Exhibit 10.1


 


SILICON GRAPHICS, INC.


 


AMENDED AND RESTATED


1985 STOCK INCENTIVE PROGRAM


 


1.                                       Purposes of the Program. 
The purposes of this Stock Incentive Program are to attract and retain
the best available personnel for positions of substantial responsibility, to
provide additional incentive to the Employees and Consultants of the Company
and to promote the success of the Company’s business.


 


Options
granted hereunder may be either Incentive Stock Options or Nonstatutory Stock
Options, at the discretion of the Board and as reflected in the terms of the
written option agreement.


 


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


 


(a)                                  “Board” shall mean the Board of Directors of the Company.


 


(b)                                 “Code” means the Internal Revenue Code of 1986 as amended
from time to time and any successor thereto.


 


(c)                                  “Committee” means the Committee appointed by the Board in
accordance with paragraph (a) of Section 4 of the Program.  If at any time no Committee shall be in
office, then the functions of the Committee specified in the Program shall be
exercised by the Board.


 


(d)                                 “Common Stock” shall mean the Common Stock of the Company.


 


(e)                                  “Company” shall mean Silicon Graphics, Inc., a Delaware
corporation, or any successor corporation.


 


(f)                                    “Consultant” shall mean any person who is engaged by the
Company or any Parent or Subsidiary to render consulting services and is
compensated for such consulting services, provided the term Consultant shall
not include directors who are not compensated for their services or are paid
only a director’s fee by the Company.


 


(g)                                 “Continuous Status as an Employee or Consultant” shall mean
the absence of any interruption or termination of service as an Employee or
Consultant.  Continuous Status as an
Employee or Consultant shall not be considered interrupted in the case of sick
leave, military leave, or any other leave of absence approved by the Board;
provided that such leave is for a period of not more than 90 days or
reemployment upon the expiration of such leave is guaranteed by contract or
statute.  Moreover, in the case of
Incentive Stock Options granted after the effective date of the restatement of
this Program, and for Nonstatutory Stock Options, Continuous Status as an
Employee or


 


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Consultant shall not be
considered interrupted in the case of transfers between locations of the
Company or between the Company, its Parent, or any of its Subsidiaries or
successors.


 


(h)                                 “Director” means a member of the Board.


 


(i)                                     “Employee” shall mean any person, including officers and
directors, employed by the Company or any Parent or Subsidiary of the
Company.  The payment of a director’s fee
by the Company shall not be sufficient to constitute “employment” by the
Company.


 


(j)                                     “Exchange Act” means the Securities Exchange Act of 1934, as
amended.


 


(k)                                  “Fair Market Value” means as of any date, unless otherwise
determined by the Board or Committee in good faith, the closing sales price for
such Common Stock as quoted on the New York Stock Exchange for the date the
Option is granted (or if there are no sales on such date, then on the last
preceding business day on which there were sales), or, if the Common Stock is
not listed on the New York Stock Exchange, then (i) the last sales price per
share of Common Stock as reported by NASDAQ (or successor system) or by the
Wall Street Journal for such date, (or if there are no sales on such date, then
on the last preceding business day on which there were sales); or (ii) if the
Common Stock is listed on any other stock exchange, the closing sales price for
such Common Stock as quoted on such exchange for the date the Option is granted
(or if there are no sales for such date, then on the last preceding business
day on which there were sales); or (iii) the fair market value thereof, as
determined in any other manner adopted in good faith by the Board.


 


(l)                                     “Incentive Stock Option” shall mean an Option intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.


 


(m)                               “Nonstatutory Stock Option” shall mean an Option not intended
to qualify as an Incentive Stock Option.


 


(n)                                 “Option” shall mean a stock option granted pursuant to the
Program.


 


(o)                                 “Optioned Stock” shall mean the Common Stock subject to an
Option.


 


(p)                                 “Optionee” shall mean an Employee or Consultant who receives
an Option.


 


(q)                                 “Parent” shall mean a “parent corporation”, whether now or
hereafter existing, as defined in Section 424(e) of the Code.


 


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(r)                                    “Program” shall mean this 1985 Stock Incentive Program.


 


(s)                                  “Subsidiary” shall mean a “subsidiary corporation”, whether
now or hereafter existing, as defined in Section 424(f) of the Code.


 


In addition, the terms “Tax
Date” and “Insiders” shall have the meanings set forth in Section 10.


 


3.                                       Stock Subject to the Program.  Subject to the provisions of Section 11 of
the Program, the maximum aggregate number of shares under the Program is
5,500,000 shares of Common Stock.  The
shares may be authorized, but unissued, or reacquired Common Stock.


 


If an Option
should expire or become unexercisable for any reason without having been
exercised in full, then such shares of Common Stock shall, unless the Program
shall have been terminated, become available for future grant or sale under the
Program.  Notwithstanding the above,
however, if shares of Common Stock are issued upon exercise of an Option and
later repurchased by the Company, such shares of Common Stock shall not become
available for future grant or sale under the Program.


 


4.                                       Administration of the Program.


 


(a)                                  Procedure.  The
Program shall be administered by (i) the Board, if the Board may administer the
Program in compliance with Rule 16b-3 promulgated under the Exchange Act, or
any successor rule thereto (“Rule 16b-3”), with respect to a plan intended to
qualify under Rule 16b-3 as a discretionary plan, or (ii) a Committee
designated by the Board to administer the Program, which Committee shall be
constructed to permit the Program to comply with Rule 16b-3 with respect to a
plan intended to qualify thereunder as a discretionary plan.  Once appointed, the Committee shall continue
to serve until otherwise directed by the Board. 
From time to time the Board may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause) and
appoint new members in substitution therefor, fill vacancies, however caused,
and remove all members of the Committee and thereafter directly administer the
Program, all to the extent permitted by Rule 16b-3 with respect to a plan
intended to qualify thereunder as a discretionary plan.


 


(b)                                 Authority.  Subject to
the general purposes, terms, and conditions of the Program and to the direction
of the Board, the Committee, if there be one, shall have full power to
implement and carry out the Program including, but not limited to, the
following:


 


(i)                                     to
select the officers, Consultants and other key Employees of the Company and its
Subsidiaries to whom Options may from time to time be granted hereunder;


 


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(ii)                                  to
determine whether and to what extent Options are granted hereunder;


 


(iii)                               to
determine the number of shares of Common Stock to be covered by each such
Option granted hereunder;


 


(iv)                              to
approve forms of agreement for use under the Program;


 


(v)                                 to
determine the terms and conditions, not inconsistent with the terms of the
Program, of any Option granted hereunder (including, but not limited to, the
share price and any restriction or limitation, or any vesting or exercise
acceleration or waiver of forfeiture restrictions regarding any Option and/or
the shares of Common Stock relating thereto, based in each case on such factors
as the Committee shall determine, in its sole discretion);


 


(vi)                              to
determine the form of payment that will be acceptable consideration for
exercise of an Option granted under the program;


 


(vii)                           to
determine whether, to what extent and under what circumstances Common Stock
under this Program shall be deferred either automatically or at the election of
the participant (including providing for and determining the amount (if any) of
any deemed earnings on any deferred amount during any deferral period);


 


(viii)                        to
determine the Fair Market Value of the Common Stock; and


 


(ix)                                to
reduce the exercise price of any Option to the then current Fair Market Value
if the Fair Market Value of the Common Stock covered by such Option shall have
declined since the date the Option was granted.


 


The Committee
shall have the authority to construe and interpret the Program, to authorize
any person to execute on behalf of the Company any instrument required to
effectuate the grant of an Option previously made by the Committee, to
prescribe, amend and rescind rules and regulations relating to the Program, and
to make all other determinations necessary or advisable for the administration
of the Program.  All decisions,
determinations and interpretations of the Committee shall be final and binding
on all Optionees and any other holders of any Options granted under the
Program.


 


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5.                                       Eligibility.


 


(a)                                  Any
Employee or Consultant of the Company or a subsidiary whom the Committee deems
to have the potential to contribute to the future success of the Company shall
be eligible to receive Options under the Program; provided, however, that
Incentive Stock Options may be granted only to Employees.


 


(b)                                 Each
Option shall be designated in the written option agreement as either an
Incentive Stock Option or a Nonstatutory Stock Option.  However, notwithstanding such designations,
to the extent that the aggregate fair market value of the shares with respect
to which Options designated as Incentive Stock Options are exercisable for the
first time by any Optionee during any calendar year (under all plans of the
Company) exceed $100,000, such Options shall be treated as Nonstatutory Stock
Options.


 


(c)                                  For
purposes of Section 5(b), Options shall be taken into account in the order in
which they were granted, and the fair market value of the shares shall be
determined as of the time the Option with respect to such shares is granted.


 


(d)                                 The
Program shall not confer upon any participant any right with respect to
continuation of employment or consulting relationship with the Company, nor
shall it interfere in any way with his or her right or the Company’s right to
terminate his or her employment or consulting relationship at any time.


 


6.                                       Term of Program.  The
restatement of the Program shall become effective upon the earlier to occur of
its adoption by the Board of Directors or its approval by vote of the
stockholders of the Company as described in Section 17 of the Program.  It shall continue in effect for a term of ten
(10) years unless sooner terminated under Section 13 of the Program.


 


7.                                       Option Exercise Price and Consideration of Shares.


 


(a)                                  The
per share exercise price for the shares to be issued pursuant to exercise of an
Option shall be such price as is determined by the Committee, and may be less
than, equal to or greater than the fair market value of the Common Stock on the
date the Option is granted; provided that in no event shall the exercise price
of an Incentive Stock Option be less than 100% of the fair market value per
share on the date of grant.  In the case
of an Incentive Stock Option granted to an Employee who, at the time of grant
of such Incentive Stock Option, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price shall be no less than 110% of the
fair market value per Share on the date of grant.


 


(b)                                 The
Option price, which shall be determined by the Committee, in the case of an
Incentive Stock Option shall in no event be less than one hundred percent


 


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(100%) of the Fair Market Value
of the Common Stock at the time the Option is granted.  The Option agreement shall specify the number
of shares of Common Stock to which it pertains.


 


(c)                                  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 may consist entirely of cash, check, other shares of Common Stock which (i)
either have been owned by the Optionee for more than six (6) months on the date
of surrender or were not acquired directly or indirectly, from the Company, and
(ii) have a Fair Market Value on the date of surrender equal to the aggregate
exercise price of the shares as to which said Option shall be exercised, or any
combination of such methods of payment, or such other consideration and method
of payment for the issuance of shares to the extent permitted under applicable
state corporation law; provided, however, that for Incentive Stock Options
granted prior to the effective date of the restatement of this Program, no
optionee shall be entitled to pay for shares to be issued upon exercise of such
Incentive Stock Options by exchanging shares of the Company which were
previously acquired as “statutory option stock,” as that term is defined in
Section 424 of the Code, until the applicable holding period, as prescribed by
the Code, has been satisfied.  In making
its determination as to the type of consideration to accept, the Committee
shall consider if acceptance of such consideration may be reasonably expected
to benefit the Company.


 


8.                                       Options.


 


(a)                                  Term of Option.  The
Committee, in its discretion, may grant options to eligible participants and
shall determine whether such Options shall be Incentive Stock Options or
Nonstatutory Stock Options.  The term of
each Option shall be ten (10) years from the date of grant thereof or such
shorter term as may be provided in the stock option agreement.  However, in the case of an Option granted to
an Optionee who, at the time the Option is granted, owns stock representing
more than ten percent (10%) of the voting power of all classes of stock of the
Company or any Subsidiary, the term of the Option shall be five (5) years from
the date of grant thereof or such shorter time as may be provided in the stock
option agreement.


 


(b)                                 Exercise of Option.


 


(i)                                     Procedure for Exercise; Rights as a Stockholder.  Any Option granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Committee, including performance criteria with respect to the Company and/or
the Optionee, and shall be permissible under the terms of the Program;
provided, however, that an Incentive Stock Option granted prior to January 1,
1987 shall not be exercisable while there is outstanding any incentive stock
option which was granted, before the granting of such Incentive Stock Option,
to the same Optionee to purchase stock of the Company or any Subsidiary, or any
predecessor corporation of such


 


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corporations.  For purposes of this provision, an incentive
stock option shall be treated as outstanding until such option is exercised in
full or expires by reason of lapse of time.


 


An Option may
not be exercised for a fraction of a Share.


 


An Option
shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Option by the person
entitled to exercise the Option and full payment for the shares with respect to
which the Option is exercised has been received by the Company.  Full payment may, as authorized by the
Committee, consist of any consideration and method of payment allowable under
Section 7(c) of the Program.  Until the
issuance (as evidenced by the appropriate entry on the books of the Company or
of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such shares, which issuance shall be made as soon as is practicable,
no right to vote or receive dividends or any other rights as a stockholder
shall exist with respect to the Optioned Stock, notwithstanding the exercise of
the Option.  The Company shall issue (or
cause to be issued) such stock certificate promptly upon exercise of the
Option.  No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
stock certificate is issued, except as provided in Section 11 of the Program.


 


Exercise of an
Option in any manner shall result in a decrease in the number of shares which
thereafter may be available, both for purposes of the Program and for sale
under the Option, by the number of shares as to which the Option is exercised.


 


(ii)                                  Termination of Status as an Employee or Consultant.  In the event of termination of an Optionee’s
Continuous Status as an Employee or Consultant, such Optionee may, but only
within such period of time not exceeding three (3) months, as is determined by
the Board, after the date of such termination (but in no event later than the
date of expiration of the term of such Option as set forth in the Option
Agreement), exercise his or her Option to the extent that he or she was
entitled to exercise it at the date of such termination.  To the extent that he or she was not entitled
to exercise the Option at the date of such termination, or if he or she does
not exercise such Option (which he or she was entitled to exercise) within the
time specified herein, the Option shall terminate and any unexercised shares
shall be returned to the Program.


 


(iii)                               Disability of Optionee. 
Notwithstanding the provisions of Section 8(b)(ii) above, in the event
of termination of an Optionee’s Continuous Status as an Employee or Consultant,
as a result of his or her total and permanent disability (as defined in Section
22(e)(3) of the Code, “Disability”), he or she may, but only within one (1)
year from the date of such termination (but in no event later than the date of
expiration of the term of such Option as set forth in the Option Agreement),
exercise his or her Option to the extent he or she was entitled to exercise it
at the date of such termination.  To the
extent that he or she was not entitled to exercise the Option at the date of
termination, or if he or she does not exercise such Option (which he or she was
entitled to exercise) within the time specified herein, the Option shall
terminate.


 


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(iv)                              Death of Optionee. 
Unless otherwise set forth in the Option Agreement, in the event of the
death of an Optionee:


 


(A)                              during
the term of the Option who is at the time of his or her death an Employee or
Consultant of the Company and who shall have been in Continuous Status as an
Employee or Consultant since the date of grant of the Option, the Option may be
exercised, at any time within one (1) year following the date of death, by the
Optionee’s estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, to the extent that he or she was entitled to
exercise it at the date of death; or


 


(B)                                within
three (3) months after the termination of Continuous Status as an Employee or
Consultant for any reason other than for cause or a voluntary termination
initiated by the Optionee, the Option may be exercised, at any time within one
(1) year following the date of death, by the Optionee’s estate or by a person
who acquired the right to exercise the Option by bequest or inheritance, but
only to the extent of the right to exercise that had accrued at the date of
termination.


 


(c)                                  Rule 16b-3.  Options
granted to persons subject to Section 16(b) of the Exchange Act must comply
with Rule 16b-3 and shall contain such additional conditions or restrictions as
may be required thereunder to qualify for the maximum exemptions of the
Exchange Act with respect to Program transactions.


 


9.                                       Transferability
of Options.  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 Optionee, only by the Optionee. 
The Committee may, in the manner established by the Committee, provide
for the transfer, without payment of consideration, of an Option by the
Optionee to the Optionee’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 9, the Optionee’s “immediate family” shall
include any child, stepchild, grandchild, 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 Optionee’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
Optionee) control the management of assets, and any other entity in which these
persons (or the Optionee) 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.


 


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10.                                 Stock Withholding to Satisfy Withholding Tax Obligations.  When a participant incurs tax liability in
connection with the exercise of an Option which tax liability is subject to tax
withholding under applicable tax laws, and the participant is obligated to pay
the Company an amount required to be withheld under applicable tax laws, the
participant may satisfy the withholding tax obligation by electing to have the
Company withhold from the shares to be issued that number of shares having a
Fair Market Value equal to the amount required to be withheld determined on the
date that the amount of tax to be withheld is to be determined (the “Tax Date”).


 


All elections
by a participant to have shares withheld for this purpose shall be made in
writing in a form acceptable to the Committee and shall be subject to the
following restrictions:


 


(i)                                     the
election must be made on or prior to the applicable Tax Date;


 


(ii)                                  once
made, the election shall be irrevocable as to the particular shares as to which
the election is made;


 


(iii)                               all
elections shall be subject to the consent or disapproval of the Committee;


 


(iv)                              if
the participant is an executive officer or Director of the Company or other
person whose transactions in Common Stock are subject to Section 16(b) of the
Exchange Act (collectively “Insiders”), the election may not be made within six
months of the date of grant of the Option; provided, however, that this
limitation shall not apply in the event that death or Disability of the
participant occurs prior to the expiration of the six-month period; and


 


(v)                                 if
the participant is an Insider, the election must be made either six months
prior to the Tax Date (as determined in accordance with Section 83 of the Code,
as amended) or in the 10-day period beginning on the third day following the
release of the Company’s quarterly or annual summary statement of sales or
earnings.


 


In the event
the election to have shares withheld is made by a participant who is an Insider
and the Tax Date is deferred because no election is filed under Section 83(b)
of the Code, as amended, the participant shall receive the full number of
shares with respect to which the exercise occurs, but such participant shall be
unconditionally obligated to tender back to the Company the proper number of
shares on the Tax Date.


 


11.                                 Adjustments Upon Changes in Capitalization or Merger.  Subject to any required action by the
stockholders of the Company, the number of shares of Common Stock covered by
each outstanding Option and the number of shares of Common Stock which have
been authorized for issuance under the Program but as to which no Options have
yet been granted or which have been returned to the Program upon cancellation
or


 


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expiration of an Option, as
well as the price per share of Common Stock covered by each such 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 Board, 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.


 


In the event
of the proposed dissolution or liquidation of the Company, the Option will
terminate immediately prior to the consummation of such proposed action, unless
otherwise provided by the Board.  The
Board may, in the exercise of its sole discretion in such instances, declare
that any Option shall terminate as of a date fixed by the Board and give each
Optionee the right to exercise his or her Option as to all or any part of the
shares subject to the Option, including as to shares as to which the Option
would not otherwise be exercisable.  In
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, the
Option shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless the Board determines, in the exercise of its sole discretion and in lieu
of such assumption or substitution, that the Optionee shall have the right to
exercise the Option as to all of the Optioned Stock, including shares as to
which the Option would not otherwise be exercisable.  If the Board makes an Option fully exercisable
in lieu of assumption or substitution in the event of a merger or sale of
assets, the Board shall notify the Optionee that the Option shall be fully
exercisable for a period of thirty (30) days from the date of such notice, and
the Option will terminate upon the expiration of such period.


 


12.                                 Time of Granting Options. 
The date of grant of an Option shall, for all purposes, be the date on
which the Board or Committee makes the determination granting such Option.  Notice of the determination shall be given to
each Employee or Consultant to whom an Option is so granted within a reasonable
time after the date of such grant.


 


13.                                 Amendment and Termination of the Program.


 


(a)                                  Amendment and Termination. 
The Board may at any time amend, alter, suspend or discontinue the
Program, but no amendment, alteration, suspension or discontinuation shall be
made which would impair the right of any participant under any grant
theretofore made, without his or her consent. 
In addition, to the extent necessary and desirable to comply with Rule
16b-3 under the Exchange Act or Section 422 of the


 


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Code (or any applicable law or
regulation), the Company shall obtain stockholder approval of any Program
amendment in such a manner and to such a degree as required.


 


(b)                                 Effect of Amendment or Termination.  Any such amendment or termination of the
Program shall not affect Options already granted and such Options shall remain
in full force and effect as if this Program had not been amended or terminated,
unless mutually agreed otherwise between the participant and the Board, which
agreement must be in writing and signed by the participant and the Company.


 


14.                                 Conditions Upon Issuance of Shares.  Shares shall not be issued pursuant to the
exercise of an Option unless the exercise of such Option and the issuance and
delivery of such shares pursuant thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933,
as amended, the Exchange Act, the rules and regulations promulgated thereunder,
and the requirements of any stock exchange upon which the shares may then be
listed, and shall be further subject to the approval of counsel for the Company
with respect to such compliance.


 


15.                                 Reservation of Shares. 
The Company, during the term of this Program, will at all times reserve
and keep available such number of shares as shall be sufficient to satisfy the
requirements of the Program.


 


Inability of
the Company to obtain authority from any regulatory body having jurisdiction,
which authority is deemed by the Company’s counsel to be necessary to the
lawful issuance and sale of any shares hereunder, shall relieve the Company of
any liability in respect of the failure to issue or sell such shares as to
which such requisite authority shall not have been obtained.


 


16.                                 Option Agreements. 
Options shall be evidenced by an Incentive Stock Option Agreement, in
the form attached hereto as Exhibit A, and by a Nonstatutory Stock Option
Agreement, in the form attached hereto as Exhibit B.  Such agreements shall be subject to amendment
from time to time as shall be determined by the Board or the Committee.


 


17.                                 Stockholder Approval. 
Continuance of the Program shall be subject to approval by the
stockholders of the Company within twelve months before or after (a) the date
the Program is adopted and, (b) the date a restatement of the Program requiring
stockholder approval pursuant to applicable state and federal law is
adopted.  Such stockholder approval and
approval for any amendment to the Program requiring stockholder approval
pursuant to Section 13 of the Program, shall be obtained in the degree and
manner required under the applicable state and federal law.


 


18.                                 Information to Optionees. 
The Company shall provide to each Optionee, during the period for which
such Optionee has one or more Options outstanding, such information and
reports, if any, as are required to be provided by applicable securities and
tax laws and regulations.


 


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