Document:

Exhibit 10.1

 

SILICON GRAPHICS, INC.

 

AMENDED AND RESTATED

1985 STOCK INCENTIVE PROGRAM

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

1

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

4.                                       Administration of the Program.

 

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

 

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

 

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

 

3

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

5.                                       Eligibility.

 

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

 

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

 

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

 

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

 

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

 

7.                                       Option Exercise Price and Consideration of Shares.

 

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

 

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

 

5

 

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

 

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

 

8.                                       Options.

 

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

 

(b)                                 Exercise of Option.

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

7

 

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

 

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

 

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

 

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

 

9.                                       Transferability
of Options.  Unless otherwise
determined by the Committee to the contrary, Options may not be sold, pledged,
assigned, hypothecated, transferred or disposed of in any manner other than by
will or by the laws of descent or distribution and may be exercised, during the
lifetime of the Optionee, only by the Optionee. 
The Committee may, in the manner established by the Committee, provide
for the transfer, without payment of consideration, of an Option by the
Optionee to the Optionee’s “immediate family”. 
In such case, the Option will be exercisable only by such
transferee.  Following a transfer, any
such Options shall continue to be subject to the same terms and conditions as were
applicable immediately prior to the transfer. 
For purposes of this Section 9, the Optionee’s “immediate family” shall
include any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, including
adoptive relationships, any person sharing the Optionee’s household (other than
a tenant or employee), a trust in which these persons have more than fifty
percent of the beneficial interest, a foundation in which these persons (or the
Optionee) control the management of assets, and any other entity in which these
persons (or the Optionee) own more than fifty percent of the voting
interests.  A transfer under a domestic
relations order in settlement of marital property rights is not a prohibited
transfer for value.

 

8

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

9

 

expiration of an Option, as
well as the price per share of Common Stock covered by each such outstanding
Option, shall be proportionately adjusted for any increase or decrease in the
number of issued shares of Common Stock resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Common
Stock, or any other increase or decrease in the number of issued shares of
Common Stock effected without receipt of consideration by the Company;
provided, however, that conversion of any convertible securities of the Company
shall not be deemed to have been “effected without receipt of consideration.”  Such adjustment shall be made by the Board, whose
determination in that respect shall be final, binding and conclusive.  Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.

 

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

 

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

 

13.                                 Amendment and Termination of the Program.

 

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

 

10

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

11Exhibit 10.2

 

SILICON GRAPHICS, INC.

AMENDED AND RESTATED

1989 EMPLOYEE BENEFIT STOCK PLAN

 

1.                                      Purpose.

 

This Plan is
intended to provide a means for Silicon Graphics, Inc. (the “Company”), by
granting shares of Company stock in the form of stock grants (“Stock Grants”),
grants of restricted stock (“Restricted Stock”) and options to purchase Company
stock (“Options”) to selected management and other key employees, to attract
and retain persons of ability and motivate them to advance the interests of the
Company.  An employee eligible to
participate under the Plan is hereinafter referred to as an “Employee.”

 

It is intended
that the Plan be interpreted in accordance with Rule 16b-3 under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”).  It is also intended that, except as otherwise
limited by paragraph 2, some or all of the Options granted to Employees under
the Plan may constitute “incentive stock options” within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended (the “Code”), and some or
all of the Options may constitute “nonstatutory options”, i.e., options not
qualifying under Section 422 or other similar provisions of the Code.  Unless otherwise indicated, the terms and
conditions of the Plan shall apply equally to all Stock Grants, grants of
Restricted Stock and Options hereunder, regardless of whether Options be
incentive stock options or nonstatutory options.

 

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

 

(a)                                  “Continuous
Status as an Employee” means that the relationship as an Employee is not
interrupted or terminated by the Company. 
Continuous Status as an Employee 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 Employee’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 or
between the Company and its subsidiaries.

 

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

 

(c)                                  “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 (or if no sales of shares were
made on such date, the closing price of a share as reported for the preceding
day), unless the Committee shall determine that such method does not reflect,
due to circumstances prevailing at that time, the true fair market value of the
Company’s Common Stock.  In that event,
the Committee shall determine fair market value through such alternative method
as it may in good faith determine to be then appropriate.

 

3.                                      Shares Subject to the Plan.

 

Subject to
adjustment as provided in Section 11, a total of 7,888,000 shares of authorized
but unissued or reacquired Common Stock of the Company is authorized and
reserved for issuance to Employees under the Plan in the form of Stock Grants
or grants of Restricted Stock or upon the exercise of Options; provided,
however, that no more than 7,888,000 shares shall be cumulatively available for
the grant of incentive stock options under the Plan.  If any Option expires or terminates without
having been exercised in full, the unacquired shares (including shares
forfeited on the termination of any grant of Restricted Stock) shall be
available for the grant of future Stock Grants, grants of Restricted Stock or
Options under the Plan.

 

4.                                      Administration.

 

The Plan shall
be administered by a Committee of the Board of Directors of the Company,
consisting of at least two (2) disinterested persons not eligible to
participate under this Plan or under any other stock or option plan of the
Company or its subsidiaries

 

2

 

except as may be permitted in
accordance with Rule 16b-3 under the Exchange Act (the “Committee”).

 

5.                                      Eligibility.

 

The Committee
shall determine the Employees to whom, and the number of shares for which,
Stock Grants, grants of Restricted Stock and/or Options shall be granted,
taking into consideration such factors, including any recommendations of the
Chief Executive Officer of the Company, as it deems relevant to select and
motivate employees of ability to advance the interests of the Company.  Employees so selected shall be either
management or other key employees of the Company or its subsidiaries, who the
Committee determines have contributed materially to the success of the Company
or are in a position to contribute materially to the future success of the
Company.  Except as hereafter limited, an
Employee from time to time may be granted any combination of Stock Grants,
grants of Restricted Stock and Options (incentive or nonstatutory) as the
Committee shall determine.

 

An employee
shall not be eligible to receive an incentive stock option if immediately
before the Option is to be granted the employee owns (directly and through
application of the constructive stock ownership attribution rules of Section
424(d) of the Code) more than ten percent of the total combined voting power of
all classes of stock of the Company or any subsidiary.  The aggregate Fair Market Value (determined
at the time an Option is granted) of shares with respect to which incentive
stock options are exercisable for the first time by an Employee during any
calendar year (under this Plan and all other plans of the Company and its
subsidiaries pursuant to Section 422 of the Code) shall not exceed $100,000.

 

6.                                      Stock Options.

 

All Options
granted hereunder shall be evidenced by an Option Agreement executed as of the
date of grant by the Company and the Employee, on such terms as may be
determined by the Committee, including the following:

 

(a)                                  The
Option Agreement shall specify whether the Option is an incentive stock option
or a nonstatutory option.

 

3

 

(b)                                 The
“date of grant” for any Option granted under the Plan shall be specified in the
Option Agreement.

 

(c)                                  The
Option exercise price per share shall be specified in the Option Agreement and
shall be equal to 100% of the Fair Market Value of a share of Company Common
Stock on the date of grant.

 

(d)                                 The
Option exercise price shall be paid at the time of exercise.  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: (1)
cash; (2) check; (3) other shares which (i) in the case of shares acquired upon
exercise of an option, have been owned by the Employee for more than six months
on the date of surrender and (ii) have an aggregate 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 as
the Committee determines are consistent with the Plan’s purpose and applicable
law.  Any fractional share not required
for payment of the Option exercise price shall be paid for by the Company in
cash on the basis of the same value utilized for such exercise.

 

(e)                                  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

 

4

 

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.

 

(f)                                    An
incentive stock option hereunder shall not contain terms pursuant to which the
exercise of the Option would affect the Employee’s right to exercise a
nonstatutory option hereunder, or vice versa, such that the incentive stock
option would be deemed a prohibited “tandem stock option” within the meaning of
Section 422 of the Code and the regulations thereunder.

 

(g)                                 Unless
the issuance of the shares upon the exercise of an Option hereunder is
registered or exempt under federal and state securities laws, the Employee
shall be required to give an investment representation at the time of exercise,
and transfer of the shares shall be appropriately restricted.

 

(h)                                 During
the lifetime of an Employee, Options held by such Employee may be exercised
only by the Employee and only while an Employee of the Company or of a parent
or a subsidiary of the Company and only if such Employee has maintained his or
her Continuous Status as an Employee since the date such Options were granted;
provided, however, that:

 

(1)                                  In
the event an Employee’s Continuous Status as an Employee terminates (other than
upon his or her death or Disability), the Option holder 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, 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
Employee 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

 

5

 

that the Employee was not entitled to
exercise an Option at the date of such termination, and to the extent that he
or she does not exercise such Option (to the extent otherwise so entitled)
within the time specified herein, the Option shall terminate.

 

(2)                                  In
the event an Employee’s Continuous Status as an Employee terminates as a result
of his or her Disability, the Option holder 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 Employee 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 the
Employee was not entitled to exercise an Option at the date of such
termination, and to the extent that he or she does not exercise such Option (to
the extent otherwise so entitled) within the time specified herein, the Option
shall terminate.

 

(3)                                  In
the event of an Employee’s death, the Employee’s estate or a person who
acquired the right to exercise the deceased Employee’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 Employee 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 the Employee was not entitled to exercise an Option at the date of
death, and to the extent that the Employee’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.

 

6

 

(4)                                  Except
as otherwise provided, in no event shall any Option be exercisable at any time
after its expiration date.

 

(5)                                  On
a case-by-case basis, the Committee may, in its sole discretion, accelerate the
schedule of the time or times when an Option granted under this Plan may be
exercised or extend the period for exercise to a time after the expiration
date.  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
Employee’s Options will become exercisable in full if, within twenty-four (24)
months after a change in control of the Company (as specified by the
Committee), the Employee’s employment is terminated without cause or the
Employee 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.

 

(i)                                                                                   Unless
otherwise determined by the Committee to the contrary, Options may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution and may be exercised,
during the lifetime of the Employee, only by the Employee.  The Committee may, in the manner established
by the Committee, provide for the transfer, without payment of consideration,
of an Option by the Employee to the Employee’s “immediate family”.  In such case, the Option will be exercisable
only by such transferee.  Following a
transfer, any such Options shall continue to be subject to the same terms and
conditions as were applicable immediately prior to the transfer.  For purposes of this Section 6(i), the
Employee’s “immediate family” shall include any child, stepchild, grandchild,

 

7

 

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
Employee’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 Employee) control the management of assets, and
any other entity in which these persons (or the Employee) 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.

 

7.                                      Stock Grants.

 

The Committee
may, in its discretion, award a Stock Grant to an Employee in furtherance of
the Plan’s purposes; provided, however, that no Employee shall be eligible to
receive a Stock Grant for more than fifty (50) shares of Company Common Stock
in any calendar year.  An Employee receiving
a Stock Grant shall be entitled to all of the rights and privileges in the
Common Stock awarded as of the date on which the award is made.  Unless the issuance of shares pursuant to a
Stock Grant is registered or exempt under federal or state securities laws, the
Employee shall be required to give an investment representation at the time of
grant, and transfer of the shares shall be appropriately restricted.

 

8.                                      Grants of Restricted Stock.

 

(a)                                The
Committee may, in its discretion and in furtherance of the purposes of the
Plan, grant Restricted Stock to an Employee. 
With respect to awards of Restricted Stock, the Committee shall:

 

(i)                                     Select
the Employees to whom grants will be made (the “Participants”);

 

(ii)                                  Determine
the number of shares to be awarded;

 

8

 

(iii)                             Determine
the length of the restricted period, if any, and the performance and employment
conditions under which the Restricted Stock may be forfeited to the Company, if
any;

 

(iv)                            Determine
the purchase price, if any, to be paid by the Participant for such Restricted
Stock; and

 

(v)                               Determine
any restrictions other than those set forth in this Section 8.

 

(b)                                 The
terms of each award of Restricted Stock shall be set forth in a written award
agreement (the “Award Agreement”) and a certificate representing the number of
shares of Common Stock granted shall be issued to the Participant as the
registered owner.  The certificate
representing such shares shall be legended as to sale, transfer, assignment,
pledge or other encumbrances during the restricted period and shall be
deposited by the Participant, together with a stock power endorsed in blank,
with the Company.  Such certificates
shall be held in the custody of the Company until the restricted period expires
or until all restrictions thereon otherwise lapse.

 

(c)                                  Subject
to the restrictions set forth in this Section 8 or in the Award Agreement, each
Participant who receives Restricted Stock shall have all rights as a
stockholder with respect to such shares, including the right to vote the shares
and receive dividends and other distributions.

 

(d)                                 The
Award Agreement may provide, or the Committee may subsequently determine in its
discretion, that, in the case of death, Disability or other special circumstances,
any or all restrictions then applicable to a Participant’s Restricted Stock be
waived.

 

(e)                                  The
Committee may, in its sole discretion, declare the restrictions applicable to
shares of Restricted Stock to lapse in the event of a change in control of the
Company (as specified by the Committee), in which case the Company shall remove
all restrictive legends and stop-transfer orders applicable to the Restricted
Stock as of the date of said change in control

 

9

 

and
certificates representing such shares shall be delivered to the Participants.

 

(f)                                    Except
as otherwise provided in this Section 8 or in the Award Agreement, no shares of
Restricted Stock shall be sold, exchanged, transferred, pledged or otherwise
disposed of during the restricted period.

 

(g)                                 With
respect to any number of shares of Restricted Stock as to which the
restrictions imposed hereunder shall have lapsed, the restrictive legend shall
be removed and a new certificate representing the shares shall be delivered to
the Participant.  The Committee may, in
its sole discretion, modify or cancel the restrictions imposed on Restricted
Stock or otherwise accelerate the vesting of shares of Restricted Stock.

 

9.                                      Termination.

 

Unless sooner
terminated by action of the Board of Directors of the Company, the Plan shall
terminate ten (10) years from its effective date.  Options outstanding under the Plan at the
time of termination shall remain in effect until exercise or expiration.  Restricted Stock outstanding under the Plan
at the time of termination shall remain subject to the restrictions imposed at
the time of grant until the restricted period expires or until all conditions
with respect thereto otherwise lapse or are satisfied.

 

10.                               Effective Date; Shareholder Approval.

 

The Plan
became effective on September 7, 1988, the date of its adoption by the Board of
Directors of the Company, and was approved by the Company’s stockholders on May
16, 1989.  The effective date of each
amendment to the Plan shall be the date of adoption of such amendment by the
Board of Directors of the Company; provided, however, that in the event the
shareholders of the Company shall not approve any amendment to the Plan which
is determined by the Board of Directors to require approval by the
shareholders, such amendment shall be of no effect and no Stock Grant, grant of
Restricted Stock or Option previously granted shall be effective if the
authorization of the grant thereof was contingent on the effectiveness of such
amendment or shall otherwise be benefited or altered by such amendment.  No Stock Grants or grants of Restricted

 

10

 

Stock shall be made under the
Plan until shareholder approval of the Plan amendments authorizing such grants
is obtained.

 

11.                               Adjustments Upon Changes in Capitalization, Dissolution, Merger or
Asset Sale.

 

(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 each
outstanding grant of Restricted Stock, and the number of shares of Common Stock
which have been authorized for issuance under the Plan but as to which no
awards have been granted or which have been returned to the Plan upon
cancellation or expiration of an award, as well as the exercise price per share
of Common Stock covered by each outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from a stock split, reverse stock split, stock dividend,
combination or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.”  Such
adjustment shall be made by the Company’s Board of Directors, 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.

 

(b)                                 Dissolution or Liquidation. 
In the event of the proposed dissolution or liquidation of the Company,
to the extent that an Option 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 shall terminate as
of a date fixed by the Committee and give each holder the right to exercise his
or her Option as to all or any part of the

 

11

 

underlying Common Stock prior to such
expiration, including shares as to which the Option 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 shall
be assumed or an equivalent Option 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
Option holder to have the right to exercise the Option as to all or a portion
of the underlying Common Stock, including shares as to which it would not
otherwise be exercisable.  If the
Committee makes an Option exercisable in lieu of assumption or substitution in
the event of a merger or sale of assets, the Committee shall notify the holder
that the Option shall be exercisable for such period as the Committee may
designate, and the Option will terminate upon the expiration of such period.  For the purposes of this Section 11(c),
the Option shall be considered assumed if, immediately following the merger or
sale of assets, the Option confers the right to receive, for each share of
Common Stock subject to the Option 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 Option holder, provide
for the consideration to be received upon the exercise of the Option, for each
share of Common Stock subject to the Option, 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

 

12.                               Amendment.

 

The Board of
Directors may amend the Plan at any time as determined to be in the best
interests of the Company.  The Board of
Directors shall not, however, without shareholder approval, increase the
maximum number of shares subject to the Plan or restrict the class of
management and other key employees eligible to be awarded Stock Grants,
Restricted Stock or Options under the Plan.

 

13

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00077-of-00352.parquet"}]]