APPLICATIONS

Renowned HPC Veteran Robert H. "Bo" Ewald Returns to SGI: SGI announced today that Robert H. "Bo" Ewald has been named Chief Executive Officer, effective immediately. Bo replaces Dennis McKenna who has served as SGI's Chief Executive Officer since January 31, 2006. In addition to his role as CEO, Bo will serve on SGI's Board of Directors. "Bo Ewald brings the right skill set to lead SGI as we move from a focus on restructuring and stabilization to a focus on growth and profitability," said Kevin Katari, SGI's Chairman of the Board and a Managing Member of Watershed Asset Management, LLC. "Bo's leadership skills and extensive experience in a range of high-performance computing and storage markets make him the right CEO to lead SGI to success, not only in the traditional technical and scientific HPC market, but also in new enterprise HPC segments where SGI's technologies have significant potential," added Mr. Katari. "I'm very pleased to be returning to SGI," said Bo Ewald. "This is a great company steeped with accomplishment and history, highly innovative products, extremely highly skilled and dedicated employees, and a solid and loyal customer base. The SGI team has done a tremendous job over the past year, restructuring the company and refocusing its approach to the business. I'm excited about the opportunity to lead SGI and build on the momentum to grow the business by helping our customers be successful." "The Board and employees of SGI are extremely grateful to Dennis McKenna for his decisive leadership and contributions over the past year, successfully restructuring and stabilizing the company," added Mr. Katari. "We also appreciate Dennis' support in assuring continuity and the smooth transition of the leadership of SGI." Mr. Ewald was most recently Chairman and CEO of Linux Networx, Inc. Prior to that, he served as President of Human Resource Solutions of Ceridian Corporation; CEO of Scale Eight, Inc, a high-performance network-clustered storage company; and President and CEO of E-Stamp. Earlier in his career, Bo served as Executive Vice President and Chief Operating Officer of Silicon Graphics, Inc. (SGI), and President and Chief Operating Officer of Cray Research, Inc. He began his management career at Los Alamos National Laboratory as the head of its Computing and Communications Division. He is involved in various industry organizations and was appointed to the President's Information Technology Advisory Committee from 1997 to 2001. As part of Bo's compensation package, SGI approved both a grant of stock options and restricted stock units (the "RSUs") as an inducement material to his entering into employment with SGI. The option grant will be made under SGI's management incentive plan, and the RSU award will be a non-plan grant. Both grants will be made later this month, with the total number of shares being 287,500. The number of these shares which will be SGI common stock subject to the option versus RSUs will be determined pursuant to a pre- established formula tied to the fair market value of the SGI common stock on the grant date. Both grants will vest in forty-eight (48) equal monthly installments measured from his first day of employment. SGI anticipates filing with the Securities and Exchange Commission a Form 8-K on or about April 10, 2007 summarizing in more detail Bo's compensation arrangement with SGI. Bo will participate in SGI's earnings release conference call for the third quarter of fiscal 2007 which is planned for May 8, 2007. More details on the earnings call will be posted on www.sgi.com shortly.