1
Exhibit 10.6
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement is entered into as of March
31, 2000 by and between Tera Computer Company, a Washington corporation
("Tera"), and Silicon Graphics, Inc., a Delaware corporation ("SGI").
RECITALS
A Tera and SGI have entered into an Asset Purchase Agreement, dated as
of March 1, 2000 (the "Purchase Agreement"), pursuant to which Tera will acquire
certain assets of SGI in exchange for, among other consideration, 1,000,000
shares of the Common Stock of Tera.
B. Tera has agreed to take steps to permit SGI to resell the Shares
without restriction under the Securities Act.
Capitalized terms used herein and not otherwise defined shall have the meaning
given to them in the Purchase Agreement.
AGREEMENTS
1. Definitions.
The following terms shall have the following meaning:
"Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
thereunder, all as the same shall be in effect at the relevant time.
"Blackout Period" means a period (a) commencing upon notice by
Tera to SGI of Tera's good faith determination that sales of Shares pursuant to
a Registration Statement would require the disclosure of material non-public
information at a time when such disclosure would be disadvantageous to Tera or
otherwise inconsistent with Tera's normal timing for disclosures and (b) ending
on the earliest of (i) the date upon which such material non-public information
is disclosed to the public or ceases to be material, (ii) 60 days after Tera
first gives notice to SGI of such Blackout Period, or (iii) the date on which
Tera gives notice to SGI that the Blackout Period is terminated; provided,
however, that Blackout Periods in any calendar year shall not exceed a total of
90 days.
2
"Business Day" means any day other than a Saturday, a Sunday, or
a day on which the Nasdaq Stock Market is not open for trading.
"Common Stock" means the common stock of Tera.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
thereunder, all as the same shall be in effect at the relevant time.
"Person" means an individual, partnership, corporation, trust or
unincorporated organization.
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement with respect
to the terms of the offering of any portion of the Shares covered by the
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.
"Registration Statement" means any registration statement of Tera
filed under the Securities Act which covers Shares pursuant to the provisions of
this Agreement, including the Prospectus, amendments and supplements to such
Registration Statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration Statement.
"SEC" means the U.S. Securities and Exchange Commission.
"Shares" means (i) 1,000,000 shares of Common Stock of Tera
issued to SGI pursuant to the Purchase Agreement and (ii) any additional shares
of Common Stock issued or issuable with respect to the Common Stock referred to
in clause (i) above by way of a stock dividend or stock split or in connection
with a combination of stock, recapitalization, merger, consolidation or other
reorganization; provided, however, that securities shall cease to be Shares when
a Registration Statement with respect to the sale of such securities shall have
become effective under the Securities Act and such securities shall have been
sold in accordance with such Registration Statement.
"S-3 Registration" means a registration statement on Form S-3
filed under the Securities Act to register the Shares.
2. S-3 Registration.
2
3
2.1. Requirement to File. As soon as practicable after the
Closing Date, and in no event later than 60 days thereafter, Tera shall file the
S-3 Registration. The obligation of Tera to include in the S-3 Registration the
Shares held by SGI shall be conditioned upon the provision by SGI of such
information regarding SGI, the Shares held by SGI and the intended method of
distribution as shall be requested by Tera and required for the registration.
2.2 Plan of Distribution. Except for restrictions which may be
imposed pursuant to Section 4, the plan of distribution of the Shares by SGI,
which shall be stated in the S-3 Registration, shall be substantially as follows
(except as may be required by the SEC or state securities law regulators):
The Shares may be sold from time to time by SGI, or by pledgees,
donees, transferees or other successors in interest. Such sales may be
made on stock exchanges (including the Nasdaq National Market) or
otherwise at prices and on terms then prevailing or at prices related to
the then current market price, or in negotiated transactions. The Shares
may be sold by one or more of the following methods: (a) block trades in
which the broker or dealer so engaged will attempt to sell the Shares as
agent but may position and resell a portion of the block as principal to
facilitate the transaction; (b) purchases by a broker or dealer as
principal, in a market maker capacity or otherwise, and resale by such
broker or dealer for its account pursuant to this Prospectus; and (c)
ordinary brokerage transactions and transactions in which the broker
solicits purchasers. In effecting sales, brokers or dealers engaged by
SGI may arrange for other brokers or dealers to participate. Brokers or
dealers will receive commissions or discounts from SGI in amounts to be
negotiated immediately prior to the sale. SGI, such brokers or dealers,
and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933 (the
"Securities Act") in connection with such sales. In addition, any
securities covered by this Prospectus which qualify for sale pursuant to
Rule 144 under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
3. Registration Procedures. In connection with the filing of the S-3
Registration, Tera will as expeditiously as possible:
3.1 Use its best efforts to cause the S-3 Registration to be
declared effective by the SEC.
3
4
3.2 Subject to Section 3.5, prepare and file with the SEC such
amendments and post-effective amendments to any S-3 Registration, and such
supplements to the Prospectus, as may be necessary to keep such S-3 Registration
continuously effective until all Shares included in the Registration Statement
shall have been sold or until all Shares held by SGI may be sold within any
three month period by SGI pursuant to Rule 144 of the Securities Act (or any
successor provision to such Rule).
3.3 Promptly notify SGI and (if requested by SGI) confirm such
advice in writing,
(a) when the S-3 Registration or any post-effective
amendment thereto has become effective,
(b) of the issuance by the SEC of any stop order
suspending the effectiveness of the S-3 Registration or the initiation of any
proceedings for that purpose,
(c) of the receipt by Tera of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose, and
(d) of the existence of any fact which results in the
Prospectus or any document incorporated therein by reference containing an
untrue statement of a material fact or omitting to state a material fact
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading.
SGI agrees that, upon receipt of any notice from Tera of the happening of any
event of the kind described in Section 3.3(d), SGI will forthwith discontinue
disposition of Shares until SGI's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 3.4.
3.4 Subject to Section 3.5, if any fact contemplated by Section
3.3(d) above shall exist, prepare a supplement or post-effective amendment to
the S-3 Registration or the related Prospectus or any document incorporated
therein by reference or file any other required document so that, as thereafter
delivered to the purchasers of the Shares, the Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
3.5 At any time when the S-3 Registration is effective, Tera may
give written notice to SGI that a Blackout Period has commenced, upon receipt of
which
4
5
SGI shall suspend sales of Shares pursuant to the S-3 Registration until the
Blackout Period terminates. During the Blackout Period, Tera's obligations under
Sections 3.2 and 3.4 shall also be suspended.
3.6 Make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the S-3 Registration.
3.7 Deliver to SGI, without charge, as many copies of the
Prospectus and any amendment or supplement thereto as SGI may reasonably
request.
3.8 Cause all Shares covered by the S-3 Registration to be listed
on the Nasdaq National Market.
3.9 Pay all expenses of Tera in connection with the registration
of the Shares.
3.10 Cause to be delivered to SGI an opinion of Stoel Rives LLP,
counsel to Tera, to the effect that the Shares have been registered, and the
Registration Statement has been declared effective by the Securities and
Exchange Commission, under the Securities Act and that, to the actual knowledge
of such counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued.
3.11 Upon being notified by SGI that any material arrangement has
been entered into with a broker or dealer for the sale of Shares which
arrangement requires a supplement to the Prospectus, to promptly file a
supplemented Prospectus pursuant to Rule 424 under the Securities Act setting
forth such additional information as is required under the Securities Act and
rules and regulations of the SEC.
4. Restrictions on Sale of Shares by SGI. In addition to any limitations
on sale of Shares resulting from the provisions of Section 3.5 relating to a
Blackout Period, no Shares may be sold by SGI except in compliance with the
provisions of this Section 4.
4.1 If SGI proposes to sell more than 100,000 Shares, as adjusted
for any subsequent stock splits, combinations or similar recapitalizations,
within five Business Days, including a sale pursuant to Rule 144 under the
Securities Act, SGI shall deliver to Tera written notice of the proposed sale
and, if any of the following applies, may not effect the sale during the period
specified:
5
6
(a) if Tera, within five Business Days after receipt of notice of
the proposed sale, delivers notice to SGI that it has commenced or
proposes to commence the registration of an underwritten public offering
of securities for the account of Tera, SGI may not sell any Shares
during the period starting with the date 60 days prior to Tera's good
faith estimate of the date of filing of, and ending on a date 90 days
following the effective date of, such registration statement, provided
that at all times during such period prior to effectiveness of such
registration statement Tera is actively employing in good faith all
reasonable efforts to cause such registration statement to become
effective, provided however, that Tera may not exercise its rights under
this clause (a) more than once in any twelve-month period; or
(b) if Tera, within five Business Days after the receipt of
notice of the proposed sale, delivers to SGI a certificate signed by the
President or any Vice President of Tera stating that in the opinion of
the Board of Directors, a disposition of Shares by SGI would materially
adversely affect the market price of Tera's securities or any
contemplated transaction involving Tera, provided that such sale of
Shares shall be deferred for a period not to exceed 60 days from the
receipt of Tera's notice of sale by SGI and provided further that Tera
shall not exercise its rights under this clause (b) to defer a sale more
than once in any twelve-month period; or
(c) if Tera, within five Business Days after receipt of notice of
the proposed sale, delivers notice to SGI that it has commenced a
transaction that would require the filing of a Form 0-X, XXX may not
sell any Shares for a reasonable period necessary for Tera to complete
the transaction.
To the extent than Tera exercises its rights under clause (b) and (c)
above, then the period in which SGI may not any Shares for such reason shall
count against the total of 90-days permitted in Blackout Periods.
5. Indemnification.
5.1. Indemnification by Tera. Tera agrees to indemnify and hold
harmless SGI, its officers, directors, employees and agents and each Person who
controls SGI within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act (each such person being sometimes hereinafter
referred to as an "Indemnified Holder") from and against all losses, damages,
liabilities and expenses arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or
6
7
Prospectus or in any amendment or supplement thereto, or arising out of or based
upon any omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages, liabilities or expenses arise
out of or are based upon any such untrue statement or omission or allegation
thereof based upon information furnished in writing to Tera by SGI expressly for
use therein; provided, however, that Tera shall not be liable in any such case
to the extent that any such loss, claim, damage, liability or expense arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission in the Prospectus, if such untrue statement or alleged
untrue statement, omission or alleged omission is corrected in an amendment or
supplement to the Prospectus and if, having previously been furnished by or on
behalf of Tera with copies of the Prospectus as so amended or supplemented, SGI
(or an underwriter on behalf of SGI) thereafter fails to deliver such Prospectus
as so amended or supplemented prior to or concurrently with a sale of Shares to
the person asserting such loss, claim, damage, liability or expense who
purchased such Shares from SGI; and provided, further, that Tera shall not be
liable with respect to any sale that occurs during a Blackout Period in
violation of Section 3.5 or in violation of Section 4.
6.2 Indemnification by SGI. SGI agrees to indemnify and hold
harmless Tera, its directors and officers and each Person, if any, who controls
Tera within the meaning of either Section 15 of the Securities Act or Section 20
of the Exchange Act to the same extent as the foregoing indemnity from Tera to
SGI, but only with respect to information relating to SGI furnished in writing
by SGI expressly for use in any Registration Statement or Prospectus, or any
amendment or supplement thereto. In case any action or proceeding shall be
brought against Tera or its directors or officers or any such controlling
person, in respect of which indemnity may be sought against SGI, SGI shall have
the rights and duties given to Tera and Tera or its directors or officers or
such controlling person shall have the rights and duties given to SGI by the
preceding paragraph. In no event shall SGI's liability hereunder be greater than
the dollar amount of the proceeds received by SGI upon the sale of the Shares
giving rise to such indemnification obligation.
5.3 Indemnification Procedures. Promptly after receipt by an
indemnified party pursuant to the provisions of Section 5.1 or 5.2 of notice of
the commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party, promptly notify the indemnifying party of
the commencement thereof; but the omission to so notify the indemnifying party
will not relieve it from any liability which it may have to any indemnified
party otherwise than hereunder. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have
7
8
the right to participate in, and, to the extent that it may wish, jointly with
any other indemnifying party similarly notified, to assume the defense thereof,
with counsel satisfactory to such indemnified party, provided, however, if the
defendants in any action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there may
be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, or if
there is a conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party or
parties shall have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of Section 5.1 or 5.2 for any legal
expense subsequently incurred by such indemnified party in connection with the
defense thereof, unless (i) the indemnified party shall have employed counsel in
accordance with the proviso of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory to the indemnified
party to represent the indemnified party within a reasonable time after the
notice of the commencement of the action, or (iii) the indemnifying party has
authorized the employment of counsel for the indemnified party at the expense of
the indemnifying party.
6. General.
6.1 Modification. This Agreement may be modified, amended or
supplemented in any manner and at any time only by a written instrument executed
by SGI and Tera.
6.2 Entire Agreement. This Agreement constitutes the entire agreement
and understanding of SGI and Tera with respect to the subject matter hereof and
supersedes any agreements or understandings between the parties prior to the
execution and delivery of this Agreement.
6.3 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 sent by telecopy or nationally recognized express courier
service, in each case addressed as follows:
8
9
(a) If to SGI:
Silicon Graphics, Inc.
0000 Xxxxx Xxxxxxxxx Xxxxxxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000-0000
Attention: Legal Services
Telecopier: (000) 000-0000
(b) If to Tera:
Tera Computer Company
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telecopier: (000) 000-0000
with a copy to:
Xxxxxx X. Xxxxxxx
Stoel Rives LLP
000 XX Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000
Telecopier: (000) 000-0000
or to such other Person or address in the United States of America as any party
hereto shall have last designated by notice given to the other party in
accordance with this Section 6.3. Any notice given hereunder shall be deemed to
have been given at the time of receipt thereof by the party to whom such notice
is addressed; provided, any notice given by telecopy and received after 5:00
p.m. at the location of the receiving party's address for notice shall be deemed
received by such party on the immediately succeeding Business Day.
9
10
6.4 Assignment; Third Party Beneficiaries.
(a) This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, but, except as expressly provided herein,
neither this Agreement nor any of the rights, interests or obligations hereunder
shall be assigned, by operation of law or otherwise, by any party hereto without
the prior written consent of the other party.
(b) Nothing in this Agreement, express or implied, is intended to
or shall confer upon any Person other than the parties hereto and their said
successors and permitted assigns, any rights, remedies or obligations under or
by reason of this Agreement.
6.5 Severability. If any provision of this Agreement is invalid or
unenforceable, all other provisions of this Agreement shall nevertheless remain
in full force and effect so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any material adverse manner
to either party. Upon such determination that any provision is invalid or
unenforceable, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that the transactions contemplated
hereby are fulfilled to the extent possible.
6.6 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
shall constitute one and the same instrument. Any counterpart of this Agreement
having attached thereto one or more counterparts of the signature pages of this
Agreement containing in the aggregate the original signatures of the parties
hereto shall be deemed to be a fully executed original.
6.7 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED, PERFORMED AND
ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON, EXCLUSIVE OF
CHOICE OF LAW PROVISIONS.
6.8 Attorneys' Fees. If any action or suit is instituted to enforce any
term of this Agreement, the prevailing party shall be entitled to recover from
the other party, in addition to any other rights and remedies it may have, all
reasonable expense and attorney fees at trial, on appeal, and in connection with
any petition for review.
10
11
6.9 Legend. The certificates representing the Shares, for so long as the
represented shares of Common Stock are Shares, as defined in Section 1 hereof,
shall bear the following legend:
The shares represented by this certificate are subject to a Registration
Rights Agreement among Silicon Graphics, Inc. and the Company and may
not be sold or transferred except in accordance with that agreement, a
copy of which is available for inspection at the principal office of the
Company or may be obtained upon written request to the secretary of the
Company.
[SIGNATURE PAGE FOLLOWS]
11
12
IN WITNESS WHEREOF, the parties hereto have caused this
Registration Rights Agreement to be executed as of the date first above written.
TERA COMPUTER COMPANY SILICON GRAPHICS, INC.
---------------------------------- ------------------------------------
By: By:
Its: Its:
12
