EXHIBIT 10.2

FORM OF

SILICON GRAPHICS, INC.

MANAGEMENT INCENTIVE PLAN

NOTICE OF STOCK OPTION GRANT

 

Optionee/ Employee ID:    Shares Subject to Option:    xxx shares of common
stock, par value $.01 (“Shares”) of Silicon Graphics, Inc. (the “Company”). Type
of Option:    Nonqualified Stock Option Exercise Price per Share:    Date of
Grant:    Date Exercisable:    This option may be exercised to the extent it is
vested. Vesting:   

Time Vesting. This option shall vest with respect to 25% of the Shares on the
anniversary of the Date of Grant, and with respect to an additional 6.25%
following the completion of each three-month period thereafter until fully
vested - so that this option shall be fully vested 48 months after the Date of
Grant.

 

Termination without Cause. The unvested portion of this option shall expire
immediately upon the date the Optionee’s Service terminates without Cause,
unless the Company pays the Optionee severance in which case this option shall
continue to vest during any severance period so long as the Optionee does not
violate the terms of the severance agreement between the Company and the
Optionee, or in the absence of any such agreement, so long as the Optionee does
not breach any Company policies in effect on the date Service terminates that
protect the Company’s business and confidential information.

 

Resignation. The unvested portion of this option shall expire immediately on the
date the Optionee’s Service terminates due to the Optionee’s resignation.

 

Termination for Cause. This entire option shall be forfeited (regardless if then
vested) on the date the Optionee’s Service terminates for Cause (or if Cause
exists on the date Service terminates).

Accelerated Vesting:   

Death/Disability. This option (or any unvested percentage thereof) shall become
100% vested upon the Optionee’s termination of Service due to the Optionee’s
death or Disability.

 

Change in Control. This option (or any unvested percentage thereof) shall become
100% vested upon a Change in Control unless the option is assumed, converted or
replaced by the continuing entity in which case this option (or its successor)
shall become 100% vested upon the Optionee’s termination of employment without
Cause within 12 months following the Change in Control (or following Termination
of Service due to death or Disability, as provided above).

Expiration Date:    This option shall expire on the earliest of the following
dates: (i) November 30, 2013, (ii) one year following termination of Service due
to the Optionee’s death or Disability, (iii) 90 days following termination of
Service without Cause (or if an option has vested following such termination of
Service, 90 days following such vesting date), (iv) 30 days following the
Optionee’s termination of Service due to the Optionee’s resignation (to the
extent then vested), and (v) the date Optionee’s Service terminates for Cause
(or if Cause exists on such date).

 

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This option is granted under and governed by the terms and conditions of Silicon
Graphics, Inc. Management Incentive Plan and the related Stock Option Agreement,
reference number 001-SO, both of which are hereby made a part of this document.
Capitalized terms used but not defined in this Notice of Stock Option Grant
shall have the meanings assigned to them in the above-referenced documents.

 

SILICON GRAPHICS, INC. By:  

 

 

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FORM OF

SILICON GRAPHICS, INC.

MANAGEMENT INCENTIVE PLAN

STOCK OPTION AGREEMENT

REFERENCE 001

SECTION 1. GRANT OF OPTION.

(a) Option. On the terms and conditions set forth in this Agreement and each
Notice of Stock Option Grant referencing this Agreement (the “Notice”), the
Company grants to the Optionee on the Date of Grant an option to purchase at the
Exercise Price a number of shares of Common Stock, all as set forth in the
Notice. Each such Notice, together with this referenced Agreement, shall be a
separate option governed by the terms of this Agreement. This option is intended
to be a Nonqualified Stock Option.

(b) Plan and Defined Terms. This option is granted under and subject to the
terms of the Plan, which is incorporated herein by this reference. Capitalized
terms are defined in Section 8 of this Agreement.

SECTION 2. RIGHT TO EXERCISE.

Subject to the conditions set forth in this Agreement, all or part of this
option may be exercised prior to its expiration at the time or times set forth
in the vesting provisions of the Notice.

SECTION 3. TRANSFER OR ASSIGNMENT OF OPTION.

(a) Generally. This option shall be exercisable during the Optionee’s lifetime,
only by the Optionee. Except as otherwise provided in subsection (b) below, this
option and the rights and privileges conferred hereby shall not be sold, pledged
or otherwise transferred (whether by operation of law or otherwise) other than
by will or the laws of descent and distribution and shall not be subject to sale
under execution, attachment, levy or similar process.

(b) Permitted Transfers. The Optionee shall be permitted to transfer this
option, in connection with his or her estate plan, to the Optionee’s spouse,
siblings, parents, children and grandchildren or a charitable organization that
is exempt under Section 501(c)(3) of the Code or to trusts for the benefit of
such persons or partnerships, corporations, limited liability companies or other
entities owned solely by such persons, including trusts for such persons or to
the Optionee’s former spouse in accordance with a domestic relations order.

SECTION 4. EXERCISE PROCEDURES.

(a) Notice of Exercise. This Option shall be exercisable by written notice
signed by the Optionee and delivered to the Company’s Employee Stock Services
group or by using the

 

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electronic methods approved from time to time by Employee Stock Services
(currently www.optionslink.com). If an electronic exercise method is not chosen,
such notice shall be in the form of Exhibit A (Stock Exercise Request) found at
the Employee Stock Services’ website (currently
http://www-finance.corp.sgi.com/stock/) or available upon request from such
group. In the event that this option is being exercised by the Optionee’s
representative or a permitted Transferee, the notice shall be accompanied by
proof (satisfactory to the Company) of the representative’s right to exercise
this option.

(b) Method of Payment. Upon exercise of the notice, the Optionee shall either

(i) Acquire the Common Stock - Make payment of the full amount of the Purchase
Price plus any applicable withholding in cash, check or other readily available
funds,

(ii) Cashless Exercise – Exercise pursuant to the Company’s approved cash-less
exercise procedure.

(iii) Alternate Method – At the sole discretion, of the Committee, pay all or
any part of the Purchase Price and any applicable withholding by an alternate
method approved by the Committee. Should the Committee exercise its discretion
to permit the Optionee to exercise this option in whole or in part in accordance
with an alternate method, it shall have no obligation to permit such alternative
exercise with respect to the remainder of this option or with respect to any
other option to purchase shares of Common Stock held by the Optionee.

(c) Issuance of Common Stock. If the Optionee exercises this option pursuant to
Section 4(b)(i) of this Agreement, the Company shall cause to be issued a
certificate or certificates for the shares of Common Stock as to which this
option has been exercised, registered in the name of the person exercising this
option (or in the names of such person and his or her spouse as community
property or as joint tenants with right of survivorship).

(d) Cashless Exercise. If the Optionee exercises this option pursuant to
Section 4(b)(ii) of this Agreement, the Optionee will receive either the net
number of shares of Common Stock after taking into account both the Purchase
Price and any required tax withholding, fees and commissions, or an amount in
cash equal to the amount realized upon the sale of such shares of Common Stock
after fees and commissions. No fractional shares of Common Stock will be issued.
The Company will pay cash in respect of fractional shares of Common Stock.

(e) Withholding Requirements. The Company may withhold any tax (or other
governmental obligation) as a result of the exercise of this option, as a
condition to the exercise of this option, and the Optionee shall make
arrangements satisfactory to the Company to enable it to satisfy all such
withholding requirements.

(f) Compliance with Law. This option may not be exercised and no shares of
Common Stock will be issued pursuant to the exercise of this option unless each
such exercise and

 

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each resulting issuance of shares of Common Stock complies with all relevant
provisions of law and the requirements of any stock exchange upon which the
shares of Common Stock may then be listed.

SECTION 5. TERM AND EXPIRATION.

(a) Basic Term. Subject to earlier termination in accordance with subsection
(b) below, the exercise period of this option shall expire seven (7) years after
the date it is granted except in the event of the Optionee’s death, in which
case, this option shall expire on the anniversary of the Optionee’s death.

(b) Termination of Service. If the Optionee’s Service terminates for any reason,
then the exercise period for this option shall expire as provided in the Notice.

SECTION 6. ADJUSTMENT OF SHARES OF COMMON STOCK.

If there shall be any change in the Common Stock of the Company, through merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
reverse stock split, split up, spinoff, combination of shares, exchange of
shares, dividend in kind or other like change in capital structure or
distribution (other than normal cash dividends) to shareholders of the Company,
the Company shall adjust this option such that it shall thereafter be
exercisable for such securities, cash and/or other property as would have been
received in respect of the Common Stock subject to this option had it been
exercised in full immediately prior to such change or distribution. Such an
adjustment shall be made successively each time any such change shall occur. In
the event of any such change or distribution or any extraordinary dividend or
distribution of cash or other assets, the Company shall adjust the number and
kind of shares of Common Stock subject to this option and the Exercise Price, to
prevent dilution or enlargement of the Optionee’s rights under this option.

SECTION 7. MISCELLANEOUS PROVISIONS.

(a) Rights as a Shareholder. Neither the Optionee nor the Optionee’s
representative shall have any rights as a shareholder with respect to any shares
of Common Stock subject to this option until the Optionee or the Optionee’s
representative becomes entitled to receive such shares of Common Stock by
(i) filing a notice of exercise, and (ii) paying the Purchase Price as provided
in this Agreement.

(b) Tenure. Nothing in the Notice, Agreement or Plan shall confer upon the
Optionee any right to continue in Service for any period of specific duration or
interfere with or otherwise restrict in any way the rights of the Company (or
any Parent or Subsidiary employing or retaining the Optionee) or of the
Optionee, which rights are hereby expressly reserved by each, to terminate his
or her Service at any time and for any reason, with or without cause.

(c) Notification. Any notification required by the terms of this Agreement shall
be given in writing and shall be deemed effective upon personal delivery or upon
deposit with the United States Postal Service, by registered or certified mail,
with postage and fees

 

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prepaid. A notice shall be addressed to the Company at its principal executive
office and to the Optionee at the address that he or she most recently provided
in writing to the Company.

(d) Entire Agreement. The Notice, this Agreement and the Plan constitute the
entire contract between the parties hereto with regard to the subject matter
hereof. They supersede any other agreements, representations or understandings
(whether oral or written and whether express or implied) which relate to the
subject matter hereof.

(e) Waiver. No waiver of any breach or condition of this Agreement shall be
deemed to be a waiver of any other or subsequent breach or condition whether of
like or different nature.

(f) Successors and Assigns. The provisions of this Agreement shall inure to the
benefit of, and be binding upon, the Company and its successors and assigns and
upon the Optionee, the Optionee’s assigns and the legal representatives, heirs
and legatees of the Optionee’s estate, whether or not any such person shall have
become a party to this Agreement and have agreed in writing to be joined herein
and be bound by the terms hereof.

(g) Choice of Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, as such laws are applied to
contracts entered into and performed in such State.

SECTION 8. DEFINITIONS.

(a) “Agreement” shall mean this Stock Option Agreement.

(b) “Board of Directors” shall mean the Board of Directors of the Company, as
constituted from time to time.

(c) “Cause” shall have the meaning ascribed to it in the Optionee’s written
employment agreement, provided, that if a Optionee does not have a written
employment agreement, it shall mean that a Optionee:

(i) committed or engaged in an act of fraud, embezzlement, sexual harassment,
dishonesty or theft in connection with Optionee’s duties for the Company or any
Subsidiary;

(ii) materially breached or defaulted under an agreement or obligation under any
employment, non-disclosure or similar agreement with the Company or any
Subsidiary;

(iii) is convicted of, or pleas nolo contendere with respect to, an act of
criminal misconduct;

 

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(iv) engaged in an act of gross negligence or a willful failure to perform
Optionee’s duties or responsibilities for the Company or any Subsidiary; or

(v) failed to follow in any material respect a direction or policy of the Board.

(d) “Change in Control” shall be deemed to have occurred upon any of the
following events:

(i) Any person(s) acting together which would constitute a “group” for purposes
of Section 13(d) of the Exchange Act (other than the Company, any subsidiary, or
any “permitted holder” as defined below) shall “beneficially own” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, at least 35% of the
total voting power of all classes of capital stock of the Company entitled to
vote generally in the election of the Board; or

(ii) Either (A) “incumbent directors”, as defined below, shall cease for any
reason to constitute at least a majority of the members of the Board (for these
purposes, an “incumbent director” shall mean any member of the Board as of the
Effective Date, and any successor of a incumbent director whose election, or
nomination for election by the Company’s shareholders was approved by at least a
majority of the current directors then on the Board), or (B) at any meeting of
the shareholders of the Company called for the purpose of electing directors, a
majority of the persons nominated by the Board for election as directors shall
fail to be elected; or

(iii) Consummation of a merger or consolidation of the Company (A) in which the
Company is not the continuing or surviving corporation (other than a
consolidation or merger with a wholly-owned subsidiary of the Company in which
all shares of Common Stock outstanding immediately prior to the effectiveness
thereof are changed into or exchanged for common stock of the subsidiary) or
(B) pursuant to which all shares of Common Stock are converted into cash,
securities or other property, except in either case, a consolidation or merger
of the Company in which the holders of the shares of Common Stock immediately
prior to the consolidation or merger have, directly or indirectly, at least a
majority of the shares of Common Stock of the continuing or surviving
corporation immediately after such consolidation or merger or in which the Board
immediately prior to the merger or consolidation would, immediately after the
merger or consolidation, constitute a majority of the board of directors of the
continuing or surviving corporation; or

(iv) Consummation of a plan of complete liquidation of the Company; or

(v) The consummation of a sale or other disposition (in one transaction or a
series of transactions) of all or substantially all of the assets of the
Company.

 

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(e) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated thereunder.

(f) “Committee” shall mean the committee of the Board, as described in Section 2
of the Plan.

(g) “Common Stock” shall mean the common stock of the Company, par value $.01.

(h) “Company” shall mean Silicon Graphics, Inc., a Delaware corporation, and any
successor thereto.

(i) “Date of Grant” shall mean the date specified in the Notice, which date
shall be the later of (i) the date on which the Board or Committee resolved to
grant this option or (ii) the first day of the Optionee’s Service.

(j) “Disability” shall mean that the Optionee is unable to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months.

(k) “Employee” shall mean any individual who is a common-law employee of the
Company, a Parent or a Subsidiary.

(l) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

(m) “Exercise Price” shall mean the amount for which one share of Common Stock
may be purchased upon exercise of this option, as specified in the Notice.

(n) “Fair Market Value” shall mean with respect to the fair market value of a
share of Common Stock, the average of the high and low prices of the Common
Stock on the date of calculation (or on the last preceding trading date if
Common Stock was not traded on such date) if the Common Stock is readily
tradeable on a national securities exchange or other market system, and if the
Common Stock is not readily tradeable, Fair Market Value shall mean the amount
determined in good faith by the Committee as the fair market value of the Common
Stock upon the reasonable application of a reasonable valuation method, as
determined by the Board or Committee in good faith. Such determination shall be
conclusive and binding on all persons.

(o) “Nonqualified Stock Option” shall mean a stock option not described in
Sections 422(b) of the Code.

(p) “Notice” shall have the meaning described in Section 1(a) of this Agreement.

(q) “Optionee” shall mean the person named in the Notice.

(r) “Parent” shall mean a “parent corporation” as defined in Section 424(e) of
the Code.

(s) “Plan” shall mean the Silicon Graphics, Inc. Management Incentive Plan.

 

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(t) “Purchase Price” shall mean the Exercise Price multiplied by the number of
shares of Common Stock with respect to which this option is being exercised.

(u) “Service” shall mean service as an Employee. For any purpose under this
Agreement, Service shall be deemed to continue while the Optionee is on a bona
fide leave of absence, if such leave was approved by the Company in writing or
if continued crediting of Service for such purpose is expressly required by the
terms of such leave or by applicable law (as determined by the Company).

(v) “Subsidiary” shall mean a “subsidiary corporation” as defined in
Section 424(f) of the Code.

 

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