Exhibit 10.3


 


SILICON GRAPHICS, INC.


AMENDED AND RESTATED


1993 LONG-TERM INCENTIVE STOCK PLAN


 


1.                                       Purpose
of the Plan.  The purpose of the
Silicon Graphics, Inc. 1993 Long-Term Incentive Stock Plan (the “Plan”)
is to promote the long-term success of Silicon Graphics, Inc. (“SGI”) and
to increase stockholder value by providing its eligible employees, consultants,
officers and directors with incentives to create excellent performance and to
continue service with the Company, its subsidiaries and affiliates. Both by
encouraging such employees, consultants, officers and directors to become
owners of Common Stock and by providing actual ownership through Plan awards,
it is intended that Plan participants will view the Company from an ownership
perspective. Additionally, the Company believes the Plan will assist in
attracting and retaining people of the highest caliber.


 


2.                                       Eligibility.  SARs and Stock Awards (collectively “Rights”)
and Nonstatutory Stock Options may be granted to Employees, Consultants and
Directors. Options that are intended to qualify as incentive stock options
within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”) or any successor section (“Incentive Stock Options”) may
be granted only to Employees. If otherwise eligible, an Employee, Consultant or
Director who has been granted an Option or Right may be granted additional
Options or Rights.


 


3.                                       Stock
Subject to the Plan.


 


(a)                                  Subject
to Section 12 of the Plan, the maximum aggregate number of shares of Common
Stock of the Company (“shares”) that may be issued pursuant to Options and
Rights granted to participants under the Plan shall be the sum of 3.5% of the
issued shares at June 30 of each of the Company’s fiscal years from 1993
through 1997, plus any unused carried forward shares and any forfeited shares;
provided, however, that the number of shares that may be transferred to
participants under the Plan in any one fiscal year of the Company shall not
exceed 3.5% of the issued shares determined as of the June 30 of the
immediately preceding fiscal year plus any unused carried forward shares and
any forfeited shares. The term “shares” shall include shares that have been
subject to SARs that are exercised for cash, whether granted in connection with
or independently of Options. For purposes of this Section 3, the following
apply: (i) the number of “issued shares” at June 30 of a fiscal year
means the number of shares outstanding at that date, plus all shares reacquired
by the Company during the preceding fiscal year, whether or not such shares are
designated as retired or treasury shares; (ii) ”unused shares” means any
shares available from a prior Plan year, based on the percentage of issued
shares calculation, which were not transferred, plus any shares reserved for
grants which have not been covered by grants under prior shareholder-approved
plans other than the 1985 Stock Incentive Program (“Prior Plans”) which will be
terminated as of the effective date of the Plan; and (iii) ”forfeited
shares”


 


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means any shares issued
pursuant to awards made under the Plan which are forfeited to the Company
pursuant to award terms and conditions, plus any shares covered by grants made
under Prior Plans which are not issued to participants or are returned to the
Company because of the cancellation, expiration or forfeiture of a grant made
under the Prior Plans; provided, however, that the term “forfeited shares”
shall not include shares as to which the original recipient received any
benefits of ownership (other than voting rights).


 


(b)                                 In
no event, however, except as subject to Section 12 of the Plan, shall more
than 23,025,560 of the shares eligible for issuance under the Plan be issued
upon the exercise of Incentive Stock Options under the Plan. Additionally, the
maximum number of shares which may be issued pursuant to Stock Awards
contemplated by Section 8 of the Plan shall be limited to 3,800,000 shares
(approximately 3% of the number of shares outstanding at June 30, 1993).


 


(c)                                  The
following limitations will apply to grants of Options or SARs under the Plan:


 


(i)                                     no
Employee will be granted Options or SARs under the Plan to purchase more than
2,000,000 shares over the term of the Plan, provided that, if the number of shares
available for issuance under Section 3(a) of the Plan is increased, the
maximum number of Options or SARs that any Employee may be granted also
automatically will increase by an amount equal to 500,000 shares for each
additional fiscal year in which shares are allocated for issuance under the
Plan.


 


The foregoing
limitations set forth in this Section 3(c) are intended to satisfy the
requirements applicable to Options and SARs intended to qualify as “performance-based
compensation” within the meaning of Section 162(k) of the Code. In the
event that the Committee determines that such limitations are not required to
qualify Options or SARs as performance-based compensation, the Committee
may modify or eliminate such limitations.


 


(d)                                 For
purposes of Section 3(a), except as to forfeited shares, the payment of
cash dividends and dividend equivalents in conjunction with outstanding awards
shall not be counted against the shares available for issuance.


 


(e)                                  Any
shares issued under the Plan may consist in whole or in part of authorized and
unissued shares or of treasury shares, and no fractional shares shall be issued
under the Plan. Cash may be paid in lieu of any fractional shares in settlement
of awards under the Plan.


 


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4.                                       Plan
Administration.


 


(a)                                  Committees.


 


(i)                                     Multiple Administrative Bodies.  The Plan may be administered by different
committees with respect to different groups of Employees, Consultants and
Directors.  Committee shall mean a
committee of Directors appointed by the Board of Directors of the Company (the “Board”).


 


(ii)                                  Section 162m.  To the
extent that the Company determines it to be desirable to qualify Options
granted hereunder as “performance-based compensation” within the meaning of
Section 162(m) of the Code, the Plan shall be administered by a committee of
two or more “outside directors” within the meaning of Section 162(m) of the
Code.


 


(iii)                               Rule 16b-3.  To the
extent desirable to qualify transactions hereunder as exempt under Rule 16b-3,
the transactions contemplated hereunder shall be structured to satisfy the
requirements for exemption under Rule 16b-3.


 


(iv)                              Other Administration. 
Other than as provided above, the Plan shall be administered by (A) the
Board or (B) a Committee, which committee shall be constituted to satisfy
applicable laws.


 


(b)                                 Powers of the Committee. 
The Committee shall have full and exclusive power to interpret the Plan
and to adopt such rules, regulations and guidelines for carrying out the Plan
as it may deem necessary or proper. This power includes, but is not limited to,
selecting award recipients, establishing all award terms and conditions and
adopting modifications, amendments and procedures, including subplans and the
like as may be necessary to comply with provisions of the laws and applicable
regulatory rulings of countries in which the Company operates in order to
assure the viability of awards granted under the Plan and to enable
participants employed in such countries to receive advantages and benefits
under the Plan and such laws and rulings.


 


(c)                                  Effect
of Committee’s Decision.  The
Committee’s decisions, determinations and interpretations shall be final and
binding on all Optionees and any other holders of Options or Rights.


 


(d)                                 Tax Withholding.  The
Committee may, in its discretion, allow Optionees to satisfy withholding tax
obligations by electing to have the Company withhold from the shares to be
issued upon exercise of an Option that number of shares having a Fair Market
Value of the shares to be withheld shall be determined on the date that the
amount of tax to be withheld is to be determined.  All elections by an Optionee to have shares
withheld for this purpose shall be made in such form and under such conditions
as the Committee may deem necessary or advisable.


 


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5.                                       Duration
of the Plan.  The Plan shall remain
in effect until terminated by the Board under the terms of the Plan, provided
that in no event may Incentive Stock Options be granted under the Plan later
than 10 years from the date the Plan was adopted by the Board.


 


6.                                       Awards.  The Committee shall determine the type or
types of award(s) to be made to each participant. Awards may be granted singly,
in combination or in tandem. Awards also may be made in combination or in
tandem with, in replacement of, as alternatives to, or as the payment form for
grants or rights under any other employee or compensation plan of the Company,
including the plan of any acquired entity. The types of awards that may be
granted under the Plan are Options, SARs and Stock Awards.


 


7.                                       Options
and SARs.


 


(a)                                  Options;
Number of Shares.  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. Each Option shall be evidenced by a Notice of Grant which shall
specify the number of shares to which it pertains, expressly identify the
Options as Incentive Stock Options or as Nonstatutory Stock Options and be in
such form and contain such provisions as the Committee shall from time to time
deem appropriate. Without limiting the foregoing, the Committee may at any time
authorize the Company, with the consent of the respective recipients, to issue
new Options or Rights in exchange for the surrender and cancellation of
outstanding Options or Rights. Option agreements shall contain the following
terms and conditions:


 


(i)                                     Exercise Price.  The
per share exercise price for the shares issuable pursuant to an Option shall be
such price as is determined by the Committee; provided, however, that in no
event shall the price of an Option or SAR be less than 100% of the Fair Market
Value of the Common Stock on the date the Option or SAR is granted, subject to
any additional conditions set out in Subsection 7(a)(v) below.


 


(ii)                                  Waiting Period and Exercise Dates.  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 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.


 


(iii)                               Form of Payment.  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:


 


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(1)                                  cash;


 


(2)                                  check;


 


(3)                                  other
shares which (a) in the case of shares acquired upon exercise of an
option, have been owned by the Optionee for more than six months on the date of
surrender, and (b) have a 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 to the
extent permitted by Applicable Laws.


 


(iv)                              Reload Options.  The
Committee may grant Options that provide for the award of a new Option when the
exercise price has been paid by tendering shares to the Company, subject to
such terms and conditions as the Committee shall determine.


 


(v)                                 Special Incentive Stock Option Provisions.  In addition to the foregoing, Options granted
under the Plan which are intended to be Incentive Stock Options shall be
subject to the following terms and conditions:


 


(1)                                  Dollar Limitation.  To
the extent that the aggregate Fair Market Value of (a) the shares with respect
to which Options designated as Incentive Stock Options plus (b) the shares of
stock of the Company with respect to which other Incentive Stock Options are
exercisable for the first time by an Optionee during any calendar year under
all plans of the Company exceeds $100,000, such Options shall be treated as
Nonstatutory Stock Options. For purposes of the preceding sentence, (a) Options
shall be taken into account in the order in which they were granted, and
(b) the Fair Market Value of the shares shall be determined as of the time
the Option or other Incentive Stock Option is granted.


 


(2)                                  10% Stockholder.  If
any Optionee to whom an Incentive Stock Option is to be granted pursuant to the
provisions of the Plan is, on the date of grant, an individual described in
Section 422(b)(6) of the Code, then the following special provisions shall
be applicable to the Option granted to such individual:


 


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(a)                                  The
per share Option price of shares subject to such Incentive Stock Option shall
not be less than 110% of the Fair Market Value of Common Stock on the date of
grant; and


 


(b)                                 The
Option shall not have a term in excess of five (5) years from the date of
grant.


 


Except as
modified by the preceding provisions of this subsection 7(a)(v) and except as
otherwise limited by Section 422 of the Code, all of the provisions of the
Plan shall be applicable to the Incentive Stock Options granted hereunder.


 


(vi)                              Other Provisions. 
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 Optionee’s Options will become exercisable
in full if, within twenty-four months after a change in control of the
Company, the Optionee’s employment is terminated without cause or the Optionee
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.


 


(vii)                           Buyout Provisions. 
The Committee may at any time offer to buyout for a payment in cash,
promissory note or shares, an Option previously granted, based on such terms
and conditions as the Committee shall establish and communicate to the Optionee
at the time that such offer is made.


 


(b)                                 SARs.


 


(i)                                     In Connection with Options. 
At the sole discretion of the Committee, SARs may be granted in
connection with all or any part of an Option, either concurrently with the
grant of the Option or at any time thereafter during the term of the Option.
The following provisions apply to SARs that are granted in connection with
Options:


 


(1)                                  The
SAR shall entitle the Optionee to exercise the SAR by surrendering to the
Company unexercised the corresponding portion of the related Option. The
Optionee shall receive in exchange from the Company an amount equal to the
excess of (1) the Fair Market Value on the date of exercise of the SAR of the
Common Stock covered by the surrendered portion of the related Option over (2)
the exercise price of the Common Stock covered by the surrendered portion of
the related Option. Notwithstanding the foregoing, the Committee may place
limits on the amount that may be paid upon exercise of an SAR; provided, however, that such limit shall not restrict the
exercisability of the related Option.


 


(2)                                  When
an SAR is exercised, the related Option, to the extent surrendered, shall cease
to be exercisable.


 


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(3)                                  An
SAR shall be exercisable only when and to the extent that the related Option is
exercisable and shall expire no later than the date on which the related Option
expires.


 


(4)                                  An
SAR may only be exercised at a time when the Fair Market Value of the Common
Stock covered by the related Option exceeds the exercise price of the Common
Stock covered by the related Option.


 


(ii)                                  Independent of Options. 
At the sole discretion of the Committee, SARs may be granted without
related Options. The following provisions apply to SARs that are not granted in
connection with Options:


 


(1)                                  The
SAR shall entitle the Optionee, by exercising the SAR, to receive from the
Company an amount equal to the excess of (1) the Fair Market Value of the
Common Stock covered by the exercised portion of the SAR, as of the date of
such exercise, over (2) the Fair Market Value of the Common Stock covered by
the exercised portion of the SAR, as of the last market trading date prior to
the date on which the SAR was granted; provided, however,
that the Committee may place limits on the aggregate amount that may be paid
upon exercise of an SAR.


 


(2)                                  SARs
shall be exercisable, in whole or in part, at such times as the Committee shall
specify in the Optionee’s SAR agreement.


 


(iii)                               Form of Payment.  
The Company’s obligation arising upon the exercise of an SAR may be paid
in Common Stock or in cash, or in any combination of Common Stock and cash, as
the Committee, in its sole discretion, may determine. Shares issued upon the exercise
of an SAR shall be valued at their Fair Market Value as of the date of
exercise.


 


(c)                                  Method of Exercise.


 


(i)                                     Procedure for Exercise; Rights as a Stockholder.  Any Option or SAR granted hereunder shall be
exercisable at such times and under such conditions as determined by the
Committee and as shall be permissible under the terms of the Plan.


 


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


 


An Option or
SAR 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 or SAR by
the person entitled to exercise the Option or SAR 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 and permitted by the
Option Agreement, consist of any consideration and method of payment allowable
under subsection 7(a)(iii) of the Plan. Until the issuance (as evidenced by the
appropriate entry


 


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on the books of the Company or
of a duly authorized transfer agent of the Company) of the stock certificate
evidencing such shares, 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. 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 12 of the Plan.


 


Exercise of an
Option in any manner shall result in a decrease in the number of shares which
thereafter shall be available, both for purposes of the Plan and for sale under
the Option, by the number of shares as to which the Option is exercised.
Exercise of an SAR for Common Stock shall, to the extent the SAR is exercised,
result in a decrease in the number of shares which thereafter shall be
available for purposes of the Plan, and the SAR shall cease to be exercisable
to the extent it has been exercised.


 


(ii)                                  Termination of Employment, Consulting or Director Relationship.  In the event an Optionee’s Continuous Status
as an Employee , Consultant or Director terminates (other than upon the
Optionee’s death or Disability), the Optionee may exercise his or her Option or
SAR, 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 Optionee 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 or SAR as set forth in the
Option or SAR Agreement). To the extent that Optionee was not entitled to
exercise an Option or SAR at the date of such termination, and to the extent
that the Optionee does not exercise such Option or SAR (to the extent otherwise
so entitled) within the time specified herein, the Option or SAR shall
terminate.


 


(iii)                               Disability of Optionee. 
In the event an Optionee’s Continuous Status as an Employee ,Consultant
or Director terminates as a result of the Optionee’s Disability, the Optionee
may exercise his or her Option or SAR, 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 Optionee 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 or SAR as set forth in the Option or SAR Agreement). To the
extent that Optionee was not entitled to exercise an Option or SAR at the date
of such termination, and to the extent that the Optionee does not exercise such
Option or SAR (to the extent otherwise so entitled) within the time specified
herein, the Option or SAR shall terminate.


 


(iv)                              Death of Optionee.  In
the event of an Optionee’s death, the Optionee’s estate or a person who
acquired the right to exercise the deceased Optionee’s Option or SAR by bequest
or inheritance may exercise the Option or SAR, but only within twelve (12)
months following the date of death, and, unless determined otherwise by the
Committee, only to the extent that the Optionee was entitled to exercise it at
the date of death (but in no event later than the expiration of the term of
such Option or SAR


 


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as set forth in the Option or
SAR Agreement). To the extent that Optionee was not entitled to exercise an
Option or SAR at the date of death, and to the extent that the Optionee’s
estate or a person who acquired the right to exercise such Option does not
exercise such Option or SAR (to the extent otherwise so entitled) within the
time specified herein, the Option or SAR shall terminate.


 


8.                                       Stock Awards.


 


(a)                                  Stock
Awards.  All or part of any Stock
Award may be subject to conditions and restrictions established by the
Committee, and set forth in the award agreement, which will include, but are
not limited to, achievement of specific business objectives and other
measurements of individual, business unit or Company performance measured over
a period of not less than twelve (12) months.


 


9.                                       Outside
Director Grants.


 


(a)                                  All
Options granted pursuant to this Section shall be Nonstatutory Stock Options
and, except as otherwise provided herein, shall be subject to the other terms
and conditions of the Plan.


 


(b)                                 All
grants of Options hereunder shall be automatic and non-discretionary and shall
be made strictly in accordance with the following provisions:


 


(i)                                     No
person shall have any discretion to select which Outside Directors shall be
granted Options or to determine the number of Shares to be covered by Options
granted to Outside Directors.


 


(ii)                                  Each
Outside Director shall be automatically granted an Option to purchase 50,000
Shares (which number shall be subject to adjustment in the manner set forth in
Section 12 hereof upon the occurrence of any event described therein) upon the
date on which such person first becomes a Director (an “Initial Grant”),
whether through election by the stockholders of the Company or by appointment
by the Board to fill a vacancy.


 


(iii)                               On
the date of each regular October meeting of the Board of Directors of the
Company (or, if the Board does not meet in October of any year, on the date of
the next regularly scheduled Board meeting) during the term of this Plan, each
Outside Director who has served as a Director for at least the previous six (6)
months shall automatically receive an Option to purchase 20,000 Shares (which
number shall be subject to adjustment in the manner set forth in Section 12
hereof upon the occurrence of any event described therein) (a “Renewal Grant”).


 


(iv)                              The
terms of each Option granted pursuant to this Section shall be as follows:


 


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(1)                                  the
term of the Option shall be ten (10) years.


 


(2)                                  the
Option shall be exercisable only while the Outside Director remains a Director
of the Company, except as set forth in Section 7 hereof; provided
that if the Optionee retires from the Board of Directors of the Company at 65
or more years of age with more than 5 years of continuous service on the Board,
he or she may, but only within twelve (12) months from the date of termination,
exercise the Option to the extent he or she was entitled to exercise it at the
date of such termination; provided  further that in the event the exercise period terminates at
a time when the Optionee is prohibited from engaging in transactions in the
Company’s stock as a result of the Company’s trading window being closed, the
Option shall remain exercisable until the Optionee is no longer so prohibited;


 


(3)                                  the
exercise price per Share shall be 100% of the Fair Market Value per Share on
the date of grant of the Option;


 


(4)                                  with
respect to Initial Grants, the Option will become exercisable in two annual
installments on each of the first and second anniversaries of the grant date,
so long as the Optionee remains a Director on such date; provided
that the Option will become fully exercisable in the event of the occurrence of
one of the following events while the Optionee remains a Director (a “Change of
Control”): (x) the consummation of a merger or consolidation of the Company
with or into any other entity pursuant to which the stockholders of the Company
immediately prior to such merger or consolidation hold, directly or indirectly,
less than 50% of the voting power of the surviving entity; (y) the sale or
other disposition of all or substantially all of the Company’s assets; or (z)
the acquisition by any person or persons of the beneficial ownership of 50% or
more of the voting power of the Company’s equity securities in a single
transaction or series of related transactions; and


 


(5)                                  with
respect to Renewal Grants, the Option will be fully exercisable on the grant
date.


 


v)                                     In
the event that any Option granted under the Plan would cause the number of
Shares subject to outstanding Options plus the number of Shares previously
purchased upon exercise of Options to exceed the Pool, then each such automatic
grant shall be for that number of Shares determined by dividing the total
number of Shares remaining available for grant by the number of Outside
Directors on the automatic grant date. 
No further grants shall be made until such time, if any, as additional
Shares become available for grant under the Plan through action of the
shareholders to increase the number of Shares which may be issued under the
Plan or through cancellation or expiration of Options previously granted
hereunder.


 


10.                                 Deferrals and Settlements. 
Payment of awards may be in the form of cash, Common Stock, other awards
or combinations thereof as the Committee shall determine, and with such
restrictions as it may impose including, without limitation, restrictions
imposed on Insiders under Rule 16b-3. The Committee also may require or


 


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permit participants to elect to
defer the issuance of shares or the settlement of awards in cash under such
rules and procedures as it may establish under the Plan. The Committee may also
provide that deferred settlements include the payment or crediting of interest
on the deferral amounts.


 


11.                                 Transferability of Options and Rights.  Unless otherwise determined by the Committee
to the contrary, Options and Rights 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 or Right by
the Optionee to the Optionee’s “immediate family”.  In such case, the Option or Right will be
exercisable only by such transferee. 
Following a transfer, any such Options or Rights shall continue to be
subject to the same terms and conditions as were applicable immediately prior
to the transfer.  For purposes of this
Section 11, 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.


 


12.                                 Adjustments Upon Changes in Capitalization, Dissolution, Merger, Asset
Sale or Change of Control.


 


(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 Right,
and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or Rights have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option or Right, as well as the price per share of Common Stock covered
by each such outstanding Option or Right, 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 or Right.


 


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(b)                                 Dissolution or Liquidation. 
In the event of the proposed dissolution or liquidation of the Company,
to the extent that an Option or Right 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 or Right shall terminate as of a date fixed by the
Committee and give each Optionee the right to exercise his or her Option or
Right as to all or any part of the Optioned Stock, including shares as to which
the Option or Right 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 and
Right shall be assumed or an equivalent Option or Right 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 Optionee to have the right to
exercise the Option or Right as to all or a portion of the Optioned Stock,
including shares as to which it would not otherwise be exercisable. If the
Committee makes an Option or Right exercisable in lieu of assumption or
substitution in the event of a merger or sale of assets, the Committee shall
notify the Optionee that the Option or Right shall be exercisable for such
period as the Committee may designate, and the Option or Right will terminate
upon the expiration of such period. For the purposes of this
Section 12(c), the Option or Right shall be considered assumed if,
immediately following the merger or sale of assets, the Option or Right confers
the right to receive, for each share of Optioned Stock subject to the Option or
Right 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 Optionee, provide
for the consideration to be received upon the exercise of the Option or Right,
for each share of Optioned Stock subject to the Option or Right, 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.


 


13.                                 Date of Grant.  The
date of grant of an Option or Right shall be, for all purposes, the date on
which the Committee makes the determination granting such Option or Right, or
such other later date as is determined by the Committee. Notice of the
determination shall be provided to each Optionee within a reasonable time after
the date of such grant.


 


 


12





















 


14.                                 Amendment and Termination of the Plan.


 


(a)                                  Amendment and Termination. 
The Board may at any time amend, alter, suspend or terminate the Plan.


 


(b)                                 Stockholder Approval. 
The Company shall obtain stockholder approval of any Plan amendment to
the extent necessary and desirable to comply with Rule 16b-3 or with
Section 422 of the Code (or any successor rule or statute or other
applicable law, rule or regulation, including the requirements of any exchange
or quotation system on which the Common Stock is listed or quoted). Such
stockholder approval, if required, shall be obtained in such a manner and to
such a degree as is required by the Applicable Laws, rules or regulations.


 


(c)                                  Effect of Amendment or Termination.  No amendment, alteration, suspension or
termination of the Plan shall impair the rights of any Optionee, unless
mutually agreed otherwise between the Optionee and the Company, which agreement
must be in writing and signed by the Optionee and the Company.


 


15.                                 Conditions Upon Issuance of Shares.


 


(a)                                  Legal Compliance. 
Shares shall not be issued pursuant to the exercise of an Option or
Right unless the exercise of such Option or Right and the issuance and delivery
of such shares 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, Applicable Laws, and the
requirements of any stock exchange or quotation system upon which the shares
may then be listed or quoted, and shall be further subject to the approval of
counsel for the Company with respect to such compliance.


 


(b)                                 Investment Representations. 
As a condition to the exercise of an Option or Right, the Company may
require the person exercising such Option or Right to represent and warrant at
the time of any such exercise that the shares are being purchased only for
investment and without any present intention to sell or distribute such shares
if, in the opinion of counsel for the Company, such a representation is
required.


 


16.                                 Liability of Company.


 


(a)                                  Inability to Obtain Authority.  The 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.


 


(b)                                 Grants Exceeding Allotted Shares.  If the Optioned Stock covered by an Option or
Right exceeds, as of the date of grant, the number of shares which may be
issued under the Plan without additional stockholder approval, such Option or
Right shall be void with respect to such excess Optioned Stock, unless
stockholder approval of


 


13





















 


an amendment sufficiently
increasing the number of shares subject to the Plan is timely obtained in
accordance with Section 14 of the Plan.


 


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


 


18.                                 Stockholder Approval. 
Continuance of the Plan shall be subject to approval by the stockholders
of the Company within twelve (12) months before or after the date the Plan is
adopted. Such stockholder approval shall be obtained in the manner and to the
degree required by the Applicable Laws, rules and regulations.


 


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


 


(a)                                  “Applicable Laws” means all applicable law, including
without limitation, the Code, Delaware General Corporation Law, and applicable
federal and state securities laws.


 


(b)                                 “Common Stock” means the Common Stock of SGI.


 


(c)                                  “Company” means Silicon Graphics, Inc., and any entity
that is directly or indirectly controlled by the Company, or any entity in
which the Company has a significant equity interest, as determined by the
Committee; provided, however, that with respect to
Options that are intended to qualify as Incentive Stock Options, the term “Company”
shall be limited to Silicon Graphics, Inc. and any “parent” or “subsidiary” as
those terms are defined in Sections 424(e) and (f) of the Code, respectively,
or any successor sections.


 


(d)                                 “Consultant” means any person, including an advisor,
engaged by the Company to render services and who is compensated for such
services, provided that the term “Consultant” shall not include Directors who
are paid only a Director’s fee by the Company or who are not compensated by the
Company for their services as Directors.


 


(e)                                  “Continuous Status as an Employee or Consultant”, means that
the relationship as an Employee or Consultant is not interrupted or terminated
by the Company. Continuous Status as an Employee or Consultant 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 Optionee’s Continuous Status
as an Employee will be deemed to have terminated on the 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.


 


14





















 


(f)                                    “Director” means any person who is a member of the
Board of Directors of the Company or its subsidiaries and affiliates.


 


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


 


(h)                                 “Employee” means any person, including Officers,
employed by the Company.  Neither service
solely as a Director nor payment solely of a director’s fee by the Company
shall be sufficient to constitute “employment” by the Company.


 


(i)                                     “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. If no sales of shares were made
on such date, the closing price of a share as reported for the preceding day on
which sale of shares were made shall be used.


 


(j)                                     “Nonstatutory Stock Option” means any Option that is
not an Incentive Stock Option.


 


(k)                                  “Notice of Grant” means a written notice evidencing
certain terms and conditions of an individual Option, SAR or Stock Award grant.
The Notice of Grant is part of the Option Agreement, the SAR Agreement and the
Stock Award Agreement.


 


(l)                                     “Option” means a stock option granted pursuant to the
Plan.


 


(m)                               “Option Agreement” means a written agreement between
the Company and an Optionee evidencing the terms and conditions of an
individual Option grant. The Option Agreement is subject to the terms and
conditions of the Plan.


 


(n)                                 “Optioned Stock” means the Common Stock subject to an
Option or Right.


 


(o)                                 “Optionee” means
an Employee, Consultant or Director who holds an outstanding Option or Right.


 


(p)                                 “Outside Director” means a Director who is not an Employee
and who is not the “beneficial owner” (as defined in Rule 13d-3 of the
Securities Exchange Act of 1934, as amended), directly or indirectly, of
securities of the Company representing 5% or more of the total voting power
represented by the Company’s outstanding voting securities on the date of any
grant hereunder.


 


(q)                                 “SAR” means a stock appreciation right granted pursuant
to Section 7(b) of the Plan.


 


15





















 


(r)                                    “SAR Agreement” means a written agreement between the
Company and an Optionee evidencing the terms and conditions of an individual
SAR grant. The SAR Agreement is subject to the terms and conditions of the
Plan.


 


(s)                                  “Stock Award” means an award made or denominated in
shares or equivalent in value to shares pursuant to Section 8 of the Plan.


 


16





















 


(RENEWAL)


 


SILICON GRAPHICS, INC.


 


1993 LONG-TERM INCENTIVE STOCK PLAN


 


NON-STATUTORY STOCK OPTION GRANT AGREEMENT


 


Silicon
Graphics, Inc., a Delaware corporation (“SGI”), has granted to the Optionee
named on the attached NOTICE OF GRANT OF STOCK OPTION AND GRANT AGREEMENT (the
“NOTICE”) which is incorporated herein by reference, an Option to purchase the
total number of shares of Common Stock and at the price determined, both as set
forth on the attached NOTICE, and in all respects subject to the terms,
definitions and provisions of the 1993 Long-Term Incentive Stock Plan (the
“Plan”) adopted by SGI which is incorporated herein by reference. The terms
defined in the Plan shall have the same defined meanings herein.


 


By signing the
NOTICE, Optionee acknowledges responsibility of reviewing the terms of the Plan
and the related prospectus, copies of which are available at
http://www-finance.corp.sgi.com/stock or upon request from Employee Stock
Services (MS-645 or stock_support@sgi.com) and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof. Optionee further agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan.


 


1.                                       Nature
of the Option. This Option is a non-statutory option and is not intended to
qualify for any special tax benefits to the Optionee.


 


2.                                       Exercise
Price. The exercise price for each share of Common Stock is as set forth in
the attached NOTICE, which price is not less than the fair market value per
share of the Common Stock on the date of grant.


 


3.                                       Exercise
of Option. This Option shall be exercisable during its term in accordance
with the provisions of Section 7 of the Plan as follows:


 


(a)                                  Right
to Exercise.


 


(i)                                     Subject
to subsection 3(a) (ii) and (iii), below, this Option shall be exercisable to
the extent of six and one-quarter percent (6.25%) of the Shares subject to the
Option every three months on each quarterly anniversary of the date of grant as
set forth in the attached NOTICE.


 


(ii)                                  This
Option may not be exercised for a fraction of a share.


 


(iii)                               In
the event of Optionee’s death, disability or other termination of employment,
the exercisability of the Option is governed by Sections 7, 8, and 9 below.


 


(b)                                 Method
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 electronic exercise methods approved from time to time by Employee
Stock Services (currently www.optionslink.com). If electronic exercise method
is not chosen, such notice shall


 





















 


be in the form of Exhibit A
(Stock Exercise Request) found at Employee Stock Services’ web site or upon
request. The exercise notice shall be accompanied by payment of the exercise
price. The Option shall be deemed to be exercised upon receipt by the Company
of such written notice accompanied by the exercise price.


 


No Shares will
be issued pursuant to the exercise of an Option unless such issuance and such
exercise shall comply with all relevant provisions of law and the requirements
of any stock exchange upon which the Shares may then be listed. Assuming such
compliance, the Shares shall be considered transferred to the Optionee on the
date on which the Option is exercised with respect to such shares.


 


4.                                       Optionee’s
Representations. In the event the shares purchasable pursuant to the
exercise of this Option have not been registered under the Securities Act of
1933, as amended, at the time this Option is exercised, Optionee shall,
concurrently with the exercise of all or any portion of this Option, deliver to
SGI his or her Investment Representation Statement in the form of Exhibit B,
(available in Employee Stock Services) and shall read the applicable rules of
the Commissioner of Corporations attached to such Investment Representation
Statement.


 


5.                                       Method
of Payment. Payment of the exercise price shall be by any of the following,
or a combination thereof, at the election of the Optionee:


 


(i)                                     cash;
or


 


(ii)                                  check;
or


 


(iii)                               surrender
of other Shares of Common Stock of SGI of a value equal to the exercise price
of the shares as to which the Option is being exercised which, in the case of
shares acquired previously upon exercise of an option have been owned by the
Optionee for more than six (6) months on the date of surrender; or


 


(iv) delivery
of a properly executed exercise notice together with such other documentation
as SGI and the broker, if applicable, shall require to effect an exercise of
the Option and delivery to SGI of the sale or loan proceeds required to pay the
exercise price.


 


6.                                       Restrictions
on Exercise. This Option may not be exercised until such time as the Plan
has been approved by the shareholders of SGI, or if the issuance of such Shares
upon such exercise or the method of payment of consideration for such shares
would constitute a violation of any applicable federal or state securities or
other law or regulation, including any rule under Part 207 of Title 12 of the
Code of Federal Regulations (“Regulation G”) as promulgated by the Federal
Reserve Board. As a condition to the exercise of this Option, the Company may require
Optionee to make any representation and warranty to the Company as may be
required by any applicable law or regulation.


 


7.                                       Termination
of Status as an Employee or Consultant. If Optionee ceases to serve as an
Employee or Consultant, he or she may, but only within three (3) months after
the date he or she ceases to be an Employee or Consultant of the Company,
exercise this 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 this Option at the date of such termination, or if he or she does


 





















 


not exercise this Option within
the time specified herein, the Option shall terminate.


 


8.                                       Disability
of Optionee. Notwithstanding the provisions of Section 7 above, if Optionee
is unable to continue his or her employment or consulting relationship with the
Company as a result of his or her Disability, the Optionee may, but only within
twelve (12) months from the date of such termination, exercise his or her Option
to the extent he or she was entitled to exercise the Option 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 within the time specified herein, the Option shall terminate.


 


9.                                       Death
of Optionee. In the event of the death of Optionee during the term of this
Option, the Option may be exercised, at any time within twelve (12) months
following the date of death, by 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 as of the date of death.


 


10.                                 Transferability
of Option. Unless otherwise determined by the Committee to the contrary,
this Option 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 Optionee only by the
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.


 


11.                                 Term
of Option. This Option may not be exercised more than seven (7) years (five
years if Optionee owns, immediately before this Option is granted, stock
representing more than 10 percent of the total combined voting power of all
classes of stock of SGI) from the date of grant of this Option, and may be
exercised during such term only in accordance with the Plan and the terms of this
Option.


 


12.                                 Taxation
Upon Exercise of Option. Optionee understands that, upon exercise of this
Option, he will recognize income for tax purposes in an amount equal to the
excess of the then fair market value of the shares over the exercise price. The
Company will be required to withhold tax from Optionee’s current compensation
with respect to such income; to the extent that Optionee’s current compensation
is insufficient to satisfy the withholding tax liability, the Company may
require the Optionee to make a cash payment to cover such liability as a
condition of exercise of this Option. Upon a resale of such shares by the
Optionee, any difference between the sale price and the fair market value of
the shares on the date of exercise of the Option will be treated as capital
gain or loss.


 


13.                                 Acceleration
Upon Change of Control. Notwithstanding provisions of Section 3(a) with
respect to option exercisability, in the event of a Change of Control of the
Company, this Option shall automatically become exercisable in full if, within
twenty-four (24) months after a Change of Control Date, (i) the Optionee is
involuntarily terminated by the Company or any successor company (hereinafter,
the “Employer”) without Cause or (ii) the Optionee voluntarily resigns from the
Employer for Good Reason.


 


14.                                 Definitions.
For purposes of Section 13, the terms “Cause,” “Change of Control,” “Change of
Control Date,” and “Good Reason” shall have the meanings set out below:


 





















 


(a)                                  “Cause”
means the termination of employment of an Optionee shall have taken place as a
result of:


 


(i)                                     any
act or acts of dishonesty undertaken by such Optionee and intended to result in
gain or personal enrichment of the Optionee, or


 


(ii)                                  persistent
failure to perform the duties and obligations of such Optionee which is not
remedied in a reasonable period of time after receipt of written notice from
the Employer, or


 


(iii)                               violation
of confidentiality or proprietary information obligations to or agreements
entered into with the Employer, or


 


(iv)                              use,
sale or distribution of illegal drugs on the Employer’s premises, or


 


(v)                                 threatening,
intimidating, or coercing or harassing fellow employees, or


 


(vi)                              the
conviction of such Optionee of a felony.


 


(b)                                 “Change
of Control” of the Company means:


 


(i)                                     the
acquisition by any Person (as such term is used in Sections 13(d) and 14(d) of
the 1934 Act) as Beneficial Owner (as such term is used in Rule 13d-3
promulgated under the 1934 Act), directly or indirectly, of fifty percent (50%)
or more of the combined voting power of the outstanding shares of capital stock
of the Company’s then outstanding securities with respect to the election of
the directors of the Board.


 


(ii)                                  During
any period of three (3) consecutive years individuals who, at the beginning of
such period, constitute the Board (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board, provided that any person
becoming a Director of the Board subsequent to the date of this agreement whose
election, or nomination for election by the Company’s shareholders, was
approved by the vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of any individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of the
Board, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the 1934 Act) shall be, for these purposes, considered as though such
person were a member of the Incumbent Board.


 


(c)                                  “Change
of Control Date” means the effective date of the Change of Control or such
date, which the Board shall, by resolution, deem to be the Change of Control
Date.


 


(d)                                 “Good
Reason” for voluntary resignation means (i) the Employer reduces by ten percent
(10%) or more the Optionee’s compensation at the rate in effect immediately
prior to the Change of Control or (ii) without the Optionee’s express written
consent, the Employer requires the Optionee to change the location of his or
her job or office, so that he or she will be


 





















 


based at a location more then
fifty (50) miles from the location of his or her job or office immediately
prior to the Change of Control. For these purposes, “Compensation” includes
base salary, exclusive of bonus, incentive compensation and shift differential,
paid by the Employer as consideration for the Optionee’s service.


 





















 


(New Employee Grant)


 


SILICON GRAPHICS,
INC

AMENDED AND RESTATED

1993 LONG-TERM INCENTIVE STOCK PLAN


 


NON STATUTORY STOCK OPTION GRANT
AGREEMENT


 


Silicon Graphics, Inc., a Delaware
corporation (“SGI”), has granted to the Optionee named on the attached NOTICE
OF GRANT OF STOCK OPTION AND GRANT AGREEMENT (the “NOTICE”) which is
incorporated herein by reference, an Option to purchase the total number of
shares of Common Stock and at the price determined, both as set forth on the
attached NOTICE, and in all respects subject to the terms, definitions and
provisions of the 1993 Long-Term Incentive Stock Plan (the “Plan”) adopted by
SGI which is incorporated herein by reference. The terms defined in the Plan
shall have the same defined meanings herein.


 


By accepting
the NOTICE, Optionee acknowledges responsibility of reviewing the terms of the
Plan and the related prospectus, copies of which are available at
http://www-finance.corp.sgi.com/stock or upon request from Employee Stock
Services (MS-645 or stock_support@sgi.com) and represents that he or she is
familiar with the terms and provisions thereof, and hereby accepts this Option
subject to all of the terms and provisions thereof. Optionee further agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Board upon any questions arising under the Plan.


 


1.                                       Nature
of the Option. This Option is a non-statutory option
and is not intended to qualify for any special tax benefits to the Optionee.


 


2.                                       Exercise
Price. The exercise price for each share of
Common Stock is as set forth in the attached NOTICE, which price is not less
than the fair market value per share of the Common Stock on the date of grant.


 


3.                                       Exercise
of Option. This Option shall be exercisable
during its term in accordance with the provisions of Section 7 of the Plan as
follows:


 


(a)                                  Right
to Exercise.


 


(i)                                     Subject
to subsection 3(a) (ii) and (iii), below, this Option shall be exercisable,
cumulatively, to the extent of twenty-five percent (25%) of the Shares subject
to the Option on the one year anniversary of the date of hire as set forth in
the attached NOTICE; thereafter the Shares subject to the Option shall be
exercisable to the extent of six and one-quarter percent (6.25%) of the Shares
subject to the Option every three months on each quarterly anniversary of the
date of hire.    


 


(ii)                                  This
Option may not be exercised for a fraction of a share.


 


(iii)                               In
the event of Optionee’s death, disability or other termination of employment,
the exercisability of the Option is governed by Sections 7, 8, and 9 below.


 


(b)                                 Method
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
electronic exercise methods approved from time to time by Employee Stock
Services (currently www.optionslink.com). If electronic exercise method is not
chosen, such notice shall be in the form of Exhibit A (Stock Exercise Request)
found at Employee Stock Services’website or upon request. The exercise notice
shall be accompanied by payment of the exercise price. The Option shall be
deemed to be exercised upon receipt by the Company of such written notice
accompanied by the exercise price.


 


No Shares will be issued pursuant to the
exercise of an Option unless such issuance and such exercise shall comply with
all relevant provisions of law and the requirements of any stock exchange upon
which the Shares may then be listed. Assuming such compliance, the Shares shall
be considered transferred to the Optionee on the date on which the Option is
exercised with respect to such shares.


 


4.                                       Optionee’s
Representations. In the event the shares
purchasable pursuant to the exercise of this Option have not been registered
under the Securities Act of 1933, as amended, at the time this Option is
exercised, Optionee shall, concurrently with the exercise of all or any portion
of this Option, deliver to SGI his or her Investment Representation Statement
in the form of Exhibit B, (available in Employee Stock Services) and shall read
the applicable rules of the Commissioner of Corporations attached to such
Investment Representation Statement.


 


5.                                       Method
of Payment. Payment of the exercise price shall
be by any of the following, or a combination thereof, at the election of the
Optionee:


 


(i)                                     cash;
or


 


(ii)                                  check;
or


 


(iii)                               surrender
of other Shares of Common Stock of the Company of a value equal to the exercise
price of the shares as to which the Option is being exercised which, in the
case of shares acquired previously upon exercise of an option have been owned
by the Optionee for more than six (6) months on the date of surrender; or


 


(iv) delivery of a properly executed exercise
notice together with such other documentation as SGI and the broker, if
applicable, shall require to effect an exercise of the Option and delivery to
SGI of the sale or loan proceeds required to pay the exercise price.


 


6.                                       Restrictions
on Exercise. This Option may not be exercised
until such time as the Plan has been approved by the shareholders of the
Company, or if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulation, including
any rule under Part 207 of Title 12 of the Code of Federal Regulations
(“Regulation G”) as promulgated by the Federal Reserve Board. As a condition to
the exercise of this Option, the Company may require Optionee to make any
representation and warranty to the Company as may be required by any applicable
law or regulation.


 


7.                                       Termination
of Status as an Employee or Consultant. If Optionee
ceases to serve as an Employee or Consultant, he or she may, but only within
three (3) months after the date he or she ceases to be an Employee or
Consultant of the Company, exercise this 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 this Option at the date of such termination, or if he or she does not
exercise this Option within the time specified herein, the Option shall
terminate.


 


8.                                       Disability
of Optionee. Notwithstanding the provisions of
Section 7 above, if Optionee is unable to continue his or her employment or
consulting relationship with the Company as a result of his or her Disability,
the Optionee may, but only within twelve (12) months from the date of such
termination, exercise his or her Option to the extent he or she was entitled to
exercise the Option 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 within the time specified herein, the
Option shall terminate.


 


9.                                       Death
of Optionee. In the event of the death of Optionee
during the term of this Option, the Option may be exercised, at any time within
twelve (12) months following the date of death, by 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 as of the date
of death.


 


10.                                 Transferability
of Option. Unless otherwise determined by the
Committee to the contrary, this Option 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
Optionee only by the Optionee. The terms of this Option shall be binding upon
the executors, administrators, heirs, successors and assigns of the Optionee.


 


11.                                 Term
of Option. This Option may not be exercised more
than seven (7) years (five years if Optionee owns, immediately before this
Option is granted, stock representing more than 10 percent of the total
combined voting power of all classes of stock of SGI) from the date of grant of
this Option, and may be exercised during such term only in accordance with the
Plan and the terms of this Option.


 


12.                                 Taxation
Upon Exercise of Option. Optionee
understands that, upon exercise of this Option, he will recognize income for
tax purposes in an amount equal to the excess of the then fair market value of
the shares over the exercise price. The Company will be required to withhold
tax from Optionee’s current compensation with respect to such income; to the
extent that Optionee’s current compensation is insufficient to satisfy the
withholding tax liability, the Company may require the Optionee to make a cash
payment to cover such liability as a condition of exercise of this Option. Upon
a resale of such shares by the Optionee, any difference between the sale price
and the fair market value of the shares on the date of exercise of the Option
will be treated as capital gain or loss.


 


13.                                 Acceleration
Upon Change of Control.
Notwithstanding provisions of Section 3(a) with respect to option
exercisability, in the event of a Change of Control of the Company, this Option
shall automatically become exercisable in full if, within twenty-four (24)
months after a Change of Control Date, (i) the Optionee is involuntarily
terminated by the Company or any successor company (hereinafter, the
“Employer”) without Cause or (ii) the Optionee voluntarily resigns from the
Employer for Good Reason.


 


14.                                 Definitions.
For purposes of Section 13, the terms “Cause,” “Change of Control,”


 





















 


“Change of Control Date,” and “Good Reason”
shall have the meanings set out below:


 


(a)                                  “Cause”
means the termination of employment of an Optionee shall have taken place as a
result of:


 


(i)                                     any
act or acts of dishonesty undertaken by such Optionee and intended to result in
gain or personal enrichment of the Optionee, or


 


(ii)                                  persistent
failure to perform the duties and obligations of such Optionee which is not
remedied in a reasonable period of time after receipt of written notice from
the Employer, or


 


(iii)                               violation
of confidentiality or proprietary information obligations to or agreements
entered into with the Employer, or


 


(iv)                              use,
sale or distribution of illegal drugs on the Employer’s premises, or


 


(v)                                 threatening,
intimidating, or coercing or harassing fellow employees, or


 


(vi)                              the
conviction of such Optionee of a felony.


 


(b)                                 “Change
of Control” of the Company means:


 


(i)                                     the
acquisition by any Person (as such term is used in Sections 13(d) and 14(d) of
the 1934 Act) as Beneficial Owner (as such term is used in Rule 13d-3
promulgated under the 1934 Act), directly or indirectly, of fifty percent (50%)
or more of the combined voting power of the outstanding shares of capital stock
of the Company’s then outstanding securities with respect to the election of
the directors of the Board.


 


(ii)                                  During
any period of three (3) consecutive years individuals who, at the beginning of
such period, constitute the Board (the “Incumbent Board”) cease for any reason
to constitute at least a majority of the Board, provided that any person
becoming a Director of the Board subsequent to the date of this agreement whose
election, or nomination for election by the Company’s shareholders, was
approved by the vote of at least a majority of the directors then comprising
the Incumbent Board (other than an election or nomination of any individual
whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the directors of the
Board, as such terms are used in Rule 14a-11 of Regulation 14A promulgated
under the 1934 Act) shall be, for these purposes, considered as though such
person were a member of the Incumbent Board.


 


(c)                                  “Change
of Control Date” means the effective date of the Change of Control or such date
which the Board shall, by resolution, deem to be the Change of Control Date.


 


(d)                                 “Good
Reason” for voluntary resignation means (i) the Employer reduces by ten percent
(10%) or more the Optionee’s compensation at the rate in effect immediately
prior to the Change of Control or (ii) without the Optionee’s express written
consent, the Employer requires the Optionee to change the location of his or
her job or office, so that he or she will be


 





















 


based at a location more then fifty (50)
miles from the location of his or her job or office immediately prior to the
Change of Control. For these purposes, “Compensation” includes base salary,
exclusive of bonus, incentive compensation and shift differential, paid by the
Employer as consideration for the Optionee’s service.


 





















 


Grant No.


 


SILICON GRAPHICS, INC.


DIRECTOR’S OPTION AGREEMENT


(Annual Option)


 


Silicon
Graphics, Inc., a Delaware corporation (“SGI”), has granted to                         
(the “Optionee”), as of                         ,
an option to purchase a total of 20,000 shares of SGI’s Common Stock (the
“Optioned Stock”), at the price determined as provided herein, and in all
respects subject to the terms, definitions and provisions of the 1993 Long-Term
Incentive Stock Plan (the “Plan”) adopted by SGI which is incorporated herein
by reference.  The terms defined in the
Plan shall have the same defined meanings herein.


 


1.                                       
Nature of the Option.  This Option
is a nonstatutory option and is not intended to qualify for any special tax
benefits to the Optionee.


 


2.                                       Exercise
Price.  The exercise price is $       
for each share of Common Stock, which is 100% of the fair market value of the
Common Stock as determined on the date of grant of this Option.


 


3.                                       Exercise
of Option.  This option shall be
exercisable during its term in accordance with the provisions of Section 7 of
the Plan as follows:


 


(i)                                     Right
to Exercise.


 


(a)                                  This
Option shall become exercisable in two installments:  the first fifty percent (50%) of the Optioned
Stock on the date of the next Annual Meeting and the second fifty percent (50%)
of the Optioned Stock on the date of the next Annual Meeting, so long as the
Optionee remains a Director.


 


(b)                                 This
Option may not be exercised for a fraction of a share.


 


(c)                                  In
the event of Optionee’s death, disability or other termination of service as a
Director, the exercisability of this Option is governed by Sections 6, 7 and 8
of this Agreement.


 


(ii)                                  Method
of Exercise.


 


(a)                                  This
Option shall be exercisable by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the holder’s
investment intent with respect to such Shares of Common Stock as may be
required by the Company pursuant to the provisions of the Plan.  Such written notice shall


 





















 


be signed by the Optionee
and shall be delivered in person, by facsimile or by certified mail to SGI’s
Employee Stock Services.  The written
notice shall be accompanied by payment of the exercise price


 


(b)                                 No Shares
will be issued pursuant to the exercise of an Option unless such issuance and
such exercise shall comply with all relevant provisions of law and the
requirements of any stock exchange upon which the Shares may then be
listed.  Assuming such compliance, the
Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such shares.


 


4.                                       Method
of Payment.  Payment of the exercise
price shall be by any of the following, or a combination thereof, at the
election of the Optionee:


 


(i)                                     cash;


 


(ii)                                  check;


 


(iii)                               surrender
of other Shares of Common Stock of SGI of a value equal to the exercise price
of the shares as to which the Option is being exercised which, in the case of
shares acquired previously upon exercise of an option have been owned by the
Optionee for more than six (6) months on the date of surrender; or


 


(iv)                              delivery
of a properly executed exercise notice together with such other documentation
as SGI and the broker, if applicable, shall require to effect an exercise of
the Option and delivery to SGI of the sale of loan proceeds required to pay the
exercise price.


 


5.                                       Restrictions
on Exercise.  This Option may not be
exercised if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulations, or if such
issuance would not comply with the requirements of any stock exchange upon
which the Shares may then be listed.  As
a condition to the exercise of this Option, the Company may require Optionee to
make any representation and warranty to the Company as may be required by any
applicable law or regulation.


 


6.                                       Termination
of Status as a Director.  If the
Optionee ceases to serve as a Director, he or she may, but only within three
(3) months after the date he or she ceases to be a Director of the Company,
exercise this Option to the extent that he or she was entitled to exercise it
at the date of such termination. 
Notwithstanding the foregoing, in no event may the Option be exercised
after its ten (10) year term has expired. 
To the extent that the Optionee was not entitled to exercise this Option
at the date of such termination, or if the Optionee does not exercise this
Option within the time specified herein, the Option shall terminate.


 


2





















 


7.                                       Disability
of Optionee.  Notwithstanding the
provisions of Section 6 above, if the Optionee is unable to continue his or her
service as a Director as a result of the Optionee’s Disability, he or she may,
but only within twelve (12) months from the date of termination, exercise this
Option to the extent he or she was entitled to exercise it at the date of such
termination.  Notwithstanding the foregoing,
in no event may the Option be exercised after its ten (10) year term has
expired.  To the extent that the Optionee
was not entitled to exercise this Option at the date of termination, or if the
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.


 


8.                                       Death
of Optionee.  In the event of the
death of the Optionee during the term of this Option, the Option may be
exercised, at any time within twelve (12) months 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 death. 
Notwithstanding the foregoing, in no event may the Option be exercised
after its ten (10) year term has expired.


 


9.                                       Transferability
of Option.  Unless otherwise
determined by the Committee to the contrary, this Option 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 Optionee only by the Optionee.  The terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.


 


10.                                 Term
of Option.  This Option may not be exercised
more than ten (10) years (five years if Optionee owns, immediately before this
Option is granted, stock representing more than 10 percent of the total
combined voting power of all classes of stock of SGI) from the date of grant of
this Option, and may be exercised during such term only in accordance with the
Plan and the terms of this Option.


 


11.                                 Taxation
Upon Exercise of Option.  Optionee
understands that, upon exercise of this Option, he or she will recognize income
for tax purposes in an amount equal to the excess of the then fair market value
of the Shares purchased over the exercise price paid for such Shares.  (Since the Optionee is subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, the measurement and
timing of such income may be deferred, and the Optionee is advised to contact a
tax advisor concerning the desirability of filing an 83(b) election in
connection with the exercise of the Option.) 
Upon a resale of such Shares by the Optionee, any difference between the
sale price and the fair market value of the Shares on the date of exercise of
the Option, to the extent not included in income as described above, will be
treated as capital gain or loss.


 


3





















 


	
   

  	
  SILICON
  GRAPHICS, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sandra M.
  Escher

  
	
   

  	
  Vice
  President, General Counsel and

  Secretary

  



 


Optionee
acknowledges receipt of a copy of the Plan, a copy of which is annexed hereto,
and represents that he or she is familiar with the terms and provisions
thereof, and hereby accepts this Option subject to all of the terms and
provisions thereof.  Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under the Plan.


 


 


	
   

  	
   

  	
   

  
	
   

  	
  Optionee

  



 


4





















 


Grant No.


 


SILICON GRAPHICS, INC.


DIRECTOR’S OPTION AGREEMENT


(First Option)


 


Silicon
Graphics, Inc., a Delaware corporation ("SGI"), has granted              
an option to purchase a total of 50,000 shares of SGI’s Common Stock (the "Optioned
Stock"), at the price determined as provided herein, and in all respects
subject to the terms, definitions and provisions of the 1993 Long-Term
Incentive Stock Plan (the "Plan") adopted by SGI which is
incorporated herein by reference.  The
terms defined in the Plan shall have the same defined meanings herein.


 


1.                                       Nature
of the Option.  This Option is a
nonstatutory option and is not intended to qualify for any special tax benefits
to the Optionee.


 


2.                                       Exercise
Price.  The exercise price is $      
for each share of Common Stock, which is 100% of the fair market value of the
Common Stock as determined on the date of grant of this Option.


 


3.                                       Exercise
of Option.  This option shall be
exercisable during its term in accordance with the provisions of Section 7 of
the Plan as follows:


 


(i)                                     Right
to Exercise.


 


(a)                                  This
Option shall become exercisable in two installments:  the first fifty percent (50%) of the Optioned
Stock on the first anniversary of the Grant Date and the second fifty percent
(50%) of the Optioned Stock on the date of the next anniversary of the Grant
Date, so long as the Optionee remains a Director.


 


(b)                                 This
Option may not be exercised for a fraction of a share.


 


(c)                                  In
the event of Optionee’s death, disability or other termination of service as a
Director, the exercisability of this Option is governed by Sections 6, 7 and 8
of this Agreement.


 


(ii)                                  Method
of Exercise.


 


(a)                                  This
Option shall be exercisable by written notice which shall state the election to
exercise the Option, the number of Shares in respect of which the Option is
being exercised, and such other representations and agreements as to the
holder’s investment intent with respect to such Shares of Common Stock as may
be required by the Company pursuant to the provisions of the Plan.  Such written notice shall


 





















 


be signed by the Optionee
and shall be delivered in person, by facsimile or by certified mail to the
SGI’s Employee Stock Services Department. 
The written notice shall be accompanied by payment of the exercise price


 


(b)                                 No Shares
will be issued pursuant to the exercise of an Option unless such issuance and
such exercise shall comply with all relevant provisions of law and the
requirements of any stock exchange upon which the Shares may then be
listed.  Assuming such compliance, the
Shares shall be considered transferred to the Optionee on the date on which the
Option is exercised with respect to such shares.


 


4.                                       Method
of Payment.  Payment of the exercise
price shall be by any of the following, or a combination thereof, at the
election of the Optionee:


 


(i)                                     cash;


 


(ii)                                  check;


 


(iii)                               surrender
of other Shares of Common Stock of SGI of a value equal to the exercise price
of the shares as to which the Option is being exercised which, in the case of
shares acquired previously upon exercise of an option have been owned by the
Optionee for more than six (6) months on the date of surrender; or


 


(iv)                              delivery
of a properly executed exercise notice together with such other documentation
as SGI and the broker, if applicable, shall require to effect an exercise of
the Option and delivery to SGI of the sale of loan proceeds required to pay the
exercise price.


 


5.                                       Restrictions
on Exercise.  This Option may not be
exercised if the issuance of such Shares upon such exercise or the method of
payment of consideration for such shares would constitute a violation of any
applicable federal or state securities or other law or regulations, or if such
issuance would not comply with the requirements of any stock exchange upon
which the Shares may then be listed.  As
a condition to the exercise of this Option, the Company may require Optionee to
make any representation and warranty to the Company as may be required by any
applicable law or regulation.


 


6.                                       Termination
of Status as a Director.  If the
Optionee ceases to serve as a Director, he or she may, but only within three
(3) months after the date he or she ceases to be a Director of the Company,
exercise this Option to the extent that he or she was entitled to exercise it
at the date of such termination. 
Notwithstanding the foregoing, in no event may the Option be exercised
after its five (5) year term has expired. 
To the extent that the Optionee was not entitled to exercise this Option
at the date of such termination, or if the Optionee does not exercise this
Option within the time specified herein, the Option shall terminate.


 


2





















 


7.                                       Disability
of Optionee.  Notwithstanding the
provisions of Section 6 above, if the Optionee is unable to continue his or her
service as a Director as a result of the Optionee’s Disability, he or she may,
but only within twelve (12) months from the date of termination, exercise this
Option to the extent he or she was entitled to exercise it at the date of such
termination.  Notwithstanding the
foregoing, in no event may the Option be exercised after its five (5) year term
has expired.  To the extent that the
Optionee was not entitled to exercise this Option at the date of termination,
or if the Optionee does not exercise this Option within the time specified
herein, the Option shall terminate.


 


8.                                       Death
of Optionee.  In the event of the
death of the Optionee during the term of this Option, the Option may be exercised,
at any time within twelve (12) months 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 death. 
Notwithstanding the foregoing, in no event may the Option be exercised
after its five (5) year term has expired.


 


9.                                       Transferability
of Option.  Unless otherwise
determined by the Committee to the contrary, this Option 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 Optionee only by the Optionee.  The terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.


 


10.                                 Term
of Option.  This Option may not be
exercised more than five (5) years from the date of grant of this Option, and
may be exercised during such term only in accordance with the Plan and the
terms of this Option.


 


11.                                 Taxation
Upon Exercise of Option.  Optionee
understands that, upon exercise of this Option, he or she will recognize income
for tax purposes in an amount equal to the excess of the then fair market value
of the Shares purchased over the exercise price paid for such Shares.  (Since the Optionee is subject to Section
16(b) of the Securities Exchange Act of 1934, as amended, the measurement and
timing of such income may be deferred, and the Optionee is advised to contact a
tax advisor concerning the desirability of filing an 83(b) election in
connection with the exercise of the Option.) 
Upon a resale of such Shares by the Optionee, any difference between the
sale price and the fair market value of the Shares on the date of exercise of
the Option, to the extent not included in income as described above, will be
treated as capital gain or loss.


 


3





















 


	
   

  	
  SILICON
  GRAPHICS, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Sandra M.
  Escher

  
	
   

  	
  Senior Vice
  President, General Counsel and

  Secretary

  



 


Optionee
acknowledges receipt of a copy of the Plan, a copy of which is annexed hereto,
and represents that he or she is familiar with the terms and provisions
thereof, and hereby accepts this Option subject to all of the terms and
provisions thereof.  Optionee hereby
agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under the Plan.


 


 


	
   

  	
   

  	
   

  
	
   

  	
  Optionee

  



 


4