Exhibit 4.8
INTERCREDITOR
AGREEMENT
THIS INTERCREDITOR
AGREEMENT (this
“Agreement”), dated as of December 24, 2003, is made
among SILICON GRAPHICS, INC ., a Delaware corporation
(“SGI”), U.S. BANK NATIONAL ASSOCIATION , a
national banking association organized and existing under the laws
of the United States of America (“Trustee”), and
WELLS FARGO FOOTHILL, INC. , a California corporation, as
Administrative Agent for itself and other Lenders
(“Agent”).
WHEREAS, SGI, Silicon Graphics
Federal, Inc., a Delaware corporation (together with SGI,
collectively, “Borrowers”), Agent, and the Lenders
named therein are parties to that certain Amended and Restated Loan
and Security Agreement, dated as of September 20, 2002 (as amended,
modified, renewed, extended, refunded, restructured, refinanced, or
replaced from time to time, the “Loan Agreement”),
pursuant to which Lenders have agreed to make certain financial
accommodations to Borrowers;
WHEREAS, Trustee and SGI are parties
to (i) that certain Indenture, dated as of December 24, 2003 with
respect to 6.50% Senior Secured Convertible Notes due 2009
(“Secured Convertible Note Indenture”); and (ii) that
certain Indenture, dated as of December 24, 2003 with respect to
11.75% Secured Senior Notes due 2009 (“Secured Note
Indenture”) (the Secured Convertible Note Indenture and
Secured Note Indenture hereinafter together are referred to as the
“Indentures”, and the notes issued under the Indentures
are referred to as the “Secured Notes.” The
holders of such Secured Notes are referred to as the “Secured
Noteholders”).
WHEREAS, pursuant to the Indentures
SGI may incur Indebtedness to the holders of Secured Notes (such
Indebtedness is included in the term “Junior Priority
Debt” defined below);
WHEREAS, the Secured Notes
constitute the consideration issued by Borrowers in exchange for
some of Borrowers’ unsecured long-term Indebtedness, pursuant
to the partial recapitalization of Borrowers’ Indebtedness
effected concurrently herewith;
WHEREAS, the terms of the Indentures
require that the Secured Notes be secured by a Lien on the
Collateral, which Lien, together with any and all other Liens now
or hereafter acquired by Trustee in the Collateral, is referred to
herein as the “Junior Priority Security
Interest;”
WHEREAS, Agent requires that the
Lien securing payment of the Secured Notes be subordinated to the
Agent’s Lien on the Collateral, which Lien, together with any
and all other Liens now or hereafter acquired by the Lenders in the
Collateral, is referred to herein as the “Senior Priority
Security Interest;”
NOW, THEREFORE, in consideration of
the mutual promises, covenants, conditions, representations, and
warranties set forth herein and for other good and valuable
consideration, the parties hereto agree as follows:
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SECTION
1 Definitions;
Interpretation
(a)
Terms Defined in Loan Agreement . All capitalized
terms used in this Agreement and not otherwise defined herein shall
have the meanings assigned to them in the Loan
Agreement.
(b)
Certain Defined Terms . As used in this Agreement, the
following terms shall have the following meanings:
“Agent” (i) has the
meaning set forth in the recitals to this Agreement until the
indefeasible payment in full of all Senior Priority Debt under the
Loan Agreement and the termination of the lending commitments
thereunder and (ii) thereafter, the representative of the holders
of any then outstanding Senior Priority Debt designated by the
Borrowers and the holders of the Senior Priority Debt as the
“Agent” hereunder.
“Agreement” has the
meaning set forth in the preamble to this Agreement.
“Governmental Authority”
means any federal, state, provincial, municipal or other
governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United
States or any other jurisdiction.
“Insolvency Event” means
any dissolution, winding up, or total or partial liquidation or
reorganization, readjustment, arrangement or similar proceeding
relating to any Borrower or its property, whether voluntary or
involuntary, or any bankruptcy, insolvency, receivership,
arrangement or similar proceedings or any assignment for the
benefit of creditors or any other marshalling or composition of the
assets and liabilities of any Borrower.
“Junior Priority Debt”
means all indebtedness, liabilities, and other obligations of SGI
owing to Trustee, in respect of the Secured Notes, whether now
existing or hereafter arising, and whether due or to become due,
absolute or contingent, liquidated or unliquidated, determined or
undetermined, including all fees and all other amounts payable by
SGI to Trustee under or in connection with any documents or
instruments related thereto.
“Loan Agreement” is
defined in the first recital; provided that the term “Loan
Agreement” shall also include any renewal, extension,
refunding, restructuring, replacement or refinancing thereof, so
long as Agent remains as the administrative agent; provided that
any such renewal, extension, refunding, restructuring, replacement
or refinancing does not increase the principal amount thereof
beyond the limit set forth in the Indentures.
“Senior Priority Debt”
means (i) the Obligations and other indebtedness and liabilities of
any Borrower to the Lender Group under or in connection with the
Loan Agreement and the other Loan Documents, including all unpaid
principal of the Advances, all interest accrued thereon (including
all interest that, but for the provisions of the Bankruptcy Code,
would have accrued), all fees due under the Loan Agreement and the
other Loan Documents (including all fees that, but for the
provisions of the Bankruptcy Code, would have accrued), and all
other amounts payable by any Borrower to any member of the Lender
Group thereunder or in connection therewith, whether now existing
or hereafter arising, and whether due or to become due, absolute or
contingent, liquidated or unliquidated, determined or undetermined
and (ii) any
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future secured indebtedness incurred by SGI
permitted under: (A) the Loan Documents (if in effect at the time),
(B) any other agreements then outstanding restricting SGI’s
ability to incur additional indebtedness and (C) under Section
4.06(e) of the Indentures, pursuant to which SGI has granted a
security interest in the Collateral senior to that granted to the
Trustee on behalf of holders of the Secured Notes and has
designated such secured indebtedness as “Senior Priority
Debt” for purposes hereof.
“Trustee” has the
meaning set forth in the preamble to this Agreement.
(c)
Interpretation . Unless the context of this Agreement
clearly requires otherwise, references to the plural include the
singular, references to the singular include the plural, the term
“including” is not limiting, the term “or”
has, except where otherwise indicated, the inclusive meaning
represented by the phrase “and/or,” and any provision
that is set forth herein as part of a list or series is to be
construed in a manner that does not result in duplication of any
other provision in such list or series. The words
“hereof,” “herein,” “hereby,”
“hereunder,” and similar terms in this Agreement refer
to this Agreement as a whole and not to any particular provision of
this Agreement. Section, subsection, clause, schedule, and
exhibit references herein are to this Agreement unless otherwise
specified. Any reference in this Agreement to any agreement,
instrument, or document shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as
applicable (subject to any restrictions on such alterations,
amendments, changes, extensions, modifications, renewals,
replacements, substitutions, joinders, and supplements set forth
herein). References to statutes or regulations are to be
construed as including all statutory and regulatory provisions
consolidating, amending, or replacing the statute or regulation
referred to. The captions and headings are for convenience of
reference only and shall not affect the construction of this
Agreement.
SECTION
2 Lien
Priorities
(a)
The Junior Priority Security Interest obtained by Trustee in the
Collateral and any such Junior Priority Security Interest that
heretofore has been, is now, or is hereafter retained or obtained,
shall at all times be junior to the Senior Priority Security
Interest heretofore, now or hereafter granted to or obtained by the
Lender Group or other holder or representative of Senior Priority
Debt, and Trustee hereby agrees, whenever requested by the Agent,
to execute such documents and instruments, in form reasonably
acceptable to the Agent and its counsel, and suitable for filing in
the appropriate governmental office, confirming the superiority of
the Senior Priority Security Interest in the Collateral to the
Junior Priority Security Interest in the Collateral.
(b)
The priorities specified herein are applicable irrespective of the
time or order of attachment or perfection of the respective
security interests or the time or order of the filing of any
Financing Statements or other similar documents, or the time or
order of recordation of any mortgage, deed of trust, or other
similar document, or the time or order of the giving of value to
support the security agreements, any mortgage, deed of trust, or
other similar documents, or the giving or failure to give notice of
the advance of any sums by the Lender Group or other holder of
Senior Priority Debt (the “Priority Lender Group”) to
any Borrower after the date hereof, or the giving or failure to
give notice of the acquisition of additional
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security
interests or liens, or any statutes, rules of law, or court
decisions to the contrary, or the time or order of the giving of
value to support the security agreements.
SECTION
3 Exercise of
Remedies . Until the indefeasible payment and performance
in full of all of the Senior Priority Debt, the Priority Lender
Group may dispose of any or all of the Collateral free and clear of
the Junior Priority Security Interest collateralizing obligations
due from Borrowers, or any of them, to Trustee, through judicial or
non-judicial proceedings, in accordance with applicable law,
including taking title in lieu of foreclosure. Trustee hereby
agrees that any such or other disposition by the Priority Lender
Group of the Collateral shall be free and clear of the Junior
Priority Security Interest granted by Borrowers or any of them,
provided the entire proceeds (after deducting reasonable costs,
attorneys’ fees and other expenses of sale) are applied first
in reduction of the Senior Priority Debt. Trustee retains all
of its rights as a junior priority secured creditor with respect to
the surplus, if any, arising from any such disposition of the
Collateral.
SECTION
4 Subordination of
Remedies . Until such time as the Trustee has received
written notice of the termination of this Agreement, Trustee shall
not, without the prior written consent of Agent:
(a)
foreclose upon or otherwise enforce any Junior Priority Security
Interest; or
(b)
indirectly or directly collect, or attempt to collect from, or
notify or communicate with any of, any Borrower’s Account
Debtors or obligors on any Collateral concerning any indebtedness
owed to any Borrower without the prior written consent of Agent,
nor may Trustee exercise any of its rights with respect to any of
the Collateral, including but not limited to the institution of any
lawsuits, whether or not any Borrower is then in default of any of
its obligations to Trustee or any holder of the Secured
Notes.
SECTION
5 Management and Sale
of Collateral and Insurance Proceeds .
(a)
Management of Collateral . Until Trustee has received
written notice of termination of this Agreement, Agent shall have
the exclusive right to manage, perform and enforce the terms of the
Loan Documents or other agreement evidencing or governing the
Senior Priority Debt (the “Priority Loan Documents”)
with respect to the Collateral and to exercise and enforce all
privileges and rights thereunder according to its discretion and
the exercise of its business judgment, including, without
limitation, the exclusive right to enforce or settle insurance
claims, take or retake control or possession of such Collateral and
to hold, prepare for sale, process, sell, lease, dispose of, or
liquidate such Collateral. In connection therewith, Trustee
waives any and all rights to affect the method or challenge the
appropriateness of any action by Agent.
(b)
Sale of Collateral . Notwithstanding anything to the
contrary contained in either of the Indentures, until such time as
the Trustee has received written notice of termination of this
Agreement, only Agent shall have the right to restrict or permit,
or approve or disapprove, the sale, transfer or other disposition
of Collateral. Trustee will, promptly upon the request of
Agent, release or otherwise terminate its Liens upon the
Collateral, to the extent such Collateral
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is sold or otherwise disposed of either by
Agent, its agents or any Borrower with the consent of Agent, and
Trustee will promptly deliver such release documents as Agent may
require in connection therewith; provided, however, that Agent and
Trustee shall retain its Lien upon the proceeds of such
Collateral.
(c)
Insurance Proceeds . Until Trustee has received
written notice of termination of this Agreement, Agent, as the
holder of the Senior Priority Security Interest on the Collateral
insured, shall have the sole and exclusive right, as against
Trustee, to adjust settlement of insurance claims in the event of
any covered loss, theft or destruction of such Collateral.
Until Trustee has received written notice of termination of this
Agreement, all proceeds of such insurance shall inure to Agent, to
the extent of Agent’s claim, and thereafter to Borrowers and
Trustee, to the extent of Trustee’s claim, in accordance with
the terms of the Indentures. Trustee shall cooperate (if
necessary) in a reasonable manner in effecting the payment of
insurance proceeds to Agent. In the event Agent, in its sole
discretion or pursuant to agreement with any Borrower, permits
Trustee to utilize the proceeds of insurance to replace Collateral,
the consent of Agent thereto shall be deemed to include the consent
of Trustee.
SECTION
6 Certain Agreements
of Trustee .
(a)
No Interference . Trustee acknowledges that Borrowers
have granted to the Priority Lender Group security interests in
certain of Borrowers’ assets, and agrees not to interfere
with or in any manner oppose a disposition of any Collateral by the
Priority Lender Group in accordance with the Loan Documents and
applicable law.
(b)
Prohibition on Contesting Liens . Each of the
Trustee, for itself and on behalf of each Secured Noteholder, and
the Agent, for itself and on behalf of the Priority Lender Group,
agrees that it shall not (and hereby waives any right to) contest
or support any other Person in contesting, in any proceeding
(including in connection with any Insolvency Event), the priority,
validity or enforceability of a Lien held by the Priority Lender
Group in the Collateral or by the Secured Noteholders in the
Collateral, as the case may be. Trustee agrees that it will
not contest the validity, perfection, priority or enforceability of
the Liens of Agent in the Collateral and that as between Trustee
and Agent, the terms of this Agreement shall govern even if part or
all of the Senior Priority Debt or the Senior Priority Security
Interest securing payment and performance thereof or part or all of
the Secured Notes or the Junior Priority Security Interest securing
payment and performance thereof, are avoided, disallowed, set aside
or otherwise invalidated in any judicial proceeding or
otherwise.
(c)
Reliance by Priority Lender Group . Trustee
acknowledges and agrees that the Priority Lender Group will have
relied upon and will continue to rely upon the lien priority
provisions provided for herein and the other provisions hereof in
making or issuing the Advances, the Letters of Credit, or other
financial accommodations under the Priority Loan
Documents.
(d)
Obligations of Borrowers Not Affected . Trustee hereby
agrees that at any time and from time to time, without notice to or
the consent of Trustee, without the Priority Lender Group incurring
responsibility to Trustee, and without impairing or releasing
the
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