Promissory Note - Silicon Graphics Inc., William Martin Kelly and Mary Jane Roskosky Kelly
PROMISSORY NOTE
SECURED BY DEED OF TRUST
AND STOCK PLEDGE AGREEMENT
NOTICE: THIS PROMISSORY NOTE PROVIDES FOR A BALLOON PAYMENT.
$400,000.00 Mountain View, California
June 18, 1997
For value received, the undersigned, WILLIAM MARTIN KELLY ("Employee")
and MARY JANE ROSKOSKY KELLY (collectively, "Borrower") jointly and severally
promise to pay to SILICON GRAPHICS, INC., a Delaware corporation ("SGI"), or
order, at 2011 N. Shoreline Boulevard, PO Box 7311, Mountain View, California
94039-7311, or such other place as SGI may designate in writing from time to
time, in lawful money of the United States of America, without abatement,
demand, deduction, setoff or counterclaim, the principal sum of Four Hundred
Thousand and 00/100 Dollars ($400,000.00), together with interest thereon at
the rate of seven and forty-five hundredths percent (7.45%) per annum,
compounded annually, from the date first set forth above ("Effective Date")
until all principal, interest and other charges under this Promissory note
are paid in full.
1. PAYMENTS. All outstanding principal and accrued interest under this
Promissory note shall be due and payable on the Due Date (as defined below).
Interest shall be computed based upon a three hundred sixty (360) day year
and thirty (30) day month. Every payment received by SGI with respect to
this Promissory note shall be applied as follows: first, to the payment of
any late charges; second, to the payment of accrued but unpaid interest; and,
third, to the payment of the outstanding principal balance of this Promissory
Note. Notwithstanding the foregoing, outstanding principal and accrued
interest under this Promissory Note shall be due and payable prior to the Due
Date to the extent of fifty percent (50%) of the sales proceeds payable to
Borrower in connection with the sale of any Shares (as defined below);
provided, however, if SGI's employment of Employee shall terminate or cease
for any reason, whether voluntary or involuntary, and whether with or without
cause, or if Borrower shall be in default hereunder, outstanding principal
and accrued interest under this Promissory Note shall be due and payable
prior to the Due Date to the extent of one hundred percent (100%) of the
sales proceeds payable to Borrower in connection with the sale of any such
Shares. In no event shall the preceding sentence be deemed a limit of SGI's
recourse or Borrower's liability under this Promissory Note. Borrower may
prepay the principal amount outstanding under this Promissory Note in whole
or in part at any time without penalty.
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2. DUE DATE. The "Due Date" shall be the earlier of (i) thirty (30)
days after the date of termination or cessation of SGI's employment of
Employee, whether voluntarily or involuntarily, and whether with or without
cause, (ii) the date that Borrower sells, leases, transfer or otherwise
conveys all or any interest in the Residence (as defined below), or (iii) the
fifth (5th) anniversary of the date first set forth above.
3. PURPOSE OF LOAN. Borrower acknowledges and agrees that SGI is
making this loan to Borrower for executive retention purposes consistent with
Section 143 of the Delaware General Corporation Law. Borrower shall use the
proceeds of this loan for purposes of improving and renovating Borrower's
principal residence located at 10 Peak Lane, Portola Valley, California
("Residence").
4. DEFAULT. In the event that Borrower fails to timely pay any amount
or perform any other obligation of Borrower under this Promissory Note, the
Deed of Trust (as defined below), the Pledge Agreement (as defined below), or
any other agreement or instrument now or hereafter executed by Borrower to
evidence or secure the performance of Borrower's obligations thereunder, SGI
may, at its option, declare the entire principal sum under this Promissory
Note immediately due and payable. In the event that SGI exercises this
option, or the principal balance of this Promissory Note otherwise becomes
due and payable, all principal then outstanding under this Promissory Note
shall thereafter bear simple interest at the lesser of ten percent (10%) per
annum or the maximum rate permitted by law. Failure to exercise this option
shall not constitute a waiver of SGI's right to exercise the same with
respect to any prior or subsequent defaults.
5. SECURITY. Borrower's obligations under this Promissory Note are
secured by (i) that certain Deed of Trust with Assignment of Rents of even
date herewith ("Deed of Trust") encumbering the Residence, as more
particularly described in the Deed of Trust, and (ii) that certain Pledge
Agreement of even date herewith ("Pledge Agreement") encumbering Borrower's
right, title and interest in and to certain stock options and other pledged
collateral, as more particularly described in the Pledge Agreement ("Pledged
Collateral").
6. DUE ON SALE. The Deed of Trust provides as follows:
If the trustor shall sell, convey or alienate said property, or any
part thereof, or any interest therein, or shall be divested of his
title or any interest therein in any manner or way, whether
voluntarily or involuntarily, without the written consent of the
beneficiary being first had and obtained, beneficiary shall have the
right, at its option, except as prohibited by law, to declare any
indebtedness or obligations secured hereby, irrespective of the
maturity date specified in any not evidencing the same, immediately
due and payable.
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7. ATTORNEYS' FEES. In the event any legal action or proceeding is
required to enforce or interpret any provision of this Promissory Note,
Borrower shall pay to SGI upon demand all costs of collection and reasonable
attorneys' fees incurred by SGI in connection therewith.
8. TAX LIABILITY. Borrower understands and agrees that any and all
income tax liability to Borrower resulting from this Promissory Note shall be
the sole responsibility of Borrower.
9. MISCELLANEOUS. If any provision of this Promissory Note shall be
invalid or unenforceable for any reason, the same shall be ineffective, but
the remainder of this Promissory Note shall not be affected thereby and shall
remain in full force and effect. Time is of the essence of each and every
obligation of Borrower hereunder. Presentment and demand for payment, notice
of dishonor, protest and notice of protest are hereby waived by Borrower. If
the due date for any payment under this Promissory Note falls on a Saturday,
Sunday or legal holiday, then such due date shall be extended to the next
business day. None of the terms or provisions of this Promissory note may be
waived, altered, modified or amended except by a writing signed by SGI and
Borrower. The provisions of this Promissory Note shall be governed by
California law. The covenants, terms and conditions hereof shall bind the
heirs, successors and assigns of Borrower and shall insure to the benefit of
the successors and assigns of SGI.
IN WITNESS WHEREOF, Borrower has executed this Promissory Note as of the date
first set forth above.
BORROWER:
/s/ William Martin Kelly
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WILLIAM MARTIN KELLY
/s/ Mary Jane Roskosky Kelly
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MARY JANE ROSKOSKY KELLY
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