Exhibit 10.2

 

SILICON GRAPHICS, INC.

AMENDED AND RESTATED

1989 EMPLOYEE BENEFIT STOCK PLAN

 

1.                                      Purpose.

 

This Plan is intended to provide a means for Silicon Graphics, Inc. (the
“Company”), by granting shares of Company stock in the form of stock grants
(“Stock Grants”), grants of restricted stock (“Restricted Stock”) and options to
purchase Company stock (“Options”) to selected management and other key
employees, to attract and retain persons of ability and motivate them to advance
the interests of the Company.  An employee eligible to participate under the
Plan is hereinafter referred to as an “Employee.”

 

It is intended that the Plan be interpreted in accordance with Rule 16b-3 under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  It is
also intended that, except as otherwise limited by paragraph 2, some or all of
the Options granted to Employees under the Plan may constitute “incentive stock
options” within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the “Code”), and some or all of the Options may constitute
“nonstatutory options”, i.e., options not qualifying under Section 422 or other
similar provisions of the Code.  Unless otherwise indicated, the terms and
conditions of the Plan shall apply equally to all Stock Grants, grants of
Restricted Stock and Options hereunder, regardless of whether Options be
incentive stock options or nonstatutory options.

 

2.                                      Additional Definitions.  As used herein,
the following definitions apply:

 

(a)                                  “Continuous Status as an Employee” means
that the relationship as an Employee is not interrupted or terminated by the
Company.  Continuous Status as an Employee shall not be considered interrupted
in the case of:  (i) any leave of absence approved by the Company, including
sick leave, military leave, or any other personal leave; provided, however, that
for purposes of qualifying an Option as an incentive stock option, in the event
any such leave exceeds ninety (90) days, the Employee’s Continuous Status as an
Employee will be deemed to have terminated on the

 

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ninety-first (91st) day after the commencement of such leave, unless
re-employment upon the expiration of such leave is guaranteed by contract
(including certain Company policies) or statute; or (ii) transfers between
locations of the Company or between the Company and its subsidiaries.

 

(b)                                 “Disability” means total and permanent
disability as defined in Section 22(e)(3) of the Code.

 

(c)                                  “Fair Market Value” means, as of any date,
the closing price for a share of Common Stock as reported daily in The Wall
Street Journal or a similar readily available public source (or if no sales of
shares were made on such date, the closing price of a share as reported for the
preceding day), unless the Committee shall determine that such method does not
reflect, due to circumstances prevailing at that time, the true fair market
value of the Company’s Common Stock.  In that event, the Committee shall
determine fair market value through such alternative method as it may in good
faith determine to be then appropriate.

 

3.                                      Shares Subject to the Plan.

 

Subject to adjustment as provided in Section 11, a total of 7,888,000 shares of
authorized but unissued or reacquired Common Stock of the Company is authorized
and reserved for issuance to Employees under the Plan in the form of Stock
Grants or grants of Restricted Stock or upon the exercise of Options; provided,
however, that no more than 7,888,000 shares shall be cumulatively available for
the grant of incentive stock options under the Plan.  If any Option expires or
terminates without having been exercised in full, the unacquired shares
(including shares forfeited on the termination of any grant of Restricted Stock)
shall be available for the grant of future Stock Grants, grants of Restricted
Stock or Options under the Plan.

 

4.                                      Administration.

 

The Plan shall be administered by a Committee of the Board of Directors of the
Company, consisting of at least two (2) disinterested persons not eligible to
participate under this Plan or under any other stock or option plan of the
Company or its subsidiaries

 

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except as may be permitted in accordance with Rule 16b-3 under the Exchange Act
(the “Committee”).

 

5.                                      Eligibility.

 

The Committee shall determine the Employees to whom, and the number of shares
for which, Stock Grants, grants of Restricted Stock and/or Options shall be
granted, taking into consideration such factors, including any recommendations
of the Chief Executive Officer of the Company, as it deems relevant to select
and motivate employees of ability to advance the interests of the Company. 
Employees so selected shall be either management or other key employees of the
Company or its subsidiaries, who the Committee determines have contributed
materially to the success of the Company or are in a position to contribute
materially to the future success of the Company.  Except as hereafter limited,
an Employee from time to time may be granted any combination of Stock Grants,
grants of Restricted Stock and Options (incentive or nonstatutory) as the
Committee shall determine.

 

An employee shall not be eligible to receive an incentive stock option if
immediately before the Option is to be granted the employee owns (directly and
through application of the constructive stock ownership attribution rules of
Section 424(d) of the Code) more than ten percent of the total combined voting
power of all classes of stock of the Company or any subsidiary.  The aggregate
Fair Market Value (determined at the time an Option is granted) of shares with
respect to which incentive stock options are exercisable for the first time by
an Employee during any calendar year (under this Plan and all other plans of the
Company and its subsidiaries pursuant to Section 422 of the Code) shall not
exceed $100,000.

 

6.                                      Stock Options.

 

All Options granted hereunder shall be evidenced by an Option Agreement executed
as of the date of grant by the Company and the Employee, on such terms as may be
determined by the Committee, including the following:

 

(a)                                  The Option Agreement shall specify whether
the Option is an incentive stock option or a nonstatutory option.

 

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(b)                                 The “date of grant” for any Option granted
under the Plan shall be specified in the Option Agreement.

 

(c)                                  The Option exercise price per share shall
be specified in the Option Agreement and shall be equal to 100% of the Fair
Market Value of a share of Company Common Stock on the date of grant.

 

(d)                                 The Option exercise price shall be paid at
the time of exercise.  The consideration to be paid for the shares to be issued
upon exercise of an Option, including the method of payment, shall be determined
by the Committee (and, in the case of an incentive stock option, shall be
determined at the time of grant) and may consist entirely of: (1) cash; (2)
check; (3) other shares which (i) in the case of shares acquired upon exercise
of an option, have been owned by the Employee for more than six months on the
date of surrender and (ii) have an aggregate Fair Market Value on the date of
surrender not greater than the aggregate exercise price of the shares as to
which said Option shall be exercised; (4) delivery of a properly executed
exercise notice together with such other documentation as the Committee and the
broker, if applicable, shall require to effect an exercise of the Option and
delivery to the Company of the sale or loan proceeds required to pay the
exercise price; (5) any combination of the foregoing methods of payment; or (6)
such other consideration and method of payment for the issuance of shares as the
Committee determines are consistent with the Plan’s purpose and applicable law. 
Any fractional share not required for payment of the Option exercise price shall
be paid for by the Company in cash on the basis of the same value utilized for
such exercise.

 

(e)                                  At the time an Option is granted, the
Committee shall determine the terms and conditions to be satisfied before shares
may be purchased, including the dates on which shares subject to the Option may
first be purchased.  The Committee may specify that an Option may not be
exercised until the completion of a service period specified at the time of
grant.  (Any such

 

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period is referred to herein as the “waiting period.”)  At the time an Option is
granted, the Committee shall fix the period within which the Option may be
exercised, which shall not be earlier than the end of the waiting period, if
any, nor, in the case of an Incentive Stock Option, later than ten (10) years
from the date of grant.

 

(f)                                    An incentive stock option hereunder shall
not contain terms pursuant to which the exercise of the Option would affect the
Employee’s right to exercise a nonstatutory option hereunder, or vice versa,
such that the incentive stock option would be deemed a prohibited “tandem stock
option” within the meaning of Section 422 of the Code and the regulations
thereunder.

 

(g)                                 Unless the issuance of the shares upon the
exercise of an Option hereunder is registered or exempt under federal and state
securities laws, the Employee shall be required to give an investment
representation at the time of exercise, and transfer of the shares shall be
appropriately restricted.

 

(h)                                 During the lifetime of an Employee, Options
held by such Employee may be exercised only by the Employee and only while an
Employee of the Company or of a parent or a subsidiary of the Company and only
if such Employee has maintained his or her Continuous Status as an Employee
since the date such Options were granted; provided, however, that:

 

(1)                                  In the event an Employee’s Continuous
Status as an Employee terminates (other than upon his or her death or
Disability), the Option holder may exercise his or her Option, but only within
such period of time from the date of such termination as is determined by the
Committee, not to exceed three (3) months in the case of an Option that is
intended to qualify as an incentive stock option, and, unless determined
otherwise by the Committee, only to the extent that the Employee was entitled to
exercise it at the date of such termination (but in no event later than the
expiration of the term of such Option as set forth in the Option Agreement). To
the extent

 

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that the Employee was not entitled to exercise an Option at the date of such
termination, and to the extent that he or she does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option
shall terminate.

 

(2)                                  In the event an Employee’s Continuous
Status as an Employee terminates as a result of his or her Disability, the
Option holder may exercise his or her Option, but only within twelve (12) months
from the date of such termination, and, unless determined otherwise by the
Committee, only to the extent that the Employee was entitled to exercise it at
the date of such termination (but in no event later than the expiration of the
term of such Option as set forth in the Option Agreement).  To the extent that
the Employee was not entitled to exercise an Option at the date of such
termination, and to the extent that he or she does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option
shall terminate.

 

(3)                                  In the event of an Employee’s death, the
Employee’s estate or a person who acquired the right to exercise the deceased
Employee’s Option by bequest or inheritance may exercise the Option, but only
within twelve (12) months following the date of death, and, unless determined
otherwise by the Committee, only to the extent that the Employee was entitled to
exercise it at the date of death (but in no event later than the expiration of
the term of such Option as set forth in the Option Agreement).  To the extent
that the Employee was not entitled to exercise an Option at the date of death,
and to the extent that the Employee’s estate or a person who acquired the right
to exercise such Option does not exercise such Option (to the extent otherwise
so entitled) within the time specified herein, the Option shall terminate.

 

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(4)                                  Except as otherwise provided, in no event
shall any Option be exercisable at any time after its expiration date.

 

(5)                                  On a case-by-case basis, the Committee may,
in its sole discretion, accelerate the schedule of the time or times when an
Option granted under this Plan may be exercised or extend the period for
exercise to a time after the expiration date.  Unless otherwise determined by
the Committee at the time of grant, each Option shall provide that in the event
of a change in control of the Company (as specified by the Committee), any
Employee’s Options will become exercisable in full if, within twenty-four (24)
months after a change in control of the Company (as specified by the Committee),
the Employee’s employment is terminated without cause or the Employee resigns
due to certain involuntary relocations or reductions in compensation, as
specified by the Committee.  Each Option granted under the Plan may contain such
other terms, provisions and conditions not inconsistent with the Plan as may be
determined by the Committee.

 

(i)                                                                                  
Unless otherwise determined by the Committee to the contrary, Options may not be
sold, pledged, assigned, hypothecated, transferred or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised, during the lifetime of the Employee, only by the Employee.  The
Committee may, in the manner established by the Committee, provide for the
transfer, without payment of consideration, of an Option by the Employee to the
Employee’s “immediate family”.  In such case, the Option will be exercisable
only by such transferee.  Following a transfer, any such Options shall continue
to be subject to the same terms and conditions as were applicable immediately
prior to the transfer.  For purposes of this Section 6(i), the Employee’s
“immediate family” shall include any child, stepchild, grandchild,

 

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parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Employee’s household (other than a tenant or employee), a trust in which these
persons have more than fifty percent of the beneficial interest, a foundation in
which these persons (or the Employee) control the management of assets, and any
other entity in which these persons (or the Employee) own more than fifty
percent of the voting interests.  A transfer under a domestic relations order in
settlement of marital property rights is not a prohibited transfer for value.

 

7.                                      Stock Grants.

 

The Committee may, in its discretion, award a Stock Grant to an Employee in
furtherance of the Plan’s purposes; provided, however, that no Employee shall be
eligible to receive a Stock Grant for more than fifty (50) shares of Company
Common Stock in any calendar year.  An Employee receiving a Stock Grant shall be
entitled to all of the rights and privileges in the Common Stock awarded as of
the date on which the award is made.  Unless the issuance of shares pursuant to
a Stock Grant is registered or exempt under federal or state securities laws,
the Employee shall be required to give an investment representation at the time
of grant, and transfer of the shares shall be appropriately restricted.

 

8.                                      Grants of Restricted Stock.

 

(a)                                The Committee may, in its discretion and in
furtherance of the purposes of the Plan, grant Restricted Stock to an Employee. 
With respect to awards of Restricted Stock, the Committee shall:

 

(i)                                     Select the Employees to whom grants will
be made (the “Participants”);

 

(ii)                                  Determine the number of shares to be
awarded;

 

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(iii)                             Determine the length of the restricted period,
if any, and the performance and employment conditions under which the Restricted
Stock may be forfeited to the Company, if any;

 

(iv)                            Determine the purchase price, if any, to be paid
by the Participant for such Restricted Stock; and

 

(v)                               Determine any restrictions other than those
set forth in this Section 8.

 

(b)                                 The terms of each award of Restricted Stock
shall be set forth in a written award agreement (the “Award Agreement”) and a
certificate representing the number of shares of Common Stock granted shall be
issued to the Participant as the registered owner.  The certificate representing
such shares shall be legended as to sale, transfer, assignment, pledge or other
encumbrances during the restricted period and shall be deposited by the
Participant, together with a stock power endorsed in blank, with the Company. 
Such certificates shall be held in the custody of the Company until the
restricted period expires or until all restrictions thereon otherwise lapse.

 

(c)                                  Subject to the restrictions set forth in
this Section 8 or in the Award Agreement, each Participant who receives
Restricted Stock shall have all rights as a stockholder with respect to such
shares, including the right to vote the shares and receive dividends and other
distributions.

 

(d)                                 The Award Agreement may provide, or the
Committee may subsequently determine in its discretion, that, in the case of
death, Disability or other special circumstances, any or all restrictions then
applicable to a Participant’s Restricted Stock be waived.

 

(e)                                  The Committee may, in its sole discretion,
declare the restrictions applicable to shares of Restricted Stock to lapse in
the event of a change in control of the Company (as specified by the Committee),
in which case the Company shall remove all restrictive legends and stop-transfer
orders applicable to the Restricted Stock as of the date of said change in
control

 

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and certificates representing such shares shall be delivered to the
Participants.

 

(f)                                    Except as otherwise provided in this
Section 8 or in the Award Agreement, no shares of Restricted Stock shall be
sold, exchanged, transferred, pledged or otherwise disposed of during the
restricted period.

 

(g)                                 With respect to any number of shares of
Restricted Stock as to which the restrictions imposed hereunder shall have
lapsed, the restrictive legend shall be removed and a new certificate
representing the shares shall be delivered to the Participant.  The Committee
may, in its sole discretion, modify or cancel the restrictions imposed on
Restricted Stock or otherwise accelerate the vesting of shares of Restricted
Stock.

 

9.                                      Termination.

 

Unless sooner terminated by action of the Board of Directors of the Company, the
Plan shall terminate ten (10) years from its effective date.  Options
outstanding under the Plan at the time of termination shall remain in effect
until exercise or expiration.  Restricted Stock outstanding under the Plan at
the time of termination shall remain subject to the restrictions imposed at the
time of grant until the restricted period expires or until all conditions with
respect thereto otherwise lapse or are satisfied.

 

10.                               Effective Date; Shareholder Approval.

 

The Plan became effective on September 7, 1988, the date of its adoption by the
Board of Directors of the Company, and was approved by the Company’s
stockholders on May 16, 1989.  The effective date of each amendment to the Plan
shall be the date of adoption of such amendment by the Board of Directors of the
Company; provided, however, that in the event the shareholders of the Company
shall not approve any amendment to the Plan which is determined by the Board of
Directors to require approval by the shareholders, such amendment shall be of no
effect and no Stock Grant, grant of Restricted Stock or Option previously
granted shall be effective if the authorization of the grant thereof was
contingent on the effectiveness of such amendment or shall otherwise be
benefited or altered by such amendment.  No Stock Grants or grants of Restricted

 

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Stock shall be made under the Plan until shareholder approval of the Plan
amendments authorizing such grants is obtained.

 

11.                               Adjustments Upon Changes in Capitalization,
Dissolution, Merger or Asset Sale.

 

(a)                                  Changes in Capitalization.  Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and each outstanding grant of
Restricted Stock, and the number of shares of Common Stock which have been
authorized for issuance under the Plan but as to which no awards have been
granted or which have been returned to the Plan upon cancellation or expiration
of an award, as well as the exercise price per share of Common Stock covered by
each outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common Stock, or any other increase or decrease in the number of issued
shares of Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.” 
Such adjustment shall be made by the Company’s Board of Directors, whose
determination in that respect shall be final, binding and conclusive.  Except as
expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number or price of shares of Common Stock subject to an Option.

 

(b)                                 Dissolution or Liquidation.  In the event of
the proposed dissolution or liquidation of the Company, to the extent that an
Option has not been previously exercised, it will terminate immediately prior to
the consummation of such proposed action.  The Committee may, in the exercise of
its sole discretion in such instances, declare that any Option shall terminate
as of a date fixed by the Committee and give each holder the right to exercise
his or her Option as to all or any part of the

 

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underlying Common Stock prior to such expiration, including shares as to which
the Option would not otherwise be exercisable.

 

(c)                                  Merger or Asset Sale.  In the event of a
merger of the Company with or into another corporation, or the sale of
substantially all of the assets of the Company, each outstanding Option shall be
assumed or an equivalent Option substituted by the successor corporation or a
parent or subsidiary of the successor corporation.  In the event that the
successor corporation does not agree to assume the Option or to substitute an
equivalent option, the Committee may, in lieu of such assumption or
substitution, provide for the Option holder to have the right to exercise the
Option as to all or a portion of the underlying Common Stock, including shares
as to which it would not otherwise be exercisable.  If the Committee makes an
Option exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Committee shall notify the holder that the Option
shall be exercisable for such period as the Committee may designate, and the
Option will terminate upon the expiration of such period.  For the purposes of
this Section 11(c), the Option shall be considered assumed if, immediately
following the merger or sale of assets, the Option confers the right to receive,
for each share of Common Stock subject to the Option immediately prior to the
merger or sale of assets, the consideration (whether stock, cash, or other
securities or property) received in the merger or sale of assets by holders of
Common Stock for each share held on the effective date of the transaction (and
if holders were offered a choice of consideration, the type of consideration
chosen by the holders of a majority of the outstanding shares); provided,
however, that if such consideration received in the merger or sale of assets was
not solely common stock of the successor corporation or its parent, the
Committee may, with the consent of the successor corporation and the Option
holder, provide for the consideration to be received upon the exercise of the
Option, for each share of Common Stock subject to the Option, to be solely
common stock of the successor corporation or its parent equal in Fair Market
Value to the per share consideration received by holders of Common Stock in the
merger or sale of assets.

 

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12.                               Amendment.

 

The Board of Directors may amend the Plan at any time as determined to be in the
best interests of the Company.  The Board of Directors shall not, however,
without shareholder approval, increase the maximum number of shares subject to
the Plan or restrict the class of management and other key employees eligible to
be awarded Stock Grants, Restricted Stock or Options under the Plan.

 

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