Exhibit
10.18   April 25, 2001  Warren Pratt [address omitted]  SGI 1600 Amphitheatre Pkwy. Mountain View, CA 94043-1389 Tel 650.960.1980   Robert R. Bishop Chairman and CEO       Dear Warren:  The purpose of this
letter is to modify the supplemental payment arrangement entered into in May
2000.  You will be entitled to
receive forgivable loans of up to an aggregate of $5 million from SGI in four
annual advances according to the schedule and terms set forth below if you
remain continuously employed by SGI through the applicable dates.  The loan advance schedule will be:  May 15, 2001         $2 million May 15, 2002         $1 million May 15, 2003         $1 million May 15, 2004         $1 million  Interest
will not accrue on the loans.  To the
extent that in any year interest is imputed to you in respect of the loans
under the Internal Revenue Code or other income tax laws, SGI will, as promptly
as practicable after December 31 of such year, make an additional payment to
you equal to [a] the interest imputed to you as a result of the loans for that
year plus the tax payable on payments under this paragraph, minus [b] the net
after-tax income you have received with respect to that year with respect to
the principal amount of the loans; it being agreed that, while you shall invest
the funds in bank or money market or similar conservative investments and shall
provide SGI with sufficient information to make a reasonable accounting, you
shall not be required to segregate these funds from other investments.  At the Measurement Date,
the Adjustment Balance will be calculated. 
If you are an active employee in good standing on May 15, 2005, the loan
will be settled based on the Adjustment Balance.  If your employment with SGI is terminated at any time on or prior
to May 15, 2005 [i] by SGI [or any designated responsible person or entity
acting on behalf of SGI or its assets] other than for Cause, [ii] by you for
Good Reason or [iii] as a result of death or Disability, the   
  April
25, 2001 Page
2   loan will be settled
based on the Adjustment Balance.  In the
event of a Change in Control of SGI, the loan will be settled based on the
Adjustment Balance.  Absent a Change in Control,
you will not be entitled to any additional advances or any forgiveness of the
outstanding loan amount if you terminate your employment with SGI prior to May
15, 2005 voluntarily other than for Good Reason or SGI terminates your
employment on or prior to May 15, 2005 for Cause.  For the purpose of this
agreement:  Cause means that you
are terminated for one of the following reasons: [1] willfully refusing or
failing to carry out specific directions of the Board of Directors or the Chief
Executive Officer of the Company; [2] for acting fraudulently or with willful
dishonesty in your relations with SGI; [3] for committing larceny,
embezzlement, conversion or any act involving the misappropriation of funds
from the Company in the course of your employment; [4] for having been
convicted of a crime involving an act of moral turpitude, fraud or
misrepresentation; or [5] for willfully engaging in misconduct which materially
injured the reputation, business or business relationship of the Company.  No act, or failure to act, by you will be
considered willful if done, or omitted to be done, by you in good faith and
in your reasonable belief that your act or omission was in the best interests
of SGI or required by applicable law.  Change in Control has
the meaning set forth in the employment continuation agreement between you and
SGI dated as of May 8, 2000.  Disability means a
physical or mental illness or injury that, as determined by SGI in good faith,
continuously prevents you from performing your duties with SGI for a period of
six months prior to termination.  Fair Market Value will
mean the closing price of SGIs common stock on the relevant date [or if that
day is not a trading day on the New York Stock Exchange, the immediately prior
trading day].  In the event of a Change
in Control, Fair Market Value will mean the consideration paid per share of
SGIs common stock in the Change in Control transaction.  Good Reason for your
voluntary resignation from SGI means your resignation  [1]as a result of the assignment to you of
duties or responsibilities that are inconsistent with the role of a senior
executive of SGI, [2]as a result of a fundamental disagreement
with the Board of Directors, the Chief Executive Officer or the President
regarding corporate strategy,   
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25, 2001 Page
3   [3]upon the occurrence of an Insolvency
Event; provided that if the Insolvency Event is a Chapter 11 case, whether it
is commenced voluntarily or involuntarily, your resignation occurs not less
than 6 months following the commencement of such Chapter 11 Case and not more
than 6 months after a plan of reorganization is confirmed by the Bankruptcy
Court, [4]as a result of SGIs failure to advance a
loan installment or other payment to be made hereunder within 15 days following
the scheduled date,  or [5]as a result of the occurrence of one or
more of the following events, unless such event[s] apply generally to all
senior officers of SGI: [a]without your express written consent, the
substantial reduction, without good business reasons, of the facilities and
perquisite [including office space and location] available to you, [b]a reduction by SGI of your salary or
annual incentive bonus compensation formula as currently in effect, [c]a material reduction by SGI in the kind
or level of employee benefits to which you are currently entitled with the
result that your overall benefits package is significantly reduced, or the
taking of any action by SGI which would materially and adversely affect your
participation in any plan, program or policy generally applicable to executives
or employees of SGI [including but not limited to paid vacation days], or [d]Without your consent, SGIs requiring you
to be based [i] anywhere other than your present location, except for required
travel on SGIs business to an extent substantially consistent with your
present business travel obligations, or [ii] at a location more than 25 miles
from your present location.  Insolvency Event means
[i] a receiver, trustee, liquidator or custodian is appointed on behalf of SGI
or a substantial part of its property, [ii] SGI makes a general assignment for
the benefit of its creditors, [iii] SGI is dissolved or liquidated in full or
in part, or [iv] a case or other proceeding seeking liquidation, reorganization
or other relief with respect to SGI or its debts is commenced under any
bankruptcy, insolvency or other similar law now or hereafter in effect.  Measurement Period
means the period that begins May 15, 2000 and ends on the date [the
Measurement Date] that is the first to occur of the termination date of your
employment, a Change in Control, or May 15, 2005.   
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25, 2001 Page
4   The
loan will be forgiven and/or be repaid at the Measurement Date based on an
Adjustment Balance determined as follows:  B = X[Y + Z], where  B is the Adjustment Balance;  X is $1 million for the period from May 15, 2000 through May 14, 2001,
then $2 million from May 15, 2001 through May 14, 2002, then $3 million from
May 15, 2002 through May 14, 2003, then $4 million from May 15, 2003 through
May 14, 2004, and $5 million from May 15, 2004 until May 15, 2005;  Y is the sum of all payments received or to be received by you in
connection with a change in control of SGI as defined in the employment
continuation agreement between you and SGI; and  Z is the total value of vested stock options and restricted stock held
or sold during the Measurement Period, whether granted before or after the date
of this agreement, and including the MIPS Technologies shares issued as a
dividend on SGI restricted stock in June 2000. 
In computing such total value, the value of any particular option or
share of restricted stock [other than the MIPS shares] will be equal to the difference
between the exercise price, if any, and the highest of the following:  [a]the per share
proceeds of sale of shares sold by you prior to the Measurement Date; [b]the Fair
Market Value on the Measurement Date [or in the case of options that expire
during the Measurement Period, the expiration date] of options or shares
[whether or not exercised or sold] that were vested at any time during the
Measurement Period.  If on the
Measurement Date you are not able to exercise and sell your vested options or
shares due to insider trading or other restrictions established by SGI, the
Measurement Date will be extended to the nearest future date that you are able
to exercise your options and sell your shares; and [c]$12.00, in the
case of vested shares or options held during a period of ten consecutive
trading days on which you were free to sell shares under SGIs insider trading
policy and the Fair Market Value was $12.00 or greater.   
  April
25, 2001 Page
5   Upon
vesting of restricted stock, you are authorized to have SGI cancel shares equal
to the amount of taxes SGI is required to withhold and these shares will be
valued at their Fair Market Value on the cancellation date for the calculation
of Z.  The
MIPS shares received as a dividend on SGI restricted stock will be valued at
their actual gross sale price per share or, if not sold prior to the
Measurement Date, at their Fair Market Value on the Measurement Date.  If
during the Measurement Period, there occurs with respect to SGIs Common Stock
any forward or reverse stock split, or any dividend payable in Common Stock of
SGI, or any distribution to SGI stockholders of cash or securities, then the
calculation of the total value of restricted stock and stock options shall be
adjusted in a manner determined by the Compensation Committee of the SGI Board
of Directors in order to appropriately reflect the impact of such events.  If
the Adjustment Balance is positive at the Measurement Date, you agree to repay
the loan in an amount equal to [Y + Z]. 
The remaining balance of the loan will be deemed to be forgiven as of
the repayment date upon your delivery to SGI of a release satisfactory in form
to SGI releasing SGI and its officers, directors, and affiliates from all
claims and liabilities that might otherwise arise from or be asserted with
respect to your employment at SGI or the termination thereof.  The forgiveness of the loan will be reported
as income to you for that tax year.  If
the Adjustment Balance is negative at the Measurement Date, you will repay the
loan in full.  Other
than in the event of a Change in Control, SGI will give you a written
calculation of the Adjustment Balance within 10 days after a Measurement Date
and to the extent the Adjustment Balance indicates the loan is to be repaid,
the repayment will be due within 30 days. 
The repayment will be made in cash unless SGI, in its sole discretion,
offers you the option of tendering shares or vested options in satisfaction of
the obligation.  In the event of any
dispute regarding the circumstances of your termination, the repayment date
will be extended by the time periods set out in the next paragraph.  In the event of a Measurement Date resulting
from a Change in Control, the written calculation of the Adjustment Balance
will be delivered at the earlier of 10 days following the termination of your
employment or within three months if you continue to be employed by SGI or its
successor following the Change in Control. 
If a Measurement Date occurs as a
result of a Change in Control prior to May 15, 2004, and if you continue to be
employed by SGI or its successor for more than three months following the
Change in Control [or through the date of a scheduled loan advance, if
earlier], then you and SGI or its successor will negotiate a successor
agreement that will be intended to provide you with economic benefits no less
favorable than what would have occurred under this agreement if such Change in
Control had not occurred.  The successor
agreement will, at a minimum, provide for the annual loan advances contemplated
by this agreement and will guarantee that    
  April
25, 2001 Page
6   you realize supplemental compensation [compensation
in addition to your salary, bonus, benefits and perquisites] on an annual basis
in the amount of the loan advances so long as you continue to be employed on
the terms described in this agreement through May 15, 2005.  The guaranteed supplemental compensation can
be realized in the form of a return on your equity position with the successor
company, through loan forgiveness, or through other cash payments.  With regard to this supplemental
compensation, you will have no obligation to the successor company beyond May
15, 2005.  Unless
you provide written notification of your intention to resign for Good Reason
within 30 days after you know or have reason to know of the occurrence of any
such event, you will be deemed to have consented thereto and the event will no
longer constitute Good Reason for purposes of this agreement.  If you provide such written notice, SGI will
have 20 business days from the date of receipt of such notice to effect a cure
of the event described therein [which cure will be retroactive with respect to
any monetary matter] and, upon cure thereof by SGI to your reasonable
satisfaction, such event will no longer constitute Good Reason for purposes of
this agreement.  To dispute a
termination by the Company or any failure to make payments claimed to be due
hereunder you must give written notice of such dispute to the Company within 30
days after receiving a notice of termination, or within 30 days after the date
on which a payment claimed by you to be due hereunder was due to be made, as
the case may be.  In
the event of any dispute, claim, question, or disagreement arising out of or
relating to this agreement or the breach thereof, the parties hereto agree to
first use their best efforts to settle such matters in an amicable manner.  Initially, they shall consult and negotiate
with each other, in good faith and, recognizing their mutual interests, attempt
to reach a just and equitable solution satisfactory to both parties.  If they do not reach such resolution within
a period of sixty [60] days, then upon written notice by either party to the
other, any unresolved dispute, claim or differences shall be submitted to
confidential mediation by a mutually agreed upon mediator.  Either party may, without inconsistency with
this agreement, apply to any court having jurisdiction hereof and seek
injunctive relief so as to maintain the status quo until such time as the
mediation is concluded or the controversy is otherwise resolved.  The site of the mediation shall be in the
County of Santa Clara, California.  Each
party shall each bear its own costs and expenses and an equal share of the
mediators and any similar administrative fees.  If
any such dispute is finally determined in your favor through a judicial
proceeding, the Company shall reimburse all reasonable fees and expenses,
including attorneys and consultants fees, that you incur in good faith in
connection therewith.  If the dispute
involves an amount to be paid, the Company shall reimburse such fees to the
extent you received half or more of the amount in dispute.    
  April
25, 2001 Page
7   SGI
will require any successor or assignee, in connection with any sale, transfer
or other disposition of all or substantially all of SGIs assets or business,
whether by purchase, merger, consolidation or otherwise, expressly to assume
and agree to perform SGIs obligations under this agreement.  This
Agreement shall be governed by and construed in accordance with the laws of the
State of California applicable to agreements made and to be performed entirely
within such state.  This
Agreement and any written agreements or Company plans that are referenced
herein represent the entire agreement and understanding between you and SGI as
to the subject matter hereof and supersede all prior or contemporaneous
agreements, whether written or oral. 
This Agreement restates our prior agreements to reflect
amendments through October 5, 2001 and is made effective in its
entirety as of April 25, 2001.  No waiver, alteration or
modification, if any, of the provisions of this Agreement shall be binding
unless in writing and signed by you and a duly authorized representative of
SGI.  Sincerely,    Robert
R. Bishop Chairman
and Chief Executive Officer   ACCEPTED
AND AGREED TO AS OF THE
DATE FIRST SET FORTH ABOVE:    /s/  WARREN PRATTWarren Pratt