Document:

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

 

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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.

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

 

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(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) promissory note; (4) 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; (5) 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; (6) any combination of the foregoing
methods of payment; or (7) 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 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

 

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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 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

 

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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.

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

 

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(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,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in-law, daughter-

 

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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;

(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;

 

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

 

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

 

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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 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,

 

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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.          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

 

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restrict the class of management and other key employees eligible to be
awarded Stock Grants, Restricted Stock or Options under the Plan.

 

13Exhibit 10.3

 

SILICON GRAPHICS, INC.

AMENDED AND RESTATED

1993 LONG-TERM INCENTIVE STOCK PLAN

 

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

 

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

 

3.                                       Stock
Subject to the Plan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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4.                                       Plan
Administration.

 

(a)                                  Committees.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

7.                                       Options
and SARs.

 

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

 

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

 

(ii)                                  Waiting Period and Exercise Dates.  At the time an Option is granted, the
Committee shall determine the terms and conditions to be satisfied before
shares may be purchased, including the dates on which shares subject to the
Option may first be purchased. The Committee may specify that an Option may not
be exercised until the completion of a service period specified at the time of
grant. (Any such period is referred to herein as the “waiting period.”) At the
time an Option is granted, the Committee shall fix the period within which the
Option may be exercised, which shall not be earlier than the end of the waiting
period, if any, nor, in the case of an Incentive Stock Option, later than ten
(10) years, from the date of grant.

 

(iii)                               Form of Payment.  The
consideration to be paid for the shares to be issued upon exercise of an
Option, including the method of payment, shall be determined by the Committee
(and, in the case of an Incentive Stock Option, shall be determined at the time
of grant) and may consist entirely of:

 

4

 

(1)                                  cash;

 

(2)                                  check;

 

(3)                                  promissory note;

 

(4)                                  other
shares which (1) 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 (2) 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;

 

(5)                                  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;

 

(6)                                  any combination of the foregoing methods of payment; or

 

(7)                                  such other consideration and method of payment for the
issuance of shares to the extent permitted by Applicable Laws.

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

(vi)                              Other Provisions.  Unless otherwise determined by the Committee
at the time of grant, each Option shall provide that in the event of a change
in control of the Company (as specified by the Committee), any Optionee’s
Options will become exercisable in full if, within twenty-four months after a
change in control of the Company, the Optionee’s employment is terminated
without cause or the Optionee resigns due to certain involuntary relocations or
reductions in compensation, as specified by the Committee. Each Option granted
under the Plan may contain such other terms, provisions, and conditions not
inconsistent with the Plan as may be determined by the Committee.

 

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

 

(b)                                 SARs.

 

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

 

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

 

6

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(c)                                  Method of Exercise.

 

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

 

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

 

An
Option or SAR shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option or SAR by the person entitled to exercise the Option or SAR and full
payment for the shares with respect to which the Option is exercised has been
received by the Company. Full payment may, as authorized by the Committee and
permitted by the

 

7

 

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 12 of the Plan.

 

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

 

(ii)                                  Termination of Employment, Consulting or Director Relationship.  In the event an Optionee’s Continuous Status
as an Employee , Consultant or Director terminates (other than upon the Optionee’s
death or Disability), the Optionee may exercise his or her Option or SAR, but
only within such period of time from the date of such termination as is
determined by the Committee, not to exceed three (3) months in the case of an
Option that is intended to qualify as an Incentive Stock Option, and, unless
determined otherwise by the Committee, only to the extent that the Optionee was
entitled to exercise it at the date of such termination (but in no event later
than the expiration of the term of such Option or SAR as set forth in the
Option or SAR Agreement). To the extent that Optionee was not entitled to
exercise an Option or SAR at the date of such termination, and to the extent
that the Optionee does not exercise such Option or SAR (to the extent otherwise
so entitled) within the time specified herein, the Option or SAR shall
terminate.

 

(iii)                               Disability of Optionee. 
In the event an Optionee’s Continuous Status as an Employee ,Consultant
or Director terminates as a result of the Optionee’s Disability, the Optionee
may exercise his or her Option or SAR, but only within twelve (12) months from
the date of such termination, and, unless determined otherwise by the
Committee, only to the extent that the Optionee was entitled to exercise it at
the date of such termination (but in no event later than the expiration of the
term of such Option or SAR as set forth in the Option or SAR Agreement). To the
extent that Optionee was not entitled to exercise an Option or SAR at the date
of such termination, and to the extent that the Optionee does not exercise such
Option or SAR (to the extent otherwise so entitled) within the time specified
herein, the Option or SAR shall terminate.

 

(iv)                              Death of Optionee.  In the event of an Optionee’s death, the
Optionee’s estate or a person who acquired the right to exercise the deceased
Optionee’s Option or SAR by bequest or inheritance may exercise the Option or
SAR, but only within twelve (12) months following the date of death, and,
unless determined otherwise

 

8

 

by
the Committee, only to the extent that the Optionee was entitled to exercise it
at the date of death (but in no event later than the expiration of the term of
such Option or SAR as set forth in the Option or SAR Agreement). To the extent
that Optionee was not entitled to exercise an Option or SAR at the date of
death, and to the extent that the Optionee’s estate or a person who acquired
the right to exercise such Option does not exercise such Option or SAR (to the
extent otherwise so entitled) within the time specified herein, the Option or
SAR shall terminate.

 

8.                                       Stock Awards.

 

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

 

9.                                       Outside Director Grants.

 

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

 

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

 

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

 

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

 

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

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

10

 

10.                                 Deferrals and Settlements. 
Payment of awards may be in the form of cash, Common Stock, other awards
or combinations thereof as the Committee shall determine, and with such
restrictions as it may impose including, without limitation, restrictions
imposed on Insiders under Rule 16b-3. The Committee also may require or permit
participants to elect to defer the issuance of shares or the settlement of
awards in cash under such rules and procedures as it may establish under the
Plan. The Committee may also provide that deferred settlements include the
payment or crediting of interest on the deferral amounts.

 

11.                                 Transferability of Options and Rights.  Unless otherwise determined by the Committee
to the contrary, Options and Rights may not be sold, pledged, assigned,
hypothecated, transferred or disposed of in any manner other than by will or by
the laws of descent or distribution and may be exercised, during the lifetime
of the Optionee, only by the Optionee. 
The Committee may, in the manner established by the Committee, provide
for the transfer, without payment of consideration, of an Option or Right by
the Optionee to the Optionee’s “immediate family”.  In such case, the Option or Right will be
exercisable only by such transferee. 
Following a transfer, any such Options or Rights shall continue to be
subject to the same terms and conditions as were applicable immediately prior
to the transfer.  For purposes of this Section 11,
the Optionee’s “immediate family” shall include any child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling,
niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law, or sister-in-law, including adoptive relationships, any person
sharing the Optionee’s household (other than a tenant or employee), a trust in
which these persons have more than fifty percent of the beneficial interest, a
foundation in which these persons (or the Optionee) control the management of
assets, and any other entity in which these persons (or the Optionee) own more
than fifty percent of the voting interests. 
A transfer under a domestic relations order in settlement of marital
property rights is not a prohibited transfer for value.

 

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

 

(a)                                  Changes in Capitalization. 
Subject to any required action by the stockholders of the Company, the
number of shares of Common Stock covered by each outstanding Option and Right,
and the number of shares of Common Stock which have been authorized for
issuance under the Plan but as to which no Options or Rights have yet been
granted or which have been returned to the Plan upon cancellation or expiration
of an Option or Right, as well as the price per share of Common Stock covered
by each such outstanding Option or Right, shall be proportionately adjusted for
any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock effected without receipt of
consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been “effected
without receipt of consideration.”  Such
adjustment shall be made by the Board, whose determination in that respect
shall be final, binding and conclusive. Except

 

11

 

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 12(c),
the Option or Right shall be considered assumed if, immediately following the
merger or sale of assets, the Option or Right confers the right to receive, for
each share of Optioned Stock subject to the Option or Right immediately prior
to the merger or sale of assets, the consideration (whether stock, cash, or
other securities or property) received in the merger or sale of assets by
holders of Common Stock for each share held on the effective date of the
transaction (and if holders were offered a choice of consideration, the type of
consideration chosen by the holders of a majority of the outstanding shares); provided, however, that if such consideration received in
the merger or sale of assets was not solely common stock of the successor
corporation or its parent, the Committee may, with the consent of the successor
corporation and the Optionee, provide for the consideration to be received upon
the exercise of the Option or Right, for each share of Optioned Stock subject
to the Option or Right, to be solely common stock of the successor corporation
or its parent equal in Fair Market Value to the per share consideration
received by holders of Common Stock in the merger or sale of assets.

 

13.                                 Date of Grant.  The
date of grant of an Option or Right shall be, for all purposes, the date on
which the Committee makes the determination granting such Option or Right, or
such other later date as is determined by the Committee. Notice of the 

 

12

 

determination
shall be provided to each Optionee within a reasonable time after the date of
such grant.

 

14.                                 Amendment and Termination of the Plan.

 

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

 

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

 

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

 

15.                                 Conditions Upon Issuance of Shares.

 

(a)                                  Legal Compliance. 
Shares shall not be issued pursuant to the exercise of an Option or
Right unless the exercise of such Option or Right and the issuance and delivery
of such shares shall comply with all relevant provisions of law, including,
without limitation, the Securities Act of 1933, as amended, the Exchange Act,
the rules and regulations promulgated thereunder, Applicable Laws, and the
requirements of any stock exchange or quotation system upon which the shares
may then be listed or quoted, and shall be further subject to the approval of counsel
for the Company with respect to such compliance.

 

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

 

16.                                 Liability of Company.

 

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

 

13

 

(b)                                 Grants Exceeding Allotted Shares.  If the Optioned Stock covered by an Option or
Right exceeds, as of the date of grant, the number of shares which may be
issued under the Plan without additional stockholder approval, such Option or
Right shall be void with respect to such excess Optioned Stock, unless
stockholder approval of an amendment sufficiently increasing the number of
shares subject to the Plan is timely obtained in accordance with Section 14
of the Plan.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(e)                                  “Continuous Status as an Employee or Consultant”, means that
the relationship as an Employee or Consultant is not interrupted or terminated
by the Company. Continuous Status as an Employee or Consultant shall not be
considered interrupted in the case of: 
(i) any leave of absence approved by the Company, including sick leave,
military leave, or any other personal leave; provided, however,
that for purposes of qualifying an Option as an Incentive Stock Option, in the
event any such leave exceeds ninety (90) days, the Optionee’s Continuous Status
as an Employee will be deemed to have terminated on the ninety-first (91st) day
after the commencement of such

 

14

 

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.

 

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

 

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

 

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

 

(i)                                     “Fair Market Value” means, as of any date, the closing
price for a share of Common Stock as reported daily in The Wall Street Journal
or a similar readily available public source. If no sales of shares were made
on such date, the closing price of a share as reported for the preceding day on
which sale of shares were made shall be used.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

15

 

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

 

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

 

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

 

16

 

(New Employee Grant)

 

SILICON GRAPHICS, INC.

 

1993 LONG-TERM INCENTIVE
STOCK PLAN

 

NON STATUTORY STOCK OPTION GRANT
AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

(a)           Right
to Exercise.

 

(i)            Subject
to subsection 3(a) (ii) and (iii), below, this Option shall be exercisable to
the extent of twelve and one-half percent (12.5%) of the Shares subject to the
Option every six months on each anniversary of the date of hire as set forth in
the attached NOTICE.

 

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

 

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

 

(b)           Method
of Exercise. This Option shall be exercisable by written notice signed by
the Optionee and delivered to the Company’s Employee Stock Services group or by
using the electronic exercise methods approved from time to time by Employee
Stock Services (currently www.optionslink.com). If electronic exercise method
is not chosen, such notice shall

 

 

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

 

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

 

4.             Optionee’s
Representations. In the event the shares purchasable pursuant to the
exercise of this Option have not been registered under the Securities Act of
1933, as amended, at the time this Option is exercised, Optionee shall, concurrently
with the exercise of all or any portion of this Option, deliver to 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 the Company of a value equal to the exercise
price of the shares as to which the Option is being exercised which, in the
case of shares acquired previously upon exercise of an option have been owned
by the Optionee for more than six (6) months on the date of surrender; or

 

(iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
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.

 

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

 

7.             Termination
of Status as an Employee or Consultant. If Optionee ceases to serve as an
Employee or Consultant, he or she may, but only within three (3) months after
the date he or she ceases to be an Employee or Consultant of the Company, exercise
this Option to the extent that he or she was entitled to exercise it at the
date of such termination. To the extent that he or she was not entitled to
exercise this Option at the date of such termination, or if he or she does

 

 

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

 

8.             Disability
of Optionee. Notwithstanding the provisions of Section 7 above, if Optionee
is unable to continue his or her employment or consulting relationship with the
Company as a result of his or her Disability, the Optionee may, but only within
twelve (12) months from the date of such termination, exercise his or her
Option to the extent he or she was entitled to exercise the Option at the date
of such termination. To the extent that he or she was not entitled to exercise
the Option at the date of termination, or if he or she does not exercise such
Option within the time specified herein, the Option shall terminate.

 

9.             Death
of Optionee. In the event of the death of Optionee during the term of this
Option, the Option may be exercised, at any time within twelve (12) months
following the date of death, by Optionee’s estate or by a person who acquired
the right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that had accrued as of the date of death.

 

10.           Transferability
of Option. Unless otherwise determined by the Committee to the contrary,
this Option may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

 

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

 

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

 

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

 

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

 

(a)           “Cause”
means the termination of employment of an Optionee shall have

 

 

taken place as a result of:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           “Good
Reason” for voluntary resignation means (i) the Employer reduces by ten percent
(10%) or more the Optionee’s compensation at the rate in effect immediately prior
to the Change of Control or (ii) without the Optionee’s express written
consent, the Employer requires the Optionee to change the location of his or
her job or office, so that he or she will be based at a location more then
fifty (50) miles from the location of his or her job or office immediately
prior to the Change of Control. For these purposes, “Compensation” includes
base

 

 

salary, exclusive of bonus,
incentive compensation and shift differential, paid by the Employer as
consideration for the Optionee’s service.

 

 

SILICON GRAPHICS, INC.

 

1993 LONG-TERM INCENTIVE
STOCK PLAN

 

NON-STATUTORY STOCK OPTION GRANT
AGREEMENT

 

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

 

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

 

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

 

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

 

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

 

(a)           Right
to Exercise.

 

(i)            Subject
to subsection 3(a) (ii) and (iii), below, this Option shall be exercisable to
the extent of twelve and one-half percent (12.5%) of the Shares subject to the
Option every six months on each anniversary of the date of grant as set forth
in the attached NOTICE.

 

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

 

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

 

(b)           Method
of Exercise. This Option shall be exercisable by written notice signed by
the Optionee and delivered to the Company’s Employee Stock Services group or by
using the electronic exercise methods approved from time to time by Employee
Stock Services (currently www.optionslink.com). If electronic exercise method
is not chosen, such notice shall be in the form of Exhibit A (Stock Exercise
Request) found at Employee Stock Services’ web

 

 

site or upon request. The
exercise notice shall be accompanied by payment of the exercise price. The
Option shall be deemed to be exercised upon receipt by the Company of such
written notice accompanied by the exercise price.

 

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

 

4.             Optionee’s
Representations. In the event the shares purchasable pursuant to the
exercise of this Option have not been registered under the Securities Act of
1933, as amended, at the time this Option is exercised, Optionee shall,
concurrently with the exercise of all or any portion of this Option, deliver to
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 the Company of a value equal to the exercise
price of the shares as to which the Option is being exercised which, in the case
of shares acquired previously upon exercise of an option have been owned by the
Optionee for more than six (6) months on the date of surrender; or

 

(iv) delivery of a properly
executed exercise notice together with such other documentation as the Company
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.

 

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

 

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

 

 

8.             Disability
of Optionee. Notwithstanding the provisions of Section 7 above, if Optionee
is unable to continue his or her employment or consulting relationship with the
Company as a result of his or her Disability, the Optionee may, but only within
twelve (12) months from the date of such termination, exercise his or her
Option to the extent he or she was entitled to exercise the Option at the date
of such termination. To the extent that he or she was not entitled to exercise
the Option at the date of termination, or if he or she does not exercise such
Option within the time specified herein, the Option shall terminate.

 

9.             Death
of Optionee. In the event of the death of Optionee during the term of this
Option, the Option may be exercised, at any time within twelve (12) months
following the date of death, by Optionee’s estate or by a person who acquired
the right to exercise the Option by bequest or inheritance, but only to the
extent of the right to exercise that had accrued as of the date of death.

 

10.           Transferability
of Option. Unless otherwise determined by the Committee to the contrary,
this Option may not be sold, pledged, assigned, hypothecated, transferred or
disposed of in any manner other than by will or by the laws of descent or
distribution and may be exercised during the lifetime of Optionee only by the
Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.

 

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

 

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

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           “Good
Reason” for voluntary resignation means (i) the Employer reduces by ten percent
(10%) or more the Optionee’s compensation at the rate in effect immediately
prior to the Change of Control or (ii) without the Optionee’s express written
consent, the Employer requires the Optionee to change the location of his or
her job or office, so that he or she will be based at a location more then
fifty (50) miles from the location of his or her job or office immediately
prior to the Change of Control. For these purposes, “Compensation” includes
base salary, exclusive of bonus, incentive compensation and shift differential,
paid by the Employer as consideration for the Optionee’s service.

 

 

Grant No.            

 

SILICON GRAPHICS, INC.

DIRECTOR’S OPTION AGREEMENT

(Initial Option)

 

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

 

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

 

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

 

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

 

(i)            Right to Exercise.

 

(a)           This
Option shall become exercisable in two annual installments on the first and
second anniversaries of the grant date, so long as the Optionee remains a
Director on such date.

 

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

 

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

 

(d)           In
the event of a Change of Control, this Option shall become fully
exercisable.  For purposes hereof, “Change
of Control” means the occurrence of one of the following events:  (i) the consummation of a merger or
consolidation of the Company with or into any other entity pursuant to which
the stockholders of the Company immediately prior to such merger or
consolidation hold, directly or indirectly, less than 50% of the voting power
of the surviving entity; (ii) the sale or other disposition of all or
substantially all of the Company’s assets; or (iii) the acquisition by any
person or persons of the beneficial ownership of 50% or more of the voting
power of the Company’s equity securities in a single transaction or series of
related transactions.

 

(ii)           Method
of Exercise.

 

(a)           This Option shall be exercisable by
written notice which shall state the election to exercise the Option, the
number of Shares in respect of which the Option is being exercised, and such
other representations and agreements as to the holder’s investment intent with
respect to such Shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan. 
Such written notice shall be signed by the Optionee and shall be
delivered in person, by facsimile or by certified mail to the Company’s Stock
Administration Department.  The written
notice shall be accompanied by payment of the exercise price

 

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

 

17

 

shall be considered transferred to the
Optionee on the date on which the Option is exercised with respect to such
shares.

 

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

 

(i)            cash;

 

(ii)           check;

 

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

 

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

 

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

 

6.             Termination
of Status as a Director.  Except as
set forth in Section 7 or 8, if the Optionee ceases to serve as a Director, he
or she may, but only within three (3) months after the date he or she ceases to
be a Director of the Company, exercise this Option to the extent that he or she
was entitled to exercise it at the date of such termination.  Notwithstanding the foregoing, in no event may
the Option be exercised after its five (5) year term has expired.  To the extent that the Optionee was not
entitled to exercise this Option at the date of such termination, or if the
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.  In the event the
exercise period terminates at a time when the Optionee is prohibited from
engaging in transactions in the Company’s stock as a result of the Company’s
trading window being closed, the Option shall remain exercisable until the date
on which the Optionee is no longer so prohibited.

 

7.             Disability
of Optionee; Retirement. 
Notwithstanding the provisions of Section 6 above, if the Optionee is
unable to continue his or her service as a Director as a result of the Optionee’s
Disability, or if the Optionee retires from the Board of Directors of the
Company at 65 or more years of age with more than 5 years of continuous service
on the Board, he or she may, but only within twelve (12) months from the date
of termination, exercise this Option to the extent he or she was entitled to
exercise it at the date of such termination. 
Notwithstanding the foregoing, in no event may the Option be exercised
after its five (5) year term has expired. 
To the extent that the Optionee was not entitled to exercise this Option
at the date of termination, or if the Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.

 

8.             Death
of Optionee.  Notwithstanding the
provisions of Section 6 above, in the event of the death of the Optionee during
the term of this Option, the Option may be exercised, at any time within twelve
(12) months following the date of death, by the Optionee’s estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
death.  Notwithstanding the foregoing, in
no event may the Option be exercised after its five (5) year term has expired.  To the extent that the Optionee was not
entitled to exercise this Option at the date of Optionee’s death, or if this
Option is not exercised within the time specified herein, the Option shall
terminate.

 

18

 

9.             Transferability
of Option.  Unless otherwise
determined by the Committee to the contrary, this Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised during the lifetime of Optionee only by the Optionee.  The terms of this Option shall be binding
upon the executors, administrators, heirs, successors and assigns of the
Optionee.

 

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

 

11.           Taxation
Upon Exercise of Option.  Optionee understands that, upon exercise of
this Option, he or she will recognize income for tax purposes in an amount
equal to the excess of the then fair market value of the Shares purchased over
the exercise price paid for such Shares. 
Upon a resale of such Shares by the Optionee, any difference between the
sale price and the fair market value of the Shares on the date of exercise of
the Option, to the extent not included in income as described above, will be
treated as capital gain or loss.

 

 

	
   

  	
  SILICON GRAPHICS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

 

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

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Optionee

  

 

19

 

Grant No.            

 

SILICON GRAPHICS, INC.

DIRECTOR’S OPTION AGREEMENT

(Annual Option)

 

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

 

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

 

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

 

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

 

(i)            Right to Exercise.

 

(a)           This
Option shall be immediately exercisable in full.

 

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

 

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

 

(ii)           Method
of Exercise.

 

(a)           This Option shall be exercisable by
written notice which shall state the election to exercise the Option, the number
of Shares in respect of which the Option is being exercised, and such other
representations and agreements as to the holder’s investment intent with
respect to such Shares of Common Stock as may be required by the Company
pursuant to the provisions of the Plan. 
Such written notice shall be signed by the Optionee and shall be
delivered in person, by facsimile or by certified mail to the Company’s Stock
Administration Department.  The written
notice shall be accompanied by payment of the exercise price

 

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

 

20

 

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

 

(i)            cash;

 

(ii)           check;

 

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

 

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

 

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

 

6.             Termination
of Status as a Director.  Except as
set forth in Section 7 or 8, if the Optionee ceases to serve as a Director, he
or she may, but only within three (3) months after the date he or she ceases to
be a Director of the Company, exercise this Option to the extent that he or she
was entitled to exercise it at the date of such termination.  Notwithstanding the foregoing, in no event
may the Option be exercised after its five (5) year term has expired.  To the extent that the Optionee was not
entitled to exercise this Option at the date of such termination, or if the
Optionee does not exercise this Option within the time specified herein, the
Option shall terminate.  In the event the
exercise period terminates at a time when the Optionee is prohibited from
engaging in transactions in the Company’s stock as a result of the Company’s
trading window being closed, the Option shall remain exercisable until the date
on which the Optionee is no longer so prohibited.

 

7.             Disability
of Optionee; Retirement. 
Notwithstanding the provisions of Section 6 above, if the Optionee is
unable to continue his or her service as a Director as a result of the Optionee’s
Disability, or if the Optionee retires from the Board of Directors of the Company
at 65 or more years of age with more than 5 years of continuous service on the
Board, he or she may, but only within twelve (12) months from the date of
termination, exercise this Option to the extent he or she was entitled to
exercise it at the date of such termination. 
Notwithstanding the foregoing, in no event may the Option be exercised
after its five (5) year term has expired. 
To the extent that the Optionee was not entitled to exercise this Option
at the date of termination, or if the Optionee does not exercise this Option
within the time specified herein, the Option shall terminate.

 

8.             Death
of Optionee.  Notwithstanding the
provisions of Section 6 above, in the event of the death of the Optionee during
the term of this Option, the Option may be exercised, at any time within twelve
(12) months following the date of death, by the Optionee’s estate or by a
person who acquired the right to exercise the Option by bequest or inheritance,
but only to the extent of the right to exercise that had accrued at the date of
death.  Notwithstanding the foregoing, in
no event may the Option be exercised after its five (5) year term has
expired.  To the extent that the Optionee
was not entitled to exercise this Option at the date of Optionee’s death, or if
this Option is not exercised within the time specified herein, the Option shall
terminate.

 

9.             Transferability
of Option.  Unless otherwise
determined by the Committee to the contrary, this Option may not be sold,
pledged, assigned, hypothecated, transferred, or disposed of in any manner
other than by will or by the laws of descent or distribution and may be
exercised during the lifetime

 

21

 

of Optionee only by the
Optionee.  The terms of this Option shall
be binding upon the executors, administrators, heirs, successors and assigns of
the Optionee.

 

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

 

11.           Taxation
Upon Exercise of Option.  Optionee understands that, upon exercise of
this Option, he or she will recognize income for tax purposes in an amount
equal to the excess of the then fair market value of the Shares purchased over
the exercise price paid for such Shares. 
Upon a resale of such Shares by the Optionee, any difference between the
sale price and the fair market value of the Shares on the date of exercise of
the Option, to the extent not included in income as described above, will be
treated as capital gain or loss.

 

 

	
   

  	
  SILICON GRAPHICS, INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  

 

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

 

 

	
   

  	
   

  	
   

  
	
   

  	
  Optionee

  

 

22

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