ACADEMIA

Company Reaches Agreement on $130 Million Financing Facility With Morgan Stanley -- Silicon Graphics today announced that it has reached agreement with Morgan Stanley on a $130 million financing facility. The new financing agreement, which will be used to fund day-to-day operations during the Company's previously announced reorganization process, will consist of a $100 million term loan and a $30 million revolving line of credit. The new financing agreement will replace the $70 million financing facility, announced on May 8, 2006, and the pre-petition credit facility with Wells Fargo Foothill, part of Wells Fargo & Company, and Ableco Finance LLC. The Company also today announced that it has reached a settlement with Goldman Sachs to restructure its lease obligations at Amphitheatre Technology Center (ATC) and the Crittenden Technology Center (CTC). Pursuant to the settlement, SGI's obligations under the ATC and CTC lease agreements will terminate upon court approval of the settlement. The settlement also provides for an agreed upon relocation schedule. In the interim, SGI will maintain its corporate headquarters at the CTC campus in Mountain View. The $130 million financing agreement and the settlement with Goldman Sachs are subject to Court approval and customary closing conditions. SGI expects the benefits of the settlement to include an increase in the availability under its line of credit of approximately $19 million and a reduction in its facilities-related cash obligations of $15 million to $20 million per year beginning in July 2006. "Today's announcements reflect our continued progress in the reorganization process," said Dennis McKenna, chairman and CEO, SGI. "The combination of the refinancing and the restructuring of our lease obligations provides SGI with incremental financial flexibility and is a major step in removing legacy cost burdens that have impacted the company. This process is allowing SGI to complete its financial re-engineering in the shortest possible time."