<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1994
Commission File Number 1-10441
SILICON GRAPHICS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-2789662
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2011 N. SHORELINE BOULEVARD, MOUNTAIN VIEW, CALIFORNIA 94043-1389
(Address of principal executive offices) (Zip Code)
(415) 960-1980
(Registrant's telephone number, including area code)
__________________
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--- ---
As of October 31, 1994 there were 141,735,671 shares of Common Stock
outstanding.
<PAGE>
SILICON GRAPHICS, INC.
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements:
Consolidated Balance Sheet at
September 30, 1994 and June 30, 1994...................... 3
Consolidated Statement of Income for the
Three Months Ended September 30, 1994 and 1993............ 4
Consolidated Statement of Cash Flows for the
Three Months Ended September 30, 1994 and 1993............ 5
Notes to Consolidated Financial Statements................ 6
Item 2: Management's Discussion and Analysis of
Results of Operations and Financial Condition............8-14
PART II - OTHER INFORMATION
Items 4 and 6: ....................................................15
Signatures ........................................................16
Index of Exhibits..................................................17
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
SILICON GRAPHICS, INC.
CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
September 30, June 30,
ASSETS 1994 1994
- ------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents.......................... $ 297,402 $ 310,767
Short-term marketable investments.................. 179,862 90,147
Accounts receivable, net........................... 395,707 391,271
Inventories, net................................... 176,773 164,319
Prepaid expenses and other current assets.......... 70,805 67,862
-------- ---------
Total current assets............................ 1,120,549 1,024,366
Other marketable investments......................... 171,469 186,836
Property and equipment:
Land and building.................................. 31,198 28,980
Machinery and equipment............................ 250,796 228,129
Furniture and fixtures............................. 57,038 50,806
Leasehold improvements............................. 54,437 58,066
--------- ---------
393,469 365,981
Accumulated depreciation and amortization.......... (198,957) (182,651)
--------- ---------
Net property and equipment...................... 194,512 183,330
Other assets......................................... 110,391 124,251
--------- ---------
$1,596,921 $1,518,783
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................. $ 101,140 $ 85,781
Accrued compensation.............................. 46,928 46,216
Income taxes payable.............................. 56,965 50,390
Other accrued liabilities......................... 83,578 80,457
Long-term debt due within one year................ 9,130 10,450
Accrued merger expenses........................... 10,351 10,303
Deferred revenue.................................. 73,318 72,682
--------- ---------
Total current liabilities...................... 381,410 356,279
Deferred revenue and other accrued expenses,
long-term......................................... 1,790 1,928
Long-term debt due after one year................... 231,879 229,950
Accrued merger expenses, long-term.................. 8,866 9,365
Stockholders' equity:
Preferred stock................................... 33,996 33,996
Common stock...................................... 141 139
Additional paid-in capital........................ 690,713 678,211
Retained earnings................................. 237,555 195,985
Accumulated translation adjustment and other...... 10,571 12,930
--------- ---------
Total stockholders' equity..................... 972,976 921,261
--------- ---------
$1,596,921 $1,518,783
--------- ---------
--------- ---------
</TABLE>
SEE ACCOMPANYING NOTES
3
<PAGE>
SILICON GRAPHICS, INC.
CONSOLIDATED STATEMENT OF INCOME
(In thousands except per share amounts)
<TABLE>
<CAPTION>
Three Months
Ended
September 30,
------------
1994 1993
---- ----
<S> <C> <C>
Product and other revenues.................... $377,965 $265,000
Service revenues.............................. 49,422 36,636
-------- --------
Total revenues............................. 427,387 301,636
Costs and expenses:
Cost of product and other revenues.......... 176,120 126,466
Cost of service revenues.................... 25,842 19,672
Research and development.................... 53,227 39,025
Selling, general and administrative......... 114,709 83,499
-------- --------
Total costs and expenses.................. 369,898 268,662
-------- --------
Operating income.............................. 57,489 32,974
Interest income and other, net................ 2,277 512
Income before income taxes.................... 59,766 33,486
Provision for income taxes.................... 17,930 7,746
-------- --------
Net income.................................... $ 41,836 $ 25,740
-------- --------
-------- --------
Net income per common share................... $ 0.27 $ 0.17
-------- --------
-------- --------
Common shares and common share equivalents
used in the calculation of net income per
common share.................................. 157,289 151,140
-------- --------
-------- --------
</TABLE>
SEE ACCOMPANYING NOTES
4
<PAGE>
<TABLE>
<CAPTION>
SILICON GRAPHICS, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Three Months Ended
September 30,
------------
1994 1993
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income..................................................... $ 41,836 $ 25,740
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization................................. 23,074 18,040
Accrued interest on convertible subordinated debenture........ 2,119 0
Other......................................................... 5,540 6,402
(Increase) decrease in assets:
Accounts receivable.......................................... (4,436) 2,109
Inventories.................................................. (12,454) (34,390)
Prepaid expenses and other current assets.................... (2,943) (1,719)
Increase (decrease) in liabilities:
Accounts payable............................................. 15,359 (13,983)
Accrued compensation......................................... 712 2,181
Income taxes payable......................................... 10,028 (1,794)
Other accrued liabilities.................................... 2,858 9,166
Deferred revenue............................................. 636 13
Deferred revenue and other accrued expenses, long-term....... (138) (448)
Accrued merger expenses...................................... (381) (1,841)
-------- --------
Total adjustments........................................... 39,974 (16,264)
-------- --------
Net cash provided by operating activities.................... 81,810 9,476
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures........................................... (28,860) (19,096)
Increase in other assets....................................... (5,247) (4,472)
Available-for-sales investments:
Purchases.................................................... (97,875) (42,667)
Sales........................................................ 2,500 0
Maturities................................................... 24,479 7,538
-------- --------
Net cash used in investing activities........................ (105,003) (58,697)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock........................................... 12,340 8,081
Issuance of debt............................................... 214 433
Payments of debt principal..................................... (2,726) (572)
-------- --------
Net cash provided by financing activities.................... 9,828 7,942
-------- --------
Net decrease in cash and cash equivalents...................... (13,365) (41,279)
Cash and cash equivalents at beginning of period............... 310,767 142,668
-------- --------
Cash and cash equivalents at end of period..................... $297,402 $101,389
-------- --------
-------- --------
</TABLE>
SEE ACCOMPANYING NOTES
5
<PAGE>
SILICON GRAPHICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. CONSOLIDATED FINANCIAL STATEMENTS
The unaudited results of operations for the interim periods shown herein
are not necessarily indicative of operating results for the entire fiscal
year. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary to present fairly the financial
position, results of operations and cash flows for all periods presented have
been made. The unaudited consolidated financial statements included in this
Form 10-Q should be read in conjunction with the audited consolidated
financial statements and notes thereto for the fiscal year ended June 30,
1994.
2. CASH AND CASH EQUIVALENTS AND MARKETABLE INVESTMENTS
Effective July 1, 1994 the Company adopted Statement of Financial Accounting
Standards No. 115 (SFAS 115), "Accounting for Certain Investments in Debt and
Equity Securities". The cumulative effect as of July 1, 1994 of adopting
SFAS 115 was immaterial.
Cash and cash equivalents consist of cash on deposit with banks and high
quality money market instruments with original maturities of 90 days or
less. Cash equivalents are classified as held-to-maturity and are therefore
stated at cost, which approximates fair value. Short-term marketable
investments, classified as available-for-sale, consist of high quality money
market instruments with original maturities greater than 90 days, but less
than or equal to one year, and are stated at fair market value as of
September 30, 1994. Other marketable investments, also classified as
available-for-sale, consist primarily of high quality debt securities with
maturities greater than one year and less than three years, and are stated at
fair market value as of September 30, 1994. The Company does not actively
invest in marketable equity securities, but has from time to time acquired
positions in certain public companies in the ordinary course of conducting
its business. These equity investments are also included in other marketable
investments and are stated at fair market value. The cost of securities sold
is based upon specific identification. The Company has not realized any
material gains or losses during the three month period ended September 30,
1994. Unrealized gains and losses (net of tax) on securities classified as
available-for-sale are included in Accumulated Translation Adjustment and
Other in the stockholders' equity section of the balance sheet.
The following tables detail the Company's marketable investments as of
September 30, 1994 (in thousands):
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Balance Sheet Classification Cost Gains Losses Fair Value
- ---------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Cash equivalents $170,121 $3 $ -- $170,124
Short-term marketable
investments 180,912 4 (1,054) 179,862
Other marketable investments 181,885 -- (10,416) 171,469
-------- --- -------- --------
Total marketable investments $532,918 $7 ($11,470) $521,455
-------- --- -------- --------
-------- --- -------- --------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Held-to-Maturity Investments Cost Gains Losses Fair Value
- ---------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Repurchase agreements $ 64,400 $-- $-- $ 64,400
U.S. commercial paper 85,008 3 -- 85,011
Other investments 20,713 -- -- 20,713
-------- -- --- --------
Total $170,121 $3 $-- $170,124
-------- -- --- --------
-------- -- --- --------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Estimated
Available-for-Sale Investments Cost Gains Losses Fair Value
- ---------------------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
U.S. treasury and agency
securities and obligations $228,892 $-- ($3,606) $225,286
U.S. commercial paper 30,252 -- (7) 30,245
U.S. corporate notes 38,100 -- (1,309) 36,791
Other investments 50,609 4 (31) 50,582
Equity investments 14,944 -- (6,517) 8,427
-------- --- -------- --------
Total $362,797 $4 ($11,470) $351,331
-------- --- -------- --------
-------- --- -------- --------
</TABLE>
3. INVENTORIES
Inventories stated at the lower of cost (first-in, first-out) or market
consist of (in thousands):
<TABLE>
<CAPTION>
September 30, June 30,
1994 1994
---- ----
<S> <C> <C>
Raw material $ 17,684 $ 9,602
Work in process 48,606 48,680
Finished goods 15,473 17,829
Service & marketing 95,010 88,208
-------- --------
Total inventories, net $176,773 $164,319
-------- --------
-------- --------
</TABLE>
4. PER SHARE DATA
Net income per share is computed using the weighted average number of
common shares and dilutive common share equivalents outstanding during the
period. Dilutive common share equivalents for the three month periods ended
September 30, 1994 and 1993, consist of stock options (using the modified
treasury stock method) and the Company's Series A convertible preferred stock
on an as-if-converted basis. The Company's zero-coupon convertible
subordinated debenture due November 2003 is not a common stock equivalent and
therefore not included in the share count.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS
OF OPERATIONS AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Silicon Graphics uses a financial target model to develop its annual
operating plans and to evaluate investment alternatives, business proposals
and operations throughout the fiscal year. This model expresses the
Company's current objectives for gross margins, spending, and operating
profit as a percentage of net revenues. The model also incorporates target
ranges for the allocation of spending between research and development, and
selling, general and administrative expenses.
The Company's current model includes the following financial targets (as a
percentage of net revenues):
Gross margin 50% - 52%
Research and development 11% - 13%
Selling, general and administrative 26% - 28%
---------
Operating margin 11% - 13%
The financial target model reflects a number of assumptions. In particular,
the gross margin target range reflects assumptions about the Company's
pricing, manufacturing costs and volumes, and the mix of products,
distribution channels and geographic distribution. The spending ranges were
established based on the Company's beliefs about the levels of research and
development necessary to develop leading-edge products for its markets, the
levels of sales and marketing expenses appropriate to support its channels of
distribution and the levels of general and administrative spending
appropriate for the size and nature of the business. Many other factors
affect the Company's financial performance and may cause the Company's future
results to be markedly outside of the ranges reflected in the target model.
The financial target model is one management tool that the Company uses to
run its business and measure its performance. IT IS NOT A PROJECTION OF
FUTURE RESULTS. The actual results for any particular period, including the
current quarter, may vary substantially from the model for numerous reasons
including but not limited to the Company's ability to attain planned revenue
growth. See "Factors That May Affect Future Results." Also, in certain
periods the Company may intentionally operate outside the model. In
addition, the financial target model itself is subject to revision from time
to time to reflect new strategies, competitive changes or other developments.
The financial target model is described above to provide a framework for the
Company's discussion and analysis of its results of operations. The Company
does not intend to provide updated information about its planning model or
its performance relative to the model in any period, other than in the
context of management's discussion and analysis in the Company's Form 10-Q.
8
<PAGE>
The following table sets forth, for the periods indicated, certain income and
expense items as a percentage of net revenues:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
------------
1994 1993
---- ----
<S> <C> <C>
Product and other revenues 88.4% 87.9%
Service revenues 11.6 12.1
----- -----
Total revenues 100.0 100.0
Cost of product and other revenues 41.2 41.9
Cost of service revenues 6.0 6.5
----- -----
Gross margin 52.7 51.6
Research and development expense 12.5 12.9
Selling, general and administrative
expenses 26.8 27.7
----- -----
Operating margin 13.5 10.9
Interest income and other, net 0.5 0.2
----- -----
Income before income taxes 14.0 11.1
Provision for income taxes 4.2 2.6
----- -----
Net income 9.8% 8.5%
----- -----
----- -----
PERCENTAGES MAY NOT ADD DUE TO ROUNDING.
</TABLE>
The following table sets forth, for the periods indicated, growth rates for
certain income and expense items:
<TABLE>
<CAPTION>
Increase/(Decrease)for the
Three Months Ended Sept 30, 1994
--------------------------------
vs Prior Qtr vs Prior Year Qtr
------------ -----------------
<S> <C> <C>
Product and other revenues.............. (3)% 43%
Service revenues........................ 9% 35%
Total revenues.......................... (1)% 42%
Gross profit............................ 0% 45%
Research and development............... 4% 36%
Selling, general and administrative..... 2% 37%
Net income.............................. (4)% 63%
Earnings per share...................... (4)% 59%
</TABLE>
OPERATING RESULTS: Revenue growth resulted principally from increased
unit shipments in all major regions worldwide and increased service revenues
from a larger installed base of products under contract. Compared to last
year's quarter, revenue was positively affected by improvement in both the
European and Japanese economies and the first shipments of the Company's new
supercomputer products during this year's quarter. Total revenue for the
first quarter of fiscal 1995 was down only slightly from the fourth quarter
of fiscal 1994, as the Company was less affected this year by the seasonal
weakness normally experienced in the first quarter. The Company experienced
strong demand across its lines of computer system products, which range from
the desktop to supercomputing, the majority of which are early in their
product life cycle.
9
<PAGE>
For the three months ended September 30, 1994, the Company exceeded its
gross margin model. The increase in gross margin for the three month period
compared to the prior year was primarily a result of a shift in mix toward
more fully-configured products within the Company's product lines and an
increase in manufacturing efficiencies due to higher volumes. The Company's
operating expenses as a percentage of revenue were within the model range.
The Company's operating margin for the first quarter of fiscal 1995 was
13.5% of net revenues, which is above the target range of 11% - 13% and
significantly above the 10.9% recorded in the comparable quarter of fiscal
1994. As a result of the positive business climate that the Company is
experiencing, the Company is considering a variety of incremental spending
programs, including sales and marketing initiatives and expanded research and
development programs, that would be designed to improve its long-term growth
prospects and market position. These programs, if implemented, could reduce
gross margins and increase operating expenses as a percentage of revenue
compared to the levels experienced in the first quarter of fiscal 1995.
REVENUE BY GEOGRAPHY: The Company's North American business revenue
increased 38% over the year ago quarter. Europe/Pacific revenue was up 47%
from a year ago. The Company experienced improvement in most major European
economies, with the exception of Italy. Revenue from Japan represented
approximately 13% of total revenues for the quarter, compared to
approximately 14% in the prior year's comparable period. The Company
believes that the Japanese economy is slowly recovering from a recession.
The change in geographical mix is largely due to relative strength the
Company experienced in its European business.
<TABLE>
<CAPTION>
Three Months Ended Sept 30,
--------------------------- Year over Year
1994 1993 Increase
---- ---- --------
(in millions)
<S> <C> <C> <C>
North America (U.S. and Canada) $244 $177 38%
Europe 100 65 54%
Pacific (including Latin America) 83 60 39%
---- ---- ---
Total Revenue $427 $302 42%
---- ---- ---
---- ---- ---
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended Sept 30,
---------------------------
(as a percentage of total revenue) 1994 1993
---- ----
<S> <C> <C>
North America 57% 59%
Europe 23% 21%
Pacific 20% 20%
</TABLE>
During the quarter the Company established subsidiaries in the Czech
Republic, Hungary and South Africa, thereby increasing the number of
international sales subsidiaries to twenty-six.
REVENUE BY PRODUCT LINE: The Company's product and other revenues
result primarily from shipment of computer system products, with subsystem
and software revenues, license fees, and non-recurring engineering (NRE)
contract payments comprising the remainder. NRE contract payments are
generally recognized upon the completion of contract requirements or
milestones, and the expenses related to these efforts are included in
research and development expense.
10
<PAGE>
The mix between high-end and low-end systems has remained relatively
constant as the Company continues to develop and deliver a wide range of
products to a broadening marketplace.
<TABLE>
<CAPTION>
Three Months Ended Sept 30,
---------------------------
1994 1993
---- ----
(as a percent of product revenue,
excluding other revenue)
<S> <C> <C>
High-end products (Challenge-TM-,
POWER Challenge-TM-, Onyx-TM-) 41% 43%
Low-end products (Indy-TM-,
IRIS Indigo[Registered Trademark]
Indigo(2)-TM-) 59% 57%
</TABLE>
During the quarter, the Company initiated shipments of the POWER
Challenge supercomputer, for which there had been a substantial backlog at
June 30, 1994. Shipments included full systems and board upgrades to the
Challenge server. The Company shipped the product in volume, including most
of the backlog of the product that had accumulated over the prior several
quarters. The combination of shipping the POWER Challenge backlog, shipping
more product than expected in the quarter, and lower booking levels relative
to shipments, resulted in a lower backlog of orders at September 30 than at
June 30.
OTHER RESULTS: Interest and other, net for the quarter ended September
30, 1994 improved compared to the prior year due to increased interest income
as a result of higher invested cash balances net of borrowings, higher
interest earned on investments, and decreased cost of hedging foreign
currencies.
TAXES: The Company's combined federal, state and foreign effective
income tax rate of 30% for the three month period ended September 30, 1994
was calculated based on an estimated annual effective tax rate applied to
income before income taxes for the quarter. The tax rate for the same period
of the prior fiscal year was 23% which was comprised of an estimated annual
tax rate of 30% and a non-recurring benefit from the Revenue Reconciliation
Act of 1993 in the amount of $2.3 million attributable to the retroactive
extension of the research and development credit to the beginning of fiscal
year 1993 and the effect of applying the increased corporate tax rate to the
Company's deferred tax asset. The Company does not provide for U.S. federal
income taxes on undistributed earnings of foreign subsidiaries which it
intends to permanently reinvest in those operations.
Based on the Company's plans, it believes that current levels of taxable
income, adjusted for non-recurring items, will be sufficient to realize the
deferred tax assets. Accordingly, the Company has determined that no
valuation allowance for deferred tax assets is required to reduce such assets
to an amount which is more likely than not to be realized either through
carrybacks, or by offsetting deferred tax liabilities or future taxable
income.
FINANCIAL CONDITION
For the three months ended September 30, 1994, the Company's cash and
cash equivalents, short term marketable investments and other marketable
investments increased by $61 million. This increase was primarily due to
positive cash flow from operating activities of $82 million, as well as $12
million generated from sales of stock through employee benefit programs,
which was partially offset by $29 million of capital expenditures.
As of September 30, 1994, the Company's principal sources of liquidity
included cash and cash equivalents, short-term marketable investments and
other marketable investments of $649 million and up to $20 million available
under a committed line of credit. These resources , and others available to
the Company, should be adequate to fund the Company's projected cash needs
beyond fiscal 1995. The Company believes that the level of financial
resources is an important competitive factor in the computer industry, and
accordingly, may elect to raise additional capital in anticipation of future
needs.
11
<PAGE>
FACTORS THAT MAY AFFECT FUTURE RESULTS
As is true for technology companies generally, Silicon Graphics operates
in a rapidly changing environment that involves a number of risks, some of
which are beyond the Company's control. The following discussion highlights
some of these risks.
PERIOD TO PERIOD FLUCTUATIONS: The Company has experienced substantial
revenue growth in recent years, and it plans its operating expenses, many of
which are relatively fixed in the short term, on the basis that its revenues
will continue to grow. As a result it may not be possible for management to
quickly adjust expense levels in response to revenue shortfalls. Further,
because of short delivery cycles the Company generally does not have a large
order backlog, which makes the forecasting of revenue inherently less
certain. This uncertainty is compounded because each quarter's revenue
results predominantly from orders received and shipments made during the last
month of the quarter, with a disproportionate amount occurring in the latter
half of that month. This pattern sharply limits the Company's ability to
react to revenue shortfalls within a particular quarter. Accordingly, even
relatively minor shipment disruptions, which could result from factors such
as supply constraints, delays in the availability of new products, an
unanticipated change in product mix, transit interruptions or natural
disasters, may cause a particular period's results to be substantially below
expectations.
The Company's results have followed a seasonal pattern, with relatively
strong second and fourth fiscal quarters and weaker first and third fiscal
quarters, reflecting the buying patterns of the Company's customers. A
variety of other factors may cause period-to-period fluctuations in revenues
and profitability, including changes in the mix of high-end and desktop
products, the mix of configurations within a product line, the geographic mix
of sales, the mix between direct and indirect channels of distribution, the
level of the Company's product discounts, and the percentage of revenues
derived from service or NRE during any fiscal period.
Additionally, because nearly half of the Company's revenue is derived
from sales outside the United States, and many key components for its
products are produced outside the United States, the Company's results could
be negatively affected by such factors as changes in foreign currency
exchange rates, trade protection measures, generally longer accounts
receivable collection patterns, and changes in regional or worldwide economic
or political conditions. The Company's sales to foreign customers are
subject to export regulations, with sales of some of the Company's high-end
products requiring clearance and export licenses from the U.S. Department of
Commerce. The Company's export sales would be adversely affected if such
regulations were tightened, or if they are not modified over time to reflect
the increasing performance of the Company's products.
Sales in foreign countries are generally priced in local currencies and
therefore are subject to the effects of currency exchange fluctuations.
Changes in foreign currency exchange rates can have either a positive or
negative effect on revenue and/or income in any given period. The Company
attempts to reduce the impact of currency fluctuations on net income
primarily through the use of forward exchange contracts and foreign currency
options that hedge foreign currency denominated receivables between the
parent and its international subsidiaries. The Company has generally not
hedged capital expenditures, investments in subsidiaries, inventory purchases
or the anticipated sales or net income of its international subsidiaries,
although it periodically evaluates its hedging practices.
The Company's stock price, like that of other technology companies, is
subject to significant volatility. If revenues or earnings in any quarter
fail to meet expectations of the investment community, there could be an
immediate impact on the Company's stock price. In addition, the Company's
stock price may be affected by broader market trends that may be unrelated to
the Company's performance.
PRODUCT DEVELOPMENT AND INTRODUCTION: The Company has achieved revenue
growth and profitability that are well above average within the computer
industry because it has been able to develop and rapidly bring to volume
production highly differentiated, technologically complex and innovative
products. The Company's future results depend on its ability to sustain this
competitive advantage. As in prior years, the Company plans to introduce a
number of new products in fiscal 1995, including products that will replace
products in the Company's current product offering. A number of risks are
inherent in this process.
12
<PAGE>
The process of developing new technology and incorporating it in the
Company's products is increasingly complex and uncertain, which raises the
potential for delays in new product introduction. The introduction of a new
computer system requires close collaboration and continued technological
advancement involving multiple hardware and software design and manufacturing
teams within the Company as well as teams at outside suppliers of key
components such as semiconductor and storage products. The failure of any
one of these elements could cause the Company's new products to fail to meet
specifications or to miss the aggressive timetables that the Company
establishes. As the variety and complexity of the Company's product offering
increases, the process of planning production and inventory levels also
becomes more difficult.
The Company generally has derived a substantial portion of its revenues
in any fiscal period from its most recently introduced products. During
fiscal 1994, the Company introduced new products at both the low-end and high-
end of its product line, most of which have shipped in volume. The Company's
results could be adversely affected by such factors as development or
manufacturing delays, variations in product costs, and delays in customer
purchases of existing products in anticipation of the introduction of new
products.
The Company's customers require applications software that addresses
their needs. The Company develops very limited applications software, and
thus relies on the availability of key third-party applications software
addressing a wide range of customer requirements. The Company actively
manages programs to promote the development of such applications, but there
can be no assurance that all competitively important applications will be
available for the Company's systems.
DEVELOPMENT AND ACCEPTANCE OF MIPS[Registered Trademark] RISC
ARCHITECTURE: All of the Company's system products incorporate
microprocessors based upon the Company's MIPS RISC microprocessor
architecture. The Company licenses the manufacturing and distribution
rights to these microprocessors to selected semiconductor manufacturing
companies (the "Semiconductor Partners"). The Company and its
Semiconductor Partners generally have jointly funded the development of
new MIPS RISC microprocessors, including the recently announced
R10000-TM- microprocessor. Changes in the timing, level or
availability of such funding could adversely affect the continued development
of the MIPS RISC architecture or increase the portion of the development
budget that is borne by the Company. The Company believes that the continued
development and broad acceptance of the MIPS architecture are critical to its
future success.
NEW VENTURES: The Company has entered into several ventures with other
companies to address new and emerging markets, including ventures with Time-
Warner Cable, Nintendo Co., Ltd. and AT&T Corp. While the Company believes
that these new ventures are strategically important, there are substantial
uncertainties associated with the development of new products and
technologies for evolving markets. The success of these ventures will be
determined not only by the Company's efforts, but also by those of its
venture partners. Initial timetables for the development and introduction of
new technologies, products or services may not be achieved, and
price/performance targets may not prove feasible. External factors, such as
the development of competitive alternatives or government regulation, may
cause new markets to evolve in an unanticipated direction.
COMPETITION: The computer industry is highly competitive and is
characterized by rapid technological advances in both hardware and software
development, which result in steadily improving price/performance and
shortening product life cycles. As the segments in which the Company
operates continue to grow faster than the industry as a whole, the Company is
experiencing an increase in competition, and it expects this trend to
continue. Many of the Company's competitors have substantially greater
technical, marketing and financial resources than the Company, as well as a
larger installed base of customers and a wider range of general purpose
applications software available for their platforms. The strong competition
faced throughout the Company's product line can result in significant
discounting of sales prices which would decrease the Company's gross margins.
BUSINESS DISRUPTION: The Company's corporate headquarters, including
its research and development operations and most of its manufacturing
facilities, are located in the Silicon Valley area of Northern California, a
region known for seismic activity. Operating results could be materially
affected by a significant earthquake. The Company is predominantly self-
insured for losses and business interruptions of this kind.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Company held its Annual Meeting of Stockholders on November 1, 1994.
Proxies for the meeting were solicited pursuant to Regulation 14A.
(b) The Company's Board of Directors is divided into three classes, with
directors in each class serving for three-year terms. Accordingly, not
all Directors are elected at each Annual Meeting of Stockholders.
Robert R. Bishop and James A. McDivitt were re-elected as Directors at
the meeting. The Directors whose terms of office continued after the
meeting are Allen F. Jacobson, Thomas A. Jermoluk, C. Richard Kramlich,
Edward R. McCracken, Mark W. Perry, Lucille Shapiro and James G. Treybig.
(c) The matters described below were voted on at the Annual Meeting of
Stockholders, and the number of votes cast with respect to each matter
and, with respect to the election of directors, for each nominee, were
as indicated.
1. To elect two Class II Directors of the Company to serve for a three-
year term.
NOMINEES
ROBERT R. BISHOP:
For: 126,888,330 Withheld: 881,441
JAMES A. MCDIVITT:
For: 127,033,573 Withheld: 766,168
2. To approve an amendment to the Company's Restated Certificate of
Incorporation to increase the number of shares of Common Stock that
the Company is authorized to issue to 500,000,000 shares.
For: 109,470,344 Against: 17,865,899 Abstain: 433,498
3. To ratify the appointment of Ernst & Young, LLP, as independent
auditors of the Company for the fiscal year ending June 30, 1995.
For: 127,302,315 Against: 113,936 Abstain: 353,490
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Restated Certificate of Incorporation of the Company.
3.2 Bylaws of the Company, as amended.
10.52 Directors' Stock Option Plan and form of Stock Option
Agreement, as amended as of October 31, 1994.
11.1 Statement of Computation of Common Shares and Common Share
Equivalents.
27.1 Financial Data Schedule.
(b) Reports on Form 8-K
There were no reports filed on Form 8-K during the quarter ended
September 30, 1994.
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 11, 1994 SILICON GRAPHICS, INC.
a Delaware corporation
By: /s/ Stanley J. Meresman
--------------------------------
Stanley J. Meresman
Senior Vice President, Finance
and Chief Financial Officer
(Principal Financial Officer)
By: /s/ Dennis P. McBride
--------------------------------
Dennis P. McBride
Vice President, Controller
(Principal Accounting Officer)
By: /s/ Tom Oswold
--------------------------------
Tom Oswold
Vice President, Finance
and Treasurer
15
<PAGE>
SILICON GRAPHICS, INC.
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
3.1 Restated Certificate of Incorporation
of the Company
3.2 Bylaws of the Company, as amended
10.52 Directors' Stock Option Plan and form
of Stock Option Agreement, as amended
as of October 31, 1994.
11.1 Statement of Computation of Common
Shares and Common Share Equivalents
27.1 Financial Data Schedule
<PAGE>
RESTATED CERTIFICATE OF INCORPORATION OF
SILICON GRAPHICS, INC.
Silicon Graphics, Inc., a corporation organized and existing under and by
virtue of the General Corporation Law of the State of Delaware (the "Company")
does hereby certify that:
(1) The name of the Company is Silicon Graphics, Inc. The name under
which the Company was originally incorporated in the State of Delaware was
Silicon Graphics, Inc. The original Certificate of Incorporation of the Company
was filed with the Secretary of State on September 5, 1986.
(2) At a meeting of the Board of Directors of the Company, a resolution
was duly adopted in accordance with Section 245 of the Delaware General
Corporation Law to restate and integrate all of the provisions of the Restated
Certificate of Incorporation in effect and operative as of the date of such
restatement.
(3) This Restated Certificate of Incorporation only restates and
integrates and does not further amend the provisions of the Company's Restated
Certificate of Incorporation as heretofore amended and supplemented. There is
no discrepancy between the provisions hereof and the provisions of the Company's
Restated Certificate of Incorporation as heretofore amended or supplemented.
(4) As a result of the foregoing, the certificate of incorporation of the
Company is restated in its entirety as follows:
<PAGE>
"FIRST: The name of the Corporation is Silicon Graphics, Inc. (the
"Corporation").
SECOND: The address of the Corporation's registered office in the State of
Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle, Zip Code 19801. The name of its
registered agent at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General
Corporation Law of Delaware.
FOURTH: The total number of shares of all classes of stock which the
Corporation has authority to issue is Five Hundred Two Million
(502,000,000) shares, consisting of Five Hundred Million (500,000,000)
shares of Common Stock, $0.001 par value, (the "Common Stock") and Two
Million (2,000,000) shares of Preferred Stock, $0.001 par value (the
"Preferred Stock").
The Preferred Stock may be issued from time to time in one or more
series. The Board of Directors is hereby authorized to fix or alter
the dividend rights, dividend rate, conversion rights, voting rights,
rights and terms of redemption (including sinking fund provisions),
redemption price or prices, and liquidation preferences of any wholly
unissued series of Preferred Stock, and the number of shares
constituting any such series and the designation thereof, or any of
them.
The Board of Directors is further authorized to increase or decrease
the number of shares of any series, the number of which was fixed by
it, subsequent to the issue of shares of such series then outstanding,
subject to the limitations and restrictions stated in the resolution
of the Board of Directors originally fixing the number of shares of
such series. If the number of shares of any series is so decreased,
then the shares constituting such decrease shall resume the status
which they had prior to the adoption of the resolution originally
fixing the number of shares of such series.
FIFTH: The Corporation is to have perpetual existence.
2
<PAGE>
SIXTH: The election of directors need not be by written ballot unless a
stockholder demands election by written ballot at a meeting of
stockholders and before voting begins or unless the Bylaws of the
Corporation shall so provide.
SEVENTH: The number of directors which constitute the whole Board of Directors
of the Corporation shall be designated in the Bylaws of the
Corporation.
EIGHTH: In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to make,
alter, amend or repeal the Bylaws of the Corporation.
NINTH: To the fullest extent permitted by the Delaware General Corporation
Law as the same exists or as may thereafter be amended, no director of
the Corporation shall be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a
director.
Neither any amendment nor repeal of this Article, nor the adoption of
any provision of this Certificate of Incorporation inconsistent with
this Article, shall eliminate or reduce the effect of this Article in
respect of any matter occurring, or any cause of action, suit or claim
that, but for this Article, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision.
TENTH: At the election of directors of the Corporation, each holder of stock
or of any class or classes of a series or series thereof shall be
entitled to as many votes as shall equal the number of votes which
(except for such provision as to cumulative voting) he would be
entitled to cast for the election of directors with respect to his
shares of stock multiplied by the number of directors to be elected,
and he may cast all of such votes for a single director or may
distribute them among the number to be voted for, or for any two or
more of them, as he may see fit.
ELEVENTH: Meetings of stockholders may be held within or without the State of
Delaware, as the Bylaws may provide. The books of the Corporation may
be kept (subject to any provision contained in the statutes) outside
of the State of Delaware at such place or places as may be designated
from time to time by the Board of Directors or in the Bylaws of the
Corporation.
3
<PAGE>
TWELFTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of
Incorporation, in the manner now or hereafter prescribed by
statute, and all rights conferred upon stockholders herein are
granted subject to this reservation.
THIRTEENTH: At each annual meeting of stockholders, directors of the
Corporation shall be elected to hold office until the expiration
of the term for which they are elected, and until their
successors have been duly elected and qualified; except that if
any such election shall not be so held, such election shall take
place at a stockholders meeting called and held in accordance
with the Delaware General Corporation Law.
The directors of the Corporation shall be divided into three
classes as nearly equal in size as is practicable, which classes
are hereby designated Class I, Class II and Class III. The term
of office of the initial Class I directors shall expire at the
next regularly-scheduled annual meeting of stockholders after the
filing of this amendment; the term of office of the initial Class
II directors shall expire at the second succeeding annual meeting
of stockholders; and the term of office of the initial Class III
directors shall expire at the third succeeding annual meeting of
the stockholders. For the purposes hereof, the initial Class I,
Class II and Class III directors shall be those directors so
designated and elected at the annual meeting of stockholders
scheduled to be held in October 1992.
At each annual meeting after the annual meeting of stockholders
scheduled to be held in October 1992, directors to replace those
of the Class whose terms expire at such annual meeting shall be
elected to hold office until the third succeeding annual meeting
and until their respective successors shall have been duly
elected and qualified.
If the number of directors is hereafter changed, any newly
created directorships or decrease in directorships shall be so
apportioned among the classes so as to make all classes as nearly
equal in number as is practicable.
Any director may be removed from office by the stockholders of
the Corporation only for cause.
The number of directors which constitute the whole Board of
Directors of the Corporation shall be designated in the Bylaws of
the Corporation.
4
<PAGE>
Vacancies occurring on the Board of Directors for any reason may
be filled only by vote of a majority of the remaining members of
the Board of Directors, although less than a quorum, at any
meeting of the Board of Directors. A person so elected by the
Board of Directors to fill a vacancy shall hold office until the
next succeeding annual meeting of stockholders of the Corporation
and until his or her successor shall have been duly elected and
qualified.
FOURTEENTH: Subject to and in accordance with the section Fourth above:
I. DESIGNATION. The initial series of Preferred Stock
shall be designated Series A Preferred Stock, $0.001 par value
(the "Series A Preferred").
II. AUTHORIZED NUMBER. The number of shares constituting
the Series A Preferred shall be Thirty-Five Thousand (35,000)
shares.
III. DIVIDENDS.
A. The holders of the Series A Preferred shall be
entitled to receive, ratably with the holders of any other series
of Preferred with Parity Rights (as defined below) based on their
respective dividend rates, annual cumulative dividends in cash on
each outstanding share of Series A Preferred at the rate of the
greater of (A) $30.00 per share (as adjusted for any
recapitalization, stock dividend, stock split or similar event
(collectively, a "Recapitalization") with respect to the Series A
Preferred) per annum, or (B) the aggregate amount of all
dividends which would have been paid on such share of Series A
Preferred during the previous one year had such share been
converted into Common Stock at the beginning of such year, based
upon the Conversion Price (as defined in Section 6(a)(iii)
hereof) in effect on the record date for the Series A Preferred
dividend. Such cumulative dividends shall be paid semi-annually
on June 1 and December 1 of each year, as declared by the Board
of Directors to the extent legally permitted, out of any assets
at the time legally available therefor, shall accrue until so
paid from the date of issuance of the applicable shares of Series
A Preferred, and shall be deemed to accrue from day to day,
whether or not earned or declared. No dividends or other
distributions shall be made with respect to any other class or
series of the Corporation's stock until cumulative dividends on
the Series A Preferred in the full amounts
5
<PAGE>
as set forth above for all past dividend periods have been
declared and paid or set apart for payment. Any accumulation of
dividends shall not bear interest.
B. Each holder of shares of Series A Preferred shall
be deemed to have consented to distributions made by the
Corporation or its subsidiaries in connection with the repurchase
of shares of Common Stock issued to or held by employees or
consultants upon termination of their employment or services
pursuant to agreements providing for such repurchase.
IV. LIQUIDATION PREFERENCE. In the event of any
liquidation, dissolution, or winding up of the Corporation,
either voluntary or involuntary, distributions to the
stockholders of the Corporation shall be made in the following
manner:
A. The holders of the Series A Preferred shall be
entitled to receive, ratably with the holders of any other series
of Preferred Stock with Parity Rights (as defined below) based on
their respective preference amounts, prior and in preference to
any distribution of any of the assets or surplus funds of the
Corporation to the holders of the Common Stock by reason of their
ownership of such stock, the preference amount of $1,000 per
share for each share of Series A Preferred then held by them
(adjusted for any Recapitalization with respect to the Series A
Preferred) plus an amount equal to all accrued but unpaid
dividends on the Series A Preferred. If the assets and funds
thus distributed among the holders of the Series A Preferred and
of any other series of Preferred Stock with Parity Rights are
insufficient to permit the payment to such holders of the full
preferential amount described above, then the entire assets and
funds of the Corporation legally available for distribution shall
be distributed among the holders of the Series A Preferred and of
any other series of Preferred Stock with Parity Rights in the
proportion that the aggregate preferential amount of shares of
Series A Preferred and of any other series of Preferred with
Parity Rights held by each such holder bears to the aggregate
preferential amount of all shares of Series A Preferred and of
any other series of Preferred Stock with Parity Rights. After
payment has been made to the holders of the Series A Preferred
and of any other series of Preferred Stock with Parity Rights of
the full amounts to which they are entitled, no further amounts
shall be paid with respect to the Series A Preferred, and the
remaining assets of the Corporation shall be distributed among
the holders of the Common Stock in proportion to their holdings
of Common Stock.
6
<PAGE>
B. For purposes of this Section 4, a merger or
consolidation of the Corporation with or into any other
corporation or corporations, or a sale of all or substantially
all of the assets of the Corporation, shall not be treated as a
liquidation, dissolution or winding up of the Corporation, but
shall be treated as provided in Section 7(e)(iii) hereof.
C. Each holder of shares of Series A Preferred shall
be deemed to have consented to distributions made by the
Corporation or its subsidiaries in connection with the repurchase
of shares of Common Stock issued to or held by employees or
consultants upon termination of their employment or services
pursuant to agreements providing for such repurchase.
D. The term "Parity Rights," as used herein, shall
mean dividend rights and liquidation preferences of any series of
Preferred Stock, if any, other than the Series A Preferred, which
have preferences upon any liquidation, dissolution, or winding up
of the Corporation or rights to declare, pay and set aside
dividends on a parity with that of the Series A Preferred.
E. Except as provided in Subsection 9 hereof, the
Corporation will not, by amendment of this Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities
or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or
performed hereunder by the Corporation, but will at all times in
good faith assist in the carrying out of all the provisions of
Subsections 3 and 4 hereof, and in the taking of all such action
as may be necessary or appropriate in order to protect the
liquidation rights of the holders of the Series A Preferred
against impairment; provided, however, that nothing herein will
prevent the Corporation from creating any new series of Preferred
Stock with higher dividend rates or liquidation payments so long
as the priority of such rights is not senior to the rights of the
Series A Preferred.
V. VOTING RIGHTS. Except as otherwise required by law or
by Subsection 9 hereof, each share of Series A Preferred shall
entitle its holder to forty (40) votes (hereinafter the "Voting
Power"), provided that if the number of shares of Common Stock
outstanding at any time after the date hereof is (A) increased by
a stock dividend or other distribution payable to all holders of
the Corporation's Common Stock in shares of its Common Stock or
by
7
<PAGE>
a subdivision or a split up or reclassification of the
outstanding shares of its Common Stock into a larger number of
shares, or (B) is decreased by a combination or reclassification
of the outstanding shares of Common Stock into a smaller number
of shares, then, in either case, the Voting Power for the Series
A Preferred in effect immediately prior thereto shall be
proportionately increased or decreased, as the case may be, such
that the proportionate voting power in the Corporation of each
share of Series A Preferred immediately after such event is equal
(as nearly as practicable) to its proportionate voting power
immediately prior to such event. Such votes shall be counted
together with all other shares of stock of the Corporation having
general voting power. Holders of Series A Preferred shall be
entitled to notice of any stockholders' meeting in accordance
with the Bylaws of the Corporation. Fractional votes for all
shares of Series A Preferred held by each holder shall be
aggregated, provided that any remaining fraction after such
aggregation shall be disregarded and not voted.
VI. CONVERSION AND REDEMPTION REQUEST PROCEDURES.
A. CERTAIN DEFINITIONS. For the purposes of
Subsections 6, 7, and 8 hereof:
1. "Measurement Date" shall mean, December 1 and
June 1 in each year commencing with December 1, 1994, unless
prior to such date there occurs an Acceleration Event, in which
case "Measurement Date" shall mean the date of such Acceleration
Event and each six month and one year anniversary of such date
thereafter.
2. "Acceleration Event" shall mean herein the
occurrence of an event described as an Acceleration Event in the
Distribution Agreement dated on or about March 2, 1990 between
Nihon Silicon Graphics KK and NKK Corporation.
3. "Conversion Price" as of any particular date
shall mean the average daily closing sale price (or if no closing
sale price is quoted, the average of the closing bid and asked
prices) of the Corporation's Common Stock on the New York Stock
Exchange, for the 30 calendar day period ending on the last day
prior to such date, appropriately adjusted for any
Recapitalization (as defined in Section 3 hereof) with respect to
the Common Stock during such period.
8
<PAGE>
4. "Redemption Price" as of any particular date
shall mean $1000.00 per share of Series A Preferred,
appropriately adjusted for any Recapitalization with respect to
the Series A Preferred.
5. "Total Issued Shares of Series A Preferred"
as of any particular date shall mean the maximum number of shares
of Series A Preferred outstanding at any one time on or before
such date (subject to appropriate adjustment in the event of any
prior Recapitalization with respect to the Series A Preferred),
without taking into account any conversions or redemptions.
6. "Maximum Redemption Percentage" as of any
particular Measurement Date shall mean the following percentages;
provided, however, that each such percentage below shall be
reduced by the percentage of the Total Issued Shares of Series A
Preferred which has been either converted or redeemed prior to
such Measurement Date:
Maximum
Number of Redemption
Measurement Date Percentage
---------------- ----------
1 --
2 16.7%
3 33.3%
4 50.0%
5 66.7%
6 83.3%
7 and later 100.0%
B. PRICE NOTICE. Within 3 business days after each
Measurement Date, the Corporation shall deliver a written notice
to each holder of Series A Preferred stating the Conversion Price
of the Series A Preferred as of such Measurement Date (the "Price
Notice"). The Conversion Price stated in the Price Notice shall
be conclusively presumed to be correct in the absence of manifest
error.
C. RIGHT TO REQUEST IF CONVERSION PRICE EQUALS OR
EXCEEDS $17.50. If the Conversion Price stated in the Price
Notice equals or exceeds $17.50 (as adjusted for any
Recapitalization of the Common Stock), then:
9
<PAGE>
1. Each holder of Series A Preferred shall
deliver to the Corporation, on or before the second business day
after receipt of the Price Notice (the "Request Date"), a written
request to convert into Common Stock any percentage, from 0% to
100%, of the shares of Series A Preferred then held by such
holder (the "Holder Conversion Percentage") at the Conversion
Price stated in the Price Notice. If the Corporation does not
receive such a request from a holder on or before the Request
Date, such holder will be deemed to have requested that 0% of
such holder's shares be converted at that time.
2. The Corporation shall deliver to all holders
of Series A Preferred, on or before the Request Date, a written
request to convert into Common Stock any percentage, from 0% to
100%, of the shares of Series A Preferred then held by each
holder (the "Corporation Conversion Percentage") at the
Conversion Price stated in the Price Notice. If no holder
receives such a request from the Corporation on or before the
Request Date, the Corporation will be deemed to have requested
that 0% of such holder's shares be converted at that time.
3. On the third business day following the
Request Date (the "Conversion Date"), that number of shares of
Series A Preferred held by each holder equal to the product of
(A) the greater of the Corporation Conversion Percentage and the
holder's Holder Conversion Percentage, multiplied by (B) the
number of shares of Series A Preferred held by such holder (the
"Conversion Shares") shall automatically be converted into Common
Stock pursuant to the procedures of Subsection 7 hereof. On or
before the Conversion Date, the Corporation shall deliver to each
holder of Conversion Shares a notice stating the number of shares
held by such holder to be converted.
D. RIGHT TO REQUEST IF CONVERSION PRICE IS LESS
THAN $17.50. If the Conversion Price in the stated Price Notice
is less than $17.50 (as adjusted for any Recapitalization of the
Common Stock), then:
1. Each holder of Series A Preferred shall
deliver to the Corporation, on or before the Request Date (as
defined in Section 6(c)(i)), a written request (A) to convert
into Common Stock at the Conversion Price stated in the Price
Notice the Holder Conversion Percentage (as defined in Subsection
6(c)(i) hereof) of such holder's shares of Series A Preferred
stated in such request, and (B) except as to the first
Measurement Date, to redeem
10
<PAGE>
any percentage, from 0% up to the Maximum Redemption Percentage
for such Measurement Date, of the shares of Series A Preferred
then held by such holder (the "Holder Redemption Percentage").
If the Corporation does not receive such a request from a holder
on or before the Request Date, then such holder will be deemed to
have requested that 0% of such holder's shares be redeemed or
converted at that time. If the Measurement Date is the first
Measurement Date, then all holders' Holder Redemption Percentages
shall automatically be 0%. Notwithstanding the foregoing,
however, each holder of Series A Preferred shall have the right,
during the two business days following the Request Date, to
change such holder's Holder Conversion Percentage; provided that
such change shall not be effective unless the holder delivers a
notice thereof to the Corporation prior to the Response Date (as
defined in Section 6(d)(iii) below).
2. The Corporation shall deliver to all holders
of Series A Preferred, on or before the Request Date, a written
request (A) to convert into Common Stock at the Conversion Price
stated in the Price Notice the Corporation Conversion Percentage
(as defined in Section 6(c)(ii)) of each holder's shares of
Series A Preferred stated in such request, and (B) except as to
the first Measurement Date, to redeem any percentage, from 0% up
to the Maximum Redemption Percentage for such Measurement Date,
of the shares of Series A Preferred then held by each holder (the
"Corporation Redemption Percentage"). If no holder receives such
a request from the Corporation on or before the Request Date,
then the Corporation will be deemed to have requested that 0% of
each holder's shares be converted or redeemed at that time. If
the Measurement Date is the first Measurement Date, then the
Corporation Redemption Percentage shall automatically be 0%.
3. On the third business day following the
Request Date (the "Response Date"), at the election of the
Corporation, either:
a. That number of shares of Series A
Preferred held by each holder equal to the product of (1) the
holder's Holder Conversion Percentage, multiplied by (2) the
number of shares of Series A Preferred held by such holder (the
"Conversion Shares") shall automatically be converted into Common
Stock pursuant to the procedures of Subsection 7 hereof, in which
case the Corporation shall deliver a notice to such effect to
each holder of Conversion Shares on or before the Response
11
<PAGE>
Date (which shall henceforth be referred to as a "Conversion
Date") stating the number of shares held by such holder to be
converted; or
b. The Corporation shall deliver to each
holder of Series A Preferred a further notice stating that the
Corporation will redeem that number of shares of Series A
Preferred held by each holder equal to the product of (1) the
greater of the Corporation Redemption Percentage and that
holder's Holder Redemption Percentage (regardless of whether
either or both such redemption percentages are 0%), multiplied by
(2) the number of shares of Series A Preferred held by such
holder (collectively, the "Redemption Shares") pursuant to the
procedures of Subsection 8 hereof.
E. NOTICES. All notices, requests, demands, and
other communications hereunder shall be in writing and shall be
deemed to have been duly given if delivered by hand, or when sent
by telex or telecopier (with receipt confirmed), provided a copy
is also sent by express (overnight, if possible) courier,
addressed (i) in the case of a holder of Series A Preferred, to
such holder's address of record, and (ii) in the case of the
Corporation, to the Corporation's principal executive offices to
the attention of the Corporation's chief financial officer.
VII. CONVERSION PROCEDURES.
A. CONVERSION. If shares of Series A Preferred are
to be converted as a result of Subsections 6(c)(iii) or
6(d)(iii)(A) hereof, then upon the applicable Conversion Date,
the Conversion Shares shall automatically, and without any action
by the holder thereof, be converted into such number of fully
paid and nonassessable shares of the Corporation's Common Stock
as is determined by multiplying the number of such Conversion
Shares by a fraction, the numerator of which is $1000.00 (as
adjusted for any Recapitalization of the Series A Preferred) and
the denominator of which is the Conversion Price stated in the
Price Notice.
B. ACCRUED DIVIDENDS AND FRACTIONAL SHARES.
1. Dividends on Conversion Shares shall cease to
accrue upon the applicable Conversion Date; provided, however,
that any dividends which are accrued but
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<PAGE>
unpaid on such shares as of such date shall remain payable to the
holder thereof, and shall be paid to such holder, to the extent
permitted by law, concurrently with the delivery of the
certificates for the shares of Common Stock issued upon
conversion of the Conversion Shares in accordance with Section
7(d) below, or, if not then permitted by law, then at such time
in the future when permitted.
2. No fractional shares of Common Stock shall be
issued upon conversion of Series A Preferred. In lieu of any
fractional shares to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction
multiplied by the Conversion Price stated in the applicable Price
Notice.
C. EFFECTIVENESS OF CONVERSION. The holder of any
Conversion Shares shall be deemed to have become a stockholder of
record of Common Stock as of the close of business of the
Corporation on the applicable Conversion Date, unless the
transfer books of the Corporation are closed on such date. In
such event, such holder shall be deemed to have become a
stockholder of record of Common Stock on the next succeeding date
on which the transfer books are open. Thereafter, such holder
shall be treated for all purposes as the record holder of shares
of Common Stock, regardless of whether the certificates
representing such shares are surrendered to the Corporation or
its transfer agent.
D. EXCHANGE OF CERTIFICATES.
1. All holders of Conversion Shares shall
promptly surrender to the Corporation or its transfer agent
certificates representing such shares. Within 5 business days
following such surrender, the Corporation shall issue and deliver
to or upon the written order of each such holder, at such office
or other place designated by the Corporation, a certificate or
certificates for the number of full shares of Common Stock to
which such holder is entitled and a check for cash with respect
to any accrued dividends upon the Conversion Shares and/or
fractional interest in a share of Common Stock, as provided in
Subsection 7(b) hereof. Upon conversion of only a portion of the
shares of Series A Preferred represented by a certificate
surrendered for conversion, the Corporation shall issue and
deliver to or upon the written order of the holder of the
certificate so surrendered, at the expense of the Corporation
(except for expenses relating to the issuance of such shares to a
person other than the
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record holder of the Conversion Shares), a new certificate
representing the unconverted shares of Series A Preferred
represented by the certificate so surrendered.
2. The Corporation shall not be obligated to issue
certificates evidencing the shares of Common Stock issuable upon
such conversion unless the certificates evidencing Conversion
Shares are either delivered to the Corporation or its transfer
agent, or the holder notifies the Corporation or its transfer
agent that such certificates have been lost, stolen or destroyed
and executes an agreement satisfactory to the Corporation to
indemnify the Corporation from any loss incurred by it in
connection with such certificates.
E. EFFECTS OF CERTAIN EVENTS.
1. DISTRIBUTIONS OF SECURITIES OTHER THAN COMMON
STOCK. In the event the Corporation at any time or from time to
time makes, or fixes a record date for the determination of
holders of Common Stock entitled to receive, any distribution
payable in securities of the Corporation other than shares of
Common Stock, then and in each such event provision shall be made
so that the holders of Series A Preferred shall receive upon
conversion thereof, in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the
Corporation which they would have received had their Series A
Preferred been converted into Common Stock immediately prior to
such event at the Conversion Price as of the date of such event,
and had they thereafter, during the period from such date to and
including the date of conversion, retained such securities
receivable by them as aforesaid during such period, subject to
all provisions of this Subsection 7 with respect to the rights of
the holders of the Series A Preferred.
2. RECLASSIFICATION, EXCHANGE AND SUBSTITUTION
OF COMMON STOCK. If the Common Stock issuable upon conversion of
the Series A Preferred shall be changed into shares of any other
class or classes of stock, whether by capital reorganization,
reclassification or otherwise, the Series A Preferred shall be
convertible pursuant to this Subsection 7 into, in lieu of shares
of Common Stock which the holders would otherwise have been
entitled to receive, shares of such other class or classes of
stock into which the Common Stock had been changed.
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3. CERTAIN REORGANIZATIONS. In the event of the
consolidation or merger of the Corporation with or into another
person (other than a consolidation or merger in which the
Corporation is the continuing entity and which does not result in
any change in the rights, preferences or privileges of the Common
Stock other than an increase in the authorized number of such
shares), or the sale or other disposition of all or substantially
all of assets and properties of the Corporation, the shares of
Series A Preferred shall, after such consolidation, merger, sale
or other disposition, be convertible into the kind and number of
shares of stock or other securities or property, of the
Corporation or otherwise, to which such holder would have been
entitled if immediately prior to such consolidation, merger, sale
or other disposition he had converted his shares of Series A
Preferred into Common Stock at the Conversion Price in effect as
of the consummation of such consolidation, merger, sale or other
disposition. The provisions of this Subsection 7(e) shall
similarly apply to successive reorganizations, consolidations,
mergers, sales or other dispositions.
F. NO IMPAIRMENT. Except as provided in Sub section
9 hereof, the Corporation will not, by amendment of this
Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or
sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation, but will at
all times in good faith assist in the carrying out of all the
provisions of this Subsection 7 and in the taking of all such
action as may be necessary or appropriate in order to protect the
conversion rights of the holders of the Series A Preferred
against impairment.
VIII. REDEMPTION PROCEDURE.
A. REDEMPTION. If the Corporation elects to
redeem shares of Series A Preferred pursuant to Subsection
6(d)(iii)(B) hereof, then within 50 calendar days following the
Response Date (as defined in Section 6(d)(iii)), the Corporation
shall redeem the Redemption Shares for cash, out of funds legally
available therefor, at the Redemption Price in effect on the
applicable Measurement Date. The date which the Corporation
shall fix for such redemption shall be referred to as the
"Redemption Date," and the payments due each holder of Redemption
Shares shall be referred to as the "Redemption Payments."
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B. ACCRUED DIVIDENDS. Dividends on Redemption
Shares shall cease to accrue upon the applicable Redemption Date;
provided, however, that any dividends which are accrued but
unpaid on such shares as of such date shall remain payable to the
holders thereof, and shall be paid to such holder, to the extent
permitted by law, concurrently with the payment of the Redemption
Payments in accordance with Subsection 8(c) below, or, if not
then permitted by law, then at such time in the future when
permitted.
C. MECHANICS OF REDEMPTION.
1. At least 10 business days prior to any
Redemption Date, the Corporation shall send a further written
notice to the holders of Redemption Shares stating the Redemption
Date and requesting that such holder surrender to the
Corporation, in the manner and at the place designated in such
notice, his certificate or certificates representing such
Redemption Shares.
2. On or prior to the Redemption Date, each
holder of Redemption Shares shall surrender to the Corporation,
in the manner and at the place designated, his certificate or
certificates representing such Redemption Shares, and thereupon
the Redemption Payment for such shares and any accrued but unpaid
dividends on such shares shall be payable to the order of the
person whose name appears on such certificate or certificates as
the owner thereof. All such surrendered certificates shall be
cancelled. Upon redemption of only a portion of the shares of
Series A Preferred represented by a certificate surrendered for
redemption, the Corporation shall issue and deliver to or upon
the written order of the holder of the certificate so
surrendered, at the expense of the Corporation (except for
expenses relating to the issuance of such shares to a person
other than the record holder of the Redemption Shares), a new
certificate representing the unredeemed shares of Series A
Preferred represented by the certificate so surrendered.
3. On or prior to the Redemption Date, the
Corporation shall have the option to deposit the aggregate of all
Redemption Payments in a bank or trust company having aggregate
capital and surplus in excess of $50,000,000, as a trust fund for
the benefit of the respective holders of Redemption Shares, with
irrevocable instructions and authority to the bank or trust
company to pay the appropriate Redemption Payment to the holders
of
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Redemption Shares upon receipt of notification from the
Corporation that such holder has surrendered the certificate
representing such shares to the Corporation. Such instructions
shall also provide that any such moneys remaining unclaimed at
the expiration of 1 year following the Redemption Date shall
thereafter be returned to the Corporation upon its request as
expressed in a resolution of the Board of Directors.
4. Provided that the Corporation has given
the notice described in Section 8(c)(i) and has on or prior to
the Redemption Date either paid directly or made available
(either directly or as described in Section 8(c)(iii)) Redemption
Payments to the holders of Redemption Shares, all Redemption
Shares shall be deemed to have been redeemed as of the close of
business of the Corporation on the applicable Redemption Date.
Thereafter, the holder of such shares shall no longer be treated
for any purposes as the record holder of such shares of Series A
Preferred, regardless of whether the certificates representing
such shares are surrendered to the Corporation or its transfer
agent, excepting only in the latter instance the right of the
holder to receive the appropriate Redemption Payment, without
interest, upon such surrender. Such shares so redeemed shall not
be transferred on the books of the Corporation or be deemed to be
outstanding for any purpose whatsoever.
5. The Corporation shall not be obligated
to pay the Redemption Payment to any holder of Redemption Shares
unless the certificates evidencing such shares are either
delivered to the Corporation or its transfer agent, or the holder
notifies the Corporation or its transfer agent that such
certificates have been lost, stolen or destroyed and executes an
agreement satisfactory to the Corporation to indemnify the
Corporation from any loss incurred by it in connection with such
certificates.
D. LIMITATION ON REDEMPTION. The Corporation
shall not be obligated to redeem any shares of Series A Preferred
which have previously been converted into Common Stock. The
Corporation shall be obligated to redeem shares pursuant to this
Subsection 8 only to the extent that such redemption would not
violate any provisions of applicable law. If the Corporation is
unable to redeem some or all Redemption Shares on any particular
Redemption Date, the Corporation shall promptly notify the
holders thereof of the facts that prevent the Corporation from so
redeeming such shares. Thereafter, on each subsequent
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Redemption Date, the Corporation shall redeem as many of such
Redemption Shares as may be lawfully redeemed prior to redeeming
any additional shares of Series A Preferred which otherwise would
be redeemed on such Redemption Date.
IX. PROTECTIVE PROVISIONS.
A. In addition to any other rights provided by
law, the Corporation shall not, without first obtaining the
affirmative vote or written consent of the holders of not less
than a majority of the outstanding shares of Series A Preferred,
amend or repeal any provision of, or add any provision to, is
Certificate of Incorporation if such action would materially and
adversely alter or change the rights, preferences, privileges or
powers of, or the restrictions provided for the benefit of, the
Series A Preferred in a manner different from its effect on the
Preferred Stock as a whole.
(b) Notwithstanding the provisions of Subsection
9(a) hereof:
1. The number of authorized shares of
Series A Preferred, or of any other class or series of the
Corporation's stock, may be increased or decreased (but not below
the number of shares thereof then outstanding) by the affirmative
vote of the holders of a majority of the outstanding stock of the
Corporation entitled to vote thereon without the separate vote or
consent of the holders of Series A Preferred, pursuant to Section
242(b)(2) of the General Corporation Law of the State of
Delaware, or by resolution of the Board of Directors, to the
extent permitted by Section 151 thereof.
2. Any new series of Preferred Stock may be
authorized, without restriction, with rights on a parity with or
superior to the Series A Preferred (provided that no such new
series of Preferred Stock shall have dividend rights or
liquidation preferences with priority senior to those of the
Series A Preferred) by resolution of the Board of Directors, to
the extent permitted by Section 151 of the General Corporation
Law of the State of Delaware, without the separate vote or
consent of the holders of Series A Preferred.
X. STATUS OF CONVERTED SHARES. If shares of Series A
Preferred are converted pursuant to Subsection 7 hereof or
redeemed pursuant to Subsection 8 hereof, the shares so converted
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or redeemed shall resume the status of authorized but unissued
shares of Preferred Stock of the Corporation.
XI. AMENDMENTS AND WAIVERS. Any right, preference,
privilege or power of, or restriction provided for the benefit
of, the Series A Preferred set forth herein may be amended and
the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively)
with the written consent of the Corporation and the affirmative
vote or written consent of the holders of not less than a
majority of the shares of Series A Preferred then outstanding,
and any amendment or waiver so effected shall be binding upon the
Corporation and all holders of Series A Preferred."
IN WITNESS WHEREOF, Silicon Graphics, Inc. has caused this certificate to
be signed by William M. Kelly, its Vice President, and attested by Sandra M.
Escher, its Assistant Secretary, this 7th day of November, 1994.
/s/ William M. Kelly
-----------------------------------
William M. Kelly
Vice President
Attest:
/s/ Sandra M. Escher
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Sandra M. Escher
Assistant Secretary
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AMENDED AND RESTATED BYLAWS
OF
SILICON GRAPHICS, INC.
ARTICLE I
CORPORATE OFFICES
1.1 REGISTERED OFFICE
The registered office of the corporation shall be in the City of
Wilmington, County of New Castle, State of Delaware. The name of the registered
agent of the corporation at such location is The Corporation Trust Company.
1.2 OTHER OFFICES
The board of directors may at any time establish other offices at any place
or places where the corporation is qualified to do business.
ARTICLE II
STOCKHOLDERS
2.1 PLACE OF MEETINGS
Meetings of stockholders shall be held at any place, within or outside the
State of Delaware, designated by the board of directors. In the absence of any
such designation, stockholders' meetings shall be held at the registered office
of the corporation.
2.2 ANNUAL MEETING
The annual meeting of stockholders shall be held, each year, on a date and
at a time designated by the board of directors. In the absence of such
designation, the annual meeting of stockholders shall be held on the third
Thursday of October in each year at 2:00 p.m. However, if such day falls on a
legal holiday, then the meeting shall be held at the same time and place on the
next succeeding full business day. At the meeting, directors shall be elected
and any other proper business may be transacted.
To be properly brought before an annual meeting business must be (a)
specified in the notice of meeting (or any supplement thereto) given by or at
the direction of the board of directors, (b) otherwise properly brought before
the meeting by or at the direction of the board of directors, or (c) otherwise
properly brought before the meeting by a stockholder. For business to be
properly brought before the meeting by a stockholder, the secretary of the
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corporation must have received notice in writing from the stockholder not less
than thirty (30) days nor more than sixty (60) days prior to the meeting;
provided, however, that if less than thirty-five (35) days' notice of the
meeting is given to stockholders, such notice shall have been received by the
secretary not later than the close of business on the seventh (7th) day
following the day on which the notice of meeting was mailed. Such written
notice to the secretary shall set forth, as to each matter the stockholder
proposes to bring before the annual meeting: (i) a brief description of the
business, (ii) the name and address, as they appear on the corporation's books,
of the stockholder proposing such business, (iii) the number of shares of stock
of the corporation beneficially owned by such stockholder, and (iv) any material
interest of such stockholder in such business. Notwithstanding any provision in
the bylaws to the contrary, no business shall be conducted at an annual meeting
except in accordance with the procedures set forth in this Section 2.2.
2.3 SPECIAL MEETING
A special meeting of the stockholders may be called at any time by the
board of directors, by the chairman of the board, by the secretary or by any
executive officer of the corporation.
If a special meeting is called by any person or persons other than the
board of directors, the request shall be in writing, specifying the time of
such meeting and the general nature of the business proposed to be transacted,
and shall be delivered personally or sent by registered mail or by telegraphic
or other facsimile transmission to the chairman of the board, the president,
chief executive officer or the secretary of the corporation. No business may be
transacted at such special meeting otherwise than specified in such notice. The
officer receiving the request shall cause notice to be promptly given to the
stockholders entitled to vote, in accordance with the provisions of Sections 2.4
and 2.5, that a meeting will be held at the time requested by the person or
persons who called the meeting, not less than thirty-five (35) nor more than
sixty (60) days after the receipt of the request. If the notice is not given
within twenty (20) days after the receipt of the request, the person or persons
requesting the meeting may give the notice. Nothing contained in this paragraph
of this Section 2.3 shall be construed as limiting, fixing, or affecting the
time when a meeting of stockholders called by action of the board of directors
may be held.
2.4 NOTICE OF STOCKHOLDERS MEETINGS
All notices of meetings of stockholders shall be in writing and shall be
sent or otherwise given in accordance with Section 2.5 of these bylaws not less
than ten (10) nor more than sixty (60) days before the date of the meeting to
each stockholder entitled to vote at such meeting, except as otherwise
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provided herein or required by law (meaning, here and hereinafter, as required
from time to time by the General Corporation Law of Delaware or the certificate
of incorporation of the corporation). The notice shall specify the place, date,
and hour of the meeting, and, in the case of a special meeting, the purpose or
purposes for which the meeting is called.
2.5 MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE
Written notice of any meeting of stockholders, if mailed, is given when
deposited in the United States mail, postage prepaid, directed to the
stockholder at his address as it appears on the records of the corporation. An
affidavit of the secretary or an assistant secretary or of the transfer agent of
the corporation that the notice has been given shall, in the absence of fraud,
be prima facie evidence of the facts stated therein.
2.6 QUORUM
At any meeting of the stockholders, the holders of a majority, present in
person or by proxy, of all of the shares of the stock entitled to vote at the
meeting shall constitute a quorum for all purposes, unless or except to the
extent that the presence of a larger number may be required by law. Where a
separate vote by a class or classes is required, a majority, present in person
or by proxy, of the shares of such class or classes entitled to take action with
respect to that vote on that matter shall constitute a quorum. If a quorum
shall fail to attend any meeting, the chairman of the meeting may adjourn the
meeting to another place, date or time.
If a notice of any adjourned special meeting of stockholders is sent to all
stockholders entitled to vote thereat, stating that it will be held with those
present constituting a quorum, those present at such adjourned meeting shall
constitute a quorum (but in no event shall a quorum consist of less than one-
third of the shares entitled to vote at the meeting), and all matters shall be
determined by a majority of the votes cast at such meeting, except as otherwise
required by law.
2.7 ADJOURNED MEETING; NOTICE
When a meeting is adjourned to another time or place, unless these bylaws
otherwise require, notice need not be given of the adjourned meeting if the time
and place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting the corporation may transact any business that
might have been transacted at the original meeting. If the adjournment is for
more than thirty (30) days, or if after the adjournment a new record date is
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
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2.8 VOTING
The stockholders entitled to vote at any meeting of stockholders shall be
determined in accordance with the provisions of Section 2.11 of these bylaws,
subject to the provisions of Sections 217 and 218 of the General Corporation Law
of Delaware (relating to voting rights of fiduciaries, pledgors and joint owners
of stock and to voting trusts and other voting agreements).
Each stockholder shall have one (1) vote for every share of stock entitled
to vote that is registered in his or her name on the record date for the meeting
(as determined in accordance with Section 2.11 of these bylaws), except as
otherwise provided herein or required by law.
At a stockholders' meeting at which directors are to be elected, each
stockholder shall be entitled to cumulate votes (i.e., cast for any candidate a
number of votes greater than the number of votes which such stockholder normally
is entitled to cast) if the candidates' names have been properly placed in
nomination (in accordance with these bylaws) prior to commencement of the voting
and the stockholder requesting cumulative voting has given notice prior to
commencement of the voting of the stockholder's intention to cumulate votes. If
cumulative voting is properly requested, each holder of stock, or of any class
or classes or of a series or series thereof, who elects to cumulate votes shall
be entitled to as many votes as equals the number of votes which (absent this
provision as to cumulative voting) he would be entitled to cast for the election
of directors with respect to his shares of stock multiplied by the number of
directors to be elected by him, and he may cast all of such votes for a single
director or may distribute them among the number to be voted for, or for any two
or more of them, as he may see fit.
Every stock vote shall be taken by ballots, each of which shall state the
name of the stockholder or proxy voting and such other information as may be
required under the procedure established for the meeting. All elections shall
be determined by a plurality of the votes cast, and except as otherwise required
by law or provided herein, all other matters shall be determined by a majority
of the votes cast affirmatively or negatively.
2.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
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purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the stockholders need be specified in any written waiver of notice unless so
required by the certificate of incorporation or these bylaws.
2.10 STOCKHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Any action required or able to be taken at any annual or special meeting of
stockholders may be taken without a meeting, without prior notice, and without a
vote if a consent or consents in writing, setting forth the action so taken,
shall be signed by the holders of outstanding stock having not less than the
minimum number of votes that would be necessary to authorize or take such action
at a meeting at which all shares entitled to vote thereon were present and voted
and shall be delivered to the corporation at its registered office in Delaware,
its principal place of business, or to an officer or agent of the corporation
having custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery to the corporation's registered office shall be made by hand
or by certified or registered mail, return receipt requested.
Every written consent shall bear the date of signature of each stockholder
who signs the consent and no written consent shall be effective to take the
corporate action referred to therein unless, within sixty (60) days after the
date the earliest dated consent is delivered to the corporation, a written
consent or consents signed by holders of a sufficient number of votes to take
action are delivered to the corporation in the manner prescribed in the first
paragraph of this section.
Prompt notice of the taking of the corporate action without a meeting by
less than unanimous written consent shall be given to those stockholders who
have not consented in writing. If the action which is consented to is such as
would have required the filing of a certificate under any section of the General
Corporation Law of Delaware if such action had been voted on by stockholders at
a meeting thereof, then the certificate filed under such section shall state, in
lieu of any statement required by such section concerning any vote of
stockholders, that written notice and written consent have been given as
provided in Section 228 of the General Corporation Law of Delaware.
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2.11 RECORD DATE FOR STOCKHOLDER NOTICE; VOTING; GIVING CONSENTS
In order that the corporation may determine the stockholders entitled to
notice of or to vote at any meeting of stockholders or any adjournment thereof,
or entitled to receive payment of any dividend or other distribution or
allotment of any rights, or entitled to exercise any rights in respect of any
change, conversion or exchange of stock or for the purpose of any other lawful
action, the board of directors may fix a record date, which shall not be more
than sixty (60) nor less than ten (10) days before the date of such meeting, nor
more than sixty (60) days prior to any other action.
If the board of directors does not so fix a record date:
(i) The record date for determining stockholders entitled to notice of or
to vote at a meeting of stockholders shall be at the close of business on the
day next preceding the day on which notice is given, or, if notice is waived, at
the close of business on the day next preceding the day on which the meeting is
held.
(ii) The record date for determining stockholders entitled to receive
payment of any dividend or other distribution or allotment of rights or to
exercise any rights of change, conversion or exchange of stock or for any other
purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
In order that the corporation may determine the stockholders entitled to
consent to corporate action in writing without a meeting, the board of directors
may fix a record date, which record date shall neither precede nor be more than
ten (10) days after the date upon which such resolution is adopted by the board
of directors. Any stockholder of record seeking to have the stockholders
authorize or take action by written consent shall, by written notice to the
secretary, request the board of directors to fix a record date. The board of
directors shall promptly, but in all events within ten (10) days after the date
on which such notice is received, adopt a resolution fixing the record date.
If the board of directors has not fixed a record date within such time, the
record date for determining stockholders entitled to consent to corporate action
in writing without a meeting, when no prior action by the board of directors is
required by law, shall be the first date on which a signed written consent
setting forth the action taken or proposed to be taken is delivered to the
corporation in the manner prescribed in the first paragraph of Section 2.10 of
these bylaws. If the board of directors has not fixed a record date within such
time and prior action by the board of directors is required by law, the record
date for determining stockholders entitled to consent to corporate action in
writing without a meeting shall be at the close of business on the
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date on which the board of directors adopts the resolution taking such prior
action.
A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
2.12 PROXIES
Each stockholder entitled to vote at a meeting of stockholders or to
express consent or dissent to corporate action in writing without a meeting may
authorize another person or persons to act for him by a written proxy, filed in
accordance with the procedure established for the meeting or taking of action in
writing, but no such proxy shall be voted or acted upon after three (3) years
from its date, unless the proxy provides for a longer period. Any copy,
facsimile telecommunication or other reliable reproduction of the writing or
transmission created pursuant to this Section 2.12 may be substituted or used in
lieu of the original writing or transmission for any and all purposes for which
the original writing or transmission could be used, provided that such copy,
facsimile telecommunication or other reproduction shall be a complete
reproduction of the entire original writing or transmission. The revocability
of a proxy that states on its face that it is irrevocable shall be governed by
the provisions of Section 212(c) of the General Corporation Law of Delaware.
2.13 LIST OF STOCKHOLDERS ENTITLED TO VOTE
The officer who has charge of the stock ledger of a corporation shall
prepare and make, at least ten (10) days before every meeting of stockholders, a
complete list of the stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder and the number
of shares registered in the name of each stockholder. Such list shall be open
to the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days prior to
the meeting, either at a place within the city where the meeting is to be held,
which place shall be specified in the notice of the meeting, or, if not so
specified, at the place where the meeting is to be held. The list shall also be
produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present. Such list
shall presumptively determine the identity of the stockholders entitled to vote
at the meeting and the number of shares held by each of them.
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2.14 CONDUCT OF BUSINESS
Such person as the board of directors may have designated or, in the
absence of such a person, any executive officer of the corporation, shall call
to order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the secretary of the corporation, the secretary of the meeting
shall be such person as the chairman appoints. The chairman of any meeting of
stockholders shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and the conduct of
discussion as seem to him in order. The date and time of the opening and
closing of the polls for each matter upon which the stockholders will vote at
the meeting shall be announced at the meeting.
2.15 INSPECTORS OF ELECTION
The corporation may, and to the extent required by law, shall, in advance
of any meeting of stockholders, appoint one or more inspectors to act at the
meeting and make a written report thereof. The corporation may designate one or
more persons as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting may, and to the extent required by law, shall,
appoint one or more inspectors to act at the meeting. Each inspector, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability. Every vote taken by ballots shall be
counted by an inspector or inspectors appointed by the chairman of the meeting.
2.16 INSPECTORS OF ELECTION AND PROCEDURES FOR COUNTING WRITTEN CONSENTS
Within three (3) business days after receipt of the earliest dated consent
delivered to the corporation in the manner provided in Section 228(c) of the
Delaware General Corporation Law or the determination by the board of directors
of the corporation that the corporation should seek corporate action by written
consent, as the case may be, the secretary may engage nationally recognized
independent inspectors of elections for the purpose of performing a ministerial
review of the validity of the consents and revocations. The cost of retaining
inspectors of election shall be borne by the corporation.
Consents and revocations shall be delivered to the inspectors upon receipt
by the corporation, the stockholder or stockholders soliciting consents or
soliciting revocations in opposition to action by consent proposed by the
corporation (the "Soliciting Stockholders") or their proxy solicitors or other
designated agents. As soon as consents and revocations are received, the
inspectors shall review the consents and revocations and shall maintain a
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count of the number of valid and unrevoked consents. The inspectors shall keep
such count confidential and shall not reveal the count to the corporation, the
Soliciting Stockholders or their representatives or any other person or entity.
As soon as practicable after the earlier of (i) sixty (60) days after the date
of the earliest dated consent delivered to the corporation in the manner
provided in Section 228(c) of the Delaware General Corporation Law or (ii) a
written request therefor by the corporation or the Soliciting Stockholders
(whichever is soliciting consents) (which request, except in the case of
corporate action by written consent taken pursuant to the solicitations of not
more than ten (10) persons, may be made no earlier than after such reasonable
amount of time after the commencement date of the applicable solicitation of
consents as is necessary to permit the inspectors to commence and organize their
count, but in no event less than five (5) days after such commencement date),
notice of which request shall be given to the party opposing the solicitation of
consents, if any, which request shall state that the corporation or Soliciting
Stockholders, as the case may be, have a good faith belief that the requisite
number of valid and unrevoked consents to authorize or take the action specified
in the consents has been received in accordance with these bylaws, the
inspectors shall issue a preliminary report to the corporation and the
Soliciting Stockholders stating: (i) the number of valid consents; (ii) the
number of valid revocations; (iii) the number of valid and unrevoked consents;
(iv) the number of invalid consents; (v) the number of invalid revocations; and
(vi) whether, based on their preliminary count, the requisite number of valid
and unrevoked consents has been obtained to authorize or take the action
specified in the consents.
Unless the corporation and the Soliciting Stockholders shall agree to a
shorter or longer period, the corporation and the Soliciting Stockholders shall
have 48 hours to review the consents and revocations and to advise the
inspectors and the opposing party in writing as to whether they intend to
challenge the preliminary report of the inspectors. If no written notice of an
intention to challenge the preliminary report is received within 48 hours after
the inspectors' issuance of the preliminary report, the inspectors shall issue
to the corporation and the Soliciting Stockholders their final report containing
the information from the inspectors' determination with respect to whether the
requisite number of valid and unrevoked consents was obtained to authorize and
take the action specified in the consents. If the corporation or the Soliciting
Stockholders issue written notice of an intention to challenge the inspectors'
preliminary report within 48 hours after the issuance of that report, a
challenge session shall be scheduled by the inspectors as promptly as
practicable. A transcript of the challenge session shall be recorded by a
certified court reporter. Following completion of the challenge session, the
inspectors shall as promptly as practicable issue their final report to the
corporation and the Soliciting Stockholders, which report shall contain the
information included in the preliminary report, plus all changes made to the
vote totals as a result of the challenge and a certification
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of whether the requisite number of valid and unrevoked consents was obtained to
authorize or take the action specified in the consents. A copy of the final
report of the inspectors shall be included in the book in which the proceedings
of meetings of stockholders are recorded.
ARTICLE III
DIRECTORS
3.1 POWERS
Subject to the provisions of the General Corporation Law of Delaware and
any limitations in the certificate of incorporation or these bylaws relating to
action required to be approved by the stockholders or by the outstanding shares,
the business and affairs of the corporation shall be managed and all corporate
powers shall be exercised by or under the direction of the board of directors.
3.2 NUMBER OF DIRECTORS
The number of directors of the corporation shall be such number between
nine (9) and twelve (12) as may be established from time to time by a resolution
adopted by a majority of the board of directors.
No reduction of the authorized number of directors shall have the effect of
removing any director before that director's term of office expires.
3.3 ELECTION, QUALIFICATION AND TERM OF OFFICE OF DIRECTORS
Except as provided in Section 3.4 of these bylaws, at each annual meeting
of stockholders, directors of the corporation shall be elected to hold office
until the expiration of the term for which they are elected, and until their
successors have been duly elected and qualified; except that if any such
election shall not be so held, such election shall take place at a stockholders'
meeting called and held in accordance with the Delaware General Corporation Law.
The directors of the corporation shall be divided into three classes as
nearly equal in size as is practicable, which classes are hereby designated
Class I, Class II and Class III. The term of office of the initial Class I
directors shall expire at the next regularly-scheduled annual meeting of
stockholders after the date of this amendment; the term of office of the initial
Class II directors shall expire at the second succeeding annual meeting of
stockholders; and the term of office of the initial Class III directors shall
expire at the third succeeding annual meeting of the stockholders. For the
purposes hereof, the initial Class I, Class II and Class III directors shall be
those directors so
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designated and elected at the annual meeting of stockholders scheduled to be
held in October 1992.
At each annual meeting after the annual meeting of stockholders scheduled
to be held in October 1992, directors to replace those of the class whose terms
expire at such annual meeting shall be elected to hold office until the third
succeeding annual meeting and until their respective successors shall have been
duly elected and qualified.
If the number of directors is hereafter changed, any newly created
directorships or decrease in directorships shall be so apportioned among the
classes so as to make all classes as nearly equal in number as is practicable.
Directors need not be stockholders unless so required by the certificate of
incorporation or these bylaws, wherein other qualifications for directors may be
prescribed.
Nominations for election to the board of directors of the corporation at an
annual meeting of stockholders may be made by the board or on behalf of the
board by a nominating committee appointed by the board, or by any stockholder of
the corporation entitled to vote for the election of directors at such meeting.
Such nominations, other than those made by or on behalf of the board, shall be
made by notice in writing received by the secretary of the corporation not less
than thirty (30) days nor more than sixty (60) days prior to the date of the
annual meeting; provided, however, that if less than thirty-five (35) days
notice of the meeting is given to stockholders, such nomination shall have been
received by the secretary not later than the close of business on the seventh
(7th) day following the day on which the notice was mailed. Such notice shall
set forth (i) the name and address of the stockholder who intends to make the
nomination; (ii) a representation that the nominating stockholder is a holder of
record of stock of the corporation entitled to vote at such meeting and intends
to appear in person or by proxy at the meeting and nominate the person or
persons specified in the notice; (iii) the number of shares of stock held
beneficially and of record by the nominating stockholder; (iv) the name, age,
business address and, if known, residence address of each nominee proposed in
such notice; (v) the principal occupation or employment of such nominee; (vi)
the number of shares of stock of the corporation beneficially owned by each such
nominee; (vii) a description of all arrangements or understandings between the
nominating stockholder and each nominee and any other person or persons (naming
such person or persons) pursuant to which the nomination or nominations are to
be made by the nominating stockholder; (viii) any other information concerning
the nominee that must be disclosed of nominees in proxy solicitations pursuant
to Regulation 14A under the Securities Exchange Act of 1934; and (ix) the
consent of such nominee to serve as a director of the corporation if so elected.
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The chairman of the annual meeting may, if the facts warrant, determine and
declare to the meeting that a nomination was not made in accordance with the
foregoing procedure. If such determination and declaration is made, the
defective nomination shall be disregarded.
3.4 RESIGNATION AND VACANCIES
Any director may resign at any time upon written notice to the corporation.
When one or more directors so resign and the resignation is effective at a
future date, only a majority of the directors then in office, including those
who have so resigned, shall have power to fill such vacancy or vacancies, the
vote thereon to take effect when such resignation or resignations shall become
effective, and each director so chosen shall hold office as provided in this
section in the filling of other vacancies.
Unless otherwise provided in the certificate of incorporation or these
bylaws:
(i) Vacancies and newly created directorships resulting from any increase
in the authorized number of directors elected by all of the stockholders having
the right to vote as a single class may be filled only by a majority of the
directors then in office, although less than a quorum, or by a sole remaining
director.
(ii) Whenever the holders of any class or classes of stock or series
thereof are entitled to elect one or more directors by the provisions of the
certificate of incorporation, vacancies and newly created directorships of such
class or classes or series may be filled only by a majority of the directors
elected by such class or classes or series thereof then in office, or by a sole
remaining director so elected.
If at any time, by reason of death or resignation or other cause, the
corporation should have no directors in office, then any officer or any
stockholder or an executor, administrator, trustee or guardian of a stockholder,
or other fiduciary entrusted with like responsibility for the person or estate
of a stockholder, may call a special meeting of stockholders in accordance with
the provisions of the certificate of incorporation or these bylaws, or may apply
to the Court of Chancery for a decree summarily ordering an election as provided
in Section 211 of the General Corporation Law of Delaware.
If, at the time of filling any vacancy or any newly created directorship,
the directors then in office constitute less than a majority of the whole board
(as constituted immediately prior to any such increase), then the Court of
Chancery may, upon application of any stockholder or stockholders holding at
least ten (10) percent of the total number of the shares at the time
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outstanding having the right to vote for such directors, summarily order an
election to be held to fill any such vacancies or newly created directorships,
or to replace the directors chosen by the directors then in office as aforesaid,
which election shall be governed by the provisions of Section 211 of the General
Corporation Law of Delaware as far as applicable.
3.5 PLACE OF MEETINGS; MEETINGS BY TELEPHONE
The board of directors of the corporation may hold meetings, both regular
and special, either within or outside the State of Delaware.
Unless otherwise restricted by the certificate of incorporation or these
bylaws, members of the board of directors, or any committee designated by the
board of directors, may participate in a meeting of the board of directors, or
any committee, by means of conference telephone or similar communications
equipment by means of which all persons participating in the meeting can hear
each other, and such participation in a meeting shall constitute presence in
person at the meeting.
3.6 REGULAR MEETINGS
Regular meetings of the board of directors shall be held at such place or
places, on such date or dates, and at such time or times as shall have been
established by the board of directors and publicized among all directors. A
notice of each regular meeting shall not be required.
3.7 SPECIAL MEETINGS; NOTICE
Special meetings of the board of directors for any purpose or purposes may
be called at any time by the secretary or by any executive officer of the
corporation, or by one-third of the directors then in office (rounded up to the
nearest whole number) and shall be held at a place, on a date and at a time as
such officer or such directors shall fix. Notice of the place, date and time of
special meetings, unless waived, shall be given to each director by mailing
written notice not less than two (2) days before the meeting or by sending a
facsimile transmission of the same not less than two (2) hours before the time
of the holding of the meeting. If the circumstances warrant, notice may also be
given personally or by telephone not less than two (2) hours before the time of
the holding of the meeting. Oral notice given personally or by telephone may be
communicated either to the director or to a person at the office of the director
who the person giving the notice has reason to believe will promptly communicate
it to the director. Unless otherwise indicated in the notice thereof, any and
all business may be transacted at a special meeting.
3.8 QUORUM
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At all meetings of the board of directors, a majority of the authorized
number of directors shall constitute a quorum for the transaction of business
and the act of a majority of the directors present at any meeting at which there
is a quorum shall be the act of the board of directors, except as may be
otherwise specifically provided by statute or by the certificate of
incorporation. If a quorum is not present at any meeting of the board of
directors, then the directors present thereat may adjourn the meeting from time
to time, without notice other than announcement at the meeting, until a quorum
is present.
A meeting at which a quorum is initially present may continue to transact
business notwithstanding the withdrawal of directors, if any action taken is
approved by at least a majority of the required quorum for that meeting.
3.9 WAIVER OF NOTICE
Whenever notice is required to be given under any provision of the General
Corporation Law of Delaware or of the certificate of incorporation or these
bylaws, a written waiver thereof, signed by the person entitled to notice,
whether before or after the time stated therein, shall be deemed equivalent to
notice. Attendance of a person at a meeting shall constitute a waiver of notice
of such meeting, except when the person attends a meeting for the express
purpose of objecting, at the beginning of the meeting, to the transaction of any
business because the meeting is not lawfully called or convened. Neither the
business to be transacted at, nor the purpose of, any regular or special meeting
of the directors, or members of a committee of directors, need be specified in
any written waiver of notice unless so required by the certificate of
incorporation or these bylaws.
3.10 ADJOURNED MEETING; NOTICE
If a quorum is not present at any meeting of the board of directors, then
the directors present thereat may adjourn the meeting from time to time, without
notice other than announcement at the meeting, until a quorum is present.
3.11 BOARD ACTION BY WRITTEN CONSENT WITHOUT A MEETING
Unless otherwise restricted by the certificate of incorporation or these
bylaws, any action required or permitted to be taken at any meeting of the board
of directors, or of any committee thereof, may be taken without a meeting if all
members of the board or committee, as the case may be, consent thereto in
writing and the writing or writings are filed with the minutes of proceedings of
the board or committee.
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3.12 FEES AND COMPENSATION OF DIRECTORS
Unless otherwise restricted by the certificate of incorporation or these
bylaws, the board of directors shall have the authority to fix the compensation
of directors. The directors may be paid their expenses, if any, of attendance of
each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
3.13 APPROVAL OF LOANS TO OFFICERS
The corporation may lend money to, or guarantee any obligation of, or
otherwise assist any officer or other employee of the corporation or of its
subsidiaries, including any officer or employee who is a director of the
corporation or its subsidiaries, whenever, in the judgment of the directors,
such loan, guaranty or assistance may reasonably be expected to benefit the
corporation. The loan, guaranty or other assistance may be with or without
interest and may be unsecured, or secured in such manner as the board of
directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
3.14 REMOVAL OF DIRECTORS
Any director may be removed from office by the stockholders of the
corporation only for cause.
For purposes of the foregoing paragraph, 'cause' shall mean (i) continued
willful failure to perform the obligations of a director, (ii) gross negligence
by the director, (iii) engaging in transactions that defraud the corporation,
(iv) fraud or intentional misrepresentation, including falsifying use of funds
and intentional misstatements made in financial statements, books, records or
reports to stockholders or governmental agencies, (v) material violation of any
agreement between the director and the corporation, (vi) knowingly causing the
corporation to commit violations of applicable law (including by failure to
act), (vii) acts of moral turpitude or (viii) conviction of a felony.
No reduction of the authorized number of directors shall have the effect of
removing any director prior to the expiration of such director's term of office.
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3.15 CONDUCT OF BUSINESS
At any meeting of the board of directors, business shall be transacted in
such order and manner as the board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law.
ARTICLE IV
COMMITTEES
4.1 COMMITTEES OF DIRECTORS
The board of directors may, by resolution passed by a majority of the whole
board, designate one or more committees, with each committee to consist of one
or more of the directors of the corporation. The board may designate one or
more directors as alternate members of any committee, who may replace any absent
or disqualified member at any meeting of the committee. In the absence or
disqualification of a member of a committee the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such committee, to the extent provided in the resolution of the
board of directors or in the bylaws of the corporation, shall have and may
exercise all the powers and authority of the board of directors in the
management of the business and affairs of the corporation, and may authorize the
seal of the corporation to be affixed to all papers that may require it; but no
such committee shall have the power or authority to (i) amend the certificate of
incorporation (except that a committee may, to the extent authorized in the
resolution or resolutions providing for the issuance of shares of stock adopted
by the board of directors as provided in Section 151(a) of the General
Corporation Law of Delaware, fix the designation and any of the preferences or
rights of such shares relating to dividends, redemption, dissolution, any
distribution of assets of the corporation or the conversion into, or the
exchange of such shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the corporation or
fix the number of shares of any series of stock or authorize the increase or
decrease of the shares of any series), (ii) adopt an agreement of merger or
consolidation under Section 251 or 252 of the General Corporation Law of
Delaware, (iii) recommend to the stockholders the sale, lease or exchange of all
or substantially all of the corporation's property and assets, (iv) recommend to
the stockholders a dissolution of the corporation or a revocation of a
dissolution, or (v) amend the bylaws of the corporation; and, unless the board
resolution establishing the committee, a supplemental resolution of the board of
directors, the bylaws or the certificate of
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incorporation expressly so provide, no such committee shall have the power or
authority to declare a dividend, to authorize the issuance of stock, or to adopt
a certificate of ownership and merger pursuant to Section 253 of the General
Corporation Law of Delaware.
4.2 COMMITTEE MINUTES
Each committee shall keep regular minutes of its meetings and report the
same to the board of directors when required.
4.3 MEETINGS AND ACTION OF COMMITTEES
Meetings and actions of committees shall be governed by, and held and taken
in accordance with, the provisions of Article III of these bylaws, Section 3.5
(place of meetings and meetings by telephone), Section 3.6 (regular meetings),
Section 3.7 (special meetings and notice), Section 3.8 (quorum), Section 3.9
(waiver of notice), Section 3.10 (adjournment and notice of adjournment), and
Section 3.11 (action without a meeting), with such changes in the context of
those bylaws as are necessary to substitute the committee and its members for
the board of directors and its members; provided, however, that the time of
regular meetings of committees may be determined either by resolution of the
board of directors or by resolution of the committee, that special meetings of
committees may also be called by resolutions of the board of directors, and that
notice of special meetings of committees shall also be given to all alternate
members, who shall have the right to attend all meetings of the committee. The
board of directors may adopt rules for the government of any committee not
inconsistent with the provisions of these bylaws.
ARTICLE V
OFFICERS
5.1 OFFICERS
The officers of the corporation shall be a chief executive officer, a
secretary, and a chief financial officer. The corporation may also have, at the
discretion of the board of directors, a chairman of the board, a vice chairman
of the board, a president, one or more vice presidents, one or more assistant
secretaries, a controller, one or more assistant controllers, a treasurer, one
or more assistant treasurers, and any such other officers as may be appointed in
accordance with the provisions of Section 5.3 of these bylaws. Any number of
offices may be held by the same person.
5.2 APPOINTMENT OF OFFICERS
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The officers of the corporation, except such officers as may be appointed
in accordance with the provisions of Section 5.3 or 5.5 of these bylaws, shall
be appointed by the board of directors, subject to the rights, if any, of an
officer under any contract of employment.
5.3 SUBORDINATE OFFICERS
The board of directors may appoint, or empower the chief executive officer
to appoint, such other officers and agents as the business of the corporation
may require, each of whom shall hold office for such period, have such
authority, and perform such duties as are provided in these bylaws or as the
board of directors may from time to time determine.
5.4 REMOVAL AND RESIGNATION OF OFFICERS
Subject to the rights, if any, of an officer under any contract of
employment, any officer may be removed, either with or without cause, by an
affirmative vote of the majority of the board of directors at any regular or
special meeting of the board or, except in the case of an officer chosen by the
board of directors, by any officer upon whom such power of removal may be
conferred by the board of directors.
Any officer may resign at any time by giving written notice to the
corporation. Any resignation shall take effect at the date of the receipt of
that notice or at any later time specified in that notice; and, unless otherwise
specified in that notice, the acceptance of the resignation shall not be
necessary to make it effective. Any resignation is without prejudice to the
rights, if any, of the corporation under any contract to which the officer is a
party.
5.5 VACANCIES IN OFFICES
Any vacancy occurring in any office of the corporation shall be filled in
the manner prescribed in these bylaws for regular appointments to that office.
5.6 CHAIRMAN OF THE BOARD
The chairman of the board, if such an officer be elected, shall, if
present, preside at meetings of the board of directors and exercise and perform
such other powers and duties as may from time to time be assigned to him by the
board of directors or as may be prescribed by these bylaws. If there is no
chief executive officer, then the chairman of the board shall also be the chief
executive officer of the corporation and shall have the powers and duties
prescribed in Section 5.7 of these bylaws.
5.7 CHIEF EXECUTIVE OFFICER; PRESIDENT
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Subject to such supervisory powers, if any, as may be given by the board of
directors to the chairman of the board, if there be such an officer, the chief
executive officer of the corporation shall , subject to the control of the board
of directors, have general supervision, direction, and control of the business
and the officers of the corporation. He shall preside at all meetings of the
stockholders and, in the absence or nonexistence of a chairman of the board, at
all meetings of the board of directors. He shall have the general powers and
duties of management usually vested in the office of the chief executive officer
of a corporation and shall have such other powers and duties as may be
prescribed by the board of directors or these bylaws.
He shall also function as president of the corporation unless the board of
directors names another person as president, in which case, the president shall
have such powers and duties as may be prescribed by the board of directors.
5.8 VICE PRESIDENTS
In the absence or disability of the president, the vice presidents, if any,
in order of their rank as fixed by the board of directors or, if not ranked, a
vice president designated by the board of directors, shall perform all the
duties of the president and when so acting shall have all the powers of, and be
subject to all the restrictions upon, the president. The vice presidents shall
have such other powers and perform such other duties as from time to time may be
prescribed for them respectively by the board of directors, these bylaws, the
chief executive officer or the chairman of the board.
5.9 SECRETARY
The secretary shall keep or cause to be kept, at the principal executive
office of the corporation or such other place as the board of directors may
direct, a book of minutes of all meetings and actions of directors, committees
of directors, and stockholders. The minutes shall show the time and place of
each meeting, whether regular or special (and, if special, how authorized and
the notice given), the names of those present at directors' meetings or
committee meetings, the number of shares present or represented at stockholders'
meetings, and the proceedings thereof.
The secretary shall keep, or cause to be kept, at the principal executive
office of the corporation or at the office of the corporation's transfer agent
or registrar, as determined by resolution of the board of directors, a share
register, or a duplicate share register, showing the names of all stockholders
and their addresses, the number and classes of shares held by each, the number
and date of certificates evidencing such shares, and the number and date of
cancellation of every certificate surrendered for cancellation.
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The secretary shall give, or cause to be given, notice of all meetings of
the stockholders and of the board of directors required to be given by law or by
these bylaws. He shall keep the seal of the corporation, if one be adopted, in
safe custody and shall have such other powers and perform such other duties as
may be prescribed by the board of directors or by these bylaws.
5.10 CHIEF FINANCIAL OFFICER
The chief financial officer shall keep and maintain, or cause to be kept
and maintained, adequate and correct books and records of accounts of the
properties and business transactions of the corporation, including accounts of
its assets, liabilities, receipts, disbursements, gains, losses, capital,
retained earnings, and shares. The books of account shall at all reasonable
times be open to inspection by any director.
The chief financial officer shall deposit all money and other valuables in
the name and to the credit of the corporation with such depositories as may be
designated by the board of directors. He shall disburse the funds of the
corporation as may be ordered by the board of directors, shall render to the
chief executive officer and directors, whenever they request it, an account of
all of his transactions as chief financial officer and of the financial
condition of the corporation, and shall have such other powers and perform such
other duties as may be prescribed by the board of directors or these bylaws.
The duties of the chief financial officer may be allocated by the board of
directors among one or more persons, in its discretion.
5.11 TREASURER
The treasurer shall keep and maintain, or cause to be kept and maintained,
adequate and correct books and records of accounts or the properties and
business transactions of the corporation, including accounts of its assets,
liabilities, receipts, disbursements, gains, losses, capital, retained earnings
and shares. The books of account shall at all reasonable times be open to
inspection by any director.
The treasurer shall deposit all money and other valuables in the name and
to the credit of the corporation with such depositories as may be designated by
the board of directors. He shall disburse the funds of the corporation as may
be ordered by the board of directors, shall render to the chief executive
officer and directors, whenever they request it, an account of all of his
transactions as treasurer and of the financial condition of the corporation, and
shall have such other powers and perform such other duties as may be prescribed
by the board of directors or these bylaws.
5.12 ASSISTANT SECRETARY
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The assistant secretary, or, if there is more than one, the assistant
secretaries in the order determined by the stockholders or board of directors
(or if there be no such determination, then in the order of their election)
shall, in the absence of the secretary or in the event of his or her inability
or refusal to act, perform the duties and exercise the powers of the secretary
and shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.13 ASSISTANT TREASURER
The assistant treasurer, or, if there is more than one, the assistant
treasurers in the order determined by the stockholders or board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his or her inability or
refusal to act, perform the duties and exercise the powers of the treasurer and
shall perform such other duties and have such other powers as the board of
directors or the stockholders may from time to time prescribe.
5.14 AUTHORITY AND DUTIES OF OFFICERS
In addition to the foregoing authority and duties, all officers of the
corporation shall respectively have such authority and perform such duties in
the management of the business of the corporation as may be designated from time
to time by the board of directors or the stockholders.
5.15 REPRESENTATION OF SHARES OF OTHER CORPORATIONS
The chairman of the board, the chief executive officer, the president, any
vice president, the treasurer, the secretary or assistant secretary of this
corporation, or any other person authorized by the board of directors, the chief
executive officer, the president or a vice president, is authorized to vote,
represent, and exercise on behalf of this corporation all rights incident to any
and all shares of any other corporation or corporations standing in the name of
this corporation. The authority granted herein may be exercised either by such
person directly or by any other person authorized to do so by proxy or power of
attorney duly executed by such person having the authority.
ARTICLE VI
INDEMNITY
6.1 INDEMNIFICATION OF DIRECTORS AND OFFICERS
The corporation shall, to the maximum extent and in the manner permitted by
the General Corporation Law of Delaware, indemnify each of its
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directors and officers against expenses (including attorneys' fees), judgments,
fines, settlements, and other amounts actually and reasonably incurred in
connection with any proceeding, arising by reason of the fact that such person
is or was a director, officer, employee or agent of the corporation. For
purposes of this Section 6.1, a "director" or "officer" of the corporation
includes any person (i) who is or was a director or officer of the corporation,
(ii) who is or was serving at the request of the corporation as a director or
officer of another corporation partnership, joint venture, trust or other
enterprise, or (iii) who was a director or officer of a corporation which was a
predecessor corporation of the corporation or of another enterprise at the
request of such predecessor corporation.
6.2 INDEMNIFICATION OF OTHERS
The corporation shall have the power, to the extent and in the manner
permitted by the General Corporation Law of Delaware, to indemnify each of its
employees and agents (other than directors and officers) against expenses
(including attorney's fees), judgments, fines, settlements, and other amounts
actually and reasonably incurred in connection with any proceeding, arising by
reason of the fact that such person is or was an agent of the corporation. For
purposes of this Section 6.2, an "employee" or "agent" of the corporation (other
than a director or officer) includes any person (i) who is or was an employee or
agent of the corporation, (ii) who is or was serving at the request of the
corporation as an employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, or (iii) who was an employee or agent of a
corporation which was a predecessor corporation of the corporation or of another
enterprise at the request of such predecessor corporation.
6.3 INSURANCE
The corporation may purchase and maintain insurance on behalf of any person
who is or was a director, officer, employee or agent of the corporation, or is
or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise against any liability asserted against him and incurred by him
in any such capacity, or arising out of his status as such, whether or not the
corporation would have the power to indemnify him against such liability under
the provisions of the General Corporation Law of Delaware.
ARTICLE VII
RECORDS AND REPORTS
7.1 MAINTENANCE AND INSPECTION OF RECORDS
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The corporation shall, either at its principal executive office or at such
place or places as designated by the board of directors, keep a record of its
stockholders listing their names and addresses and the number and class of
shares held by each stockholder, a copy of these bylaws as amended to date,
accounting books, and other records.
Any stockholder of record, in person or by attorney or other agent, shall,
upon written demand under oath stating the purpose thereof, have the right
during the usual hours for business to inspect for any proper purpose the
corporation's stock ledger, a list of its stockholders, and its other books and
records and to make copies or extracts therefrom. A proper purpose shall mean a
purpose reasonably related to such person's interest as a stockholder. In every
instance where an attorney or other agent is the person who seeks the right to
inspection, the demand under oath shall be accompanied by a power of attorney or
such other writing that authorizes the attorney or other agent to so act on
behalf of the stockholder. The demand under oath shall be directed to the
corporation at its registered office in Delaware or at its principal place of
business.
7.2 INSPECTION BY DIRECTORS
Any director shall have the right to examine the corporation's stock
ledger, a list of its stockholders, and its other books and records for a
purpose reasonably related to his position as a director. The Court of Chancery
is hereby vested with the exclusive jurisdiction to determine whether a director
is entitled to the inspection sought. The Court may summarily order the
corporation to permit the director to inspect any and all books and records, the
stock ledger, and the stock list and to make copies or extracts therefrom. The
Court may, in its discretion, prescribe any limitations or conditions with
reference to the inspection, or award such other and further relief as the Court
may deem just and proper.
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7.3 ANNUAL STATEMENT TO STOCKHOLDERS
The board of directors shall present at each annual meeting, and at any
special meeting of the stockholders when called for by vote of the stockholders,
a full and clear statement of the business and condition of the corporation.
ARTICLE VIII
GENERAL MATTERS
8.1 CHECKS
From time to time, the board of directors shall determine by resolution
which person or persons may sign or endorse all checks, drafts, other orders for
payment of money, notes or other evidences of indebtedness that are issued in
the name of or payable to the corporation, and only the persons so authorized
shall sign or endorse those instruments.
8.2 EXECUTION OF CORPORATE CONTRACTS AND INSTRUMENTS
The board of directors, except as otherwise provided in these bylaws, may
authorize any officer or officers, or agent or agents, to enter into any
contract or execute any instrument in the name of and on behalf of the
corporation; such authority may be general or confined to specific instances.
Unless so authorized or ratified by the board of directors or within the agency
power of an officer, no officer, agent or employee shall have any power or
authority to bind the corporation by any contract or engagement or to pledge its
credit or to render it liable for any purpose or for any amount.
8.3 STOCK CERTIFICATES; PARTLY PAID SHARES
The shares of a corporation shall be represented by certificates, provided
that the board of directors of the corporation may provide by resolution or
resolutions that some or all of any or all classes or series of its stock shall
be uncertificated shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is surrendered to the
corporation. Notwithstanding the adoption of such a resolution by the board of
directors, every holder of stock represented by certificates and upon request
every holder of uncertificated shares shall be entitled to have a certificate
signed by, or in the name of the corporation by the chairman or vice-chairman of
the board of directors, or the president or vice-president, and by the treasurer
or an assistant treasurer, or the secretary or an assistant secretary of such
corporation representing the number of shares registered in certificate form.
Any or all of the signatures on the certificate may be a facsimile. In case any
officer, transfer agent or registrar who has signed or whose facsimile
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signature has been placed upon a certificate has ceased to be such officer,
transfer agent or registrar before such certificate is issued, it may be issued
by the corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
The corporation may issue the whole or any part of its shares as partly
paid and subject to call for the remainder of the consideration to be paid
therefor. Upon the face or back of each stock certificate issued to represent
any such partly paid shares, upon the books and records of the corporation in
the case of uncertificated partly paid shares, the total amount of the
consideration to be paid therefor and the amount paid thereon shall be stated.
Upon the declaration of any dividend on fully paid shares, the corporation shall
declare a dividend upon partly paid shares of the same class, but only upon the
basis of the percentage of the consideration actually paid thereon.
8.4 SPECIAL DESIGNATION ON CERTIFICATES
If the corporation is authorized to issue more than one class of stock or
more than one series of any class, then the powers, the designations, the
preferences, and the relative, participating, optional or other special rights
of each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights shall be set forth in full or
summarized on the face or back of the certificate that the corporation shall
issue to represent such class or series of stock; provided, however, that,
except as otherwise provided in Section 202 of the General Corporation Law of
Delaware, in lieu of the foregoing requirements there may be set forth on the
face or back of the certificate that the corporation shall issue to represent
such class or series of stock a statement that the corporation will furnish
without charge to each stockholder who so requests the powers, the designations,
the preferences, and the relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights.
8.5 LOST CERTIFICATES
Except as provided in this Section 8.5, no new certificates for shares
shall be issued to replace a previously issued certificate unless the latter is
surrendered to the corporation and canceled at the same time. The corporation
may issue a new certificate of stock or uncertificated shares in the place of
any certificate theretofore issued by it, alleged to have been lost, stolen or
destroyed, and the corporation may require the owner of the lost, stolen or
destroyed certificate, or his legal representative, to give the corporation a
bond sufficient to indemnify it against any claim that may be made against it on
account of the alleged loss, theft or destruction of any such certificate or the
issuance of such new certificate or uncertificated shares.
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8.6 CONSTRUCTION; DEFINITIONS
Unless the context requires otherwise, the general provisions, rules of
construction, and definitions in the General Corporation Law of Delaware shall
govern the construction of these bylaws. Without limiting the generality of
this provision, the singular number includes the plural, the plural number
includes the singular, and the term "person" includes both a corporation and a
natural person.
8.7 DIVIDENDS
The directors of the corporation, subject to any restrictions contained in
(i) the General Corporation Law of Delaware or (ii) the certificate of
incorporation, may declare and pay dividends upon the shares of its capital
stock. Dividends may be paid in cash, in property, or in shares of the
corporation's capital stock.
The directors of the corporation may set apart out of any of the funds of
the corporation available for dividends a reserve or reserves for any proper
purpose and may abolish any such reserve. Such purposes shall include but not
be limited to equalizing dividends, repairing or maintaining any property of the
corporation, and meeting contingencies.
8.8 FISCAL YEAR
The fiscal year of the corporation shall be fixed by resolution of the
board of directors and may be changed by the board of directors.
8.9 SEAL
The corporation may adopt a corporate seal, which may be altered at
pleasure, and may use the same by causing it or a facsimile thereof to be
impressed or affixed or in any other manner reproduced.
8.10 TRANSFER OF STOCK
Upon surrender to the corporation or the transfer agent of the corporation
of a certificate for shares duly endorsed or accompanied by proper evidence of
succession, assignment or authority to transfer, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate, and record the transaction in its books.
8.11 STOCK TRANSFER AGREEMENTS
The corporation shall have power to enter into and perform any agreement
with any number of stockholders of any one or more classes of
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stock of the corporation to restrict the transfer of shares of stock of the
corporation of any one or more classes owned by such stockholders in any manner
not prohibited by the General Corporation Law of Delaware.
8.12 REGISTERED STOCKHOLDERS
The corporation shall be entitled to recognize the exclusive right of a
person registered on its books as the owner of shares to receive dividends and
to vote as such owner, shall be entitled to hold liable for calls and
assessments the person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of another person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
8.13 NOTICES
Except as otherwise specifically provided herein or required by law, all
notices required to be given to any stockholder, director, officer, employee or
agent shall be in writing and may in every instance be effectively given by hand
delivery, by mail, postage paid, or by facsimile transmission. Any such notice
shall be addressed to such stockholder, director, officer, employee or agent at
his last known address as it appears on the books of the corporation. The time
when such notice shall be deemed received, if hand delivered, or dispatched, if
sent by mail or facsimile, transmission, shall be the time of the giving of the
notice.
ARTICLE IX
AMENDMENTS
Any of these bylaws may be altered, amended or repealed by the affirmative
vote of a majority of the board of directors or, with respect to bylaw
amendments placed before the stockholders for approval and except as otherwise
provided herein or required by law, by the affirmative vote of the holders of a
majority of the shares of the corporation's stock entitled to vote in the
election of directors, voting as one class.
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ARTICLE X
DISSOLUTION
If it should be deemed advisable in the judgment of the board of directors
of the corporation that the corporation should be dissolved, the board, after
the adoption of a resolution to that effect by a majority of the whole board at
any meeting called for that purpose, shall cause notice to be mailed to each
stockholder entitled to vote thereon of the adoption of the resolution and of a
meeting of stockholders to take action upon the resolution.
At the meeting a vote shall be taken for and against the proposed
dissolution. If a majority of the outstanding stock of the corporation entitled
to vote thereon votes for the proposed dissolution, then a certificate stating
that the dissolution has been authorized in accordance with the provisions of
Section 275 of the General Corporation Law of Delaware and setting forth the
names and residences of the directors and officers shall be executed,
acknowledged, and filed and shall become effective in accordance with Section
103 of the General Corporation Law of Delaware. Upon such certificate's
becoming effective in accordance with Section 103 of the General Corporation Law
of Delaware, the corporation shall be dissolved.
Whenever all the stockholders entitled to vote on a dissolution consent in
writing, either in person or by duly authorized attorney, to a dissolution, no
meeting of directors or stockholders shall be necessary. The consent shall be
filed and shall become effective in accordance with Section 103 of the General
Corporation Law of Delaware. Upon such consent's becoming effective in
accordance with Section 103 of the General Corporation Law of Delaware, the
corporation shall be dissolved. If the consent is signed by an attorney, then
the original power of attorney or a photocopy thereof shall be attached to and
filed with the consent. The consent filed with the Secretary of State shall
have attached to it the affidavit of the secretary or some other officer of the
corporation stating that the consent has been signed by or on behalf of all the
stockholders entitled to vote on a dissolution; in addition, there shall be
attached to the consent a certification by the secretary or some other officer
of the corporation setting forth the names and residences of the directors and
officers of the corporation.
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ARTICLE XI
CUSTODIAN
11.1 APPOINTMENT OF A CUSTODIAN IN CERTAIN CASES
The Court of Chancery, upon application of any stockholder, may appoint one
or more persons to be custodians and, if the corporation is insolvent, to be
receivers, of and for the corporation when:
(i) any meeting held for the election of directors the stockholders
are so divided that they have failed to elect successors to directors whose
terms have expired or would have expired upon qualification of their successors;
or
(ii) the business of the corporation is suffering or is threatened
with irreparable injury because the directors are so divided respecting the
management of the affairs of the corporation that the required vote for action
by the board of directors cannot be obtained and the stockholders are unable to
terminate this division; or
(iii) the corporation has abandoned its business and has failed
within a reasonable time to take steps to dissolve, liquidate or distribute its
assets.
11.2 DUTIES OF CUSTODIAN
The custodian shall have all the powers and title of a receiver appointed
under Section 291 of the General Corporation Law of Delaware, but the authority
of the custodian shall be to continue the business of the corporation and not to
liquidate its affairs and distribute its assets, except when the Court of
Chancery otherwise orders and except in cases arising under Sections 226(a)(3)
or 352(a)(2) of the General Corporation Law of Delaware.
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SILICON GRAPHICS, INC.
DIRECTORS' STOCK OPTION PLAN
(as amended October 31, 1994)(1)
1. PURPOSES OF THE PLAN. The purposes of this Directors' Stock Option
Plan are to attract and retain the best available personnel for service as
Directors of the Company, to provide additional incentive to the Outside
Directors of the Company to serve as Directors, and to encourage their continued
service on the Board.
All options granted hereunder shall be non-statutory stock options.
2. DEFINITIONS. As used herein, the following definitions shall apply:
(a) "ANNUAL MEETING" means the Company's regularly scheduled annual
meeting of stockholders, as provided for in the Company's bylaws.
(b) "BOARD" means the Board of Directors of the Company.
(c) "CODE" means the Internal Revenue Code of 1986, as amended.
(d) "COMMON STOCK" means the Common Stock of the Company.
(e) "COMPANY" means Silicon Graphics, Inc., a Delaware corporation.
(f) "CONTINUOUS STATUS AS A DIRECTOR" means the absence of any
interruption or termination of service as a Director.
(g) "DIRECTOR" means a member of the Board.
(h) "EMPLOYEE" means any person, including officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. The payment
of a Director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.
(i) "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
(j) "FAIR MARKET VALUE" means, as of any date, the value of Common
Stock determined as follows:
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(1) Share numbers restated to reflect the two-for-one stock split in the form of
a dividend effected December 15, 1993.
<PAGE>
(i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the National
Market System of the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System, the Fair Market Value of a Share of Common Stock
shall be the closing sales price for such stock or the closing bid, if no sales
were reported, as quoted on such system or exchange (or the exchange with the
greatest volume of trading in Common Stock) on the day of determination, as
reported in THE WALL STREET JOURNAL or such other source as the Board deems
reliable;
(ii) If the Common Stock is quoted on the NASDAQ System (but not
on the National Market System thereof) or regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high and low asked prices
for the Common Stock on the day of determination, as reported in THE WALL STREET
JOURNAL or such other source as the Board deems reliable, or;
(iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof shall be determined in good faith by the
Board.
(k) "OPTION" means a stock option granted pursuant to the Plan.
(l) "OPTIONED STOCK" means the Common Stock subject to an Option.
(m) "OPTIONEE" means an Outside Director who receives an Option.
(n) "OUTSIDE DIRECTOR" means a Director who is not an Employee.
(o) "PARENT" means a "parent corporation", whether now or hereafter
existing, as defined in Section 425(e) of the Code.
(p) "PLAN" means this Directors' Stock Option Plan.
(q) "SHARE" means a share of the Common Stock, as adjusted in
accordance with Section 10 of the Plan.
(r) "SUBSIDIARY" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 425(f) of the Code.
3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section 10 of
the Plan, the maximum aggregate number of Shares which may be optioned and sold
under the Plan is 800,000 Shares (the "Pool") of Common Stock. The Shares may
be authorized, but unissued, or reacquired Common Stock.
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If an Option should expire or become unexercisable for any reason without
having been exercised in full, the unpurchased Shares which were subject thereto
shall, unless the Plan shall have been terminated, become available for future
grant under the Plan.
4. ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.
(a) ADMINISTRATOR. Except as otherwise required herein, the Plan
shall be administered by the Board, or by a compensation committee (the
"Committee") appointed by the Board. No discretion concerning decisions
regarding the Plan shall be afforded to any person who is not a "disinterested
person" (as defined in Rule 16b-3 under the Exchange Act).
(b) PROCEDURE FOR GRANTS. 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 30,000 Shares (which number shall be subject to adjustment in
the manner set forth in Section 10 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 Annual 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 10,000
Shares, which number shall be subject to adjustment in the manner set forth in
Section 10 hereof upon the occurrence of any event described therein (a "Renewal
Grant").
(iv) The terms of each Option granted hereunder shall be as
follows:
(A) the term of the Option shall be five (5) years.
(B) the Option shall be exercisable only while the Outside
Director remains a Director of the Company, except as set forth in Section 8
hereof.
(C) the exercise price per Share shall be 100% of the Fair
Market Value per Share on the date of grant of the Option.
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(D) the Option will become exercisable in three
installments: the first 34% of the Optioned Stock on the first annual vesting
date and an additional 33% of the Optioned Stock on each of the next two annual
vesting dates, so long as the Optionee remains a Director. The vesting dates of
Initial Grants will be (1) the first three anniversaries of the date of grant in
the case of an Optionee who first becomes a Director by appointment by the
Board, and (2) the dates of the next three Annual Meetings in the case of a
person who first becomes a Director by election by the stockholders at an Annual
Meeting. Renewal Grants will vest on the dates on which the next three Annual
Meetings following the date of grant are held.
(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.
(c) POWERS OF THE BOARD. Subject to the provisions and restrictions
of the Plan, the Board or the Committee shall have the authority, in its
discretion: (i) to determine, upon review of relevant information and in
accordance with Section 2(j) of the Plan, the Fair Market Value of the Common
Stock; (ii) to interpret the Plan; (iii) to prescribe, amend and rescind rules
and regulations relating to the Plan; (iv) to authorize any person to execute on
behalf of the Company any instrument required to effectuate the grant of an
Option previously granted hereunder; and (v) to make all other determinations
deemed necessary or advisable for the administration of the Plan.
(d) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board or the Committee shall be final.
5. ELIGIBILITY. Options may be granted only to Outside Directors. All
Options shall be automatically granted in accordance with the terms set forth in
Section 4(b) hereof. An Outside Director who has been granted an Option may, if
he or she is otherwise eligible, be granted an additional Option or Options in
accordance with such provisions.
The Plan shall not confer on any Optionee any right with respect to
continuation of service as a Director or nomination to serve as a Director, nor
shall it interfere in any way with any rights which the Director or the Company
may have to terminate his or her directorship at any time.
6. TERM OF PLAN. The Plan shall become effective upon the earlier to
occur of its adoption by the Board or its approval by the shareholders of the
Company as described
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in Section 16 of the Plan. It shall continue in effect for a term of ten (10)
years unless sooner terminated under Section 12 of the Plan.
7. EXERCISE PRICE AND CONSIDERATION.
(a) EXERCISE PRICE. The per Share exercise price for Optioned Stock
shall be 100% of the Fair Market Value per Share on the date of grant of the
Option.
(b) FORM OF CONSIDERATION. 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 Board and may consist entirely of: (i) cash, (ii)
check, (iii) promissory note, (iv) other shares which (x) in the case of Shares
acquired upon exercise of an Option either have been owned by the Optionee for
more than six (6) months on the date of surrender, or were not acquired directly
or indirectly from the Company, and (y) have a Fair Market Value on the date of
surrender equal to the aggregate exercise price of the Shares as to which said
Option shall be exercised, (v) authorization from the Company to retain from the
total number of Shares as to which the Option is exercised that number of Shares
having a Fair Market Value on the date of exercise equal to the exercise price
for the total number of Shares as to which the Option is exercised, (vi)
delivery of a properly executed exercise notice together with irrevocable
instructions to a broker to promptly deliver to the Company the amount of sale
or loan proceeds required to pay the exercise price, (vii) by delivering an
irrevocable subscription agreement for the Shares which irrevocably obligates
the Optionee to take and pay for the Shares not more than twelve (12) months
after the date of delivery of the subscription agreement, (viii) any combination
of the foregoing methods of payment, or (ix) such other consideration and method
of payment for the issuance of Shares to the extent permitted by applicable law.
8. EXERCISE OF OPTION.
(a) PROCEDURE FOR EXERCISE; RIGHTS AS A SHAREHOLDER. Any Option
granted hereunder shall be exercisable at such times as are set forth in Section
4(b) hereof; provided, however, that no Options shall be exercisable until
shareholder approval of the Plan in accordance with Section 16 hereof has been
obtained.
An Option may not be exercised for a fraction of a share.
An Option shall be deemed to be exercised when written notice of such
exercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may consist of any consideration and method of payment
allowable under Section 7(b) 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 shareholder shall
exist with respect to the Optioned Stock, notwithstanding the exercise
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of the Option. A share certificate for the number of Shares so acquired shall
be issued to the Optionee as soon as practicable after 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 10 of the Plan.
Exercise of an Option in any manner shall result in a decrease in the
number of Shares which thereafter may be available, both for purposes of the
Plan and for sale under the Option, by the number of Shares as to which the
Option is exercised.
(b) RULE 16B-3. Options granted to Outside Directors must comply
with the applicable provisions of Rule 16b-3 promulgated under the Exchange Act
or any successor thereto and shall contain such additional conditions or
restrictions as may be required thereunder to qualify for the maximum exemption
from Section 16 of the Exchange Act with respect to Plan transactions.
(c) TERMINATION OF STATUS AS A DIRECTOR. If an Outside Director
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 an
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 an Option at the date of such termination,
or if the Optionee does not exercise such Option (which he or she was entitled
to exercise) within the time specified herein, the Option shall terminate.
(d) DISABILITY OF OPTIONEE. Notwithstanding the provisions of
Section 8(c) above, in the event an Optionee is unable to continue his or her
service as a Director as a result of the Optionee's total and permanent
disability (as defined in Section 22(e)(3) of the Code), he or she may, but only
within six (6) months from the date of termination, exercise an 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 the Option at the date of termination, or
if the Optionee does not exercise such Option (which he or she was entitled to
exercise) within the time specified herein, the Option shall terminate.
(e) DEATH OF OPTIONEE. In the event of the death of an Optionee, the
Option may be exercised, at any time within six (6) 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.
9. NON-TRANSFERABILITY OF OPTIONS . The 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 the Optionee, only by the Optionee.
-6-
<PAGE>
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION OR MERGER. Subject to any
required action by the stockholders of the Company, the number of Shares covered
by each outstanding Option, and the number of Shares which have been authorized
for issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share covered by each such outstanding Option
or Right, shall be proportionately adjusted for any increase or decrease in the
number of issued Shares of 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 effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
Shares of stock of any class, or securities convertible into Shares of stock of
any class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, all
outstanding Options will terminate immediately prior to the consummation of such
proposed action, unless otherwise provided by the Board. The Board may, in the
exercise of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable.
Subject to the provisions of paragraph (b) hereof, in the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, each outstanding Option
shall be assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless the
Board determines, in the exercise of its sole discretion and in lieu of such
assumption or substitution, that the Optionee shall have the right to exercise
the Option as to all of the Optioned Stock, including Shares as to which the
Option would not otherwise be exercisable. If the Board makes an Option
exercisable in lieu of assumption or substitution in the event of a merger or
sale of assets, the Company shall notify the Optionee that the Option shall be
fully exercisable for a period of fifteen (15) days from the date of such
notice, and the Option will terminate upon the expiration of such period. For
the purposes of this paragraph, an Option granted under the Plan shall be deemed
to be assumed if, following the sale of assets or merger, the Option confers the
right to purchase, for each share of Optioned Stock subject to the Option
immediately prior to the sale of assets or merger, the consideration (whether
stock, cash, or other securities or property) received in the sale of assets or
merger by holders of Common Stock for each Share held on the effective date of
the transaction (and if such 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
-7-
<PAGE>
such consideration received in the sale of assets or merger was not solely
Common Stock of the successor corporation or its parent, the Board may, with the
consent of the successor corporation and the participant, provide for the
consideration to be received upon the exercise of 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 sale of
assets or merger.
11. AMENDMENT AND TERMINATION OF THE PLAN.
(a) AMENDMENT AND TERMINATION. The Board may at any time amend,
alter, suspend or discontinue the Plan, but no amendment, alteration,
suspension, or discontinuation shall be made which would impair the rights of
any Optionee under any grant theretofore made, without his or her consent. In
addition, to the extent necessary and desirable to comply with Rule 16b-3 under
the Exchange Act (or any other applicable law or regulation), the Company shall
obtain stockholder approval of any Plan amendment in such a manner and to such a
degree as required.
(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated.
12. TIME OF GRANTING OPTIONS. The date of grant of an Option or Right
shall, for all purposes, be the date determined in accordance with Section 4(b)
hereof. Notice of the determination shall be given to each Outside Director to
whom an Option is so granted within a reasonable time after the date of such
grant.
13. CONDITIONS UPON ISSUANCE OF SHARES. Shares shall not be issued
pursuant to the exercise of an Option unless the exercise of such Option and the
issuance and delivery of such Shares pursuant thereto shall comply with all
relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act, the rules and regulations promulgated
thereunder, state securities laws, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject to the
approval of counsel for the Company with respect to such compliance.
As a condition to the exercise of an Option, the Company may require the
person exercising such Option 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 by any of the
aforementioned relevant provisions of law.
14. 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.
-8-
<PAGE>
15. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.
16. SHAREHOLDER APPROVAL. Continuance of the Plan shall be subject to
approval by the shareholders of the Company at or prior to the first annual
meeting of shareholders subsequent to the granting of an Option hereunder. Such
shareholder approval shall be obtained in the manner and to the degree required
under applicable state and federal law.
-9-
<PAGE>
GRANT UPON APPOINTMENT BY THE BOARD
SILICON GRAPHICS, INC.
DIRECTOR'S OPTION AGREEMENT
(First Option)
Silicon Graphics, Inc., a Delaware corporation (the "Company"), has granted
to ______________, (the "Optionee"), as of ________________ (the "Grant Date"),
an option to purchase a total of 30,000 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 Directors"
Stock Option 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 8 of the Plan as follows:
(i) RIGHT TO EXERCISE.
(a) This Option shall become exercisable in three installments:
the first thirty-four percent (34%) of the Optioned Stock on the first
anniversary of the Grant Date and an additional thirty-three percent (33%) of
the Optioned Stock on each of the next two anniversaries of the Grant Date, so
long as the Optionee remains a Director.
(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 the Option is
governed by Sections 6, 7 and 8 of this Agreement.
(ii) METHOD OF EXERCISE. 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.
<PAGE>
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
which (A) either have been owned by the Optionee for more than six (6) months on
the date of surrender or were not acquired, directly or indirectly, from the
Company, and (B) have a Fair Market Value on the date of surrender equal to the
exercise price of the Shares as to which the Option is being exercised; or
(iv) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or 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. If 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 the
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 he or
she does not exercise this Option within the time specified herein, the Option
shall terminate.
7. DISABILITY OF OPTIONEE. 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 total and permanent disability (as defined in Section
22(e)(3) of the Code), he or she may, but only within six (6) 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 the 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 he or she does not exercise this Option
within the time specified herein, the Option shall terminate.
-2-
<PAGE>
8. DEATH OF OPTIONEE. In the event of the death of the Optionee, the
option may be exercised, at any time within six (6) 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 the five (5) year term
has expired.
9. NON-TRANSFERABILITY OF OPTION. This Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner otherwise 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 five (5)
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. (Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, the
measurement and timing of such income may be deferred, and the Optionee is
advised to contact a tax advisor concerning the desirability of filing an 83(b)
election in connection with the exercise of the 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, to the extent
not included in income as described above, will be treated as capital gain or
loss.
SILICON GRAPHICS, INC.,
a Delaware corporation
---------------------------
William M. Kelly
Vice President, Business Development
General Counsel and Secretary
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
-3-
<PAGE>
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under the Plan.
--------------------------
Optionee
-4-
<PAGE>
GRANT UPON ELECTION AT AN ANNUAL MEETING
SILICON GRAPHICS, INC.
DIRECTOR'S OPTION AGREEMENT
(First Option)
Silicon Graphics, Inc., a Delaware corporation (the "Company"), has granted
to ______________, (the "Optionee"), as of ________________, the date of the
Company's Annual Meeting, an option to purchase a total of 30,000 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 Directors" Stock Option 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 8 of the Plan as follows:
(i) RIGHT TO EXERCISE.
(a) This Option shall become exercisable in three installments:
the first thirty-four percent (34%) of the Optioned Stock on the date of the
next Annual Meeting and an additional thirty-three percent (33%) of the Optioned
Stock on the dates of each of the next two Annual Meetings, so long as the
Optionee remains a Director.
(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 the Option is
governed by Sections 6, 7 and 8 of this Agreement.
(ii) METHOD OF EXERCISE. 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.
<PAGE>
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
which (A) either have been owned by the Optionee for more than six (6) months on
the date of surrender or were not acquired, directly or indirectly, from the
Company, and (B) have a Fair Market Value on the date of surrender equal to the
exercise price of the Shares as to which the Option is being exercised; or
(iv) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or 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. If 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 the
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 he or
she does not exercise this Option within the time specified herein, the Option
shall terminate.
7. DISABILITY OF OPTIONEE. 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 total and permanent disability (as defined in Section
22(e)(3) of the Code), he or she may, but only within six (6) 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 the 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 he or she does not exercise this Option
within the time specified herein, the Option shall terminate.
-2-
<PAGE>
8. DEATH OF OPTIONEE. In the event of the death of the Optionee, the
option may be exercised, at any time within six (6) 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 the five (5) year term
has expired.
9. NON-TRANSFERABILITY OF OPTION. This Option may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner otherwise 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 five (5)
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. (Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, the
measurement and timing of such income may be deferred, and the Optionee is
advised to contact a tax advisor concerning the desirability of filing an 83(b)
election in connection with the exercise of the 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, to the extent
not included in income as described above, will be treated as capital gain or
loss.
SILICON GRAPHICS, INC.,
a Delaware corporation
---------------------------
William M. Kelly
Vice President, Business Development
General Counsel and Secretary
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
-3-
<PAGE>
hereby agrees to accept as binding, conclusive and final all decisions or
interpretations of the Committee upon any questions arising under the Plan.
---------------------------
Optionee
-4-
<PAGE>
SILICON GRAPHICS, INC.
DIRECTOR'S OPTION AGREEMENT
(Annual Option)
Silicon Graphics, Inc., a Delaware corporation (the "Company"), has granted
to ____________, (the "Optionee"), as of ____________, the date of the Company's
Annual Meeting, an option to purchase a total of 10,000 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
Directors' Stock Option 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 8 of the Plan as follows:
(i) RIGHT TO EXERCISE.
(a) This Option shall become exercisable in three installments:
the first thirty-four percent (34%) of the Optioned Stock on the date of the
next Annual Meeting and an additional thirty-three percent (33%) of the Optioned
Stock on the dates of each of the next two Annual Meetings, so long as the
Optionee remains a Director.
(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. 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.
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:
<PAGE>
(i) cash;
(ii) check;
(iii) surrender of other Shares of Common Stock of the Company
which (A) either have been owned by the Optionee for more than six (6) months on
the date of surrender or were not acquired, directly or indirectly, from the
Company, and (B) have a Fair Market Value on the date of surrender equal to the
exercise price of the Shares as to which the Option is being exercised; or
(iv) delivery of a properly executed exercise notice together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale or 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. 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.
7. DISABILITY OF OPTIONEE. 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 total and permanent disability (as defined in Section
22(e)(3) of the Code), he or she may, but only within six (6) 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. In the event of the death of the Optionee, the
Option may be exercised, at any time within six (6) 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
-2-
<PAGE>
death. Notwithstanding the foregoing, in no event may the Option be exercised
after its five (5) year term has expired.
9. NON-TRANSFERABILITY OF OPTION. 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 five (5)
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. (Since the Optionee is subject to
Section 16(b) of the Securities Exchange Act of 1934, as amended, the
measurement and timing of such income may be deferred, and the Optionee is
advised to contact a tax advisor concerning the desirability of filing an 83(b)
election in connection with the exercise of the 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, to the extent
not included in income as described above, will be treated.
SILICON GRAPHICS, INC.,
a Delaware corporation
--------------------------------------
William M. Kelly
Vice President, Business Development
General Counsel and Secretary
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
-3-
<PAGE>
EXHIBIT 11.1
STATEMENT OF COMPUTATION OF COMMON SHARES AND COMMON
SHARE EQUIVALENTS
WEIGHTED AVERAGE SHARES OUTSTANDING
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------
1994 1993
---- ----
<S> <C> <C>
Common Shares 140,332 132,250
Convertible preferred shares 1,655 1,964
Stock options 15,302 16,926
------- -------
Total weighted average
shares outstanding 157,289 151,140
------- -------
------- -------
Net income available to
common stockholders $41,836 $25,740
------- -------
------- -------
Income Per Share:
Net income per share $ 0.27 $ 0.17
------- -------
------- -------
</TABLE>
All share and per share data have been restated for all periods presented to
reflect the two-for-one stock split payable in the form of a stock dividend
which was distributed on December 15, 1993 to holders of record on November 30,
1993.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheet, consolidated statement of income and consolidated
statement of cash flows included in the Company's Form 10-Q for the period
ending September 30, 1994, and is qualified in its entirety by reference to
such financial statements and the notes thereto.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> QTR-1
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-START> JUL-01-1994
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0
33,996
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</TABLE>
