SILICON GRAPHICS INC
FORMS OF NOTICE OF STOCK OPTION AWARD - NON-EMPLOYEE DIRECTORS
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<TYPE>EX-10.37
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<FILENAME>dex1037.htm
<DESCRIPTION>FORMS OF NOTICE OF STOCK OPTION AWARD - NON-EMPLOYEE DIRECTORS
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<TITLE>Forms of Notice of Stock Option Award - Non-Employee Directors</TITLE>
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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="right"><FONT FACE="Times New Roman" SIZE="2"><B>Exhibit 10.37 </B></FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px" ALIGN="center"><FONT
FACE="Times New Roman" SIZE="2"><B>F<SMALL>ORM</SMALL> <SMALL>OF</SMALL> N<SMALL>OTICE</SMALL> <SMALL>OF</SMALL> S<SMALL>TOCK</SMALL> O<SMALL>PTION</SMALL> A<SMALL>WARD</SMALL> <SMALL>FOR</SMALL> N<SMALL>ON</SMALL>-E<SMALL>MPLOYEE</SMALL>
D<SMALL>IRECTORS</SMALL> </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>S<SMALL>ILICON</SMALL> G<SMALL>RAPHICS</SMALL>, I<SMALL>NC</SMALL>. </B></FONT></P> <P
STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>M<SMALL>ANAGEMENT</SMALL> I<SMALL>NCENTIVE</SMALL> P<SMALL>LAN</SMALL> </B></FONT></P> <P
STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P>
<TABLE CELLSPACING="0" CELLPADDING="0" WIDTH="100%" BORDER="0" ALIGN="center">

<TR>
<TD WIDTH="16%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="83%"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Optionee:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Shares&nbsp;Subject&nbsp;to&nbsp;Option:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">XXX shares of common stock, par value $.01 (&#147;Shares&#148;) of Silicon Graphics, Inc. (the &#147;Company&#148;).</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Type of Option:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">Nonqualified Stock Option</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Exercise&nbsp;Price&nbsp;per&nbsp;Share:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">$xx.xx</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Date of Grant:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Date Exercisable:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">This option may be exercised to the extent it is vested.</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Vesting:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><U>Time Vesting</U>. This option shall vest on the first anniversary of the date of grant; provided either (i)&nbsp;the Optionee&#146;s Service has not terminated on such date, or (ii) the
Optionee&#146;s Service terminated (other than for Cause) on the date of the Company&#146;s annual meeting of shareholders which occurred prior to the first anniversary of the date of grant due to the Optionee&#146;s not standing for re-election or
not being reelected.</FONT></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Accelerated Vesting:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"> <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><U>Death/Disability</U>. If not then vested, this option shall become 100% vested upon the Optionee&#146;s termination of Service due to the
Optionee&#146;s death or Disability.</FONT></P> <P STYLE="font-size:6px;margin-top:0px;margin-bottom:0px">&nbsp;</P> <P STYLE="margin-top:0px;margin-bottom:1px"><FONT FACE="Times New Roman" SIZE="2"><U>Change in Control</U>. If not then vested, this
option shall become 100% vested upon a Change in Control.</FONT></P></TD></TR>
<TR>
<TD HEIGHT="8"></TD>
<TD HEIGHT="8" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2"><B>Expiration Date:</B></FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">This option shall expire on the earliest of the following dates: (i) 5 years from the date of the grant, (ii) the date Optionee&#146;s Service terminates for Cause (or if Cause exists on such
date), (iii) one year following termination of service due to Optionee&#146;s Death/Disability, (iv) 90 days following termination of Service without cause, and (v) 30 days following the Optionee&#146;s termination of Service due to the
Optionee&#146;s resignation (to the extent then vested).</FONT></TD></TR>
</TABLE> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">This option is granted under and governed by the terms and conditions of Silicon Graphics, Inc. Management
Incentive Plan and the related Non-Employee Director Stock Option Agreement, reference number 001-D, both of which are hereby made a part of this document. Capitalized terms used but not defined in this Non-Employee Director Notice of Stock Option
Grant shall have the meanings assigned to them in the above-referenced documents. The undersigned Optionee acknowledges receipt of, and understands and agrees to, this Notice of Stock Option Grant, the Stock Option Agreement and the Silicon
Graphics, Inc. Management Incentive Plan. </FONT></P> <P STYLE="font-size:12px;margin-top:0px;margin-bottom:0px">&nbsp;</P><DIV ALIGN="right">
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<TD WIDTH="6%"></TD>
<TD VALIGN="bottom" WIDTH="1%"></TD>
<TD WIDTH="93%"></TD></TR>
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<TD VALIGN="bottom" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2"><B>S<SMALL>ILICON</SMALL> G<SMALL>RAPHICS</SMALL>, I<SMALL>NC</SMALL>.</B></FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-bottom:1px;margin-top:0px;border-bottom:1px solid #000000">&nbsp;</P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">Robert H. Ewald, Chief Executive Officer</FONT></TD></TR>
<TR>
<TD HEIGHT="16" COLSPAN="3"></TD></TR>
<TR>
<TD VALIGN="top" COLSPAN="3"><FONT FACE="Times New Roman" SIZE="2">[Name of Director]</FONT></TD></TR>
<TR>
<TD HEIGHT="16"></TD>
<TD HEIGHT="16" COLSPAN="2"></TD></TR>
<TR>
<TD VALIGN="top"><FONT FACE="Times New Roman" SIZE="2">By:</FONT></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"> <P STYLE="margin-bottom:1px;border-bottom:1px solid #000000"><FONT FACE="Times New Roman" SIZE="2">&nbsp;</FONT></P></TD></TR>
<TR>
<TD VALIGN="top"></TD>
<TD VALIGN="bottom"><FONT SIZE="1">&nbsp;</FONT></TD>
<TD VALIGN="bottom"><FONT FACE="Times New Roman" SIZE="2">[Name]</FONT></TD></TR>
</TABLE></DIV>

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 <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>F<SMALL>ORM</SMALL> <SMALL>OF</SMALL> S<SMALL>TOCK</SMALL> O<SMALL>PTION</SMALL>
A<SMALL>GREEMENT</SMALL> <SMALL>FOR</SMALL> N<SMALL>ON</SMALL>-E<SMALL>MPLOYEE</SMALL> D<SMALL>IRECTORS</SMALL> </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman"
SIZE="2"><B>S<SMALL>ILICON</SMALL> G<SMALL>RAPHICS</SMALL>, I<SMALL>NC</SMALL>. </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2"><B>M<SMALL>ANAGEMENT</SMALL> I<SMALL>NCENTIVE</SMALL>
P<SMALL>LAN</SMALL> </B></FONT></P> <P STYLE="margin-top:0px;margin-bottom:0px" ALIGN="center"><FONT FACE="Times New Roman" SIZE="2">R<SMALL>EFERENCE</SMALL> 001-SO-D </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>SECTION 1. GRANT OF OPTION. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(a) <B>Option.</B> On the terms and conditions set forth in this Agreement and each
Notice of Stock Option Grant referencing this Agreement (the &#147;Notice&#148;), the Company grants to the Optionee on the Date of Grant an option to purchase at the Exercise Price a number of shares of Common Stock, all as set forth in the Notice.
Each such Notice, together with this referenced Agreement, shall be a separate option governed by the terms of this Agreement. This option is intended to be a Nonqualified Stock Option. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">(b) <B>Plan and Defined Terms</B>. This option is granted under and subject to the terms of the Plan, which is incorporated herein by this reference. Capitalized terms are defined in Section&nbsp;8 of this Agreement.
</FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 2. RIGHT TO EXERCISE. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">Subject to the
conditions set forth in this Agreement, all or part of this option may be exercised prior to its expiration at the time or times set forth in the vesting provisions of the Notice. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2"><B>SECTION 3. TRANSFER OR ASSIGNMENT OF OPTION. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(a) <B>Generally</B>. This option shall be exercisable during the
Optionee&#146;s lifetime, only by the Optionee. Except as otherwise provided in subsection (b)&nbsp;below, this option and the rights and privileges conferred hereby shall not be sold, pledged or otherwise transferred (whether by operation of law or
otherwise) other than by will or the laws of descent and distribution and shall not be subject to sale under execution, attachment, levy or similar process. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">(b) <B>Permitted Transfers</B>. The Optionee shall be permitted to transfer this option, (i)&nbsp;in connection with his or her estate plan, to the Optionee&#146;s spouse, siblings, parents, children and grandchildren or a charitable
organization that is exempt under Section&nbsp;501(c)(3) of the Code or to trusts for the benefit of such persons or partnerships, corporations, limited liability companies or other entities owned solely by such persons, including trusts for such
persons, (ii)&nbsp;to the Optionee&#146;s former spouse in accordance with a domestic relations order or (iii)&nbsp;to the entity that employs the Optionee or to its affiliate, provided that the Optionee owns more than 50% of the voting interests of
such entity or affiliate or such transfer otherwise complies with applicable securities laws. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 4. EXERCISE PROCEDURES. </B></FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(a) <B>Notice of Exercise.</B> This Option shall be exercisable by written notice signed by the Optionee and delivered to the Company&#146;s Employee Stock Services group
or by using the electronic methods approved from time to time by Employee Stock Services (currently </FONT>
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<FONT FACE="Times New Roman" SIZE="2">www.optionslink.com). If an electronic exercise method is not chosen, such notice shall be in the form of <U>Exhibit A</U> (Stock Exercise Request) found at
the Employee Stock Services&#146; website (currently <U>http://www-finance.corp.sgi.com/stock/</U>) or available upon request from such group. In the event that this option is being exercised by the Optionee&#146;s representative or a permitted
Transferee, the notice shall be accompanied by proof (satisfactory to the Company) of the representative&#146;s right to exercise this option. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(b)
<B>Method of Payment.</B> Upon exercise of the notice, the Optionee shall either </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) <U>Acquire the Common Stock</U> &#150;
Make payment of the full amount of the Purchase Price plus any applicable withholding in cash, check or other readily available funds, </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(ii) <U>Cashless Exercise</U> &#150; Exercise pursuant to the Company&#146;s approved cash-less exercise procedure. </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">(iii) <U>Alternate Method</U> &#150; At the sole discretion, of the Committee, pay all or any part of the Purchase Price and any applicable withholding by an alternate method approved by the Committee. Should the
Committee exercise its discretion to permit the Optionee to exercise this option in whole or in part in accordance with an alternate method, it shall have no obligation to permit such alternative exercise with respect to the remainder of this option
or with respect to any other option to purchase shares of Common Stock held by the Optionee. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(c) <B>Issuance of Common Stock.</B> If the Optionee
exercises this option pursuant to Section&nbsp;4(b)(i) of this Agreement, the Company shall cause to be issued a certificate or certificates for the shares of Common Stock as to which this option has been exercised, registered in the name of the
person exercising this option (or in the names of such person and his or her spouse as community property or as joint tenants with right of survivorship). </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman"
SIZE="2">(d) <B>Cashless Exercise. </B>If the Optionee exercises this option pursuant to Section&nbsp;4(b)(ii) of this Agreement, the Optionee will receive either the net number of shares of Common Stock after taking into account both the Purchase
Price and any required tax withholding, fees and commissions, or an amount in cash equal to the amount realized upon the sale of such shares of Common Stock after fees and commissions. No fractional shares of Common Stock will be issued. The Company
will pay cash in respect of fractional shares of Common Stock. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(e) <B>Withholding.</B> Should the government require the Company to withhold any taxes in
respect of the exercise of this by the Optionee, the Company may, in its discretion, hold the stock certificate to which such Optionee is otherwise entitled upon the exercise of a Stock Option as security for the payment of such withholding tax
liability, until cash sufficient to pay that liability has been accumulated. In addition, should the Company become subject to a withholding obligation under applicable law with respect to the Optionee&#146;s exercise of this Option as of a
particular date (the &#147;Tax Date&#148;), the Optionee may elect to satisfy, in whole or in part, the holder&#146;s related personal tax liabilities by (i)&nbsp;directing the Company to withhold from shares of Common Stock issuable in the related
vesting or exercise either a specified number of shares or shares having a specified value (in each case not in excess of the related personal tax </FONT>
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<FONT FACE="Times New Roman" SIZE="2">liabilities), (ii)&nbsp;tendering shares of Common Stock previously issued pursuant to the exercise of a Stock Option or other shares of Common Stock owned
by the holder or (iii)&nbsp;combining any or all of the foregoing elections in any fashion. The withheld shares and other shares of Common Stock tendered in payment shall be valued at their Fair Market Value on the Tax Date. The Committee may
disapprove of any election, suspend or terminate the right to make Elections or provide that the right to make elections shall not apply to particular shares or exercises. The Committee may impose any additional conditions or restrictions on the
right to make an Election as it shall deem appropriate. The Committee may prescribe such rules as it determines with respect to the Optionee subject to the reporting requirements of Section&nbsp;16(a) of the Exchange Act to effect such tax
withholding in compliance with the rules established by the SEC under Section&nbsp;16 of the Exchange Act and the positions of the staff of the SEC thereunder expressed in no-action letters exempting such tax withholding from liability under
Section&nbsp;16(b) of the Exchange Act. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(f) <B>Compliance with Law. </B>This option may not be exercised and no shares of Common Stock will be issued
pursuant to the exercise of this option unless each such exercise and each resulting issuance of shares of Common Stock complies with all relevant provisions of law and the requirements of any stock exchange upon which the shares of Common Stock may
then be listed. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 5. TERM AND EXPIRATION. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(a)
<B>Basic Term.</B> Subject to earlier termination in accordance with subsection (b)&nbsp;below, the exercise period of this option shall expire five (5)&nbsp;years after the date it is granted. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(b) <B>Termination of Service.</B> If the Optionee&#146;s Service terminates for any reason, then the exercise period for this option shall expire as provided in the
Notice. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 6. ADJUSTMENT OF SHARES OF COMMON STOCK. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; text-indent:4%"><FONT
FACE="Times New Roman" SIZE="2">If there shall be any change in the Common Stock of the Company, through merger, consolidation, reorganization, recapitalization, stock dividend, stock split, reverse stock split, split up, spinoff, combination of
shares, exchange of shares, dividend in kind or other like change in capital structure or distribution (other than normal cash dividends) to shareholders of the Company, the Company shall adjust this option such that it shall thereafter be
exercisable for such securities, cash and/or other property as would have been received in respect of the Common Stock subject to this option had it been exercised in full immediately prior to such change or distribution. Such an adjustment shall be
made successively each time any such change shall occur. In the event of any such change or distribution or any extraordinary dividend or distribution of cash or other assets, the Company shall adjust the number and kind of shares of Common Stock
subject to this option and the Exercise Price, to prevent dilution or enlargement of the Optionee&#146;s rights under this option. </FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 7.
MISCELLANEOUS PROVISIONS. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(a) <B>Rights as a Shareholder</B>. Neither the Optionee nor the Optionee&#146;s representative shall have any rights as a
shareholder with respect to any shares of Common Stock subject to this option until the Optionee or the Optionee&#146;s representative becomes entitled to receive such shares of Common Stock by (i)&nbsp;filing a notice of exercise, and
(ii)&nbsp;paying the Purchase Price as provided in this Agreement. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(b) <B>Tenure</B>. Nothing in the Notice, Agreement or Plan shall confer upon the Optionee any right to continue in
Service for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company (or any Parent or Subsidiary employing or retaining the Optionee) or of the Optionee, which rights are hereby expressly reserved
by each, to terminate his or her Service at any time and for any reason, with or without cause. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(c) <B>Notification</B>. Any notification required by the
terms of this Agreement shall be given in writing and shall be deemed effective upon personal delivery or upon deposit with the United States Postal Service, by registered or certified mail, with postage and fees prepaid. A notice shall be addressed
to the Company at its principal executive office and to the Optionee at the address that he or she most recently provided in writing to the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(d)
<B>Entire Agreement</B>. The Notice, this Agreement and the Plan constitute the entire contract between the parties hereto with regard to the subject matter hereof. They supersede any other agreements, representations or understandings (whether oral
or written and whether express or implied) which relate to the subject matter hereof. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(e) <B>Waiver</B>. No waiver of any breach or condition of this
Agreement shall be deemed to be a waiver of any other or subsequent breach or condition whether of like or different nature. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(f) <B>Successors and
Assigns</B>. The provisions of this Agreement shall inure to the benefit of, and be binding upon, the Company and its successors and assigns and upon the Optionee, the Optionee&#146;s assigns and the legal representatives, heirs and legatees of the
Optionee&#146;s estate, whether or not any such person shall have become a party to this Agreement and have agreed in writing to be joined herein and be bound by the terms hereof. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">(g) <B>Choice of Law</B>. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware, as such laws are applied to contracts entered into and performed in such State.
</FONT></P> <P STYLE="margin-top:18px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2"><B>SECTION 8. DEFINITIONS. </B></FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(a)
&#147;<B>Agreement</B>&#148; shall mean this Stock Option Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(b) &#147;<B>Board of Directors</B>&#148; shall mean the Board of Directors of the
Company, as constituted from time to time. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(c) &#147;<B>Cause</B>&#148; shall mean that the Optionee: </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) committed or engaged in an act of fraud, embezzlement, sexual harassment, dishonesty or theft in connection with Optionee&#146;s
Service; or </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) is convicted of, or pleas <I>nolo contendere</I> with respect to, an act of criminal misconduct.
</FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(d) &#147;<B>Change in Control</B>&#148; shall be deemed to have occurred upon any of the following events: </FONT></P>
<P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(i) Any person(s) acting together which would constitute a &#147;group&#148; for purposes of Section&nbsp;13(d) of the Exchange Act
(other than the Company, any subsidiary, or any &#147;permitted holder&#148; as defined below) shall &#147;beneficially own&#148; (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, at least 35% of the total voting power of
all classes of capital stock of the Company entitled to vote generally in the election of the Board; or </FONT></P> <P STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(ii) Either
(A)&nbsp;&#147;incumbent directors&#148;, as defined below, shall cease for any reason to constitute at least a majority of the members of the Board (for these purposes, an &#147;incumbent director&#148; shall mean any member of the Board as of the
Effective Date, and any successor of a incumbent director whose election, or nomination for election by the Company&#146;s shareholders was approved by at least a majority of the current directors then on the Board), or (B)&nbsp;at any meeting of
the shareholders of the Company called for the purpose of electing directors, a majority of the persons nominated by the Board for election as directors shall fail to be elected; or </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iii) Consummation of a merger or consolidation of the Company (A)&nbsp;in which the Company is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly-owned subsidiary of the Company in which all shares of Common Stock outstanding immediately prior to the effectiveness thereof are changed into or exchanged for common stock of the
subsidiary) or (B)&nbsp;pursuant to which all shares of Common Stock are converted into cash, securities or other property, except in either case, a consolidation or merger of the Company in which the holders of the shares of Common Stock
immediately prior to the consolidation or merger have, directly or indirectly, at least a majority of the shares of Common Stock of the continuing or surviving corporation immediately after such consolidation or merger or in which the Board
immediately prior to the merger or consolidation would, immediately after the merger or consolidation, constitute a majority of the board of directors of the continuing or surviving corporation; or </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(iv) Consummation of a plan of complete liquidation of the Company; or </FONT></P> <P
STYLE="margin-top:6px;margin-bottom:0px; margin-left:4%; text-indent:4%"><FONT FACE="Times New Roman" SIZE="2">(v) The consummation of a sale or other disposition (in one transaction or a series of transactions) of all or substantially all of the
assets of the Company. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(e) &#147;<B>Code</B>&#148; shall mean the Internal Revenue Code of 1986, as amended from time to time, and the regulations
promulgated thereunder. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(f) &#147;<B>Committee</B>&#148; shall mean the committee of the Board, as described in Section&nbsp;2 of the Plan. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(g) &#147;<B>Common Stock</B>&#148; shall mean the common stock of the Company, par value $.01. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">(h) &#147;<B>Company</B>&#148; shall mean Silicon Graphics, Inc., a Delaware corporation, and any successor thereto. </FONT></P>

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 <P STYLE="margin-top:0px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(i) &#147;<B>Date of Grant</B>&#148; shall mean the date specified in the Notice, which date shall be the later of
(i)&nbsp;the date on which the Board or Committee resolved to grant this option or (ii)&nbsp;the first day of the Optionee&#146;s Service. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(j)
&#147;<B>Disability</B>&#148; shall mean that the Optionee is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to
last for a continuous period of not less than 12 months. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(k) &#147;<B>Employee</B>&#148; shall mean any individual who is a common-law employee of the
Company, a Parent or a Subsidiary. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(l) <B>&#147;Exchange Act&#148;</B> shall mean the Securities Exchange Act of 1934, as amended. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(m) &#147;<B>Exercise Price</B>&#148; shall mean the amount for which one share of Common Stock may be purchased upon exercise of this option, as specified in the
Notice. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(n) <B>&#147;Fair Market Value&#148;</B> shall mean with respect to the fair market value of a share of Common Stock, the average of the high and
low prices of the Common Stock on the date of calculation (or on the last preceding trading date if Common Stock was not traded on such date) if the Common Stock is readily tradeable on a national securities exchange or other market system, and if
the Common Stock is not readily tradeable, Fair Market Value shall mean the amount determined in good faith by the Committee as the fair market value of the Common Stock upon the reasonable application of a reasonable valuation method, as determined
by the Board or Committee in good faith. Such determination shall be conclusive and binding on all persons. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(o) &#147;<B>Nonqualified Stock
Option</B>&#148; shall mean a stock option not described in Sections 422(b) of the Code. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(p) &#147;<B>Notice</B>&#148; shall have the meaning described in
Section&nbsp;1(a) of this Agreement. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(q) &#147;<B>Optionee</B>&#148; shall mean the person named in the Notice. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(r) &#147;<B>Parent</B>&#148; shall mean a &#147;parent corporation&#148; as defined in Section&nbsp;424(e) of the Code. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(s) &#147;<B>Plan</B>&#148; shall mean the Silicon Graphics, Inc. Management Incentive Plan. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">(t) &#147;<B>Purchase Price</B>&#148; shall mean the Exercise Price multiplied by the number of shares of Common Stock with respect to which this option is being exercised. </FONT></P> <P
STYLE="margin-top:12px;margin-bottom:0px"><FONT FACE="Times New Roman" SIZE="2">(u) &#147;<B>Service</B>&#148; shall mean service as a non-Employee member of the Board of Directors. </FONT></P> <P STYLE="margin-top:12px;margin-bottom:0px"><FONT
FACE="Times New Roman" SIZE="2">(v) &#147;<B>Subsidiary</B>&#148; shall mean a &#147;subsidiary corporation&#148; as defined in Section&nbsp;424(f) of the Code. </FONT></P>
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