Exhibit
10.4


 


SILICON
GRAPHICS, INC.


 


AMENDED
AND RESTATED 1996 SUPPLEMENTAL NON-

EXECUTIVE EQUITY INCENTIVE PLAN


 


1.                                       Purpose
of the Plan.  The purpose of the
Silicon Graphics, Inc. 1996 Supplemental Non-Executive Equity Incentive Plan
(the “Plan”) is to promote the long-term success of Silicon Graphics, Inc. (“SGI”)
by providing supplemental equity incentives to non-executives of the Company to
address special circumstances identified from time to time by the Compensation
and Human Resources Committee (the “Committee”) appointed by the Board of
Directors of SGI (the “Board”), which could without limitation include special
retention programs addressing exceptional competitive pressures in the market
for technical personnel, special recognition programs for outstanding
performance, and other circumstances outside of the normal course.


 


2.                                       Eligibility.  Stock Awards (“Rights”) and Options may be
granted to Eligible Employees.  If
otherwise eligible, an Employee 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 11 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 22,500,000
shares.  If shares issued pursuant to a
Stock Award are forfeited or otherwise reacquired by the Company, or if an
Option or Right expires or becomes unexercisable without having been exercised
in full, the reacquired or unpurchased shares, respectively, that were subject
thereto shall become available for future grant or sale under the Plan (unless
the Plan has terminated).


 


(b)                                 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.


 


4.                                       Plan Administration.


 


(a)                                  Committee.  The Committee shall be responsible for
administering the Plan.  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.


 


(b)                                 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.


 


5.                                       Duration of the Plan.  The Plan shall remain in effect until
terminated 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 and Stock Awards.


 


7.                                       Options.


 


(a)                                  Options; Number of
Shares.  The Committee, in its
discretion, may grant Options to eligible participants.  Each Option shall be evidenced by a Notice of
Grant that shall specify the number of shares to which it pertains 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.


 


(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 than 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.


 


(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 may consist entirely of:


 


(1)                                  cash;


 


(2)                                  check;


 


(3)                                  other shares that
(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 SGI 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)                              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 (24) 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.


 


(v)                                 Buyout Provisions.  The Committee may at any time offer to buy
out 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)                                 Method of
Exercise.


 


(i)                                     Procedure for
Exercise; Rights as a Stockholder. 
Any Option granted hereunder shall be exercisable at such times and
under such conditions as determined by the Committee 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 shall be deemed to be exercised
when written notice of such exercise has been given to the Company in
accordance with the terms of the Option by the person entitled to exercise the
Option and full payment for the shares with respect to which the Option is
exercised has been received by the Company. 
Full payment may, as authorized by the Committee 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 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 11 of the Plan.


 


Exercise of an Option in any manner shall
result in a decrease in the number of shares that 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.


 


(ii)                                  Termination of
Employment Relationship.  In the
event an Optionee ceases to be an Employee (other than as a result of the
Optionee’s death or Disability), the Optionee may exercise his or her Option,
but only within such period of time from the date of such termination as is
determined by the Committee 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 as set forth in the Option Agreement). 
To the extent that Optionee was not entitled to exercise an Option at
the date of such termination, and to the extent that the Optionee does not
exercise such Option (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.


 


(iii)                               Disability of
Optionee.  In the event an Optionee
ceases to be an Employee as a result of the Optionee’s Disability, the Optionee
may exercise his or her Option, but only within twelve (12) months from the
date of such termination, and, unless determined otherwise by the Committee,
only to the extent that the 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 as set forth in the Option 


 





















 


Agreement).  To the extent that
Optionee was not entitled to exercise an Option at the date of such
termination, and to the extent that the Optionee does not exercise such Option
(to the extent otherwise so entitled) within the time specified herein, the
Option 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 by bequest or inheritance may exercise the Option, but only
within twelve (12) months following the date of death, and, unless determined
otherwise by the Committee, only to the extent that the 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 as set forth in the Option Agreement).  To the extent that Optionee was not entitled
to exercise an Option 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 (to the extent otherwise so entitled) within the time
specified herein, the Option shall terminate.


 


8.                                       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.                                       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.  The Committee also may require or 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.


 


10.                                 Tranferability
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 10,
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.


 


11.                                 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 that 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.


 


(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 11(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 (either 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.


 


12.                                 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.


 


13.                                 Amendment
and Termination of the Plan.


 


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


 


(b)                                 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.


 


14.                                 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.


 


15.                                 Liability
of Company.  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.


 


16.                                 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.


 


17.                                 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.


 


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


 


(e)                                  “Eligible Employee”
means an Employee who is not a vice-president or more senior Employee.


 


(f)                                    “Employee”
means any person employed by the Company.


 


(g)                                 “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.


 


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


 


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


 


(j)                                     “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.


 


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


 


(l)                                     “Optionee”
means an Employee who holds an outstanding Option or Right.


 


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


 





















 


(RENEWAL)


 


SILICON GRAPHICS, INC.


AMENDED AND RESTATED


1996 SUPPLEMENTAL NON-EXECUTIVE
EQUITY INCENTIVE 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 included in this Option package, and in all respects subject to
the terms, definitions and provisions of the Amended and Restated 1996
Supplemental Non-Executive Equity Incentive 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 included in this Option grant package and also available at
http://www-finance.corp.sgi.com/stock or upon request from Employee Stock
Services (MS-645 or stock_support@sgi.com). Optionee further 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.


 


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 SGI’s Employee Stock Services
group or by using the electronic methods approved from time to time by Employee
Stock Services (currently www.optionslink.com). 
If an electronic exercise method is not chosen, such notice shall be in
the form of Exhibit A (Stock Exercise Request) found at the Employee
Stock Services’ website 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 SGI 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 a cashless exercise of the Option and
delivery to SGI of the sale proceeds required to pay the exercise price.


 


2





















 


6.                                       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 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, SGI may require Optionee to make any representation and warranty to SGI
as may be required by any Applicable Law or regulation.


 


7.                                       Termination
of Status as an Employee.  If
Optionee ceases to serve as an Employee, he or she may, but only within three
(3) months after the date he or she ceases to be an Employee 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 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 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


 


3





















 


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 SGI, 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)                                     an 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
SGI means:


 


(i)                                     the acquisition by
any Person (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”)) as Beneficial Owner (as such term is
used in Rule 13d-3 promulgated under the Exchange


 


4





















 


Act), directly or indirectly, of fifty percent (50%) or more of the
combined voting power of the outstanding shares of capital stock of SGI’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 the NOTICE whose election, or nomination
for election by SGI’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 Exchange 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.


 


5





















 


(NEW
HIRE)


 


SILICON GRAPHICS, INC.


AMENDED AND RESTATED


1996 SUPPLEMENTAL NON-EXECUTIVE
EQUITY INCENTIVE 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 included in this Option package, and in all respects subject to
the terms, definitions and provisions of the Amended and Restated 1996
Supplemental Non-Executive Equity Incentive 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 included in this Option grant package and also
available at http://www-finance.corp.sgi.com/stock or upon request from
Employee Stock Services (MS-645 or stock_support@sgi.com). Optionee further
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.


 


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 SGI’s Employee Stock Services
group or by using the electronic methods approved from time to time by Employee
Stock Services (currently www.optionslink.com). 
If an electronic exercise method is not chosen, such notice shall be in
the form of Exhibit A (Stock Exercise Request) found at the Employee
Stock Services’ website 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 SGI 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 the Company 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 a cashless exercise of the Option and
delivery to SGI of the sale proceeds required to pay the exercise price.


 


2





















 


6.                                       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 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, SGI may require Optionee to make any representation and warranty to SGI
as may be required by any Applicable Law or regulation.


 


7.                                       Termination
of Status as an Employee.  If
Optionee ceases to serve as an Employee, he or she may, but only within three
(3) months after the date he or she ceases to be an Employee 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 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 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


 


3





















 


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 SGI, 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)                                     an 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
SGI means:


 


(i)                                     the acquisition by
any Person (as such term is used in Sections 13(d) and 14(d) of the Securities
Exchange Act of 1934 (the “Exchange Act”) as Beneficial Owner (as such term is
used in Rule 13d-3 promulgated under the Exchange


 


4





















 


Act), directly or indirectly, of fifty percent (50%) or more of the
combined voting power of the outstanding shares of capital stock of SGI’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 the NOTICE whose election, or nomination
for election by SGI’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 Exchange 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.


 


5