encumbrances; all filings, recordations and searches necessary or desirable in connection with such liens and security interests (including UCC, tax lien and litigation searches) shall have been duly made or arranged for, and the results of which shall have been reasonably satisfactory to the Lenders; and all filing and recording fees and taxes shall have been duly paid.

(m) Good Standing Certificates. Each of the Administrative Agent and the Revolving Agent shall have received, on the Closing Date, governmental certificates, dated the most recent practicable date prior to the Closing Date, showing that each Credit Party is organized and in good standing in the jurisdiction of its organization, and is qualified as a foreign corporation and in good standing in all other jurisdictions in which it is qualified to transact business except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect.

(n) Organizational Documents. Each of the Administrative Agent and the Revolving Agent shall have received on the Closing Date, a copy of the certificate of incorporation or certificate of formation, as applicable, and all amendments thereto of each Credit Party, certified as of a recent date by the appropriate government official of the jurisdiction of its organization, and copies of each Credit Party’s by-laws or limited liability company agreement, as applicable, certified by the Secretary, Assistant Secretary or managing member, as applicable, of such Credit Party as true and correct as of the Closing Date.

(o) Financial Statements. Each of the Administrative Agent and the Revolving Agent shall have received the 2006 Financial Statements, and all financial statements and projections described in Section 5.01(h) in form and substance reasonably satisfactory to the Administrative Agent and the Revolving Agent.

(p) Certificates.

(i) Each of the Administrative Agent and the Revolving Agent shall have received, on the Closing Date, certificates of the Secretary, Assistant Secretary or managing member of each Credit Party, dated the Closing Date, as to the incumbency and signatures of its officers executing this Agreement and each other Loan Document to which such Credit Party is a party and any other certificate or other document to be delivered pursuant hereto or thereto, together with evidence of the incumbency of such Secretary, Assistant Secretary or managing member.

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(ii) Each of the Administrative Agent and the Revolving Agent shall have received, on the Closing Date, the certificate of a Senior Officer of each Credit Party, dated the Closing Date, stating that to the knowledge of such officer and on behalf of such Credit Party (not in such officer’s individual capacity) all of the representations and warranties of such Credit Party contained herein or in any of the other Loan Documents are true and correct in all material respects on and as of the Closing Date as if made on such date, that no breach of any covenant contained in Article VII, Article VIII or Article IX has occurred or would result from the execution, delivery of and performance under this Agreement and the transactions contemplated hereunder and that all of the conditions set forth in this Section 4.01 have been satisfied on such date (or shall, to the extent permitted therein, be satisfied substantially simultaneously with the incurrence of Loans on the Closing Date).

(q) Representations and Warranties. Both before and after giving effect to the Loans to be made on the Closing Date, as the case may be, all of the representations and warranties of any Credit Party contained in Article V and in the other Loan Documents shall be true and correct in all material respects (except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date).

(r) No Defaults. No Event of Default or Default, and no default under any other Loan Document, shall have occurred and be continuing or would result from the execution and delivery of, or the performance under, the Loan Documents, or making the requested Loans or the application of the proceeds therefrom.

(s) Minimum Liquidity. The Credit Parties shall have a Minimum Liquidity, measured as of the Closing Date, greater than or equal to forty million Dollars ($40,000,000) after giving effect to the initial use of proceeds of the Loans and all payments and distributions necessary for the Plan of Reorganization to be effective.

(t) Intellectual Property Appraisal. Each of the Agents shall have received (i) evidence satisfactory to it of the completion of an appraisal of the Borrowers’ Intellectual Property (the “Intellectual Property Appraisal”) by CRA International (formerly known as Charles River Associates), or such other firm as the Administrative Agent, the Revolving Agent and the Borrowers may agree, (ii) a copy of the results of such Intellectual Property Appraisal, which results shall be satisfactory to the Revolving Agent and the Administrative Agent and (iii) reasonably satisfactory evidence that all Intellectual Property material to the operations of the Credit Parties is licensed to or owned by such Credit Party.

(u) Field Examination. Each of the Agents shall have received evidence satisfactory to it of the completion of a Field Examination (as set forth in Section 7.04(b)), with the results of such Field Examination satisfactory to each of them.

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(v) Closing Date Mortgaged Properties. Each of the Administrative Agent and the Revolving Agent shall have received:

(i) evidence satisfactory to it of the completion of an updated appraisal of each Real Estate Collateral Asset listed in Schedule 4.01(v) (each, a “Closing Date Mortgaged Property”) by Cushman & Wakefield (a “Real Estate Appraisal”), with the results of such appraisal satisfactory to the Administrative Agent and the Revolving Agent;

(ii) fully executed and notarized Mortgages, in proper form for recording in each applicable jurisdiction, encumbering each Closing Date Mortgaged Property;

(iii) an opinion of counsel (which counsel shall be reasonably satisfactory to the Revolving Agent and the Administrative Agent) in each state in which a Closing Date Mortgaged Property is located with respect to the enforceability of the Mortgage to be recorded in such state and such other matters as the Revolving Agent or the Administrative Agent may reasonably request, in each case in form and substance reasonably satisfactory to the Revolving Agent and the Administrative Agent;

(iv) binding and effective ALTA mortgagee title insurance policies or unconditional commitments therefor issued by one or more title companies reasonably satisfactory to the Agents (the “Title Company”) with respect to each Closing Date Mortgaged Property (each, a “Title Policy”), with such reinsurance arrangements, if any, as are reasonably acceptable to the Agents, each in an amount equal to 125% of the fair market value of such Closing Date Mortgaged Property as established by the Real Estate Appraisal of such Closing Date Mortgaged Property, insuring the Collateral Agent, as agent for the Secured Creditors, that the applicable Credit Party is vested with good and marketable fee simple title to such Closing Date Mortgaged Property and that the Mortgage insured thereby creates a valid and enforceable first priority Lien on such Closing Date Mortgaged Property in favor of the Collateral Agent, for the benefit of the Secured Creditors, subject only to Permitted Encumbrances. In addition, each such insurance policy (or commitment therefor): (A) shall describe the Closing Date Mortgaged Property covered thereby in accordance with the Survey thereof; (B) shall have attached thereto copies of all instruments that appear as exceptions to title therein (or copies of all of such instruments shall have previously been delivered to the Agents); (C) shall contain such affirmative insurance and endorsements as the Agents shall reasonably request; (D) shall contain no exceptions for filed or unfiled mechanics’ or materialmen’s liens for work performed prior to the date of such policy; (E) shall contain no limitations of coverage (beyond those contained in a standard ALTA mortgagee title policy) that are not acceptable to the Agents in their reasonable discretion; and (F) shall provide evidence satisfactory to the Agents that such Credit Party has paid to the Title Company and/or to all appropriate Governmental Authorities all expenses and premiums of the Title Company and all other sums required in connection with the issuance of each Title Policy, including all recording and stamp taxes (including mortgage recording and intangible taxes) payable in connection with recording the Mortgages in the appropriate real estate records;

(v) an ALTA survey map of each Closing Date Mortgaged Property prepared and certified to the Agents and the applicable Title Company (which

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certification shall be in form and substance reasonably acceptable to the Agents), dated as of a date within a reasonable period of time prior to the Closing, prepared by an independent professional land surveyor (a “Survey”), on which Survey there shall be indicated (A) all buildings, structures and other improvements located on or over the applicable Closing Date Mortgaged Property, (B) all easements, rights of way, roadways, paths and driveways running above, over or under the applicable Closing Date Mortgaged Property, (C) by location and by reference to deed book and page number, all easements appurtenant necessary to utilize the applicable Closing Date Mortgaged Property in the manner that the same is being used as of the date hereof, including rights of ingress and egress and (D) whether or not any part of the applicable Closing Date Mortgaged Property is located within a designated Special Flood Hazard Area as identified by the Secretary of the Department of Housing and Urban Development on the latest available Flood Insurance Rate Maps published by the Federal Emergency Management Agency, each of which Surveys shall otherwise be reasonably acceptable to the Agents;

(vi) if applicable, evidence of flood insurance with respect to each Flood Hazard Property, in each case in compliance with any applicable regulations of the Board of Governors of the Federal Reserve System and in form and substance reasonably satisfactory to the Revolving Agent and the Administrative Agent; and

(vii) such other information, documentation, and certifications as may be reasonably required by the Revolving Agent or the Administrative Agent.

(w) Cash Management.

(i) The Borrowers shall have established and maintained cash management services of a type and on terms satisfactory to the Collateral Agent at one or more of the banks set forth on Schedule 4.01(w) (each a “Cash Management Bank”), and shall have requested in writing and otherwise taken such reasonable steps to ensure that all of their domestic Account Debtors forward payment of the amounts owed by them directly to a bank account subject to a Control Agreement at such Cash Management Bank.

(ii) Each Cash Management Bank shall have established and maintained cash management agreements (each a “Cash Management Agreement”) with the Collateral Agent and one or more Borrowers, in form and substance reasonably acceptable to each Agent. Each such Cash Management Agreement shall have provided, among other things, that (A) the Cash Management Bank will comply with any instructions originated by the Collateral Agent directing the disposition of the funds in such Cash Management Account without further consent by the Borrowers, (B) the Cash Management Bank has no rights of setoff or recoupment or any other claim against the applicable Cash Management Account, other than for payment of its service fees and other charges directly related to the administration of such Cash Management Account and for returned checks or other items of payment, and (C) it will forward by daily sweep all amounts in the collection Cash Management Accounts to the Collateral Agent’s account.

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(iii) The Cash Management Accounts shall be subject to Control Agreements.

(x) Legal Due Diligence. Each of the Administrative Agent and the Revolving Agent shall have completed confirmatory legal due diligence satisfactory to it with respect to the transactions contemplated by the Loan Documents.

(y) Environmental. Each of the Administrative Agent and the Revolving Agent shall have received Phase I and, if applicable, Phase II environmental reports with respect to each Closing Date Mortgaged Property, each in form and substance satisfactory to it.

Section 4.02. Conditions Precedent to Revolving Advances and Issuances of Letters of Credit. The obligation of each Revolving Lender to make any Revolving Advance requested to be made by it on any Funding Date on or after the Closing Date and the obligation of the L/C Issuer to issue any Letter of Credit on any Business Day on or after the Closing Date are subject to the satisfaction or waiver of each of the following conditions precedent as of each such date:

(a) Representations and Warranties. As of such date, both before and after giving effect to the Loans to be made on such date or the issuance of the Letter of Credit on such date, as the case may be, all of the representations and warranties of any Credit Party contained in Article V and in the other Loan Documents shall be true and correct in all material respects (except to the extent such representations and warranties specifically relate to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date).

(b) No Events of Defaults. As of such date, without giving effect to any waiver by the Term Lenders pursuant to Section 13.02(c), no Event of Default (other than, if Minimum Liquidity is greater than thirty million Dollars ($30,000,000)) based upon a Default under Section 9.01 or Section 9.02) shall have occurred and be continuing or would result therefrom.

(c) No Change in Condition. There shall not have occurred any event or condition since March 31, 2006, other than the filing of the Bankruptcy Petition, which could reasonably be expected to have a Material Adverse Effect.

(d) No Legal Impediment. No injunction, writ, restraining order, or other order of any nature (whether temporary, preliminary or permanent) restricting or prohibiting, directly or indirectly, the extending of such credit shall have been issued and remain in force by any Governmental Authority against any Borrower, any Agent or any Participating Lender, and such extension of credit shall not violate any requirement of applicable law.

Each request by the Borrowers for a Loan, each submission by the Borrower Representative of a Notice of Borrowing or a request for a Letter of Credit, and each acceptance by such Borrower of the proceeds of each Loan made hereunder shall constitute a representation and warranty by such Borrower, as of the Funding Date in respect of such Loan, or the issuance date of a Letter of Credit, as the case may be, that all conditions set forth in this Section 4.02 have been satisfied.

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ARTICLE V

REPRESENTATIONS AND WARRANTIES

Section 5.01. Representations and Warranties. In order to induce the Participating Lenders to enter into this Agreement and to make the Loans or issue Letters of Credit, as the case may be, each Credit Party hereby represents and warrants as follows:

(a) Organization, Good Standing, Etc. Each Credit Party (i) is a corporation or limited liability company duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (ii) has all requisite power and authority to conduct its business as now conducted and as presently contemplated, to make the borrowings hereunder (in the case of the Borrowers), to execute and deliver each Loan Document to which it is a party, and to consummate the transactions contemplated thereby, and (iii) except where failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, is duly qualified to do business and is in good standing in each jurisdiction in which the character of the properties owned or leased by it or in which the transaction of its business makes such qualification necessary for its business as currently conducted.

(b) Authorization, No Conflict, Etc. The execution, delivery and performance by each Credit Party of each Loan Document to which it is or will be a party and the transactions contemplated thereunder, (i) have been or, with respect to such Credit Parties formed or acquired hereafter, will be, duly authorized by all necessary corporate, limited liability company or partnership action, as applicable, (ii) do not and will not contravene its Governing Documents, (iii) do not and will not violate any Requirements of Law or any material contract of such Credit Party binding on or otherwise affecting it, any of its Subsidiaries or any of its properties or its Subsidiaries’ properties except where failure to do so, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect, and (iv) do not and will not result in or require the creation of any Lien (other than Permitted Encumbrances or pursuant to any Loan Document) upon or with respect to any of its properties or its Subsidiaries’ properties. Each Credit Party has the requisite corporate, limited liability company or partnership power and authority, as applicable, to execute, deliver and perform each of the Loan Documents to which it is a party.

(c) Governmental Approvals. No authorization or approval or other action by, and no notice to or filing with, any Governmental Authority that has not been obtained is required in connection with the due execution, delivery and performance by each Credit Party of each Loan Document to which it is a party.

(d) Enforceability of Loan Documents. Each of the Loan Documents to which a Credit Party is a party has been duly executed and delivered by such Credit Party and constitutes the legal, valid and binding obligation of such Credit Party, enforceable against such Credit Party in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws, or by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).

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(e) Capitalization. On the Closing Date, the authorized Capital Stock of each of the Credit Parties and each of their Subsidiaries, and the issued and outstanding Capital Stock of each of the Credit Parties and each of their Subsidiaries, are as set forth on Schedule 5.01(e). All of the issued and outstanding shares of Capital Stock of each of the Borrowers and each of their Subsidiaries have been validly issued and, to the extent applicable, are fully paid and nonassessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. Schedule 5.01(e) sets forth each plan pursuant to which shares of the Capital Stock of each of the Credit Parties and each of their Subsidiaries are issuable as of the Closing Date, copies of which plans have been delivered to the Administrative Agent and the Revolving Agent under this Agreement, in the form and on the terms in effect on the Closing Date, and the number of shares of Capital Stock of each of the Borrowers and each of their Subsidiaries and each such subsidiary issuable under each such plan. Except as set forth on Schedule 5.01(e), there are no other plans or arrangements in existence relating to the issuance of shares of Capital Stock of any Subsidiary of any of the Credit Parties. Except as set forth on Schedule 5.01(e), as of the Closing Date, there are no outstanding debt or equity securities of the Borrowers or any of their Subsidiaries, and no outstanding obligations of any of the Credit Parties or any of its Subsidiaries convertible into or exchangeable for, or warrants, options or other rights for the purchase or acquisition from any of the Credit Parties or any of their Subsidiaries or other obligations of any of the Credit Parties or any of their Subsidiaries, to issue, directly or indirectly, any shares of Capital Stock of any such Person.

(f) Subsidiaries. Schedule 5.01(f) is a complete and correct description of the name, jurisdiction of organization and ownership of the outstanding Capital Stock of each Subsidiary of the Credit Parties in existence on the Closing Date hereof. All of the issued and outstanding shares or units of Capital Stock of such Subsidiaries have been validly issued and are fully paid and nonassessable, and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. Except as indicated on such Schedule 5.01(f), all such Capital Stock is owned by one of the Credit Parties or one or more of their Wholly-Owned Subsidiaries. Except as set forth on Schedule 5.01(f), there are no subscriptions, options, warrants, or calls relating to any shares of any Credit Party’s Subsidiaries’ Capital Stock, including any right of conversion or exchange under any outstanding security or other instrument. No Borrower or any of its Subsidiaries is subject to any obligation (contingent or otherwise) to repurchase or otherwise acquire or retire any shares of any Credit Party’s Subsidiaries’ Capital Stock or any security convertible into or exchangeable for any such Capital Stock, except with respect to Foreign Subsidiaries, an immaterial number or percentage of shares of Capital Stock thereof which is held by local Persons in accordance with the applicable laws or regulations of the jurisdictions of such Foreign Subsidiaries.

(g) Litigation. Except for the Chapter 11 Cases and except as set forth in Schedule 5.01(g), there is no pending or, to the knowledge of such Credit Party, threatened action, suit or proceeding affecting any Credit Party, its Subsidiaries or any of their respective properties or assets before any court or other Governmental Authority or any arbitrator that, individually or in the aggregate, (i) could reasonably be expected to have a Material Adverse Effect or (ii) purports to affect the legality, validity or enforceability of any Loan Document or the consummation of the Loans evidenced hereby and by the other Loan Documents.

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(h) Financial Condition; Material Adverse Effect.

(i) The 2006 Financial Statements, copies of which have been delivered to the Administrative Agent and the Revolving Agent, and any financial statements delivered pursuant to Section 6.01, fairly present, in all material respects, the consolidated financial condition of the Parent as at the respective dates thereof and the consolidated results of operations of the Parent, the Credit Parties and their Subsidiaries for the fiscal periods ended on such respective dates, all in accordance with GAAP.

(ii) The Credit Parties have heretofore furnished to the Administrative Agent and the Revolving Agent under this Agreement (A) projected balance sheets, income statements and statements of cash flows of the Parent and its Subsidiaries on a consolidated basis, for the period from the Closing Date through the Maturity Date, and (B) projected annual balance sheets, income statements and statements of cash flows of the Parent and its Subsidiaries on a consolidated basis for each Fiscal Year ending on or prior to June 28, 2011. Such projections are based upon assumptions that are reasonably believed by the Borrowers to have been reasonable at the time made (it being understood that any such forecasts or projections are subject to significant uncertainties and contingencies, many of which are beyond the Credit Parties’ control, that no assurance can be given that any such forecasts or projections will be realized and that actual results may differ from any such forecasts or projections and such differences may be material) and have been prepared in good faith by the Parent.

(iii) Since March 31, 2006, no event or development has occurred and is continuing, other than the filing of the Bankruptcy Petition, that has had or could reasonably be expected to have a Material Adverse Effect.

(i) Compliance with Law, Etc. No Credit Party or any Subsidiary of any Credit Party is in violation of its Governing Documents, any Requirements of Law, any judgment or order of any Governmental Authority applicable to it or any of its property or assets, or any material term of any material contract binding on it or any of its properties except for any such violations which, individually or in the aggregate, have not had and could not reasonably be expected to have a Material Adverse Effect. Each Credit Party and each Subsidiary of each Credit Party has policies in place to observe the requirements of the Patriot Act Related Requirements consistent with U.S. industry practice.

(j) ERISA. None of the Credit Parties nor any ERISA Affiliate has (i) any “accumulated funding deficiency” (within the meaning of Section 412 of the Code and Section 302 of ERISA), whether or not waived, with respect to any Benefit Plan, (ii) failed to make any contribution or payment to any Benefit Plan which has resulted, or could reasonably be expected to result, in the imposition of a Lien or the posting of a bond or other security under Section 302(f) of ERISA or Section 401(a)(29) of the Code, (iii) incurred, or is reasonably likely to incur, any material liability under Title IV of ERISA (other than a liability to the U.S. Pension Benefit Guaranty Corporation for premiums under Section 4007 of ERISA) or (iv) violated any provision of ERISA that individually or in the aggregate can reasonably be expected to result in a Material Adverse Effect to the Parent and its Subsidiaries taken as a whole. None of the Credit Parties nor any ERISA Affiliate is obligated to contribute to a Multiemployer Plan.

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(k) Taxes, Etc. All Federal, and all material state, provincial and material local tax returns and other material reports required by Applicable Law to be filed by any Credit Party or any Subsidiary of a Credit Party have been filed, or extensions have been obtained, except to the extent subject to a Permitted Protest, and all taxes shown on such tax returns to be due and payable and all assessments, fees and other governmental charges upon such Credit Party and any Subsidiary of a Credit Party and upon its properties, assets, income, businesses and franchises that are due and payable have been paid when due and payable, except to the extent subject to a Permitted Protest.

(l) Margin Regulations. No Credit Party is, nor will any Credit Party be engaged, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations T, U or X), and no proceeds of any Loan will be used to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock. The Loans, the use of proceeds thereof and the pledge of the Collateral pursuant to the Security Documents do not violate Regulation T, U or X.

(m) Permits, Etc. Such Credit Party and any Subsidiary of a Credit Party has, and is in compliance with, all material permits, licenses, authorizations, approvals, entitlements and accreditations (collectively, the “Permits”) required for such Person lawfully to own, lease, manage or operate each business and Property currently owned, leased, managed or operated by such Person, except where the failure to have or to so comply, individually or in the aggregate, could not reasonably be expected to have a Material Adverse Effect. No condition exists or event has occurred which, in itself or with the giving of notice or lapse of time or both, would result in the suspension, revocation, impairment, forfeiture or non-renewal of any Permit, and there is no claim that any thereof is not in full force and effect.

(n) Properties. All Property of each Credit Party and any Subsidiary of a Credit Party (other than Intellectual Property) material to its business is in good working order and condition, ordinary wear and tear excepted, except to the extent that the failure to be in such condition could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(o) Real Estate. (i) As of the Closing Date, Schedule 5.01(o) contains a true, accurate and complete list of (A) all Real Estate Assets (other than any Non-Material Leasehold Properties) and (B) all existing leases, subleases and any other occupancy agreements to which any Credit Party is a party with respect to any Real Estate Asset (other than any Non-Material Leasehold Properties), regardless of whether such Credit Party is the landlord or tenant (whether directly or as an assignee or successor in interest) under such lease or other agreement (each such agreement, together with all amendments, modifications, supplements, renewals or extensions of any thereof, a “Lease”). Each Credit Party has, and is the sole owner of, good, insurable and marketable fee simple title to all of its owned Real Estate Assets or a good and valid leasehold estate and title in and to its leased Real Estate Assets (other than any Non-Material Leasehold Properties), and has all necessary right, power and authority to mortgage, encumber, give, grant, bargain, sell, convey, confirm, pledge, assign, and hypothecate all of the Real Estate Collateral Assets in accordance with the terms of this Agreement. Except for the “Crittenden” Lease identified on Schedule 5.01(o), each Lease is in full force and effect and no Credit Party has any knowledge of any default that has occurred and is continuing thereunder, except for defaults as

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may have occurred as a result of the commencement of the Chapter 11 Cases on the Petition Date. Each Lease constitutes the legally valid and binding obligation of each applicable Credit Party, enforceable against such Credit Party in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or by equitable principles.

(ii) Restrictions on Use. No part of any Real Estate Collateral Asset is subject to any building or use restrictions that would prevent or interfere in any material respect with the current use and operation of such Real Estate Collateral Asset. Each Real Estate Collateral Asset is properly and duly zoned for its current use, and such current use is in all respects a conforming use or a non-conforming use permitted by variance or other applicable law. No Governmental Authority having jurisdiction over any Real Estate Collateral Asset has issued or, to the knowledge of any Credit Party, has threatened to issue any notice or order that adversely affects the use or operation of such Real Estate Collateral Asset, or requires, as of the date hereof or a specified date in the future, any material repairs, alterations, additions or improvements to such Real Estate Collateral Asset, or the payment or dedication of any money, fee, exaction or property other than amounts (such as taxes and utility charges) due in the ordinary course of the ownership, use or operation of such Real Estate Collateral Asset.

(iii) Condemnation. As of the Closing Date, there are neither any actual, nor, to the knowledge of any Credit Party, any threatened or contemplated condemnation or eminent domain proceedings that affect any Real Estate Collateral Asset or any part thereof, and no Credit Party has received any notice, oral or written, of the intention of any Governmental Authority or other Person to take or use all or any part thereof.

(iv) Mechanics’ Liens. No labor has been performed and no material has been furnished for any portion of any Real Estate Collateral Asset for which full payment has not been made and for which a mechanic’s or materialmen’s lien, or any other Lien, can be claimed by any Person, other than a Lien which constitutes a Permitted Encumbrance under clause (b) of the definition thereof.

(v) Encroachments. Except as indicated on a Survey for any particular Real Estate Collateral Asset, no improvements constituting a part of such Real Estate Collateral Asset encroach on any real property not owned or leased by a particular Credit Party.

(vi) Repairs and Alterations. As of the Closing Date, no Credit Party has received any notice from any insurance company which has issued an insurance policy with respect to any Real Estate Collateral Asset requesting performance of any structural or other repairs or alterations to such Real Estate Collateral Asset.

(vii) Access to Public Streets. Except as indicated on a Title Policy insuring the Mortgage encumbering any particular Real Estate Collateral Asset, each parcel (or group of parcels) comprising such particular Real Estate Collateral Asset is located on public roads and streets with adequate ingress and egress available between

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such streets and such Real Estate Collateral Asset or otherwise has access to public roads and streets pursuant to access easements benefiting such Real Estate Collateral Asset.

(viii) Utilities. All utility systems required in connection with the use, occupancy and operation of each Real Estate Collateral Asset are sufficient for their present purposes, are fully operational and in working order, and are benefited by customary utility easements providing for the continued use and maintenance of such systems or, in the case of a leased Real Estate Collateral Asset, the Credit Party leasing the same has valid and enforceable rights to the same under the applicable Lease or otherwise.

(ix) Parking. Each Real Estate Collateral Asset consists of or otherwise has rights to use sufficient land, parking areas, sidewalks, driveways and other improvements to permit the continued use of such Real Estate Collateral Asset in the manner and for the purposes to which it is presently devoted.

(p) Full Disclosure. None of the reports, financial statements, certificates or other written information furnished by or on behalf of a Credit Party to the Administrative Agent, the Revolving Agent or the Collateral Agent under this Agreement or any other Loan Document in connection with the negotiation of this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or supplemented by other information so furnished) contains any material misstatement of fact or omits to state any material fact necessary to make the statements therein, taken as a whole, in the light of the circumstances under which it was made, not materially misleading; provided that to the extent any such reports, financial statements, certificates or other written information therein was based upon or constitutes a forecast or projection, such Credit Party represents only that the relevant Credit Party acted in good faith and utilized assumptions believed by it to be reasonable at the time made (it being understood that any such forecasts or projections are subject to significant uncertainties and contingencies, many of which are beyond the Credit Parties’ control, that no assurance can be given that any such forecasts or projections will be realized and that actual results may differ from any such forecasts or projections and such differences may be material). As of the Closing Date, there are no contingent liabilities or obligations that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

(q) Environmental Matters. Except as set forth on Schedule 5.01(q) (i) the operations of each Credit Party and any Subsidiary of a Credit Party are and have been in material compliance with all applicable Environmental Laws, (ii) there has been no Release on, in, at, to, from or under any of the properties currently or formerly owned or operated by any Credit Party or any Subsidiary of a Credit Party or a predecessor in interest that could reasonably be expected to result in any material Environmental Liabilities and Costs to any Credit Party or any Subsidiary of a Credit Party, (iii) no Environmental Action has been asserted or threatened against any Credit Party or any Subsidiary of a Credit Party which is unresolved, nor to the knowledge of any Credit Party are there any threatened Environmental Actions against a Credit Party or any Subsidiary of a Credit Party that in either case could reasonably be expected to result in any material Environmental Liabilities and Costs to any Credit Party or any Subsidiary of a Credit Party, (iv) to the knowledge of the Credit Parties no Environmental Action has been asserted against any facilities that may have received Hazardous Materials generated by a Credit

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Party or any Subsidiary of a Credit Party or any predecessor in interest that could reasonably be expected to result in any material Environmental Liabilities and Costs to any Credit Party or any Subsidiary of a Credit Party, (v) none of the Credit Parties or any Subsidiary of a Credit Party is subject to any outstanding order, decree, injunction or other agreement with any Governmental Authority or any indemnity or other agreement (other than routine permits, approvals, credit agreements and lease terms) imposing obligations with any third party relating to any Environmental Law that could reasonably be expected to result in any material Environmental Liabilities and Costs to any Credit Party or any Subsidiary of a Credit Party, (vi) to the knowledge of any Credit Parties there are no other circumstances or existing conditions involving any Credit Party or any Subsidiary of a Credit Party that could reasonably be expected to result in any such Credit Party or Subsidiary of a Credit Party becoming the subject of any Environmental Actions or material Environmental Liabilities and Costs including any material restriction on the ownership, use, or transfer of any property in connection with any Environmental Law, and (vii) the Credit Parties and any Subsidiary of a Credit Party made available to the Administrative Agent and the Revolving Agent copies of all material environmental reports, studies, assessments, sampling data and other material, non-privileged environmental documents in its possession relating to the Credit Parties and any Subsidiary of a Credit Party and their current and former properties and operations.

(r) Insurance. Each Credit Party and any Subsidiary of a Credit Party keeps its property adequately insured and maintains (i) insurance to such extent and against such risks, including fire, as is customary with companies in the same or similar businesses, (ii) workmen’s compensation insurance in the amount required by Applicable Law, (iii) public liability insurance, which shall include product liability insurance, but only to the extent and in the amount customary with companies in the same or similar business against claims for personal injury or death on properties owned, occupied or controlled by it and (iv) such other insurance as may be required by law (including against larceny, embezzlement or other criminal misappropriation). Schedule 5.01(r) sets forth a list of all insurance maintained by such Credit Party or any Subsidiary of a Credit Party on the Closing Date other than immaterial insurance maintained by Foreign Subsidiaries, as required by local law.

(s) Solvency. Each of the Credit Parties is Solvent after giving effect to the transactions effected by the Loan Documents.

(t) Location of Bank Accounts. Schedule 5.01(t) sets forth a complete and accurate list as of the Closing Date of all Deposit Accounts and Securities Accounts or other accounts of the Credit Parties and each of their Domestic Subsidiaries and any Deposit Account and Securities Account or other account of a Foreign Subsidiary from which any of the Credit Parties receives cash in the ordinary course of business or on a regular basis, together with a description thereof (i.e., the bank or broker-dealer at which such Deposit Account or Securities Account is maintained, and the account number and the purpose thereof).

(u) Intellectual Property. (i) Each Borrower and each Subsidiary of a Borrower owns or has a right to use all the Intellectual Property that is necessary to the conduct of its business as currently conducted. Schedule 5.01(u) to this Agreement is, as of the Closing Date or as of the most recent quarterly update thereof, a true, correct, and complete listing of all Registered Patents, Copyrights and Trademarks and material unregistered Software products as

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to which each Borrower or Subsidiary of a Borrower is the owner or is an exclusive licensee (collectively, “Scheduled Intellectual Property Collateral”).

(ii) Except as set forth in Schedule 5.01(u):

(1) Each Borrower or each Subsidiary of a Borrower is the sole owner or is an exclusive licensee of its Scheduled Intellectual Property Collateral, free and clear of any Lien (other than in favor of the Collateral Agent, for the benefit of the Secured Creditors) without the payment of any monies or royalty;

(2) Each Borrower or each Subsidiary of a Borrower has taken, and will continue to take, all actions which are necessary or advisable to acquire and protect its Scheduled Intellectual Property Collateral, consistent with prudent commercial practices and such Borrower’s or Subsidiary’s business judgment, including (A) registering all Copyrights included within the Scheduled Intellectual Property Collateral which, in such Borrower’s or Subsidiary’s business judgment, are of sufficient value to merit such treatment in the U.S. Copyright Office, and (B) registering all Patents and Trademarks included within the Scheduled Intellectual Property Collateral which, in such Borrower’s or Subsidiary’s business judgment, are of sufficient value to merit such treatment in the United States Patent and Trademark Office;

(3) Each Borrower’s or each Subsidiary’s rights in the Scheduled Intellectual Property Collateral, to the knowledge of any Borrower or Subsidiary, are valid and enforceable; provided, however that no Borrower or Subsidiary has knowledge of any problem with the validity or enforceability of its rights in its Scheduled Intellectual Property Collateral;

(4) No Borrower or Subsidiary of a Borrower has received any material demand, claim, notice or inquiry from any Person in respect of the Scheduled Intellectual Property Collateral which challenges, threatens to challenge or inquires as to whether there is any basis to challenge the validity of the rights of the Borrowers and their Subsidiaries or the right of the Borrowers or their Subsidiaries to use any such Scheduled Intellectual Property Collateral, and the Borrowers and their Subsidiaries know of no basis for any such challenge;

(5) The Borrowers and their Subsidiaries have not received any formal written notice of any violation or infringement of any proprietary rights of any other Person that could reasonably be expected to result in a Material Adverse Effect;

(6) Except on an arm’s-length basis for value and other commercially reasonable terms, the Borrowers and their Subsidiaries have not granted any license with respect to any Scheduled Intellectual Property Collateral to any Person, other than that Scheduled Intellectual Property Collateral that the Borrowers and their Subsidiaries have made available to the “open source

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community” consistent with historical business practices and reasonable business judgment; and

(7) The Borrowers and their Subsidiaries are not pursuing any claims or causes of actions against any Person for infringement of the Scheduled Intellectual Property Collateral that could reasonably be expected to result in a Material Adverse Effect.

(v) Material Contracts. Set forth on Schedule 5.01(v) is a complete and accurate list as of the Closing Date of all material contracts to which any Credit Party or any Subsidiary of a Credit Party is a party, showing the parties and subject matter thereof and amendments and modifications thereto.

(w) Investment Company Act. None of the Credit Parties is, or is controlled by, an “investment company” or an “affiliated person” or “promoter” of, or “principal underwriter” of or for, an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.

(x) Employee and Labor Matters. As of the Closing Date there is (i) no unfair labor practice complaint pending or, to the best of any Credit Party’s or any Subsidiary of a Credit Party’s knowledge, threatened against any Credit Party or any Subsidiary of a Credit Party before any Governmental Authority and no grievance or arbitration proceeding pending or, to the best of such Credit Party’s or any Subsidiary of such Credit Party’s knowledge, threatened against any Credit Party or any Subsidiary of a Credit Party which arises out of or under any collective bargaining agreement, and (ii) no strike, labor dispute, slowdown, stoppage or similar action or grievance pending or, to the best of such Credit Party’s or any Subsidiary of a Credit Party’s knowledge, threatened against any Credit Party or any Subsidiary of a Credit Party that, in the case of clause (i) or (ii) could reasonably be expected to have a Material Adverse Effect.

(y) Location of Collateral; Chief Place of Business; Chief Executive Office FEIN; Name. All of the Threshold Inventory is located on one of the locations listed on Schedule 5.01(y)(1). All of the Threshold Equipment is located on one of the locations listed on Schedule 5.01(y)(2). Schedules 5.01(y)(1) and (2) contain a true, correct and complete list, as of the Closing Date, of the legal names and addresses of each warehouse at which the Threshold Inventory or Threshold Equipment, as the case may be, is stored. None of the receipts received by such Credit Party from any warehouse states that the goods covered thereby are to be delivered to bearer or to the order of a named Person or to a named Person and such named Person’s assigns. Schedule 5.01(y) sets forth a complete and accurate list as of the date hereof of (i) each place of business (other than a location that is only a sales office) of each Credit Party, (ii) the chief executive office of each Credit Party, (iii) the exact legal name of each Credit Party, (iv) the jurisdiction of organization of each Credit Party, (v) the organizational identification number of each Credit Party (or indicates that such Credit Party has no organizational identification number) and (vi) the federal employer identification number of such Credit Party.

(z) Equipment; Inventory Records; Commercial Tort Claims. Each material item of Equipment of the Credit Parties and their Subsidiaries is used or held for use in their

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business and is in good working order, ordinary wear and tear and damage by casualty excepted. Each Borrower keeps correct and accurate records itemizing and describing the type, quality, and quantity of Inventory and the book value thereof in all material respects. As of the Closing Date, Schedule 5.01(z) sets forth a true and complete list of all commercial tort claims of each of the Credit Parties.

(aa) Security Interests. Each Security Document creates in favor of the Collateral Agent a legal, valid and enforceable security interest in the Collateral purported to be secured thereby. Upon the filing of the UCC-1 financing statements and the recording of the collateral assignments for security referred to in the Security Agreements in the United States Patent and Trademark Office and the United States Copyright Office, such security interests in and Liens on the Collateral granted thereby shall be perfected security interests, in each case to the extent a Lien thereon can be perfected by filing pursuant to the UCC or by the recording of such collateral assignments in the United States Patent and Trademark Office or the United States Copyright Office, and no further recordings or filings are or will be required in connection with the creation, perfection or enforcement of such security interests and Liens, other than (i) the filing of continuation statements or financing change statements in accordance with Applicable Law, (ii) the recording of the collateral assignments for security pursuant to the Security Agreement in the United States Patent and Trademark Office and the United States Copyright Office, as applicable, with respect to after-acquired United States patent and trademark applications and registrations and United States copyrights and additional filings and/or other actions as may be required to perfect the Collateral Agent’s lien in Registered Intellectual Property under the laws of a jurisdiction outside the United States and (iii) additional filings if a relevant Credit Party changes its name, identity or organizational structure or the jurisdiction in which each relevant Credit Party is organized.

(bb) Foreign Assets Control Regulations, Etc. Neither the execution and delivery of, nor the borrowing under any Loan Document, nor the use of proceeds from any Loan will violate (i) the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto, (ii) the Patriot Act or (iii) Executive Order No. 13,224, 66 Fed. Reg. 49,079 (2001), issued by the President of the United States (Executive Order Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism). Without limiting the foregoing, none of the Credit Parties is or will become a “blocked person” as described in Section 1 of such Executive Order or engages or will engage in any dealings or transactions with, or is otherwise associated with, any such blocked person.

(cc) Equipment Leases. Each Credit Party has good and indefeasible title to, or a valid leasehold interest in, its personal property, in each case, free and clear of Liens except for Permitted Encumbrances. The Credit Parties enjoy peaceful and undisturbed possession under all leases of Equipment, Machinery and other personal property material to their business and to which they are parties or under which they are operating, and all of such material leases are valid and subsisting.

(dd) Inactive Subsidiaries. Schedule 5.01(dd) contains a true, accurate and complete list of all the Inactive Subsidiaries. The Inactive Subsidiaries listed on

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Schedule 5.01(dd), taken as a whole, do not own assets with an aggregate fair market value in excess of one million Dollars ($1,000,000) (excluding obligations constituting Permitted Investments due from any Affiliate). None of the Inactive Subsidiaries has any material liabilities or engages in any business operations.

(ee) None of the Credit Parties nor any of their Subsidiaries have granted to any of the Funding Partners any lien on any of their assets other than precautionary liens on Contracts assigned by any of the Borrowers to any Funding Partners and liens on the goods, equipment, payments, guaranties and proceeds assigned or transfered under such Contracts in favor of the Funding Partners.

None of the Contracts assigned by any of the Borrowers to any Funding Partners pursuant to the Program Agreements gives any party rights to any of the Credit Parties’ Intellectual Property (other than the non-exclusive license for use conveyed in the Contract), equipment or real estate or other assets of the Credit Parties, other than the rights to Contracts assigned by any of the Borrowers to any Funding Partner and the goods, equipment, payments, guaranties and proceeds assigned or transfered under such Contracts in favor of the Funding Partners.

ARTICLE VI

REPORTING COVENANTS

Each Credit Party covenants and agrees that, from and after the date hereof (except as otherwise provided herein, or unless the Required Lenders have given their prior written consent) until all amounts owing hereunder or under any Security Document or in connection herewith or therewith have been paid in full, that:

Section 6.01. Financial Statements. Each Credit Party (1) shall keep, and cause each of its Subsidiaries to keep, proper books of record and account, in which true and correct entries shall be made of all material financial transactions and the assets and business of each Borrower and each such Subsidiary and (2) shall maintain a system of accounting established and administered in accordance with sound business practices to permit preparation of consolidated financial statements in conformity with GAAP, and each of the financial statements described below shall be prepared from such system and records. The Borrowers shall deliver or cause to be delivered to the Agents in form and detail satisfactory to the Agents:

(a) Monthly Reports. As soon as available, but in any event within thirty (30) days after the end of each Fiscal Month (and with respect to the last Fiscal Month of each Fiscal Quarter of the Parent (including the last Fiscal Month of the Parent’s Fiscal Year), forty-five (45) days after the end of such Fiscal Month), (i) a consolidated balance sheet for the Parent and its Subsidiaries as at the end of such Fiscal Month (and showing the same period from the previous Fiscal Year), (ii) the related consolidated statements of income of the Parent and its Subsidiaries for such Fiscal Month, (iii) the related consolidated statements of cash flow of the Parent and its Subsidiaries for such Fiscal Month, and (iv) the related unaudited consolidated statements of income and cash flow, in each case, for such Fiscal Month and for the period commencing on the first day of such Fiscal Year and ending the last day of such Fiscal Month (and showing the same periods from the previous Fiscal Year), in a form reasonably satisfactory to the Administrative

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Agent and certified by an Authorized Officer of the Parent as fairly presenting, in all material respects, the financial position of the Parent and its Subsidiaries as at the dates indicated and the results of their operations for the Fiscal Months indicated, such consolidated balance sheets and consolidated statements of income in accordance with GAAP, subject to normal year-end adjustments and the absence of footnotes.

(b) Quarterly Reports. As soon as available, but in any event within forty-five (45) days after the end of each Fiscal Quarter in each Fiscal Year (excluding the last Fiscal Quarter of each Fiscal Year), (i) the quarterly report of Parent required to be filed with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act, including the unaudited consolidated balance sheets of the Parent and its Subsidiaries as at the end of such period, the related unaudited consolidated statements of income and cash flow of the Parent and its Subsidiaries and the related unaudited consolidated statements of income for such Fiscal Quarter or if such quarterly reports are not filed with the SEC for any reason, the unaudited consolidated balance sheets of the Parent and its Subsidiaries as at the end of such period, the related unaudited consolidated statements of income and cash flow of the Parent and its Subsidiaries and the related unaudited consolidated statements of income for such Fiscal Quarter, (ii) a certificate of a Responsible Officer of the Parent stating that such unaudited financial information fairly presents, in all material respects, the financial position of the Parent and its Subsidiaries as at the dates indicated and the results of its operations and cash flow for the Fiscal Quarters indicated, such consolidated balance sheets and consolidated statements of income and cash flow in accordance with GAAP, subject to normal year-end adjustments and the absence of footnotes, (iii) a copy of the quarterly updated litigation report for such Fiscal Quarter; provided, however, to the extent such quarterly report filed with the SEC contains a complete and correct disclosure regarding litigation, such quarterly report shall be deemed to satisfy this clause (iii), (iv) an unaudited balance sheet and related statements of income of the foreign operations on a country by country basis for such Fiscal Quarter (including the last Fiscal Quarter of each Fiscal Year), (v) a detailed report of all Asset Dispositions permitted by Section 8.04(k) and (vi) an update of Schedule 5.01(u) reflecting all changes since the last update.

(c) Annual Reports and Insurance Information. As soon as available, but in any event within ninety (90) days after the end of each Fiscal Year, (i) the annual report of Parent required to be filed with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act, including the audited consolidated balance sheets of the Parent and its Subsidiaries as of the end of such Fiscal Year, the related audited consolidated statements of income, stockholders’ equity and cash flow of the Parent and its Subsidiaries and the related unaudited consolidated statements of income of the Parent and its Subsidiaries for such Fiscal Year or if such annual reports are not filed with the SEC for any reason, the audited consolidated balance sheets of the Parent and its Subsidiaries as of the end of such Fiscal Year, the related audited consolidated statements of income, stockholders’ equity and cash flow of the Parent and its Subsidiaries and the related unaudited consolidated statements of income of the Parent and its Subsidiaries for such Fiscal Year and (ii) a report on such financial statements of KPMG LLP or other independent public accountants of nationally recognized standing or other independent certified public accountants reasonably acceptable to the Administrative Agent, which report shall be unqualified in all material respects.

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(d) Officer’s Certificate; Etc. Together with each delivery of any financial statement pursuant to subsections (b) and (c) of this Section 6.01, (i) an Officer’s Certificate substantially in the form of Exhibit F attached hereto and made a part hereof, stating that an Authorized Officer signatory thereto has reviewed the terms of the Loan Documents, and has made, or caused to be made under his or her supervision, a review in reasonable detail of the transactions and financial condition of the Parent and its Subsidiaries during the accounting period covered by such financial statements, that such review has not disclosed the existence during or at the end of such accounting period, and that such officer does not have knowledge of the existence as at the date of such Officer’s Certificate, of any condition or event which constitutes an Event of Default or a continuing Default, if any such condition or event existed or exists, specifying the nature and period of existence thereof and what action the Parent and its Subsidiaries have taken, are taking and propose to take with respect thereto (the “Officer’s Certificate”) and (ii) a certificate substantially in the form of Exhibit G attached hereto and made a part hereof (the “Compliance Certificate”), signed by the Parent’s chief financial officer, treasurer or controller, setting forth calculations (with such specificity as the Administrative Agent may reasonably request) for the period then ended which demonstrate compliance, when applicable, with the provisions of Article VIII and Article IX during such period.

(e) Budgets; Business Plans; Financial Projections. (i) As soon as practicable and in any event not later than ninety (90) days after the beginning of each Fiscal Year of the Parent a financial forecast, prepared in accordance with the Parent’s normal accounting procedures applied on a consistent basis, for the succeeding Fiscal Year, including (A) a forecasted consolidated balance sheet, and the related consolidated statements of income and cash flows of the Parent and its Subsidiaries for and as of the end of such Fiscal Year and (B) the amount of forecasted Capital Expenditures for such Fiscal Year.

(ii) a statement, with supporting schedules, of Minimum Liquidity, as of the last day of each week, delivered no later than three (3) Business Days after the end of such week and a cash balance statement, separately identifying (A) amounts held in Cash Management Accounts or other Accounts subject to a Control Agreement and (B) amounts held by Foreign Subsidiaries, on each Funding Date for the Revolving Loans.

Section 6.02. Other Financial Information. (a) Each of the Credit Parties hereby authorizes each Agent and its representatives to communicate directly with the accountants so long as an Authorized Officer of such Credit Party participates in such communication and authorizes the accountants to disclose to each Agent, each Lender and their respective representatives any and all financial statements and other financial information, including copies of any final management letter, that such accountants may have with respect to the Collateral or such Credit Party’s financial condition, results of operations, properties, projections, business and business prospects. The Agents and such representatives shall treat any non-public information so obtained as confidential.

(b) Each of the Credit Parties shall deliver to the Administrative Agent and Revolving Agent copies of all documents and financial statements, reports and notices, if any, sent or made available generally by the Credit Parties to the holders of its Securities or to a trustee under any indenture or filed with the SEC, and promptly upon their becoming available, copies of all press releases and other statements made available by any Credit Party to the public

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concerning material developments in the business of any Credit Party and materials, information, reports, notices and proxy statements sent or made available by the Borrower to its security holders generally in their capacities as such.

(c) The Borrower shall deliver to the Administrative Agent and Revolving Agent copies of any final management reports delivered to any of the Borrowers by the accountants in connection with the financial statements delivered pursuant to Section 6.01.

Section 6.03. Defaults, Events of Default. Promptly upon any Authorized Officer obtaining knowledge of any condition or event which constitutes an Event of Default or Default, each Credit Party shall deliver to the Administrative Agent and Revolving Agent an Officer’s Certificate specifying (a) the nature and period of existence of any such claimed Event of Default, Default, condition or event, (b) the notice given or action taken by such Person in connection therewith and (c) what action such Credit Party has taken, is and proposes to take with respect thereto.

Section 6.04. Lawsuits. (a) Promptly upon any Credit Party obtaining knowledge of the institution of, or written threat of, (i) any action, suit, proceeding or arbitration against or affecting such Credit Party or any Subsidiary or asset of such Credit Party not previously disclosed pursuant to Section 5.01(g), which action, suit, proceeding or arbitration could reasonably be expected to have a Material Adverse Effect, (ii) any investigation or proceeding before or by any Governmental Authority, the effect of which could reasonably be expected to materially limit, prohibit or restrict the manner in which such Credit Party currently conducts its business, (iii) any Forfeiture Proceeding which could reasonably be expected to have a Material Adverse Effect, or (iv) any material Condemnation or Condemnation proceeding, such Credit Party shall give written notice thereof to the Administrative Agent and Revolving Agent and provide such other information reasonably requested by the Administrative Agent or the Revolving Agent as may be reasonably available to enable the Administrative Agent or the Revolving Agent to evaluate such matters except, in each case, where the same is fully covered by insurance (other than applicable deductible), and (b) in addition to the requirements set forth in clause (a) of this Section 6.04, such Credit Party upon request of the Administrative Agent or the Revolving Agent, shall promptly give written notice of the status of any action, suit, proceeding, governmental investigation or arbitration covered by a report delivered pursuant to clause (a) above and provide such other information as may be reasonably requested by the Administrative Agent and reasonably available to such Credit Party to enable the Administrative Agent or the Revolving Agent to evaluate such matters.

Section 6.05. Insurance. As soon as practicable and in any event within ten (10) Business Days of any cancellation without replacement thereof of any material insurance coverage set forth on the most recent schedule delivered pursuant to Section 5.01(r), the Borrower Representative shall deliver to the Administrative Agent and Revolving Agent notice of such cancellation.

Section 6.06. Environmental Notices. The Credit Parties shall, and shall cause their Subsidiaries to, notify the Administrative Agent, Collateral Agent and Revolving Agent, in writing, promptly, and in any event within ten (10) Business Days after such Credit Party’s obtaining knowledge thereof, of any: (a) notice or claim to the effect that such Credit

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Party or any of its Subsidiaries is or may be liable to any Person as a result of the Release of any Hazardous Material; (b) investigation by any Governmental Authority of any Credit Party or any of its Subsidiaries evaluating whether any Remedial Action is needed to respond to the Release of any Hazardous Material; (c) notice that any Property of such Credit Party or any of its Subsidiaries is subject to an Environmental Lien; (d) any material violation of Environmental Laws by such Credit Party or any of its Subsidiaries or awareness by such Credit Party of a condition which would reasonably be expected to result in a material violation of any Environmental Law by such Credit Party or any of its Subsidiaries; (e) commencement or written threat of any judicial or administrative proceeding alleging a violation of or liability under any Environmental Law involving such Credit Party or any of its Subsidiaries; (f) any proposed acquisition of stock, assets, real estate or leasing of property, or any other action by such Credit Party or any of its Subsidiaries that would reasonably be expected to subject such Credit Party or such Subsidiary to material Environmental Liabilities and Costs; or (g) document provided to a Governmental Authority concerning any Release of a Hazardous Material in excess of any reportable quantity from or onto property owned or operated by such Credit Party or any of its Subsidiaries or any release or event requiring reporting pursuant to any Environmental Law or any material obligation to take any Remedial Action to abate any Release. For purposes of clauses (a), (b), (c) and (d), notice shall include any other written communications given to an agent or employee of the Borrower or such Credit Party with direct or indirect supervisory responsibility with respect to the activity, if any, which is the subject of such communication. With respect to clauses (a) through (g) above, such notice shall be required only if (A) the liability or potential liability, or with respect to clause (g), the cost or potential cost of compliance, which is the subject matter of the notice is reasonably likely to exceed one hundred thousand Dollars ($100,000), or if (B) such liability or potential liability or cost of compliance when added to other ongoing or pending liabilities of such Credit Party and its Subsidiaries of the kind covered by clauses (a) through (f) above is reasonably likely to exceed two hundred and fifty thousand Dollars ($250,000). Upon the written request of the Administrative Agent, the Credit Parties shall provide the Administrative Agent with copies of any non-privileged documents related to any matter for which notice has been given pursuant to this Section 6.06.

Section 6.07. Labor Matters. Each Credit Party shall notify the Administrative Agent and Revolving Agent in writing, promptly, but in any event within ten (10) Business Days after learning thereof, of (a) any material labor dispute to which such Credit Party could reasonably be likely to become a party, any actual or threatened strikes, lockouts or other disputes relating to such Credit Party’s plants and other facilities and (b) any material liability incurred with respect to the closing of any plant or other facility of such Credit Party.

Section 6.08. Other Information. Promptly upon receiving a request therefor from the Administrative Agent or Revolving Agent, each Credit Party shall prepare and deliver to the Administrative Agent and Revolving Agent (a) such other information with respect to such Credit Party’s business, financial condition, results of operations, properties, projections, business or business prospects, (b) such other information with respect to the Collateral, including, without limitation, schedules identifying and describing the Collateral and any Dispositions thereof or (c) such other information with respect to such Credit Party, as from time to time may be reasonably requested by the Administrative Agent or Revolving Agent.

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ARTICLE VII

AFFIRMATIVE COVENANTS

Each Credit Party covenants and agrees, from and after the date hereof (except as otherwise provided herein, or unless the Required Lenders have given their prior written consent) until all amounts owing hereunder or under any Loan Document or in connection herewith or therewith have been paid in full, that:

Section 7.01. Compliance with Laws and Contractual Obligations. Each Credit Party shall, and shall cause each of its Subsidiaries to, comply with all Requirements of Law (including with respect to the licenses, approvals, certificates, permits, franchises, notices, registrations and other governmental authorizations necessary to the ownership of its respective properties or to the conduct of its respective business, antitrust laws or Environmental Laws and laws with respect to social security and pension funds obligations) and all of its obligations pursuant to material contracts, except, in each case, where the failures to do so, in the aggregate, could not reasonably be expected to result in a Material Adverse Effect. Each Credit Party shall, and shall cause each of its Subsidiaries to, have policies in place to observe the applicable requirements of the Patriot Act Related Requirements consistent with U.S. industry practice.

Section 7.02. Payment of Taxes and Claims. Each Credit Party shall, and shall cause each of its Subsidiaries to, pay (a) all taxes, assessments and other governmental charges imposed upon it or on any of its properties or assets or in respect of any of its franchises, business, income or property, and (b) all claims (including claims for labor, services, materials and supplies) for sums material in the aggregate to such Credit Party which have become due and payable and which by law have or may become a Lien upon any of such Credit Party’s properties or assets, in each case prior to the time when any penalty or fine will be incurred by the Credit Party with respect thereto, except for (i) such taxes, assessments, other governmental charges and claims that are being contested in a Permitted Protest or (ii) to the extent that the failure to do so could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect.

Section 7.03. Conduct of Business and Preservation of Corporate Existence. Each Credit Party shall, and shall cause each of its Subsidiaries to, (a) continue to engage in business of the same general type as now conducted by the Credit Parties and their Subsidiaries, taken as a whole, and (b) preserve and maintain its corporate existence, rights (charter and statutory), licenses, consents, permits, notices or approvals and franchises deemed material to its business; provided that no Credit Party nor any of such Credit Party’s Subsidiaries shall be required to preserve any right or franchise if (i) the Credit Party or any such Subsidiary shall determine in good faith that the preservation thereof is no longer necessary, and (ii) that the loss thereof could not reasonably be expected to have a Material Adverse Effect, and provided further that this Section 7.03 shall not prohibit any merger, consolidation, liquidation or dissolution otherwise permitted by Section 8.03 or any sale, transfer or other Disposition permitted under Section 8.04.

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Section 7.04. Field Examination; Real Estate Asset Appraisal; Other Appraisals; Lender Meeting.

(a) At any reasonable time during normal business hours and from time to time with at least three (3) Business Days’ prior notice, or at any time if a Default or Event of Default shall have occurred and be continuing, each Credit Party shall, and shall cause each of its Subsidiaries to, permit any authorized representative(s) designated by the Administrative Agent or the Collateral Agent to visit and inspect any of its assets, to examine, audit, check and make copies of their respective financial and accounting records, books, journals, orders, receipts and any correspondence with regulators and other data relating to their respective businesses or the transactions contemplated by the Loan Documents (including in connection with environmental compliance, hazard or liability or insurance programs), and to discuss their affairs, finances and accounts with their officers and independent certified public accountants, all upon reasonable notice and at such reasonable times during normal business hours. The visitations and/or inspections by or on behalf of the Administrative Agent and Collateral Agent shall be at the Borrower’s expense; provided, however, that so long as no Default or Event of Default has occurred and is continuing, no more than one (1) visitation or inspection per Credit Party shall be made in any Fiscal Year. Each Credit Party shall, and shall cause each of its Subsidiaries to, keep and maintain in all material respects proper, complete and accurate books of record and account, in which entries in conformity with GAAP shall be made of all dealings and financial transactions and the assets and business of such Credit Party or Subsidiary in relation to their respective businesses and activities, including transactions and other dealings with respect to the Collateral. If an Event of Default has occurred and is continuing and the Loans have been accelerated, the Borrowers, upon the Administrative Agent’s or Collateral Agent’s request, shall provide copies of any such records to the Administrative Agent or Collateral Agent or their representatives.

(b) Upon three (3) Business Days’ prior written notice to the Credit Parties, each Credit Party shall permit any authorized representatives of the Collateral Agent to conduct a field examination, at the Borrowers’ expense, of any of the properties of such Credit Party and its Subsidiaries, including its and their financial and accounting records, and to make copies and take extracts therefrom, and to discuss its and their affairs, finances and business with its and their officers and certified public accountants, at such reasonable times during normal business hours and, subject to the proviso set forth below, as often as may be reasonably requested (a “Field Examination”); provided, however, so long as no Default or Event of Default has occurred and is continuing, the Collateral Agent shall be limited to one (1) Field Examination per Credit Party during each Fiscal Year if Minimum Liquidity of the Parent and its Subsidiaries is greater than thirty million Dollars ($30,000,000) at all times during such Fiscal Year, or if Minimum Liquidity of the Parent and its Subsidiaries is less than or equal to than thirty million Dollars ($30,000,000) at anytime during any Fiscal Year, the Collateral Agent shall be limited to two (2) Field Examinations per Credit Party during such Fiscal Year; provided, further, if an Event of Default has occurred and is continuing, the Collateral Agent shall not be so limited. Representatives of each Lender will be permitted to accompany representatives of the Collateral Agent during each Field Examination at such Lender’s expense.

(c) Each Credit Party shall permit any authorized representatives of the Collateral Agent to conduct an appraisal of the Inventory of such Credit Party (an “Inventory Appraisal”) and Real Estate Appraisal at such Credit Party’s expense; provided, however, that, unless an Event of Default has occurred and is continuing the Collateral Agent shall be limited to one (1) Real Estate Appraisal per Credit Party and one (1) Inventory Appraisal per Credit Party

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during each Fiscal Year. Any Real Estate Appraisal or Inventory Appraisal shall be at the Borrowers’ expense.

(d) Each Credit Party will participate and will cause key management personnel of each Credit Party to participate in a meeting with the Collateral Agent, the Administrative Agent, the Revolving Agent and Lenders at least once during each Fiscal Year, which meeting shall be held at a mutually agreeable location and time.

(e) Each Credit Party shall submit to Intellectual Property Appraisals, at such Credit Party’s expense, which shall be no more frequent than bi-annual so long as no Event of Default occurs and is continuing.

Section 7.05. Maintenance of Properties. Each Credit Party shall, and shall cause each of its Subsidiaries to, maintain, preserve and protect consistent with past practice all of their tangible Properties and Intellectual Property and other intangible assets which are necessary or useful in the proper conduct of their business in good working order and condition, ordinary wear and tear and Casualty and Condemnation excepted, except where the failure to do so could reasonably be expected to have a Material Adverse Effect, and comply and cause each of the Subsidiaries to comply, in all material respects with the provisions of all material leases to which each of them is a party so as to prevent any material loss or forfeiture thereof or thereunder. With respect to Intellectual Property, if consistent with reasonable commercial judgment, each Credit Party shall, and shall cause each of its Subsidiaries to, maintain all material Registered Intellectual Property and Trade Secrets owned by such Credit Party or Subsidiary, including taking all commercially reasonable steps to preserve and protect such material Intellectual Property, including maintaining the quality of any and all products or services used or provided in connection with any material Trademark, substantially consistent with the quality of the products and services as of the date hereof, and ensuring that all licensed users of any such Trademark use such substantially consistent standards of quality, except where the failure to do so, in each case, could not reasonably be expected to have a Material Adverse Effect.

Section 7.06. Transactions with Related Parties. Each Credit Party shall, and shall cause each of its Subsidiaries to, conduct all transactions otherwise permitted under this Agreement with any of its Related Parties on terms that are fair and reasonable and no less favorable to such Credit Party or Subsidiary, as the case may be, than it would obtain in a comparable arm’s-length transaction with a Person not a Related Party, provided that the following shall be allowed notwithstanding the foregoing: (a) nonexclusive licenses of patents, copyrights, trademarks, trade secrets and other intellectual property by any Credit Party or any Subsidiary to any Credit Party or any Subsidiary of a Credit Party and (b) transactions between or among the Parent and its Subsidiaries that are otherwise permitted under the Loan Documents. Any Related Party may serve as director, officer, employee or consultant of any Credit Party or its Subsidiaries, subject to the preceding sentence.

Section 7.07. Further Assurances. Each Credit Party shall take such action and execute, acknowledge and deliver, and cause each of its Subsidiaries to take such action and execute, acknowledge and deliver, at its sole cost and expense, such agreements, instruments, updated or amended schedules (including without limitation Schedule 5.01(u)) or

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other documents as the Collateral Agent may reasonably require from time to time in order (a) to carry out more effectively the purposes of this Agreement and the other Loan Documents, (b) to subject to valid and perfected first priority Liens (except for Permitted Encumbrances) on any of the Collateral or any other property of the Credit Parties acquired after the Closing Date and required to be so perfected pursuant to any Loan Document, (c) to establish and maintain the validity and effectiveness of any of the Loan Documents and the validity, perfection and priority of the Liens intended to be created thereby (except for Permitted Encumbrances), and (d) to better assure, convey, grant, assign, transfer and confirm unto the Collateral Agent for the ratable benefit of the Secured Creditors the rights now or hereafter intended to be granted to the Collateral Agent for the ratable benefit of the Secured Creditors under this Agreement or any other Loan Document.

Section 7.08. Additional Security; Additional Guaranties; Further Assurances.

(a) If any Credit Party acquires a fee interest in any Real Estate Asset with a fair market value in excess of one hundred thousand Dollars ($100,000), such Credit Party shall notify the Agents thereof within fifteen (15) days thereafter, and if such interest has not otherwise been made subject to a Lien in favor of Collateral Agent, for the benefit of the Secured Creditors, under a Mortgage delivered on the date hereof, then within sixty (60) days after acquiring such Real Estate Asset, or such later time as may be reasonably necessary, in the Collateral Agent’s reasonable discretion, the applicable Credit Party shall take all such actions and execute and deliver, or cause to be executed and delivered to the Agents, (A) all such Mortgages, documents, instruments, agreements, opinions and certificates that the Collateral Agent shall reasonably request to create in favor of Collateral Agent, for the benefit of the Secured Creditors, a valid and enforceable perfected first priority (subject to any Permitted Encumbrances) Lien and security interest in such Real Estate Asset, and (B) all of the documents, instruments and other materials related thereto described in Section 4.01(v) and Section 4.01(y) hereof. In addition to the foregoing, each Credit Party shall, at the request of the Required Lenders, deliver, from time to time, to the Administrative Agent and the Revolving Agent such appraisals as are required by law or regulation applicable to such Real Estate Asset or to any Secured Creditor’s interest in such Real Estate Asset hereunder or under any Mortgage thereof.

(b) If any Credit Party enters into any Lease after the Closing Date with respect to real property pursuant to which such Credit Party has an obligation to pay annual base rent in excess of one million Dollars ($1,000,000) after the expiration of any rent abatement or free rent period, then such Credit Party shall notify the Agents thereof within fifteen (15) days thereafter, and such Credit Party shall promptly (and, in any event, within sixty (60) days following the date of such Lease or such later time as may reasonably be necessary, in the Collateral Agent’s reasonable discretion), use commercially reasonable efforts to execute and deliver to the Agents (i) all such Mortgages, documents, instruments, agreements, opinions and certificates that the Collateral Agent shall reasonably request to create in favor of the Collateral Agent, for the benefit of the Secured Creditors, a valid and enforceable perfected first priority (subject to Permitted Encumbrances) Lien and security interest in such Leasehold Property, (ii) each of the documents, instruments and other materials related thereto described in Section 4.01(v) and Section 4.01(y) hereof as may be reasonably requested by the Agents, (iii) a

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Landlord Consent and Estoppel if required under the applicable Lease, or landlord estoppel certificate if no consent is required under the Lease; provided that any such landlord estoppel shall be in form and substance reasonably acceptable to the Revolving Agent and the Administrative Agent and shall address such matters as are reasonably required by the Lenders, which shall include, but not be limited to, a waiver by the landlord of all landlord liens, (iv) evidence that the Lease (or a memorandum thereof) has been recorded in all places necessary or desirable, in the judgment of the Administrative Agent and Revolving Agent, to give constructive notice of such Lease to third-party purchasers and encumbrances of the affected real property; and (v) a subordination, non-disturbance and attornment agreement in a form reasonably acceptable to the Collateral Agent.

(c) Each Credit Party shall pledge, or cause to be pledged, to the Collateral Agent, for the benefit of the Collateral Agent and Secured Creditors, all of the Capital Stock owned by a Credit Party of each Person that after the date hereof becomes a Domestic Subsidiary of such Credit Party, and 65% of the Capital Stock of each material new Foreign Subsidiary directly owned by such Credit Party. The documentation for such security and pledge shall be in form and substance reasonably satisfactory to the Administrative Agent or the Collateral Agent and shall be substantially similar to the Loan Documents executed concurrently herewith with such modifications as are reasonably requested by the Collateral Agent.

(d) Each Credit Party will cause each Subsidiary which, after the Closing Date, is required to become a Guarantor to, at its own expense, execute, acknowledge and deliver, or cause the execution, acknowledgment and delivery of, and thereafter register, file or record in any appropriate governmental office, any document or instrument reasonably deemed by the Collateral Agent to be necessary or desirable for the creation and perfection of the Liens on its assets intended to be created pursuant to the relevant Security Documents. The Credit Parties will take, and cause each Subsidiary described above in Section 7.08(c) to take, all actions reasonably requested by any Agent (including the filing of UCC-1s (or the appropriate equivalent filings under the laws of any relevant foreign jurisdiction), or the furnishing of legal opinions, etc.) in connection with the granting of such Liens.

(e) The Liens required to be granted pursuant to this Section 7.08 shall be granted pursuant to the respective Security Documents previously executed and delivered by the Credit Parties (or other security documentation substantially similar to such Security Documents or otherwise reasonably satisfactory in form and substance to the Collateral Agent) for the benefit of the Secured Creditors and shall constitute valid and enforceable first priority perfected Liens on all of the Collateral subject thereto, prior to the rights of all third Persons and subject to no other Liens except Permitted Encumbrances, and with such exceptions, conditions and qualifications as shall be permitted by the respective Security Documents. Any Additional Security Documents and other instruments related thereto or related to existing Security Documents shall be duly recorded or filed in such manner and in such places and at such times as are required by law to create, maintain, effect, perfect, preserve, maintain and protect the Liens, in favor of the Collateral Agent for the benefit of the Secured Creditors, required to be granted pursuant to the Additional Security Documents and all taxes, fees and other charges payable in connection therewith shall be paid in full by the Borrowers. At the time of the execution and delivery of any Security Documents or Additional Security Documents, the Credit Parties will, at the request of the Collateral Agent, cause to be delivered to the Collateral Agent such customary

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opinions of counsel and other related documents as may be reasonably requested by the Collateral Agent to assure that this Section 7.08 has been complied with.

(f) Each Credit Party agrees that each action required above by this Section 7.08 shall be completed as promptly as reasonably practicable after such action is requested to be taken by the Administrative Agent, the Revolving Agent or the Collateral Agent; provided that any action required above by Section 7.08(c), (d), and (e) with respect to a newly formed, created or acquired Subsidiary shall be completed as promptly as practicable following the formation, creation or acquisition of such Subsidiary.

Section 7.09. Powers; Conduct of Business. Each Credit Party shall, and shall cause each of its Subsidiaries to, qualify and remain qualified to do business in each jurisdiction in which the nature of its business requires it to be so qualified except for those jurisdictions where failure to so qualify does not have or could not reasonably be expected to have a Material Adverse Effect.

Section 7.10. Use of Proceeds. Proceeds of the Loans shall be used in accordance with Section 1.04 hereof.

Section 7.11. Obtaining of Permits, Etc. Each Credit Party shall obtain, maintain and preserve, and cause each of its Subsidiaries to obtain, maintain and preserve, all permits, licenses, authorizations, approvals, entitlements and accreditations which are necessary or useful in the proper conduct of its business, except where the failure to maintain and preserve such permits, licenses, authorizations, approvals, entitlements and accreditations does not or could not reasonably be expected to have a Material Adverse Effect.

Section 7.12. Environmental. Each Credit Party shall, and shall cause each of its Subsidiaries to, (a) comply, and cause it Subsidiaries to comply, in all material respects with Environmental Laws and provide to the Collateral Agent documentation of such compliance which Collateral Agent reasonably requests, which documentation shall include a notice by the Borrower Representative six (6) months after the Closing Date of the steps taken by the Credit Parties or their Subsidiaries to address any outstanding matters described on Section 5.01(q), (b) in the event of any material violation of any Environmental Law promptly commence and diligently pursue appropriate measures to abate such violation, and (c) perform any Remedial Action at property owned or operated by the Borrower or any of its Subsidiaries (x) that is required of the Borrower or such Subsidiary pursuant to any Environmental Law or agreement with a Governmental Authority, or (y) that was initiated prior to the Closing Date and is identified on Section 5.01(q).

Section 7.13. Fiscal Year. Each Credit Party shall cause its Fiscal Year to end on or about June 30 of each year unless the Required Lenders consent to a change in such Fiscal Year (and appropriate related changes to this Agreement).

Section 7.14. Condemnation. Immediately upon learning of the institution of any Condemnation of any of its owned or leased real property, any Credit Party shall notify each of the Agents of the pendency of such proceeding.

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Section 7.15. Maintenance of Insurance. (a) Each Credit Party shall maintain, and cause each of its Subsidiaries to maintain (either in the name of such Credit Party or in such Subsidiary’s own name), insurance with financially sound and reputable insurance companies or associations (including, without limitation, commercial general liability, property and business interruption insurance) with respect to their Properties (including all Real Estate Assets leased or owned by them) and business, in such amounts and covering such risks as is required by any Governmental Authority having jurisdiction with respect thereto or as is carried generally in accordance with sound business practice by companies in similar businesses similarly situated. All property policies covering the Collateral shall name the Collateral Agent as an additional insured or loss payee, in case of loss. All certificates of insurance are to be delivered to the Collateral Agent and the policies shall contain a loss payable and additional insured endorsements in favor of the Collateral Agent (substantially in the form reasonably requested by the Collateral Agent), and shall provide for not less than thirty (30) days’ prior written notice to the Collateral Agent and other named insureds of the exercise of any right of cancellation;

(b) Each Credit Party shall provide, and shall cause each of its Subsidiaries to provide, the Collateral Agent with copies of all insurance renewal certificates obtained by the Credit Parties and their Subsidiaries within three (3) Business Days of the receipt thereof; and

(c) Each Credit Party hereby waives, and shall cause each of its Subsidiaries and each of its insurers to waive, all rights of subrogation against any Agent and the Secured Creditors.

Section 7.16. Change in Collateral; Collateral Records. Each Credit Party shall advise the Collateral Agent promptly, in sufficient detail, of any change which could reasonably be expected to have a Material Adverse Effect relating to the value of the Collateral or the Lien granted thereon and execute and, upon the Collateral Agent’s reasonable request, deliver, and cause each of its Subsidiaries to execute and deliver, to the Collateral Agent from time to time, solely for the Collateral Agent’s convenience in maintaining a record of Collateral, such written statements and schedules, maintained by such Borrower and its Subsidiaries in the ordinary course of business, as the Collateral Agent may reasonably require, designating, identifying or describing the Collateral.

Section 7.17. Payment of Contractual Obligations. Each Credit Party shall, and shall cause each of its Subsidiaries to, pay on a timely basis (a) any and all amounts due and payable pursuant to any material contracts (other than material insurance policies) except where the failure to pay could not reasonably be expected to cause a Material Adverse Effect and (b) any and all premium, cash reserve, claims or other payment obligations in respect of any material insurance policy.

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Section 7.18. Formation of Subsidiaries. In addition to Section 7.08, at the time that any Credit Party forms any Domestic Subsidiary or acquires any Domestic Subsidiary after the Closing Date, such Credit Party shall promptly (a) cause such Domestic Subsidiary to execute and deliver to the Administrative Agent, the Revolving Agent and the Collateral Agent a Joinder Agreement, the Security Agreement, and such security documents, as well as appropriate financing statements, all in form and substance reasonably satisfactory to the Administrative Agent the Revolving Agent and the Collateral Agent (including being sufficient to grant the Collateral Agent, on behalf of the Secured Creditors, a first priority Lien (subject to Permitted Encumbrances) in and to the assets of such newly formed or acquired Subsidiary) and (b) provide to the Administrative Agent, the Revolving Agent and the Collateral Agent all other documentation, including, at the Collateral Agent’s request, one or more opinions of counsel reasonably satisfactory to the Administrative Agent, the Revolving Agent and the Collateral Agent, which in the opinion of each of them is appropriate with respect to the execution and delivery of the applicable documentation referred to above (including the grant and perfection of any Lien contemplated thereby). Any document, agreement, or instrument executed or issued pursuant to this Section 7.18 shall be a Loan Document.

Section 7.19. Cash Management.

(a) The Credit Parties shall cause the Secured Creditors to have a valid, perfected, first-priority security in all Permitted Accounts as and to the extent provided in the Security Agreement.

(b) Each Credit Party shall deposit or cause to be deposited promptly, and in any event no later than the first Business Day (other than with respect to payments made by check in an aggregate amount not to exceed five hundred thousand Dollars ($500,000) at any one time, which shall be made weekly) after the date of receipt thereof, all of their Collections (including those sent directly by their Account Debtors to the Credit Parties) into a bank account subject to a Control Agreement (a “Cash Management Account”) at one of the Cash Management Banks.

(c) So long as no Event of Default has occurred and is continuing, the Credit Parties may amend Schedule 4.01(w) to add or replace a Cash Management Bank or Cash Management Account; provided, however, that (i) such prospective Cash Management Bank shall be reasonably satisfactory to each of the Agents, and (ii) prior to the time of the opening of such Cash Management Account, such Credit Party, as applicable, and such prospective Cash Management Bank shall have executed and delivered to the Collateral Agent a Cash Management Agreement. The Credit Parties shall close any of their Cash Management Accounts (and establish replacement cash management accounts in accordance with the foregoing sentence) promptly and in any event within thirty (30) days of written notice from any Agent that the creditworthiness of any Cash Management Bank is no longer acceptable in such Agent’s reasonable judgment, or as promptly as practicable and in any event within sixty (60) days of notice from any Agent that the operating performance, funds transfer, or availability procedures or performance of the Cash Management Bank with respect to Cash Management Accounts or any Agent’s liability under any Cash Management Agreement with such Cash Management Bank is no longer acceptable in such Agent’s reasonable judgment.

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Section 7.20. Location of Inventory and Equipment. Each Credit Party will keep its Threshold Inventory and Threshold Equipment only at any of the locations identified on Schedule 5.01(y) or in transit from one such location to another; provided, however, that the Borrower Representative may amend Schedule 5.01(y) so long as such amendment occurs by written notice to the Collateral Agent not less than thirty (30) days prior to the date on which the list of locations has changed and such Threshold Inventory or Threshold Equipment is moved to such new location in the United States.

Section 7.21. Post-Closing Matters. Each Credit Party shall satisfy each condition and complete each item set forth on Schedule 7.21 attached hereto on or before the time specified on Schedule 7.21 with respect to such condition or item.

Section 7.22. Threshold Inventory. Each Credit Party shall maintain its Threshold Inventory only (a) at locations that are (i) owned by the Credit Parties or (ii) subject to a Collateral Access Agreement or will be within 60 days from the Closing Date, (b) in transit from one such location to another or (c) in transit to, or on a customer site for, installation.

ARTICLE VIII

NEGATIVE COVENANTS

Each Credit Party covenants and agrees, from and after the date hereof (except as otherwise provided herein, or unless the Required Lenders have given their prior written consent) until all amounts owing hereunder or under any other Loan Document or in connection herewith or therewith have been paid in full, that:

Section 8.01. Liens. It shall not, and shall not permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with respect to any of its property or assets, whether now owned or hereafter acquired, or assign or otherwise transfer any account receivable or other right to receive income, other than:

(a) Permitted Encumbrances.

(b) Liens in effect on the Closing Date on Contracts assigned by any of the Borrowers to any of the Funding Partners and the goods, equipment, payments, guaranties and proceeds related to any of such Contracts in favor of the Funding Partners, in each case, solely to the extent sold, conveyed, pledged, assigned or transferred pursuant to the Program Agreements among any of the Borrowers and each separate Funding Partner to the extent such Contracts are fully paid for.

(c) Liens created after the Closing Date on Contracts assigned by any of the Borrowers to any of the Funding Partners and the goods, equipment, payments, guaranties and proceeds of such Contracts in favor of the Funding Partners, in each case solely to the extent sold, conveyed, pledged, assigned or transferred pursuant to the Program Agreements among any of the Borrowers and each separate Funding Partner to the extent such Contracts are fully paid for.

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Section 8.02. Indebtedness. It shall not, and shall not permit any of its Subsidiaries to, create, incur, assume, guarantee or suffer to exist, or otherwise become or remain liable with respect to any Indebtedness, other than Permitted Indebtedness.

Section 8.03. Restrictions on Fundamental Changes. Except as expressly permitted by Section 8.04, it shall not, and shall not permit any of its Subsidiaries to:

(a) Enter into any merger or consolidation, reorganization or recapitalization (other than any merger (i) between any Domestic Subsidiary and Parent in which Parent is the surviving corporation, or (ii) between two Foreign Subsidiaries) not otherwise permitted under the Loan Documents, or reclassify its Stock other than pursuant to the terms of such Stock;

(b) Other than with respect to Inactive Subsidiaries and Foreign Subsidiaries, liquidate, wind up or dissolve itself (or suffer any liquidation or dissolution);

(c) Convey, sell, lease, license, assign, transfer, or otherwise dispose of, in one transaction or a series of transactions, all or substantially all of its assets; or

(d) Suspend or go out of a substantial portion of its or their business or a division thereof; provided, however, the Credit Parties may suspend or discontinue a substantial portion, or division, of any Subsidiary to the extent such Subsidiary or division contributes less than twenty percent (20%) of the consolidated revenue of the Parent and its Subsidiaries during the last Fiscal Year.

Section 8.04. Asset Dispositions, Etc. It shall not, and it shall not permit any of its Subsidiaries to, sell, transfer, lease or otherwise dispose of, or grant options, warrants or other rights with respect to, any of its assets (including any Capital Stock or Indebtedness of any Person), except for the following:

(a) sales, transfers, leases or other dispositions of Inventory or rights to Inventory in the ordinary course of business;

(b) sales, transfers, leases or other dispositions of assets to a Credit Party;

(c) the discount or sale, in each case without recourse and in the ordinary course of business, of receivables more than ninety (90) days overdue and arising in the ordinary course of business, but only in connection with the compromise or collection thereof consistent with customary industry practice (and not as part of any bulk sale or financing of receivables);

(d) sales or other dispositions in the ordinary course of business of assets (including Intellectual Property) that have become obsolete, uneconomic, worn-out or no longer useful in the business of the Parent and its Subsidiaries;

(e) Restricted Payments permitted by the terms of this Agreement;

(f) dispositions of cash and Cash Equivalents in the ordinary course of business;

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(g) nonexclusive licenses of patents, copyrights, Trademarks, Trade Secrets and other Intellectual Property of the Credit Parties and their Subsidiaries entered into in the ordinary course of business;

(h) in a transaction permitted under Section 8.06 or Section 8.07;

(i) leases, subleases or licenses of property to other Persons not materially interfering with the business of the Credit Parties and their Subsidiaries;

(j) issuance of Capital Stock, options or warrants of the Parent;

(k) Dispositions with an aggregate fair market value not exceeding three million Dollars ($3,000,000) in the aggregate in any Fiscal Year; provided, however, to the extent that in any Fiscal Year the Credit Parties do not use the entire amount available pursuant to this clause (k) (after giving effect to any carry-forward pursuant to this proviso), the Credit Parties may carry forward such unused amounts to the succeeding Fiscal Years; and provided, further, that sales, conveyances, transfers, leases, subleases, licenses, assignments and other dispositions of machinery, Equipment and Real Estate Assets, which are not replaced within one hundred eighty (180) days, shall not exceed three million Dollars ($3,000,000) in the aggregate at any time on or after the Closing Date.

Section 8.05. Limitation on Issuance of Capital Stock. It shall not, and it shall not permit any of its Subsidiaries to, issue or sell or enter into any agreement or arrangement for the issuance and sale of any shares of its Capital Stock, any Securities convertible into or exchangeable for its Capital Stock or any warrants, options or other rights for the purchase or acquisition of any of its Capital Stock, other than (a) in connection with the plans set forth on Schedule 8.05; (b) the issuance of Capital Stock by Parent; (c) the issuance of Capital Stock to any Credit Party to the extent such stock is covered by the Pledge Agreement; or (d) the issuance of Capital Stock by any Subsidiary of directors’ qualifying shares.

Section 8.06. Limitations on Dividends and Distributions and Other Payment Restrictions Affecting Subsidiaries. It shall not, and it shall not permit any of its Subsidiaries to, create or otherwise cause, incur, assume, suffer or permit to exist or become effective any consensual encumbrance or restriction of any kind on its ability (a) to pay dividends or to make any other distribution on any shares of its Capital Stock, (b) to subordinate or to pay, prepay, redeem or repurchase any Indebtedness owed to any Credit Party or Subsidiary of a Credit Party, (c) to make loans or advances to any Credit Party or Subsidiary of a Credit Party or (d) to transfer any of its property or assets to any Credit Party or Subsidiary of a Credit Party; provided, however, that nothing in clauses (a) through (d) of this Section 8.06 shall prohibit or restrict: (i) this Agreement and the other Loan Documents; (ii) any applicable law, rule or regulation (including applicable currency control laws and applicable state or provincial corporate statutes restricting the payment of dividends or any other distributions in certain circumstances); (iii) any restriction set forth in any document or agreement governing or securing any Existing Debt; (iv) in the case of clause (d), any restrictions on the subletting, assignment or transfer of any property or asset included in a lease, license, sale conveyance or similar agreement with respect to such property or asset; (v) in the case of clause (d), any holder of a Permitted Encumbrance from restricting on customary terms the transfer of any property or

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assets subject to such Permitted Encumbrance; (vi) any agreement or instrument in effect at the time a Person first became a Subsidiary of the Borrower or the date such agreement or instrument is otherwise assumed by the Borrower or any of its Subsidiaries, so long as such agreement or instrument was not entered into solely in contemplation of such Person becoming a Subsidiary of the Borrowers or such assumption; (vii) customary provisions restricting assignment of any licensing agreement or other contract entered into by the Borrowers or any of its Subsidiaries in the ordinary course of business; (viii) restrictions on the transfer of any asset pending the close of the sale of such asset; or (ix) customary provisions with respect to the payment of dividends or other distributions by any Subsidiary that is not a Credit Party set forth in the organizational documents for such Subsidiary so long as such provisions were not entered into in connection with any other agreement or arrangement not otherwise permitted under this Section 8.06.

Section 8.07. Investments. It shall not, and it shall not permit any of its Subsidiaries to, directly or indirectly, hold, own or invest in or commit or agree to hold or invest in, or purchase or otherwise acquire or commit or agree to purchase or otherwise acquire any Investment, except for Permitted Investments.

Section 8.08. Sale and Leaseback. It shall not, and it shall not permit any of its Subsidiaries to, directly or indirectly, become or remain liable as lessee or as a guarantor or other surety with respect to any lease, whether an Operating Lease or a Capitalized Lease, of any property (whether real, personal or mixed), whether now owned or hereafter acquired, (a) that any Credit Party or any of its Subsidiaries has sold or transferred or is to sell or transfer to any other Person or (b) that any Credit Party or any of its Subsidiaries intends to use for substantially the same purpose as any other property that has been or is to be sold or transferred by such Credit Party or any other Credit Party to any Person in connection with such lease.

Section 8.09. Negative Pledges. It shall not, and it shall not permit any of its Subsidiaries to, enter into any agreement prohibiting the creation or assumption of any Lien upon any of its properties or assets, whether now owned or hereafter acquired, except (a) pursuant to this Agreement and the Security Documents, (b) pursuant to any document or instrument governing Existing Debt or governing Capitalized Leases or purchase money debt incurred pursuant to Section 8.02 if any such restriction contained therein relates only to the asset or assets acquired in connection therewith or in connection with any Lien permitted by Section 8.01 or any Disposition permitted by Section 8.04; (c) prohibitions or conditions under applicable law, rule or regulation; (d) any agreement or instrument to which any Person is a party existing on the date such Person first becomes a Subsidiary of a Credit Party or the date such agreement or instrument is otherwise assumed by a Credit Party or any of its Subsidiaries (so long as such agreement or instrument was not entered into solely in contemplation of such Person becoming a Subsidiary of a Credit Party or such assumption and such prohibitions or conditions do not affect any other Subsidiary of the Credit Party (other than Subsidiaries of such Person having primary obligation for repayment of such Indebtedness)); (e) customary provisions restricting subletting or assignment of any lease governing any leasehold interest of the Borrower or any of its Subsidiaries; (f) customary provisions restricting assignment of any licensing agreement or other contract entered into by a Credit Party or any of its Subsidiaries in the ordinary course of business; or (g) restrictions on the transfer of any asset pending the close of the sale of such asset.

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Section 8.10. Change in Nature of Business. (a) Except as expressly permitted hereunder, it shall not, and it shall not permit any of its Subsidiaries to, make any material change in the nature of its business as such business is carried on as of the Closing Date or any business substantially related or incidental thereto.

(b) It shall not, and it shall not permit any of its Subsidiaries to, modify or change its fiscal year or materially modify or change its method of accounting (other than as may be required to conform to GAAP or, with respect to Subsidiaries, to conform to the Parent’s Fiscal Year) or enter into, modify, or terminate any agreement currently existing or at any time hereafter entered into with any third party accounting firm or service bureau for the preparation or storage of the Borrowers’ accounting records in a manner that would result in said accounting firm or service bureau declining to provide the Agents with information regarding the Borrowers’ and their Subsidiaries’ financial condition.

Section 8.11. Change Name. It shall not, and it shall not permit any of its Subsidiaries to, change any Borrower’s or any of its Subsidiaries’ name, organizational identification number, state of organization, or organizational identity; provided, however, that a Borrower or a Subsidiary of a Borrower may change its name upon at least thirty (30) days’ prior written notice by the Borrowers to the Administrative Agent and the Collateral Agent of such change and so long as, at the time of such written notification, such Borrower or such Subsidiary provides any financing statements or fixture filings necessary to perfect and continue perfected Liens.

Section 8.12. Restricted Payments. It shall not, and it shall not permit any of its Subsidiaries to, make any Restricted Payment, except (a) intercompany loans and advances between Credit Parties to the extent permitted by Section 8.02, (b) dividends and distributions by Subsidiaries of the Credit Parties to the Credit Party or a Subsidiary of the Credit Party that holds of the Stock of such Subsidiaries, (c) employee loans permitted under Section 8.02, and (d) payments of principal and interest of intercompany notes issued in accordance with Section 8.02.

Section 8.13. Change of Control. It shall not, and it shall not permit any of its Subsidiaries to, cause, or take action in support of, directly or indirectly, any Change of Control.

Section 8.14. Modifications of Indebtedness, Organizational Documents and Certain Other Agreements. It shall not, and it shall not permit any of its Subsidiaries to, amend, modify or otherwise change (a) its certificate of incorporation or bylaws (or other similar organizational documents), including by the filing or modification of any certificate of designation, or any agreement or arrangement entered into by it, with respect to any of its Capital Stock (including any shareholders’ agreement) except any such amendments, modifications or changes pursuant to this clause that either individually or in the aggregate would not be materially adverse to the interests of the Lenders or (b) its accounting policies or reporting practices.

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Section 8.15. Federal Reserve Regulations. It shall not, and it shall not permit any of its Subsidiaries to, use any Loan or the proceeds of any Loan for any purpose that would cause such Loan to be a margin loan under the provisions of Regulation T, U or X.

Section 8.16. Investment Company Act of 1940. It shall not, and it shall not permit any of its Subsidiaries to, engage in any business, enter into any transaction, use any Securities or take any other action that would cause it or any of its Subsidiaries to become subject to the registration requirements of the Investment Company Act of 1940, as amended, by virtue of being an “investment company” or a company “controlled” by an “investment company” not entitled to an exemption within the meaning of such Act.

Section 8.17. Securities Accounts; Deposit Accounts. Subject to the Security Agreement and except as permitted by Section 8.07, it shall not, and shall not permit any of its Subsidiaries, to establish or maintain any domestic Securities Account, Deposit Account or similar account unless the Collateral Agent shall have received a Control Agreement in respect of such domestic Securities Account, Deposit Account or similar account. Each Credit Party shall comply in all material respects with the provisions of each Control Agreement to which it is a party.

Section 8.18. Impairment of Security Interests. Except as otherwise permitted pursuant to any of the Loan Documents, it shall not, and it shall not permit its Subsidiaries who are Credit Parties to, directly or indirectly, take any action or do anything that would have the effect of terminating, limiting or impairing the perfection or priority of any Lien securing the Obligations except as expressly permitted under any Loan Document.

Section 8.19. Inactive Subsidiaries. It shall not, and it shall not permit any of its Subsidiaries to, permit, at any time (a) the Inactive Subsidiaries, taken as a whole, to own assets with an aggregate fair market value of one million Dollars ($1,000,000) or more or (b) any of the Inactive Subsidiaries to incur any material liabilities or engage in any business activities.

Section 8.20. Foreign Deposit Accounts. It shall not, and shall not permit any of its domestic Subsidiaries to, make any investment or transfer any cash, cash equivalents or other Securities to any foreign Deposit Account or Securities Account, except as permitted pursuant to clause (g) of the definition of Permitted Investment.

Section 8.21. Program Agreements. (a) It shall not, and it shall not permit any of its Subsidiaries to, amend, modify, supplement or otherwise change any Program Agreement without the prior written consent of the Agents, which is not to be unreasonably withheld.

(b) It shall not, and it shall not permit any of its Subsidiaries to, (i) enter into any financial transactions, agreements, contracts or relationship with any Funding Partner, (ii) modify, amend, supplement or otherwise change (other than insignificant administrative changes) any existing agreement, contract or other relationship with any Funding Partner, (iii) enter into any new transaction with any Funding Partner under any existing Program Agreement or other contract or arrangement, or (iv) add any assets to a Program Agreement or

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sell, pledge, assign, or otherwise transfer any interest in any assets or property that would constitute program contracts, whether under a Program Agreement or otherwise, in each case, without the prior written consent of the Agents and the Required Lenders. Notwithstanding the foregoing, if a Funding Partner has both (1) entered into an intercreditor agreement with the Collateral Agent in form and substance satisfactory to the Agents, and, in addition, (2) filed amendments in form and substance satisfactory to the Collateral Agent limiting such Funding Partner’s recorded financing statements and any other liens of record, the restrictions of this Section 8.21(b) shall not apply to such Funding Partner.

ARTICLE IX

FINANCIAL COVENANTS

Each Credit Party covenants and agrees, from and after the date hereof (except as otherwise provided herein) until all amounts owing hereunder or under any Loan Document or in connection herewith or therewith have been paid in full, that:

Section 9.01. Total Leverage Ratio. Total Leverage Ratio, as of each date set forth below, for the Parent and its Subsidiaries on a consolidated basis, shall not be greater than the ratio set forth opposite such date below:

Period Ending	Ratio
December 29, 2006	23.6x
March 30, 2007	9.8x
June 29, 2007	5.0x
September 28, 2007	5.0x
December 28, 2007	3.5x
March 28, 2008	3.5x
June 27, 2008	3.5x
September 26, 2008	3.5x
December 26, 2008	3.5x
March 27, 2009	3.0x
June 26, 2009	3.0x
September 25, 2009	3.0x
December 25, 2009	3.0x
March 26, 2010	3.0x
June 25, 2010	3.0x
September 24, 2010	3.0x
December 24, 2010	3.0x
March 25, 2011	3.0x
June 24, 2011	3.0x
September 30, 2011	3.0x

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Section 9.02. Minimum Levels of Consolidated EBITDA. The Credit Parties shall not permit Consolidated EBITDA for the Parent and its Subsidiaries:

(a) for the quarterly period ending December 29, 2006 to be less than $1,580,000;

(b) for the six-month period ending March 30, 2007 to be less than $6,080,000;

(c) for the nine-month period ending June 29, 2007 to be less than $15,310,000;

(d) for the twelve-month period ended on each date set forth below to be less than the amount set forth opposite such date:

Measurement Period Ending	Amount
September 28, 2007	$	20,600,000
December 28, 2007	$	31,150,000
March 28, 2008	$	31,150,000
June 27, 2008	$	29,420,000
September 26, 2008	$	28,710,000
December 26, 2008	$	28,720,000
March 27, 2009	$	28,530,000
June 26, 2009	$	37,000,000
September 25, 2009	$	37,000,000
December 25, 2009	$	37,000,000
March 26, 2010	$	37,000,000
June 25, 2010	$	37,000,000
September 24, 2010	$	37,000,000
December 24, 2010	$	37,000,000
March 25, 2011	$	37,000,000
June 24, 2011	$	37,000,000
September 30, 2011	$	37,000,000
December 30, 2011	$	37,000,000

Section 9.03. Minimum Liquidity. The Credit Parties shall maintain Minimum Liquidity of not less than (a) fifteen million Dollars ($15,000,000) on or before the first anniversary of the Closing Date and (b) ten million Dollars ($10,000,000) thereafter.

Section 9.04. Capital Expenditures. Such Credit Party will not, and will not permit any of its Subsidiaries to, make or agree to make any Capital Expenditure that would cause the aggregate amount of all such Capital Expenditures made by any of the Credit Parties to exceed (a) twenty million Dollars ($20,000,000) in the Fiscal Year ending on or before June 29, 2007 and (b) fifteen million Dollars ($15,000,000) in any Fiscal Year thereafter; provided, however, to the extent that actual Capital Expenditures for any Fiscal Year are less

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than the maximum amount set forth above for such Fiscal Year, (i) for the first Fiscal Year up to five million Dollars ($5,000,000) of such unused amount may be carried forward and used only in the next Fiscal Year and (ii) up to three million Dollars ($3,000,000) of such unused amounts from subsequent Fiscal Years may be carried forward into the next succeeding Fiscal Year. Notwithstanding the foregoing, the Credit Parties may make Capital Expenditures (which Capital Expenditures will not be included in any determination under this Section 9.04) with the Net Cash Proceeds of a Disposition, to the extent such Net Cash Proceeds are not required to be applied to repay the Loans pursuant to Section 2.02(a).

ARTICLE X

EVENTS OF DEFAULT, RIGHTS AND REMEDIES

Section 10.01. Events of Default. Each of the following occurrences shall constitute an event of default (an “Event of Default”) under this Agreement.

(a) Failure to Make Payments When Due. Any Borrower shall fail to pay (i) any principal or reimbursement obligations when due or (ii) any interest, fees, or any other monetary Obligation, and such failure shall continue for a period of three (3) Business Days after such amount was due (in each case, whether by scheduled maturity, required prepayment, acceleration, demand or otherwise).

(b) Breach of Certain Covenants. Any Credit Party shall fail to perform or comply with any covenant or agreement contained in Section 7.03, Section 7.04, Section 7.06, Section 7.07, Section 7.08, Section 7.09, Section 7.10, Section 7.12, Section 7.15, Section 7.18, Section 7.19, Section 7.22, Article VIII, or Article IX under this Agreement.

(c) Breach of Representation or Warranty. Any representation, warranty or statement made in this Agreement or deemed made pursuant to a Notice of Borrowing or Section 4.02 by or on behalf of any Credit Party or by any officer of the foregoing under any Loan Document or in any report, certificate, or other document delivered to any Agent or any Lender pursuant to any Loan Document proves to be incorrect or misleading in any material respect when made or deemed made.

(d) Other Defaults (Thirty (30) Day Cure). Any Credit Party shall fail to perform or comply with any other covenant or agreement and such failure continues for a period of thirty (30) days after learning of such failure or receiving written notice thereof from any Agent.

(e) Default as to Other Indebtedness. Any Credit Party or any Subsidiary of a Credit Party shall fail to make any payment when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) with respect to any Indebtedness if the aggregate amount of such Indebtedness is in excess of one hundred thousand Dollars ($100,000) in the aggregate and such failure shall continue after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness; or any other breach, default or event of default shall occur, or any other condition shall exist under any instrument, agreement or indenture pertaining to any such Indebtedness, if the effect thereof (with or without the giving of notice or lapse of time or both) is to permit or require an acceleration, mandatory redemption

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or other required repurchase of such Indebtedness or, as to such Indebtedness, permit the holder or holders of such Indebtedness to accelerate the maturity of any such Indebtedness or require a redemption or other repurchase of such Indebtedness; or any Indebtedness if the aggregate amount of such Indebtedness is in excess of three million Dollars ($3,000,000) shall be declared due and payable (by acceleration or otherwise) by a Person (other than a Credit Party or any Subsidiary of a Credit Party) as a result of a breach, Default or Event of Default by a Credit Party or any Subsidiary of a Credit Party, or required to be prepaid, redeemed or otherwise repurchased by any Credit Party or any Subsidiary of a Credit Party (other than by a regularly scheduled required prepayment) prior to the stated maturity thereof; or the holder or holders of any Lien, securing obligations of three million Dollars ($3,000,000) or more, shall commence foreclosure of such Lien upon property of any Credit Party or any Subsidiary of a Credit Party.

(f) Voluntary Bankruptcy Proceeding. Any Credit Party (i) shall institute any proceeding or voluntary case seeking to adjudicate it as bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief or composition of it or its debts under any law relating to bankruptcy, insolvency, reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, receiver and manager, interim receiver, sequestration, administrator, monitor, custodian or other similar official for any such Credit Party or any Subsidiaries or for any substantial part of its property, (ii) shall consent to the entry of an order for relief in an involuntary bankruptcy case or to the conversion of an involuntary case to a voluntary case under bankruptcy, insolvency or reorganization law, (iii) shall be generally not paying its debts as such debts become due or shall admit in writing its inability to pay its debts generally, (iv) shall make a general assignment for the benefit of creditors or (v) shall take any action to authorize or effect any of the actions set forth above in this Section 10.01(f).

(g) Involuntary Bankruptcy Proceeding.

(i) An involuntary case shall be commenced against any Credit Party or any Subsidiary of a Credit Party and the petition shall not be dismissed, stayed, bonded or discharged within sixty (60) days; or a court having jurisdiction in the premises shall enter a decree or order for relief in respect of such Credit Party or Subsidiary of a Credit Party in an involuntary case, under any applicable bankruptcy, insolvency or other similar law now or hereinafter in effect; or any other similar relief shall be granted under any applicable federal, state, provincial, local or foreign law; or the board of directors of such Credit Party or Subsidiary of a Credit Party (or any committee thereof) adopts any resolution or otherwise authorizes any action to approve any of the foregoing.

(ii) A decree or order of a court having jurisdiction in the premises for the appointment of a receiver, liquidator, sequestrator, trustee, receiver and manager, administrator, monitor, custodian or other officer having similar powers over any Credit Party or any Subsidiary of a Credit Party or over all or a substantial part of their respective assets shall be entered; or an interim receiver, trustee or other custodian of any Credit Party or any Subsidiary of a Credit Party or of all or a substantial part of their respective assets shall be appointed or a warrant of attachment, execution or similar process against any substantial part of their respective assets shall be issued and any such event shall not be stayed, dismissed, bonded or discharged; or the board of directors of

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any Credit Party or any Subsidiary of a Credit Party (or any committee thereof) adopts any resolution or otherwise authorizes any action to approve any of the foregoing.

(h) Invalidity of Documents. A court of competent jurisdiction shall declare that any material provision of any Loan Document shall at any time for any reason (other than pursuant to the express terms thereof) cease to be valid and binding on or enforceable against a Credit Party intended to be a party thereto; or the validity or enforceability thereof shall be contested by any Credit Party that is a party thereto; or a proceeding shall be commenced by a Credit Party or any Governmental Authority having jurisdiction over any of them, seeking to establish the invalidity or unenforceability thereof; or a Credit Party shall deny in writing that it has any liability or obligation purported to be created under any Loan Document.

(i) Loan Documents; Impairment. At any time, for any reason, (i) any Loan Document shall for any reason (other than pursuant to the express terms hereof or thereof) fail or cease to create a valid and perfected Lien on any Collateral or the Liens intended to be created or perfected thereby are, or any Credit Party seeks to render such Liens, invalid or unperfected with respect to any Collateral except as otherwise contemplated hereby or thereby, or (ii) Liens with respect to any Collateral in favor of the Collateral Agent contemplated by the Loan Documents shall be invalidated or otherwise cease to be in full force and effect, or such Liens shall be subordinated or shall not have the priority contemplated hereby or by the other Loan Documents (subject to Permitted Encumbrances and to the exceptions set forth in the applicable Security Documents).

(j) Judgments. One or more judgments or judicial or administrative orders for the payment of money exceeding one million Dollars ($1,000,000) in the aggregate shall be rendered against a Credit Party or any Subsidiary of a Credit Party and remain unsatisfied, undischarged, unvacated or unbonded and either (i) enforcement proceedings shall have been commenced by any creditor upon any such judgment or judicial or administrative order or (ii) there shall be a period of twenty (20) consecutive Business Days after entry thereof during which a stay of enforcement of any such judgment or order, by reason of a pending appeal or otherwise, shall not be in effect; provided, however, that any such judgment or order shall not give rise to an Event of Default under this Section 10.01(j) if and to the extent that (A) the amount of such judgment or order is covered by a valid and binding policy of insurance between the defendant and the insurer covering full payment thereof and (B) such insurer has been notified, and has not disputed the claim made for payment, of the amount of such judgment or order.

(k) Change of Control. A Change of Control shall have occurred.

(l) ERISA. With respect to any Plan or Benefit Plan, as applicable, (i) any accumulated funding deficiency (within the meaning of Section 412 of the Code and Section 302 of ERISA), whether or not waived, shall exist with respect to any Benefit Plan, or (ii) the occurrence of any ERISA Event; provided, however, that the events listed in clauses (i) through (ii) above shall constitute Events of Default only if the liability or deficiency of any Credit Party or any Subsidiary of a Credit Party or ERISA Affiliate, would reasonably be expected to exceed one million Dollars ($1,000,000) in the aggregate for all such events.

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Section 10.02. Remedies. If any Event of Default specified in Section 10.01 shall have occurred and be continuing, the Administrative Agent, upon the written request of Required Lenders, shall by written notice to the Borrower Representative, take any or all of the following actions, without prejudice to the rights of any Agent or any Lender to enforce its claims against any Guarantor or the Borrowers: (a) terminate or reduce the Commitments, whereupon the Commitments shall immediately be terminated or reduced, (b) declare all or a portion of the Loans then outstanding to be due and payable, whereupon all or such portion of the aggregate principal of such Loans and reimbursement obligations, all accrued and unpaid interest thereon, all fees and all other amounts payable under this Agreement and all other Obligations (other than Hedging Obligations) shall become immediately due and payable, without presentment, demand, protest or further notice of any kind, all of which are hereby expressly waived by the Borrowers, (c) require the Borrowers to cash collateralize all outstanding Letters of Credit in an amount equal to 105% of the face amount of such Letters of Credit (by transfer of such funds to a Cash Collateral Account) and (d) exercise any and all of its other rights and remedies hereunder, under the other Loan Documents, under Applicable Law and otherwise; provided, however, that upon the occurrence of any Event of Default described in subsection (f) or (g) of Section 10.01, the Commitments shall automatically terminate and the Loans and reimbursement obligations then outstanding, together with all accrued and unpaid interest thereon, all fees and all other amounts due under this Agreement shall become immediately due and payable automatically, without presentment, demand, protest or notice of any kind, all of which are expressly waived by the Borrowers, and provided further, that the Collateral Agent shall pay and apply the proceeds of any sale or other disposition of the Collateral, or any part thereof, resulting from the exercise of the remedies as provided for in this Section 10.02 in accordance with Section 1.10.

Section 10.03. Waivers by the Credit Parties. Except as otherwise provided for in this Agreement and Applicable Law, the Credit Parties waive (a) presentment, demand, protest, notice of presentment or dishonor, notice of intent to accelerate and notice of acceleration, (b) all rights to notice and a hearing prior to the Lenders’ taking possession or control of, or to the Lenders’ replevin, attachment or levy upon, any collateral securing the Obligations or any bond or Security which might be required by any court prior to allowing such Lenders to exercise any of their remedies, (c) the benefit of all valuation, appraisal and exemption laws and (d) all rights of set-off against any Secured Creditor as it applies to the payment of the Obligations. The Credit Parties acknowledge that they have been advised by counsel of their choice with respect to this Agreement, the other Loan Documents and the transactions evidenced by this Agreement and the other Loan Documents.

ARTICLE XI

GUARANTY OF OBLIGATIONS OF BORROWER

Section 11.01. Guaranty. In order to induce the Agents and the Secured Creditors to enter into this Agreement and to make available the Loans and Letters of Credit hereunder, and in recognition of the direct benefits to be received by each Guarantor from the proceeds of the Loans, Swap Related Reimbursement Obligations, Hedging Agreements and Letters of Credit, each Guarantor hereby agrees with the Administrative Agent, the Revolving Agent and the Collateral Agent, for the benefit of the Secured Creditors, as follows: each Guarantor hereby jointly, severally, unconditionally and irrevocably guarantees, as primary

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obligor and not merely as surety, the full and prompt payment when due, whether upon maturity, acceleration or otherwise, and the performance, of any and all of the Obligations of all other Credit Parties (such Obligations, collectively, the “Guaranteed Obligations”). If any or all of the Obligations becomes due and payable hereunder, each Guarantor irrevocably and unconditionally promises to pay such Indebtedness to the Collateral Agent, for the benefit of the Secured Creditors.

Section 11.02. Nature of Liability. The Guarantors agree that this Guaranty is a guaranty of payment and performance and not of collection, and that their obligations under this Guaranty shall be primary, absolute and unconditional, irrespective of, and the liability of each Guarantor shall not be affected by, nor shall this Guaranty be discharged or reduced by reason of:

(a) the genuineness, validity, regularity, enforceability or any future amendment of, or change in this Guaranty, any other Loan Document or any other agreement, document or instrument to which any Credit Party and/or Guarantors are or may become a party;

(b) the absence of any action to enforce this Guaranty or any other Loan Document or the waiver or consent by the Administrative Agent, the Revolving Agent, the Collateral Agent and/or Secured Creditors with respect to any of the provisions thereof;

(c) any other continuing or other guaranty, undertaking or maximum liability of a Guarantor or of any other party as to the Obligations, or any payment on or in reduction of any such other guaranty or undertaking;

(d) the incapacity or any change in the name, style or constitution of any Credit Party or any other person liable;

(e) any dissolution, termination, increase, decrease or change in personnel by the Borrowers;

(f) the Collateral Agent granting any time, indulgence or concession to, or compounding with, discharging, releasing or varying the liability of, any Credit Party or any other person liable or renewing, determining, varying or increasing any accommodation, facility or transaction or otherwise dealing with the same in any manner whatsoever or concurring in, accepting or varying any compromise, arrangement or settlement or omitting to claim or enforce payment from any Credit Party or any other person liable;

(g) the existence, value or condition of, or failure to perfect its Lien against, any Collateral for the Guaranteed Obligations or any action, or the absence of any action, by the Administrative Agent, the Revolving Agent, or the Collateral Agent in respect thereof (including, without limitation, the release of any such Collateral);

(h) the insolvency of any Credit Party, or any payment made to any Agent or Secured Creditor on the Obligations which any such Agent or Secured Creditor repays to the Borrowers pursuant to a court order in any bankruptcy, reorganization, arrangement, moratorium or other debtor relief proceeding, and each Guarantor waives any right to the deferral or modification of its obligations hereunder by reason of any such proceeding;

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(i) any act or omission which would not have discharged or affected the liability of a Guarantor had it been a principal debtor instead of a Guarantor or by anything done or omitted which but for this provision might operate to exonerate or discharge a Guarantor; or

(j) any other action or circumstances which might otherwise constitute a legal or equitable discharge or defense of a surety or Guarantor.

Section 11.03. Independent Obligation.

(a) The obligations of each Guarantor hereunder are independent of the obligations of any other Guarantor, any other party or the Borrowers, and a separate action or actions may be brought and prosecuted against each Guarantor whether or not action is brought against any other Guarantor, any other party or the Borrowers and whether or not any other Guarantor, any other party or the Borrowers be joined in any such action or actions.

(b) Each Guarantor shall be regarded, and shall be in the same position, as principal debtor with respect to the Guaranteed Obligations. Each Guarantor agrees that any notice or directive given at any time to the Administrative Agent and the Revolving Agent that is inconsistent with the preceding paragraph shall be null and void and may be ignored by the Administrative Agent, the Revolving Agent and the Secured Creditors, and, in addition, may not be pleaded or introduced as evidence in any litigation relating to this Guaranty for the reason that such pleading or introduction would be at variance with the written terms of this Guaranty, unless the Agents and the Secured Creditors have specifically agreed otherwise in writing. It is agreed among each Guarantor, the Administrative Agent, the Revolving Agent and the Secured Creditors that the foregoing waivers are of the essence of the transaction contemplated by the Loan Documents and that, but for this Guaranty and such waivers, the Agents and the Secured Creditors would decline to enter into this Agreement.

Section 11.04. Demand by the Administrative Agent, the Revolving Agent or the Secured Creditors. In addition to the terms of the Guaranty set forth in Section 11.01, and in no manner imposing any limitation on such terms, it is expressly understood and agreed that, if, at any time, the outstanding principal amount of the Guaranteed Obligations under this Agreement (including all accrued interest thereon) is declared to be immediately due and payable, then the Guarantors shall, without demand, pay to the holders of the Guaranteed Obligations the entire outstanding Guaranteed Obligations due and owing to such holders. Payment by the Guarantors shall be made to the Administrative Agent or the Revolving Agent in immediately available funds to an account designated by the Administrative Agent or the Revolving Agent, as the case may be, or at the address set forth herein for the giving of notice to the Administrative Agent or the Revolving Agent or at any other address that may be specified in writing from time to time by the Administrative Agent or the Revolving Agent, and shall be credited and applied to the Guaranteed Obligations.

Section 11.05. Enforcement of Guaranty. In no event shall the Administrative Agent or the Revolving Agent have any obligation (although it is entitled, at its option) to proceed against the Borrowers or any other Credit Party or any Collateral pledged to secure Guaranteed Obligations before seeking satisfaction from any or all of the Guarantors, and the Administrative Agent or the Revolving Agent may proceed, prior or subsequent to, or

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simultaneously with, the enforcement of the Administrative Agent’s or the Revolving Agent’s rights hereunder, to exercise any right or remedy it may have against any Collateral, as a result of any Lien it may have as security for all or any portion of the Guaranteed Obligations.

Section 11.06. Waiver. In addition to the waivers contained in Section 11.02, the Guarantors waive, and agree that they shall not at any time insist upon, plead or in any manner claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshaling of assets or redemption law, or exemption, whether now or at any time hereafter in force, which may delay, prevent or otherwise affect the performance by the Guarantors of their Guaranteed Obligations under, or the enforcement by the Collateral Agent, the Administrative Agent, the Revolving Agent or the Secured Creditors of, the Guaranty. The Guarantors hereby waive diligence, presentment and demand (whether for non-payment or protest or of acceptance, maturity, extension of time, change in nature or form of the Guaranteed Obligations, acceptance of further Collateral, release of further Collateral, composition or agreement arrived at as to the amount of, or the terms of, the Guaranteed Obligations, notice of adverse change in the Borrower’s financial condition or any other fact which might increase the risk to the Guarantors) with respect to any of the Guaranteed Obligations or all other demands whatsoever and waive the benefit of all provisions of law which are or might be in conflict with the terms of the Guaranty. The Guarantors represent, warrant and jointly and severally agree that, as of the date of this Agreement, their obligations under the Guaranty are not subject to any offsets or defenses against the Administrative Agent, the Revolving Agent or the Secured Creditors or any Credit Party of any kind. The Guarantors further jointly and severally agree that their obligations under this Guaranty shall not be subject to any counterclaims, offsets or defenses against the Collateral Agent, the Revolving Agent, the Administrative Agent or any Secured Creditor or against any Credit Party of any kind which may arise in the future.

Section 11.07. Benefit of Guaranty. The provisions of the Guaranty are for the benefit of the Agents and the Secured Creditors and their respective permitted successors, permitted transferees, endorsees and assigns, and nothing herein contained shall impair, as between any Credit Party and the Agents or the Secured Creditors, the obligations of any Credit Party under the Loan Documents. In the event all or any part of the Guaranteed Obligations are transferred, endorsed or assigned by the Agents or any Secured Creditor to any Person or Persons in a manner permitted by this Agreement, any reference to “the Agents” or “the Secured Creditor” herein shall be deemed to refer equally to such Person or Persons.

Section 11.08. Modification of Guaranteed Obligations, Etc. Each Guarantor hereby acknowledges and agrees that the Agents and the Secured Creditors may at any time or from time to time, with or without the consent of, or notice to, the Guarantors (in their capacity as Guarantors):

(a) change or extend the manner, place or terms of payment of, or renew or alter all or any portion of, the Guaranteed Obligations;

(b) take any action under or in respect of the Loan Documents in the exercise of any remedy, power or privilege contained therein or available to it at law, equity or otherwise, or waive or refrain from exercising any such remedies, powers or privileges;

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(c) amend or modify, in any manner whatsoever, the Loan Documents;

(d) extend or waive the time for any Credit Party’s performance of, or compliance with, any term, covenant or agreement on its part to be performed or observed under the Loan Documents, or waive such performance or compliance or consent to a failure of, or departure from, such performance or compliance;

(e) take and hold Collateral for the payment of the Guaranteed Obligations guaranteed hereby or sell, exchange, release, dispose of, or otherwise deal with, any property pledged, mortgaged or conveyed, or in which the Agents or the Secured Creditors have been granted a Lien, to secure any Obligations;

(f) release anyone who may be liable in any manner for the payment of any amounts owed by the Guarantors or any Credit Party to the Agents or any Secured Creditor;

(g) modify or terminate the terms of any intercreditor or subordination agreement pursuant to which claims of other creditors of any Guarantor or any Credit Party are subordinated to the claims of the Agents and the Secured Creditors;

(h) apply any sums by whomever paid or however realized to any amounts owing by any Guarantor or any Credit Party to the Agents or any Secured Creditor in such manner as the Agents or any Secured Creditor shall determine in its discretion; and/or

(i) the Agents and the Secured Creditors shall not incur any liability to the Guarantors as a result thereof, and no such action shall impair or release the Guaranteed Obligations of the Guarantors or any of them under the Guaranty.

Section 11.09. Reinstatement.

(a) The Guaranty shall remain in full force and effect and continue to be effective should any petition be filed by or against any Credit Party or any Guarantor for liquidation or reorganization, should any Credit Party or any Guarantor become insolvent or make an assignment for the benefit of creditors or should a receiver or trustee be appointed for all or any significant part of such Credit Party’s or such Guarantor’s assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Guaranteed Obligations, or any part thereof, is, pursuant to Applicable Law, rescinded or reduced in amount, or must otherwise be restored or returned by the Administrative Agent or any Secured Creditor, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Guaranteed Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

(b) If any claim is ever made upon any Agent or Secured Creditor for repayment or recovery of any amount or amounts received in payment or on account of any of the Obligations and any of the aforesaid payees repays all or part of said amount by reason of (i) any judgment, decree or order of any court or administrative body having jurisdiction over such payee or any of its property or (ii) compliance by the Secured Creditors or the Agents with

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any requirement of a Governmental Authority having jurisdiction over the Secured Creditors or the Agents, then and in such event each Guarantor agrees that any such judgment, decree or order shall be binding upon it, notwithstanding any revocation of the Guaranty or other instrument evidencing any liability of the Borrowers or any termination of this Agreement, and each Guarantor shall be and remain liable to the aforesaid payees hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by any such payee. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Guaranteed Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.

Section 11.10. Waiver of Subrogation, Etc. Notwithstanding anything to the contrary in the Guaranty or in any other Loan Document, each Guarantor hereby:

(a) until the indefeasible payment and satisfaction in full in cash of the Guaranteed Obligations, expressly waives, on behalf of itself and its successors and assigns (including any surety), any and all rights at law or in equity to subrogation, to reimbursement, to exoneration, to contribution, to indemnification, to set off or to any other rights that could accrue to a surety against a principal, to a Guarantor against a principal, to a Guarantor against a maker or obligor, to an accommodation party against the party accommodated, to a holder or transferee against a maker, or to the holder of any claim against any Person, and which such Guarantor may have or hereafter acquire against any Credit Party in connection with or as a result of such Guarantor’s execution, delivery and/or performance of this Agreement, or any other documents to which such Guarantor is a party or otherwise; and

(b) acknowledges and agrees (i) that this waiver is intended to benefit the Agents and the Secured Creditors and shall not limit or otherwise effect any Guarantor’s liability hereunder or the enforceability of the Guaranty and (ii) that the Agents, the Secured Creditors and their respective successors and assigns are intended third-party beneficiaries of the waivers and agreements set forth in this Section 11.10 and their rights under this Section 11.10 shall survive payment in full of the Guaranteed Obligations.

Section 11.11. Election of Remedies. If any Agent may, under Applicable Law, proceed to realize benefits under any of the Loan Documents giving the Agents and the Secured Creditors a Lien upon any Collateral owned by any Credit Party, either by judicial foreclosure or by non-judicial sale or enforcement, the Collateral Agent may, at its sole option, determine which of such remedies or rights it may pursue without affecting any of such rights and remedies under this Guaranty. If, in the exercise of any of its rights and remedies, the Collateral Agent shall forfeit any of its rights or remedies, including its right to enter a deficiency judgment against any Credit Party, whether because of any applicable laws pertaining to “election of remedies” or the like, the Guarantors hereby consent to such action by any Agent and waive any claim based upon such action, even if such action by any Agent shall result in a full or partial loss of any rights of subrogation which the Guarantors might otherwise have had but for such action by any Agent. Any election of remedies that results in the denial or impairment of the right of any Agent to seek a deficiency judgment against any Credit Party shall not impair each Guarantor’s obligation to pay the full amount of the Guaranteed Obligations. In the event any Agent shall bid at any foreclosure or trustee’s sale or at any private sale permitted by law or the Loan Documents, such Agent may bid all or less than the amount of the

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Guaranteed Obligations and the amount of such bid need not be paid by such Agent but shall be credited against the Guaranteed Obligations. The amount of the successful bid at any such sale shall be conclusively deemed to be the fair market value of the Collateral and the difference between such bid amount and the remaining balance of the Guaranteed Obligations shall be conclusively deemed to be the amount of the Guaranteed Obligations guaranteed under the Guaranty, notwithstanding that any present or future law or court decision or ruling may have the effect of reducing the amount of any deficiency claim to which the Administrative Agent and the Secured Creditors might otherwise be entitled but for such bidding at any such sale.

Section 11.12. Further Assurances. Each Guarantor agrees, upon the written request of the Administrative Agent or the Revolving Agent, to execute and deliver to the Administrative Agent or the Revolving Agent, from time to time, any additional instruments or documents reasonably considered necessary by the Administrative Agent or the Revolving Agent to cause the Guaranty to be, become or remain valid and effective in accordance with its terms.

Section 11.13. Limitation on Amount Guarantied; Contribution by Guarantors. Anything contained in this Article XI to the contrary notwithstanding, if any Fraudulent Transfer Law (as defined below) is determined by a court of competent jurisdiction to be applicable to the obligations of any Guarantor under this Agreement, such obligations of such Guarantor hereunder shall be limited to a maximum aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance as a fraudulent transfer or conveyance under Section 548 of the Bankruptcy Code or any applicable provisions of comparable state law (collectively, the “Fraudulent Transfer Laws”), in each case after giving effect to all other liabilities of such Guarantor, contingent or otherwise, that are relevant under the Fraudulent Transfer Laws (excluding, however, any liabilities of such Guarantor (a) in respect of intercompany indebtedness to the Borrowers or other affiliates of the Borrowers to the extent that such indebtedness would be discharged in an amount equal to the amount paid by such Guarantor hereunder and (b) under any guarantee of any subordinated indebtedness which guarantee contains a limitation as to maximum amount similar to that set forth in this Section 11.13, pursuant to which the liability of such Guarantor hereunder is included in the liabilities taken into account in determining such maximum amount).

Section 11.14. Additional Waivers. Each Guarantor waives all rights and defenses that the Guarantor may have because any Borrower’s Obligations are secured by real property. This means, among other things:

(i) The Secured Creditors may collect from the Guarantor without first foreclosing on any real or personal property collateral pledged by the Borrowers.

(ii) If the Secured Creditors foreclose on any real property collateral pledged by the Borrowers, (1) the amount of the Obligations may be reduced only by the price for which that collateral is sold at the foreclosure sale, even if the collateral is worth more than the sale price or (2) the creditor may collect from the Guarantor even if the Secured Creditors, by foreclosing on the real property collateral, has destroyed any right the Guarantor may have to collect from the Borrowers.

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This is an unconditional and irrevocable waiver of any rights and defenses the Guarantor may have because the debtor’s debt is secured by real property. These rights and defenses include, but are not limited to, any rights or defenses based upon Section 580a, 580b, 580d, or 726 of the California Code of Civil Procedure or similar provisions in any other jurisdiction.

ARTICLE XII

THE AGENTS

Section 12.01. Appointment of Agents.

(a) Each Lender hereby irrevocably designates and appoints MORGAN STANLEY SENIOR FUNDING, INC. as Administrative Agent under this Agreement and the other Loan Documents and GENERAL ELECTRIC CAPITAL CORPORATION as Revolving Agent and Collateral Agent under this Agreement and the other Loan Documents. The provisions of this Section 12.01 are solely for the benefit of the Agents and Lenders and no Credit Party nor any other Person, other than permitted sub-agents, shall have any rights as a third party beneficiary of any of the provisions hereof. In performing its functions and duties under this Agreement and the other Loan Documents, each Agent shall act solely as an agent of Lenders and does not assume and shall not be deemed to have assumed any obligation toward or relationship of agency or trust with or for any Credit Party or any other Person. No Agent shall have duties or responsibilities except for those expressly set forth in this Agreement and the other Loan Documents. Unless otherwise provided, each Agent may execute its functions and duties under this Agreement and the other Loan Documents by or through agents, employees or attorneys-in-fact and shall be entitled to the advice of counsel concerning all matters pertaining to such functions and duties. No Agent shall be responsible for the negligence or misconduct of any agent or attorney-in-fact that it selects as long as such selection was made without gross negligence or willful misconduct. The duties of each Agent shall be mechanical and administrative in nature and no Agent shall have, or be deemed to have, by reason of this Agreement, any other Loan Document or otherwise, a fiduciary relationship in respect of any Lender. Except as expressly set forth in this Agreement and the other Loan Documents, no Agent shall have any duty to disclose, and shall not be liable for failure to disclose, any information relating to any Credit Party or any of such Credit Party’s Subsidiaries or any Account Debtor that is communicated to or obtained any Agent or any of its Affiliates in any capacity. No Agent nor any Agent’s Affiliates nor any Agent’s respective officers, directors, employees, agents or representatives shall be liable to any Lender for any action taken or omitted to be taken by it hereunder or under any other Loan Document, or in connection herewith or therewith, except for damages caused by its own gross negligence or willful misconduct.

If the Administrative Agent, Revolving Agent or the Collateral Agent shall request instructions from the Required Lenders, Required Revolving Lenders or Required Term Lenders or all affected Lenders with respect to any act or action (including a failure to act) in connection with this Agreement or any other Loan Document, then the Administrative Agent, Revolving Agent or Collateral Agent, as the case may be, shall be entitled to refrain from such act or taking such action unless and until such Agent shall have received instructions from the Required Lenders, Required Revolving Lenders, Required Term Lenders or all affected Lenders, as the case may be, and neither the Administrative Agent, Revolving Agent nor Collateral Agent shall incur liability to any Person by reason of so refraining. Each Agent shall be fully justified

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in failing or refusing to take any action hereunder or under any other Loan Document (a) if such action would, in the opinion of such Agent, be contrary to law or the terms of this Agreement or any other Loan Document, (b) if such action would, in the opinion of such Agent, expose such Agent to Environmental Liabilities and Costs or (c) if such Agent shall not first be indemnified to its satisfaction against any and all liability and expense which may be incurred by it by reason of taking or continuing to take any such action. Without limiting the foregoing, no Lender shall have any right of action whatsoever against any Agent as a result of such Agent acting or refraining from acting hereunder or under any other Loan Document in accordance with the instructions of Required Lenders, Required Revolving Lenders, Required Term Lenders or all affected Lenders, as applicable.

Section 12.02. Agents’ Reliance, Etc. No Agent nor any of the Agent’s Affiliates nor any of the Agent’s respective directors, officers, agents or employees shall be liable for any action taken or omitted to be taken by it or them under or in connection with this Agreement or the other Loan Documents, except for damages caused by its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, each Agent: (a) may treat the payee of any Note as the holder thereof until the Administrative Agent or Revolving Agent, as the case may be receives written notice of the assignment or transfer thereof signed by such payee and in form and substance reasonably satisfactory to such Agent; (b) may consult with legal counsel, independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken by it in good faith in accordance with the advice of such counsel, accountants or experts; (c) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement or the other Loan Documents; (d) shall not have any duty to ascertain or to inquire as to the performance or observance of any of the terms, covenants or conditions of this Agreement or the other Loan Documents on the part of any Credit Party or to inspect the Collateral (including the books and records) of any Credit Party, unless otherwise provided in this Agreement; (e) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or the other Loan Documents or any other instrument or document furnished pursuant hereto or thereto; and (f) shall incur no liability under or in respect of this Agreement or the other Loan Documents by acting upon any notice, consent, certificate or other instrument or writing (which may be by telecopy, telegram, cable or telex) believed by it to be genuine and signed or sent by the proper party or parties.

Section 12.03. Agents in Individual Capacities. With respect to its Commitments hereunder, each Agent shall have the same rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not an Agent; and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated, include each of the Agents in its individual capacity. Each Agent and its respective Affiliates may lend money to, invest in, and generally engage in any kind of business with, any Credit Party, any Credit Party’s Affiliate and any Person that may do business with or own securities of any Credit Party or any such Affiliate, all as if such Agent were not an Agent and without any duty to account therefor to Lenders. Each Agent and its respective Affiliates may accept fees and other consideration from any Credit Party for services in connection with this Agreement or otherwise without having to account for the same to Lenders. Each Lender acknowledges the potential conflict of interest between the Agents in their capacity as Lenders

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holding disproportionate interests in the Loans and Agents in their capacity as Agents and expressly consents to, and waives any claim based upon, such conflict of interest.

Section 12.04. Lender Credit Decision. Each Lender acknowledges that none of the Agent-Related Persons has made any representation or warranty to it, and that no act by any Agent hereinafter taken, including any review of the affairs or Property of the Credit Parties, shall be deemed to constitute any representation or warranty by any Agent-Related Person to any Lender. Each Lender also acknowledges that it has, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it has deemed appropriate, made its own credit and financial analysis of the Credit Parties and its own decision to enter into this Agreement. Each Lender also acknowledges that it will, independently and without reliance upon any Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under this Agreement. Except for notices, reports and other documents expressly herein required to be furnished to the Lenders by such Agent, no Agent shall have any duty or responsibility to provide any lender with any credit or other information concerning the business, prospectus, operations, Property, financial and other condition or creditworthiness of the Borrowers and any other Person party to a Loan Document that may come into the possession of any of the Agent-Related Parties. Each Lender acknowledges the potential conflict of interest of each other Lender as a result of Lenders holding disproportionate interests in the Loans, and expressly consents to, and waives any claim based upon, such conflict of interest.

Section 12.05. Costs and Expenses; Indemnification. Each Lender hereby agrees that it is and shall be obligated to pay to or reimburse each Agent for the amount of such Lender’s Pro Rata Share of any fees, costs, and expenses incurred by such Agent or permitted sub-agent in the performance of its functions and duties under this Agreement and the Loan Documents to the extent that the Credit Parties have not done so and without limiting their obligation to do so. The Lenders agree to indemnify the Agents and permitted sub-agents (to the extent not reimbursed by Credit Parties and without limiting the obligations of Credit Parties hereunder), ratably according to their respective Pro Rata Shares, from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever that may be imposed on, incurred by, or asserted against any Agent or permitted sub-agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted to be taken by any Agent or permitted sub-agent in connection therewith; provided that no Lender shall be liable for any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting from such Agent’s or permitted sub-agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse such Agent or permitted sub-agent promptly upon demand for its ratable share of any out-of-pocket expenses (including reasonable counsel fees) incurred by such Agent or permitted sub-agent in connection with the preparation, execution, delivery, administration, modification, amendment or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal advice in respect of rights or responsibilities under, this Agreement and each other Loan Document, to the extent that such Agent or permitted sub-agent is not reimbursed for such expenses by Credit Parties.

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Section 12.06. Successor Agents.

(a) The Administrative Agent may resign at any time by giving not less than thirty (30) days’ prior written notice thereof to the other Agents, the Participating Lenders and Borrower Representative. Upon any such resignation, (i) the Revolving Agent may, by giving not less than ten (10) days’ prior written notice to the Lenders, assume the role of Administrative Agent or (ii) if the Revolving Agent elects not to assume the role of Administrative Agent, then the Required Term Lenders shall have the right to appoint a successor Administrative Agent with the consent of the Borrower Representative (not to be unreasonably withheld or delayed); provided that such consent shall not be required if a Default or Event of Default shall have occurred and be continuing. If no successor Administrative Agent shall have been so appointed by the Required Term Lenders and shall have accepted such appointment within thirty (30) days following the resigning Administrative Agent’s giving notice of resignation, then the resigning Administrative Agent may, on behalf of Lenders, appoint a successor Administrative Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least three hundred million Dollars ($300,000,000). If no successor Administrative Agent has been appointed pursuant to the foregoing, within thirty (30) days following the date such notice of resignation was given by the resigning Administrative Agent, such resignation shall become effective and the Required Term Lenders shall thereafter perform all the duties of such Administrative Agent hereunder until such time, if any, as the Required Term Lenders appoint a successor Administrative Agent as provided above. Upon the acceptance of any appointment as Administrative Agent hereunder by a successor Administrative Agent, such successor Administrative Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Administrative Agent. Upon the earlier of the acceptance of any appointment as such Administrative Agent hereunder by a successor Administrative Agent or the effective date of the resigning Agent’s resignation, the resigning Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Administrative Agent shall continue. After any resigning Administrative Agent’s resignation hereunder, the provisions of this Article XII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as Administrative Agent under this Agreement and the other Loan Documents.

(b) The Collateral Agent may resign at any time by giving not less than thirty (30) days’ prior written notice thereof to the other Agents, the Lenders and the Borrower Representative. Upon any such resignation, the Required Lenders shall have the right to appoint a successor Collateral Agent with the consent of the Borrower Representative (not to be unreasonably withheld or delayed); provided that such consent shall not be required if a Default or Event of Default shall have occurred and be continuing. If no successor Collateral Agent shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the resigning Collateral Agent’s giving notice of resignation, then the resigning Collateral Agent may, on behalf of Lenders, appoint a successor Collateral Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial

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institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least three hundred million Dollars ($300,000,000). If no successor Collateral Agent has been appointed pursuant to the foregoing, within thirty (30) days following the date such notice of resignation was given by the resigning Collateral Agent, such resignation shall become effective and the Required Lenders shall thereafter perform all the duties of such Collateral Agent hereunder until such time, if any, as the Required Lenders appoint a successor Collateral Agent as provided above. Upon the acceptance of any appointment as Collateral Agent hereunder by a successor Collateral Agent, such successor Collateral Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Collateral Agent. Upon the earlier of the acceptance of any appointment as such Collateral Agent hereunder by a successor Collateral Agent or the effective date of the resigning Collateral Agent’s resignation, the resigning Collateral Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Collateral Agent shall continue. After any resigning Collateral Agent’s resignation hereunder, the provisions of this Article XII shall inure to its benefit as to any actions taken or omitted to be taken by it while it was acting as Collateral Agent under this Agreement and the other Loan Documents.

(c) The Revolving Agent may resign at any time by giving not less than thirty (30) days’ prior written notice thereof to the other Agents, the L/C Issuer, the Lenders and the Borrower Representative. Upon any such resignation, the Required Revolving Lenders shall have the right to appoint a successor Revolving Agent with the consent of the Borrower Representative (not to be unreasonably withheld or delayed); provided that such consent shall not be required if a Default or Event of Default shall have occurred and be continuing. If no successor Revolving Agent shall have been so appointed by the Required Revolving Lenders and shall have accepted such appointment within thirty (30) days after the resigning Revolving Agent’s giving notice of resignation, then the resigning Revolving Agent may, on behalf of Lenders, appoint a successor Revolving Agent, which shall be a Lender, if a Lender is willing to accept such appointment, or otherwise shall be a commercial bank or financial institution or a subsidiary of a commercial bank or financial institution if such commercial bank or financial institution is organized under the laws of the United States of America or of any State thereof and has a combined capital and surplus of at least three hundred million Dollars ($300,000,000). If no successor Revolving Agent has been appointed pursuant to the foregoing, within thirty (30) days after the date such notice of resignation was given by the resigning Revolving Agent, such resignation shall become effective and the Required Revolving Lenders shall thereafter perform all the duties of such Revolving Agent hereunder until such time, if any, as the Required Revolving Lenders appoint a successor Revolving Agent as provided above. Upon the acceptance of any appointment as Revolving Agent hereunder by a successor Revolving Agent, such successor Revolving Agent shall succeed to and become vested with all the rights, powers, privileges and duties of the resigning Revolving Agent. Upon the earlier of the acceptance of any appointment as such Revolving Agent hereunder by a successor Revolving Agent or the effective date of the resigning Revolving Agent’s resignation, the resigning Revolving Agent shall be discharged from its duties and obligations under this Agreement and the other Loan Documents, except that any indemnity rights or other rights in favor of such resigning Revolving Agent shall continue. After any resigning Revolving Agent’s resignation hereunder, the provisions of this Article XII shall inure to its benefit as to any actions taken or omitted to be

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taken by it while it was acting as Revolving Agent under this Agreement and the other Loan Documents.

(d) Collateral Sub-Agents. Each Lender by its execution and delivery of this Agreement (or any joinder hereto or any Assignment and Acceptance hereunder) agrees that, in the event it shall hold any monies or other investments on account of the Credit Parties, such monies or other investments shall be held in the name and under the control of the Administrative Agent, Revolving Agent or such Lender, and the Administrative Agent, Revolving Agent or such Lender shall hold such monies or other investments as a collateral sub-agent for the Collateral Agent under this Agreement and the other Loan Documents. The Credit Parties, by their execution and delivery of this Agreement, hereby consent to the foregoing.

Section 12.07. Collateral Matters.

(a) The Participating Lenders hereby irrevocably authorize the Collateral Agent and any permitted sub-agent, at its option and in its sole discretion, to release any Lien on any Collateral (i) upon the termination of the Commitments and payment and satisfaction in full of all Obligations; (ii) constituting property being sold or disposed of if a release is required or desirable in connection therewith and if the Borrower Representative certifies in writing to the Collateral Agent that the sale or disposition is permitted under this Agreement or the other Loan Documents (and the Collateral Agent may rely conclusively on any such certificate, without further inquiry); (iii) constituting Property in which the Credit Parties owned no interest at the time the security interest was granted or at any time thereafter; (iv) constituting property leased to the Credit Parties under a lease that has expired or is terminated in a transaction permitted under this Agreement; or (v) constituting Equipment which, in the aggregate with all other dispositions of Equipment covered by this clause (v), has a fair market value or book value, whichever is less, of three million Dollars ($3,000,000) or less over the life of the loan. Upon request by the Collateral Agent or the Borrower Representative at any time, the Administrative Agent, the Revolving Agent and the Lenders will confirm in writing the Collateral Agent’s authority to release any such Liens on particular types or items of Collateral pursuant to this Section 12.07; provided, however, that (A) the Collateral Agent shall not be required to execute any document necessary to evidence such release on terms that, in the Collateral Agent’s opinion, would expose the Collateral Agent to liability or create any obligation or entail any consequence other than the release of such Lien without recourse, representation, or warranty and (B) such release shall not in any manner discharge, affect, or impair the Obligations or any Liens (other than those expressly being released) upon (or obligations of the Credit Parties in respect of) all interests retained by the Credit Parties, including, the proceeds of any sale, all of which shall continue to constitute part of the Collateral.

(b) The Collateral Agent shall have no obligation whatsoever to any other Participating Lenders to assure that the Collateral exists or is owned by the applicable Borrower or is cared for, protected, or insured or has been encumbered, or that the Lenders’ Liens have been properly or sufficiently or lawfully created, perfected, protected, or enforced or are entitled to any particular priority, or to exercise at all or in any particular manner or under any duty of care, disclosure or fidelity, or to continue exercising, any of the rights, authorities and powers granted or available to the Collateral Agent pursuant to any of the Loan Documents, it being understood and agreed that in respect of the Collateral, or any act, omission or event related

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thereto, subject to the terms and conditions contained herein, the Collateral Agent may act in any manner it may deem appropriate, in its sole discretion given the Collateral Agent’s own interest in the Collateral in its capacity as one of the Lenders and that the Collateral Agent shall have no other duty or liability whatsoever to any other Lender as to any of the foregoing, except as otherwise provided herein.

Section 12.08. Collateral Restrictions on Actions by the Agents and the Participating Lenders; Sharing Payments. Subject to Section 12.03, if, at any time or times any Lender shall receive (a) by payment, foreclosure, set-off or otherwise, any proceeds of Collateral or any payments with respect to the Obligations arising under, or relating to, this Agreement or the other Loan Documents, except for any such proceeds or payments received by such Participating Lender from the Administrative Agent or the Revolving Agent pursuant to the terms of this Agreement or (b) payments from the Administrative Agent or the Revolving Agent in excess of such Participating Lender’s ratable portion of all such distributions by the Administrative Agent or the Revolving Agent, such Participating Lender promptly shall turn the same over to the Administrative Agent or the Revolving Agent, in kind, and with such endorsements as may be required to negotiate the same to the Administrative Agent or the Revolving Agent, or in same-day funds, as applicable, for the account of the Participating Lenders and for apportionment and application to the Obligations in accordance with Section 2.02(d).

Section 12.09. Several Obligations; No Liability. Notwithstanding that certain of the Loan Documents now or hereafter may have been or will be executed only by or in favor of an Agent in its capacity as such, and not by or in favor of the Participating Lenders, any and all obligations on the part of the Administrative Agent or the Revolving Agent, if any, to make any credit available hereunder shall constitute the several (and not joint) obligations of the respective Participating Lenders on a ratable basis, according to their respective Commitments, to make an amount of such credit not to exceed, in principal amount, at any one time outstanding, the amount of their respective Commitments. Nothing contained herein shall confer upon any Lender any interest in, or subject any Lender to any liability for, or in respect of, the business, assets, profits, losses, or liabilities of any other Lenders. Each Lender shall be solely responsible for notifying its Participants of any matters relating to the Loan Documents to the extent any such notice may be required, and no Lender shall have any obligation, duty, or liability to any Participant of any other Lender. Except as provided in Section 12.05, no Agent nor any Lender shall have any liability for the acts of any other Agent or any other Lender. No Lender shall be responsible to the Credit Parties or any other Person for any failure by any other Lender to fulfill its obligations to make credit available hereunder, nor to advance for it or on its behalf in connection with its Commitment, nor to take any other action on its behalf hereunder or in connection with the financing contemplated herein.

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ARTICLE XIII

MISCELLANEOUS

Section 13.01. Notices, Etc. All notices and other communications provided for hereunder shall be in writing and shall be mailed, telecopied, emailed or delivered:

if to the Credit Parties prior to November 1, 2006, the Borrower Representative at the following address:

Silicon Graphics, Inc.

1200 Crittenden Lane

Mountain View, CA 94043-1351

Attn: Chief Financial Officer (with a copy to the Treasurer and General Counsel)

Phone: 650-960-1980

if to the Credit Parties on or after November 1, 2006, the Borrower Representative at the following address:

Silicon Graphics, Inc.

1140 East Arques Avenue

Sunnyvale, CA 94085

Attn: Chief Financial Officer (with a copy to the Treasurer and General Counsel)

Phone: 650-960-1980

with a copy to:

Weil Gotshal & Manges LLP

767 Fifth Avenue

New York, NY 10153

Attn: Warren T. Buhle, Esq.

Phone: 212-310-8898

Fax: 212-310-8007

if to the Administrative Agent, at the following address:

Morgan Stanley Senior Funding, Inc.

1585 Broadway

New York, NY 10036

Attn: Gavin Baiera

Phone: 212-761-1595

Fax: 212-507-2086

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Morgan Stanley Senior Funding, Inc.

1585 Broadway

New York, NY 10036

Attn: Robert A. Louzan

Phone: 212-761-1576

Fax: 212-290-2655

with a copy to:

Sullivan & Cromwell LLP

1888 Century Park East

Los Angeles, CA 90067

Attn: Hydee R. Feldstein

Phone: 310-712-6600

Fax: 310-712-8800

if to the Collateral Agent, at the following address:

General Electric Capital Corporation

c/o GE Corporate Financial Services

100 California Street, 10^th Floor

San Francisco, CA 94111

Attention: Account Manager

Phone: 415-277-7437

Fax: 513-794-8596

with a copy to:

Bingham McCutchen LLP

Three Embarcadero Center

San Francisco, CA 94111

Attn: George A. Hisert

Phone: (415) 393-2577

Fax: (415) 393-2286

or, as to each party, at such other address as shall be designated by such party in a written notice to the other party complying as to delivery with the terms of this Section 13.01. All such notices and other communications shall be effective, (a) if mailed, when received or five (5) Business Days after deposited in the mails as registered or certified (in each case with return receipt requested) with postage pre-paid and properly addressed, whichever occurs first, (b) if telecopied, when transmitted and confirmation received, (c) if emailed, when transmitted and confirmation acknowledged by recipient or (d) if delivered, upon delivery, except that notices to the Administrative Agent or Revolving Agent pursuant to Article I shall not be effective until received by the Administrative Agent or Revolving Agent.

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Section 13.02. Amendments, Etc.

(a) Except as set forth below or as otherwise provided in this Agreement, no amendment or waiver of any provision of this Agreement, any Loan or any other Loan Document, nor consent to any departure by any Credit Party therefrom, shall in any event be effective unless the same shall be in writing and signed by the Borrower Representative and the Required Lenders (or the Administrative Agent at the request of the Required Lenders), and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. Except as set forth below, all such amendments, modifications, terminations or waivers requiring the consent of any Lenders shall require the written consent of Required Lenders.

(b) No amendment, modification, termination or waiver or consent shall, without the consent of the Administrative Agent, the Revolving Agent, the Borrower Representative and each Lender directly affected thereby, do any of the following:

(i) increase the principal amount of any Lender’s Commitment (which action shall be deemed only to affect those Lenders whose Commitments are increased and may be approved by Required Lenders, including those Lenders whose Commitments are increased);

(ii) reduce the principal of or rate of interest on any Loan owed or any fees payable to such affected Lender;

(iii) postpone or extend any date fixed for any payment of principal or, interest due on, any Loan owed to such affected Lender;

(iv) release all or substantially all of the Collateral, or subordinate the right of the Collateral Agent and the Lenders with respect to all or substantially all of the Collateral (except as expressly permitted herein or in the other Loan Documents);

(v) amend, modify or waive Section 2.04(b), Section 2.04(c) or this Section 13.02;

(vi) amend or waive the priorities established under Section 1.10, the definitions of the terms “Required Lenders”, “Required Revolving Lenders,” “Required Term Lenders” or “Pro Rata Share”; insofar as such definitions affect the substance of this Section 13.02.

(c) At any time that Minimum Liquidity is greater than thirty million Dollars ($30,000,000), the failure of the Borrowers to comply with the covenants contained in Section 9.01 or Section 9.02 may be waived by Required Term Lenders (or by Administrative Agent upon the written direction of the Required Term Lenders) without the consent of any of the Revolving Lenders; provided that no waiver shall be permitted to amend the covenants unless such waiver is approved by Required Lenders.

(d) No amendment, modification, termination or waiver affecting the rights or duties of any Agent or the L/C Issuer under this Agreement or any other Loan Document shall be

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effective unless in writing and signed by such Agent or the L/C Issuer, as the case may be, in addition to the Lenders required hereinabove to take such action.

(e) No amendment, modification, termination or waiver affecting the rights or duties of GE Capital in respect of any Swap Related Reimbursement Obligations, under this Agreement or any other Loan Document, including any release of any Guaranty or Collateral requiring a writing signed by all Lenders, shall be effective unless in writing and signed by GE Capital in addition to Lenders required hereinabove to take such action.

Furthermore, no amendment, modification, termination or waiver shall be required for the Collateral Agent to take additional Collateral pursuant to any Loan Document. No notice to or demand on any Credit Party in any case shall entitle such Credit Party or any other Credit Party to any other or further notice or demand in similar or other circumstances. Any amendment, modification, termination, waiver or consent effected in accordance with this Section 13.02 shall be binding upon each holder of the Notes at the time outstanding and each future holder of the Notes.

Section 13.03. Non-Consenting Lenders; Replacement Lenders.

(a) If (i) in connection with any proposed amendment, modification, waiver or termination (a “Proposed Change”) requiring the consent of Required Lenders or all affected Lenders, the consent of the Required Term Lenders and the consent of the Administrative Agent has been obtained, but the consent of other Lenders or Agents whose consent is required has not been obtained (any Lender whose consent is obtained as described in this Section 13.03 being referred to as a “Consenting Lender,” and any Lender whose consent is not obtained as described in this Section 13.03 being referred to as a “Non-Consenting Lender”) or (ii) the Revolving Agent or Required Revolving Lenders take any action (other than the making of Advances or issuance of Letters of Credit in accordance with the terms of this Agreement) that has the effect of reducing the Available Commitments (including, without limitation, any action to establish or increase Reserves), then the Administrative Agent (or a Person reasonably acceptable to the Administrative Agent) shall have the right (but shall have no obligation), with the Administrative Agent’s written consent and in the Administrative Agent’s sole discretion, to purchase for cash from any such Non-Consenting Lenders, and all such Non-Consenting Lenders agree that they shall, upon Administrative Agent’s request, sell and assign to Administrative Agent (or to such Person), all right, title and interest of such Non-Consenting Lender under the Loan Documents for an amount equal to the principal balance of all Loans held by such Non-Consenting Lender and all accrued interest and fees (but not including any Prepayment Premium) with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment and Acceptance.

(b) Defaulting Lenders. The failure of any Defaulting Lender to make any Advance, Loan or any payment required to be made by such Lender hereunder shall not relieve any other Lender (each such other Lender, an “Other Lender”) of any of its obligations to make an Advance, Loan or payment or otherwise, but none of any Other Lender, the Administrative Agent or the Revolving Agent shall be responsible to the Credit Parties or to any other Person for the failure of any Defaulting Lender to meet its obligations hereunder. Notwithstanding anything set forth herein to the contrary, a Defaulting Lender shall not have any voting or consent rights

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under or with respect to any Loan Document or constitute a “Lender” (or be included in the calculation of “Required Lenders,” “Required Revolving Lenders” or “Required Term Lenders,” as applicable) for any voting or consent rights under or with respect to any Loan Document. At the Borrower Representative’s request with the Administrative Agent’s consent and in the Administrative Agent’s sole discretion, the Administrative Agent (or a Person reasonably acceptable to the Administrative Agent) shall have the right (but shall have no obligation) to purchase from any Defaulting Lender, and each Defaulting Lender agrees that it shall, at Administrative Agent’s request, sell and assign to Administrative Agent (or to such Person), all right, title and interest of such Defaulting Lender under the Loan Documents for an amount equal to the principal balance of all Loans held by such Defaulting Lender and all accrued interest and fees with respect thereto through the date of sale, such purchase and sale to be consummated pursuant to an executed Assignment and Acceptance.

Section 13.04. No Waiver; Remedies, Etc. No failure on the part of the Lenders or any Agent to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Lenders and the Agents provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Lenders and the Agents under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Lenders and the Agents to exercise any of their rights under any other Loan Document against such party or against any other Person.

Section 13.05. Expenses; Taxes; Attorneys’ Fees. The Borrowers will pay promptly following demand therefor, all reasonable fees, costs and expenses incurred by or on behalf of the Administrative Agent, the Collateral Agent, the Revolving Agent or the Participating Lenders, including, without limitation, reasonable out-of-pocket fees, costs and expenses of counsel for the Administrative Agent or the Revolving Agent, accounting, due diligence, investigations, environmental assessments, miscellaneous disbursements, examination, travel, lodging and meals arising from or relating to: (a) subject to the terms of the Fee Letter, the negotiation, preparation, execution, delivery, performance and administration of this Agreement and the other Loan Documents, (b) any requested amendments (other than amendments requested solely by the Lenders), waivers or consents to this Agreement or the other Loan Documents whether or not such documents become effective or are given, (c) the preservation and protection of any of the Lenders’ rights under this Agreement or the other Loan Documents, (d) the filing of any petition, complaint, answer, motion or other pleading by the Lenders, or the taking of any action in respect of the Collateral or other security, in connection with this Agreement or any other Loan Document, (e) the protection, collection, lease, sale, taking possession of or liquidation of, any Collateral or other security in connection with this Agreement or any other Loan Document, (f) any attempt to enforce any Lien or security interest in any Collateral or other security in connection with this Agreement or any other Loan Document, (g) any attempt to collect from any Borrower or any other Credit Party, (h) during the continuance of an Event of Default, the receipt by any Lender of any advice from its professionals (including, without limitation, the reasonable fees of its outside attorneys and consultants) with respect to any of the foregoing (to the extent that such fees, costs and expenses are not otherwise recoverable pursuant to any other provision of this Agreement or any other

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Loan Document), (i) all liabilities and costs arising from or in connection with the past, present or future operations of a Credit Party involving any damage to real or personal Property or natural resources or harm or injury alleged to have resulted from any Release of Hazardous Materials on, upon or into such Property, (j) any Environmental Liabilities and Costs incurred in connection with facility of any Credit Party including any Remedial Action for any Hazardous Materials present or arising out of the operations of any facility of a Credit Party or (k) any liabilities and costs incurred in connection with any Environmental Lien. Without limitation of the foregoing or any other provision of any Loan Document: (i) the Borrowers agree to pay all stamp, document, transfer, recording or filing taxes or fees and similar impositions now or hereafter determined by the Lenders to be payable in connection with this Agreement or any other Loan Document, and the Borrowers agree to hold the Lenders harmless from and against any and all present or future claims, liabilities or losses with respect to or resulting from any omission to pay or delay in paying any such taxes, fees or impositions, (ii) the Borrowers agree to pay all broker fees with respect to any broker retained by the Borrowers or any of their Subsidiaries that may become due in connection with the transactions contemplated by this Agreement and (iii) during the continuance of a Default or an Event of Default, if a Credit Party (A) fails to make any payments or deposits with respect to any taxes of any kind or nature to the extent that such payments or deposits are due and payable prior to delinquency, (B) fails to make any payments or deposits with respect to any other governmental assessment prior to the time that any Lien may inure against any property of any Credit Party, or (C) fails to make any payments or deposits with respect to any insurance premiums then due and payable or otherwise comply with Section 7.15, then the Administrative Agent, in its sole discretion and without prior notice to the Borrowers, may do any or all of the following, without duplication: (1) make payment of the same or any part thereof, (2) in the case of any failure described in clause (iii)(C) above, obtain and maintain insurance policies of the type described in Section 5.01(r) and take the actions with respect to such policies which are authorized pursuant to Article XII. Any payment described above in clause (2) shall not constitute an agreement by the Lenders to make similar payments in the future or a waiver by the Lenders of any Event of Default under this Agreement. The Administrative Agent and Revolving Agent need not inquire as to, or contest the validity of, any such obligation. The foregoing to the contrary notwithstanding, the agreements set forth above in this Section 13.05 are subject to the limitations set forth in Section 8.07, solely to the extent applicable. The Administrative Agent and Revolving Agent agree to provide to the Borrowers an invoice with respect to each cost or expense incurred in connection with the Loan Documents by any Lender promptly upon the Administrative Agent’s or Revolving Agent’s receipt thereof, and agree, upon the reasonable request of the Borrowers, to provide reasonable backup information with respect to such costs or expenses (subject to the right of the Administrative Agent and Revolving Agent to take whatever steps are reasonably necessary to protect any confidential or privileged information which may be contained therein).

Section 13.06. Right of Set-Off. If an Event of Default shall have occurred and be continuing, each Lender and each of their respective Affiliates, is hereby authorized at any time and from time to time, to the fullest extent permitted by Applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender or any such Affiliate to or for the credit or the account of the Borrowers or any other Credit Party against any and all of the obligations of the Borrowers or such Credit Party now or hereafter existing under this Agreement or any other Loan Document to such

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Lender, irrespective of whether or not such Lender shall have made any demand under this Agreement or any other Loan Document and although such obligations of the Borrowers or such Credit Party may be contingent or unmatured or are owed to a branch or office of such Lender different from the branch or office holding such deposit or obligated on such indebtedness. The rights of each Lender and their respective Affiliates under this Section 13.06 are in addition to other rights and remedies (including other rights of set-off) that such Lender or their respective Affiliates may have. Each Lender agrees to notify the Borrowers and the Administrative Agent and Revolving Agent promptly after any such setoff and application, provided that the failure to give such notice shall not affect the validity of such set-off and application.

Section 13.07. Severability. Any provision of this Agreement, which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 13.08. Complete Agreement; Sale of Interest. The Loan Documents constitute the complete agreement between the parties with respect to the subject matter hereof and thereof, supersede any previous agreement or understanding between them relating hereto or thereto and may not be modified, altered or amended except by an agreement in writing signed by the Credit Parties and the Lenders in accordance with Section 13.02. The Credit Parties may not sell, assign or transfer any of the Loan Documents or any portion thereof, including their rights, title, interests, remedies, powers and duties hereunder or thereunder. The Credit Parties hereby consent to any Lender’s sale of participations, assignment, transfer or other disposition, at any time or times, of any of the Loan Documents or of any portion thereof or interest therein, including such Lender’s rights, title, interests, remedies, powers or duties thereunder, subject, in the case of a participation, assignment, transfer or other disposition, to the provisions of Section 13.09.

Section 13.09. Assignment; Register.

(a) The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted hereby, except that no Credit Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of each Lender (and any attempted assignment or transfer by any Credit Party without such consent shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby and, to the extent expressly contemplated hereby, the Affiliates of the Administrative Agent) any legal or equitable right, remedy or claim under or by reason of this Agreement.

(b) Any Lender may assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Loans at the time owing to it); provided that (i) except in the case of an assignment of the entire remaining outstanding amount of the Loans at the time owing to it (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to the Administrative Agent) or in the case of an assignment to an entity described in clause (d) of the definition of Eligible Assignee, any such assignment shall not be less than two million Dollars ($2,000,000),

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unless each of the Administrative Agent and Revolving Agent otherwise consents (such consent not to be unreasonably withheld or delayed), and (c) the parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Acceptance. Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (d) of this Section 13.09, from and after the effective date specified in each Assignment and Acceptance, the Eligible Assignee thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment and Acceptance, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Acceptance, be released from its obligations under this Agreement, and, in the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and obligations under this Agreement, such Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of Section 2.05, Section 3.03, Section 3.04, Section 13.17, and Section 13.18 to the extent any claim thereunder relates to an event arising out of such Lender’s status or activity as Lender prior to such assignment.

(c) Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 13.09 shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (e) of this Section.

(d) The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Administrative Agent’s Office a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Term Lenders, and the Term Loan Commitment of, and principal amount of the Term Loan owing to, each Lender pursuant to the terms hereof from time to time (the “Term Register”). The Revolving Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at the Revolving Agent’s Office a copy of each Assignment and Acceptance delivered to it and a register for the recordation of the names and addresses of the Revolving Lenders, and the Revolving Commitment of, and principal amount of the Revolving Advances owing to, each Revolving Lender pursuant to the terms hereof from time to time (the “Revolving Register”). The entries in either Register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. Each Register shall be available for inspection by the Borrower Representative and any Lender, at any reasonable time and from time to time upon reasonable prior notice. The Borrower Representative may request in writing a copy of either Register from time to time and the Administrative Agent will promptly deliver a copy of such Register to the Borrower Representative promptly thereafter.

(e) Any Lender may, without the consent of, or notice to, the Borrowers or the Administrative Agent, sell participations to one or more banks or other entities (a “Participant”) in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all or a portion of the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Agents and the Participating Lenders shall continue to deal solely and directly with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any agreement or instrument

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pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement, provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree to any amendment, modification or waiver described in Section 13.02(b)(ii) or Section 13.02(b)(iii) that affects such Participant. Subject to paragraph (f) of this Section the Borrower agrees that each Participant shall be entitled to the benefits of Section 2.05, Section 3.03 and Section 3.04 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 13.05 as though it were a Lender, provided such Participant agrees to be subject to Section 12.05 as though it were a Lender.

(f) Any Lender selling a participation to a Participant shall, as agent for the Credit Parties, keep a register, in substantially the same form as such Lender’s respective Register, of each such Participant, specifying such Participant’s entitlement to payments of principal and interest with respect to such participation.

(g) A Participant shall not be entitled to receive any greater payment under Section 2.05 or Article III than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrower’s prior written consent. A Participant that would be a Non-U.S. Lender if it were a Lender shall not be entitled to the benefits of Section 2.05 unless the Borrowers are notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 2.05 as though it were a Lender.

(h) Any Lender may, without the consent of the Borrowers, the Administrative Agent or the Revolving Agent, at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including without limitation (i) any pledge or assignment to secure obligations to a Federal Reserve Bank and (ii) in the case of any Lender that is a fund, any pledge or assignment of all or any portion of such Lender’s rights under this Agreement to any holders of obligations owed, or securities issued, by such Lender as security for such obligations or securities, or to any trustee for, or any other representative of, such holders, and this Section shall not apply to any such pledge or assignment of a security interest; provided that no such pledge or assignment of a security interest shall release a Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

Section 13.10. Counterparts. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement or any of the other Loan Documents by telecopy shall have the same force and effect as the delivery of an original executed counterpart of this Agreement or any of such other Loan Documents. Any party delivering an executed counterpart of any such agreement by telecopy shall also deliver an original executed counterpart, but the failure to do so shall not affect the validity, enforceability or binding effect of such agreement.

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Section 13.11. GOVERNING LAW. THIS AGREEMENT, THE NOTES AND, EXCEPT TO THE EXTENT OTHERWISE PROVIDED THEREIN, THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

Section 13.12. CONSENT TO JURISDICTION, SERVICE OF PROCESS AND VENUE. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE BOROUGH OF MANHATTAN, COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH CREDIT PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH CREDIT PARTY FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED COURTS AND IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO SUCH CREDIT PARTY AT THE ADDRESS FOR NOTICES SET FORTH IN SECTION 13.01, SUCH SERVICE TO BECOME EFFECTIVE FIVE (5) DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE LENDERS OR THE AGENTS TO SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY CREDIT PARTY IN ANY OTHER JURISDICTION. EACH CREDIT PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

Section 13.13. WAIVER OF JURY TRIAL, ETC. THE CREDIT PARTIES, THE LENDERS AND THE AGENTS HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES OR OTHER LOAN DOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREE THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH CREDIT PARTY CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF THE LENDERS OR THE AGENTS HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT THE LENDERS OR THE AGENTS WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH CREDIT PARTY HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS AND THE AGENTS ENTERING INTO THIS AGREEMENT.

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Section 13.14. Consent. Except as otherwise expressly set forth herein or in any other Loan Document to the contrary, if the consent, approval, satisfaction, determination, judgment, acceptance or similar action (an “Action”) of the Lenders or the Agents, shall be permitted or required pursuant to any provision hereof or any provision of any other agreement to which the Borrowers or any other Guarantors are parties and to which the Lenders or the Agents have succeeded thereto, such Action shall be required to be in writing and may be withheld or denied by the Lenders or the Agents with or without any reason in their reasonable discretion.

Section 13.15. Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against the Lenders, the Agents or the Borrowers, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

Section 13.16. Reinstatement; Certain Payments. If any claim is ever made upon the Secured Creditors or the Agents for repayment or recovery of any amount or amounts received by the Secured Creditors or the Agents in payment or received on account of any of the Obligations, the Secured Creditors or the Agents shall give prompt notice of such claim to the Borrowers, and if the Secured Creditors or the Agents repay all or part of such amount by reason of (a) any judgment, decree or order of any court of competent jurisdiction or administrative body having jurisdiction over the Secured Creditors or the Agents or any of their respective property, or (b) compliance by the Secured Creditors or the Agents with any requirement of a Governmental Authority having jurisdiction over the Secured Creditors or the Agents, then and in such event the Borrowers agree that (i) any such judgment, decree or order shall be binding upon it notwithstanding the cancellation of any instrument evidencing the Obligations or the other Loan Documents or the termination of this Agreement or the other Loan Documents and (ii) it shall be and remain liable to the Secured Creditors or the Agents hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by the Secured Creditors or the Agents.

Section 13.17. Indemnification. In addition to the Borrowers’ other Obligations under this Agreement, the Borrowers agree to defend, protect, indemnify and hold harmless the Lenders and each of their respective Affiliates and their officers, directors, trustees, employees, agents and advisors, the Administrative Agent, the Revolving Agent, the Collateral Agent, the Agent-Related Persons and the Lender-Related Persons (collectively called the “Indemnitees”) from and against any and all claims, losses, demands, settlements, damages, liabilities, obligations, penalties, fines, fees, reasonable costs and expenses (including, without limitation, reasonable attorneys’ fees, costs and expenses, but excluding income, franchise and similar taxes of an Indemnitee) incurred by such Indemnitees (but not taxes, which shall be governed by Section 2.05), whether prior to or from and after the Closing Date, as a result of or arising from or relating to or in connection with any of the following: (a) the Administrative Agent, the Revolving Agent, the Collateral Agent or the Lenders furnishing of funds to the Borrowers under this Agreement, including, without limitation, the management of any such Loans, (b) any matter relating to the financing transactions contemplated by this Agreement or the other Loan Documents or by any document executed in connection with the transactions

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contemplated by this Agreement or the other Loan Documents, (c) any claim, litigation, investigation or administrative or judicial proceeding in connection with any transaction contemplated in, or consummated under, the Loan Documents or (d) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, including without limitation, claims, litigations, investigations or other proceedings arising out of (i) the presence, disposal, Release of any Hazardous Materials on, in, at, to, from or under any property at any time owned or occupied by the Borrowers or any of their Subsidiaries (or any of their respective predecessors in interest or title) or at any facility which received Hazardous Materials generated by the Borrowers or any of their Subsidiaries or any of their respective predecessors in interest in connection with the receipt of such Hazardous Materials, (ii) any alleged personal injury (including wrongful death) or property damage (real or personal) arising out of or related to any Hazardous Materials generated by the Borrower or any of its Subsidiaries, (iii) any investigation, lawsuit brought or threatened, settlement reached or government order relating to such Hazardous Materials, (iv) any alleged violation of any Environmental Law by the Borrower or any of its Subsidiaries or any of their respective predecessors in interest, and/or (v) any Environmental Action (collectively, the “Indemnified Matters”); provided, however, that the Borrower shall not have any obligation to any Indemnitee under this Section 13.17 if such Indemnified Matter results solely from the gross negligence or willful misconduct of such Indemnitee or as a result of the presence or release of Hazardous Materials that are first brought on to a property after such property is transferred to any Indemnitee or its successors or assigns by foreclosure, deed-in-lieu of foreclosure or similar transfer; provided, however, that no Credit Party shall be required to reimburse the legal fees and expenses of more than one outside counsel (in addition to up to one local counsel in each applicable local jurisdiction) for all Indemnitees under this Section 13.17 unless on advice of outside counsel, representation of all such Indemnitees would be inappropriate due to the existence of an actual or potential conflict of interest. Such indemnification for all of the foregoing losses, damages, fees, costs and expenses of the Indemnitees shall be due and payable promptly after demand therefor. To the extent that the undertaking to indemnify, pay and hold harmless set forth in this Section 13.17 may be unenforceable because it is violative of any law or public policy, the Borrowers shall contribute the maximum portion which it is permitted to pay and satisfy under Applicable Law, to the payment and satisfaction of all Indemnified Matters incurred by the Indemnitees. This Indemnity shall survive the repayment of the Obligations and the discharge of the Liens granted under the Loan Documents.

Section 13.18. Interest. It is the intention of the parties hereto that each Agent and each Lender shall conform strictly to usury laws applicable to it. Accordingly, if the transactions contemplated hereby or by any other Loan Document would be usurious as to any Agent or any Lender under laws applicable to it (including the laws of the United States of America and the State of New York or any other jurisdiction whose laws may be mandatorily applicable to such Agent or such Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in this Agreement or any other Loan Document or any agreement entered into in connection with or as security for the Obligations, it is agreed as follows: (a) the aggregate of all consideration which constitutes interest under law applicable to any Agent or any Lender that is contracted for, taken, reserved, charged or received by such Agent or such Lender under this Agreement or any other Loan Document or agreements or otherwise in connection with the Obligations shall under no circumstances exceed the maximum amount allowed by such applicable law, any excess shall be

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canceled automatically and if theretofore paid shall be credited by such Agent or such Lender on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Agent or such Lender, as applicable, to the Borrowers); and (b) in the event that the maturity of the Obligations is accelerated by reason of any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to any Agent or any Lender may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by such Agent or such Lender, as applicable, as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by such Agent or such Lender, as applicable, on the principal amount of the Obligations (or, to the extent that the principal amount of the Obligations shall have been or would thereby be paid in full, refunded by such Agent or such Lender to the Borrowers). All sums paid or agreed to be paid to any Agent or any Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to such Agent or such Lender, be amortized, prorated, allocated and spread throughout the full term of the Loans until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law. If at any time and from time to time, (i) the amount of interest payable to any Agent or any Lender on any date shall be computed at the Highest Lawful Rate applicable to such Agent or such Lender pursuant to this Section 13.18 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to such Agent or such Lender would be less than the amount of interest payable to such Agent or such Lender computed at the Highest Lawful Rate applicable to such Agent or such Lender, then the amount of interest payable to such Agent or such Lender in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to such Agent or such Lender until the total amount of interest payable to such Agent or such Lender shall equal the total amount of interest which would have been payable to such Agent or such Lender if the total amount of interest had been computed without giving effect to this Section 13.18.

For purposes of this Section 13.18, the term “Applicable Law” shall mean that law in effect from time to time and applicable to the loan transaction between the Borrower, on the one hand, and the Agents and the Lenders, on the other, that lawfully permits the charging and collection of the highest permissible, lawful non-usurious rate of interest on such loan transaction and this Agreement, including laws of the State of New York and, to the extent controlling, laws of the United States of America.

The right to accelerate the maturity of the Obligations does not include the right to accelerate any interest that has not accrued as of the date of acceleration.

Section 13.19. Records. The unpaid principal of, and interest on, the Obligations, the interest rate or rates applicable to such unpaid principal and interest, the duration of such applicability, the Commitment, and the accrued and unpaid fees payable pursuant to Section 3.06, including without limitation fees set forth in the Fee Letter, shall at all times be ascertained from the records of the Lender and Agents, which shall be conclusive and binding absent manifest or demonstrable error.

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Section 13.20. Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Credit Parties, the Lenders and the Agents, and their respective successors and assigns, subject to Section 13.09.

Section 13.21. Confidentiality. The Agents and the Participating Lenders each individually (and not jointly or jointly and severally) agree that material, non-public information regarding the Borrowers and their Subsidiaries, their operations, assets, and existing and contemplated business plans shall be treated by the Agents and the Participating Lenders in a confidential manner, and shall not be disclosed by any Agent or any Participating Lender to Persons who are not parties to this Agreement for a period of two (2) years, except (a) to attorneys for and other advisors, accountants, auditors, employees and consultants to any Participating Lender or any Agent, (b) to Subsidiaries and Affiliates of any Participating Lender or any Agent; provided, however, that any such Subsidiary or Affiliate shall have agreed to receive such information hereunder subject to the terms of this Section 13.21, (c) as may be required by statute, decision, or judicial or administrative order, rule, or regulation, (d) as may be agreed to in advance by the Borrower Representative or its Subsidiaries or as requested or required by any Governmental Authority pursuant to any subpoena or other legal process, (e) as to any such information that is or becomes generally available to the public (other than as a result of prohibited disclosure by any Agent or any Participating Lender), (f) in connection with any assignment, prospective assignment, sale, prospective sale, participation or prospective participations, or pledge or prospective pledge of any Participating Lender’s interest under this Agreement; provided, however, that any such assignee, prospective assignee, purchaser, prospective purchaser, participant, prospective participant, pledgee, or prospective pledgee shall have agreed in writing to receive such information hereunder subject to the terms of this Section 13.21, and (g) in connection with any litigation or other adversary proceeding involving parties hereto which such litigation or adversary proceeding involves claims related to the rights or duties of such parties under this Agreement or the other Loan Documents; provided, however, that, unless prohibited by applicable law, statute, regulation, or court order, such Participating Lender or such Agent shall: (x) where legally permissible, notify the Borrower Representative of any request by any court, governmental or administrative agency, or pursuant to any subpoena or other legal process for disclosure of any such non-public material information concurrent with, or, if practicable, prior to the disclosure thereof, and (y) notify all other Persons described in clause (a) above that they are bound by, the provisions of this Section 13.21; provided, however, with respect to such material, non-public information identified by the Credit Parties in writing as restricted material (“Restricted Material”) that the Credit Parties are required to keep confidential for a longer period of time (such additional period, a “Restricted Period”), the Agents and the Participating Lenders agree to treat such Restricted Material confidentially in accordance with this Section 13.21 for such applicable Restricted Period to the extent the Agents and the Participating Lenders receive written notice of such Restricted Period.

Section 13.22. Lender Advertising. The Agents and the Lenders shall be entitled to advertise the closing of the transactions contemplated by this Agreement in such trade publications, business journals, newspapers of general circulation and otherwise, as the Agents and the Lenders shall deem appropriate, including, without limitation, the publication of a tombstone announcing the closing of this transaction; provided that the Agents and the Lenders shall obtain written consent of the Borrowers prior to disseminating any advertisement described in this Section 13.22 which consent shall not be reasonably withheld.

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Section 13.23. Common Enterprise. The successful operation and condition of each of the Credit Parties is dependent on the continued successful performance of the functions of the group of the Credit Parties as a whole and the successful operation of each of the Credit Parties is dependent on the successful performance and operation of each other Credit Party. Each Credit Party expects to derive benefit (and its board of directors or other governing body has determined that it may reasonably be expected to derive benefit), directly and indirectly, from (a) successful operations of each of the other Credit Parties and (b) the credit extended by the Lenders to the Borrowers hereunder, both in their separate capacities and as members of the group of companies. Each Credit Party has determined that execution, delivery and performance of this Agreement and any other Loan Documents to be executed by such Credit Party is within its purpose, will be of direct and indirect benefit to such Credit Party, and is in its best interest.

Section 13.24. USA PATRIOT ACT. Each Lender that is subject to the requirements of the Patriot Act hereby notifies the Borrowers that pursuant to the requirements of the Patriot Act, it is required to obtain, verify and record information that identifies each Credit Party, which information includes the name and address of the Borrower and other information that will allow such Lender to identify the Borrower in accordance with the Act.

ARTICLE XIV

DEFINITIONS; CERTAIN TERMS

Section 14.01. Definitions. terms:

“2006 Financial Statements” means the audited consolidated balance sheet of the Parent for the Fiscal Year ended June 28, 2006 and the related consolidated statement of operations, shareholders’ equity and cash flows for the Fiscal Year then ended.

“Account” means an “account” as that term is defined in the UCC.

“Account Debtor” means any Person that is obligated on an Account, chattel paper or general intangible.

“Action” has the meaning ascribed to such term in Section 13.14.

“Additional Security Documents” means any Security Documents entered into pursuant to Section 7.08 hereof.

“Administrative Agent” has the meaning ascribed to such term in the introductory paragraph hereto.

“Administrative Agent Account” means such Deposit Account as the Administrative Agent may from time to time specify in writing to the Borrower and the Lenders.

“Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.

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“Agent-Related Persons” means each of the Agents and its Affiliates, and the officers, directors, employees, counsel, consultants, agents and attorneys-in-fact of such Agent and its Affiliates.

“Agents” means, collectively, the Administrative Agent, the Revolving Agent and the Collateral Agent.

“Aggregate Exposure” means the sum of (a) the outstanding Revolving Advances under this Agreement and (b) the Letter of Credit Exposure.

“Agreement” means this Senior Secured Credit Agreement, together with all Exhibits and Schedules hereto, as such agreement may be amended, supplemented or otherwise modified from time to time.

“ALTA” means American Land Title Association.

“Alternate Base Rate” at any time means the rate of interest per annum equal to the higher of (a) the rate of interest quoted by The Wall Street Journal as the “base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks” and (b) the rate that is 0.50% in excess of the Federal Funds Rate. Any change in the Alternate Base Rate due to a change in The Wall Street Journal rate referred to in clause (a) of this definition or the Federal Funds Rate shall be effective on the opening of business on the date of such change.

“Alternate Base Rate Loans” means Loans that bear interest at an interest rate based on the Alternate Base Rate.

“Applicable Law” means, in respect of any Person, all provisions of constitutions, laws, statutes, rules, regulations, treaties, directives, guidelines and orders of Governmental Authorities applicable to such Person, including zoning ordinances, all Environmental Laws, and all orders, decisions, judgments and decrees of all courts and arbitrators in proceedings or actions to which the Person in question is a party or by which it is bound.

“Applicable Margin” means a percentage per annum determined as of the end of the last Fiscal Quarter, as set forth below:

	Alternate Base Rate Loan		LIBOR Rate Loan
Revolving Advances	1.75	%	3.00	%
Term Loans	5.75	%	7.00	%

“Approved Fund” means any fund that is administered or managed by (a) a Lender, (b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a Lender.

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“Assignment and Acceptance” means an Assignment and Acceptance substantially in the form of Exhibit H attached hereto and made a part hereof (with blanks appropriately completed) delivered to the Administrative Agent in connection with an assignment of a Lender’s interest under this Agreement in accordance with Section 13.09(b).

“Authorized Officer” means, with respect to any Credit Party, the chief executive officer, chief administrative officer, chief financial officer, vice president of financial compliance and reporting, and treasurer, controller or chief accounting officer or other officer with similar responsibility designated by the Board of Directors or similar governing body of the Credit Party.

“Available Commitments” means, as of any date, the Total Revolving Commitment minus the Aggregate Exposure minus the Reserve Amount.

“Availability Period” means the period from the Closing Date to the Maturity Date.

“Bankruptcy Code” means Title 11 of the United States Code (11 U.S.C. §§ 101 et seq.), as amended from time to time, and any successor statute.

“Bankruptcy Petition” has the meaning ascribed to such term in the Recitals.

“Benefit Plan” means an employee pension benefit plan, excluding any Multiemployer Plan, which is subject to Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code.

“Borrower Representative” has the meaning ascribed to such term in Section 1.08(b).

“Borrower” has the meaning ascribed to such term in the introductory paragraph hereto.

“Business Day” means any day that is not a Saturday, a Sunday or a day on which commercial banks are required or permitted to be closed in the State of New York; provided that when used in connection with a rate determination, borrowing or payment in respect of a LIBOR Rate Loan, the term “Business Day” shall also exclude any day on which banks in London, England are not open for dealings in U.S. Dollar deposits in the London interbank market.

“Capital Expenditures” means, with respect to any Person for any period, the sum of the aggregate of all expenditures by such Person and its Subsidiaries arising during such period that, in accordance with GAAP, are or should be included in the “property, plant and equipment” account on its consolidated balance sheet, including all applicable Capitalized Lease Obligations with respect to “property, plant and equipment”, paid or payable during such period, excluding in each case, (a) any such expenditures made for the repair, replacement or restoration of assets to the extent paid or reimbursed by any insurance policy or condemnation award to the extent such expenditures are permitted under the Loan Documents, (b) any leasehold improvement expenditures to the extent paid or reimbursed by the applicable lessor, sublessor or sublessee, (c) any acquisition of all or substantially all of the assets of, all of the Capital Stock of, or a business line, unit, office or division of any Person and (d) purchases of spare parts Inventory.

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“Capital Stock” means (a) with respect to any Person that is a corporation, any and all shares, options, warrants, interests, participations or other equivalents (however designated and whether or not voting) of or in a Person, including common stock, preferred stock or any other “equity security” and (b) with respect to any Person that is not a corporation, any and all partnership, limited liability company interests or other equity interests of such Person excluding, in the case of clauses (a) and (b) above, any debt security that is exchangeable for or convertible into such capital stock.

“Capitalized Lease” means, with respect to any Person, any lease of real or personal property by such Person as lessee which is required under GAAP to be capitalized on the balance sheet of such Person.

“Capitalized Lease Obligations” means, with respect to any Person, obligations of such Person and its Subsidiaries as lessee under Capitalized Leases as determined in accordance with GAAP.

“Cash Collateral Account” means a deposit account in the name of the Collateral Agent at a bank or financial institution selected by the Collateral Agent and approved by the Borrowers.

“Cash Equivalents” means (a) marketable direct obligations issued or unconditionally guaranteed by the United States Government or issued by an agency thereof and backed by the full faith and credit of the United States, in each case maturing within one (1) year after the date of acquisition thereof; (b) marketable direct obligations issued by any state of the United States of America or any political subdivision of any such state or any public instrumentality thereof maturing within one (1) year after the date of acquisition thereof and, at the time of acquisition, having the highest ratings obtainable from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then from such other nationally recognized rating services reasonably acceptable to the Administrative Agent) and not listed in Credit Watch published by S&P; (c) commercial paper, other than commercial paper issued by the Borrower or any of its Subsidiaries, maturing no more than two hundred seventy (270) days after the date of acquisition thereof and, at the time of acquisition, having a rating of at least A-1 or P-1, respectively, from either S&P or Moody’s (or, if at any time neither S&P nor Moody’s shall be rating such obligations, then the comparable rating from such other nationally recognized rating services reasonably acceptable to the Administrative Agent); (d) certificates of deposit or time deposits or bankers’ acceptances maturing within one (1) year after the date of acquisition thereof either (i) issued by any bank which has a rating of A or A2, or better, from S&P or Moody’s, or (ii) constituting certificates of deposit less than or equal to one hundred thousand Dollars ($100,000) in the aggregate issued by any other bank insured by the Federal Deposit Insurance Corporation.

“Cash Management Account” has the meaning ascribed to such term in Section 7.19(b).

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“Cash Management Agreement” has the meaning ascribed to such term in Section 4.01(w)(ii).

“Cash Management Bank” has the meaning ascribed to such term in Section 4.01(w)(i).

“Casualty” means any casualty, loss, damage, destruction or other similar loss with respect to real or personal property or improvements.

“Change in Law” means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation or application thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or directive (whether or not having the force of law) by any Governmental Authority.

“Change of Control” means (a) that any “person” or “group” (within the meaning of Sections 13(d) and 14(d) of the Exchange Act) other than the Existing Owners becomes the beneficial owner (as that term is defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of 35%, or more, of the Capital Stock of Parent having the right to vote for the election of members of the Board of Directors or (b) a majority of the members of the Board of Directors do not constitute Continuing Directors.

“Chapter 11 Cases” means the cases commenced under the Bankruptcy Code by the Borrowers on the Petition Date.

“Closing Date” means the Business Day, on or before October 31, 2006, on which all of the conditions precedent set forth in Section 4.01 have been satisfied (or waived in accordance with the terms of this Agreement).

“Closing Date Mortgaged Property” has the meaning ascribed to such term in Section 4.01(v)(i).

“Code” means the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder, in each case as in effect from time to time. References to sections of the Code shall be construed also to refer to any successor sections.

“Collateral” has the meaning ascribed to such term in the Security Agreement.

“Collateral Access Agreement” means a landlord waiver, mortgagee waiver, bailee letter, or acknowledgement agreement of any warehouseman, processor, lessor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the Books, Equipment, or Inventory of any Grantor, in each case, in form and substance reasonably satisfactory to the Collateral Agent.

“Collateral Agent” has the meaning ascribed to such term in the introductory paragraph hereto.

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“Collections” means all cash, checks, notes, instruments, and other items of payment (including insurance and condemnation proceeds, cash proceeds of sales and other voluntary or involuntary dispositions of property, rental proceeds, and tax refunds).

“Commitments” means the Revolving Commitments and the Term Loan Commitments.

“Commitment Reduction Fee” has the meaning ascribed to such term in Section 2.03(b).

“Compliance Certificate” has the meaning ascribed to such term in Section 6.01(d)(ii).

“Condemnation” means any taking by a Governmental Authority of property or assets, or any part thereof or interest therein, for public or quasi-public use under the power of eminent domain, by reason of any public improvement or condemnation or in any other manner.

“Consenting Lender” has the meaning ascribed to such term in Section 13.03(a)(i).

“Consolidated EBITDA” means, with respect to any Person and its consolidated Subsidiaries for any quarterly period, the GAAP operating income of such Person for such period plus (a) depreciation expense and (b) amortization expense; provided, however, Consolidated EBITDA for the quarterly periods ending on or about December 29, 2006, March 30, 2007, June 29, 2007 and September 28, 2007 shall be deemed to be Consolidated EBITDAR for such period; and provided further that in computing GAAP Operating Income for periods ending on or prior to June 26, 2009, changes relating to revenue recognition under fresh start accounting rules and changes under SOP 97-2 accounting rules shall be excluded.

“Consolidated EBITDAR” means, with respect to any Person and its consolidated Subsidiaries for any period, the Consolidated EBITDA of such Person and its consolidated Subsidiaries for such period plus the Restructuring Charges for such period in an amount not to exceed ten million Dollars ($10,000,000) in the aggregate.

“Consolidated Total Debt” means, as of any particular time and after eliminating inter-company items, all Debt for Borrowed Money of the Parent and its Subsidiaries, as the same would be set forth in a consolidated balance sheet of the Parent and its Subsidiaries for such period.

“Contingent Obligation” means, with respect to any Person, any obligation of such Person guaranteeing or intended to guarantee any Indebtedness (“Primary Obligations”) of any other Person (the “Primary Obligor”) in any manner, whether directly or indirectly, including, without limitation, (a) the direct or indirect guaranty, endorsement (other than for collection or deposit in the ordinary course of business), co-making, discounting with recourse or sale with recourse by such Person of the obligation of a primary obligor, (b) the obligation to make take-or-pay or similar payments, if required, regardless of nonperformance by any other party or parties to an agreement, or (c) any obligation of such Person, whether or not contingent, (i) to purchase any such primary obligation or any property constituting direct or indirect

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Security therefor, (ii) to advance or supply funds (A) for the purchase or payment of any such primary obligation or (B) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, assets, Securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof, provided, however, that the term “Contingent Obligation” shall not include any products warranties extended in the ordinary course of business. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation with respect to which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such Person may be liable pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability with respect thereto (assuming such Person is required to perform thereunder), as determined by such Person in good faith.

“Continuing Director” means (a) any member of the Board of Directors who was a director (or comparable manager) of Parent on the Closing Date, and (b) any individual who becomes a member of the Board of Directors after the Closing Date if such individual was appointed or nominated for election to the Board of Directors by a majority of the Continuing Directors, but excluding any such individual originally proposed for election in opposition to the Board of Directors in office at the Closing Date in an actual or threatened election contest relating to the election of the directors (or comparable managers) of Parent and whose initial assumption of office resulted from such contest or the settlement thereof.

“Contracts” means leases, lease schedules, installment sales agreements, security agreements, chattel paper and other instruments and documents.

“Control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract or otherwise. “Controlling” and “Controlled” have meanings correlative thereto.

“Control Agreement” means, with respect to a Securities Account or a Deposit Account, an agreement, in form and substance reasonably satisfactory to the Collateral Agent, which effectively gives control (as defined in the UCC) to the Collateral Agent in such Securities Account and all investment property contained therein or in such Deposit Account and all funds contained therein, as the case may be, as it may be amended, supplemented or otherwise modified.

“Copyrights” has the meaning ascribed to such term in the Security Agreement.

“Credit Parties” means, collectively, the Borrowers and the Guarantors.

“Debt for Borrowed Money” of any Person means, at any date of determination, without duplication, the sum of (a) all items that, in accordance with GAAP, would be classified as debt on a consolidated balance sheet of such Person at such date and (b) all obligations of such Person under acceptance, letter of credit or similar facilities at such date; provided that, with

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respect to the Borrower and its Subsidiaries, Debt for Borrowed Money shall exclude, to the extent otherwise included in the items in clause (a) or (b) above, (i) accounts payable and accrued liabilities in the ordinary course of business of the Borrower and its Subsidiaries, and (ii) notes, bills and checks presented in the ordinary course of business by such Person to banks for collection or deposit.

“Default” means an event which, with the giving of notice or the lapse of time or both, would constitute an Event of Default.

“Defaulting Lender” means a Revolving Defaulting Lender or a Term Defaulting Lender.

“Deposit Account” means a “deposit account” as that term is defined in the UCC.

“Disposition” means any transaction, or series of related transactions, pursuant to which any Credit Party conveys, sells, leases or subleases, licenses, assigns, transfers or otherwise disposes of any part of its business, property or assets (whether now owned or hereafter acquired) to any other Person, in each case whether or not the consideration therefor consists of cash, Securities or other assets, excluding any sales of Inventory in the ordinary course of business.

“Dollar”, “Dollars” and the symbol “$” each means lawful money of the United States of America.

“Domestic Subsidiary” means any Subsidiary organized under the laws of the United States of America, any State thereof or the District of Columbia.

“Dutch Security Document” means the agreement and deed of pledge of shares of Silicon Graphics World Trade B.V.

“Eligible Assignee” means (a) a commercial bank organized under the laws of the United States, or any state thereof, and having total assets in excess of two hundred and fifty million Dollars ($250,000,000), (b) a commercial bank organized under the laws of any other country which is a member of the Organization for Economic Cooperation and Development or a political subdivision of any such country and which has total assets in excess of two hundred and fifty million Dollars ($250,000,000), provided, however, that such bank is acting through a branch or agency located in the United States, (c) a finance company (other than an entity which is an Affiliate of IBM, Sun Microsystems, Hewlett Packard, Dell, Inc., or Apple Computer, Inc.), insurance company, or other financial institution or fund that is engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of its business and having (together with its Affiliates and Related Funds) total assets in excess of two hundred and fifty million Dollars ($250,000,000), (d) any Lender or any Affiliate (other than individuals) of a Lender, and (e) during the continuation of an Event of Default, any other Person approved by the Revolving Agent.

“Environmental Actions” means any complaint, summons, citation, notice, directive, order, claim, litigation, investigation, judicial or administrative proceeding, judgment, letter or other communication from any Governmental Authority or other Person alleging a

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violation of, or liability under, any Environmental Law and Release of Hazardous Materials on, in, at, to, from or under (a) any assets, properties or businesses of the Borrower or any of its Subsidiaries or any of their respective predecessors in interest and (b) any facilities which received Hazardous Materials generated by the Borrower or any of its Subsidiaries or any of their respective predecessors in interest.

“Environmental Laws” means any federal, state, local or foreign law or regulation relating to the protection of the environment or health and safety as it relates to any Hazardous Material compliance or exposure, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601, et seq.), the Hazardous Materials Transportation Act (49 U.S.C. § 1801, et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901, et seq.), the Federal Clean Water Act (33 U.S.C. § 1251 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.) and the Occupational Safety and Health Act (29 U.S.C. § 651 et seq.) as it relates to any Hazardous Material compliance or exposure and any other law, including common law, relating to the environment or health and safety as it relates to any Hazardous Material compliance or exposure (including, without limitation, laws relating to the storage, generation, use, handling, manufacture, processing, labeling, transportation, treatment, reuse, recycling, release and disposal of Hazardous Materials) and any environmental requirement or any health or safety requirement as it relates to any Hazardous Material compliance or exposure of any Governmental Authority, as such laws or requirements may be amended or otherwise modified from time to time, and any other present or future federal, state, provincial, local or foreign statute, ordinance, rule, regulation, order, judgment, decree, permit, license or other binding determination (including the common law) of any Governmental Authority imposing liability or establishing standards of conduct for protection of the environment.

“Environmental Liabilities and Costs” means all liabilities, monetary obligations, Remedial Actions, losses, damages, punitive damages, consequential damages, treble damages, costs and expenses (including all reasonable fees, disbursements and expenses of counsel, experts and consultants and costs of investigations and feasibility studies), fines, penalties, sanctions and interest incurred as a result of any claim or demand by any Governmental Authority or any third party, and which relate to any violation of any Environmental Law, environmental condition or any Release of Hazardous Materials from or onto (a) any property presently or formerly owned by the Borrower or any of its Subsidiaries or (b) any facility which received Hazardous Materials or wastes generated by the Borrower or any of its Subsidiaries but excluding the routine costs and expenses incurred in the ordinary course of maintaining compliance with Environmental Laws.

“Environmental Lien” means any Lien in favor of any Person or Governmental Authority for Environmental Liabilities and Costs or otherwise relating to any Environmental Law.

“Equipment” means, with respect to any Person, all of such Person’s now owned or hereafter acquired right, title, and interest with respect to equipment (including, without limitation, “equipment” as such term is defined in Article 9 of the UCC), machinery, machine tools, motors, furniture, furnishings, fixtures, vehicles (including motor vehicles), tools, parts, goods (other than consumer goods, farm products, or Inventory), wherever located, including all

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attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended and the regulations promulgated thereunder. References to sections of ERISA shall be construed also to refer to any successor sections.

“ERISA Affiliate” means, with respect to any Person, any trade or business (whether or not incorporated) which is a member of a group of which such Person is a member and which would be deemed to be a “controlled group” within the meaning of Sections 414(b), (c), (m) and (o) of the Code.

“ERISA Event” means (a) a Reportable Event with respect to any Benefit Plan, (b) the filing of a notice of intent to terminate a Benefit Plan in a distress termination (as described in Section 4041(c) of ERISA), (c) the institution by the Pension Benefit Guaranty Corporation of proceedings to terminate a Benefit Plan or Multiemployer Plan, (d) the appointment of a trustee to administer any Benefit Plan under Section 4042 of ERISA, or (e) any event requiring the Borrower or any ERISA Affiliate to provide security to a Benefit Plan under Section 401(a)(29) of the Code.

“Event of Default” has the meaning ascribed to such term in Section 10.01.

“Excluded Asset Dispositions” means with respect to any Credit Party and its Subsidiary:

(a) any liquidation or sale of Cash Equivalents in the ordinary course of business;

(b) any sale, lease, transfer, assignment or other Disposition of assets (other than in connection with any Casualty or Condemnation) to any Person; provided that the aggregate fair market value of all property disposed of pursuant to this clause (b), when taken together with all other Dispositions pursuant to this clause (b) does not exceed three million Dollars ($3,000,000) in the aggregate in any Fiscal Year; provided, however, to the extent the aggregate fair market value of all property disposed of pursuant to this clause (b) in any Fiscal Year is less than the amount permitted hereunder, such amounts may be carried forward into the subsequent Fiscal Years;

(c) any disposition of obsolete, worn out or surplus tangible assets in the ordinary course of business and in a commercially reasonable manner; and

(d) any sale, lease or other transfer of any part of the assets of a Credit Party to any other Credit Party so long as (i) the security interests granted to the Collateral Agent for the benefit of the Secured Creditors pursuant to the Security Documents in such assets shall remain in full force and effect and perfected (to at least the same extent as in effect immediately prior to such sale, lease or other transfer), (ii) after giving effect to such Disposition, no Default or Event of Default exists and (iii) such Disposition is on an arm’s-length basis; provided, however, amount not used hereunder may be carried forward into subsequent Fiscal Years.

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“Excluded Taxes” means, with respect to the Participating Lenders or any other recipient of any payment to be made by or on account of any obligation of the Credit Parties hereunder: (a) Taxes imposed on or measured by its overall net income (however denominated), and franchise Taxes imposed on it (in lieu of net income Taxes), by the jurisdiction (or any political subdivision thereof) under the laws of which such recipient, for tax purposes, is organized or in which its principal office is located or in which it does business or in which its applicable lending office is located or in which such lending office does business or by reason of any other past, present, or future connection to any jurisdiction (other than any such connection arising solely from the recipient having executed, delivered or performed its obligations or received a payment under this Agreement or solely because the recipient enforced this Agreement or participated in transactions contemplated by this Agreement); (b) any branch profits taxes imposed by the United States or any similar tax imposed by any other jurisdiction; and (c) any withholding taxes payable with respect to payments under the Loan Documents under any law (including any law, rule, regulation or treaty or any interpretation or application thereof by any Governmental Authority or any request, guideline or directive (whether or not having the force of law) by any Governmental Authority) in effect, in the case of a Participating Lender a party to this Agreement as of the Closing Date, on the Closing Date, or, in the case of an Eligible Assignee or Participant becoming a party to this Agreement or a Participant (as the case may be) after the Closing Date, on the date such Eligible Assignee or Participant becomes a party to this Agreement or a Participant (as the case may be); except to the extent that such recipient shall be entitled to receive additional amounts from the applicable Borrower with respect to any Taxes pursuant to Section 3.04(a) as limited by Section 3.05.

“Existing Debt” means Indebtedness of the Borrower and its Subsidiaries existing on the Closing Date.

“Existing Owners” means one or more shareholders of the Parent on the Closing Date after giving effect to the Plan of Reorganization.

“Extraordinary Receipts” means any cash received by any Borrower not in the ordinary course of business (and not consisting of proceeds from the issuance of Capital Stock, debt or disposition of Collateral), including, without limitation, (a) pension plan reversions, (b) judgments, proceeds of settlements or other consideration of any kind in connection with any cause of action, other than recoveries from avoidance actions and proceeds from litigation awards and settlements with respect to patent infringements, and (c) indemnity payments, but excluding tax refunds received in connection with or as the result of any settlement, audit, or amendment to any tax return.

“Federal Funds Rate” means, for any period, a fluctuating interest rate equal for each day during such period to the weighted average of the rates on overnight Federal Funds transactions with members of the Federal Reserve System arranged by Federal Funds brokers, as published for such day (or, if such day is not a Business Day, for the next preceding Business Day) by the Federal Reserve Bank of New York, or, if such rate is not so published for any day which is a Business Day, the average of the quotations for such day on such transactions received by the Administrative Agent from three Federal Funds brokers of recognized standing selected by the Administrative Agent in the exercise of its reasonable discretion.

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“Federal Reserve Board” means the Board of the Federal Reserve System or any Governmental Authority succeeding to its functions.

“Fee Letter” means the Fee Letter, dated August 31, 2006, between the Parent, the Administrative Agent and the Collateral Agent.

“Field Examination” has the meaning set forth in Section 7.04(b).

“Fiscal Month” means each fiscal month of the Parent consisting of a four (4) or five (5) week period.

“Fiscal Quarter” means the fiscal quarter of the Parent ending in March, June, September and December of any Fiscal Year.

“Fiscal Year” means the fiscal year of the Parent ending on the last day of the last Fiscal Month of the Parent.

“Flood Hazard Property” means any Real Estate Collateral Asset located in an area designated by the Federal Emergency Management Agency (or any successor or other applicable Government Authority) as having special flood or mud slide hazards.

“Foreign Collection Account” means the foreign accounts listed on lines [21 and 23] of Schedule 5.01(t).

“Foreign Subsidiary” means a Subsidiary other than a Domestic Subsidiary.

“Forfeiture Proceeding” means any action, proceeding or investigation affecting the Borrower or any of the Guarantors before any court, governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, or the receipt of notice by any such party that any of them is a suspect in or a target of any governmental inquiry or investigation which may result in an indictment of any of them or the seizure or forfeiture of any of their respective properties.

“Fraudulent Transfer Laws” has the meaning ascribed to such term in Section 11.13.

“Funding Date” means, with respect to any Loan, the date of the funding of a Loan.

“Funding Partner” shall mean both individually and/or collectively, as the context may require, (A) BAL Global Finance, LLC f/k/a Fleet Business Credit, LLC f/k/a Fleet Business Credit Corporation, or Banc of America Leasing & Capital, LLC, and (B) Key Bank and National City Capital Corporation (f/k/a Information Leasing Corporation), in each case, party to any Program Agreements with any of the Borrowers, or any predecessor, successor or assignee of the applicable Funding Partner. The term Funding Partner shall also include any other entity, the inclusion of which within such term is approved by the prior written consent of the Agents (not to be unreasonably withheld), and who (subject to such approval) shall become party to any Program Agreement with any of the Borrowers, or any successor or assignee thereof.

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“GAAP” means generally accepted accounting principles in effect from time to time in the United States, provided that, for the purpose of the financial amounts and the definitions used herein, “GAAP” shall mean generally accepted accounting principles in effect on the date hereof and consistent with those used in the preparation of the financial statements, and provided further that, if there occurs after the date of this Agreement any change in GAAP that affects in any material respect the calculation of any financial covenant contained in Article IX, the Administrative Agent and the Borrowers shall negotiate in good faith an amendment to such financial covenant and any other provision of this Agreement that relates to the calculation of such financial covenant with the intent of having the respective positions of the Lenders and the Borrowers after such change in GAAP conform as nearly as possible to their respective positions as of the date of this Agreement and, after the execution of any such amendment or consent by the Required Lenders in connection with any such change in GAAP, “GAAP” shall mean generally accepted accounting principles in effect on the effective date of such amendment or consent. Until any such amendments have been agreed upon, the covenants in Article IX shall be calculated as if no such change in GAAP has occurred.

“GE Capital” means General Electric Capital Corporation or an Affiliate thereof.

“GE SWAP Agreements” means any and all interest rate or short term currency transactions, agreements or documents now existing or hereafter entered into by a Credit Party or any Subsidiary of a Credit Party (other than an Inactive Subsidiary), arranged by GE Capital and entered into for the sole purpose of hedging such Credit Party’s or any Subsidiary’s exposure to fluctuations in interest rates or currencies and not for speculative purposes.

“Governing Documents” means, (a) with respect to any corporation, (i) the articles/certificate of incorporation (or the equivalent organizational documents) of such corporation, (ii) the by-laws (or the equivalent governing documents) of the corporation and (iii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any class or series of such corporation’s capital stock; and (b) with respect to any general partnership, (i) the partnership agreement (or the equivalent organizational documents) of such partnership and (ii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any of the partnership interests; (c) with respect to any limited partnership, (i) the partnership agreement (or the equivalent organizational documents) of such partnership, (ii) a certificate of limited partnership (or the equivalent organizational documents) and (iii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any of the partnership interests; (d) with respect to any limited liability company, (i) the certificate of limited liability (or equivalent filings) of such limited liability company, (ii) the operating agreement (or the equivalent organizational documents) of such limited liability company, and (iii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any of such company’s membership interests; and (e) with respect to any unlimited liability company, (i) the certificate of incorporation (or the equivalent organizational documents) of such unlimited liability company, (ii) the memorandum and articles of association (or the equivalent governing documents) of such unlimited liability company and (iii) any document setting forth the designation, amount and/or relative rights, limitations and preferences of any class or series of such unlimited liability company’s Capital Stock.

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“Governmental Authority” means the government of the United States of America or any other nation, or of any political subdivision thereof, whether state or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“Guaranteed Obligations” has the meaning ascribed to such term in Section 11.01.

“Guarantors” means (a) each Borrower and (b) each of the Borrower’s future Subsidiaries that is required to become a Guarantor hereunder from time to time.

“Guaranty” means the guaranty of each of the Guarantors pursuant to Article XI.

“Hazardous Materials” means (a) any element, compound or chemical that is regulated under any Environmental Law including any substance that is defined, listed or otherwise classified as a contaminant, pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous substance or chemical, hazardous waste, special waste, or solid waste under Environmental Laws; (b) petroleum and its refined products; (c) polychlorinated biphenyls; (d) any waste exhibiting a hazardous characteristic as defined by applicable Environmental Laws, including, but not limited to, corrosivity, ignitability, toxicity or reactivity as well as any radioactive or explosive materials; and (e) asbestos-containing materials.

“Hedging Agreement” means any and all interest rate or short term currency transactions, agreements or documents now existing or hereafter entered into by a Credit Party or any Subsidiary of a Credit Party (other than an Inactive Subsidiary) with a (a) the Administrative Agent or (b) an Affiliate of the Administrative Agent for the purpose of hedging such Credit Party’s or such Subsidiary’s exposure to fluctuations in interest rates or currencies and not for speculative purposes.

“Hedging Agreement Provider” means any Person that enters into a Hedging Agreement with a Credit Party to the extent such Person is (a) the Administrative Agent or (b) an Affiliate of the Administrative Agent.

“Hedging Obligations” means obligations and liabilities entered into with any Hedging Agreement Provider, owing by any Credit Party under Hedging Agreements.

“Highest Lawful Rate” has the meaning ascribed to such term in Section 3.01(c).

“Inactive Subsidiaries” means the Subsidiaries listed on Schedule 5.01(dd).

“Indebtedness” means, without duplication, with respect to any Person, (a) all indebtedness of such Person for borrowed money; (b) all obligations of such Person for the deferred purchase price of property or services (other than trade payables incurred in the ordinary course of business irrespective of when paid); (c) all obligations of such Person evidenced by

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bonds, debentures, notes or other similar instruments; (d) all obligations and liabilities of such Person created or arising under any conditional sales or other title retention agreement with respect to property used and/or acquired by such Person, even though the rights and remedies of the lessor, seller and/or lender thereunder are limited to repossession or sale of such property; (e) all Capitalized Lease Obligations of such Person; (f) all obligations and liabilities of such Person as an account party, in respect of letters of credit, bankers’ acceptances and similar facilities; (g) all the aggregate mark-to-market exposure of such Person under Hedging Agreements and GE SWAP Agreements; (h) all Contingent Obligations; (i) all Swap Related Reimbursement Obligations and (j) all obligations referred to in clauses (a) through (i) of this definition of another Person secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) a Lien upon property owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness, provided that the amount of Indebtedness of others that constitutes Indebtedness solely by reason of this clause (j) shall not for purposes of this Agreement exceed the fair market value of the properties or assets subject to such Lien. The Indebtedness of any Person shall include the Indebtedness of any partnership of or joint venture in which such Person is a general partner or a joint venturer that is required to be consolidated under GAAP to the extent such Person would be liable therefor under applicable law or any agreement or instrument by virtue of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person shall not be liable therefor.

“Indemnified Matters” has the meaning ascribed to such term in Section 13.17(d).

“Indemnified Taxes” means all Taxes imposed upon or with respect to payments from the Credit Parties to the Participating Lenders or any recipient of any payment to be made by or on account of any obligation of the Credit Parties hereunder pursuant to this Agreement, other than Excluded Taxes.

“Indemnitees” has the meaning ascribed to such term in Section 13.17.

“Intellectual Property” has the meaning ascribed to such term in the Security Agreement.

“Intellectual Property Appraisal” has the meaning ascribed to such term in Section 4.01(t).

“Interest Payment Date” means (a) with respect to (i) any Alternate Base Rate Loan, the last Business Day of each calendar month, commencing on the first such date to occur after the Closing Date, and (ii) any LIBOR Rate Loan, the last day of each LIBOR Period applicable to such Loan; (b) with respect to the amount of any Loan prepaid, the date of such prepayment, and (c) with respect to all Loans, the Maturity Date.

“Interest Rate” means (a) with respect to the Term Loans, interest at a rate equal to either, at the Borrower’s option, (i) LIBOR Rate plus the Applicable Margin for Term Loans or (ii) the Alternate Base Rate, plus the Applicable Margin for Term Loans and (b) with respect to the Revolving Advances, interest at a rate equal to, at the Borrower’s option, (i) the Alternate

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Base Rate plus the Applicable Margin for Revolving Advances or (ii) LIBOR Rate plus the Applicable Margin for Revolving Advances.

“Inventory” means all Credit Parties’ now owned or hereafter acquired right, title, and interest with respect to (a) all “inventory” as defined in Article 9 of the UCC and (b) all goods held for sale or lease or to be furnished under contracts of service or so leased or furnished, all raw materials, work in process, finished goods, and materials used or consumed in the manufacture, packing, shipping, advertising, selling, leasing, furnishing or production of such inventory or otherwise used or consumed in any Credit Party’s business; all goods which are returned to or repossessed by any Credit Party; and all computer programs embedded in any of the foregoing and all accessions thereto and products thereof (in each case, regardless of whether characterized as inventory under the UCC).

“Inventory Appraisal” has the meaning ascribed to such term in Section 7.04(c).

“Investment” means, with respect to any Person, (a) any purchase or other acquisition by that Person of Securities, or of a beneficial interest in Securities, issued by any other Person, (b) any purchase by that Person of all or substantially all of the assets of a business conducted by another Person, (c) any joint venture and (d) any direct or indirect loan, advance (other than prepaid expenses, accounts receivable, advances and other loans to employees including, without limitation, employee forgivable loans and similar items made or incurred in the ordinary course of business) or capital contribution by that Person to any other Person, including all Indebtedness owing to such Person arising from a sale of any property or assets by such Person other than in the ordinary course of its business.

“IRS” means the Internal Revenue Service or any successor federal tax Governmental Authority.

“Joinder Agreement” means a joinder agreement substantially in the form of Exhibit I. Each Hedging Agreement Provider may from time to time enter into a Joinder Agreement.

“Junior Lien DIP Facility” has the meaning ascribed to such term in the Recitals.

“L/C Issuer” has the meaning ascribed to it in Exhibit A.

“L/C Sublimit” has the meaning ascribed to it in Exhibit A.

“Landlord Consent and Estoppel” means, with respect to any Leasehold Property that constitutes a Real Estate Collateral Asset, a letter, certificate or other instrument in writing from the lessor under the related Lease, pursuant to which, among other things, the landlord consents to the granting of a Mortgage on such Leasehold Property by the Credit Party tenant, such Landlord Consent and Estoppel to be in form and substance reasonably acceptable to the Collateral Agent in its reasonable discretion, but in any event sufficient for the Collateral Agent to obtain a Title Policy with respect to such Mortgage.

“Lease” has the meaning ascribed to such term in Section 5.01(o).

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“Leasehold Property” means any leasehold interest of any Credit Party as lessee under any lease of real property, other than any such leasehold interest designated from time to time by Collateral Agent in its sole discretion as not being required to be included in the Collateral.

“Lenders” means, collectively, the lenders identified on the signature pages hereof, together with their respective successors and permitted assigns, each a “Lender”.

“Lender-Related Persons” means, with respect to any Lender, such Lender, together with such Lender’s Affiliates, and the officers, directors, employees, counsel, agents, consultants and attorneys-in-fact of such Lender and such Lender’s Affiliates.

“Letter of Credit” means a letter of credit issued by the L/C Issuer (or its designee) or a Person approved by the Revolving Agent as it may hereafter be amended or replaced from time to time pursuant to the terms of this Agreement or otherwise in form and substance reasonably satisfactory to the L/C Issuer; provided, however, the term shall not include any Swap Related L/Cs.

“Letter of Credit Exposure” means at any time, the sum of (a) the aggregate undrawn amount at such time of all outstanding Letters of Credit of the L/C Issuer plus (b) the aggregate unpaid amount at such time of all unreimbursed drawings under a Letter of Credit.

“Letter of Credit Obligations” means all outstanding obligations incurred by the Revolving Lenders at the request of the Borrowers, whether direct or indirect, contingent or otherwise, due or not due, in connection with the issuance of Letters of Credit by the Revolving Lenders or another L/C Issuer or the purchase of a participation as set forth in Exhibit A with respect to any Letter of Credit. The amount of such Letter of Credit Obligations shall equal the maximum amount that may be payable under Letters of Credit at such time or at any time thereafter by the Revolving Lenders thereupon or pursuant thereto.

“LIBOR Period” means, with respect to any LIBOR Rate Loan, the period commencing on the date of the making of such LIBOR Rate Loan (or the continuation of a LIBOR Rate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) and ending one, two or three months thereafter; and provided that the foregoing provisions are subject to the following:

(a) if any LIBOR Period pertaining to a LIBOR Rate Loan would otherwise end on a day that is not a Business Day, such LIBOR Period shall be extended to the next succeeding Business Day unless the result of such extension would be to carry such LIBOR Period into another calendar month, in which event such LIBOR Period shall end on the immediately preceding Business Day;

(b) any LIBOR Period pertaining to a LIBOR Rate Loan that begins on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the calendar month at the end of such LIBOR Period) shall end on the last Business Day of the relevant calendar month; and

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(c) any LIBOR Period in respect of any Loan that would otherwise extend beyond the Maturity Date shall end on the Maturity Date.

“LIBOR Rate” means for each LIBOR Period, a rate of interest determined by the Revolving Agent equal to:

(a) the offered rate for deposits in United States Dollars for the applicable LIBOR Period that appears on Telerate Page 3750 as of 11:00 a.m. (London time), on the second full Business Day next preceding the first day of such LIBOR Period (unless such date is not a Business Day, in which event the next succeeding Business Day will be used); divided by

(b) a number equal to 1.0 minus the aggregate (but without duplication) of the rates (expressed as a decimal fraction) of reserve requirements in effect on the day that is two (2) Business Days prior to the beginning of such LIBOR Period (including basic, supplemental, marginal and emergency reserves under any regulations of the Federal Reserve Board or other Governmental Authority having jurisdiction with respect thereto, as now and from time to time in effect) for Eurocurrency funding (currently referred to as “Eurocurrency Liabilities” in Regulation D of the Federal Reserve Board) that are required to be maintained by a member bank of the Federal Reserve System.

If such interest rates shall cease to be available from Telerate News Service (or its successor satisfactory to Administrative Agent), the LIBOR Rate shall be determined from such financial reporting service or other information as shall be mutually acceptable to the Revolving Agent and Borrower Representative.

“LIBOR Rate Loans” means Loans which bear interest at a rate determined by reference to the LIBOR Rate.

“Lien” means any lien, security interest or other encumbrance of any kind, or any other type of preferential arrangement which has the effect of a lien or security interest, including, without limitation, the lien or retained security title of a conditional vendor and any easement, right of way or other encumbrance on title to real property.

“Loans” means, collectively, the Revolving Advances, the Letters of Credit and the Term Loans.

“Loan Documents” means this Agreement, the Notes, the Security Documents and all other agreements, instruments, and other documents executed and delivered by any Credit Party pursuant hereto or thereto or otherwise evidencing or securing any Loan, in each case, excluding any Hedging Agreements.

“Material Adverse Effect” means a material adverse effect on (a) the business, operations, properties, assets, conditions (financial or otherwise) or prospects of the Parent and its Subsidiaries taken as a whole, (b) the ability of the Credit Parties to perform their obligations hereunder or under any of the other Loan Documents or (c) the rights and remedies of any Agent or any Lender hereunder or under any other Loan Document.

“Maturity Date” means with respect to the Loans, October 17, 2011.

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“Minimum Liquidity” means cash or Cash Equivalents held in Cash Management Accounts or other Accounts subject to a Control Agreement in the United States plus the Available Commitments.

“Moody’s” means Moody’s Investors Service and any successor thereto.

“Mortgages” means the mortgages, deeds of trust and/or assessments and other similar security instruments with respect to Real Estate Assets executed and delivered by a Credit Party in favor of the Collateral Agent, in form and substance reasonably satisfactory to the Collateral Agent, as the same may be amended, modified and otherwise supplemented from time to time.

“Multiemployer Plan” means a “multiemployer plan” as defined in Section 4001(a)(3) of ERISA to which the Borrower or its Subsidiaries or any of their ERISA Affiliates has contributed, or has been obligated to contribute, at any time during the preceding six years, or has liability.

“Net Cash Proceeds” means cash or cash equivalents received by a Credit Party or any Subsidiary of a Credit Party from time to time in connection with a Disposition (whether as initial consideration, through the payment of deferred consideration, the release of any reserve taken in connection with such Dispositions, or the release or adjustment of any provision for Taxes in connection with such Disposition) other than any Excluded Asset Disposition, after deducting therefrom only (a) the principal amount of any Indebtedness of such Credit Party secured by any Permitted Encumbrance on any asset that is the subject of the Disposition (other than Indebtedness assumed by the purchaser of such asset) which is required to be, and is, repaid in connection with such Disposition (other than Indebtedness under this Agreement), (b) reasonable fees and expenses related thereto reasonably incurred by such Credit Party in connection therewith and (c) a provision for any Taxes to be paid or reasonably estimated to be payable, in connection with such Disposition (after taking into account any tax credits or deductions and any tax sharing arrangements); provided, however, in the event that a Credit Party or any Subsidiary is required to take a reserve in accordance with GAAP against any contingent liabilities associated with such Disposition, such Credit Party or Subsidiary may deduct from the Net Cash Proceeds received from such Disposition an amount equal to such reserve; provided, further, upon the release of such reserves or the determination that such reserves are no longer necessary, such amounts shall be considered Net Cash Proceeds and applied to the prepayment of Loans in accordance with Section 2.02(a)(i).

“Net Casualty/Condemnation Proceeds” means, with respect to any Casualty or Condemnation, the amount of any insurance proceeds or condemnation awards received by a Credit Party from time to time in connection with such Casualty or Condemnation (net of all reasonable fees and expenses related thereto reasonably incurred by such Credit Party in connection therewith), but excluding any proceeds or awards of errors and omissions insurance; provided, however, in the event that a Credit Party or any Subsidiary is required to take a reserve in accordance with GAAP against any contingent liabilities associated with such Casualty or Condemnation, such Credit Party or Subsidiary may deduct from the Net Cash Proceeds received from such Casualty or Condemnation an amount equal to such reserve; provided, however, in the event that a Credit Party or any Subsidiary is required to take a reserve in accordance with

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GAAP against any contingent liabilities associated with such Casualty or Condemnation , such Credit Party or Subsidiary may deduct from the Net Casualty/Condemnation Proceeds received from such Casualty or Condemnation an amount equal to such reserve; provided, further, upon the release of such reserves or the determination that such reserves are no longer necessary, such amounts shall be considered Net Cash Proceeds and applied to the prepayment of Loans in accordance with Section 2.02(a)(ii).

“Net Income” means, with respect to any Person and its consolidated Subsidiaries, for any period, the net income (loss) of such Person and its consolidated Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP, but in any case, excluding (a) income (or deficit) of any Person accrued prior to the date it became a Subsidiary of, or was merged or consolidated into, such Person or any of such Person’s Subsidiaries; (b) income (or deficit) of any Person (other than a Subsidiary) in which such Person has an ownership interest, except to the extent any such income has actually been received by such Person in the form of cash dividends or distributions; (c) the undistributed earnings of any Subsidiary of such Person to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary is not at the time permitted by the terms of any contractual obligation or requirement of law applicable to such Subsidiary; (d) any restoration to income of any contingency reserve, except to the extent that provision for such reserve was made out of income accrued during such period; (e) any net gain attributable to the write-up of any asset; (f) any net gain from the collection of life insurance policies; (g) any net gain arising from the acquisition of any securities, or the extinguishment of any Indebtedness of such Person or any of its Subsidiaries; and (h) any deferred credit representing the excess of equity in any Subsidiary of such Person at the date of acquisition of such Subsidiary over the cost to such Person of the investment in such Subsidiary.

“Non-Consenting Lender” has the meaning ascribed to such term in Section 13.03(a)(i).

“Non Material Leasehold Property” means any Leasehold Property with respect to which a Credit Party has an obligation to pay annual base rent of $1,000,000 or less after the expiration of any rent abatement or free rent period.

“Non-U.S. Lender” has the meaning ascribed to such term in Section 2.05(e)(i).

“Note” has the meaning ascribed to such term in Section 1.07(a).

“Notice of Borrowing” means a notice substantially in the form of Exhibit B attached hereto and made a part hereof.

“Notice of Conversion/Continuation” means a notice substantially in the form of Exhibit E attached hereto and made a part hereof.

“Obligations” means all Loans, advances, debts, liabilities, obligations, Hedging Obligations, covenants and duties, owing by any Credit Party to the Administrative Agent, the Collateral Agent, any Lender, any Affiliate of any Lender, any Hedging Agreement Provider, GE Capital or any Person entitled to indemnification pursuant to Section 13.17 of this Agreement, of any kind or nature, present or future, whether or not evidenced by any note, guaranty or other

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instrument, whether or not for the payment of money, whether arising by reason of an extension of credit, loan, guaranty, indemnification, interest rate contract, foreign exchange contract or in any other manner, whether direct or indirect (including those acquired by assignment), absolute or contingent, due or to become due, but in all such circumstances only to the extent now existing or hereafter arising or however acquired, arising under or in connection with this Agreement, the Notes or any other Loan Document. The term includes all interest other than Default Interest (including any interest that, but for the provisions of the Bankruptcy Code, would have accrued), Swap Related Reimbursement Obligations, charges, expenses, fees, attorneys’ fees and disbursements and any other sum chargeable to the Credit Parties under this Agreement, the Notes or any other Loan Document or any Hedging Agreement.

“Officer’s Certificate” has the meaning ascribed to such term in Section 6.01(d)(i).

“Operating Lease” means, as applied to any Person, any lease (including leases that may be terminated by the lessee at any time) of any property (whether real, personal or mixed) that is not a Capitalized Lease other than any such lease under which that Person is the lessor.

“Other Lender” has the meaning ascribed to such term in Section 13.03(b).

“Other Taxes” has the meaning ascribed to such term in Section 2.05(b).

“Owned Intellectual Property” has the meaning ascribed to such term in Section 5.01(u).

“Parent” has the meaning ascribed to such term in the introductory paragraph hereto.

“Participant” has the meaning ascribed to such term in Section 13.09(e).

“Participating Lender” means, individually and collectively, each of the Lenders and the L/C Issuer.

“Participating Lender Expenses” means all:

(a) costs or expenses (including taxes, and insurance premiums) required to be paid by a Credit Party or its Subsidiaries under any of the Loan Documents that are paid, advanced, or incurred by the Participating Lenders or the Agents;

(b) reasonable fees or charges paid or incurred by any Agent in connection with the Participating Lenders’ transactions with the Credit Parties or their Subsidiaries, including fees or charges for photocopying, notarization, couriers and messengers, telecommunication, public record searches (including tax lien, litigation, and Uniform Commercial Code searches, searches with the patent and trademark office, or the copyright office), filing, recording, publication, to the extent of the fees and charges (and up to the amount of any limitation) contained in the Loan Documents, real estate surveys, real estate title policies

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and endorsements, and environmental audits, Field Examinations, Intellectual Property Appraisals, Inventory Appraisals and Real Estate Appraisals;

(c) reasonable costs and expenses incurred by any Agent or any Participating Lender in the disbursement of funds to the Borrower or any Participating Lender (by wire transfer or otherwise);

(d) charges paid or incurred by any Agent resulting from the dishonor of checks;

(e) reasonable costs and expenses paid or incurred by an Agent or the Participating Lenders to correct any default or enforce any provision of the Loan Documents, or in gaining possession of, maintaining, handling, preserving, storing, shipping, selling, preparing for sale, or advertising to sell the Collateral, or any portion thereof, irrespective of whether a sale is consummated;

(f) audit fees and expenses of each of the Agents related to any inspections or audits to the extent of the fees and charges (and up to the amount of any limitation) contained in the Agreement;

(g) reasonable costs and expenses of third party claims or any other suit paid or incurred by any one or more of the Participating Lenders in enforcing or defending the Loan Documents or in connection with the transactions contemplated by the Loan Documents or the relationship of any one or more of the Participating Lenders with any Credit Party or any Subsidiary of a Credit Party;

(h) the Administrative Agent’s reasonable costs and expenses (including attorneys’ fees) incurred in advising, structuring, drafting, reviewing, administering, syndicating, or amending the Loan Documents; and

(i) each Agent’s and each Participating Lender’s reasonable costs and expenses (including attorneys’, accountants’, consultants’, and other advisors’ fees and expenses) incurred in terminating, enforcing, or defending the Loan Documents, irrespective of whether suit is brought, or in taking any Remedial Action concerning the Collateral.

“Patent” shall have the meaning ascribed to such term in the Security Agreement.

“Patriot Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Title III of Pub. L. No. 107-56 (signed into law October 26, 2001).

“Patriot Act Related Requirements” means the Patriot Act, the Trading with the Enemy Act, the International Emergency Economic Powers Act, the International Security and Development Cooperation Act, the Export Administration Act, the Arms Export Control Act and similar statutes administered by the Office of Foreign Assets Control or the U.S. Bureau of Export Administration and the regulations promulgated under such statutes.

“Permits” has the meaning ascribed to such term in Section 5.01(m).

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“Permitted Accounts” means all domestic Deposit Accounts and Securities Accounts (other than zero-balance Accounts), which are subject to a Control Agreement.

“Permitted Encumbrances” means:

(a) Liens imposed by law for unpaid utilities and taxes, assessments or governmental charges or levies that are not yet due and payable or that are being contested in a Permitted Protest;

(b) landlords’, carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens imposed by law, arising in the ordinary course of business and securing obligations that are not overdue by more than thirty (30) days or that are being contested in a Permitted Protest;

(c) pledges and deposits made in the ordinary course of business in compliance with workers’ compensation, unemployment insurance and other social security or employment laws or regulations or similar legislation or to secure public, statutory or regulatory obligations;

(d) deposits to secure the performance of bids, trade contracts, government contracts, leases, statutory or regulatory obligations, surety and appeal bonds, performance bonds and other obligations of a like nature, in each case in the ordinary course of business;

(e) easements, zoning restrictions, rights-of-way and similar encumbrances on a Real Estate Asset imposed by law or granted in the ordinary course of business that do not materially interfere with or impair the use or operation of such Real Estate Asset;

(f) Liens existing on the Closing Date and listed on Schedule 8.01 hereto or in a Title Policy delivered to and accepted by the Agents with respect to the Collateral insured thereby;

(g) Liens securing the Obligations created by the Security Documents;

(h) Liens securing judgments entered after the date hereof for the payment of money not constituting a Default under Section 10.01(j) or securing appeal or other surety bonds relating to such judgments;

(i) Liens securing indebtedness permitted pursuant to paragraph (c) of the definition of Permitted Indebtedness below; provided, however, the value of all assets subject to liens granted pursuant hereto shall not exceed two million Dollars ($2,000,000) in the aggregate; and

(j) Liens on insurance premiums in favor of AFCO Premium Acceptance, Inc. or another insurance lender, securing Indebtedness permitted by Section 8.01 in an aggregate amount not to exceed three million Dollars ($3,000,000).

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“Permitted Indebtedness” means:

(a) the Indebtedness existing on the Closing Date and listed on Schedule 8.02 and any Permitted Refinancing of such Indebtedness;

(b) Indebtedness of any Credit Party or any Subsidiary of a Credit Party (other than an Inactive Subsidiary) under (i) this Agreement, (ii) other Loan Documents and (iii) Hedging Agreements;

(c) purchase money indebtedness and Capital Lease Obligations incurred after the Closing Date; provided that (i) the aggregate amount of all such Indebtedness does not exceed two million five hundred thousand Dollars ($2,500,000) at any time outstanding, (ii) the Indebtedness when incurred shall not be more than 100% of the lesser of the cost or the fair market value as of the time of acquisition of the asset financed, (iii) such Indebtedness is issued and any Liens securing such Indebtedness are created within 90 days after the acquisition of the asset financed and (iv) no Lien securing such Indebtedness shall extend to or cover any property or asset other than the asset so financed;

(d) contingent liabilities in respect of any indemnification, adjustment of purchase price, non-compete, consulting, deferred compensation and similar obligations incurred in connection with any Disposition permitted hereunder;

(e) Indebtedness owed to a Credit Party, which Indebtedness shall (i) constitute Pledged Debt and (ii) be otherwise permitted under the provisions of Section 8.07 hereunder;

(f) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument of any Credit Party or any Subsidiary of a Credit Party drawn against insufficient funds in the ordinary course of business, provided that the aggregate amount of all such Indebtedness does not exceed two hundred fifty thousand Dollars ($250,000) at any time outstanding;

(g) Indebtedness under performance bonds, surety bonds and letter of credit obligations to provide security for worker’s compensation claims, in each case, incurred in the ordinary course of business;

(h) Indebtedness of Foreign Subsidiaries comprising performance guaranties issued on behalf of any Foreign Subsidiary in the ordinary course of business, which are fully cash collateralized and in an aggregate amount at any time outstanding not to exceed thirty million Dollars ($30,000,000);

(i) Indebtedness incurred solely for the purpose of financing Insurance Premiums pursuant to a premium finance agreement by and among the Borrowers and AFCO Premium Finance, Inc. or another insurance lender in an aggregate principal amount not to exceed three million Dollars ($3,000,000);

(j) unsecured Indebtedness of all Foreign Subsidiaries (other than Indebtedness described in clause (h) of this definition) in an aggregate principal amount at any time outstanding not to exceed three million Dollars ($3,000,000);

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(k) Indebtedness that constitutes a Permitted Investment of the obligee pursuant to clauses (e), (f) and (g) of the definition thereof; and

(l) Indebtedness under GE SWAP Agreements.

“Permitted Investments” means:

(a) (i) cash or Cash Equivalents in Securities Accounts or Deposit Accounts with respect to which a Control Agreement has been executed and delivered, (ii) cash or Cash Equivalents in Securities Accounts or Deposit Accounts maintained by Foreign Subsidiaries and (iii) cash held in the Foreign Collection Account;

(b) Investments in negotiable instruments for collection;

(c) advances made in connection with purchases of goods or services in the ordinary course of business;

(d) Investments (including obligations owing under Indebtedness) received in connection with the bankruptcy or reorganization of suppliers and customers and in settlement of delinquent obligations of, and other disputes with, customers and suppliers arising in the ordinary course of business;

(e) Investments by any Foreign Subsidiary in another Foreign Subsidiary or in a Credit Party;

(f) Investments existing on the date hereof in Persons which are Subsidiaries of such Credit Party on the Closing Date;

(g) Investments in Foreign Subsidiaries of the Borrowers provided that such investments are subject to an aggregate amount per Fiscal Quarter not to exceed the lesser of (i) the aggregate amount of quarterly cash repatriated by all Foreign Subsidiaries during such Fiscal Quarter (to the extent separately identified and reported) and (ii) ten million Dollars ($10,000,000);

(h) receivables or trade credits created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms;

(i) Investments consisting of non-cash consideration received from the purchaser of assets in connection with a sale of such assets in an aggregate amount not to exceed two million Dollars ($2,000,000); and

(j) Investments in “Contracts” assigned by any of the Borrowers to any Funding Partners and the goods, equipment, payments, guaranties and proceeds related to any of such Contracts in favor of the Funding Partners, in each case solely to the extent sold, conveyed, pledged, assigned or transferred pursuant to the Program Agreements among any of the Borrowers and each separate Funding Partner.

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“Permitted Protest” means the right of a Person to protest any Lien (other than any such Lien that secures all or any portion of the Obligations) or taxes, provided that (a) a reserve with respect to such obligation is established, if required, by such Person in such amount as is required under GAAP and (b) any such protest is instituted promptly and prosecuted diligently and in good faith by such Person.

“Permitted Refinancing” means, with respect to any Person, any modification, refinancing, refunding, renewal or extension of any Indebtedness of such Person; provided that (a) the principal amount (or accreted value, if applicable) thereof does not exceed the principal amount (or accreted value, if applicable) of the Indebtedness so modified, refinanced, refunded, renewed or extended at the time of such Permitted Refinancing except by an amount equal to any premium or other similar amount paid, and fees and expenses incurred, in connection with such modification, refinancing, refunding, renewal or extension, (b) such modification, refinancing, refunding, renewal or extension has a final maturity date equal to or later than the final maturity date of the Indebtedness being modified, refinanced, refunded, renewed or extended, (c) none of the Credit Parties and their Subsidiaries not previously directly or contingently obligated on the applicable Indebtedness becomes directly or contingently obligated thereunder as a result of such Permitted Refinancing and (d) if the Indebtedness being modified, refinanced, refunded, renewed or extended is subordinated in right of payment to the Obligations, such modification, refinancing, refunding, renewal or extension is subordinated in right of payment to the Obligations on subordination terms at least as favorable to the Lenders, taken as a whole, as those contained in the documentation governing the Indebtedness being modified, refinanced, refunded, renewed or extended, as determined by the board of directors of such Person.

“Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“Petition Date” has the meaning ascribed to such term in the Recitals.

“Plan” means any “employee benefit plan”, as defined in Section 3(3) of ERISA.

“Plan of Reorganization” means the First Amended Joint Plan of Reorganization under Chapter 11 of the Bankruptcy Code, dated July 27, 2006, as modified which has been filed by the Parent and the other parties identified as “Debtors” in the Plan of Reorganization and confirmed by the court in jointly administered Case No. 06-109777 (BRL) in the United States Bankruptcy Court for the Southern District of New York by order dated September 19, 2006.

“Pledge Agreement” means the Pledge Agreement, dated as of the date hereof, among the Borrowers, the other pledgors identified therein and the Collateral Agent, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance therewith and herewith.

“Pledged Debt” has the meaning ascribed to such term in the Pledge Agreement.

“Post-Petition Loan Agreement” has the meaning ascribed to such term in the Recitals.

“Prepayment Premium” has the meaning ascribed to such term in Section 2.03(a).

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“Program Agreements” means (a) that certain “without recourse purchase agreement dated February 26, 2004” and “amended and restated lease program agreement dated August 31, 2001” and (b) that certain “without recourse purchase agreement dated May 13, 2004” and “without recourse repurchase agreement dated March 8, 2004”, between any of the Borrowers and any of the Funding Partners, as previously amended and in effect as of the date hereof, and as may be amended from time to time hereafter with the prior written consent of the Administrative Agent. The term Program Agreement shall also include any similar agreement with a Funding Partner who is approved, and the Program Agreement applicable thereto is approved, with the prior written consent of the Agents (not to be unreasonably withheld).

“Property” means any right or interest in or to property of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible.

“Pro Rata Share” means (a) with respect to any Revolving Lender, the percentage obtained by dividing the Revolving Commitment of such Revolving Lender at such time by the Total Revolving Commitment at such time and (b) with respect to any Term Lender, the percentage obtained by dividing such Term Lender’s exposure under the Term Loan by the aggregate exposure under the Term Loan of all Term Lenders. The initial Pro Rata Shares are set out on Schedule B.

“Protective Advance” has the meaning ascribed to such term in Section 1.05.

“Rating Agencies” means Moody’s and S&P, or if either of such Persons cease to perform credit ratings or other applicable services, such nationally recognized statistical rating organization the Administrative Agent may select.

“Real Estate Appraisal” has the meaning ascribed to such term in Section 4.01(v)(i).

“Real Estate Asset” means any real property, or any direct or indirect interest in any real property, in which any Credit Party has a fee, leasehold or other interest.

“Real Estate Collateral Asset” means any Real Estate Asset that is subject to a Mortgage or is required to be subject to a Mortgage.

“Registered Intellectual Property” means all Intellectual Property that has been registered with, filed in or issued by, as the case may be, the United States Patent and Trademark Office or such other similar filing offices, domestic or foreign, as applicable.

“Regulation T”, “Regulation U”, and “Regulation X” mean, respectively, Regulations T, U, and X of the Federal Reserve Board or any successor, as the same may be amended or supplemented from time to time.

“Related Parties” means, with respect to any Person, such Person’s Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person’s Affiliates.

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“Release” means any spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, seeping, migrating, dumping or disposing of any Hazardous Material (including the abandonment or discarding of barrels, containers and other closed receptacles containing any Hazardous Material) into the workplace environment, including ambient air, soil, surface or ground water.

“Remedial Action” means all actions taken to (a) clean up, remove, remediate, contain, treat, monitor, assess, evaluate or in any other way address Hazardous Materials in the workplace environment; (b) prevent or minimize a Release or threatened Release of Hazardous Materials so they do not migrate or endanger or threaten to endanger public health or welfare or the indoor or outdoor environment; (c) perform pre-remedial studies and investigations and post-remedial operation and maintenance activities; or (d) any other actions authorized by 42 U.S.C. § 9601.

“Reportable Event” means any of the events described in Section 4043(c) of ERISA or the regulations thereunder other than a Reportable Event as to which the provision of thirty (30) days’ notice to the Pension Benefit Guaranty Corporation is waived under applicable regulations.

“Required Lenders” means the Required Revolving Lenders and the Required Term Lenders.

“Required Revolving Lenders” means, at any time, collectively, (i) the Revolving Lenders having more than 50% of the Total Revolving Commitments or (ii) if the Revolving Commitments have been terminated, more than 50% of the aggregate outstanding amount of the Aggregate Exposure.

“Required Term Lenders” means, at any time, Term Lenders having more than 50% of the aggregate outstanding amount of the Term Loans.

“Requirements of Law” means, as to any Person, the charter and by-laws or other organizational or Governing Documents of such Person, and any law, ordinance, rule, regulation, requirement, or determination of an arbitrator or a court or other Governmental Authority, in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject, including, without limitation, the Patriot Act Related Requirements, the Securities Act, the Securities Exchange Act, Regulations T, U and X, ERISA, the Internal Revenue Code, the Fair Labor Standards Act and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or Permit or environmental, labor, employment, occupational safety or health law, rule or regulation.

“Reserve Amount” means the amount of reserves against availability established by the Revolving Agent pursuant to Section 1.01(a).

“Responsible Officer” means the chief financial officer or treasurer of the Parent.

“Restricted Material” has the meaning ascribed to such term in Section 13.21.

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“Restricted Payments” means, with respect to any Person, (a) any dividend or other distribution, direct or indirect, on account of any shares of any class of Capital Stock of, partnership interest of or other equity interest of, such Person, now or hereafter outstanding, except a dividend or distribution payable solely in shares of that class of stock or in any junior class of stock to the holders of that class, (b) any redemption, retirement, sinking fund or similar payment, purchase or other acquisition for value, direct or indirect, of any shares of any class of capital stock of, partnership interest of or other equity interest of, such Person now or hereafter outstanding, (c) any payment or prepayment of principal of, premium, if any, or interest, fees or other charges on or with respect to, and any redemption, purchase, retirement, defeasance, sinking fund or similar payment and any claim for rescission with respect to any Indebtedness which is subordinated to the Obligations and (d) any payment made to redeem, purchase, repurchase or retire, or to obtain the surrender of, any outstanding warrants, options or other rights to acquire shares of any class of Capital Stock of, partnership interest of or other equity interest of, such Person now or hereafter outstanding.

“Restricted Period” has the meaning ascribed to such term in Section 13.21.

“Restructuring Charges” means (a) fees, costs and expenses of bankruptcy counsel, financial advisors and other restructuring professionals incurred by the Borrowers in connection with the Chapter 11 Cases, (b) extraordinary, unusual or non-recurring charges for such period for severance, restructuring costs or goodwill impairment plus all non-cash amounts in any period of four fiscal quarters, (c) forgiveness of indebtedness income, and (d) non-cash expenses resulting from the grant of stock options or other equity related incentives to any current or former director, officer or employee of the Borrowers and any other “restructuring charge” as defined in GAAP.

“Revolving Advance” has the meaning ascribed to such term in Section 1.01(a).

“Revolving Agent” has the meaning ascribed to such term in the introductory paragraph hereto.

“Revolving Commitment” means, with respect to any Revolving Lender, the obligation of such Revolving Lender at such time to make Revolving Advances pursuant to the terms and conditions of this Agreement. The Initial Revolving Commitments of each Lender are set forth in Schedule B.

“Revolving Defaulting Lender” has the meaning ascribed to such term in Section 1.01(d).

“Revolving Lender” means a Lender that has a Revolving Commitment and/or that has an outstanding Revolving Advance.

“Revolving Register” has the meaning ascribed to such term in Section 13.09(d).

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill Companies, Inc. and any successor thereto.

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“Scheduled Intellectual Property Collateral” has the meaning ascribed to such term in Section 5.01(u).

“SEC” means the Securities and Exchange Commission or any other similar or successor agency of the Federal government administering the Securities Act.

“Secured Creditors” has the meaning ascribed to such term in the Security Agreement.

“Securities” means any Capital Stock, shares, voting trust certificates, bonds, debentures, notes, loans or other evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or any certificates of interest, shares or participations in temporary or interim certificates for the purchase or acquisition of, or any right to subscribe to, purchase or acquire any of the foregoing, but shall not include the Obligations.

“Securities Account” shall have the meaning provided in Section 8-501(a) of the UCC.

“Securities Act” means the Securities Act of 1933, as amended, or any successor Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended or any successor Federal statute, and the rules and regulations of the SEC thereunder, all as the same shall be in effect at the time.

“Securitization” means a public or private offering by a Lender or any of its Affiliates or their respective successors and assigns of Securities which represent an interest in, or which are collateralized in whole or in part by, the Loans.

“Security Agreement” means the Security Agreement, dated as of the date hereof, among the Borrower, the other assignors identified therein and the Collateral Agent, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance therewith and herewith.

“Security Documents” means the Security Agreement, the Pledge Agreement, the UCC financing statements, the Mortgages, the Control Agreements, the Cash Management Agreements, the Dutch Security Document and any other documents granting a Lien upon the Collateral as security for all or any part of the Obligations.

“Senior Officer” means, with respect to any Credit Party, such Credit Party’s president, chief executive officer, chief administrative officer, chief financial officer, managing director or chief accounting officer.

“Software” shall have the meaning ascribed to such term in the Security Agreement.

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“Solvent” or “Solvency” with respect to any person means (a) the fair value of the property of such person exceeds its total liabilities (including, without limitation, contingent liabilities), (b) the present fair saleable value of the assets of such person is not less than the amount that will be required to pay its probable liability on its existing debts as they become absolute and matured, (c) such person does not intend to incur debts or liabilities beyond its ability to pay, as such debts and liabilities mature, and (d) such person is not engaged, and is not about to engage, in business or a transaction for which its property would constitute an unreasonably small capital. The amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

“Subsidiary” means, with respect to any Person at any date, any corporation, limited or general partnership, limited liability company, trust, association or other entity (a) the accounts of which would be consolidated with those of such Person in such Person’s consolidated financial statements if such financial statements were prepared in accordance with GAAP or (b) of which more than 50% of (i) the outstanding Capital Stock having (in the absence of contingencies) ordinary voting power to elect a majority of the board of directors of such corporation, (ii) the interest in the capital or profits of such partnership or limited liability company or (iii) the beneficial interest in such trust or estate is, at the time of determination, owned or controlled directly or indirectly through one or more intermediaries, by such Person.

“Survey” has the meaning ascribed to such term in Section 4.01(v)(v).

“Swap Related L/C” means a letter of credit or other credit enhancement provided by GE Capital to the extent supporting the payment obligations by any Borrower under an interest rate protection or hedging agreement or transaction (including, but not limited to, interest rate swaps, caps, collars, floors and similar transactions) designed to protect or manage exposure to the fluctuations in the interest rates applicable to any of the Loans, and which agreement or transaction a Borrower entered into as the result of a specific referral pursuant to which GE Capital, GE Corporate Financial Services, Inc. or any other Affiliate of GE Capital had arranged for Borrower to enter into such agreement or transaction. The term includes a Swap Related L/C as it may be increased from time to time fully to support Borrower’s payment obligations under any and all such interest rate protection or hedging agreements or transactions.

“Swap Related Reimbursement Obligation” has the meaning ascribed to it in Section 1.12.

“Syndication Agent” has the meaning ascribed to such term in the introductory paragraph.

“Taxes” means any and all present or future taxes, levies, imposts, deductions, charges or withholdings imposed by any Governmental Authority.

“Term Defaulting Lender” has the meaning ascribed to such term in Section 1.03(d).

“Term Lender” means a Lender that has a Term Loan Commitment outstanding and/or an outstanding Term Loan.

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“Term Loan” has the meaning ascribed to such term in Section 1.03(a).

“Term Loan Commitment” means, with respect to any Lender, the obligation of such Lender at such time to make a Term Loan pursuant to the terms and conditions of this Agreement.

“Term Register” has the meaning ascribed to such term in Section 13.09(d).

“Threshold Equipment” means, as of the date of determination, no less than 80% of the Borrowers’ Equipment, as measured by book value, other than demonstration systems.

“Threshold Inventory” means, as of the date of determination, no less than 80% of the Borrowers’ Inventory, as measured by book value, other than demonstration systems.

“Title Company” has the meaning ascribed to such term in Section 4.01(v)(iv).

“Title Policy” has the meaning ascribed to such term in Section 4.01(v)(iv).

“Total Leverage Ratio” means, as of any date of determination,

(a) as of December 29, 2006, the ratio of (i) Consolidated Total Debt as of on such date to (ii) the Parent’s Consolidated EBITDA for the quarterly period ending on December 29, 2006 multiplied by four (4);

(b) as of March 30, 2007, the ratio of (i) Consolidated Total Debt as of on such date to (ii) the Parent’s Consolidated EBITDA for the six-month period ending on March 30, 2007 multiplied by two (2);

(c) as of June 29, 2007, the ratio of (i) Consolidated Total Debt as of on such date to (ii) the Parent’s Consolidated EBITDA for the nine-month period ending on June 29, 2007 multiplied by four (4) and divided by three (3); and

(d) as of September 28, 2007 and any date of determination thereafter, the ratio of (i) Consolidated Total Debt as of such date to (ii) the Parent’s Consolidated EBITDA for the four (4) Fiscal Quarters most recently ended on such date.

“Total Revolving Commitment” means the aggregate principal amount of the Revolving Commitments of all the Revolving Lenders (it being understood and agreed that the maximum aggregate principal amount of the Revolving Commitments shall not exceed thirty million Dollars ($30,000,000), as reduced from time to time pursuant to the terms hereof).

“Trademarks” shall have the meaning ascribed to such term in the Security Agreement.

“Trade Secrets” means all trade secrets and all other confidential or proprietary information and know-how including drawings, formulae, schematics, designs, plans, processes, supplier lists, business plans, business methods and prototypes now or hereafter owned or used in the business of such Credit Party throughout the world (all of the foregoing being collectively

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called a “Trade Secret”), whether or not such Trade Secret has been reduced to a writing or other tangible form, including all documents and things embodying, incorporating, or referring in any way to such Trade Secret, the right to sue for past, present and future infringement of any Trade Secret, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit.

“UCC” means the Uniform Commercial Code enacted in the State of New York, as in effect from time to time; provided, however, that if by reason of mandatory provisions of law, any or all of the attachment, perfection, effect of perfection, non-perfection, priority or remedies with respect to the Collateral Agent’s Liens is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” means the Uniform Commercial Code as enacted and in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection, effect of perfection, non-perfection, priority or remedies.

“Unused Commitment Fee” has the meaning ascribed to such term in Section 3.06(b).

“Wholly-Owned” means, when used to describe any Subsidiary of a Credit Party, that all of the Capital Stock (other than directors’ qualifying shares) of such Subsidiary is owned by one or more Credit Parties or Wholly-Owned Subsidiaries of the Credit Parties.

Section 14.02. Terms Generally. The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”. The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (a) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (c) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or supplemented from time to time and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

Section 14.03. Accounting and Other Terms. Unless otherwise expressly provided herein, each accounting term used herein shall have the meaning given to it under GAAP. All terms used in this Agreement which are defined in Article 8 or Article 9 of the UCC and which are not otherwise defined herein shall have the same meanings herein as set forth therein.

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Section 14.04. Time References. Unless otherwise indicated herein, all references to time of day refer to Eastern standard time or Eastern daylight saving time, as in effect in New York, New York on such day. For purposes of the computation of a period of time from a specified date to a later specified date, the word “from” means “from and including” and the words “to” and “until” each means “to but excluding”; provided, however, that with respect to a computation of fees or interest payable to the Administrative Agent or the Lenders, such period shall in any event consist of at least one full day.

(signature pages follow)

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized, as of the date first above written.

BORROWERS:
SILICON GRAPHICS, INC.
By	/s/ Kathy Lanterman
	Name:   Kathy Lanterman
	Title:     Senior Vice President and Chief Financial Officer
SILICON GRAPHICS FEDERAL, INC.
By	/s/ Kathy Lanterman
	Name:   Kathy Lanterman
	Title:     Vice President
SILICON GRAPHICS WORLD TRADE CORPORATION
By	/s/ Kathy Lanterman
	Name:   Kathy Lanterman
	Title:     Senior Vice President and Chief Financial Officer

ADMINISTRATIVE AGENT:
MORGAN STANLEY SENIOR FUNDING, INC.
By	/s/ Jason Colodne
	Name:   Jason Colodne
	Title:     Authorized Signatory

COLLATERAL AGENT:
GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/ Wafa Shalabi
	Name:   Wafa Shalabi
	Title:     Its Duly Authorized signatory
REVOLVING AGENT:
GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/ Wafa Shalabi
	Name:   Wafa Shalabi
	Title:     Its Duly Authorized signatory

LENDERS:
MORGAN STANLEY SENIOR FUNDING, INC.
By	/s/ Jason Colodne
	Name:   Jason Colodne
	Title:     Authorized Signatory

GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/ Wafa Shalabi
	Name:   Wafa Shalabi
	Title:     Its Duly Authorized signatory

EX-10.3

Exhibit 10.3

SECURITY AGREEMENT

This SECURITY AGREEMENT (this “Agreement”), dated as of October 17, 2006, among the Grantors listed on the signature pages hereof and those additional entities that hereafter become parties hereto by executing the form of Supplement attached hereto as Annex 1 (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and General Electric Capital Corporation (“GE”), in its capacity as collateral agent for the Secured Creditors (together with its successors, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, Silicon Graphics, Inc., Silicon Graphics Federal, Inc. and Silicon Graphics World Trade Corporation (each a “Borrower” and collectively, the “Borrowers”), the other Credit Parties party thereto from time to time as guarantors, the Participating Lenders party thereto from time to time, Morgan Stanley Senior Funding, Inc., as Administrative Agent for the Participating Lenders, and as Book Runner and Lead Arranger, and GE, as Revolving Agent, Syndication Agent and Collateral Agent, have entered into that certain Senior Secured Credit Agreement, dated as of the date hereof (as it may be amended, restated, modified or supplemented from time to time, including all exhibits and schedules thereto, or otherwise modified, the “Credit Agreement”), providing for a senior secured credit facility to the Borrowers, all as contemplated therein;

WHEREAS, the Collateral Agent has agreed to act as collateral agent for the benefit of the Secured Creditors in connection with the transactions contemplated by this Agreement; and

WHEREAS, to induce the Participating Lenders under the Credit Agreement and the other Secured Creditors (as defined below) to make the financial accommodations provided to the Borrowers pursuant to the Credit Agreement and the other Loan Documents, the Grantors have agreed to grant a continuing security interest in and to the Collateral in order to secure the prompt and complete payment, observance and performance of the Secured Obligations as provided herein.

NOW, THEREFORE, in consideration of the mutual promises, covenants, representations, and warranties set forth herein and for other good and valuable consideration the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

Section 1.1. Defined Terms. All capitalized terms used herein (including in the preamble and recitals hereof) without definition shall have the meanings ascribed thereto in the Credit Agreement. Any terms used in this Agreement that are defined in the UCC shall be construed and defined as set forth in the UCC unless otherwise defined herein or in the Credit Agreement; provided, however, that to the extent that the UCC is used to define any term herein and such term is defined differently in different articles of the UCC, the definition of such term

contained in Article 9 of the UCC shall govern. In addition to those terms defined elsewhere in this Agreement, as used in this Agreement, the following terms shall have the following meanings:

“Account” means any “account” as such term is defined in the UCC and, in any event, shall include all rights to payment of any monetary obligation, whether or not earned by performance, (a) for property that has been or is to be sold, leased, licensed, assigned or otherwise disposed of, (b) for services rendered or to be rendered, (c) for a policy of insurance issued or to be issued, (d) for a secondary obligation incurred or to be incurred, (e) for energy provided or to be provided, (f) for the use or hire of a vessel under a charter or other contract, (g) arising out of the use of a credit or charge card or information contained on or for use with the card, or (h) as winnings in a lottery or other game of chance operated or sponsored by a State, governmental unit of a State, or person licensed or authorized to operate the game by a State or governmental unit of a State. Without limiting the foregoing, the term “account” shall include all Health-Care-Insurance Receivables.

“Account Debtor” means any Person who is obligated on an Account, chattel paper or a general intangible.

“Additional Intellectual Property” shall have the meaning provided in Section 4.7.

“Agreement” means this Security Agreement, together with all Exhibits and Schedules hereto, as such agreement may be amended, supplemented or otherwise modified from time to time.

“As-Extracted Collateral” shall mean “as-extracted collateral” as such term is defined in the UCC.

“Books” means books and records (including each Grantor’s records indicating, summarizing or evidencing such Grantor’s assets (including the Collateral) or liabilities, each Grantor’s records relating to such Grantor’s business operations or financial condition and each Grantor’s goods or General Intangibles related to such information).

“Borrower” and “Borrowers” shall have the meaning specified therefor in the recitals hereto.

“Capital Stock” has the meaning specified therefor in the Credit Agreement.

“Cash Equivalents” has the meaning specified therefor in the Credit Agreement.

“Chattel Paper” means chattel paper as that term is defined in the UCC, and includes tangible chattel paper and electronic chattel paper.

“Collateral” has the meaning specified therefor in Section 2.1.

“Collateral Access Agreement” means a landlord waiver, mortgagee waiver, bailee letter, or acknowledgement agreement of any warehouseman, processor, lessor, consignee, or other Person in possession of, having a Lien upon, or having rights or interests in the Books,

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Equipment, or Inventory of any Grantor, in each case, in form and substance reasonably satisfactory to the Collateral Agent.

“Collateral Agent” has the meaning ascribed to such term in the introductory paragraph hereto.

“Commercial Tort Claims” means commercial tort claims as that term is defined in the UCC, and includes those commercial tort claims listed on Schedule 5.01(z) attached to the Credit Agreement.

“Contract Rights” shall mean all rights of any Grantor under each Contract, including (i) any and all rights to receive and demand payments under any or all Contracts, (ii) any and all rights to receive and compel performance under any or all Contracts and (iii) any and all other rights, interests and claims now existing or in the future arising in connection with any or all Contracts.

“Contracts” shall mean all contracts between any Grantor and one or more additional parties (including any partnership agreements, joint venture agreements and limited liability company agreements).

“Control Agreement” has the meaning specified therefor in the Credit Agreement.

“Controlled Foreign Corporation” has the meaning set forth in the United States Internal Revenue Code of 1986, as amended from time to time ( the “Tax Code”).

“Copyrights” means published and unpublished works of authorship, whether copyrightable or not (including without limitation databases and other compilations of information), copyrights therein and thereof and registrations and applications therefor, including all copyright registrations, recordings, and applications listed on Schedule 5.01(u) attached to the Credit Agreement and made a part hereof (as such schedule may be amended or supplemented from time to time), and (a) all extensions, restorations, reversions, or renewals thereof, (b) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past, present, or future infringements or other violations thereof, (c) the right to sue for past, present, or future infringements or other violations thereof, (d) the goodwill of each Grantor’s business symbolized by the foregoing and connected therewith, and (e) all of each Grantor’s rights corresponding thereto throughout the world.

“Copyright Security Agreement” means each Copyright Security Agreement among the Grantors, or any of them, and the Collateral Agent, for the benefit of the Secured Creditors, in substantially the form of Annex 2 attached hereto, pursuant to which the Grantors have granted to the Collateral Agent, for the benefit of the Secured Creditors, a security interest in all their respective Copyrights.

“Credit Agreement” has the meaning specified therefor in the recitals to this Agreement.

“Deposit Account” means any deposit account as that term is defined in the UCC.

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“Documents” shall mean “documents” as such term is defined in the UCC.

“Equipment” has the meaning specified therefor in the Credit Agreement.

“Event of Default” has the meaning specified therefor in Article X of the Credit Agreement.

“General Intangibles” means general intangibles as that term is defined in the UCC and, in any event, including payment intangibles, contract rights, rights to payment, rights arising under common law, statutes, or regulations, choses or things in action, goodwill (including the goodwill associated with any Trademark, Patent, or Copyright), Patents, Trademarks, servicemarks, Copyrights, URLs and domain names, industrial designs, other industrial or Intellectual Property or rights therein or applications therefor, whether under license or otherwise, programs, programming materials, blueprints, drawings, purchase orders, customer lists, rights to monies due or recoverable from pension funds, route lists, rights to payment and other rights under any royalty or licensing agreements, including Intellectual Property Licenses, infringement claims, computer programs, information contained on computer disks or tapes, software, literature, reports, catalogs, pension plan refunds, pension plan refund claims, insurance premium rebates, tax refunds, and tax refund claims, uncertificated securities, and any other personal property other than commercial tort claims, money, Accounts, Chattel Paper, Deposit Accounts, goods, Investment Related Property, Negotiable Collateral, and oil, gas, or other minerals before extraction.

“Goods” shall mean “goods” as such term is defined in the UCC.

“Grantor” and “Grantors” has the meaning ascribed to such term in the introductory paragraph hereto.

“Guaranty” has the meaning specified therefor in the Credit Agreement.

“Health-Care-Insurance Receivable” shall mean any “health-care-insurance receivable” as such term is defined in the UCC.

“Hedging Agreement Provider” has the meaning specified therefor in the Credit Agreement.

“Hedging Obligations” has the meaning specified therefor in the Credit Agreement.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other bankruptcy or insolvency law, assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“Instrument” shall mean “instruments” as such term is defined in the UCC.

“Intellectual Property” means all (a) Trademarks; (b) Patents; (c) Trade Secrets; (d) Copyrights; and (e) all other intellectual property or proprietary rights.

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“Intellectual Property Collateral” shall have the meaning provided in Section 2.1(o).

“Intellectual Property Licenses” means rights under or interest in any Patent, Trademark, Copyright or other Intellectual Property, including software license agreements with any other party, whether the applicable Grantor is a licensee or licensor under any such license agreement, including the license agreements listed on Schedule 5.01(u) attached to the Credit Agreement and made a part hereof, and the right to use the foregoing in connection with the enforcement of the Secured Creditors’ rights under the Loan Documents, including the right to prepare for sale and sell any and all Inventory and Equipment now or hereafter owned by any Grantor and now or hereafter covered by such licenses.

“Intellectual Property Security Agreement” shall have the meaning provided in Section 4.6.

“Intellectual Property Security Agreement Supplement” shall have the meaning provided in Section 4.7.

“Inventory” has the meaning specified therefor in the Credit Agreement.

“Investment Related Property” means (i) investment property as that term is defined in the UCC and (ii) all of the following regardless of whether classified as investment property under the UCC: all Pledged Interests, Pledged Operating Agreements, and Pledged Partnership Agreements.

“Letter-of-Credit Rights” shall mean “letter-of-credit rights” as such term is defined in the UCC.

“Loan Documents” has the meaning specified therefor in the Credit Agreement.

“Location” shall have the meaning provided in Section 9-307 of the UCC.

“Negotiable Collateral” means letters of credit, letter of credit rights, notes, instruments, promissory notes, drafts and documents (as that term is defined in the UCC) and chattel paper (including electronic chattel paper and tangible chattel paper).

“Obligations” has the meaning specified therefor in the Credit Agreement.

“Participating Lenders” has the meaning specified therefor in the Credit Agreement.

“Patents” means inventions and discoveries, whether patentable or not and all patents, registrations, invention disclosures, and patent applications therefor, including all patents and patent applications listed on Schedule 5.01(u) attached to the Credit Agreement and made a part hereof (as such schedule may be amended or supplemented from time to time), and (a) all divisions, continuations, continuations-in-part and renewal applications, and all renewals, extensions and reissues thereof, (b) all income, royalties, damages and payments now and hereafter due or payable under and with respect thereto, including payments under all licenses entered into in connection therewith and damages and payments for past, present, or future infringements or other violations thereof, (c) the right to sue for past, present, or future

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infringements or other violations thereof, and (d) all of each Grantor’s rights corresponding thereto throughout the world.

“Patent Security Agreement” means each Patent Security Agreement among the Grantors, or any of them, and the Collateral Agent, for the benefit of the Secured Creditors, in substantially the form of Annex 3 attached hereto, pursuant to which the Grantors have granted to the Collateral Agent, for the benefit of the Secured Creditors, a security interest in all their respective Patents.

“Permitted Encumbrance” has the meaning specified therefor in the Credit Agreement.

“Permitted Protest” has the meaning specified therefor in the Credit Agreement.

“Person” has the meaning specified therefor in the Credit Agreement.

“Pledged Companies” means each Person listed on Schedule A to the Pledge Agreement as an “Issuer”, together with each other Person, all or a portion of whose Capital Stock, is acquired or otherwise owned by a Grantor after the Closing Date.

“Pledged Interests” means all of each Grantor’s right, title and interest in and to all of the Capital Stock now or hereafter owned by such Grantor, regardless of class or designation, including, in each of the Pledged Companies, and all substitutions therefor and replacements thereof, all proceeds thereof and all rights relating thereto, including any certificates representing the Stock, the right to request after the occurrence and during the continuation of an Event of Default that such Stock be registered in the name of the Collateral Agent or any of its nominees, the right to receive any certificates representing any of the Stock and the right to require that such certificates be delivered to the Collateral Agent together with undated powers or assignments of investment securities with respect thereto, duly endorsed in blank by such Grantor, all warrants, options, share appreciation rights and other rights, contractual or otherwise, in respect thereof and of all dividends, distributions of income, profits, surplus, or other compensation by way of income or liquidating distributions, in cash or in kind, cash, instruments and other property from time to time received, receivable, or otherwise distributed in respect of or in addition to, in substitution of, on account of, or in exchange for any or all of the foregoing; provided, however, Pledged Interests shall not include any of the voting capital stock of Silicon Graphics Biomedical (1995) Ltd. (“SGI Biomedical”) or Silicon Graphics Computer Systems Limited (“SGCS”), each an entity organized under the laws of Israel or more than 65% of the Capital Stock of any Subsidiary that is a Controlled Foreign Corporation; provided, however, that immediately upon the amendment of the Tax Code to allow the pledge of a greater percentage of the voting power of capital stock in a Controlled Foreign Corporation without adverse tax consequences to the Grantor owning such voting capital stock, the Collateral shall include, and the security interest granted by each Grantor shall attach to, such greater percentage of capital stock of each Controlled Foreign Corporation owned by such Grantor; provided, further, however, that, in no event shall the foregoing be construed to exclude the Proceeds of all capital stock of SGI Biomedical, SGCS or any Controlled Foreign Corporation from the security interest created by this Agreement.

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“Pledged Interests Addendum” means a Pledged Interests Addendum substantially in the form of Annex 5 to this Agreement.

“Pledged Operating Agreements” means all of each Grantor’s rights, powers and remedies under the limited liability company operating agreements of each of the Pledged Companies that are limited liability companies.

“Pledged Partnership Agreements” means all of each Grantor’s rights, powers and remedies under the partnership agreements of each of the Pledged Companies that are partnerships.

“Proceeds” has the meaning specified therefor in Section 2.1.

“Real Estate Asset” has the meaning specified therefor in the Credit Agreement.

“Real Property” means any estates or interests in real property now owned or hereafter acquired by any Grantor and the improvements thereto.

“Records” means information that is inscribed on a tangible medium or which is stored in an electronic or other medium and is retrievable in perceivable form.

“Registered” means issued by, registered with, renewed by or the subject of a pending application before any Governmental Authority or internet domain name registrar.

“Registered Organization” shall have the meaning provided in the UCC.

“Scheduled Intellectual Property Collateral” has the meaning specified therefor in the Credit Agreement.

“Secured Creditors” shall mean the Participating Lenders, the Collateral Agent, the Administrative Agent, the Revolving Agent, the Agent-Related Persons and the Lender-Related Persons, the Hedging Agreement Providers, if any, and GE Capital, as holder of Swap Related Reimbursement Obligations, if any.

“Secured Obligations” means all (a) Obligations and (b) all liabilities, obligations, or undertakings owing by any Grantor to any of the Secured Creditors of any kind or description arising out of or outstanding under, advanced or issued pursuant to, or evidenced by the Credit Agreement, this Agreement, or any of the other Loan Documents, in each case irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, voluntary or involuntary, whether now existing or hereafter arising, and including all interest, indemnities and any and all costs, fees (including attorneys’ fees), and expenses and any other amounts (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, whether or not allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding) which such Grantor is required to pay in connection with any of the foregoing, whether compelled to do so by law, or otherwise, including (i) any and all reasonable sums advanced by any Secured Creditor in order to preserve its security interest in the Pledged Collateral, or upon the occurrence and during the continuance of an Event of Default, preserve the Pledged Collateral and (ii) in the event of any proceeding for the collection or enforcement of

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any indebtedness, obligations, or liabilities of such Grantor referred to above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of the Collateral Agent of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Pledged Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with its reasonable attorneys’ fees and court costs.

“Securities Account” has the meaning specified therefor in the Credit Agreement.

“Security Interest” has the meaning specified therefor in Section 2.1.

“Software” shall mean “software” as such term is defined in the UCC.

“Supporting Obligations” means Supporting Obligations (as such term is defined in the UCC), and includes letters of credit, guaranties, secondary obligation, in each case issued in support of Accounts, Chattel Paper, documents, General Intangibles, instruments, or Investment Related Property.

“Tax Code” has the meaning specified therefore in the definition of Controlled Foreign Corporation.

“Termination Date” shall mean that date on which all Secured Obligations (other than contingent indemnity obligations) have been paid in full.

“Timber-to-be-Cut” shall mean “timber-to-be-cut” as such term is defined in the UCC.

“Trade Secrets” has the meaning specified therefor in the Credit Agreement.

“Trademarks” means all United States, state and foreign trademarks, trade names, corporate names, company names, business names, fictitious business names, internet domain names, trade dress, service marks, certification marks, collective marks, logos, all indicators of the source of goods or services, designs and general intangibles of a like nature, all registrations and applications for any of the foregoing including, but not limited to the registrations and applications referred to in Schedule 5.01(u) attached to the Credit Agreement and made a part hereof (as such schedule may be amended or supplemented from time to time), but excluding in all cases all intent-to-use United States trademark applications for which an amendment to allege use or statement of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), respectively, or if filed, has not been deemed in conformance with 15 U.S.C. § 1051(a) or examined and accepted, respectively, by the United States Patent and Trademark Office, all extensions or renewals of any of the foregoing, all of the goodwill of the business connected with the use of and symbolized by the foregoing, the right to sue for past, present and future infringement or dilution of any of the foregoing or for any injury to goodwill, and all proceeds of the foregoing, including licenses, royalties, income, payments, claims, damages, and proceeds of suit, which are owned or licensed by a Credit Party.

“Trademark Security Agreement” means each Trademark Security Agreement among the Grantors, or any of them, and the Collateral Agent, for the benefit of the Secured Creditors, in substantially the form of Annex 4 attached hereto, pursuant to which the Grantors have granted

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to the Collateral Agent, for the benefit of the Secured Creditors, a security interest in all their respective Trademarks.

“UCC” means the Uniform Commercial Code enacted in the State of New York, as in effect from time to time; provided, however, that in the event that, by reason of mandatory provisions of law, any or all of the attachment, the perfection, the effect of perfection, non-perfection, priority or remedies with respect to the Collateral Agent’s lien on Collateral, is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York, the term “UCC” means the Uniform Commercial Code as enacted and in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection, priority or remedies.

“URL” means “uniform resource locator,” an internet web address.

ARTICLE II

Section 2.1. Grant of Security. As security for the prompt and complete payment and performance when due of all of the Secured Obligations, each Grantor hereby unconditionally grants, assigns and pledges to the Collateral Agent, for the benefit of the Secured Creditors, a continuing security interest (hereinafter referred to as the “Security Interest”) in all property and assets of such Grantor whether now owned or hereafter acquired or arising and wherever located, including without limitation such Grantor’s right, title, and interest in the following, whether now owned or hereafter acquired or arising and wherever located (the “Collateral”):

(a) all of such Grantor’s Accounts (including all Health-Care-Insurance Receivables);

(b) all of such Grantor’s Books;

(c) all of such Grantor’s Chattel Paper (including all tangible Chattel Paper and all electronic Chattel Paper);

(d) all of such Grantor’s interest with respect to any Deposit Account (or demand, deposit, time savings or similar accounts);

(e) all of such Grantor’s Equipment and fixtures;

(f) all of such Grantor’s General Intangibles;

(g) all of such Grantor’s Inventory;

(h) all of such Grantor’s Investment Related Property (including all such Grantor’s Securities and Securities Accounts);

(i) all of such Grantor’s Negotiable Collateral;

(j) all of such Grantor’s rights in respect of Supporting Obligations;

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(k) all of such Grantor’s interest with respect to any Commercial Tort Claims;

(l) all of such Grantor’s Documents;

(m) all of such Grantor’s Goods;

(n) all of such Grantor’s Instruments;

(o) all of such Grantor’s Intellectual Property (collectively, the “Intellectual Property Collateral”), and all copies and tangible embodiments of any of the foregoing in whatever form or medium;

(p) all of such Grantor’s Software;

(q) all of such Grantor’s Permits;

(r) all of such Grantor’s cash, Cash Equivalents or other assets of each such Grantor that now or hereafter come into the possession, custody or control of the Collateral Agent or any other member of the Secured Creditors;

(s) all of the proceeds (and all proceeds of proceeds) and products, whether tangible or intangible, of any of the foregoing, including proceeds commercial tort claims or payments under any policy of insurance and proceeds of any insurance (excluding directors and officers insurance), or guaranty (including guaranties of delivery) payable from time to time covering or relating to any or all of the foregoing, and any and all Accounts, Books, Chattel Paper, Deposit Accounts, Equipment, General Intangibles, Inventory, Investment Related Property, Negotiable Collateral, Supporting Obligations, money, all “proceeds” as that term is defined in Section 9-102(a)(64) of the UCC of Collateral, or other tangible or intangible property resulting from the sale, lease, license, exchange, collection, or other disposition of any of the foregoing, payments (in any form whatsoever) made or due and payable to any Grantor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the property or assets of the Grantors, any rebates or refunds, whether for taxes or otherwise, and all proceeds of any such proceeds, or any portion thereof or interest therein, and the proceeds thereof, and all proceeds of any loss of, damage to, or destruction of the above, whether insured or not insured, and, to the extent not otherwise included, any indemnity or warranty payable by reason of loss or damage to, or otherwise with respect to any of the foregoing Collateral) or any other amounts from time to time paid or payable under or in connection with any of the foregoing Collateral (the “Proceeds”). Without limiting the generality of the foregoing, the term “Proceeds” includes whatever is receivable or received when Investment Related Property or proceeds are sold, exchanged, collected, or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes proceeds of any indemnity or guaranty payable to any Grantor or the Collateral Agent from time to time with respect to any of the Investment Related Property;

Notwithstanding the foregoing, the security interest granted herein shall not extend to, and the term “Collateral” shall not include: (i) any property subject to a Lien that constitutes a Permitted Encumbrance under clause (i) of the definition thereof, if the applicable documents

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creating such Lien or the Indebtedness it secures prohibits the Grantor from granting a security interest in such property, (ii) any assets, other than Inventory, Equipment, machinery, owned Intellectual Property, owned Real Estate Assets and Accounts, owned by any of the Credit Parties or their Subsidiaries as of the date hereof, to the extent that the terms thereof or of any Applicable Law in effect at the time (1) prohibit the creation of a security interest therein, or (2) the creation of a security interest therein would cause such item to become void, would constitute a breach under such item or would otherwise violate the terms thereof, but only to the extent that (and for so long as) the terms contemplated by clause (1) or (2), as applicable, are not terminated, repealed, or rendered unenforceable or otherwise deemed ineffective (whether pursuant to the terms thereof or under Applicable Law), and at such time the applicable Grantor shall be deemed to have granted, without any further action, a security interest, pursuant to this Section 2.1, in any such assets, accounts, property, licenses or other interests, (iii) all of the voting capital stock of SGI Biomedical or SGCS and (iv) more than 65% of the Capital Stock of any Subsidiary that is a Controlled Foreign Corporation; provided, however, that immediately upon the amendment of the Tax Code to allow the pledge of a greater percentage of the voting power of capital stock in a Controlled Foreign Corporation without adverse tax consequences to the Grantor owning such voting capital stock, the Collateral shall include, and the security interest granted by each Grantor shall attach to, such greater percentage of capital stock of each Controlled Foreign Corporation owned by such Grantor; provided, further, however, that, in no event shall the foregoing be construed to exclude the Proceeds of all capital stock of SGI Biomedical, SGCS or any Controlled Foreign Corporation from the security interest created by this Agreement or the Proceeds of any assets excluded from the definition of “Collateral” pursuant to clause (i) or (ii) above. In the event that any asset, account, property or other interest of any Grantor (including of the types described in the proviso of the preceding sentence) is excluded from the Collateral as a result of a restriction on assignment or creation of a security interest in the terms thereof, such Grantor agrees to use reasonable efforts to obtain all requisite consents to enable such Grantor to provide a security interest in such asset pursuant hereto as soon as practicable (except to the extent that such Grantor is otherwise excused from delivering such consent under the Loan Documents).

Section 2.2. Security for Obligations. This Agreement and the Security Interest created hereby secure the payment and performance of all of the Secured Obligations, whether now existing or arising hereafter. Without limiting the generality of the foregoing, this Agreement secures the payment of all amounts which constitute part of the Secured Obligations and would be owed by the Grantors, or any of them, to the Collateral Agent, the Secured Creditors or any of them, whether or not they are unenforceable or not allowable due to the existence of an Insolvency Proceeding involving any Grantor.

Section 2.3. Grantors Remain Liable. Anything herein to the contrary notwithstanding, (a) each of the Grantors shall remain liable under the contracts and agreements included in the Collateral, including the Pledged Operating Agreements and the Pledged Partnership Agreements, to perform all of the duties and obligations thereunder to the same extent as if this Agreement had not been executed, (b) the exercise by the Collateral Agent or any other Secured Creditor of any of the rights hereunder shall not release any Grantor from any of its duties or obligations under such contracts and agreements included in the Collateral, and (c) none of the Secured Creditors shall have any obligation or liability under such contracts and agreements included in the Collateral by reason of this Agreement, nor shall any of the Secured Creditors be

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obligated to perform any of the obligations or duties of any Grantors thereunder or to take any action to collect or enforce any claim for payment assigned hereunder. Until an Event of Default shall occur and be continuing, except as otherwise provided in this Agreement, the Credit Agreement, or other Loan Documents, the Grantors shall have the right to possession and enjoyment of the Collateral for the purpose of conducting the ordinary course of their respective businesses, subject to and upon the terms hereof and of the Credit Agreement and the other Loan Documents. Without limiting the generality of the foregoing, it is the intention of the parties hereto that record and beneficial ownership of the Pledged Interests, including all voting, consensual and dividend rights, shall remain in the applicable Grantor until the occurrence of an Event of Default and in accordance with the Pledge Agreement.

ARTICLE III

GENERAL REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 3.1. Representations and Warranties. Each Grantor hereby represents and warrants as follows:

(a) Legal Names. The exact legal name of each of the Grantors is set forth on the signature pages of this Agreement.

(b) Real Estate Assets. Schedule 4.01(v) attached to the Credit Agreement sets forth all Real Estate Assets owned or leased by the Grantors as of the Closing Date.

(c) Intellectual Property. As of the Closing Date, no Grantor owns or is the exclusive licensee of any Registered Intellectual Property or material unregistered Software products except as set forth on Schedule 5.01(u) attached to the Credit Agreement. This Agreement is effective to create a valid and continuing Lien on each Grantor’s Intellectual Property and Intellectual Property Licenses and, upon filing of the Copyright Security Agreement with the United States Copyright Office and filing of the Patent Security Agreement and the Trademark Security Agreement with the United States Patent and Trademark Office, and the filing of appropriate financing statements in the applicable jurisdictions, all actions necessary or desirable to protect and perfect the Security Interest in and to each Grantor’s Intellectual Property have been taken, and such perfected Security Interests are enforceable as such as against any and all creditors of and purchasers from any Grantor. Each Grantor has registered with the United States Copyright Office any Copyright that is necessary in connection with the operation of such Grantor’s business, except for those Copyrights that in such Grantor’s business judgment, are not of sufficient value to merit such treatment in the United States Copyright Office.

(d) Validity. The security interests granted pursuant to this Agreement, upon completion of the filings specified in Schedule 1 hereto, shall constitute valid, binding, enforceable and, with respect to only those items of Collateral for which perfection can be achieved by filing a financing statement under the UCC, perfected security interests in the Collateral in favor of the Collateral Agent for the benefit of the Secured Creditors subject to no other Liens (other than Permitted Encumbrances). When, in addition to the filings specified in

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Schedule 1 hereto, the Trademark Security Agreement and the Patent Security Agreement have been filed with the United States Patent and Trademark Office, together with appropriately completed recordation forms, and the Copyright Security Agreement has been filed with the United States Copyright Office, together with an appropriately completed recordation form, the security interests granted hereby in such Patents, Trademarks and Copyrights, as applicable, will constitute perfected first priority Security Interests in favor of the Collateral Agent for the benefit of the Secured Creditors in all right, title and interest of such Grantors in such Collateral to the extent that security interests therein may be perfected by such filings. All action by any Grantor necessary to protect and perfect such Security Interest on each item of Collateral has been duly taken.

(e) Location of Inventory and Equipment. All Threshold Inventory and Threshold Equipment located within the United States and held on the date hereof by each Grantor is located at one of the locations shown on Schedule 5.01(y) attached to the Credit Agreement.

(f) Legal Names; Type of Organization (and Whether a Registered Organization); Jurisdiction of Organization; Location; Organizational Identification Numbers; Changes Thereto; etc. The exact legal name of each Grantor, the type of organization of such Grantor, whether or not such Grantor is a Registered Organization, the jurisdiction of organization of such Grantor, such Grantor’s Location, and the organizational identification number (if any) of such Grantor is listed on Schedule 2 for such Grantor. Such Grantor shall not change its legal name, its type of organization, its status as a Registered Organization (in the case of a Registered Organization), its jurisdiction of organization, its Location, or its organizational identification number (if any) from that used on Schedule 2, except that any such changes shall be permitted (so long as not in violation of the applicable requirements of the Loan Documents and so long as same do not involve (i) a Registered Organization ceasing to constitute same (other than as a result of one Credit Party merging into another Credit Party or as otherwise permitted under the Credit Agreement) or (ii) such Grantor changing its jurisdiction of organization or Location from the United States or a State thereof to a jurisdiction of organization or Location, as the case may be, that is neither the United States nor a State thereof) if (A) it shall have given to the Collateral Agent not less than twenty (20) days’ prior written notice of each change to the information listed on Schedule 2 (as adjusted for any subsequent changes thereto previously made in accordance with this sentence), together with a supplement to Schedule 2, which shall correct all information contained therein for such Grantor, and (B) in connection with such change or changes, it shall have taken all action reasonably requested in writing by the Collateral Agent to maintain the security interests of the Collateral Agent in the Collateral intended to be granted hereby at all times fully perfected and in full force and effect. In addition, to the extent that such Grantor does not have an organizational identification number on the date hereof and later obtains one, such Grantor shall promptly thereafter notify the Collateral Agent of such organizational identification number and shall take all actions reasonably satisfactory to the Collateral Agent to the extent necessary to maintain the security interest of the Collateral Agent in the Collateral intended to be granted hereby fully perfected and in full force and effect.

(g) Certain Significant Transactions. During the four (4) month period preceding the date of this Agreement, no Person shall have merged or consolidated with or into

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any Grantor, and no Person shall have liquidated into, or transferred all or substantially all of its assets to, any Grantor, in each case except as described in Schedule 3. With respect to any transactions so described in Schedule 3, the respective Grantor shall have furnished such information with respect to the Person (and the assets of the Person and locations thereof) that merged with or into or consolidated with such Grantor, or was liquidated into or transferred all or substantially all of its assets to such Grantor, and shall have furnished to the Collateral Agent such UCC lien searches as may have been requested with respect to such Person and its assets, to establish that no security interest (excluding Permitted Encumbrances) continues perfected on the date hereof with respect to any Person described above (or the assets transferred to the respective Grantor by such Person), including pursuant to Section 9-316(a)(3) of the UCC.

(h) As-Extracted Collateral; Timber-to-be-Cut. On the date hereof, such Grantor does not own, or expect to acquire, any property that constitutes, or would constitute, As-Extracted Collateral or Timber-to-be-Cut. If at any time after the date of this Agreement such Grantor owns, acquires or obtains rights to any As-Extracted Collateral or Timber-to-be-Cut, such Grantor shall furnish the Collateral Agent with prompt written notice thereof (which notice shall describe in reasonable detail the As-Extracted Collateral and/or Timber-to-be-Cut and the locations thereof) and shall take all actions as may be deemed reasonably necessary or desirable by the Collateral Agent to perfect the security interest of the Collateral Agent therein.

(i) Consents, Etc. No consent, approval, authorization, or other order or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required (i) for the grant of a Security Interest by such Grantor in and to the Collateral pursuant to this Agreement or for the execution, delivery, or performance of this Agreement by such Grantor or (ii) for the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement with respect to the Investment Related Property or the remedies in respect of the Collateral pursuant to this Agreement, except as may be required in connection with such disposition of Investment Related Property by laws affecting the offering and sale of securities generally.

(j) Motor Vehicles. Schedule 4 attached hereto sets forth all motor vehicles owned by the Grantors as of the Closing Date, by model, model year and vehicle identification number (“VIN”).

Section 3.2. Covenants. Each Grantor, jointly and severally, covenants and agrees with the Collateral Agent and the Secured Creditors that from and after the date of this Agreement and until the date of termination of this Agreement hereof:

(a) Possession of Collateral. In the event that any Collateral, including proceeds, is evidenced by or consists of Negotiable Collateral, Investment Related Property or Chattel Paper, and if and to the extent that perfection or priority of the Collateral Agent’s Security Interest is dependent on or enhanced by possession, the applicable Grantor, immediately upon the request of the Collateral Agent, shall execute such other documents and instruments as shall be requested by the Collateral Agent or, if applicable, endorse and deliver physical possession of such Negotiable Collateral, Investment Related Property or Chattel Paper to the

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Collateral Agent, together with such undated powers endorsed in blank as shall be requested by the Collateral Agent;

(b) Chattel Paper.

(i) Each Grantor shall take all steps reasonably necessary to grant the Collateral Agent control of all electronic Chattel Paper in accordance with the UCC and all “transferable records” as that term is defined in Section 16 of the Uniform Electronic Transaction Act and Section 201 of the federal Electronic Signatures in Global and National Commerce Act as in effect in any relevant jurisdiction; and

(ii) If any Grantor retains possession of any Chattel Paper or instruments (which retention of possession shall be subject to the extent permitted hereby and by the Credit Agreement), promptly upon the request of the Collateral Agent, such Chattel Paper and instruments shall be marked with the following legend: “This writing and the obligations evidenced or secured hereby are subject to the Security Interest of General Electric Capital Corporation, as the Collateral Agent for the benefit of the Secured Creditors;

(c) Control Agreements. Each Grantor shall comply in all respects with the Credit Agreement, including Section 7.19 thereof;

(d) Letter of Credit Rights. Each Grantor that is or becomes the beneficiary of a letter of credit in an amount greater than one million dollars ($1 million) shall promptly (and in any event within five (5) Business Days after becoming a beneficiary), notify the Collateral Agent thereof and, upon the request of the Collateral Agent, enter into a tri-party agreement with the Collateral Agent and the issuer or confirmation bank with respect to Letter-of-Credit Rights assigning such Letter-of-Credit Rights to the Collateral Agent and directing all payments thereunder to a bank account designated by the Collateral Agent, all in form and substance satisfactory to the Collateral Agent;

(e) Commercial Tort Claims. Each Grantor shall promptly (and in any event within five (5) Business Days of receipt thereof), notify the Collateral Agent in writing upon incurring or otherwise obtaining a Commercial Tort Claim with a value in excess of one million dollars ($1 million) after the date hereof against any third party and, upon request of the Collateral Agent, promptly amend Schedule 5.01(z) to the Credit Agreement, authorize the filing of additional financing statements or amendments to existing financing statements and do such other acts or things deemed necessary or desirable by the Collateral Agent to give the Collateral Agent a first priority perfected security interest in any such Commercial Tort Claim;

(f) Government Contracts. If any Account or Chattel Paper arises out of a contract or contracts with the United States of America or any department, agency or instrumentality thereof, the Grantors shall promptly, at the request of the Collateral Agent, execute any instruments or take any steps reasonably required by the Collateral Agent in order that all monies due or to become due under such contract or contracts shall be assigned to the Collateral Agent, for the benefit of the Secured Creditors, and give notice thereof under the Assignment of Claims Act or other applicable law;

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(g) Intellectual Property.

(i) Upon request of the Collateral Agent, in order to facilitate filings with the United States Patent and Trademark Office and the United States Copyright Office, each Grantor shall execute and deliver to the Collateral Agent a Copyright Security Agreement, Trademark Security Agreement or Patent Security Agreement to evidence the Collateral Agent’s lien on such Grantor’s Patents, Trademarks or Copyrights, and the General Intangibles of such Grantor relating thereto or represented thereby;

(ii) Each Grantor shall promptly file an application with the United States Copyright Office for any Copyright that has not been registered with the United States Copyright Office if such Copyright is necessary in connection with the operation of such Grantor’s business, except for those Copyrights that, in such Grantor’s business judgment, are not of sufficient value to merit such treatment in the United States Copyright Office. Any expenses incurred in connection with the foregoing shall be borne by the appropriate Grantor. Each Grantor further agrees to notify the Collateral Agent of any such filing as set forth in Section 4.7 hereof;

(iii) Each Grantor acknowledges and agrees that the Secured Creditors shall have no duties with respect to the Trademarks, Patents, Copyrights or Intellectual Property Licenses. Without limiting the generality of this Section 3.2(g), each Grantor acknowledges and agrees that no Secured Creditor shall be under any obligation to take any steps necessary to preserve rights in the Trademarks, Patents, Copyrights or Intellectual Property Licenses against any other Person, but any Secured Creditor may do so at its option from and after the occurrence and during the continuance of an Event of Default, and all expenses incurred in connection therewith (including reasonable fees and expenses of attorneys and other professionals) shall be for the sole account of each Grantor; and

(iv) In no event shall any Grantor, either itself or through any agent, employee, licensee or designee, file an application for the registration of any Patent, Trademark or Copyright with the United States Patent and Trademark Office, the United States Copyright Office or any similar office or agency without giving the Collateral Agent written notice thereof as set forth in Section 4.7 hereof;

(h) Investment Related Property.

(i) If any Grantor shall receive or become entitled to receive any Pledged Interests after the Closing Date, it shall promptly (and in any event within five (5) Business Days of receipt thereof) deliver to the Collateral Agent a duly executed Pledged Interests Addendum substantially in the form of Annex 5 identifying such Pledged Interests;

(ii) All sums of money and property paid or distributed in respect of the Investment Related Property which are received by any Grantor shall be

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held by such Grantor in trust for the benefit of the Collateral Agent, and such Grantor shall deliver it forthwith to the Collateral Agent in the exact form received;

(iii) Each Grantor shall promptly deliver to the Collateral Agent a copy of each notice or other communication received by it in respect of any Pledged Interests;

(iv) No Grantor shall make or consent to any amendment or other modification or waiver with respect to any Pledged Interests, Pledged Operating Agreement or Pledged Partnership Agreement, or enter into any agreement or permit to exist any restriction with respect to any Pledged Interests other than pursuant to the Loan Documents;

(v) Each Grantor agrees that it will cooperate with the Collateral Agent in obtaining all necessary approvals and making all necessary filings under federal, state, local or foreign law in connection with the Security Interest on the Investment Related Property or any sale or transfer thereof; and

(vi) As to all limited liability company or partnership interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, each Grantor hereby represents, warrants and covenants that the Pledged Interests issued pursuant to such agreement (A) are not and shall not be dealt in or traded on securities exchanges or in securities markets, (B) do not and will not constitute investment company securities, and (C) are not and will not be held by such Grantor in a securities account. In addition, none of the Pledged Operating Agreements, the Pledged Partnership Agreements, or any other agreements governing any of the Pledged Interests issued under any Pledged Operating Agreement or Pledged Partnership Agreement, provide or shall provide that such Pledged Interests are securities governed by Article 8 of the Uniform Commercial Code as in effect in any relevant jurisdiction;

(i) Real Estate Assets; Fixtures. Each Grantor covenants and agrees that upon the acquisition of any fee interest in any Real Estate Asset it will promptly comply with Section 7.08 of the Credit Agreement. Each Grantor acknowledges and agrees that, to the extent permitted by applicable law, all of the fixtures shall remain personal property regardless of the manner of its attachment or affixation to real property;

(j) Transfers and Other Liens. The Grantors shall not (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Collateral, except as expressly permitted by the Credit Agreement, or (ii) create or permit to exist any Lien upon or with respect to any of the Collateral of any of the Grantors, except for Permitted Encumbrances. The inclusion of Proceeds in the Collateral shall not be deemed to constitute the Collateral Agent’s consent to any sale or other disposition of any of the Collateral except as expressly permitted in this Agreement or the other Loan Documents;

(k) Other Actions as to Any and All Collateral. Each Grantor shall promptly notify the Collateral Agent in writing upon (i) acquiring or otherwise obtaining any Collateral after the date hereof consisting of Intellectual Property Licenses, Investment Related

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Property, Chattel Paper (electronic, tangible or otherwise), Documents, promissory notes (as defined in the UCC), or Instruments or (ii) any amount payable under or in connection with any of the Collateral being or becoming evidenced after the date hereof by any Chattel Paper, documents, promissory notes, or instruments and, in each such case upon the request of the Collateral Agent, promptly execute such other documents, or if applicable, deliver such Chattel Paper, other documents or certificates evidencing any Investment Related Property and do such other acts or things deemed necessary or desirable by the Collateral Agent to protect the Collateral Agent’s Security Interest therein. Each Grantor shall comply with Section 4.7 hereof with respect to Intellectual Property Collateral; and

(l) Motor Vehicles. Upon the request of the Collateral Agent, with respect to all motor vehicles owned by any Grantor, the Grantor shall deliver to the Collateral Agent, a certificate of title for all such motor vehicles and shall cause those title certificates to be filed (with the Collateral Agent’s lien noted thereon) in the appropriate state motor vehicle filing office.

Section 3.3. Relation to Other Security Documents. The provisions of this Agreement shall be read and construed with the other Loan Documents referred to below in the manner so indicated.

(a) Credit Agreement. In the event of any conflict between any provision in this Agreement and a provision in the Credit Agreement, such provision of the Credit Agreement shall control.

(b) Patent, Trademark, Copyright Security Agreements. The provisions of the Copyright Security Agreements, Trademark Security Agreements and Patent Security Agreements are supplemental to the provisions of this Agreement, and nothing contained in the Copyright Security Agreements, Trademark Security Agreements or the Patent Security Agreements shall limit any of the rights or remedies of the Collateral Agent hereunder.

Section 3.4. Further Assurances.

(a) Each Grantor agrees that from time to time, at its own expense, such Grantor will promptly execute and deliver all further instruments and documents and take all further action, that may be necessary or that the Collateral Agent may reasonably request, in order to perfect and protect any Security Interest granted or purported to be granted hereby or to enable the Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any of the Collateral.

(b) Each Grantor authorizes the filing by the Collateral Agent of financing or continuation statements, or amendments thereto, and such Grantor will execute and deliver to the Collateral Agent such other instruments or notices, as may be necessary or as the Collateral Agent may reasonably request, in order to perfect and preserve the Security Interest granted or purported to be granted hereby.

(c) Each Grantor authorizes the Collateral Agent at any time and from time to time to file, transmit, or communicate, as applicable, financing statements and amendments (i) describing the Collateral as “all personal property of debtor” or “all assets of

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debtor” or words of similar effect, (ii) describing the Collateral as being of equal or lesser scope or with greater detail, or (iii) that contain any information required by part 5 of Article 9 of the UCC for the sufficiency or filing office acceptance. Each Grantor also hereby ratifies any and all financing statements or amendments filed by the Collateral Agent on or prior to the date hereof in any jurisdiction.

(d) Each Grantor acknowledges that it is not authorized to file any financing statement or amendment or termination statement with respect to any financing statement filed in connection with this Agreement without the prior written consent of the Collateral Agent, subject to such Grantor’s rights under Section 9-509(d)(2) of the UCC.

Section 3.5. Maintenance of Records. Each Credit Party shall, and shall cause each of its Subsidiaries to, keep and maintain in all material respects proper, complete and accurate books of record and account, in which entries in conformity with GAAP shall be made of all dealings and financial transactions and the assets and business of such Credit Party or Subsidiary in relation to their respective businesses and activities, including transactions and other dealings with respect to the Collateral. If an Event of Default has occurred and is continuing and the Loans have been accelerated, the Borrowers, upon the Administrative Agent’s or Collateral Agent’s request, shall provide copies of any such records to the Administrative Agent or Collateral Agent or their representatives.

Section 3.6. Direction to Account Debtors; Contracting Parties; etc. Upon the occurrence and during the continuance of an Event of Default, if the Collateral Agent so directs any Grantor in writing, such Grantor agrees (a) to cause all payments on account of the Accounts, General Intangibles, Negotiable Collateral and Contracts to be made directly to an account specified by the Collateral Agent and (b) that the Collateral Agent may, at its option, directly notify the obligors with respect to any Accounts, General Intangibles, Negotiable Collateral and/or Contracts (i) that such Accounts, General Intangibles, Negotiable Collateral and/or Contracts have been assigned to the Collateral Agent (or its designee) for the benefit of the Secured Creditors, (ii) to make payments with respect thereto as provided in the preceding clause (a), (iii) that the Collateral Agent may enforce collection of any such Accounts, General Intangibles, Negotiable Collateral and Contracts and (iv) the Collateral Agent may adjust, settle or compromise the amount of payment thereof, in the same manner and to the same extent as such Grantor. The reasonable costs and expenses of collection (including reasonable attorneys’ fees), whether incurred by an Grantor or the Collateral Agent, shall be borne by the relevant Grantor. The Collateral Agent shall deliver a copy of each notice referred to in the preceding clause (b) to the relevant Grantor; provided that (i) the failure by the Collateral Agent to so notify such Grantor shall not affect the effectiveness of such notice or the other rights of the Collateral Agent created by this Section 3.6 and (ii) no such notice shall be required if an Event of Default of the type described in Section 10.01(a), (f) and (g) of the Credit Agreement has occurred and is continuing.

Section 3.7. Collateral Agent’s Right to Perform Contracts. Notwithstanding anything to the contrary contained herein, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent (or its designee) may proceed to perform any and all of the obligations of any Grantor contained in any contract, lease, or other agreement and exercise any and all rights of any Grantor therein contained as fully as such Grantor itself could, except to the

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extent prohibited by law, rule or regulation or the terms of the applicable contract (unless consented to by the other party to such contract).

Section 3.8. Grantors Remain Liable Under Accounts. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Account (or any agreement giving rise thereto) by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Account pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Account (or any agreement giving rise thereto), to make any payment, to make any inquiry as to the nature or the sufficiency of any payment received by them or as to the sufficiency of any performance by any party under any Account (or any agreement giving rise thereto), to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to them or to which they may be entitled at any time or times.

Section 3.9. Grantors Remain Liable Under Contracts. Neither the Collateral Agent nor any other Secured Creditor shall have any obligation or liability under any Contract by reason of or arising out of this Agreement or the receipt by the Collateral Agent or any other Secured Creditor of any payment relating to such Contract pursuant hereto, nor shall the Collateral Agent or any other Secured Creditor be obligated in any manner to perform any of the obligations of any Grantor under or pursuant to any Contract, to make any payment, to make any inquiry as to the nature or the sufficiency of any performance by any party under any Contract, to present or file any claim, to take any action to enforce any performance or to collect the payment of any amounts that may have been assigned to them or to which they may be entitled at any time or times.

ARTICLE IV

SPECIAL PROVISIONS CONCERNING INTELLECTUAL PROPERTY

Section 4.1. Representations and Warranties. Each Grantor incorporates by reference Section 5.01(u) of the Credit Agreement.

Section 4.2. Infringements. In the event that any Grantor becomes aware that any item of Intellectual Property Collateral is being infringed, misappropriated, diluted, or otherwise violated by a third party in any manner that could reasonably be expected to have a Material Adverse Effect, such Grantor shall promptly notify the Collateral Agent and, at such Grantor’s expense, shall take all actions that are necessary or advisable, consistent with prudent commercial practices and such Grantor’s business judgment, to protect or enforce such Intellectual Property Collateral.

Section 4.3. Maintenance. With respect to each item of its material Registered Intellectual Property Collateral and material Trade Secrets now or hereafter included in the Intellectual Property Collateral, subject to Sections 4.2 and 4.4, each Grantor agrees to maintain, at its expense, such Intellectual Property Collateral in full force and effect, including the payment of required fees and taxes; the filing of: (i) applications for renewal or extension, (ii) affidavits of use, and (iii) affidavits of incontestability; and the participation in interference, reexamination,

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opposition, cancellation, infringement and misappropriation proceedings. Subject to Section 4.4, each Grantor shall take all commercially reasonable steps to preserve and protect each item of such Intellectual Property Collateral, including maintaining the quality of any and all products or services used or provided in connection with any material Trademark, substantially consistent with the quality of the products and services as of the date hereof, and ensuring that all licensed users of any of the Trademarks use such substantially consistent standards of quality.

Section 4.4. Abandonment. No Grantor shall, without the written consent of the Collateral Agent, abandon any material Registered Intellectual Property or any material Intellectual Property License, unless such Grantor shall have previously determined, consistent with reasonable commercial judgment, that such use or the pursuit or maintenance of such Intellectual Property Collateral or such Intellectual Property License is no longer necessary in the conduct of such Grantor’s business and that the loss thereof would not be reasonably likely to have a Material Adverse Effect, in which case, such Grantor will give prompt notice of any such abandonment to the Collateral Agent.

Section 4.5. Enforceability. Subject to Section 4.4, each Grantor agrees promptly to notify the Collateral Agent if such Grantor becomes aware (a) that any item of its material Intellectual Property Collateral may have become (i) abandoned, (ii) placed in the public domain, (iii) invalid or (iv) unenforceable; or (b) of any adverse determination or the institution of any proceeding (including, without limitation, the institution of any proceeding in the United States Patent and Trademark Office or any court) regarding any item of material Intellectual Property Collateral. Except as set forth in Section 4.4, no Grantor shall do or permit any act or knowingly omit to do any act whereby any of its material Intellectual Property Collateral may lapse or become invalid or unenforceable or placed in the public domain. For the avoidance of doubt, a non-final determination by a governmental intellectual property office examiner concerning the registerability of a trademark in connection with the prosecution of an application for registration shall not constitute an “adverse determination” for the purposes of clause (b) above.

Section 4.6. Intellectual Property Security Agreements. Each Grantor agrees to execute or otherwise authenticate agreements, in substantially the form set forth in Annexes 2, 3 and 4, as applicable, or otherwise in form and substance satisfactory to the Collateral Agent (each, an “Intellectual Property Security Agreement”), for recording the security interest granted hereunder in such Registered Intellectual Property Collateral with the United States Patent and Trademark Office, the United States Copyright Office and any other Governmental Authority necessary to perfect the security interest granted hereunder in such Registered Intellectual Property Collateral.

Section 4.7. Additional Intellectual Property Collateral. Each Grantor agrees that should it obtain an interest in any item of Intellectual Property that is not on the date hereof a part of the Intellectual Property Collateral (“Additional Intellectual Property”), (a) the provisions of this Agreement shall automatically apply thereto, and (b) any such Additional Intellectual Property shall automatically become part of the Intellectual Property Collateral subject to the terms and conditions of this Agreement. Within ten (10) Business Days of the end of each calendar quarter, each Grantor shall give, to the Collateral Agent, written notice updating all the Schedules required pursuant to Section 5.01(u) of the Credit Agreement, and such Grantor shall execute and deliver to the Collateral Agent with such written notice, or otherwise authenticate,

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an agreement substantially in the form of Annexes 2, 3 and 4, as applicable, or otherwise in form and substance reasonably satisfactory to the Collateral Agent (an “Intellectual Property Security Agreement Supplement”), covering all Registered Intellectual Property in which such Grantor has acquired rights in such calendar quarter, which Intellectual Property Security Agreement Supplement may be recorded with the United States Patent and Trademark Office, United States Copyright Office and any other Governmental Authority necessary to perfect the security interest granted hereunder in such Registered Intellectual Property.

Section 4.8. Remedies. If an Event of Default shall occur and be continuing, the Collateral Agent may, subject to Article VI and any then-existing third party rights, by written notice to the relevant Grantor, take any or all of the following actions for the duration of such Event of Default: (a) subject to the requirements of Applicable Law, declare the entire right, title and interest of such Grantor in and to all Intellectual Property Collateral vested in the Collateral Agent for the benefit of the Secured Creditors, in which event such right, title and interest shall immediately vest, in the Collateral Agent for the benefit of the Secured Creditors, and the Collateral Agent shall be entitled to exercise the power of attorney referred to in Section 5.4 hereof to execute, cause to be acknowledged and notarized and record said absolute assignment with the applicable Governmental Authority; (b) take and use, practice under or sell the Intellectual Property Collateral and the right to carry on the business and use the assets of such Grantor in connection with which the Intellectual Property Collateral has been used; and (c) direct such Grantor to refrain, in which event such Grantor shall refrain, from using or practicing under the Intellectual Property Collateral in any manner whatsoever, directly or indirectly, and such Grantor shall execute such further documents that the Collateral Agent may reasonably request to further confirm this and to transfer ownership of the Intellectual Property Collateral to the Collateral Agent in accordance with Applicable Law.

ARTICLE V

PROVISIONS CONCERNING ALL COLLATERAL

Section 5.1. Protection of Collateral Agent’s Security. Except to the extent not otherwise prohibited by the Loan Documents, each Grantor will do nothing to impair the rights of the Collateral Agent in the Collateral. Each Grantor will at all times cause to be maintained insurance, at such Grantor’s own expense or the expense of the Borrower to the extent and in the manner provided in the Loan Documents. Except to the extent otherwise permitted to be retained by such Grantor or applied by such Grantor pursuant to the terms of the Loan Documents, the Collateral Agent shall, at the time any proceeds of such insurance are distributed to the Secured Creditors, apply such proceeds, or distribute such proceeds to the applicable Grantor so such Grantor may apply such proceeds, in either case in accordance with Section 1.10 of the Credit Agreement. Each Grantor assumes all liability and responsibility in connection with the Collateral acquired by it and the liability of such Grantor to pay the Obligations shall in no way be affected or diminished by reason of the fact that such Collateral may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable to such Grantor.

Section 5.2. Warehouse Receipts Non-Negotiable. To the extent practicable, each Grantor agrees that if any warehouse receipt or receipt in the nature of a warehouse receipt is issued with respect to any of its Inventory, such Grantor shall request that such warehouse

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receipt or receipt in the nature thereof shall not be “negotiable” (as such term is used in Section 7-104 of the UCC as in effect in any relevant jurisdiction or under other relevant law).

Section 5.3. Additional Information. Each Grantor will, at its own expense, from time to time upon the reasonable request of the Collateral Agent, promptly furnish to the Collateral Agent such information with respect to the Collateral (including the identity of the Collateral or such components thereof as may have been reasonably requested by the Collateral Agent in writing, the value and location of such Collateral, etc.) as may be reasonably requested by the Collateral Agent. Without limiting the foregoing, each Grantor agrees that it shall promptly furnish to the Collateral Agent such updated Schedules as may from time to time be reasonably requested in writing by the Collateral Agent.

Section 5.4. Collateral Agent Appointed Attorney-in-Fact. Each Grantor hereby irrevocably appoints the Collateral Agent its attorney-in-fact, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, at such time as an Event of Default has occurred and is continuing under the Credit Agreement, to take any action and to execute any instrument which the Collateral Agent may reasonably deem necessary or advisable to accomplish the purposes of this Agreement, including:

(a) to ask, demand, collect, sue for, recover, compromise, receive and give acquittance and receipts for moneys due and to become due under or in connection with the Accounts or any other Collateral of such Grantor;

(b) to receive and open all mail addressed to such Grantor and to notify postal authorities to change the address for the delivery of mail to such Grantor to that of the Collateral Agent;

(c) to receive, indorse and collect any drafts or other Instruments, Documents, Negotiable Collateral or Chattel Paper;

(d) to file any claims or take any action or institute any proceedings which the Collateral Agent may deem necessary or desirable for the collection of any of the Collateral of such Grantor or otherwise to enforce the rights of the Collateral Agent with respect to any of the Collateral;

(e) to repair, alter or supply goods, if any, necessary to fulfill in whole or in part the purchase order of any Person obligated to such Grantor in respect of any Account of such Grantor;

(f) to use any labels, Patents, Trademarks, trade names, URLs, domain names, industrial designs, Copyrights, advertising matter or other industrial or intellectual property rights, in advertising for sale and selling Inventory and other Collateral and to collect any amounts due under Accounts, contracts or Negotiable Collateral of such Grantor; and

(g) to sign any document that may be required by the United States Patent and Trademark Office, United States Copyright Office or any other Governmental Authority in order to effect an absolute assignment of all right, title and interest in or to any Intellectual Property Collateral, and record the same.

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In addition, the Collateral Agent, on behalf of the Secured Creditors, shall have the right, but shall not be obligated, to bring suit in its own name to enforce the Trademarks, Patents, Copyrights and Intellectual Property Licenses and, if the Collateral Agent shall commence any such suit, the appropriate Grantor shall, at the request of the Collateral Agent, do any and all lawful acts and execute any and all proper documents reasonably required by the Collateral Agent in aid of such enforcement.

To the extent permitted by law, each Grantor hereby ratifies all that such attorney-in-fact shall lawfully do or cause to be done by virtue hereof. This power of attorney is coupled with an interest and shall be irrevocable until this Agreement is terminated.

Section 5.5. Collateral Agent May Perform. If any of the Grantors fails to perform any agreement contained herein, the Collateral Agent may itself perform, or cause performance of, such agreement, and the reasonable expenses of the Collateral Agent incurred in connection therewith shall be payable, jointly and severally, by the Grantors.

Section 5.6. Collateral Agent’s Duties. The powers conferred on the Collateral Agent hereunder are solely to protect the Collateral Agent’s interest in the Collateral, for the benefit of the Secured Creditors, and shall not impose any duty upon the Collateral Agent to exercise any such powers. Except for the safe custody of any Collateral in its actual possession and the accounting for monies actually received by it hereunder, the Collateral Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral. The Collateral Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its actual possession if such Collateral is accorded treatment substantially equal to that which the Collateral Agent accords its own property.

Section 5.7. Disposition of Pledged Interests by the Collateral Agent. None of the Pledged Interests existing as of the date of this Agreement are, and none of the Pledged Interests hereafter acquired on the date of acquisition thereof will be, registered or qualified under the various federal or state securities laws of the United States and disposition thereof after an Event of Default may be restricted to one or more private (instead of public) sales in view of the lack of such registration. Each Grantor understands that in connection with such disposition, the Collateral Agent may approach only a restricted number of potential purchasers and further understands that a sale under such circumstances may yield a lower price for the Pledged Interests than if the Pledged Interests were registered and qualified pursuant to federal and state securities laws and sold on the open market. Each Grantor, therefore, agrees that: (a) if the Collateral Agent shall, pursuant to the terms of this Agreement, sell or cause the Pledged Interests or any portion thereof to be sold at a private sale, the Collateral Agent shall have the right to rely upon the advice and opinion of any nationally recognized brokerage or investment firm (but shall not be obligated to seek such advice and the failure to do so shall not be considered in determining the commercial reasonableness of such action) as to the best manner in which to offer the Pledged Interest or any portion thereof for sale and as to the best price reasonably obtainable at the private sale thereof; and (b) such reliance shall be conclusive evidence that the Collateral Agent has handled the disposition in a commercially reasonable manner.

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Section 5.8. Voting Rights.

(a) Upon the occurrence and during the continuation of an Event of Default, (i) the Collateral Agent may, at its option, and with two (2) Business Days prior notice to any Grantor, and in addition to all rights and remedies available to the Collateral Agent under any other agreement, at law, in equity, or otherwise, exercise all voting rights and all other ownership or consensual rights in respect of the Pledged Interests owned by such Grantor, but under no circumstances is the Collateral Agent obligated by the terms of this Agreement to exercise such rights and (ii) if the Collateral Agent duly exercises its right to vote any of such Pledged Interests, each Grantor hereby appoints the Collateral Agent such Grantor’s true and lawful attorney-in-fact and grants the Collateral Agent an IRREVOCABLE PROXY to vote such Pledged Interests in any manner the Collateral Agent deems advisable for or against all matters submitted or which may be submitted to a vote of shareholders, partners or members, as the case may be. The power-of-attorney granted hereby is coupled with an interest and shall be irrevocable.

(b) For so long as any Grantor shall have the right to vote the Pledged Interests owned by it, such Grantor covenants and agrees that it will not, without the prior written consent of the Collateral Agent, vote or take any consensual action with respect to such Pledged Interests which would materially adversely affect the rights of the Collateral Agent and the Secured Creditors or the value of the Pledged Interests.

ARTICLE VI

REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT

Section 6.1. Remedies; Obtaining the Collateral Upon Default. If any Event of Default shall have occurred or be continuing:

(a) The Collateral Agent may exercise in respect of the Collateral, in addition to other rights and remedies provided for herein, in the other Loan Documents, or otherwise available to it, all the rights and remedies of a secured party on default under the UCC or any other applicable law. Without limiting the generality of the foregoing, each Grantor expressly agrees that, in any such event, the Collateral Agent without demand of performance or other demand, advertisement or notice of any kind (except a notice specified below of time and place of public or private sale) to or upon any of the Grantors or any other Person (all and each of which demands, advertisements and notices are hereby expressly waived to the maximum extent permitted by the UCC or any other applicable law), may take immediate possession of all or any portion of the Collateral and (i) require the Grantors to, and each Grantor hereby agrees that it will at its own expense and upon request of the Collateral Agent, forthwith assemble all or part of the Collateral as directed by the Collateral Agent and make it available to the Collateral Agent at one or more locations where such Grantor regularly maintains Inventory and (ii) without notice except as specified below, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Collateral Agent’s offices or elsewhere, for cash, on credit, and upon such other terms as the Collateral Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale shall be required by law, at least ten (10) days notice to any of the Grantors of the time and place of any public sale or the time after which

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any private sale is to be made shall constitute reasonable notification and specifically such notice shall constitute a reasonable “authenticated notification of disposition” within the meaning of Section 9-611 of the UCC. The Collateral Agent shall not be obligated to make any sale of Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned.

(b) The Collateral Agent is hereby granted a license or other right to use, without liability for royalties or any other charge, each Grantor’s labels, Patents, Copyrights, rights of use of any name, trade secrets, trade names, Trademarks, service marks and advertising matter, URLs, domain names, industrial designs, other industrial or intellectual property or any property of a similar nature, whether owned by any of the Grantors or with respect to which any of the Grantors have rights under license, sublicense, or other agreements, as it pertains to the Collateral, in preparing for sale, advertising for sale and selling any Collateral, and each Grantor’s rights under all licenses and all franchise agreements shall inure to the benefit of the Collateral Agent.

(c) Any cash held by the Collateral Agent as Collateral and all cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied against the Secured Obligations in the order set forth in Section 1.10 of the Credit Agreement. In the event the proceeds of Collateral are insufficient to satisfy all of the Secured Obligations in full, each Grantor shall remain jointly and severally liable for any such deficiency.

(d) Each Grantor hereby acknowledges that the Secured Obligations arose out of a commercial transaction, and agrees that if an Event of Default shall occur and be continuing the Collateral Agent shall have the right to an immediate writ of possession without notice of a hearing. The Collateral Agent shall have the right to the appointment of a receiver for the properties and assets of each of the Grantors, and each Grantor hereby consents to such rights and such appointment and hereby waives any objection such Grantors may have thereto or the right to have a bond or other security posted by the Collateral Agent.

Section 6.2. Remedies; Disposition of the Collateral. If any Event of Default shall have occurred and be continuing, then any Collateral, repossessed by the Collateral Agent under or pursuant to Section 6.1 hereof and any other Collateral whether or not so repossessed by the Collateral Agent, may be sold, assigned, leased or otherwise disposed of under one or more contracts or as an entirety, without the necessity of gathering at the place of sale the property to be sold, and in general in such manner, at such time or times, at such place or places and on such terms as the Collateral Agent may, in compliance with any mandatory requirements of Applicable Law, determine to be commercially reasonable. Any of the Collateral may be sold, leased or otherwise disposed of, in the condition in which the same existed when taken by the Collateral Agent or after any overhaul or repair at the expense of the relevant Grantor that the Collateral Agent shall determine to be commercially reasonable. Any such sale, lease or other disposition may be effected by means of a public disposition or private disposition, effected in accordance with the applicable requirements (in each case if and to the extent applicable) of Sections 9-610 through 9-613 of the UCC and/or such other mandatory requirements of

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Applicable Law as may apply to the respective disposition. The Collateral Agent may, without notice or publication, adjourn any public or private disposition or cause the same to be adjourned from time to time by announcement at the time and place fixed for the disposition, and such disposition may be made at any time or place to which the disposition may be so adjourned. To the extent permitted by Applicable Law, the Collateral Agent may bid for and become the purchaser (and may pay all or any portion of the purchase price by crediting Obligations against the purchase price) of the Collateral or any item thereof, offered for disposition in accordance with this Section 6.2 without accountability to the relevant Grantor. Each Grantor agrees to do or cause to be done all such other acts and things as may be reasonably necessary to make such disposition or dispositions of all or any portion of the Collateral valid and binding and in compliance with any and all Applicable Laws, regulations, orders, writs, injunctions, decrees or awards of any and all courts, arbitrators or governmental instrumentalities, domestic or foreign, having jurisdiction over any such sale or sales, all at such Grantor’s expense.

Section 6.3. Waiver of Claims. Except as otherwise provided in this Agreement, EACH GRANTOR HEREBY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, NOTICE AND JUDICIAL HEARING IN CONNECTION WITH THE COLLATERAL AGENT’S TAKING POSSESSION OR THE COLLATERAL AGENT’S DISPOSITION OF ANY OF THE COLLATERAL IF AN EVENT OF DEFAULT HAS OCCURRED AND IS CONTINUING, INCLUDING ANY AND ALL PRIOR NOTICE AND HEARING FOR ANY PREJUDGMENT REMEDY OR REMEDIES, and each Grantor hereby further waives, to the extent permitted by law:

(a) all damages occasioned by such taking of possession or any such disposition except any damages that are the result of the Collateral Agent’s gross negligence or willful misconduct (as determined by a court of competent jurisdiction);

(b) all other requirements as to the time, place and terms of sale or other requirements with respect to the enforcement of the Collateral Agent’s rights hereunder; and

(c) all rights of redemption, appraisement, valuation, stay, extension or moratorium now or hereafter in force under any Applicable Law in order to prevent or delay the enforcement of this Agreement or the absolute sale of the Collateral or any portion thereof, and each Grantor, for itself and all who may claim under it, insofar as it or they now or hereafter lawfully may, hereby waives the benefit of all such laws.

To the fullest extent permitted by Applicable Law, any sale of, or the grant of options to purchase, or any other realization upon, any Collateral in accordance with the terms hereof shall operate to divest all right, title, interest, claim and demand, either at law or in equity, of the relevant Grantor therein and thereto and shall be a perpetual bar both at law and in equity against such Grantor and against any and all Persons claiming or attempting to claim the Collateral so sold, optioned or realized upon, or any part thereof, from, through and under such Grantor.

Section 6.4. Application of Proceeds. All moneys collected by the Collateral Agent upon any sale or other disposition of the Collateral, together with all other monies received by

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the Collateral Agent under any Security Document, shall be applied as set forth in Section 1.10 of the Credit Agreement.

It is understood that the Borrower and the other Grantors shall remain jointly and severally liable to the extent of any deficiency between the amount of the proceeds of the Collateral and the aggregate amount of the Obligations.

Section 6.5. Remedies Cumulative. Each right, power, and remedy of the Collateral Agent as provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise shall be cumulative and concurrent and shall be in addition to every other right, power, or remedy provided for in this Agreement or in the other Loan Documents or now or hereafter existing at law or in equity or by statute or otherwise, and the exercise or beginning of the exercise by the Collateral Agent, of any one or more of such rights, powers, or remedies shall not preclude the simultaneous or later exercise by the Collateral Agent of any or all such other rights, powers, or remedies.

Section 6.6. Marshaling. The Collateral Agent shall not be required to marshal any present or future collateral security (including but not limited to the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Collateral Agent’s rights and remedies hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights and remedies, however existing or arising. To the extent that it lawfully may, each Grantor hereby agrees that it will not invoke any law relating to the marshaling of collateral which might cause delay in or impede the enforcement of the Collateral Agent’s rights and remedies under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.

ARTICLE VII

MISCELLANEOUS

Section 7.1. Indemnity and Expenses.

(a) Each Grantor agrees to indemnify the Collateral Agent and the Secured Creditors from and against all claims, lawsuits and liabilities (including reasonable attorneys fees) growing out of or resulting from this Agreement (including enforcement of this Agreement) or any other Loan Document to which such Grantor is a party, except claims, losses or liabilities resulting from the gross negligence or willful misconduct of the party seeking indemnification as determined by a final non-appealable order of a court of competent jurisdiction. This provision shall survive the termination of this Agreement and the Credit Agreement and the repayment of the Secured Obligations.

(b) Grantors, jointly and severally, shall, upon demand, pay to the Collateral Agent (or the Collateral Agent, may charge to the Loan Account) all the Participating

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Lender Expenses which the Collateral Agent may incur in connection with (i) the administration of this Agreement, (ii) the custody, preservation, use or operation of, or, upon an Event of Default, the sale of, collection from, or other realization upon, any of the Collateral in accordance with this Agreement and the other Loan Documents, (iii) the exercise or enforcement of any of the rights of the Collateral Agent hereunder or (iv) the failure by any of the Grantors to perform or observe any of the provisions hereof.

Section 7.2. Merger, Amendments; Etc. THIS WRITTEN AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN AGREEMENTS BETWEEN THE PARTIES. No waiver of any provision of this Agreement, and no consent to any departure by any of the Grantors herefrom, shall in any event be effective unless the same shall be in writing and signed by the Collateral Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given. No amendment of any provision of this Agreement shall be effective unless the same shall be in writing and signed by the Collateral Agent and each of the Grantors to which such amendment applies.

Section 7.3. Addresses for Notices. All notices and other communications provided for hereunder shall be given in the form and manner and delivered to the Collateral Agent at its address specified in Section 13.01 of the Credit Agreement, and to any of the Grantors at their respective addresses specified in Section 13.01 of the Credit Agreement or Guaranty, as applicable, or, as to any party, at such other address as shall be designated by such party in a written notice to the other party.

Section 7.4. Continuing Security Interest: Assignments under Credit Agreement. This Agreement shall create a continuing security interest in the Collateral and shall (a) remain in full force and effect until the Obligations have been paid in full in cash in accordance with the provisions of the Credit Agreement and the Commitments have expired or have been terminated, (b) be binding upon each of the Grantors, and their respective successors and assigns, and (c) inure to the benefit of, and be enforceable by, the Collateral Agent, and its successors, transferees and assigns. Without limiting the generality of the foregoing clause (c), any the Participating Lender may, in accordance with the provisions of the Credit Agreement, assign or otherwise transfer all or any portion of its rights and obligations under the Credit Agreement to any other Person, and such other Person shall thereupon become vested with all the benefits in respect thereof granted to such the Participating Lender herein or otherwise. Upon payment in full in cash of the Obligations in accordance with the provisions of the Credit Agreement and the expiration or termination of the Commitments, the Security Interest granted hereby shall terminate and all rights to the Collateral shall revert to the Grantors or any other Person entitled thereto. At such time, the Collateral Agent will authorize the filing of appropriate termination statements to terminate such Security Interests. No transfer or renewal, extension, assignment, or termination of this Agreement or of the Credit Agreement, any other Loan Document, or any other instrument or document executed and delivered by any Grantor to the Collateral Agent nor any additional Advances or other loans made by any the Participating Lender to the Borrowers, nor the taking of further security, nor the retaking or re-delivery of the Collateral to the Grantors, or any of them, by the Collateral Agent, nor any other act of the Secured Creditors, or any of

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them, shall release any of the Grantors from any obligation, except a release or discharge executed in writing by the Collateral Agent in accordance with the provisions of the Credit Agreement. The Collateral Agent shall not by any act, delay, omission or otherwise, be deemed to have waived any of its rights or remedies hereunder, unless such waiver is in writing and signed by the Collateral Agent and then only to the extent therein set forth. A waiver by the Collateral Agent of any right or remedy on any occasion shall not be construed as a bar to the exercise of any such right or remedy which the Collateral Agent would otherwise have had on any other occasion.

Section 7.5. Governing Law.

(a) THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF, AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

(b) THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, FEDERAL COURTS LOCATED IN THE COUNTY OF NEW YORK, STATE OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE COLLATERAL AGENT’S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE THE COLLATERAL AGENT ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE FOUND. THE COLLATERAL AGENT AND EACH GRANTOR WAIVE, TO THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE WITH THIS SECTION 7.5(b).

(c) THE COLLATERAL AGENT AND EACH GRANTOR HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE COLLATERAL AGENT AND EACH GRANTOR REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

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Section 7.6. New Subsidiaries. Pursuant to Section 7.18 of the Credit Agreement, any new Domestic Subsidiary (whether by acquisition or creation) of the Grantor is required to enter into this Agreement by executing and delivering in favor of the Collateral Agent a supplement to this Agreement in the form of Annex 1 attached hereto. Upon the execution and delivery of Annex 1 by such new Subsidiary, such Subsidiary shall become a Grantor hereunder with the same force and effect as if originally named as a Grantor herein. The execution and delivery of any instrument adding an additional Grantor as a party to this Agreement shall not require the consent of any Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force and effect notwithstanding the addition of any new Grantor hereunder.

Section 7.7. Collateral Agent. Each reference herein to any right granted to, benefit conferred upon or power exercisable by the “Collateral Agent” shall be a reference to the Collateral Agent, for the benefit of the Secured Creditors.

Section 7.8. Miscellaneous.

(a) This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when 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 or other electronic method of transmission 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 or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement. The foregoing shall apply to each other Loan Document mutatis mutandis.

(b) Any provision of this Agreement which is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof in that jurisdiction or affecting the validity or enforceability of such provision in any other jurisdiction.

(c) Headings used in this Agreement are for convenience only and shall not be used in connection with the interpretation of any provision hereof.

(d) The pronouns used herein shall include, when appropriate, either gender and both singular and plural, and the grammatical construction of sentences shall conform thereto.

(e) Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, the terms “includes” and “including” are not limiting, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be. Section, subsection, clause, schedule, and exhibit references herein are to

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this Agreement unless otherwise specified. Any reference in this Agreement or in any other Loan Document 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). Any reference herein or in any other Loan Document to the satisfaction or repayment in full of the Obligations shall mean the repayment in full in cash (or cash collateralization in accordance with the terms hereof) of all Obligations other than unasserted contingent indemnification Obligations and other than any Hedging Obligations that, at such time, are allowed by the applicable Hedging Agreement Provider to remain outstanding and that are not required by the provisions of the Credit Agreement to be repaid or cash collateralized. Any reference herein to any Person shall be construed to include such Person’s successors and assigns. Any requirement of a writing contained herein or in any other Loan Document shall be satisfied by the transmission of a Record and any Record so transmitted shall constitute a representation and warranty as to the accuracy and completeness of the information contained therein.

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IN WITNESS WHEREOF, the undersigned parties hereto have executed this Agreement by and through their duly authorized officers, as of the day and year first above written.

GRANTORS:	SILICON GRAPHICS, INC.
	By:	/s/ Kathy Lanterman
	Name:	Kathy Lanterman
	Title:	Senior Vice President and Chief Financial Officer
	SILICON GRAPHICS FEDERAL, INC.
	By:	/s/ Kathy Lanterman
	Name:	Kathy Lanterman
	Title:	Vice President
	SILICON GRAPHICS WORLD TRADE CORPORATION
	By:	/s/ Kathy Lanterman
	Name:	Kathy Lanterman
	Title:	Senior Vice President and Chief Financial Officer
COLLATERAL AGENT:	GENERAL ELECTRIC CAPITAL CORPORATION, as Collateral Agent
	By:	/s/ Wafa Shalabi
	Name:	Wafa Shalabi
	Title:	Its Duly Authorized Signatory

ANNEX 1 TO SECURITY AGREEMENT

FORM OF SUPPLEMENT

Supplement No. ____ (this “Supplement”) dated as of _______________, _____, to the Security Agreement, dated as of October 17, 2006 (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), among the Grantors listed on the signature pages hereof and the additional entities hereto (collectively, jointly and severally, “Grantors” and each individually “Grantor”), and General Electric Capital Corporation (“GE”), in its capacity as collateral agent for the Secured Creditors (together with its successors, the “Collateral Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to that certain Senior Secured Credit Agreement, dated as of October 17, 2006 (as it may be amended, restated, modified, supplemented, refinanced, renewed or extended from time to time, including all exhibits and schedules thereto, or otherwise modified, the “Credit Agreement”), by and among Silicon Graphics, Inc., Silicon Graphics Federal, Inc. and Silicon Graphics World Trade Corporation (each a “Borrower” and collectively, the “Borrowers”), the other Credit Parties party thereto from time to time as guarantors, the Participating Lenders party thereto from time to time, Morgan Stanley Senior Funding, Inc., as Administrative Agent for the Participating Lenders, Book Runner and Lead Arranger, and GE, as Revolving Agent, Syndication Agent and Collateral Agent are willing to make certain financial accommodations available to the Borrowers from time to time pursuant to the terms and conditions thereof; and

WHEREAS, capitalized terms used herein and not otherwise defined herein shall have the meanings assigned to such terms in the Security Agreement; and

WHEREAS, the Grantors have entered into the Security Agreement in order to induce the Secured Creditors to make certain financial accommodations to the Borrowers; and

WHEREAS, pursuant to Section 7.18 of the Credit Agreement, new direct or indirect Subsidiaries of the Borrowers, must execute and deliver certain Loan Documents, including the Security Agreement, and the execution of the Security Agreement by the undersigned new Grantor or Grantors (collectively, the “New Grantors”) may be accomplished by the execution of this Supplement in favor of the Collateral Agent, for the benefit of the Secured Creditors;

NOW, THEREFORE, for and in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, each New Grantor hereby agrees as follows:

Section 1. In accordance with Section 7.6 of the Security Agreement, each New Grantor, by its signature below, becomes a “Grantor” under the Security Agreement with the same force and effect as if originally named therein as a “Grantor” and each New Grantor hereby (a) agrees to all of the terms and provisions of the Security Agreement applicable to it as a

SUPPLEMENT TO PLEDGE AND SECURITY AGREEMENT

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“Grantor” thereunder and (b) represents and warrants that the representations and warranties made by it as a “Grantor” thereunder are true and correct on and as of the date hereof. In furtherance of the foregoing, each New Grantor, as security for the payment and performance in full of the Secured Obligations, does hereby grant, assign, and pledge to the Collateral Agent, for the benefit of the Secured Creditors, a security interest in and security title to all assets of such New Grantor including, all property of the type described in Section 2.1 of the Security Agreement to secure the full and prompt payment of the Secured Obligations, including, any interest thereon, plus reasonable attorneys’ fees and expenses if the Secured Obligations represented by the Security Agreement are collected by law, through an attorney-at-law, or under advice therefrom. Schedule 1, “Filings”, Schedule 2, “Legal Names”, Schedule 3, “Significant Transactions” and Schedule 4, “Motor Vehicles” attached hereto supplement Schedule 1, Schedule 2, Schedule 3 and Schedule 4 respectively, to the Security Agreement and shall be deemed a part thereof for all purposes of the Security Agreement. Schedule 4.01(v) “Real Estate Assets/Closing Date Mortgaged Property”, Schedule 5.01(u) “Scheduled Intellectual Property Collateral”, Schedule 5.01(y) “Threshold Inventory and Threshold Equipment Locations” and Schedule 5.01(z) “Commercial Tort Claims” attached hereto supplement Schedule 4.01(v), Schedule 5.01(u), Schedule 5.01(y) and Schedule 5.01(z) respectively, to the Credit Agreement and shall be deemed a part thereof for all purposes of the Credit Agreement. Each reference to a “Grantor” in the Security Agreement shall be deemed to include each New Grantor. The Security Agreement is incorporated herein by reference.

Section 2. Each New Grantor represents and warrants to the Collateral Agent and the Secured Creditors that this Supplement has been duly executed and delivered by such New Grantor and constitutes its legal, valid and binding obligation, enforceable against it in accordance with its terms, except as enforceability thereof may be limited by bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium or other similar laws affecting creditors’ rights generally and general principles of equity (regardless of whether such enforceability is considered in a proceeding at law or in equity).

Section 3. This Supplement may be executed in multiple counterparts, each of which shall be deemed to be an original, but all such separate counterparts shall together constitute but one and the same instrument. Delivery of a counterpart hereof by facsimile transmission or by e-mail transmission shall be as effective as delivery of a manually executed counterpart hereof.

Section 4. Except as expressly supplemented hereby, the Security Agreement shall remain in full force and effect.

Section 5. This Supplement shall be construed in accordance with and governed by the laws of the State of New York, without regard to the conflict of laws principles thereof.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

SUPPLEMENT TO PLEDGE AND SECURITY AGREEMENT

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IN WITNESS WHEREOF, each New Grantor and the Collateral Agent have duly executed this Supplement to the Security Agreement as of the day and year first above written.

NEW GRANTORS:	[Name of New Grantor]
	By:
	Name:
	Title:
	[Name of New Grantor]
	By:
	Name:
	Title:
COLLATERAL AGENT:	GENERAL ELECTRIC CAPITAL CORPORATION, as Collateral Agent
	By:
	Name:
	Title:

SUPPLEMENT TO PLEDGE AND SECURITY AGREEMENT

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ANNEX 2 TO SECURITY AGREEMENT

COPYRIGHT SECURITY AGREEMENT

This GRANT OF SECURITY INTEREST IN UNITED STATES COPYRIGHTS (as amended, modified, restated and/or supplemented from time to time, the “Grant”) dated October [ ], 2006, is made by [Name of Grantor], a __________ _________ (the “Grantor”), in favor of [Name of Collateral Agent], as Collateral Agent, a __________ _________ (the “Grantee”), for the benefit of the Secured Creditors. Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth in the Security Agreement among the Grantor, the other Grantors from time to time party thereto and the Grantee, dated as of October [_], 2006 (as amended, modified, restated and/or supplemented from time to time, the “Security Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

1. The Grantor hereby grants to Grantee, for the benefit of the Secured Creditors, which grant is and shall be deemed to be one and the same as the grant set forth in the Security Agreement, a continuing security interest in all of the Grantor’s right, title and interest in, to and under the following: (i) all copyrights, whether registered or unregistered, now owned or hereafter acquired by the Grantor, including, without limitation, the United States copyright registrations and applications and exclusive copyright licenses set forth on Schedule A attached hereto, together with any and all renewals, extensions, restorations and reversions thereof, and all moral and common-law rights thereto (the “Copyrights”), (ii) all rights in the Copyrights provided by international treaties or conventions, and all other rights associated therewith, (iii) all rights to sue, recover and retain damages, costs and fees for past, present and future infringement, breach or other violation of or conflict with any of the foregoing, and (iv) all Proceeds and products of the foregoing.

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2. The Grantor authorizes and requests that the Register of Copyrights and any other applicable government officer record this Grant.

3. This Grant may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

4. This Grant has been granted in conjunction with the security interest granted to the Grantee under the Security Agreement. The rights and remedies of the Grantee with respect to the security interest granted herein are more fully set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this Grant are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.

5. This Grant shall be construed in accordance with and be governed by the laws of the State of New York.

[Remainder of page left blank intentionally]

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IN WITNESS WHEREOF, the undersigned have executed this Grant as of the ___ day of ______, 2006.

[NAME OF GRANTOR], Grantor
By
	Name:
	Title:
[NAME OF COLLATERAL AGENT], as Collateral Agent and Grantee
By
	Name:
	Title:

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STATE OF ______________	)
	) ss.:
COUNTY OF____________	)

On this ____ day of _________, ____, before me personally came ___________ ______________, who being duly sworn, did depose and say that [s]he is ___________________ of [Name of Grantor], that [s]he is authorized to execute the foregoing Grant on behalf of said [corporation] and that [s]he did so by authority of the [Board of Directors of said corporation].

Notary Public

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Schedule A to Grant of Security Interest in United States Copyrights

Copyright Title Copyright Reg. No. Registration Date/Filing Date

A-1

ANNEX 3 TO SECURITY AGREEMENT

FORM OF GRANT OF SECURITY INTEREST

IN UNITED STATES PATENTS

This GRANT OF SECURITY INTEREST IN UNITED STATES PATENTS (as amended, modified, restated and/or supplemented from time to time, the “Grant”) dated October [ ], 2006, is made by [Name of Grantor], a __________ _________ (the “Grantor”), in favor of [Name of Collateral Agent], as Collateral Agent, a __________ _________ (the “Grantee”), for the benefit of the Secured Creditors. Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth in the Security Agreement among the Grantor, the other Grantors from time to time party thereto and the Grantee, dated as of October [ ], 2006 (as amended, modified, restated and/or supplemented from time to time, the “Security Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

1. The Grantor hereby grants to Grantee, for the benefit of the Secured Creditors, which grant is and shall be deemed to be one and the same as the grant set forth in the Security Agreement, a continuing security interest in all of the Grantor’s right, title and interest in, to and under the following: (i) the United States patents and patent applications set forth on Schedule A attached hereto, together with any and all reissues, divisions, continuations, continuations-in-part, extensions, and reexaminations thereof, all inventions disclosed therein and improvements thereto (the “Patents”), (ii) all rights in the Patents provided by international treaties or conventions, and all other rights associated therewith, (iii) all rights to sue, recover and retain damages, costs and fees for past, present and future infringement or other violation of or interference or conflict with, including unfair competition regarding, any of the foregoing, and (iv) all Proceeds and products of the foregoing.

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2. The Grantor authorizes and requests that the Commissioner for Patents and any other applicable government officer record this Grant.

3. This Grant may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

4. This Grant has been granted in conjunction with the security interest granted to the Grantee under the Security Agreement. The rights and remedies of the Grantee with respect to the security interest granted herein are more fully set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this Grant are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.

5. This Grant shall be construed in accordance with and be governed by the laws of the State of New York.

[Remainder of page left blank intentionally]

III-2

IN WITNESS WHEREOF, the undersigned have executed this Grant as of the ____ day of _______, 2006.

[NAME OF GRANTOR], Grantor
By
	Name:
	Title:
[NAME OF COLLATERAL AGENT], as Collateral Agent and Grantee
By
	Name:
	Title:

III-3

STATE OF ______________	)
	) ss:
COUNTY OF____________	)

On this ____ day of _________, ____, before me personally came ________ ________________ who, being by me duly sworn, did state as follows: that [s]he is ______________ of [Name of Grantor], that [s]he is authorized to execute the foregoing Grant on behalf of said ____________ and that [s]he did so by authority of the [Board of Directors] of said ____________.

Notary Public

III-4

Schedule A to Grant of Security Interest in United States Patent

Patent/Patent Application Patent No./Application No. Issue Date/Filing Date

A-1

ANNEX 4 TO SECURITY AGREEMENT

TRADEMARK SECURITY AGREEMENT

This GRANT OF SECURITY INTEREST IN UNITED STATES TRADEMARKS (as amended, modified, restated and/or supplemented from time to time, the “Grant”) dated October [ ], 2006, is made by [Name of Grantor], a __________ _________ (the “Grantor”) in favor of [Name of Collateral Agent], as Collateral Agent, a __________ _________ (the “Grantee”), for the benefit of the Secured Creditors. Capitalized terms used herein but not otherwise defined herein shall have the meanings set forth in the Security Agreement among the Grantor, the other Grantors from time to time party thereto and the Grantee, dated as of October [ ], 2006 (as amended, modified, restated and/or supplemented from time to time, the “Security Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Grantor agrees as follows:

1. The Grantor hereby grants to Grantee, for the benefit of the Secured Creditors, which grant is and shall be deemed to be one and the same grant as the grant set forth in the Security Agreement, a continuing security interest in all of the Grantor’s right, title and interest in, to and under the following: (i) the United States trademarks and service marks, and registrations and applications therefor, set forth on Schedule A attached hereto (provided, that no security interest shall be granted in United States intent-to-use trademark or service mark applications to the extent that, and solely during the period in which, the grant of a security interest therein would impair the validity or enforceability of such intent-to-use applications under Applicable Law), together with all common-law rights thereto and the goodwill of the businesses symbolized thereby or associated therewith (the “Marks”), (ii) all rights in the Marks provided by international treaties or conventions, and all other rights associated therewith, (iii) all rights to sue, recover and retain damages, costs and fees for past, present and future

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infringement, dilution or other violation of or conflict with (including unfair competition regarding) any of the foregoing, and (iv) all Proceeds and products of the foregoing.

2. The Grantor authorizes and requests that the Commissioner for Trademarks and any other applicable government officer record this Grant.

3. This Grant may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

4. This Grant has been granted in conjunction with the security interest granted to the Grantee under the Security Agreement. The rights and remedies of the Grantee with respect to the security interest granted herein are more fully set forth in the Security Agreement, all terms and provisions of which are incorporated herein by reference. In the event that any provisions of this Grant are deemed to conflict with the Security Agreement, the provisions of the Security Agreement shall govern.

5. This Grant shall be construed in accordance with and be governed by the laws of the State of New York.

[Remainder of page left blank intentionally]

IV-2

IN WITNESS WHEREOF, the undersigned have executed this Grant as of the ___ day of _______, 2006.

[NAME OF GRANTOR], Grantor
By
	Name:
	Title:
[NAME OF COLLATERAL AGENT], as Collateral Agent and Grantee
By
	Name:
	Title:

IV-3

STATE OF ______________	)
	) ss.:
COUNTY OF____________	)

On this ____ day of ________, _____, before me personally came ________ ________________ who, being by me duly sworn, did state as follows: that [s]he is ______________ of [Name of Grantor], that [s]he is authorized to execute the foregoing Grant on behalf of said ____________ and that [s]he did so by authority of the [Board of Directors] of said ____________.

Notary Public

IV-4

Schedule A to Grant of Security Interest in United States Trademarks

Mark Reg./App. No. Reg./App. Date

A-1

ANNEX 5 TO SECURITY AGREEMENT

Annex 1 is Form of Supplement

PLEDGED INTERESTS ADDENDUM

This Pledged Interests Addendum, dated as of October [ ], 2006, is delivered pursuant to Section 3.2(h)(i) of the Security Agreement referred to below. The undersigned hereby agrees that this Pledged Interests Addendum may be attached to that certain Security Agreement, dated as of October [ ], 2006 (as amended, restated, supplemented or otherwise modified from time to time, the “Security Agreement”), made by the undersigned, together with the other Grantors named therein in favor of General Electric Capital Corporation, as the Collateral Agent. Initially capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Security Agreement or the Credit Agreement. The undersigned hereby agrees that as of the date hereof, the additional interests listed on this Pledged Interests Addendum as set forth below shall be and become part of the Pledged Interests pledged by the undersigned to the Collateral Agent in the Security Agreement and any pledged company set forth on this Pledged Interests Addendum as set forth below shall be and become a “Pledged Company” under the Security Agreement, each with the same force and effect as if originally named therein.

The undersigned hereby certifies that the representations and warranties set forth in Section 3.1 of the Security Agreement of the undersigned are true and correct as to the Pledged Interests listed herein on and as of the date hereof.

SILICON GRAPHICS, INC.
By:
	Name:
	Title:
SILICON GRAPHICS FEDERAL, INC.
By
	Name:
	Title:

PLEDGED INTERESTS ADDENDUM

V-1

SILICON GRAPHICS WORLD TRADE CORPORATION
By
	Name:
	Title:

PLEDGED INTERESTS ADDENDUM

V-2

Name of Pledgor Name of Pledged
Company Number of
Shares/Units Class of
Interests Percentage
of Class
Owned Certificate
Nos.

PLEDGED INTERESTS ADDENDUM

V-3

EX-10.4

Exhibit 10.4

PLEDGE AGREEMENT

This PLEDGE AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time including all schedules thereto, this “Agreement”), dated as of October 17, 2006, is entered into by and among SILICON GRAPHICS, INC., a Delaware corporation (the “Parent”), each of the Parent’s Subsidiaries signatory hereto (together with the Parent, each a “Pledgor” and collectively, jointly and severally, the “Pledgors”) and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation (“GE”), in its capacity as the Collateral Agent under the Credit Agreement (as defined below), with reference to the following:

RECITALS

WHEREAS, the Pledgors beneficially own the Pledged Collateral (as defined below);

WHEREAS, the Parent, Silicon Graphics Federal, Inc. and Silicon Graphics World Trade Corporation (each a ”Borrower” and collectively, the “Borrowers”), the other Credit Parties party thereto from time to time as guarantors, the Lenders party thereto from time to time, Morgan Stanley Senior Funding, Inc., as Administrative Agent for the Lenders, and as Book Runner and Lead Arranger, and GE, as Revolving Agent, Syndication Agent and Collateral Agent, have entered into that certain Senior Secured Credit Agreement, dated as of the date hereof (as it may be amended, restated, modified, or supplemented or extended from time to time, including all exhibits and schedules thereto, or otherwise modified, the “Credit Agreement”), providing for a senior secured credit facility to the Borrowers, all as contemplated therein; and

WHEREAS, to induce the Lenders under the Credit Agreement and the other Secured Creditors (as defined below) to make the financial accommodations provided to the Borrowers pursuant to the Credit Agreement and the other Loan Documents, each Pledgor has agreed to pledge to the Collateral Agent, for the benefit of the Secured Creditors, all of the Pledged Collateral (as defined below) to secure the Secured Obligations (as defined below), as provided herein.

NOW, THEREFORE, in consideration of the mutual promises, covenants, representations, and warranties set forth herein and for other good and valuable consideration the receipt, sufficiency and adequacy of which are hereby acknowledged, the parties hereto hereby agree as follows:

1. Definitions and Construction.

(a) Definitions.

All initially capitalized terms used herein and not otherwise defined herein shall have the meaning ascribed thereto in the Credit Agreement. As used in this Agreement:

“Agreement” shall have the meaning specified therefor in the preamble hereto.

“Borrower” and “Borrowers” shall have the meaning specified therefor in the recitals hereto.

“Capital Stock” means all shares, units, options, warrants, interests, participations, or other equivalents (regardless of how designated) of or in a corporation, partnership, limited liability company, or equivalent entity, whether voting or nonvoting, including general partner partnership interests, limited partner partnership interests, limited liability company membership interests, common stock, preferred stock, or any other “equity security” (as such term is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the SEC under the Exchange Act) in each case whether constituting “general intangibles” or “investment property” or otherwise under (and as defined in) the UCC; provided, however, that Capital Stock shall not include that portion of the voting capital stock of a Controlled Foreign Corporation that would cause the threshold of voting capital stock with respect to such Controlled Foreign Corporation as described in the definition of Pledged Collateral to be violated.

“Chief Executive Office” means, with respect to each Pledgor, the address of the chief executive office of such Pledgor set forth on Schedule B to this Agreement.

“Collateral Agent” means GE in its capacity as Collateral Agent under the Credit Agreement, and any successors or assigns to GE in such capacity.

“Controlled Foreign Corporation” has the meaning set forth in the United States Internal Revenue Code of 1986, as amended from time to time (the “Tax Code”).

“Credit Agreement” shall have the meaning specified therefor in the recitals hereto.

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and any successor statute.

“Future Rights” means: (i) all the Capital Stock (other than the Pledged Interests existing on the date hereof) of the Issuers, and all securities convertible or exchangeable into, and all warrants, options, or other rights to purchase, the Capital Stock of the Issuers; (ii) to the extent of each Pledgor’s interest therein, all shares of, all securities convertible or exchangeable into, and all warrants, options, or other rights to purchase the Capital Stock of each Issuer; and (iii) the certificates or instruments representing such additional Capital Stock, convertible or exchangeable securities, warrants, and other rights and all dividends, cash, options, warrants, rights, instruments, and other property or proceeds from time to time received, receivable, or otherwise distributed in respect of or in exchange for any or all of such Capital Stock.

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“Governing Documents” shall have the meaning set forth in the Credit Agreement.

“Hedging Agreement” shall have the meaning set forth in the Credit Agreement.

“Holder” shall have the meaning specified therefor in Section 3(c) hereto.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other federal, state or foreign bankruptcy or insolvency law, including assignments for the benefit of creditors, formal or informal moratoria, compositions, extensions generally with creditors, or proceedings seeking reorganization, arrangement, liquidation or other similar relief.

“Issuer” and “Issuers” shall mean each of the Persons identified as an Issuer on Schedule A attached hereto (or any addendum thereto), and any successors thereto, whether by merger or otherwise.

“Lender” means individually, and “Lenders” means collectively, each of the Participating Lenders (together with their respective successors and assigns).

“Loan Documents” shall have the meaning set forth in the Credit Agreement.

“Pledged Collateral” shall mean the Pledged Interests, the Future Rights, and the Proceeds, collectively. Anything contained in this Agreement to the contrary notwithstanding, the terms “Pledged Collateral” and “Pledged Interests” shall not include any of the voting capital stock of Silicon Graphics Biomedical (1995) Ltd. (“SGI Biomedical”) or Silicon Graphics Computer Systems Limited (“SGCS”), each an entity organized under the laws of Israel or more than 65% of the Capital Stock of any Subsidiary that is a Controlled Foreign Corporation; provided that immediately upon the amendment of the Tax Code to allow the pledge of a greater percentage of the voting power of capital stock in a Controlled Foreign Corporation without adverse tax consequences to the Pledgor owning such voting capital stock, the Pledged Collateral shall include, and the security interest granted by each Pledgor shall attach to, such greater percentage of capital stock of each Controlled Foreign Corporation owned by such Pledgor; provided, however, that, in no event shall the foregoing be construed to exclude the Proceeds of all capital stock of a Controlled Foreign Corporation from the security interest created by this Agreement.

“Pledged Interests” means all of the Capital Stock in which the Pledgors have any right, title and interest, or any of them, including those identified as Pledged Interests on Schedule A attached hereto (or any addendum thereto).

“Pledgor” and “Pledgors” shall have the respective meanings specified therefor in the preamble hereto.

“Proceeds” means all proceeds (and all proceeds of proceeds) of the Pledged Interests and Future Rights including all: (i) rights, benefits, distributions, premiums, profits, dividends, interest, cash, instruments, documents of title, accounts, contract rights, inventory, equipment, general intangibles, deposit accounts, chattel paper, negotiable collateral, supporting

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obligations and other property from time to time received, receivable, or otherwise distributed in respect of or in exchange for, or as a replacement of or a substitution for, any of the Pledged Interests, Future Rights, or proceeds thereof (including any cash, Capital Stock, or other securities or instruments issued after any recapitalization, readjustment, reclassification, merger or consolidation with respect to the Issuer and any security entitlements, as defined in the UCC, with respect thereto); (ii) all “proceeds” (as that term is defined in Section 9-102(a)(64) of the UCC) of Collateral; (iii) payments under any policy of insurance and proceeds of any insurance (excluding directors and officers insurance), indemnity, warranty, or guaranty (including guaranties of delivery) payable from time to time with respect to any of the Pledged Interests, Future Rights, or proceeds thereof; (iv) payments (in any form whatsoever) made or due and payable to Pledgor from time to time in connection with any requisition, confiscation, condemnation, seizure or forfeiture of all or any part of the Pledged Interests, Future Rights, or proceeds thereof; and (v) other amounts from time to time paid or payable under or in connection with any of the Pledged Interests, Future Rights, or proceeds thereof.

“Secured Creditors” shall have the meaning set forth in the Security Agreement.

“Secured Obligations” means all (i) Obligations and (ii) all liabilities, obligations, or undertakings owing by any Pledgor to any of the Secured Creditors of any kind or description arising out of or outstanding under, advanced or issued pursuant to, or evidenced by the Credit Agreement, this Agreement, or any of the other Loan Documents, in each case irrespective of whether for the payment of money, whether direct or indirect, absolute or contingent, due or to become due, voluntary or involuntary, whether now existing or hereafter arising, and including all interest, indemnities and any and all costs, fees (including attorneys’ fees), and expenses and any other amounts (including any portion thereof that accrues after the commencement of an Insolvency Proceeding, whether or not allowed or allowable in whole or in part as a claim in any such Insolvency Proceeding) which such Pledgor is required to pay in connection with any of the foregoing, whether compelled to do so by law, or otherwise, including (A) any and all reasonable sums advanced by any Secured Creditor in order to preserve its security interest in the Pledged Collateral or upon the occurrence and during the continuance of an Event of Default, preserve the Pledged Collateral, and (B) in the event of any proceeding for the collection or enforcement of any indebtedness, obligations, or liabilities of such Pledgor referred to above, after an Event of Default shall have occurred and be continuing, the reasonable expenses of the Collateral Agent of retaking, holding, preparing for sale or lease, selling or otherwise disposing of or realizing on the Pledged Collateral, or of any exercise by the Collateral Agent of its rights hereunder, together with its reasonable attorneys’ fees and court costs.

“Security Agreement” means the Security Agreement, dated as of the date hereof, among the Borrower, the other grantors identified therein and the Collateral Agent, as such agreement may be amended, supplemented or otherwise modified from time to time in accordance therewith and herewith.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“UCC” shall have the meaning set forth in the Credit Agreement.

(b) Construction.

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(i) All terms used in this Agreement that are defined in Article 8 or Article 9 of the UCC and that are not otherwise defined herein shall have the same meanings herein as set forth therein.

(ii) The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and “including” shall be deemed to be followed by the phrase “without limitation”, whether or not so expressly stated in each such instance, and the term “or” has, except where otherwise indicated, the inclusive meaning represented by the phrase “and/or.” The word “will” shall be construed to have the same meaning and effect as the word “shall”. Unless the context requires otherwise, (A) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, restated, supplemented or otherwise modified (subject to any restrictions on such amendments, restatements, supplements or modifications set forth herein), (B) any reference herein to any Person shall be construed to include such Person’s successors and assigns, (C) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (D) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement and (E) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights. References in this Agreement to “determination” by any Agent include reasonable estimates honestly made by such Agent (in the case of quantitative determinations) and reasonable beliefs honestly held by such Agent (in the case of qualitative determinations). 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. Headings and numbers have been set forth herein for convenience only. Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement. In the event of a direct conflict between the terms and provisions of this Agreement and the Credit Agreement, or between the terms and provisions of this Agreement and the Security Agreement, it is the intention of the parties hereto that such documents shall be read together and construed, to the fullest extent possible, to be in concert with each other. In the event of any actual, irreconcilable conflict between this Agreement and the Credit Agreement that cannot be resolved as aforesaid, the terms and provisions of the Credit Agreement shall control and govern.

(iii) All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

2. Pledge. As security for the prompt payment in full and performance of the Secured Obligations and as security for the prompt performance by each Pledgor of its covenants and duties under each Loan Document to which such Pledgor is a party, each Pledgor hereby pledges, grants, transfers, and assigns to the Collateral Agent, for the benefit of the Secured Creditors, a security interest in all of such Pledgor’s right, title, and interest in and to (a) the Pledged Collateral, (b) all payments of principal or interest, dividends, cash, instruments and other property from time to time received, receivable or otherwise distributed in respect of, in exchange for or upon the conversion of, and all other Proceeds received in respect of, the

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Pledged Collateral, (c) all rights and privileges of such Pledgor with respect to the Pledged Collateral and (d) all Proceeds of any of the foregoing.

3. Delivery and Registration of the Pledged Collateral.

(a) All certificates or instruments representing or evidencing the Pledged Collateral shall be (i) in form and substance reasonably satisfactory to the Collateral Agent, (ii) promptly delivered by each Pledgor to the Collateral Agent or the Collateral Agent’s designee pursuant hereto at a location designated by the Collateral Agent, (iii) held by or on behalf of the Collateral Agent pursuant hereto and (iv) in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank.

(b) Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the right, at any time in its discretion and without notice to the Pledgors, to transfer to or to register on the books of the issuers of the Pledged Collateral (or of any other Person maintaining records with respect to the Pledged Collateral) in the name of the Collateral Agent or any of its nominees any or all of the Pledged Collateral. In addition, upon the occurrence and during the continuance of an Event of Default, the Collateral Agent shall have the right at any time to exchange certificates or instruments representing or evidencing Pledged Collateral for certificates or instruments of smaller or larger denominations.

(c) If, at any time and from time to time, any Pledged Collateral (including any certificate or instrument representing or evidencing any such Pledged Collateral) is in the possession of a Person other than the Collateral Agent or a Pledgor (a “Holder”), then the Pledgors shall promptly, at the Collateral Agent’s option, either cause such Pledged Collateral to be delivered into the Collateral Agent’s possession, or execute and deliver to such Holder a written notification/instruction and take all other steps reasonably necessary to perfect the security interest of the Collateral Agent in such Pledged Collateral, including using commercially reasonable efforts to obtain from such Holder a written acknowledgment that such Holder holds such Pledged Collateral for the Collateral Agent, all pursuant to the UCC or other applicable law governing the perfection of the Collateral Agent’s security interest in the Pledged Collateral in the possession of such Holder. Each such notification/instruction and acknowledgment shall be in form and substance reasonably satisfactory to the Collateral Agent.

(d) Any and all Pledged Collateral (including dividends, interest, and other distributions) at any time received or held by any Pledgor, (i) shall be segregated from other funds or property of such Pledgor not pledged to the Collateral Agent, (ii) shall be so received or held in trust for the Collateral Agent and (iii) shall be promptly delivered to the Collateral Agent in the same form as so received or held, with any necessary endorsements; provided that cash dividends, cash interest or cash distributions received by any Pledgor, if and to the extent they are not prohibited by the Credit Agreement or this Agreement, may be retained by such Pledgor in accordance with Section 4 and used in the ordinary course of such Pledgor’s business.

(e) If at any time and from time to time any Pledged Collateral consists of an uncertificated security or a security in book entry form, then the Pledgors shall promptly cause such Pledged Collateral to be registered or entered, as the case may be, in the name of the Collateral Agent, for the benefit of the Secured Creditors or otherwise cause the security interest therein held by the Collateral Agent, for the benefit of the Secured Creditors, to be perfected in accordance with applicable law.

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4. Voting Rights and Dividends.

(a) So long as (i) no Event of Default shall have occurred and be continuing, or (ii) if an Event of Default has occurred and is continuing, and no Pledgor has received the written notice from the Collateral Agent described below in Section 4(b), each Pledgor shall be entitled to (1) exercise any and all voting, management and other consensual rights pertaining to the Pledged Collateral owned by it, and to give consents, waivers or ratifications in respect thereof; provided that, in each case, no vote shall be cast, or any consent, waiver or ratification given, or any action taken or omitted to be taken, that would violate, or result in a breach of any covenant contained in, or be inconsistent with, any of the terms of any Loan Document or that could reasonably be expected, individually or in the aggregate with other actions under this Section 4, to have the effect of impairing the value of the Pledged Collateral taken as a whole or the position or interests of the Collateral Agent or any other Secured Creditor in the Pledged Collateral, unless expressly permitted by the terms of the Loan Documents and (2) receive and retain any cash dividends or distributions paid in respect of the Pledged Collateral if and to the extent they are not prohibited by the Loan Documents.

(b) Upon the occurrence and during the continuance of an Event of Default, the Collateral Agent may elect, in its sole and absolute discretion, to deliver a written notice to any Pledgor, and upon the receipt by such Pledgor of such written notice, as and to the extent set forth in such notice, all such rights of such Pledgor (i) to exercise the voting and other consensual rights and/or (ii) to receive and retain cash dividends or distributions that it would otherwise be entitled to exercise or receive and retain, as applicable pursuant to Section 4(a), shall cease, and all such rights shall thereupon become vested in the Collateral Agent, which shall thereupon have the sole right to exercise such voting or other consensual rights and/or to receive and retain such cash dividends and distributions, as set forth in such notice. Upon the receipt of such written notice by such Pledgor, such Pledgor shall execute and deliver (or cause to be executed and delivered) to the Collateral Agent all such proxies and other instruments as the Collateral Agent may request for the purpose of enabling the Collateral Agent to exercise the voting and other rights that it is entitled to exercise and to receive the dividends and distributions that it is entitled to receive and retain pursuant to the preceding sentence.

5. Representations, Warranties and Covenants. Each Pledgor represents, warrants, and covenants, as to itself and its Pledged Collateral, as follows:

(a) Each Pledgor (i) is the legal, beneficial and record owner of, and has good and marketable title to, all of its Pledged Collateral and (ii) has sufficient interest in all of its Pledged Collateral in which a security interest is purported to be created hereunder for such security interest to attach (subject, in each case, to no pledge, lien, mortgage, hypothecation, security interest, charge, option, adverse claim (as such term is defined in Section 8-102(a)(1) of the UCC) or other encumbrance whatsoever, except for Permitted Liens or Liens created by this Agreement [or any of the other Loan Documents]);

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(b) Each Pledgor has taken all steps it deems necessary or appropriate to be informed on a continuing basis of changes or potential changes affecting the Pledged Collateral (including rights of conversion and exchange, rights to subscribe, payment of dividends, reorganizations or recapitalization, tender offers and voting rights), and such Pledgor agrees that no Agent nor any Lender shall have any responsibility or liability for informing such Pledgor of any such changes or potential changes or for taking any action or omitting to take any action with respect thereto;

(c) All of the information herein or hereafter supplied to any Agent or any Lender by or on behalf of each Pledgor with respect to the Pledged Collateral is, or in the case of information hereafter supplied will be, accurate and complete in all material respects as of the time supplied;

(d) Each Pledgor is, and at the time of delivery of the Pledged Interests to the Collateral Agent will be, the sole holder of record and the sole beneficial owner of such Pledged Collateral pledged by each Pledgor free and clear of any Lien thereon or affecting the title thereto, except for Permitted Liens or any Lien created by this Agreement [or any of the other Loan Documents];

(e) All of the Pledged Interests have been duly authorized, validly issued and (in the case of capital stock) are fully paid and non-assessable;

(f) Each Pledgor has the right and requisite authority to pledge, assign, transfer, deliver, deposit and set off the Pledged Collateral pledged by each Pledgor to the Collateral Agent as provided herein, and there are no restrictions on the transfer of the Pledged Interests;

(g) None of the Pledged Interests have been issued or transferred in violation of the securities registration, securities disclosure or similar laws of any jurisdiction to which such issuance or transfer may be subject;

(h) All of the Pledged Interests are presently owned by Pledgors, which Pledged Interests, to the extent certificated, are presently represented by the certificates listed on Schedule A hereto. As of the date hereof, except as set forth on Schedule A hereto, there are no existing options, warrants, calls or commitments of any character whatsoever relating to the Pledged Interests;

(i) No consent, approval, authorization or other order or other action by, and no notice to or filing with, any Governmental Authority or any other Person is required (i) for the pledge by any Pledgor of the Pledged Collateral pursuant to this Agreement or for the execution, delivery or performance of this Agreement by any Pledgor, or (ii) for the exercise by the Collateral Agent of the voting or other rights provided for in this Agreement or the remedies in respect of the Pledged Collateral pursuant to this Agreement, except as may be required in connection with such disposition by laws affecting the offering and sale of securities generally;

(j) The pledge, assignment and delivery of the Pledged Collateral pursuant to this Agreement (together with the completion of the applicable financing statement and other filing requirements under the Credit Agreement) will create a valid first priority Lien on and a

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first priority perfected security interest in favor of the Collateral Agent for the benefit of the Secured Creditors, in the Pledged Collateral and the proceeds thereof, securing the payment of the Secured Obligations, subject to no Lien other than Permitted Liens;

(k) This Agreement has been duly authorized, executed and delivered by each Pledgor and constitutes its legal, valid and binding obligation enforceable against it in accordance with the terms herein;

(l) Except for the voting capital stock of Silicon Graphics Biomedical (1995) Ltd. or Silicon Graphics Computer Systems Limited, each an entity organized under the laws of Israel, and as expressly noted on Schedule A hereto, the Pledged Interests constitute 100% of the issued and outstanding Capital Stock of each Issuer that is a Domestic Subsidiary (other than Inactive Subsidiaries) of a Pledgor; and 65% of the issued and outstanding Capital Stock of any direct Subsidiary of a Pledgor that is a Controlled Foreign Corporation; and

(m) The Pledged Interests are “securities” as such term is defined in the UCC.

6. Subsequently Acquired Pledged Collateral; Further Assurances.

(a) If any Pledgor shall acquire (by purchase, stock dividend, distribution or otherwise) any additional Pledged Collateral that is required to be pledged pursuant to the Credit Agreement, such Pledged Collateral shall automatically (and without any further action being required to be taken) be subject to the pledge and security interests created hereunder, and furthermore, such Pledgor shall thereafter take (or cause to be taken) all action as promptly as practicable with respect to such Pledged Collateral in accordance with the procedures set forth in Section 3 hereof for the benefit of the Collateral Agent and shall promptly thereafter deliver to the Collateral Agent (i) a certificate executed by an Authorized Officer of such Pledgor describing such Pledged Collateral and certifying that the same has been duly pledged in favor of the Collateral Agent (for the benefit of the Secured Creditors) hereunder and (ii) supplements to Schedule A as are necessary to cause such Schedule to be complete and accurate at such time.

(b) Each Pledgor agrees that from time to time, at its expense, such Pledgor shall promptly execute and deliver all further instruments and documents, and take all further action that may be necessary that the Collateral Agent may reasonably request in order to perfect and protect any security interest granted or purported to be granted hereby or to enable the Collateral Agent, on behalf of the Secured Creditors, to exercise and enforce their rights and remedies provided to them hereunder with respect to any Pledged Collateral. Without limiting the generality of the foregoing, each Pledgor shall: promptly upon the reasonable request of the Collateral Agent, (i) mark conspicuously each of its records pertaining to the Pledged Collateral with a legend, in form and substance reasonably satisfactory to the Collateral Agent, indicating that such Pledged Collateral is subject to the security interest granted hereby; (ii) authorize such financing or continuation statements, or amendments thereto, and such other instruments or notices, that may be necessary or that the Collateral Agent may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (iii) allow inspection of the Pledged Collateral by the Collateral Agent or Persons designated by the Collateral Agent from time to time hereafter (subject to any limits on such inspections or costs therefor contained in the Credit Agreement); and (iv) appear in and defend any action or

9

proceeding that may materially affect such Pledgor’s title to or the Collateral Agent’s security interest in the Pledged Collateral.

(c) Each Pledgor hereby authorizes the Collateral Agent to file any financing statement (including, without limitation, any such financing statements that indicate the Pledged Collateral as “all assets” or words of similar impact) necessary or that the Collateral Agent may reasonably request, to effectuate the transactions contemplated herein and by the other Loan Documents, and any continuation statement or amendment with respect to such purpose, in any appropriate filing office without the signature of such Pledgor where permitted by applicable law. Each Pledgor hereby ratifies the filing of any financing statement filed without the signature of such Pledgor prior to the date hereof.

(d) Each Pledgor shall furnish to the Collateral Agent, upon the reasonable request of the Collateral Agent, (i) a certificate executed by an authorized officer of such Pledgor, and dated as of the date of delivery to the Collateral Agent, itemizing in such detail as the Collateral Agent may reasonably request, the Pledged Collateral which, as of the date of such certificate, has been delivered to the Collateral Agent by such Pledgor pursuant to the provisions of this Agreement; and (ii) such statements and schedules further identifying and describing the Pledged Collateral and such other reports in connection with the Pledged Collateral as the Collateral Agent may reasonably request.

7. Covenants of the Pledgors. Each Pledgor, as to itself and its Pledged Collateral, shall:

(a) Perform each and every covenant in any of the Loan Documents applicable to such Pledgor;

(b) At all times keep at least one complete set of its records concerning the Pledged Collateral pledged by such Pledgor hereunder at such Pledgor’s respective Chief Executive Office as set forth in Schedule B hereto, and not change the location of such Chief Executive Office or of such records without giving the Collateral Agent at least thirty (30) days prior written notice thereof;

(c) Not permit any Issuer that is a general partnership, limited partnership or limited liability company to: (i) authorize the amendment of or amend the Governing Documents of such Issuer or (ii) to the extent such Capital Stock is uncertificated, authorize the issuance of or issue certificates evidencing the Capital Stock of such Issuer without the consent of the Collateral Agent (which consent shall not be unreasonably withheld);

(d) To the extent it may lawfully do so, use its best efforts to prevent the Issuers from issuing Future Rights or Proceeds, except for cash dividends and other distributions, if any, that are not prohibited by the terms of the Credit Agreement or this Agreement to be paid by any Issuer to any Pledgor; and

(e) Upon receipt by such Pledgor of any notice, report, or other communication from the Issuer or any Holder of its Pledged Collateral materially affecting all or any part of the Pledged Collateral, promptly deliver a copy of such notice, report or other

10

communication to the Collateral Agent, but in no event later than five (5) days following the receipt thereof by such Pledgor.

8. The Collateral Agent as Each Pledgor’s Attorney-in-Fact.

(a) Each Pledgor hereby irrevocably appoints the Collateral Agent, on behalf of the Secured Creditors, as such Pledgor’s attorney-in-fact, with full authority in the place and stead of such Pledgor and in the name of such Pledgor, the Collateral Agent or otherwise, from time to time at the Collateral Agent’s reasonable discretion, (i) to issue any notifications/instructions the Collateral Agent reasonably deems necessary pursuant to this Agreement and (ii) exercisable only at such time as an Event of Default has occurred and is continuing, to take any other action and to execute any other instrument that the Collateral Agent, on behalf of the Secured Creditors, may reasonably deem necessary or advisable to exercise the powers, rights and remedies granted to the Collateral Agent hereunder, including: (1), to receive, endorse, and collect all instruments made payable to such Pledgor representing any dividend, interest payment or other distribution in respect of the Pledged Collateral or any part thereof to the extent permitted hereunder and to give full discharge for the same and to execute and file governmental notifications and reporting forms in connection therewith; or (2) to arrange for the transfer of the Pledged Collateral on the books of any Issuer or any other Person to the name of the Collateral Agent or to the name of the Collateral Agent’s nominee.

(b) In addition to the designation of the Collateral Agent as each Pledgor’s attorney-in-fact in subsection (a), each Pledgor hereby irrevocably appoints the Collateral Agent, on behalf of the Secured Creditors, as such Pledgor’s agent and attorney-in-fact with power to make, execute and deliver any and all documents and writings which may be reasonably necessary or appropriate for approval of, or be required by, any regulatory authority located in any city, county, state or country where such Pledgor or Issuer engage in business, in order to transfer or to more effectively transfer any of the Pledged Interests or otherwise enforce the rights granted hereunder to the Secured Creditors, or the Collateral Agent for the benefit thereof, exercisable only at such time as an Event of Default has occurred and is continuing.

9. Remedies upon Default. Upon the occurrence and during the continuance of an Event of Default:

(a) The Collateral Agent shall have the right to exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided for herein or otherwise available to it, all the rights and remedies of a secured party under the UCC (irrespective of whether the UCC applies to the affected items of the Pledged Collateral), and the Collateral Agent shall have the right, also without notice (except as specified below), to sell the Pledged Collateral or any part thereof in one or more parcels at a public or private sale, at any exchange, broker’s board or at any of the Collateral Agent’s offices or elsewhere, for cash, on credit or for future delivery, at such time or times and at such price or prices and upon such other terms as the Collateral Agent may deem commercially reasonable, irrespective of the impact of any such sales on the market price of the Pledged Collateral. To the maximum extent permitted by applicable law, the Collateral Agent may be the purchaser of any or all of the Pledged Collateral at any such sale and shall be entitled, for the purpose of bidding and making settlement or payment of the purchase price for all or any portion of the Pledged Collateral sold at any such

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public sale, to use and apply all or any part of the Secured Obligations as a credit on account of the purchase price of any Pledged Collateral payable at such sale. Each purchaser at any such sale shall hold the property sold absolutely free from any claim or right on the part of any Pledgor, and each Pledgor hereby waives (to the extent permitted by law) all rights of redemption, stay, or appraisal that it now has or may at any time in the future have under any rule of law or statute now existing or hereafter enacted. Each Pledgor agrees that, to the extent notice of sale shall be required by law, at least ten (10) calendar days notice to such Pledgor of the time and place of any public sale or the time after which a private sale is to be made shall constitute reasonable notification. The Collateral Agent shall not be obligated to make any sale of the Pledged Collateral regardless of notice of sale having been given. The Collateral Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. To the maximum extent permitted by law, each Pledgor hereby waives any claims against the Collateral Agent arising because the price at which any Pledged Collateral may have been sold at such a private sale was less than the price that might have been obtained at a public sale, even if the Collateral Agent accepts the first offer received and does not offer such Pledged Collateral to more than one offeree.

(b) Each Pledgor hereby agrees that any sale or other disposition of the Pledged Collateral conducted in conformity with reasonable commercial practices of banks, insurance companies, or other financial institutions in the County of New York, State of New York regularly employed in disposing of property similar to the Pledged Collateral shall be deemed to be commercially reasonable.

(c) Each Pledgor hereby acknowledges that the sale by the Collateral Agent of any Pledged Collateral pursuant to the terms hereof in compliance with the Securities Act as now in effect or as hereafter amended, or any similar statute hereafter adopted with similar purpose or effect, as well as applicable “Blue Sky” or other state securities laws may require strict limitations as to the manner in which the Collateral Agent or any subsequent transferee of the Pledged Collateral may dispose thereof. Each Pledgor acknowledges and agrees that in order to protect the Collateral Agent’s interest it may be necessary to sell the Pledged Collateral at a price less than the maximum price attainable if a sale were delayed or were made in another manner, such as a public offering under the Securities Act. Each Pledgor has no objection to a sale made in such a manner and agrees that the Collateral Agent and the other Secured Creditors shall have no obligation to obtain the maximum possible price for the Pledged Collateral. Without limiting the generality of the foregoing, each Pledgor agrees that, upon the occurrence and during the continuation of an Event of Default, the Collateral Agent may, subject to applicable law, from time to time attempt to sell all or any part of the Pledged Collateral by a private placement, restricting the bidders and prospective purchasers to those who will represent and agree that they are purchasing for investment only and not for distribution. In so doing, the Collateral Agent may solicit offers to buy the Pledged Collateral or any part thereof for cash, from a limited number of investors deemed by the Collateral Agent, in its reasonable judgment, to be institutional investors or other responsible and eligible parties who might be interested in purchasing the Pledged Collateral. If the Collateral Agent shall solicit such offers, then the acceptance by the Collateral Agent of one of the offers shall be deemed to be a commercially reasonable method of disposition of the Pledged Collateral.

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(d) If the Collateral Agent shall determine to exercise its right to sell all or any portion of the Pledged Collateral pursuant to this Section, each Pledgor agrees that, upon request of the Collateral Agent, such Pledgor will, at its own expense:

(i) use its best efforts to execute and deliver, and cause the Issuer and the directors and officers thereof to execute and deliver, all such instruments and documents, and to do or cause to be done all such other acts and things, as may be reasonably necessary, or in the opinion of the Collateral Agent, reasonably advisable to register such Pledged Collateral under the provisions of the Securities Act, and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectuses which, in the opinion of the Collateral Agent, are reasonably necessary or advisable, all in conformity with the requirements of the Securities Act and the rules and regulations of the Securities and Exchange Commission applicable thereto;

(ii) use its best efforts to qualify the Pledged Collateral under the state securities laws or “Blue Sky” laws and to obtain all reasonably necessary governmental approvals for the sale of the Pledged Collateral, as requested by the Collateral Agent;

(iii) execute and deliver, or cause the officers and directors of the Issuer to execute and deliver, to any person, entity or Governmental Authority as the Collateral Agent may deem reasonably necessary or appropriate, any and all documents and writings which, in the Collateral Agent’s reasonable judgment, may be necessary for approval, or be required by, any regulatory authority located in any city, county, state or country where any Pledgor or Issuer engage in business, in order to transfer or to more effectively transfer the Pledged Interests or otherwise enforce the Collateral Agent’s rights hereunder; and

(iv) do or cause to be done all such other acts and things as may be necessary to make such sale of the Pledged Collateral or any part thereof valid and binding and in compliance with applicable law.

Each Pledgor acknowledges that there is no adequate remedy at law for failure by it to comply with the provisions of this Section and that such failure would not be adequately compensable in damages, and therefore agrees that its agreements contained in this Section may be specifically enforced.

(e) EACH PLEDGOR EXPRESSLY WAIVES TO THE MAXIMUM EXTENT PERMITTED BY LAW: (i) ANY CONSTITUTIONAL OR OTHER RIGHT TO A JUDICIAL HEARING PRIOR TO THE TIME THE COLLATERAL AGENT DISPOSES OF ALL OR ANY PART OF THE PLEDGED COLLATERAL AS PROVIDED IN THIS SECTION; (ii) ALL RIGHTS OF REDEMPTION, STAY, OR APPRAISAL THAT IT NOW HAS OR MAY AT ANY TIME IN THE FUTURE HAVE UNDER ANY RULE OF LAW OR STATUTE NOW EXISTING OR HEREAFTER ENACTED; AND (iii) EXCEPT AS SET FORTH IN SUBSECTION (a) OF THIS SECTION, ANY REQUIREMENT OF NOTICE, DEMAND, OR ADVERTISEMENT FOR SALE.

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10. Application of Proceeds. Upon the occurrence and during the continuance of an Event of Default, any cash held by the Collateral Agent as Pledged Collateral and all cash proceeds received by the Collateral Agent in respect of any sale of, collection from, or other realization upon all or any part of the Pledged Collateral pursuant to the exercise by the Collateral Agent of its remedies as a secured creditor as provided in Section 9 shall be applied from time to time by Collateral Agent as provided in Section 1.10 of the Credit Agreement.

11. Duties of the Collateral Agent. So long as the Collateral Agent complies with its obligations, if any, under the UCC and under this Agreement and the other Loan Documents, the Collateral Agent’s only duty shall be to deal with the Pledged Collateral in its possession in the same manner as the Collateral Agent deals with similar property for its own account, and otherwise shall not be liable or responsible for: (a) the safekeeping of the Pledged Collateral; (b) any loss or damage thereto occurring or arising in any manner or fashion from any cause; (c) any diminution in the value thereof; or (d) any act or default of any carrier, warehouseman, bailee, forwarding agency, or other Person. All risk of loss, damage, or destruction of the Pledged Collateral shall be borne by the Pledgors. The powers conferred on the Collateral Agent hereunder are solely to protect its interests in the Pledged Collateral and shall not impose on it any duty to exercise such powers. Except as provided in the UCC, this Agreement and the other Loan Documents, the Collateral Agent shall not have any duty with respect to the Pledged Collateral or any responsibility for taking any necessary steps to preserve rights against any Persons with respect to any Pledged Collateral. Nothing contained in this Section 11 or elsewhere in the Loan Documents shall relieve the Collateral Agent of liability or responsibility for its own gross negligence or willful misconduct.

12. GOVERNING LAW.

THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN THE STATE OF NEW YORK.

13. CONSENT TO JURISDICTION, SERVICE OF PROCESS AND VENUE.

ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK IN THE COUNTY OF NEW YORK OR OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PLEDGOR HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS PLEDGED COLLATERAL, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. EACH PLEDGOR HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL LEGAL PROCESS, SUMMONS, NOTICES, AND DOCUMENTS IN ANY SUIT, ACTION, OR PROCEEDING BROUGHT IN THE UNITED STATES OF AMERICA ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BY THE MAILING (BY REGISTERED MAIL OR CERTIFIED MAIL, POSTAGE PREPAID) OR DELIVERING OF A COPY OF SUCH PROCESS TO SUCH PLEDGOR, C/O THE BORROWER REPRESENTATIVE, AT THE BORROWER REPRESENTATIVE’S ADDRESS FOR NOTICES AS SET FORTH IN THE CREDIT

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AGREEMENT. EACH PLEDGOR 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 PROVIDED BY LAW. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE SECURED CREDITORS TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY PLEDGOR IN ANY OTHER JURISDICTION. EACH PLEDGOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT PLEDGOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH RESPECT TO ITSELF OR ITS PLEDGED COLLATERAL, SUCH PLEDGOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT.

14. WAIVER OF JURY TRIAL, ETC.

EACH PLEDGOR AND THE COLLATERAL AGENT HEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OR OTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED IN CONNECTION HEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS OR COUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. EACH PLEDGOR CERTIFIES THAT NO OFFICER, REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOING WAIVERS. EACH PLEDGOR HEREBY ACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE SECURED CREDITORS, ENTERING INTO THIS AGREEMENT.

15. Entire Agreement, Amendments; Etc. This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof. Neither this Agreement nor any provision hereof may be modified, amended or waived except by the written agreement of the parties to this Agreement. The foregoing notwithstanding, the Collateral Agent may re-execute this Agreement, modify, amend or supplement the Schedules hereto or execute a supplemental Pledge Agreement, as

15

provided herein, and the terms of any such modification, amendment, supplement or supplemental Pledge Agreement shall be deemed to be incorporated herein by this reference.

16. No Waiver; Remedies, Etc. No failure on the part of the Collateral Agent or any other Secured Creditor to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any right under any Loan Document preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Secured Creditors and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Secured Creditors under any Loan Document against any party thereto are not conditional or contingent on any attempt by the Secured Creditors to exercise any of their rights under any other Loan Document against such party or against any other Person.

17. Notices. All notices and other communications hereunder to the Collateral Agent shall be in writing and shall be mailed, sent or delivered in accordance with the Credit Agreement and all notices and other communications hereunder to any Pledgor shall be in writing and shall be mailed, sent or delivered in care of the Borrower Representative in accordance with the Credit Agreement.

18. Security Interest Absolute. To the maximum extent permitted by law, all rights of the Collateral Agent, all security interests hereunder, and all obligations of the Pledgors hereunder, shall be absolute and unconditional, irrespective of:

(a) any lack of validity or enforceability of any of the Secured Obligations or any other agreement or instrument relating thereto, including any of the Loan Documents, any change in the time, manner, or place of payment of, or in any other term of, all or any of the Secured Obligations, or any other amendment or waiver of or any consent to any departure from any of the Loan Documents or any other agreement or instrument relating thereto;

(b) any exchange, release, or non-perfection of any other Pledged Collateral, or any release or amendment or waiver of or consent to departure from any Loan Document; or

(c) any other circumstances that might otherwise constitute a defense available to, or a discharge of, any Pledgor.

Notwithstanding the foregoing, no Pledgor waives any defense or discharge available to it as a primary obligor, it being understood that the foregoing waivers are made by each Pledgor only in its capacity as a surety or other guarantor of the Secured Obligations.

19. Severability. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or affecting the validity or enforceability of such provision in any other jurisdiction.

20. Counterparts; Telefacsimile Execution. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original and all of which together shall

16

constitute 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 of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, or binding effect hereof.

21. Waiver of Marshaling. Each Pledgor and the Collateral Agent acknowledges and agrees that in exercising any rights under or with respect to the Pledged Collateral: (a) the Collateral Agent is not under any obligation to marshal any Pledged Collateral; (b) the Collateral Agent may, in its absolute discretion, realize upon the Pledged Collateral in any order and in any manner it so elects (subject to any manner of realization or application otherwise required by the Loan Documents; and (c) the Collateral Agent may, subject solely to Section 10 hereof, apply the proceeds of any or all of the Pledged Collateral to the Secured Obligations in any order and in any manner it so elects (subject to any manner or order of application otherwise required by the Loan Documents). Each Pledgor and the Collateral Agent waives any right to require the marshaling of any of the Pledged Collateral.

22. Termination; Release. Subject to Section 24, when the Secured Obligations have been indefeasibly paid and performed in full in immediately available funds (other than contingent indemnification obligations to the extent no claim giving rise thereto has been asserted), including the cash collateralization, expiration, or cancellation of all Secured Obligations, if any, consisting of Letter of Credit Obligations, and the Commitments shall have expired or been irrevocably terminated, this Agreement shall terminate and all rights in the Pledged Collateral shall revert to the Pledgors. The Collateral Agent, at the request and sole expense of the Pledgors, will promptly execute and deliver to the Debtors the necessary instruments (including Uniform Commercial Code termination statements) acknowledging the termination of this Agreement, and will duly assign, transfer and deliver to the Debtors, without recourse, representation or warranty of any kind whatsoever, such of the Pledged Collateral as may be in possession of the Collateral Agent and has not theretofore been disposed of, applied or released.

23. Interpretation. Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against the Collateral Agent or the other Secured Creditors, whether under any rule of construction or otherwise. On the contrary, this Agreement has been reviewed by all parties and shall be construed and interpreted according to the ordinary meaning of the words used so as to fairly accomplish the purposes and intentions of all parties hereto.

24. Reinstatement; Certain Payments. If any claim is ever made upon any Secured Creditor, for repayment or recovery of any amount or amounts received by such Secured Creditor, in payment or on account of any of the Secured Obligations, such Secured Creditor shall give prompt notice of such claim to each other Secured Creditor and the Pledgors, and if such Secured Creditor repays all or part of such amount by reason of (a) any judgment, decree or order of any court or administrative body having jurisdiction over such Secured Creditor, or any of its property or (b) any good faith settlement or compromise of any such claim effected by such Secured Creditor with any such claimant, then, each Pledgor agrees that (i) any such judgment, decree, order, settlement or compromise shall be binding upon it notwithstanding the cancellation of any Indebtedness hereunder or under the other Loan Documents or the

17

termination of this Agreement or the other Loan Documents, and (ii) it shall be and remain liable to such Secured Creditor hereunder for the amount so repaid or recovered to the same extent as if such amount had never originally been received by such Secured Creditor.

[Signature page to follow]

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IN WITNESS WHEREOF, the Pledgors and the Collateral Agent have caused this Agreement to be duly executed and delivered by their respective officers as of the date first written above.

PLEDGORS:
SILICON GRAPHICS, INC.
By:	/s/ Kathy Lanterman
Name:	Kathy Lanterman
Title:	Senior Vice President and Chief Financial Officer

SILICON GRAPHICS WORLD TRADE CORPORATION
By:	/s/ Kathy Lanterman
Name:	Kathy Lanterman
Title:	Senior Vice President and Chief Financial Officer

COLLATERAL AGENT:
GENERAL ELECTRIC CAPITAL CORPORATION
By:	/s/ Wafa Shalabi
Name:	Wafa Shalabi
Title:	Its Duly Authorized Signatory

SCHEDULE A

TO

PLEDGE AGREEMENT

Pledgor: Silicon Graphics, Inc.

Pledged Interests

ISSUER	NUMBER OF SHARES	CERTIFICATED	CERTIFICATE NUMBER	PLEDGOR’S PERCENTAGE OWNERSHIP		JURISDICTION OF FORMATION
Silcon Graphics Federal, Inc.	100	Yes	C-1	100	%	Delaware
Silicon Graphics World Trade Corporation	1,004	Yes	C-1	100	%	Delaware

Pledgor: Silicon Graphics World Trade Corporation

Pledged Interests

ISSUER	NUMBER OF SHARES	CERTIFICATED	CERTIFICATE NUMBER	PLEDGOR’S PERCENTAGE OWNERSHIP		JURISDICTION OF FORMATION
Silicon Graphics World Trade B.V.	584,440,876	No	N/A	100	%	Netherlands

A-1

SCHEDULE B

TO

PLEDGE AGREEMENT

Pledgor	Address of Chief Executive Office
Silicon Graphics, Inc.	1200 Crittenden Lane Mountain View, California 94043-1351
Silicon Graphics World Trade Corporation	1200 Crittenden Lane Mountain View, California 94043-1351

EX-10.5

Exhibit 10.5

SILICON GRAPHICS, INC.

MANAGEMENT INCENTIVE PLAN

1. Purpose. The Silicon Graphics, Inc. Management Incentive Plan (the “Plan”) is intended to attract, retain and motivate officers and employees of, consultants to, and non-employee directors providing services to Silicon Graphics, Inc. (the “Company”) and its subsidiaries by providing them with the opportunity to acquire shares of the Company’s common stock (the “Common Stock”), to receive monetary payments based on the value of such shares or to receive other equity or cash incentive compensation.

2. Administration.

(a) Committee. The Plan will be administered by a committee (the “Committee”) appointed by the Board of Directors of the Company (the “Board”) from among its members and shall be comprised, unless otherwise determined by the Board, of not less than two (2) members each of whom shall be (i) a “Non-Employee Director” within the meaning of Rule 16b-3(b)(3) (or any successor rule) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), (ii) “outside directors” within the meaning of Treasury Regulation Section 1.162-27(e)(3) under Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and (iii) an “independent director” within the meaning of the listing requirements of the National Association of Securities Dealers Automated Quotation System and such other exchange on which the Company may be listed.

(b) Authority. The Committee is authorized, subject to the provisions of the Plan, to establish such rules as it deems necessary for the proper administration of the Plan and to make such determinations and interpretations in its sole discretion and to take such action in connection with the Plan and any Benefits (as defined in Section 4) granted hereunder as it deems necessary or advisable, including, subject to the terms of the Plan, the right to accelerate the vesting or exercisability of Benefits, establish the terms and conditions of Benefits and cancel Benefits upon a Change in Control. All determinations and interpretations made by the Committee shall be binding and conclusive on all participants and their legal representatives.

(c) Indemnification. Except in circumstances involving bad faith or willful misconduct of the person acting or failing to act, no member of the Committee and no employee of the Company shall be liable for any act or failure to act hereunder or for any act or failure to act hereunder by any other member or employee or by any agent to whom duties in connection with the administration of this Plan have been delegated. The Company shall indemnify members of the Committee and any agent of the Committee who is an employee of the Company, a subsidiary or an affiliate against any and all liabilities or expenses to which they may be subjected by reason of any act or failure to

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act with respect to their duties on behalf of the Plan, except in circumstances involving such person’s bad faith or willful misconduct.

(d) Delegation. The Committee may delegate to one or more of its members, one or more officers of the Company, and one or more agents or advisors such administrative duties or powers as it may deem advisable. Any person to whom it has delegated duties as aforesaid may employ one or more persons to render advice with respect to any responsibility the Committee or such person may have under the Plan. To the extent permitted by applicable law, the Committee may, by resolution, authorize one or more officers of the Company to do one or both of the following on the same basis as can the Committee: (i) designate employees and consultants to be recipients of Benefits, and (ii) determine the terms and conditions of any such Benefits; provided, however, that (1) the Committee shall not delegate such responsibilities to any such officer for Benefits granted to an employee that is considered an “insider” for purposes of Section 16 of the Exchange Act; (2) the resolution providing for such authorization shall set forth the total number of Benefits such officer(s) may grant; and (3) the officer(s) shall report periodically to the Committee regarding the nature and scope of the Benefits granted pursuant to the authority delegated.

(e) Advisors. The Committee may employ such legal or other counsel, consultants and agents as it may deem desirable for the administration of the Plan and may rely upon any opinion or computation received from any such counsel, consultant or agent. Expenses incurred by the Committee in the engagement of such counsel, consultant or agent shall be paid by the Company, or the subsidiary or affiliate whose employees, consultants and directors have benefited from the Plan, as determined by the Committee.

3. Participants. Participants will consist of such officers, employees, consultants, and non-employee directors of the Company and its subsidiaries as the Committee in its sole discretion determines and whom the Committee may designate from time to time to receive Benefits under the Plan. The Committee may impose such conditions on participation as it shall deem appropriate, including, without limitation, a condition that any Benefit be subject to the participant’s agreement to modify existing agreements with the Company related to indemnification and/or Change in Control. In addition, participation in the Plan and enjoyment of Benefits hereunder is conditioned upon the agreement to be bound by restrictive covenants relating to confidentiality, non-disclosure and non-competition, which covenants shall be contained in the applicable Benefit Agreement, as defined in Section 4. Designation of a participant in any year shall not require the Committee to designate such person to receive a Benefit in any other year or, once designated, to receive the same type or amount of a Benefit as granted to the participant in any other year. The Committee shall consider such factors as it deems pertinent in selecting participants and in determining the type and amount of their respective Benefits.

4. Type of Benefits. Awards under the Plan may be granted in the form of any one or a combination of the following (collectively, “Benefits”): (a) Stock Options, (b) Stock Appreciation Rights, (c) Stock Awards, (d) Stock Units, (e) Other Stock Based

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Awards, (f) Dividend Equivalent Rights, and (g) Cash Awards. Stock Awards, Stock Units, Other Stock Based Awards and Cash Awards may be designed to qualify as Performance-Based Awards, as described in Section 13 hereof. Benefits awarded to a participant shall be evidenced by written agreements between the Company and the participant (which need not be identical) in such forms as the Committee may from time to time approve (each a “Benefit Agreement”); provided, however, that in the event of any conflict between the provisions of the Plan and any Benefit Agreement, the provisions of the Plan shall prevail.

5. Common Stock Available Under the Plan; Plan Maximums.

(a) Plan Maximums. Subject to the provisions of this Section 5 and any adjustments made in accordance with Section 16 hereof, the maximum number of shares of Common Stock that may be delivered to participants (including permitted assignees) and their beneficiaries under this Plan shall be equal to 1,250,000 shares of Common Stock, which may be authorized and unissued or treasury shares, all of which may issued as Incentive Stock Options, under Section 6 of this Plan, if the Committee so elects. Of the shares of Common Stock reserved for issuance under this Section no more than 312,500 may be issued as Full Value Benefits, as defined in Section 5(c) below.

(b) Share Counting Rules.

(i) General. Shares shall be charged against the Plan maximums and the individual maximums of Section 5(c) on the date of grant to the extent such Benefits are denominated in Common Stock and on the date of settlement for any other Benefit which are settled in shares of Common Stock; provided, however, that in the case of a Stock Appreciation Right granted in tandem with a Stock Option, only the number of shares of Common Stock subject to the Stock Option shall be counted.

(ii) Benefits Not Settled in Shares. If all or a portion of a Benefit denominated in shares of Common Stock is not settled in such shares, such shares of Common Stock that are not actually issued and delivered to a participant (or, if permitted by the Committee, to a participant’s designated transferee) shall not be counted against the total number of shares available for Benefits but shall continue to be counted for purposes of the individual maximums.

(iii) Cancelled/Forfeited Awards. Any shares of Common Stock related to Benefits which terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such shares or are settled in cash in lieu of shares of Common Stock shall be available again for grant under the Plan but shall continue to be counted for purposes of the individual maximums.

(iv) Stock Options; Withholding. To the extent the Committee permits the exercise price of any Stock Option (or related tax withholding) or Other Stock Based Award or the tax withholding on other Benefits to be satisfied by tendering shares to the Company (by either actual delivery or by attestation), only the

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number of shares of Common Stock issued, net of the shares of Common Stock tendered, if any, will be deemed delivered for purposes of determining the Plan maximums but such shares shall continue to be counted for purposes of the individual maximums.

(v) Dividends or Dividend Equivalents. The Plan maximums and individual maximums shall not be reduced to reflect any dividends or Dividend Equivalents paid in respect of Benefits made under the Plan that are settled or reinvested in shares of Common Stock or additional Benefits under the Plan; provided, however, that if a dividend or Dividend Equivalent is granted in respect of an Appreciation Benefit, as defined below in Section 5(c)(ii), this rule shall only apply if the payment or settlement of such dividend or Dividend Equivalent is not contingent upon the exercise of the Benefit.

(vi) Substituted Benefit. If the Committee authorizes the issuance or assumption under this Plan of awards granted under another plan in connection with any merger, consolidation, acquisition of property or stock, or reorganization (such Benefit, a “Substituted Benefit”), such authorization shall not reduce the Plan maximums; provided, however, that if any assumed Substituted Benefits is an Incentive Stock Option such Substituted Benefit shall reduce the maximum number of shares that may be delivered to participants under the Plan pursuant to the exercise of an Incentive Stock Option.

(c) Individual Maximums.

(i) Appreciation Benefits. Stock Options, Stock Appreciation Rights and Other Stock Based Awards designed to provide equity compensation based solely upon the appreciation in the value of stock over an exercise price or base price following the date of grant, are “Appreciation Benefits”. The maximum number of shares of Common Stock with respect to which Appreciation Benefits denominated in such shares may be granted or measured to any Participant in any consecutive 12 month period shall be 250,000 shares.

(ii) “Full Value” Benefits. Stock Awards, Stock Units and Other Stock Based Awards designed to provide equity compensation based upon the value of stock on the date of grant rather than solely on the appreciation of such stock after the date of grant are “Full Value Benefits”. The maximum number of shares of Common Stock with respect to which Full Value Benefits denominated in such shares may be granted or measured to any Participant in any consecutive 36 month period shall be 100,000 shares.

(iii) Maximum Dollar Benefit. The maximum amount of any Benefit denominated in cash that may be paid, credited or vested to any Participant in any consecutive 12 month period shall $3,000,000.

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6. Stock Options.

(a) Stock Options. Stock Options are awards from the Company that enable the holder to purchase a number of shares of Common Stock at the exercise price. Stock Options may be “incentive stock options” within the meaning of Section 422 of the Code (“Incentive Stock Options”), or Stock Options which do not constitute Incentive Stock Options (“Nonqualified Stock Options”).

(b) Authority to Grant. The Committee shall have the authority to grant to any participant one or more Incentive Stock Options, Nonqualified Stock Options, or both types of Stock Options (in each case with or without Stock Appreciation Rights). All Stock Options granted under the Plan shall be Nonqualified Stock Options unless the Benefit Agreement expressly states that the Stock Option is intended to be an Incentive Stock Option. Each Stock Option shall be subject to such terms and conditions consistent with the Plan as the Committee may impose from time to time, subject to the limitations of Sections 6(c) through 6(g) below.

(c) Exercise Price. Each Stock Option granted hereunder shall have such per-share exercise price as the Committee may determine at the date of grant; provided, however, that subject to any additional requirements imposed with respect to Incentive Stock Options under Section 6(f), the per-share exercise price of each Stock Option (i) shall not be less than 100% of the Fair Market Value (as defined in Section 18 below) of the Common Stock on the date the Stock Option is granted, or (ii) in the case of a Stock Option that is a Substituted Benefit shall not be less than the exercise price necessary to ensure that the Stock Option is excluded from coverage under Section 409A of the Code.

(d) Payment of Exercise Price. The exercise price of a Stock Option may be paid in cash, check or other readily available funds or, in the discretion of the Committee, by tendering shares of Common Stock of the Company then owned by the participant or by a combination of these methods. In the discretion of the Committee, payment also may be made by delivering a properly executed exercise notice to the Company together with a copy of irrevocable instructions to a broker to deliver promptly to the Company the amount of sale or loan proceeds to pay the exercise price. To facilitate the foregoing, the Company may enter into agreements for coordinated procedures with one or more brokerage firms. The Committee may prescribe any other method of paying the exercise price that it determines to be consistent with applicable law and the purposes of the Plan, including, without limitation, in lieu of the exercise of a Stock Option by tendering shares of Common Stock of the Company then owned by a participant, providing the Company with a notarized statement attesting to the number of shares owned, in which case upon verification by the Company, the Company would issue to the participant only the number of incremental shares to which the participant is entitled upon exercise of the Stock Option. In determining which methods a participant may utilize to pay the exercise price, the Committee may consider such factors as it determines are appropriate.

(e) Exercise Period. Except as otherwise provided in this Section 6(e), Stock Options granted under the Plan shall be vested and exercisable at such time or times and

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subject to such terms and conditions as shall be determined by the Committee. All Stock Options shall terminate at such earlier times and upon such conditions or circumstances as the Committee shall in its discretion set forth in the Benefit Agreement relating to the Stock Option grant.

(i) Expiration. No Stock Option shall be exercisable later than seven years after the date it is granted except in the event of a participant’s death or termination of service due to disability, in which case, the exercise period of such participant’s Stock Option shall be extended beyond such period but no longer than one year after the participant’s death or termination of service due to disability.

(ii) Vesting. No Stock Option shall be exercisable earlier than the first anniversary of the date of grant except (i) in the event of a participant’s death, termination of service due to disability or a Change in Control, in which case, the Committee may provide for an earlier exercise date, and (ii) in the case of a Stock Option which is a Substituted Benefit in which case the Stock Option shall be exercisable at such times as the original award was exercisable.

(f) Limitations on Incentive Stock Options. Incentive Stock Options may be granted only to participants who are employees of the Company or one of its subsidiaries (within the meaning of Section 424(f) of the Code) at the date of grant. The aggregate Fair Market Value (determined as of the time the Stock Option is granted) of the Common Stock with respect to which Incentive Stock Options are exercisable for the first time by a participant during any calendar year (under all option plans of the Company and of any parent corporation or subsidiary corporation (as defined in Sections 424(e) and (f) of the Code, respectively)) shall not exceed $100,000. For purposes of the preceding sentence, Incentive Stock Options will be taken into account in the order in which they are granted. The per-share exercise price of an Incentive Stock Option shall not be less than 100% of the Fair Market Value of the Common Stock on the date of grant, and no Incentive Stock Option may be exercised later than ten years after the date it is granted; provided, however, that Incentive Stock Options may not be granted to any participant who, at the time of grant, owns stock possessing (after the application of the attribution rules of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any parent or subsidiary corporation of the Company, unless the exercise price is fixed at not less than 110% of the Fair Market Value of the Common Stock on the date of grant and the exercise of such Incentive Stock Option is prohibited by its terms after the expiration of five years from the date of grant of such Incentive Stock Option. If a Stock Option is intended to be an Incentive Stock Option, and if for any reason such Stock Option (or any portion thereof) shall not qualify as an Incentive Stock Option, then, to the extent of such nonqualification, such Stock Option (or portion thereof) shall be regarded as a Nonqualified Stock Option appropriately granted under the Plan; provided that such Stock Option (or portion thereof) otherwise complies with the Plan’s requirement relating to Nonqualified Stock Options.

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(g) Rights as a Shareholder. No participant shall have any rights to dividends or other shareholder rights with respect to shares of Common Stock subject to a Stock Option until the participant has given written notice of exercise of the Stock Option, paid in full for such shares, received such shares from the Company and, if applicable, has satisfied any other conditions imposed by the Committee pursuant to the Plan or any Benefit Agreement.

7. Stock Appreciation Rights.

(a) Stock Appreciation Rights. A Stock Appreciation Right is a right to receive a payment in cash, Common Stock or a combination thereof, in an amount equal to the excess of (i) the Fair Market Value, or other specified valuation (which shall be no greater than the Fair Market Value), of a specified number of shares of Common Stock on the date the right is exercised over (ii) the Fair Market Value, or other specified valuation (which, (1) shall be no less than 100% the Fair Market Value of such shares of Common Stock on the date the right is granted, or (2) in the case of a Stock Appreciation that is a Substituted Benefit shall not be less than the amount necessary to ensure that the Stock Appreciation Right is excluded from coverage under Section 409A of the Code); provided, however, that if a Stock Appreciation Right is granted in tandem with or in substitution for a Stock Option, Fair Market Value in clause (ii) above shall be the Fair Market Value of a share of Common Stock on the date such Stock Option was granted.

(b) Authority to Grant. The Committee shall have the authority to grant Stock Appreciation Rights to the holders of any Stock Options granted hereunder. In addition, Stock Appreciation Rights may be granted independently of, and without relation to, Stock Options.

(c) Terms. Except as otherwise provided herein, each Stock Appreciation Right shall be subject to such terms and conditions as the Committee shall impose from time to time:

(i) Expiration. No Stock Appreciation Right shall be exercisable later than seven years after the date it is granted except in the event of a participant’s death or termination of service due to disability, in which case, the exercise period of such participant’s Stock Appreciation Rights shall be extended beyond such period but no longer than one year after the participant’s death or termination of service due to disability.

(ii) Vesting. No Stock Appreciation Right shall be exercisable earlier than the first anniversary of the date of grant except (1) in the event of a participant’s death, termination of service due to disability or a Change in Control, in which case, the Committee may provide for an earlier exercise date, and (2) in the case of a Stock Appreciation Right which is a Substituted Benefit in which case the Stock Appreciation Right may be exercised at such times as the original award was exercisable.

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8. Stock Awards.

(a) Stock Award. A Stock Award is an award that results in the issuance or transfer of Common Stock to a participant with or without payment therefor. Stock Awards can be used by the Company to pay earned compensation, including earned incentive compensation under other Company programs. If a Stock Award provides for the grant of Common Stock that is subject to a substantial risk of forfeiture that lapses in accordance with a vesting schedule, such Stock Award may be referred to as a Restricted Stock Award. If the issuance or vesting of a Stock Award is contingent upon the satisfaction of performance criteria, such Stock Award may be referred to as a Performance Stock Award. If a participant is granted a right to receive Common Stock on a fixed future date or upon the occurrence of a particular event such Stock Award may be referred to as Deferred Stock Award.

(b) Authority to Grant. The Committee shall have the authority to grant Stock Awards.

(c) Terms. Except as otherwise provided herein, each Stock Award shall be subject to such terms and conditions as the Committee shall impose from time to time, including, without limitation, restrictions on the sale or other disposition of shares subject to the Stock Award and the right of the Company to reacquire such shares for no consideration upon termination of the participant’s employment within specified periods.

(i) Vesting. No Stock Award shall vest solely on the basis of time more rapidly than pro rata over a three year period following the date of the award except (1) in the event of a participant’s death, termination of service due to disability or a Change in Control, in which case the Committee may provide for accelerated vesting, (2) subject to Section 8(c)(ii) below, in the case of a Performance Stock Award, which shall vest in accordance with its terms when performance conditions are satisfied, (3) in the case of a Stock Award granted to pay incentive compensation earned under other Company programs, which may be fully vested when granted, (4) in the case of a Stock Award which is a Substituted Benefit or which is issued to a newly hired participant to replace awards granted by a former employer or entity to which such participant provided services, in which case such Stock Award shall vest in accordance with the vesting schedule of the original or forfeited award (or in the case of a Stock Award to a new hire, on the first anniversary of the date of grant, if later).

(ii) Performance Stock. The performance period established with respect to any Performance Stock Award shall not be less than one year. Performance Stock may be designed as Performance-Based Awards which qualify under Section 162(m) of the Code.

(iii) Deferred Stock. No Deferred Stock Award shall provide for the delivery of Common Stock prior to the expiration of one year following the date of the award except in the event of a participant’s death, termination of service

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due to disability or a Change in Control, in which case the Committee may provide for earlier delivery of the Common Stock.

(iv) Rights as a Shareholder. Each Stock Award shall specify whether the participant shall have, with respect to the shares of Common Stock subject to the Stock Award, all of the rights of a holder of shares of Common Stock of the Company, including the right to receive dividends and to vote the shares.

(d) Additional Conditions. The Committee may require the participants who receive Stock Awards to deliver a duly signed stock power, endorsed in blank, relating to the Common Stock covered by a Stock Award. The Committee also may require that the stock certificates evidencing shares subject to a Stock Award be held in custody or bear restrictive legends until the restrictions thereon shall have lapsed.

9. Stock Units.

(a) Stock Unit. A “Stock Unit” is a notional unit representing one share of Common Stock. If a Stock Unit is subject to a vesting schedule, such Stock Unit may be referred to as a Restricted Stock Unit. If the issuance or vesting of a Stock Unit is contingent upon the satisfaction of performance criteria, such Stock Award may be referred to as a Performance Unit. If a participant is granted a Stock Unit which will be settled on a fixed future date or upon the occurrence of a particular event such Stock Unit may be referred to as a Deferred Stock Unit.

(b) Authority to Grant. The Committee shall have the authority to grant Stock Units to participants hereunder, which are settled in cash, shares of Common Stock or other Benefits. If Stock Units will be settled in shares of Common Stock, such shares may be issued with or without payments or other consideration therefor, as may be required by applicable law or as may be determined by the Committee.

(c) Terms. Except as otherwise provided herein, the Committee shall determine the criteria for the vesting and settlement of Stock Units, including whether the participant may defer such payment pursuant to a valid deferral agreement. Any such deferral shall comply with Section 409A of the Code.

(i) Vesting. No Stock Unit shall vest solely on the basis of time more rapidly than pro rata over a three year period following the date of the award except (1) in the event of a participant’s death, termination of service due to disability or a Change in Control, in which case the Committee may provide for accelerated vesting, (2) subject to Section 9(c)(ii) below, in the case of a Performance Unit, which shall vest in accordance with its terms when performance conditions are satisfied, (3) in the case of a Stock Unit which is a Substituted Benefit or which is granted to a newly hired participant to replace awards granted by a former employer or entity to which such participant provided services, in which case such Stock Unit shall vest in accordance with the vesting schedule of the original or forfeited award (or in the case of a Stock Unit to a new hire, on the first anniversary of the date of grant, if later).

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(ii) Performance Unit. The performance period established with respect to any Performance Unit shall not be less than one year. Performance Units may be designed as Performance-Based Awards which qualify under Section 162(m) of the Code.

(iii) Deferred Stock Unit. No Deferred Stock Units shall provide for settlement prior to the expiration of one year following the date of the award except in the event of a participant’s death, termination of service due to disability or a Change in Control, in which case, the Committee may provide for earlier settlement.

10. Other Stock Based Awards

(a) Other Stock Based Awards. An “Other Stock-Based Award” is an equity-based or equity-related award denominated in shares of Common Stock or an equivalent measurement based on the equity of the Company which are not otherwise described by the terms of the Plan and may include, without limitation, the sale of unrestricted shares of Common Stock or an award designed comply with or take advantage of the applicable local laws of jurisdictions other than the United States. Other Stock Based Awards may be designed as either Appreciation Benefits or Full Value Benefits. Other Stock Based Awards may be designed as Performance Based Awards which qualify under Section 162(m) of the Code.

(b) Authority. The Committee shall have the authority to grant Other Stock Based Awards.

(c) Terms. Except as otherwise provided herein, the Committee shall have the authority to determine all of the terms of the Other Stock Based Awards; provided, however, that subject to Section 15 related to grants made to participants subject to the tax laws of foreign jurisdictions, the Committee shall ensure that the terms of the Other Stock Based Awards are not more favorable to the participants than similar Benefits provided for under the Plan. Specifically, subject to Section 15,

(i) Full Value Benefits - Vesting on Other Stock Based Awards which are Full Value Benefits shall, subject to similar exceptions provided under Section 8 and 9, (1) not provide for time vesting more rapidly than pro rata over three years, (2) not provide a shorter performance period than one year, and (3) not provide for settlement prior to the expiration of one year, and

(ii) Appreciation Benefits - Other Stock Based Awards which are Appreciation Benefits shall (1) be granted with an exercise price or base value that is not less than 100% of Fair Market Value, (2) subject to similar exceptions provided under Sections 6 and 7, not provide for time vesting prior to the expiration of one year following the date of grant, and (3) subject to similar exceptions provided under Sections 6 and 7, expire no later than seven years after the date of grant.

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11. Dividend Equivalent Rights.

(a) Dividend Equivalent Right. A “Dividend Equivalent Right” is the right to receive the amount of any dividend paid on one share of Common Stock. Dividend Equivalent Rights shall be payable in cash, share of Common Stock or in the form of additional Benefits.

(b) Authority to Grant. The Committee is authorized to grant to dividend equivalent rights on Shares that are subject to any Benefit.

(c) Terms. Dividend Equivalent Rights shall be credited as of dividend payment dates during the period between the date the Benefit is granted and the date the Benefit is exercised, vested, expired, credited or paid. Dividend Equivalent Rights shall be converted to cash, shares of Common Stock or additional Benefits by such formula and at such time and subject to such limitations as is determined by the Committee. Dividend Equivalents granted with respect to any Stock Option or Stock Appreciation Right may be payable regardless of whether such Stock Option or Stock Appreciation Right is subsequently exercised.

12. Cash Awards.

The Committee is authorized to grant Benefits to participants denominated in cash in such amounts and subject to such terms and conditions as the Committee may determine. Such Benefits shall be referred to as “Cash-Based Awards.” Each such Cash-Based Award shall specify a payment amount or payment range as determined by the Committee.

13. Performance-Based Awards.

(a) Performance-Based Awards. The Committee is authorized to design Stock Awards, Stock Units, Other Stock Based Awards and Cash Awards so that the amounts or shares of Common Stock payable or distributed pursuant to such Benefit are treated as “qualified performance based compensation” within the meaning Section 162(m) of the Code and related regulations. As determined by the Committee in its sole discretion, either the granting or vesting of such Performance-Based Awards shall be based on achievement of hurdle rates and/or growth rates in one or more business criteria that apply to the individual participant, one or more business units, divisions, subsidiaries or business segments or the Company as a whole.

(b) Business Criteria. The Committee may use any of the following business criteria, individually or in combination, in designing a Performance-Based Award: (i) revenue growth, (ii) premium growth, (iii) policy growth; (iii) earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization), (iv) operating income; (v) pre- or after-tax income; (vi) cash flow (before or after dividends); (vii) cash flow per share (before or after dividends); (viii) earnings per share; (ix) return on equity; (x) return on capital (including return on total capital or return on invested capital); (xi) cash flow return on investment; (xii) return on assets; (xiii) economic value added (or an equivalent metric); (xiv) market share or

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penetration; (xv) share price performance; (xvi) total shareholder return; (xvii) improvement in or attainment of expense levels or expenses ratios; (xviii) employee and/or agent satisfaction; (xix) employee and/or agent satisfaction; (xx) customer satisfaction; (xxi) customer satisfaction; (xxii) customer retention; and (xxiii) rating agency ratings. In addition, Performance-Based Awards may include comparisons to the performance of other companies or an index covering multiple companies, such performance to be measured by one or more of the foregoing business criteria. Furthermore, the measurement of performance against goals may exclude or adjust for the impact of certain events or occurrences that were not budgeted or planned for in setting the goals, including, among other things, the impact of charges for restructurings, discontinued operations, extraordinary items and other unusual or non-recurring items, and the cumulative effects of tax or accounting changes, each as defined by generally accepted accounting principles as identified in the financial statements, notes to the financial statements or management’s discussion or analysis or other SEC filing.

(c) Procedure. For each Performance-Based Awards, the Committee shall establish in writing, no later than 90 days after the commencement of a performance period (but in no event after one-quarter of such period has elapsed) (i) the performance goals applicable to the performance period specifying in terms of an objective formula or standard the method for computing the amount of compensation payable to the participant if such performance goals are achieved and (ii) the individual employees or class of employees to which such performance goals apply. No Performance-Based Awards shall be payable to or vest with respect to any participant for a given period until the Committee certifies in writing that the objective performance goals (and any other material terms) applicable to such period have been satisfied. The Committee shall not have the authority to increase the amount of compensation payable upon attainment of the performance goals but may reduce or eliminate compensation, provided the Benefit Agreement so permits.

14. Section 409A of the Code.

(a) Compliance. Notwithstanding anything herein or in any Benefit Agreement to the contrary, (i) this Plan and any Benefit shall be interpreted in accordance with Section 409A of the Code, Department of Treasury regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the Effective Date, (ii) in the event that the Committee determines that the Plan and/or Benefits are subject to Section 409A of the Code, the Committee may, in its sole discretion and without a participant’s prior consent, amend the Plan and/or Benefits, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and actions with retroactive effect) as are necessary or appropriate to (1) exempt the Plan and/or any Benefits from the application of Section 409A of the Code, (2) preserve the intended tax treatment of any such Benefit, and (3) comply with the requirements of Section 409A of the Code, including any regulations or other interpretive guidance that may be issued after the grant of any Benefit. Notwithstanding the foregoing, neither the Committee nor the Company is obligated to ensure that Benefits comply with Section 409A of the Code or to take any actions to ensure such compliance.

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(b) Specified Payment Date. To the extent not otherwise specified in the applicable Benefit Agreement, each Benefits shall be paid or otherwise settled on or as soon as practicable after the amount due is determinable and no longer subject to a substantial risk of forfeiture, but in no event later than the 15th day of the third month from the end of (i) the participant’s tax year that includes the applicable payment date, or (ii) the Company’s tax year that includes the applicable payment date, whichever is later.

15. Foreign Laws. The Committee may grant Benefits to individual participants who are subject to the tax laws of nations other than the United States, which Benefits may have terms and conditions which the Committee determines to be necessary to comply with applicable foreign laws. The Committee may take any action which it deems advisable to obtain approval of such Benefits by the appropriate foreign governmental entity; provided, however, that no Benefits may be granted pursuant to this Section 15 and no action may be taken which would result in a violation of the Exchange Act, the Code or any other applicable law.

16. Adjustment Provisions; Change in Control.

(a) Adjustments. If there shall be any change in the Common Stock of the Company, through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, split up, spinoff, combination of shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, an adjustment shall be made to each outstanding Stock Option and Stock Appreciation Right such that each such Stock Option and Stock Appreciation Right shall thereafter be exercisable for such securities, cash and/or other property as would have been received in respect of the Common Stock subject to such Stock Option or Stock Appreciation Right had such Stock Option or Stock Appreciation Right been exercised in full immediately prior to such change or distribution, and such an adjustment shall be made successively each time any such change shall occur. In addition, in the event of any such change or distribution or any extraordinary dividend or distribution of cash or other assets, in order to prevent dilution or enlargement of participants’ rights under the Plan, the Committee shall adjust, in an equitable manner, the number and kind of shares that may be issued and granted under the Plan, the number and kind of shares subject to outstanding Benefits, the exercise price applicable to outstanding Benefits, and the Fair Market Value of the Common Stock and other value determinations or affected terms applicable to outstanding Benefits. The Committee shall also make appropriate adjustments to the terms of any Benefits (other than Benefits intended to constitute Performance-Based Awards unless permitted under Section 162(m) of the Code) to reflect such changes or distributions (and any extraordinary dividend or distribution of cash or other assets) and to modify corresponding terms of such outstanding Benefits. Such changes may include modifications of performance targets and changes in the length of performance periods. In addition, the Committee shall make adjustments to the terms and conditions of, and the criteria included in, Benefits in recognition of unusual or nonrecurring events affecting the Company or the financial statements of the Company, or in response to changes in applicable laws, regulations, or accounting principles (except that with respect to Stock Options, Stock Appreciation Rights, and other Benefits intended to constitute

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Performance-Based Awards, such adjustments shall not be made unless permitted under Section 162(m) of the Code).

(b) Change in Control. Notwithstanding any other provision of this Plan, in the event of a Change in Control (as defined below), the Committee, in its discretion, may take such actions as it deems appropriate with respect to outstanding Benefits, including, without limitation, accelerating the exercisability or vesting of such Benefits, providing for the assumption of all Benefits by the continuing entity or such other actions provided in an agreement approved by the Board in connection with a Change in Control and such Benefits shall be subject to the terms of such agreement as the Committee, in its discretion, shall determine. The Committee, in its discretion, may determine that, upon the occurrence or in anticipation of and subject to the occurrence of a Change in Control of the Company, each Stock Option and Stock Appreciation Right outstanding hereunder shall terminate within a specified number of days after notice to the holder. In addition, the Committee may provide that each such holder shall receive, with respect to each share of Common Stock subject to such Stock Option or Stock Appreciation Right, an amount equal to the excess of the Fair Market Value of such shares of Common Stock immediately prior to the occurrence of such Change in Control over the exercise price per share of such Stock Option or Stock Appreciation Right; such amount to be payable in cash, in one or more kinds of property (including the property, if any, payable in the transaction) or in a combination thereof, as the Committee, in its discretion, shall determine. For purposes of this Section 16(b), a “Change in Control” of the Company shall be deemed to have occurred upon any of the following events:

(i) Any person(s) acting together which would constitute a “group” for purposes of Section 13(d) of the Exchange Act (other than the Company, any subsidiary, or any “permitted holder” as defined below) shall “beneficially own” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, at least 35% of the total voting power of all classes of capital stock of the Company entitled to vote generally in the election of the Board;

(ii) Either (A) “incumbent directors”, as defined below, shall cease for any reason to constitute at least a majority of the members of the Board (for these purposes, an “incumbent director” shall mean any member of the Board as of the Effective Date, and any successor of a incumbent director whose election, or nomination for election by the Company’s shareholders was approved by at least a majority of the current directors then on the Board), or (B) at any meeting of the shareholders of the Company called for the purpose of electing directors, a majority of the persons nominated by the Board for election as directors shall fail to be elected;

(iii) Consummation of a merger or consolidation of the Company (A) in which the Company is not the continuing or surviving corporation (other than a consolidation or merger with a wholly-owned subsidiary of the Company in which all shares of Common Stock outstanding immediately prior to the effectiveness thereof are changed into or exchanged for common stock of the subsidiary) or (B) pursuant to which all shares of Common Stock are converted

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into cash, securities or other property, except in either case, a consolidation or merger of the Company in which the holders of the shares of Common Stock immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the shares of Common Stock of the continuing or surviving corporation immediately after such consolidation or merger or in which the Board immediately prior the merger or consolidation would, immediately after the merger or consolidation, constitute a majority of the board of directors of the continuing or surviving corporation; or

(iv) Consummation of a plan of complete liquidation of the Company.

(v) The consummation of a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the assets of the Company.

17. Nontransferability. Each Benefit granted under the Plan to a participant (other than a Stock Award for which there are no transfer restrictions) shall not be transferable otherwise than by will or the laws of descent and distribution, and shall be exercisable, during the participant’s lifetime, only by the participant. In the event of the death of a participant, each Stock Option or Stock Appreciation Right theretofore granted to him or her shall be exercisable during such period after his or her death as the Committee shall in its discretion set forth in the Benefit Agreement at the date of grant, subject to the restrictions set forth in Sections 6 and 7 herein, and then only by the executor or administrator of the estate of the deceased participant or the person or persons to whom the deceased participant’s rights under the Stock Option or Stock Appreciation Right shall pass by will or the laws of descent and distribution. Notwithstanding the foregoing, at the discretion of the Committee, a Benefit other than an Incentive Stock Option may permit the transferability of a Benefit (i) by a participant solely to the participant’s spouse, siblings, parents, children and grandchildren or a charitable organization that is exempt under Section 501(c)(3) of the Code or to trusts for the benefit of such persons or partnerships, corporations, limited liability companies or other entities owned solely by such persons, including trusts for such persons, subject to any restriction included in the Benefit Agreement, (ii) by a participant who is a non-employee director of the Company to the entity that employs such participant or to its affiliate.

18. Fair Market Value. For purposes of this Plan and any Benefits awarded hereunder, Fair Market Value shall be the average of the high and low prices of the Common Stock on the date of calculation (or on the last preceding trading date if Common Stock was not traded on such date) if the Common Stock is readily tradeable on a national securities exchange or other market system, and if the Common Stock is not readily tradeable, Fair Market Value shall mean the amount determined in good faith by the Committee as the fair market value of the Common Stock upon the reasonable application of a reasonable valuation method.

19. Withholding. All payments or distributions of Benefits made pursuant to the Plan shall be net of any amounts required to be withheld pursuant to applicable federal, state and local tax-withholding requirements at the minimum statutory withholding rates. Notwithstanding the foregoing, if the Company proposes or is

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required to distribute Common Stock pursuant to the Plan, it may require the recipient to remit to it or to the corporation that employs such recipient an amount sufficient to satisfy such tax withholding requirements prior to the delivery of any certificates for such Common Stock. In the discretion of the Committee, such remittance may be made by tendering shares of Common Stock of the Company then owned by the participant, or providing the Company with a notarized statement attesting to the number of shares owned, in which case upon verification by the Company, the Company would issue to the participant only the number of incremental shares above the amount of the withholding obligation to which the participant is entitled in respect of the Benefit. In lieu thereof, the Company or the employing corporation shall have the right to withhold the amount of such taxes from any other sums due or to become due from such corporation to the recipient as the Committee shall prescribe. The Committee may, in its discretion and subject to such rules as it may adopt (including any as may be required to satisfy applicable tax and/or non-tax regulatory requirements), permit an optionee, or an award or right holder to pay all or a portion of the federal, state and local withholding taxes arising in connection with any Benefit consisting of shares of Common Stock by electing to have the Company withhold shares of Common Stock having a Fair Market Value equal to the amount of tax to be withheld at the minimum statutory withholding rates.

20. Tenure. A participant’s right, if any, to continued employment or service of Company or any of its subsidiaries as an officer, employee, or otherwise, shall not be enlarged or otherwise affected by his or her designation as a participant under the Plan.

21. Unfunded Plan. Participants shall have no right, title, or interest whatsoever in or to any investments that the Company may make to aid it in meeting its obligations under the Plan. Nothing contained in the Plan, and no action taken pursuant to its provisions, shall create or be construed to create a trust of any kind, or a fiduciary relationship between the Company and any participant, beneficiary, legal representative or any other person. To the extent that any person acquires a right to receive payments from the Company under the Plan, such right shall be no greater than the right of an unsecured general creditor of the Company. All payments to be made hereunder shall be paid from the general funds of the Company and no special or separate fund shall be established and no segregation of assets shall be made to assure payment of such amounts except as expressly set forth in the Plan.

22. No Fractional Shares. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan or any Benefit. The Committee shall determine whether cash, or Benefits, or other property shall be issued or paid in lieu of fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

23. Amendment, Termination, Duration. The Committee may, at any time and from time to time, alter, amend, modify, suspend, or terminate the Plan and any Benefit in whole or in part; provided, however, that, without the prior approval of the Company’s shareholders, Stock Options or Stock Appreciation Rights and any Other Stock Based Award that is not a Full Value Benefit which is issued under the Plan will not be repriced, replaced, or regranted through cancellation or by lowering the exercise

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price or grant price of a previously granted Benefit or cancelled while the per share exercise price is lower than the Fair Market Value of a share of Common Stock on the date of such cancellation in exchange for a cash payment, and no amendment of the Plan shall be made without shareholder approval if shareholder approval is required by law, regulation, or stock exchange rule; and provided, further, no Benefit may be amended if such amendment is prohibited by the applicable terms of the Benefit Agreement. No Benefit shall be granted under the Plan more than ten years after the Effective Date. After the Plan is terminated in accordance with this Section 23, no Benefits may be granted but any Benefit previously granted shall remain outstanding in accordance with the terms and conditions of the Plan and the Benefit Agreement.

24. Governing Law. This Plan, Benefits granted hereunder and actions taken in connection herewith shall be governed and construed in accordance with the laws of the State of Delaware (regardless of the law that might otherwise govern under applicable Delaware principles of conflict of laws).

25. Effective Date. The Plan shall be effective as of the date the Company emerges from the bankruptcy it filed under title 11, chapter 11 of the United States Code (the “Effective Date”).

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