SILICON GRAPHICS INC /CA/
EX-10.20
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<DESCRIPTION>EX-10.20
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<p align="right" style="margin:0in 0in .0001pt;text-align:right;"><b><font size="2" face="Times New Roman" style="font-size:10.0pt;font-weight:bold;">Exhibit
10.20</font></b></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">PLEDGE AGREEMENT</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; This Pledge Agreement (&#147;Agreement&#148;) is made and
entered into as of this 27th day of September, 2000 (&#147;Effective Date&#148;) by and
between Silicon Graphics, Inc., a Delaware corporation (&#147;SGI&#148;), and WARREN C.
PRATT (&#147;Pledgor&#148;).</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>RECITALS</u></font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; A.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; SGI
has agreed to make a loan (&#147;Loan&#148;) to Pledgor in the original principal amount
of Two Hundred Fifty Thousand Dollars and 00/100 ($250,000.00) pursuant to the
terms of that certain promissory note of even date herewith.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; B.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; SGI
has granted or may hereafter grant to Pledgor certain stock options for the
purchase of shares of common stock of SGI pursuant to the terms and conditions
of that certain Incentive Stock Option Grant Agreement and/or Non-qualified
Stock Option Agreement, as the same may be amended from time to time
(collectively, &#147;Option Agreement&#148;).</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; C.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Pledgor
now desires to pledge all of its right, title and interest in and to the
Pledged Collateral (as defined below) to SGI upon the terms and conditions set
forth hereinbelow.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; NOW, THEREFORE, Pledgor hereby covenants and agrees
as follows:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 1.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Pledge
of Collateral</u>.&#160; Pledgor hereby
pledges, assigns, grants and delivers to SGI a security interest in all of
Pledgor&#146;s right, title and interest in and to the Option Agreement, all options
and shares of common stock of SGI now or hereafter issued or issuable to
Pledgor thereunder (&#147;Shares&#148;) and all cash and non-cash proceeds and
substitutions thereof (collectively, the &#147;Pledged Collateral&#148;) as security for
the prompt performance of Pledgor&#146;s obligations under the Loan.&#160; Pledgor&#146;s stock options under the Option
Agreement as of the Effective Date are more particularly set forth in Exhibit A
attached hereto.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 2.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Pledgor&#146;s
Covenants</u>.&#160; Pledgor hereby
represents, warrants and covenants to SGI as follows:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The
Pledged Collateral is free and clear of any security interests, liens,
encumbrances or other interests other than this Agreement.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Pledgor
has full power and authority to create a lien on the Pledged Collateral in
favor of SGI and no disability or contractual obligation exists which would
prohibit Pledgor from pledging the Pledged Collateral pursuant to this
Agreement.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Pledgor
shall not assign, create or permit to exist any other claim to, lien or
encumbrance upon, or security interest in any of the Pledged Collateral, and </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">1</font></p>


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<hr size="2" width="100%" noshade color="gray" align="left">

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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">shall not permit
Pledgor&#146;s rights in the Pledged Collateral to be reached by attachment, levy or
other judicial process.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; At SGI&#146;s request, Pledgor shall
execute and acknowledge such other documents and instruments which SGI deems
necessary or desirable to evidence, continue or preserve SGI&#146;s security
interest in the Pledged Collateral and/or to otherwise effect any of the terms
of this Agreement.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The foregoing representations, warranties and
covenants shall survive the termination of this Agreement.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 3.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Payment
of Proceeds</u>.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (a)&#160;
With regard to the Balloon Payment Note, fifty percent (50%) of all
monies or other proceeds payable to Pledgor in connection with the sale or
transfer of any Shares shall be applied first to the payment of principal,
accrued interest and other charges then outstanding under the Balloon Note;
provided, however, that if SGI&#146;s employment of Employee shall terminate or
cease for any reason, whether voluntary or involuntary, and whether with or
without cause, or if Pledgor shall be in default hereunder, all monies or other
proceeds payable to Pledgor in connection therewith shall be applied to the
payment of principal, accrued interest and other charges then outstanding under
the Balloon Note.&#160; Upon Pledgor&#146;s
payment to SGI of all principal, accrued interest and other charges under the
Loan, the security interest created under this Agreement shall automatically
terminate, and SGI shall promptly deliver to Pledgor all remaining Shares then
held by SGI.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (b)&#160;
With respect to the concurrent exercise and disposition of Shares by
&#147;Same Day Sale,&#148; Pledgor shall instruct Pledgor&#146;s stock broker (&#147;Broker&#148;) to
pay directly to SGI from Broker&#146;s account an amount equal to the lesser of (i)
the gross proceeds from the sale of such Shares, less applicable commissions,
to the extent payable by Pledgor pursuant to subparagraph (a) above or (ii) the
amount of principal, accrued interest and other charges then outstanding under
the Loan.&#160; SGI shall have no obligation
to deliver the Shares to Broker unless and until SGI receives written
confirmation from Broker that the foregoing payment shall be promptly made by
Broker to SGI.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">2</font></p>


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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (c)&#160;
With respect to the exercise of Shares by &#147;Cash Exercise,&#148; the exercise
price paid by Pledgor shall be applied to the payment of the exercise price for
such Shares, the applicable shares of SGI&#146;s common stock shall be issued and
deemed delivered to Pledgor, and SGI shall retain possession of such shares
until either (i) all principal, accrued interest and other charges under the
Loan have been paid in full, in which event the security interest under this Agreement
shall terminate as to all of the Shares, or (ii) the applicable proceeds from
the sale of such Shares have been paid to SGI and applied to the payment of
principal, accrued interest and other charges then outstanding under the Loan,
in which event the security interest under this Agreement shall terminate as to
such Shares sold by Pledgor.&#160; If Pledgor
desires to sell any such Shares, Pledgor shall instruct Broker to pay directly
to SGI from Broker&#146;s account an amount equal to the lesser of (i) the sales
price of the Shares, less commissions, to the extent payable by Pledgor
pursuant to subparagraph (a) above or (ii) the amount of principal, accrued
interest and other charges then outstanding under the Loan.&#160; SGI shall have no obligation to deliver the
Shares to Pledgor or Broker unless and until SGI receives written confirmation
from Broker that the foregoing payment shall be promptly made by Broker to SGI.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (d)&#160;
All instructions required to be submitted by Pledgor to Broker shall be
irrevocable and in writing, with a copy thereof delivered concurrently to
SGI.&#160; All proceeds paid for the Shares
(less commissions) and otherwise payable to SGI hereunder shall be deposited
directly into the account of Broker for payment to SGI.&#160; SGI&#146;s delivery of any Shares to Broker shall
be for the sole purpose of facilitating the sale of such Shares, and SGI&#146;s
security interest therein shall continue until Broker shall have paid to SGI
all applicable sums as required hereinabove.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 4.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Events
of Default</u>.&#160; Each of the following
shall constitute an event of default (&#147;Event of Default&#148;) hereunder:</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The
failure by Pledgor to observe or perform any of the provisions of this
Agreement or to pay any amount due under the Loan, including, without
limitation, the Forgivable Note, and/or this Agreement.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The
inaccuracy or breach of any warranty, representation or statement made or
furnished to SGI by or on behalf of Pledgor.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The
assignment for the benefit of creditors or the commencement of any proceeding
under any bankruptcy or insolvency law by or against Pledgor.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; The
seizure or attachment of, or a levy on all or any portion of the Pledged
Collateral.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">3</font></p>


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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 5.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>SGI&#146;s
Remedies Upon Default</u>.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Upon
the occurrence of an Event of Default, SGI shall have the right to:</font></p>

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<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (i)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Declare all of the obligations and
liabilities of Pledgor under the Loan immediately due and payable.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (ii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Repurchase all or part of the Shares
from Pledgor for a purchase price equal to the lesser of (i) the fair market
value of such Shares as of the date of the Event of Default, or (ii) the fair
market value of such Shares as of the date of repurchase.&#160; The fair market value of the Shares, as of
any date, shall be the closing price for a share of SGI&#146;s common stock as
reported in <i><font style="font-style:italic;">The
Wall Street Journal</font></i> or a similar readily available public
source.&#160; If no sales of Shares were made
on such date, the fair market value of the Shares shall be determined using the
closing price of a Share as reported for the preceding day on which a sale of
Shares occurred.&#160; Notwithstanding the
foregoing, the fair market value of any stock options comprising Shares shall
be determined using the fair market value of SGI&#146;s common stock as of the
applicable date set forth above less the applicable exercise price under such
stock options and any costs incurred by SGI pursuant to subparagraph (b) below.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (iii)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; Exercise any and all rights of a
secured party under the Uniform Commercial Code of the State of California
which SGI, in its sole judgment,&#160; deems
necessary or appropriate, including without limitation the right to sell or
otherwise dispose of all or any part of the Pledged Collateral.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; After
the repurchase, sale or transfer of any of the Pledged Collateral, SGI may
deduct all reasonable attorneys&#146; fees, brokerage commissions and other expenses
incurred by SGI in preserving, collecting, selling, repurchasing and/or
delivering the Pledged Collateral and for enforcing its rights with respect to
the Loan and this Agreement, and shall apply the residue of the proceeds to, or
hold as a reserve against, the Loan in such manner as SGI in its reasonable
discretion shall determine, and shall pay the balance, if any, to Pledgor.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 6&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>SGI&#146;s
Duties</u>.&#160; SGI shall have no duty or
liability for the Pledged Collateral except for the exercise of reasonable care
of the Pledged Collateral while in the possession of SGI.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; 7.&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>General
Provisions</u>.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (a)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Successors
and Assigns</u>.&#160; This Agreement shall
bind and insure to the benefit of the respective heirs, successors and
permitted assigns of each of the parties; provided, however, that neither this
Agreement nor any rights hereunder may be assigned by Pledgor without SGI&#146;s
prior written consent, which consent may be granted or withheld in SGI&#146;s sole
discretion.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (b)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Severability
of Provisions</u>.&#160; Each provision of
this Agreement shall </font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">4</font></p>


<div style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">

<hr size="2" width="100%" noshade color="gray" align="left">

</font></div>

<font size="2" face="Times New Roman" style="font-size:10.0pt;">
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<p align="center" style="font-size:12.0pt;margin:0in 0in .0001pt;text-align:center;">&nbsp;</p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">be severable from every
other provision of this Agreement for the purpose of determining the legal
enforceability of any specific provision.&#160;
In case one or more of the provisions contained in this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, the
invalidity, illegality or unenforceability of that provision shall not affect
any other provision of this Agreement.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (c)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Joint
and Several Obligations</u>.&#160; If Pledgor
consists of more than one person, the obligations of Pledgor shall be the joint
and several obligations of all such persons.&#160;
When the context and construction so require, all words used in the
singular herein shall be deemed to have been used in the plural and the
masculine shall include the feminine and neuter and vice versa.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (d)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>No
Waiver</u>.&#160; No delay or omission by SGI
in exercising any right or remedy arising from any default of Pledgor shall be
construed as a waiver of such default or as an acquiescence therein, nor shall
any single or partial exercise thereof preclude any further exercise
thereof.&#160; SGI may, at its option, waive
any of the conditions herein and any such waiver shall not be deemed the waiver
of SGI&#146;s rights hereunder.&#160; The waiver
of any Event of Default shall not be construed as any waiver of or acquiescence
in or consent to any preceding or subsequent Event of Default by Pledgor
hereunder.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; (e)&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; <u>Collection
Costs</u>.&#160; Pledgor shall promptly pay
SGI all reasonable attorneys&#146; fees and all costs and other expenses paid or
incurred by SGI in enforcing or exercising its rights or remedies created by,
connected with or provided in this Agreement, and payment thereof shall be
secured by the Pledged Collateral.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160;&#160; IN WITNESS WHEREOF, this Pledge Agreement has been
executed as of the Effective Date.</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<table border="0" cellspacing="0" cellpadding="0" width="100%" style="border-collapse:collapse;width:100.0%;">
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.16%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="37%" valign="top" style="padding:0in .7pt 0in .7pt;width:37.42%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">PLEDGOR:</font></p>
  </td>
  <td width="13%" valign="top" style="padding:0in .7pt 0in .7pt;width:13.42%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.16%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="37%" valign="top" style="padding:0in .7pt 0in .7pt;width:37.42%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="13%" valign="top" style="padding:0in .7pt 0in .7pt;width:13.42%;">
  <p style="font-size:12.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.16%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
  <td width="37%" valign="top" style="border:none;border-bottom:solid windowtext .5pt;padding:0in .7pt 0in .7pt;width:37.42%;">
  <p style="margin:0in 0in .0001pt;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">/s/&#160; Warren
  C. Pratt</font></p>
  </td>
  <td width="13%" valign="top" style="padding:0in .7pt 0in .7pt;width:13.42%;">
  <p style="font-size:1.0pt;margin:0in 0in .0001pt;">&nbsp;</p>
  </td>
 </tr>
 <tr>
  <td width="49%" valign="top" style="padding:0in .7pt 0in .7pt;width:49.16%;">
  <h1 align="left" style="font-size:1.0pt;font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:left;">&nbsp;</h1>
  </td>
  <td width="37%" valign="top" style="border:none;padding:0in .7pt 0in .7pt;width:37.42%;">
  <h1 align="left" style="font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:left;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">WARREN C. PRATT</font></h1>
  </td>
  <td width="13%" valign="top" style="padding:0in .7pt 0in .7pt;width:13.42%;">
  <h1 align="left" style="font-size:1.0pt;font-weight:normal;margin:0in 0in .0001pt;page-break-after:avoid;text-align:left;">&nbsp;</h1>
  </td>
 </tr>
</table>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">&nbsp;</font></p>

<p align="center" style="margin:0in 0in .0001pt;text-align:center;"><font size="2" face="Times New Roman" style="font-size:10.0pt;">5</font></p>


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