Exhibit 10.40

FORM OF SEPARATION AGREEMENT AND GENERAL RELEASE

You,                                         , have voluntarily elected to
accept, and Silicon Graphics, Inc. (“SGI”) has agreed to pay you, a Severance
Benefit. This document will, upon your signature, constitute the Agreement
between you and SGI, including all subsidiaries on the terms of your separation
from employment with SGI. It is agreed that you and SGI want to end the
employment relationship amicably and finally and to preclude any dispute between
you and SGI arising from your employment by SGI, your separation or any other
matter.

Accordingly, it is understood and agreed as follows:

1. Your last day of work was                                         
(“Separation Date”). You separated from SGI and your position as
                                        , as of your Separation Date. You agree
to return all SGI confidential and/or proprietary information in your
possession, access card keys, identification badges and all SGI property,
including, but not limited to, files, records, computer access codes, computer
programs, instruction manuals, business plans, and other property which you
prepared or helped to prepare in connection with your employment with SGI. You
understand and agree that as of the Separation Date, you received a check for
all unpaid wages and accrued, unused vacation due through that date, less
applicable payroll taxes and required withholdings. You certify and agree that
no additional wages and unused vacation are due to you. You also will be
reimbursed for any reasonable and customary reimbursable business expenses, if
any, incurred prior to the Separation Date, as long as you submit evidence of
such expenses within sixty (60) days of the Separation Date. Receipt of unpaid
wages, unused vacation and reimbursement for business expenses is not dependent
upon you signing this Agreement.

2. In order to assist you in making this transition and in consideration of your
adherence to the terms of this Agreement, SGI agrees to the following terms if
you execute this Agreement. The following terms will become effective and
enforceable only upon receipt of the executed Agreement within the time period,
as specified below in Paragraph 8, and upon the expiration of the revocation
period, as specified below in Paragraph 8. Upon the effective date of this
Agreement, SGI will provide you the following:

a. You will be eligible for an amount equivalent to [6/9/12 months] of base
salary, calculated as of your Separation Date, subject to required tax and other
withholdings. This amount will be paid to you in bi-weekly payments on SGI
established paydays until                                         . These
payments will be made regardless of whether you find other employment.

b. If you elect continuation of your health benefits (paid medical, dental and
vision benefits) through COBRA, SGI will subsidize COBRA payments on your behalf
at the same rate SGI paid when you were an employee for a period of up to
[6/9/12 months] following the Separation Date. After this period, you may extend
your COBRA coverage for an additional                     (    ) at the full
premium rate and at your own expense.

c. The Management Incentive Plan, along with your Stock Option and Restricted
Stock Unit Notices and Agreements, define the terms of vesting, exercisability
and expiration for your grants. Please contact the Stock Administration
Department to discuss the status of your equity awards.

 

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3. Other than the items set forth above and unpaid reimbursement for business
expenses, you have no expectation of, and shall make no other claims for payment
or any other compensation from SGI.

4. In consideration of SGI’s agreement as stated above, you agree to release and
discharge unconditionally SGI and any successors, subsidiaries, affiliates,
related entities, and their respective current and former officers, directors,
stockholders, employees, benefits plan administrators and trustees, agents,
attorneys, insurers, representatives, affiliates, successors and assigns, from
any and all claims, actions, causes of action, demands, obligations or damages
of any kind arising from your employment with SGI and the separation of that
employment or otherwise, whether known or unknown to you, which you ever had or
now have upon or by reason of any matter, cause or thing, up to and including
the day on which you sign this Agreement. The claims you are waiving include,
but are not limited to, all claims arising out of or related to any stock
options or restricted stock units held by you or granted to you by SGI except to
the extent of any claims pursuant to or resulting from SGI’s breach of Paragraph
2(c) above; all claims under Title VII of the Civil Rights Act of 1964, as
amended; all claims under the Age Discrimination in Employment Act of 1967; all
claims under the Worker Adjustment and Retraining Notification Act (WARN) or
similar state statutes; all claims under the Americans with Disabilities Act;
all claims under the Fair Labor Standards Act; all claims under the National
Labor Relations Act; all claims under the Employee Retirement Income Security
Act; all claims under 42 U.S.C. section 1981; and all claims under other
analogous federal, state and local laws, regulations, statutes and ordinances;
all claims under any principle of common law; all claims concerning any right to
reinstatement; and all claims for any type of relief from SGI, whether federal,
state or local, whether statutory, regulatory or common law, and whether tort,
contract or otherwise. This release of claims does not affect any claim for
workers’ compensation benefits, any unemployment claim, any claims based on your
statutory right to be indemnified under California Labor Code Section 2802, your
vested rights, if any, in SGI’s 401(k) plan, or any other claims that cannot be
waived or released under applicable laws.

5. Because you agree to release all claims, known or unknown as set forth in
Paragraph 4 above, it is further understood and agreed that as part of the
consideration and inducement for the execution of this Agreement, you
specifically waive the provisions of section 1542 of the California Civil Code
(or any analogous federal or state law or regulations), which reads as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR
SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF
KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE DEBTOR.

Notwithstanding the provisions of section 1542, and for the purpose of
implementing a full and complete release and discharge of SGI, you expressly
acknowledge that this Agreement is intended to include in its effect, without
limitation, all the claims described herein, whether known or unknown, and that
this Agreement contemplates the extinction of any and all such claims, including
claims for attorneys’ fees.

 

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6. You acknowledge that, because of your position with SGI, you have specific
knowledge of many types of information which is proprietary to SGI, including,
without limitation, its current and planned technology; its current and planned
corporate strategies; strategic customers and business partners; and the
identity, skills and interests of its employees. You agree to keep and treat all
such proprietary information as confidential; you acknowledge and reaffirm your
obligations to SGI under the Proprietary Information and Invention Agreement
signed by you, wherein you agreed to keep and treat all such proprietary
information as confidential and these obligations survive your separation of
employment with SGI.

7. It is agreed that you will not disclose the discussions leading to the terms
of this Separation Agreement, or the terms of the Separation Agreement itself,
the benefit being paid under it or the fact of its payment, except that you may
disclose this information to those individuals that have a need to know in order
for them to render professional or financial services or as may be required by
law, rule or regulation. Failure to adhere to this paragraph constitutes a
material breach of this Agreement and excuses SGI’s obligations to make payments
pursuant to the Agreement.

8. You understand and agree that:

a. You have had a period of twenty-one (21) days within which to consider
whether you would execute this Agreement, that no one has hurried you into
executing this Agreement during that twenty-one (21) day period, and no one
coerced you into executing this Agreement.

b. You have carefully read and fully understand all of the provisions of this
Agreement, declare that this Agreement is written in a manner that you
understand, and know that you are giving up important rights.

c. You are entering into this Agreement knowingly and voluntarily and intend to
be bound by its terms.

d. You were advised and hereby are advised in writing to consult with an
attorney of your choice prior to executing this Agreement.

e. You understand that rights or claims, including those arising under the Age
Discrimination in Employment Act of 1967, which may arise after the date this
Agreement is executed, are not waived.

f. You understand that you have a period of
                                         to revoke your acceptance of this
Agreement, and that you may deliver notification of revocation in person or by
letter via overnight mail to                                          at 1140 E.
Arques Avenue, Sunnyvale, CA 94085. You further understand that this Agreement
will not become effective and binding, and none of the consideration described
in Paragraph 2 will be provided to you until the expiration of the revocation
period. The revocation period commences when you execute this Agreement and ends
at 11:59 p.m. PST on the                                          calendar day
after execution, not counting the date

 

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on which you execute this Agreement. You also understand that, if you do not
mail a notice of revocation before the end of the
                                         period described above, this Agreement
will become final, binding and enforceable.

9. You agree that, for a period of 6 months following the effective date of
separation of your employment with the Company, you will not directly or
indirectly solicit, induce, recruit or encourage any of the employees of the
Company (or any of its subsidiaries or affiliates) to leave their employment, or
take away such employees, or attempt to solicit, induce, recruit, encourage or
take away such employees either for employment by yourself or by any other
person or entity.

10. You and SGI agree not to make any untruthful remarks or statements about
each other or the Company, its officers, directors, employees, or agents.

11. You agree, upon SGI’s or its agent’s request and reasonable notice, to
cooperate with SGI in connection with any claim or litigation or other matter
about which you may have relevant information. Upon request, you will also
provide SGI with information that you obtained from your employment regarding
SGI’s business or operations. Additionally, you will immediately notify SGI’s
General Counsel if you receive any written or oral request for information from
any persons (other than your full-time employer), or their counsel, who are
asserting or investigating claims or litigation asserted against, or otherwise
adverse to, SGI. You will not disclose information to such persons except as
required by legal process. You will not disclose to anyone, except SGI,
confidential or privileged matters obtained from or related to your employment
with SGI, except as required by law.

12. You declare and represent that no promise, inducement or other agreement not
expressly contained in this Agreement or referred to in this Agreement, has been
made conferring any benefit upon you; that this Agreement contains the entire
agreement between the parties with respect to any benefit conferred upon you;
and that the terms of this Agreement are contractual. This Agreement is entered
into and governed by the laws of the State of California.

13. In the event of any dispute, claim, question, or disagreement arising out of
or relating to this agreement or the breach thereof, you and SGI agree to first
use our best efforts to settle such matters in an amicable manner. Initially, we
shall consult and negotiate with each other, in good faith and, recognizing our
mutual interests, attempt to reach a just and equitable solution satisfactory to
both parties. If we do not reach such resolution within a period of sixty
(60) days, then upon written notice by either party to the other, any unresolved
dispute, claim or differences shall be submitted to confidential mediation by a
mutually agreed upon mediator. Either party may, without inconsistency with this
agreement, apply to any court having jurisdiction hereof and seek injunctive
relief so as to maintain the status quo until such time as the mediation is
concluded or the controversy is otherwise resolved. The site of the mediation
shall be in the County of Santa Clara, California. Each party shall each bear
its own costs and expenses and an equal share of the mediators’ and any similar
administrative fees. Should mediation not resolve the dispute, claim, question,
or disagreement, all parties retain their right to pursue all legal remedies.

14. This Agreement contains the entire agreement between you and SGI and
supersedes any and all prior agreements or understandings pertaining to the
subject matter of this

 

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Agreement. You represent and acknowledge that in executing this Agreement you
have not relied upon any representation or statement not set forth here with
regard to the subject matter of this Agreement.

15. The above provisions are severable. If a court of competent jurisdiction
rules that any provision of this Agreement is invalid or unenforceable, the
court’s ruling will not affect the validity and enforceability of the other
provisions of this Agreement.

By signing this Agreement and general release, you confirm that:

 

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You have read it; you understand it and know that you are giving up important
rights;

 

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You have been advised to consult an attorney before signing it; and

 

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You have signed it knowingly and voluntarily.

 

 

   

 

Date     Employee Signature    

 

    Employee Name (Printed) & EE Number

 

   

 

Date     SGI Representative

 

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