Sample Business Contracts


Employment Agreement - Silicon Graphics Inc. and Richard E. Belluzzo

Employment Forms

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                                     AGREEMENT

          AGREEMENT, dated as of January 22, 1998 (the "EFFECTIVE DATE"), by
and between SILICON GRAPHICS, INC., a Delaware corporation (the "COMPANY"),
and RICHARD E. BELLUZZO (the "EXECUTIVE").


          WHEREAS, the Company has offered to engage the Executive as its
Chief Executive Officer on the terms set forth in an offer letter of even
date herewith (the "OFFER LETTER"), and the Executive has indicated his
willingness to accept such offer; and

          WHEREAS, the Company and the Executive wish to set forth in this
Agreement certain additional terms relating to the Executive's employment
with the Company;

          NOW, THEREFORE, in consideration of the promises and the mutual
covenants herein contained, the parties hereto hereby agree as follows
(capitalized terms used herein without definition having the meanings
assigned to such terms in Section 7 below):

          1.   SUPPLEMENTAL PAYMENT

          Subject to the other provisions of this Agreement, promptly
following Final Measurement Date the Company will make a payment (the
"SUPPLEMENTAL PAYMENT") to the Executive (or upon the Executive's death, to
his Beneficiary) equal to the Shortfall Amount determined as of the Final
Measurement Date, PROVIDED, HOWEVER, that if the Shortfall Amount determined
as of the First Measurement Date is zero, then the obligations of the Company
under this Section 1 shall lapse and the Company shall not thereafter be
obligated to make any Supplemental Payment.  In no event shall the
Supplemental Payment be greater than $10,000,000 or less than zero.  No later
than the time of payment, the Company shall provide the Executive with a
written explanation in reasonable detail of its calculation of the Shortfall
Amount.  The Supplemental Payment shall be subject to applicable withholding
taxes.

          2.   SUPPLEMENTAL ANNUITY

          Promptly following the Effective Date the Company shall purchase an
annuity contract from an insurance company of national standing selected by
the Executive, which contract shall name the Executive as beneficiary.  The
Company commits to spend $1.25 million (inclusive of commissions and other
third-party expenses) for the purchase of the annuity contract.  The
Executive shall have the right to specify the terms of the annuity contract,
including terms relating to alternate forms of payment, beneficiary
designations, etc.  In no event will the Company's commitment under this
Section 2 exceed payment of the $1.25 million referred to herein.


<PAGE>

          3.   TERMINATION OF EMPLOYMENT.  Subject to the notice and other
provisions of this Section 3, the Company shall have the right to terminate the
Executive's employment with the Company, and the Executive shall have the right
to resign from such employment, at any time for any reason or for no stated
reason.

          (a)  TERMINATION FOR CAUSE; RESIGNATION WITHOUT GOOD REASON.

          (i)   If the Executive's employment is terminated by the Company
     for Cause, or if the Executive resigns from his employment with the
     Company other than for Good Reason, the Executive shall be entitled to
     payment of his salary through and including the date of termination or
     resignation as well as any unreimbursed expenses and any bonus earned in
     respect of a prior year and not yet paid.  The Executive shall not be
     entitled to a bonus for the year in which termination for Cause or
     resignation other than for Good Reason occurs.  Except to the extent
     required by the terms of any grant of Options or other equity-based awards
     to the Executive or under applicable law, and except for the Executive's
     rights in the annuity contract provided for in Section 2 above, the
     Executive shall have no right under this Agreement or otherwise to receive
     any other compensation (including without limitation the Supplemental
     Payment) or to participate in any other compensation or benefit plan,
     program or arrangement of the Company after such termination or
     resignation of employment with respect to the year of such termination or
     resignation and later years.

          (ii)  Notwithstanding termination for Cause or resignation other than
     for Good Reason, the Executive shall retain his rights in the supplemental
     annuity described in Section 2 above.

          (iii) Termination of the Executive's employment for Cause shall
     be communicated by delivery to the Executive of a copy of a resolution
     duly adopted by the affirmative vote of not less than a majority of the
     entire membership of the Board at a meeting of the Board called and held
     for such purpose (after reasonable notice to the Executive and reasonable
     opportunity for the Executive, together with the Executive's counsel, to
     be heard before the Board prior to such vote), finding that in the good
     faith opinion of the Board an event constituting Cause has occurred and
     specifying the particulars thereof (a "NOTICE OF TERMINATION").  If the
     event constituting Cause is of the type described in clause (i) or clause
     (ii) of the definition of Cause in Section 7 below and which in the good
     faith judgment of the Board is capable of being cured, the Executive shall
     have 20 business days from the date of receipt of such Notice of
     Termination to effect a cure of the event described therein and, upon cure
     thereof by the Executive to the reasonable satisfaction of the Board, such
     event shall no longer constitute Cause for purposes of this Agreement. The
     Executive shall provide at least 90 days' advance written notice of
     resignation without Good Reason.

          (b)  INVOLUNTARY TERMINATION.  This subsection (b) shall apply if,
prior to July 1, 2005, the Company terminates the Executive's employment for
any reason other than Cause


<PAGE>

or the Executive resigns from his employment with the Company for Good Reason
(such a resignation or termination being referred to as an "INVOLUNTARY
TERMINATION").  This subsection (b) shall not apply under any other
circumstances (including without limitation upon termination of employment by
reason of death or Disability or termination occurring on or after July 1,
2005).  The payments and benefits provided for in this subsection (b) shall
be conditioned upon the Executive's satisfaction of the conditions set forth
in Section 5.

          (i)   In the event of Involuntary Termination, the Company shall
     pay to the Executive his salary accrued up to and including the effective
     date of Involuntary Termination as well as any unreimbursed expenses and
     any bonus earned in respect of a prior year and not yet paid.  In
     addition, the Company shall pay to the Executive as severance (the
     "SEVERANCE PAYMENTS") (A) his salary, at the rate in effect immediately
     prior to Involuntary Termination, for the 24-month period beginning
     immediately following the effective date of Involuntary Termination (the
     "SEVERANCE PERIOD") and (B) a pro rata bonus for the fiscal year in which
     termination occurs.  The salary component of the Severance Payments shall
     be paid in payroll installments in accordance with the Company's payroll
     practices in effect from time to time.  The bonus component of the
     Severance Payments will be determined at the end of the fiscal year based
     on the terms of the bonus program applicable to the Executive for such
     year and the Company's performance during such year, with the proration
     based on the number of days of the year elapsed through the effective date
     of Involuntary Termination.  Notwithstanding the preceding sentence, the
     Company, in its sole discretion, may at any time during the Severance
     Period pay to the Executive the then remaining portion of Severance
     Payments due during the Severance Period in a cash lump sum.

          (ii)  If Involuntary Termination occurs before the Supplemental
     Payment has been made (or it has been determined that the Company's
     obligation under Section 1 is zero), then, in addition to the Severance
     Payments, within five business days of the Final Measurement Date (which
     shall be ascertained in accordance with Section 7), the Company shall make
     the Supplemental Payment, it being acknowledged by both parties that, in
     accordance with Section 7 below, the calculation of the Shortfall Amount
     will take into account the In-the-Money Value only of those Options and
     restricted stock or stock units that have vested as of the effective date
     of the Executive's Involuntary Termination (including any Options and
     restricted stock or stock units that vest by virtue of clause (iii)
     below).

          (iii) As of the effective date of Involuntary Termination, the
     Executive will be credited with an additional six months of service credit
     for vesting purposes in respect of all Options and other equity-based
     awards that have been awarded to him by the Company prior to such
     effective date.

          (iv)  During the Severance Period, the Executive and his dependents,
     if any, shall continue to participate (at no greater expense to them than
     was the case for such coverage prior to his termination) in the Company's
     health and medical plans,


<PAGE>

     PROVIDED, HOWEVER, that such benefits shall cease to the extent the
     Executive begins coverage under plans of a subsequent employer. Anything
     herein to the contrary notwithstanding, the Company shall have no
     obligation to continue to maintain during the Severance Period any plan
     or program solely as a result of the provisions of this Agreement.

          (v)   In the event of the Executive's death prior to the end of the
     Severance Period, the balance of the Severance Payments for such Severance
     Period, shall continue to be paid in periodic installments to the
     Executive's Beneficiary for the balance of the Severance Period; PROVIDED,
     HOWEVER, that the Company, in its sole discretion, may at any time pay
     such Beneficiary the then remaining Severance Payments in a cash lump sum.

          (vi)  The Executive shall have no duty of mitigation with respect to
     amounts payable to him pursuant to this Agreement or other benefits to
     which he is entitled pursuant hereto, and subject to the specific
     provisions concerning medical, dental and insurance plans set forth in
     Section 3(b)(iv) above, no amounts payable to the Executive pursuant
     hereto, or other benefits to which he is entitled pursuant hereto, will be
     offset or reduced by any compensation, payments or benefits he may receive
     from a subsequent employer.

          (vii) The date of termination of employment without Cause shall
     be the date specified in a written notice of termination to the Executive.
     The date of resignation for Good Reason shall be the date specified in a
     written notice of resignation from the Executive to the Company; PROVIDED,
     HOWEVER, that no such written notice shall be effective unless the cure
     period specified Section 7 has expired without the Company having
     corrected, to the reasonable satisfaction of the Executive, the event or
     events subject to cure.

          (c)  TERMINATION DUE TO DISABILITY.  In the event that the Company
terminates the Executive's employment due to Disability, the Executive shall
be entitled to payment of the Salary through and including the date of
termination, as well as any unpaid expense reimbursements and any bonus
earned in respect of a prior year and not yet paid.  Following termination of
employment, the Company shall continue to pay the Executive or his
conservator or guardian, as the case may be, his salary (at the rate in
effect immediately prior to termination of employment) for two years from the
date of such termination (the "DISABILITY CONTINUATION PERIOD"); in the event
of the Executive's death prior to the end of the Disability Continuation
Period, the balance of the salary continuation payments for such period shall
continue to be paid in periodic installments to the Executive's Beneficiary
for the balance of the Disability Continuation Period, PROVIDED, HOWEVER,
that the Company, in its sole discretion, may at any time pay such
Beneficiary the then remaining salary continuation payments in a cash lump
sum.  Notwithstanding the preceding sentence, the payments provided for in
this Section 3(c) shall be reduced by the amount of any benefits payable to
the Executive or his conservator or guardian, or to his Beneficiary, as the
case may be, during the Disability Continuation Period under any disability
or other welfare benefits plan or program of the Company or any of its
subsidiaries in


<PAGE>

respect of the Executive's Disability. In addition to salary continuation,
the Executive shall be entitled to the Supplemental Payment (the Final
Measurement Date for, and amount of, which will be ascertained in accordance
with Section 7).

          (d)  DEATH.  Except as provided in Sections 1, 2, 3(b)(iv) and (v)
and this Section 3(d), no compensation or benefits shall be payable under
this Agreement following the date of the Executive's death.  In the event of
the Executive's death, all Salary earned by the Executive up to the date of
death, all unreimbursed expenses and any bonus earned in respect of a prior
year and not yet paid, shall be paid to the Executive's Beneficiary within 30
days of such termination.

          (e)  EQUITY AWARDS/SUPPLEMENTAL ANNUITY.  Except for the additional
vesting provided for in Section 3(b)(iii) above, upon termination of the
Executive's employment, or in the event of the Executive's death, all Options
and other equity-based awards made to the Executive will be governed by the
terms of the relevant plan and agreement under which the relevant Option or
other award was granted.  In addition, no termination of employment shall
affect the Executive's rights in the supplemental annuity provided for in
Section 2 above.

          4.   CHANGE IN CONTROL.

          (a)  CHANGE-IN-CONTROL PAYMENT.  In the event of a Change in
Control, the Company (or any successor of the Company) shall pay the
Change-in-Control Payment to the Executive, within five days after the
occurrence of the Change in Control.  The Change-in-Control Payment shall be
made whether or not the Executive's employment with the Company (or any
successor of the Company) continues following the Change in Control and shall
be in lieu of any severance or similar payment that the Executive would
otherwise be entitled to receive upon termination or resignation of his
employment with the Company following a Change in Control, whether pursuant
to this Agreement or otherwise, including without limitation the Severance
Payments provided for in Section 3(b) above.

          (b)  STOCK OPTIONS; RESTRICTED STOCK.  In addition to the
Change-in-Control Payment:

          (i)  The Executive shall have the right during the period of six
     months following a Change in Control either (i) to exercise all Options
     (whether non-qualified or incentive stock options) granted to the
     Executive by the Company as to all or any part of the shares covered
     thereby, including shares as to which such Options would not otherwise
     then be exercisable, or (ii) to have such Options "cashed out" at their
     fair market value determined as provided herein.  The cash out proceeds
     shall be paid to the Executive or, in the event of the Executive's death
     prior to payment, the Executive's Beneficiary.  For this purpose, the fair
     market value of an outstanding Option shall be measured as the difference
     between the Option exercise price and the Change in Control Price, as of
     the date the Change in Control is determined to have occurred or such
     other date as the Board may determine prior to the Change in Control.  Any
     cash payable to the Executive under this subsection (b) shall be made
     within 30 calendar days after the


<PAGE>

     date the Company receives the Executive's written notice electing to be
     cashed out on the value of his Options in lieu of exercise thereof.

          (ii) All restricted stock granted to the Executive shall be released
     from the Company's repurchase right (as set forth in the applicable
     restricted stock repurchase agreements) 15 calendar days after the Change
     in Control.

          (c)  TERMINATION OF EMPLOYMENT/POOLING CONSIDERATIONS.  Anything
contained in Section 4 (a) or 4(b) above to the contrary notwithstanding, the
Company shall have no obligation to pay the Change-in-Control Payment, to
accelerate vesting of shares, to cash out Options or to release restricted
stock from the Company's repurchase right under this Agreement in the event
that the Executive's employment with the Company terminates prior to, but not
in connection with, a Change in Control.  Furthermore, if it is determined by
the Board, upon receipt of a written opinion of the Company's independent
public accountants, that acceleration of vesting of shares, cash out of
outstanding Options or release of restricted stock from the Company's
repurchase right would preclude accounting for the acquisition of the Company
as a "pooling of interests", and the Board otherwise desires to approve a
proposed acquisition of the Company by an acquiring Company which requires as a
condition to closing of the acquisition that the acquisition be accounted for
as a "pooling of interests", then the Company shall not be obligated to
accelerate the Executive's Options or cash out such Options or release the
Executive's restricted stock from the Company's repurchase right under this
Section 4.

          (d)  CONFLICTS.  In the event that the terms of this Section 4
relating to Options conflict with the terms of any option or related agreement
between the Executive and the Company, the terms that are more favorable to the
Executive will control.

          (e)  REDUCTION IN CERTAIN CASES.  Anything in this Agreement to the
contrary notwithstanding, if any amounts due to the Executive under this
Agreement and any other benefits to which he becomes entitled hereunder
constitute "parachute payments" as such term is defined in Section 280G(b)(2)
of the Code, and if the amount of such parachute payments, reduced by all
federal, state and local taxes applicable thereto, including the excise tax
imposed pursuant to Section 4999 of the Code, would be less than the amount the
Executive would receive if he were paid three times his "base amount", as
defined in Section 280G(b)(3) of the Code, less, $1.00, reduced by all federal,
state and local taxes applicable thereto, then the aggregate of the amounts
constituting parachute payments shall, at the request of the Executive, be
reduced to an amount that will equal three times the Executive's base amount
less $1.00   The determination of any required reduction pursuant to this
Section 4(e) (including the determination as to which specific amounts or
benefits shall be reduced) shall be made by the Executive in his sole
discretion, and such determination shall be conclusive and binding upon the
Company or any related corporation for all purposes.  The Company shall reduce
a payment or other benefit in accordance with this Section 4(e) only upon
written notice by the Executive indicating the amount of such reduction, if
any.

          5.   PROTECTION OF THE COMPANY'S INTERESTS.


<PAGE>

          (a)  NO COMPETING EMPLOYMENT.  The Severance Payments provided for in
Section 3(b) are made in consideration of, and their continued payment is
conditioned upon, the Executive's refraining, for so long as the Executive is
employed by the Company and continuing for two years after the termination of
such employment or resignation therefrom (such period being referred to
hereinafter as the "RESTRICTED PERIOD"), from engaging in any of the following,
unless he has obtained the prior written consent of the Board (which consent
may be withheld in the Board's sole discretion):

          (i)  directly or indirectly soliciting any person who is, or during
     the 90 days preceding the effective date of the Executive's termination or
     resignation from employment was, employed by the Company or any of its
     subsidiaries to leave the employ of the Company; or

          (ii) soliciting, in competition with the Company or any of its
     subsidiaries, any business of any person or entity who is, or during the
     one year preceding the effective date of the Executive's termination or
     resignation from employment was, a customer or client of the Company or
     any of its subsidiaries; or

          (iii)     engaging in any activities, whether as employee, director,
     consultant, agent, proprietor, owner, partner, contractor, stockholder, or
     otherwise, with or for the account of any corporation or firm engaged in
     the Computer Systems Business that competes with the Company or any of its
     subsidiaries, PROVIDED, HOWEVER, that this condition (iii) shall not fail
     to be satisfied solely by virtue of (A) the Executive's serving as an
     employee, officer, consultant or member of the board of directors of any
     corporation or firm having gross revenues, during its last completed
     fiscal year, of $75 million or less or (B) the Executive's serving as a
     partner or affiliate of a venture capital fund or (C) the Executive's
     passive investment of no more than $10 million in, or 5% of the equity of
     (whichever is greater), any corporation or other firm.

The Executive's engaging in any of the activities described in clauses (i)
through (iii) above during the Restricted Period will result in forfeiture of
his right to receive any further Severance Payment.  The Company acknowledges
that this Section 5(a) does not constitute a covenant on the part of the
Executive to refrain from engaging in such activities and is not intended to
confer on the Company any right to injunctive or other equitable relief to
prevent the Executive from engaging therein.

          (b)  PROPRIETARY INFORMATION.  Concurrently with the execution of
this Agreement, the Executive shall enter into a confidentiality and
proprietary information agreement with the Company in the standard form used
for the Company's other senior officers.


<PAGE>

          6.   GENERAL PROVISIONS.

          (a)  INDEMNIFICATION.  Concurrently with the execution of this
Agreement, the Executive shall enter into an indemnification agreement with the
Company in the standard form used for the Company's other senior officers.

          (b)  SOURCE OF PAYMENTS.  All payments provided under this Agreement,
other than payments made pursuant to a plan which provides otherwise, shall be
paid in cash from the general funds of the Company, and no special or separate
fund shall be established, and no other segregation of assets made, to assure
payment.  The Executive shall have no right, title or interest whatever in or
to any investments which the Company may make to aid the Company in meeting its
obligations hereunder.  To the extent that any person acquires a right to
receive payments from the Company hereunder, such right shall be no greater
than the right of an unsecured creditor of the Company; PROVIDED, HOWEVER, that
this provision shall not be deemed to waive or abrogate any preferential or
other rights to payment accruing to the Executive under applicable bankruptcy
laws by virtue of the Executive's status as an employee of the Company.

          (c)  NO OTHER SEVERANCE BENEFITS.  Except as specifically set forth
in this Agreement, the Executive covenants and agrees that he shall not be
entitled to any other form of severance benefits from the Company, including,
without limitation, benefits otherwise payable under any of the Company's
regular severance policies, in the event his employment with the Company ends
for any reason and, except with respect to obligations of the Company expressly
provided for herein, the Executive unconditionally releases the Company and its
subsidiaries and affiliates, and their respective directors, officers,
employees and stockholders, or any of them, from any and all claims,
liabilities or obligations under this Agreement or under any severance or
termination arrangements of the Company or any of its subsidiaries or
affiliates for compensation or benefits in connection with his employment or
the termination thereof.

          (d)  TAX WITHHOLDING.  Payments to the Executive of all compensation
contemplated under this Agreement shall be subject to all applicable tax
withholding.

          (e)  NOTICES.  Any notice hereunder by either party to the other
shall be given in writing by personal delivery, or certified mail, return
receipt requested, or (if to the Company) by telex or facsimile, in any case
delivered to the applicable address set forth below:

          (i)  To the Company:     Silicon Graphics, Inc.
                                   2011 North Shoreline Boulevard
                                   Mountain View, CA 94039-7311
                                   attention: General Counsel

                                   with a copy to:

                                   William Hinman
                                   Shearman & Sterling
                                   555 California Street
                                   San Francisco, CA 94104

<PAGE>

          (ii) To Executive:       At the address indicated
                                   on the signature page hereof

                                   with a copy to:

                                   Craig Johnson
                                   Venture Law Group
                                   2800 Sand Hill Road
                                   Menlo Park, CA 94025

or to such other persons or other addresses as either party may specify to the
other in writing.

          (f)  REPRESENTATION BY THE EXECUTIVE.  The Executive represents and
warrants that his entering into this Agreement does not, and that his
performance under this Agreement and acceptance of the Offer Letter and the
consummation of the transactions contemplated hereby and thereby will not,
violate the provisions of any agreement or instrument to which the Executive is
a party, including without limitation any agreement with his former employer,
or any decree, judgment or order to which the Executive is subject, and that
this Agreement constitutes a valid and binding obligation of the Executive in
accordance with its terms.  Breach of this representation will render all of
the Company's obligations under this Agreement and the Offer Letter void AB
INITIO.

          (g)  LIMITED WAIVER.  The waiver by the Company or the Executive of a
violation of any of the provisions of this Agreement, whether express or
implied, shall not operate or be construed as a waiver of any subsequent
violation of any such provision.

          (h)  ASSIGNMENT; ASSUMPTION OF AGREEMENT.  No right, benefit or
interest hereunder shall be subject to assignment, encumbrance, charge, pledge,
hypothecation or setoff by the Executive in respect of any claim, debt,
obligation or similar process.  The Company will require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company to assume expressly
and to agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.

          (i)  AMENDMENT; ACTIONS BY THE COMPANY.  This Agreement may not be
amended, modified or canceled except by written agreement of the Executive and
the Company.  Any and all determinations, judgments, reviews, verifications,
adjustments, approvals, consents, waivers or other actions of the Company
required or permitted under this Agreement shall be effective only if
undertaken by the Company pursuant to authority granted by a resolution duly
adopted by the Board; PROVIDED, HOWEVER, that by resolution duly adopted in
accordance with this subsection (j), the Board may delegate its
responsibilities hereunder to one or more of its members other than the
Executive.

          (j)  SEVERABILITY.  If any term or provision hereof is determined to
be invalid or unenforceable in a final court or arbitration proceeding, (i) the
remaining terms and


<PAGE>

provisions hereof shall be unimpaired and (ii) the invalid or unenforceable
term or provision shall be deemed replaced by a term or provision that is
valid and enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision.

          (k)  LEGAL FEES.  The Company will reimburse the Executive for his
reasonable legal fees and expenses incurred in connection with the negotiation
of this Agreement and the Offer Letter.

          (l)  GOVERNING LAW.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California (determined
without regard to the choice of law provisions thereof).

          (m)  DISPUTE RESOLUTION.  In the event of any dispute, claim,
question, controversy or disagreement arising under or in connection with this
Agreement, the Offer Letter or the other agreements referred to herein, the
parties agree to use their best efforts to settle such matters in an amicable
manner.  Initially, they shall consult and negotiate with each other, in good
faith and, recognizing their mutual interests, attempt to reach a just and
equitable solution satisfactory to both parties.  If they do not reach such
resolution within a period of six weeks, then upon written notice by either
party to the other, any unresolved matter shall be submitted to confidential
mediation conducted by a mediator mutually acceptable to each of them.  The
site of the mediation shall be in the county of Santa Clara, California.
Either party may, without inconsistency with this Agreement, apply to any court
having jurisdiction and seek injunctive relief so as to maintain the status quo
until such time as the mediation is concluded or the controversy is otherwise
resolved and, if the claims between the parties are not resolved within six
weeks of the commencement of mediation, either party may initiate litigation in
a court having jurisdiction over the matter to enforce such party's claim.
Following resolution of all claims between the parties in a mediation or legal
proceeding, the Company shall promptly reimburse the Executive for all legal
fees and expenses incurred by the Executive in connection with a successful
claim to enforce his rights under this Agreement.

          (n)  ENTIRE AGREEMENT.  This Agreement, together with the Offer
Letter, the non-disclosure agreement between the Company and the Executive, the
stock option agreement between the Company and the Executive relating to the
Executive's initial grant of Options, the confidentiality agreement referred to
in Section 5(b) and the indemnification agreement referred to in Section 6(a),
set forth the entire agreement and understanding of the parties hereto with
respect to the matters covered hereby and supersede all prior agreements and
understandings of the parties with respect to the subject matter hereof.

          (o)  CONFLICTS.  To the extent that any of the terms of this
Agreement and the Offer Letter conflict with any policies or procedures of the
Company in effect from time to time, the terms of this Agreement and the Offer
Letter will prevail.

          (p)  HEADINGS.  The headings and captions of the sections of this
Agreement are included solely for convenience of reference and shall not
control the meaning or interpretation of any provisions of this Agreement.


<PAGE>

          (q)  COUNTERPARTS.  This Agreement may be executed by the parties
hereto in counterparts, each of which shall be deemed an original, but both
such counterparts shall together constitute one and the same document.

          7.   DEFINED TERMS

          For purposes of this Agreement, the following terms shall have the
meanings indicated below:

          "AVERAGE FAIR MARKET VALUE" means the average of the Fair Market
     Values for the 30 calendar days ending with the relevant date of
     determination.

          "BENEFICIAL OWNER" has the meaning ascribed to such term in Rule 13d-
     3 under the Exchange Act.

          "BENEFICIARY" means the person or persons designated in writing by
     the Executive to receive benefits under a plan, program or arrangement or
     to receive the balance of the Severance Payments, if any, in the event of
     the Executive's death, or, if no such person or persons are designated by
     the Executive, the Executive's estate.  No Beneficiary designation shall
     be effective unless it is in writing and received by the Company prior to
     the date of the Executive's death.

          "BOARD" means the board of directors of the Company.

          "BUSINESS COMBINATION" means and includes each of the following
     occurrences:

               (i)   a consolidation or merger pursuant to which more than
          75% of the Company's voting stock is transferred to different
          holders, except for a transaction intended primarily to change the
          state of the Company's incorporation;

               (ii)  more than 75% of the assets of the Company are sold or
          otherwise disposed of; or

               (iii) the Company dissolves or liquidates or effects a partial
          liquidation involving more than 75% of its assets.


<PAGE>

          "CAUSE" for termination of the Executive's employment means:

               (i)   willful and continued failure to substantially perform his
          duties with the Company (other than such failure resulting from
          incapacity due to physical or mental illness) after there has been
          delivered to the Executive by the Board a written demand for
          substantial performance which sets forth in detail the specific
          respects in which it believes the Executive has not substantially
          performed his duties;

               (ii)  willful misconduct which is inconsistent with Company
          policy and is materially and demonstrably injurious to the Company;

               (iii) commission of a felony or an act of fraud against the
          Company or any of its affiliates; or

               (iv)  material breach of the terms of this Agreement or the
          terms of the confidentiality and proprietary information agreement
          referred to in Section 5(b) of this Agreement.

          "CHANGE IN CONTROL" means and includes each of the following
     occurrences:

               (i)   a Business Combination;

               (ii)  when any "person" as defined in Section 3(a)(9) of the
          Exchange Act and as used in Sections 13(d) and 14(d) thereof,
          including a "group" as defined in Section 13(d) of the Exchange Act
          but excluding the Company and any subsidiary and any employee benefit
          plan sponsored or maintained by the Company or any subsidiary
          (including any trustee of such plan acting as trustee), directly or
          indirectly, becomes the Beneficial Owner of securities of the Company
          representing thirty percent (30%) or more of the combined voting
          power of the Company's then outstanding securities with respect to
          the election of the directors of the Company;

               (iii) during any period of three (3) consecutive years (not
          including any period prior to the date hereof), 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 subsequent to the
          date hereof 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
          Company, as such terms are used in Rule 14a-11 under the Exchange
          Act) shall be, for purposes of this Agreement, considered as though
          such person were a member of the Incumbent Board.


<PAGE>

For purposes of this Agreement, the Board may, by resolution, clarify the
date as of which a Change in Control shall be deemed to have occurred.

          "CHANGE-IN-CONTROL PAYMENT" means a payment, equal to 24 months of
the Executive's base salary as in effect immediately prior to a Change in
Control, to which the Executive shall become entitled as provided in
Section 4(a) above.

     "CHANGE IN CONTROL PRICE" means (i) the highest closing price of a share
of Common Stock on the New York Stock Exchange (or, if the Common Stock is no
longer listed on the New York Stock Exchange but is listed on another stock
exchange, on such other stock exchange) as reported on the composite
transactions reporting system (or in the event that the Common Stock is no
longer listed on any stock exchange but is traded on the NASDAQ National
Market System, the highest closing sale price of a share of Common Stock as
reported by the NASDAQ National Market System and as appearing in the WALL
STREET JOURNAL), at any time within the 60-day period immediately preceding
the date of determination of the Change in Control Price by the Board (the
"60-DAY PERIOD"), or (ii) the highest price paid or offered for a share of
Common Stock, as determined by the Board, in any bona fide transaction or
bona fide offer related to the Change in Control at any time within the
60-day period.  The Change in Control Price shall be determined by the Board.

     "CODE" means the Internal Revenue Code of 1986, as amended, and the
regulations thereunder.

     A corporation or other firm will be considered to be engaged in the
"COMPUTER SYSTEMS BUSINESS" if it is engaged in the design, manufacture or
marketing of desktop or deskside computer systems, servers, graphics
microprocessors or graphics hardware components, or in any combination of
such activities.

     "DISABILITY" means a physical or mental incapacity that substantially
prevents the Executive from performing his duties hereunder and that has
continued for at least 180 days and can reasonably be expected to continue
indefinitely.  Any dispute as to whether or not the Executive is disabled
within the meaning of the preceding sentence shall be resolved by a physician
reasonably satisfactory to the Executive and the Company, and the
determination of such physician shall be final and binding upon both the
Executive and the Company.

     "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules thereunder.

     "FAIR MARKET VALUE" of a share of Common Stock means such fair market
value determined in accordance with the terms of the 1993 Plan.

     "FINAL MEASUREMENT DATE" means the earliest of:

<PAGE>

          (i)  the date that the Option to purchase 3,000,000 shares of
     Common Stock provided for in the Offer Letter vests in full (including
     full vesting pursuant to Section 4 above);

          (ii) the date following a termination of the Executive's employment
     with the Company (including termination due to death or Disability, but
     excluding termination of the Executive's employment by the Company for
     Cause or resignation by the Executive from his employment with the
     Company other than for Good Reason), as of which the Executive's vested
     Options are fully exercised or expire in accordance with their term;

          (iii) the effective date of the Executive's termination or
     resignation of employment with Company (for any reason) following a
     Change in Control, or, if earlier, the second anniversary of the
     Effective Date if a Change in Control has occurred before such second
     anniversary;

     PROVIDED, HOWEVER, that if the shares issuable upon exercise of any
     Options awarded to the Executive prior to the date specified in clause
     (i), (ii) or (iii) above, as applicable, and vested as of such date
     would not be Unrestricted Stock if the Options were exercised and the
     shares were issued as of such date, then the Final Measurement Date
     shall be the earliest date after the date specified in clause (i), (ii)
     or (iii) above, as applicable, as of which such shares, if issued, would
     be Unrestricted Stock.

     "FIRST MEASUREMENT DATE" means the earlier of:

          (i) the second anniversary of the Effective Date; or

          (ii) the date following a termination of the Executive's employment
     with the Company (including termination due to death or Disability, but
     excluding termination of the Executive's employment by the Company for
     Cause or resignation by the Executive from his employment with the
     Company other than for Good Reason) as of which the Executive's vested
     Options are either fully exercised or expire in accordance with their
     terms,

     PROVIDED, HOWEVER, that if the shares issuable upon exercise of any
     Options awarded to the Executive prior to the date specified in clause
     (i) or (ii) above, as applicable, and vested as of such date would not
     be Unrestricted Stock if the Options were exercised and the shares were
     issued as of such date, then the First Measurement Date shall be the
     earliest date after the date specified in clause (i) or (ii) above, as
     applicable, as of which such shares, if issued, would be Unrestricted
     Stock.


<PAGE>

     "GOOD REASON" for the Executive's resignation of his employment with
the Company means the occurrence of any of the following events:

          (i)  the assignment to the Executive of any duties or the
     significant reduction of the Executive's duties, either of which is
     inconsistent with the Executive's position as Chief Executive Officer of
     the Company, or the removal of the Executive from or failure to re-elect
     the Executive as Chief Executive Officer of the Company or as a member
     of the Board, PROVIDED, HOWEVER, that the election of a non-executive
     Chairman of the Board, or the appointment of a person other than the
     Executive as President of the Company, shall not constitute Good Reason
     as long as (A) the Executive remains the most highly compensated
     executive officer of the Company and (B) any such President reports to
     the Executive;

          (ii)  the failure of the Company to increase the Executive's base
     salary each year by an amount which equals at least one-half, on a
     percentage basis, of the average annual percentage increase, if any, in
     base salary for all officers of the Company (and any successor of the
     Company) during the prior two full calendar years;

          (iii)  the taking of any action by the Company which would
     materially and adversely affect the Executive's participation in any
     plan, program or policy generally applicable to executives or employees
     of the Company or any successor of the Company; or

          (iv)  the failure of the Company to obtain the assumption of this
     Agreement by any successor as contemplated by Section 6(h) hereof.

Unless the Executive provides written notification of his intention to
resign within 90 business days after the Executive knows or has reason to
know of the occurrence of any such event, the Executive shall be deemed to
have consented thereto and such event shall no longer constitute Good
Reason for purposes of this Agreement.  If the Executive provides such
written notice to the Company, the Company shall have 20 business days
from the date of receipt of such notice to effect a cure of the event
described therein (which cure shall be retroactive with respect to any
monetary matter) and, upon cure thereof by the Company to the reasonable
satisfaction of the Executive, such event shall no longer constitute Good
Reason for purposes of this Agreement.

     "IN-THE-MONEY VALUE" means:

          (i)   with respect to any Option (or portion thereof) that has been
     exercised on or prior to a Measurement Date, the product of (A) the
     amount, if any, by which the Fair Market Value of a share of Common
     Stock on the date of exercise exceeds the per share exercise price of
     the Option, multiplied by (B) the number of shares as to which the
     Option was exercised;


<PAGE>

          (ii)  with respect to any Option (or portion thereof) that has not
     been exercised as a Measurement Date, the product of (A) the amount, if
     any, by which the Average Fair Market Value of a share of Common Stock
     as of the relevant Measurement Date exceeds the per share exercise price
     of such Option, multiplied by (B) the number of shares of Common Stock
     subject to such Option (or unexercised portion thereof);

          (iii) with respect to any restricted stock or other stock award
     that has been sold on or prior to a Measurement Date, the product of (A)
     the Fair Market Value of a share of Common Stock on the date of sale
     multiplied by (B) the number of shares sold; and

          (iv)  with respect to any restricted stock or other stock award
     that has not been sold on or prior to a Measurement Date, the product of
     (A) the Average Fair Market Value of a share of Common Stock as of the
     relevant Measurement Date multiplied by (B) the number of shares that
     remain included in or subject to such award.

     "MEASUREMENT DATE" means each of the First Measurement Date and the
Final Measurement Date.

     "OPTIONS" means stock options to purchase shares of the Company's common
stock awarded to the Executive under the 1993 Plan or any other plan or
program of the Company.

     "SHORTFALL AMOUNT" means the excess, if any, determined as of a
Measurement Date, of (i) $10 million over (ii) the aggregate In-the-Money
Value of all Options and restricted stock or stock units that have been
awarded to the Executive by the Company, and have vested, on or prior to the
Measurement Date.  In no event shall the Shortfall Amount be greater than $10
million or less than zero.  The Company shall be responsible for calculating
the Shortfall Amount.

     "UNRESTRICTED STOCK" means shares of Common Stock owned by the Executive
the sale or other disposition of which is not restricted (i) under any
trading policy of the Company applicable to the Executive, including any
policy designed to restrict trading by the Company's officers during periods
when the Company is or may be in possession of material undisclosed
information, or (ii) as a condition to the qualification of a transaction
involving the Company as a "pooling of interests" for accounting purposes. 
Shares of Common Stock owned by the Executive will not fail to be considered
Unrestricted Stock solely by virtue of any volume limitations on the
Executive's ability to sell or dispose of such shares imposed under the
Securities Act of 1933, as amended, and the rules thereunder.


<PAGE>

          IN WITNESS WHEREOF, the parties have executed this Agreement
effective as of the day and year first written above.

                              SILICON GRAPHICS, INC.


                              By: /s/ William M. Kelly
                                  --------------------------------------------
                                   Name:  William M. Kelly
                                   Title: Senior Vice President



                              EXECUTIVE
                             
                                  /s/ Richard E. Belluzo
                                  --------------------------------------------
                                   Address: 927 Wyndemere
                                            Boise, Idaho 83902

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