Document:

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                                                                    Exhibit 10.5

                         TRANSITION SERVICES AGREEMENT

        TRANSITION SERVICES AGREEMENT, dated as of March 31, 2000 (the "Services
Agreement"), by and between SILICON GRAPHICS, INC., a Delaware corporation
("SGI"), and TERA COMPUTER COMPANY, a Washington corporation ("Tera"). SGI and
Tera are sometimes hereinafter collectively referred to as the "Parties."

                                    RECITALS

        A. SGI and Tera are parties to an Asset Purchase Agreement, dated as of
March 1, 2000, as amended March 31, 2000 (the "Asset Purchase Agreement"),
pursuant to which Tera has agreed to acquire certain business and assets of SGI.

        B. The Parties are interested in purchasing from each other certain
transition services listed and described in Schedule A and Schedule B attached
hereto during certain transition periods commencing from the date hereof.

        NOW, THEREFORE, the Parties, in consideration of the premises and the
mutual covenants and agreements contained herein, and intending to become
legally bound, hereby agree as follows:

                                    SECTION 1
                       AGREEMENT TO SELL AND BUY SERVICES

        1.1 Definitions. Except as otherwise defined in this Services Agreement,
all capitalized terms shall have the meaning assigned to them in the Asset
Purchase Agreement.

        1.2 Provision of Services.

               (a) SGI shall provide to Tera the services described on Schedule
A (the "SGI Services") for the period set forth on Schedule A for each such SGI
Service. All of the SGI Services shall be provided in accordance with the terms,
limitations and conditions set forth herein and on Schedule A.

               (b) Tera shall provide to SGI the services described on Schedule
B (the "Tera Services" and together with the SGI Services, the "Services") for
the period set forth on Schedule B for each such Tera Service. All of the Tera
Services shall be provided in accordance with the terms, limitations and
conditions set forth herein and on Schedule B.

               (c) The Party providing Services (the "Service Provider") shall
receive, as payment for providing each Service, the amount, if any, set forth on
Schedule A or B, as the case may be, for each such Service.

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               (d) If the Service Provider's obligation to perform any Service
expires or is terminated pursuant to this Agreement, there shall be no
obligation to reinstate such Service, unless the Parties mutually agree in
writing.

               (e) If after the date of this Agreement, either Party identifies
any additional Service it reasonably requires from the other Party in order to
operate its business, the Parties will negotiate in good faith for such
additional Service and amend Schedule A or B, as the case may be, to reflect the
same; provided that this Section 1.2(e) shall not require any Party to provide
any additional Services absent the agreement of such Party.

        1.3 Access.

               (a) Tera shall make available on a timely basis to SGI all
information and materials reasonably required by SGI to enable it to provide the
SGI Services. SGI shall not be liable for any claims, errors or omissions
resulting from untimely or incorrect information provided by Tera. To the extent
reasonably necessary in order to provide the SGI Services, upon reasonable
advance notice to the applicable Tera Representative (as defined below), Tera
shall give appropriate representatives of SGI reasonable access, during regular
business hours and at such other times as are reasonably required, to the
premises of Tera.

               (b) SGI shall make available on a timely basis to Tera all
information and materials reasonably required by Tera to enable it to provide
the Tera Services. Tera shall not be liable for any claims, errors or omissions
resulting from untimely or incorrect information provided by SGI. To the extent
reasonably necessary in order to provide the Tera Services, upon reasonable
advance notice to the applicable SGI Representative (as defined below), SGI
shall give appropriate representatives of Tera reasonable access, during regular
business hours and at such other times as are reasonably required, to the
premises of SGI.

        1.4 Tera Representatives. Tera has designated the individual(s) set
forth on Schedule B for each Tera Service as its representative(s) for such Tera
Service (the "Tera Representatives") who have the authority to act on Tera's
behalf in connection with the performance of such Tera Services for which they
are the named Tera Representative, and who shall serve as the primary contact
for communications between SGI and Tera concerning the performance of such Tera
Services for which they are the named Tera Representative. No Tera
Representative has the authority to (i) amend or supplement the terms,
limitations or conditions of any Tera Service set forth on Schedule B or (ii)
agree to provide any services beyond the Tera Services described on Schedule B.

        1.5 SGI Representatives. SGI has designated the individual(s) set forth
on Schedule A for each SGI Service as its representative(s) for such SGI Service
(the "SGI Representatives") who have the authority to act on SGI's behalf in
connection with the performance of such SGI Services for which they are the
named SGI Representative, and who shall serve as the primary contact for
communications between Tera and SGI concerning

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the performance of such SGI Services for which they are the named SGI
Representative. No SGI Representative has the authority to (i) amend or
supplement the terms, limitations or conditions of any SGI Service set forth on
Schedule A or (ii) agree to provide any services beyond the SGI Services
described on Schedule A.

                                    SECTION 2
                    SERVICES, PAYMENT; INDEPENDENT CONTRACTOR

        2.1 Services to be Provided.

               (a) Unless otherwise agreed in writing by the Parties, the
Service Provider shall use commercially reasonable efforts to perform all
Services to be performed under this Services Agreement. Notwithstanding anything
to the contrary contained herein, the Service Provider shall not be in default
of its obligations to provide any Service hereunder to the extent the inability
to provide such Service arises out of the other Party's failure to perform such
tasks as are required to be performed by the other Party to enable the Service
Provider to provide such Service.

               (b) SGI and Tera agree to cooperate, to provide such information,
and to take such actions as may be reasonably required to assist each other in
accomplishing the Services, including, without limitation, in the manner
specifically set forth in Schedules A and B hereto. The Parties agree to
maintain the confidentiality of all non-public information relating to the other
Party and its affiliates regarding the Services and each Party's business
activities, except as may be required to be disclosed by law.

               (c) Any amendment, supplement, variation, alteration or
modification to any Service as described on Schedule A or B must be made in
writing and signed by an executive officer or agent of each of the Parties.

               (d) The Service Provider shall have the right to cease
temporarily for maintenance purposes the operation of the equipment or
facilities providing any Service whenever in its reasonable and good faith
judgment such action is necessary. In the event such maintenance is required,
the other Party shall be reasonably notified of such maintenance (which notice
may be given during or after any emergency maintenance). Notwithstanding the
above, the Service Provider shall give the other Party as much advance notice of
any shutdown as is practicable, but in no event less that five business days
(except in the case of an emergency as set forth above). Where written notice is
not feasible, oral notice may be given. The Service Provider shall be relieved
of its obligations to provide such Service during the period that its equipment
or facilities are shut down; provided that the Service Provider shall use all
reasonable efforts to restart such equipment or reopen such facilities as
promptly as practicable.

        2.2 Payment. Invoices for SGI Services rendered will be delivered to
Tera as provided in Schedule A for each SGI Service for which SGI will be paid,
and amounts

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charged shall be payable as provided in Schedule A. Invoices for Tera Services
rendered will be delivered to SGI as provided in Schedule B for each Tera
Service for which Tera will be paid, and amounts charged shall be payable as
provided in Schedule B. Invoiced amounts not paid when due shall be subject to
late charges for each month and portion thereof that the invoice is overdue,
with such late charges calculated at the lesser of (i) 18% and (ii) the maximum
rate allowed by applicable law.

        2.3 Independent Contractor. All Services performed by a Service Provider
under this Services Agreement shall be performed by the Service Provider as an
independent contractor, and employees of the Service Provider or any other
entities providing Services shall at all times be under the Service Provider's
sole discretion and control. Neither the Service Provider nor any other person
or entity performing any Services hereunder shall be deemed for any purpose to
be the agent, servant, employee, or representative of the other Party in the
performance of this Services Agreement. Nothing in this Services Agreement shall
be construed to mean that a Service Provider is a partner of the other Party or
a joint venturer with the other Party. The relationship of the Service Provider
to the other Party under this Services Agreement, and with respect to the
Services, shall be that of an independent contractor. The Service Provider shall
be responsible for and shall withhold or pay, or both, as may be required by
law, all taxes pertaining to the employment of its personnel and/or performance
by it of the Services. The Service Provider also assumes full responsibility for
the payment of all payroll burdens, fringe benefits and payroll taxes, whether
federal, state, municipal or otherwise, as to its employees, servants or agents
engaged in the performance of any Services.

                                    SECTION 3
                           TERM OF PARTICULAR SERVICES

        The provision of SGI Services shall commence on the date hereof and,
with respect to each SGI Service listed in Schedule A, shall terminate as set
forth in Section 6.1 below; provided, however, that (i) Tera may cancel any SGI
Service with written notice to SGI; and (ii) SGI may cancel any SGI Service in
accordance with the terms and conditions in Schedule A. The provision of Tera
Services shall commence on the date hereof and, with respect to each Tera
Service listed in Schedule B, shall terminate as set forth in Section 6.1 below;
provided, however, that (i) SGI may cancel any Tera Service with written notice
to Tera; and (ii) Tera may cancel any Tera Service in accordance with the terms
and conditions in Schedule B.

                                    SECTION 4
                                  FORCE MAJEURE

        The Service Provider shall not be liable for any interruption of
service, delay or failure to perform under this Services Agreement when such
interruption, delay or failure results from causes beyond its reasonable
control, including, but not limited to, any strikes, lockouts or other labor
difficulties, acts of any government, riot, insurrection or other

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hostilities, embargo, fuel or energy shortage, fire, flood, acts of God, wrecks
or transportation delays, or inability to obtain necessary labor, materials or
utilities. In any such event, the Service Provider's obligations hereunder and
the other Party's obligations to pay for any Service so suspended or delayed
hereunder shall be postponed for such time as the Service Provider's performance
is suspended or delayed on account thereof. The Service Provider will notify the
other Party promptly, either orally or in writing, upon learning of the
occurrence of such event of force majeure. Upon the cessation of the force
majeure event, the Service Provider will use all reasonable efforts to resume
its performance as soon as reasonably practicable. The Parties agree that the
terms of this Services Agreement shall be extended for a period of time equal to
the period of time during which the Service Provider's obligations under this
Services Agreement are suspended pursuant to this Section 4.

                                    SECTION 5
                                   LIABILITIES

        5.1 Consequential and Other Damages. The Service Provider shall not be
liable for, and the other Party expressly waives any right to recover, whether
in contract, in tort (including without limitation negligence and strict
liability), or otherwise, any punitive, exemplary, special, indirect, incidental
or consequential damages whatsoever, which in any way arise out of, relate to,
or are a consequence of, the Service Provider's performance or nonperformance
hereunder, or the provision of or failure to provide any Service hereunder,
including, but not limited to, loss of profits, business interruptions and
claims of customers.

        5.2 Limitation of Liability. In any event, the liability of the Service
Provider with respect to this Services Agreement or anything done in connection
herewith, including, but not limited to, the performance or breach hereof, or
from the sale, delivery, provisions or use of any Service or product provided
under or covered by this Services Agreement, whether in contract, tort
(including without limitation negligence or strict liability) or otherwise,
shall not exceed the aggregate of all fees then paid by the other Party to the
Service Provider hereunder.

        5.3 Obligation to Reperform. In the event of any material breach of this
Services Agreement by the Service Provider with respect to any error or defect
in the provision of any Service, the other Party shall promptly notify the
Service Provider of said breach, and the Service Provider shall, at the other
Party's reasonable request, promptly make all reasonable efforts to correct such
error or defect.

        5.4 Release and Indemnity. Except as specifically set forth in this
Services Agreement, the Party receiving Services shall indemnify and hold
harmless the Service Provider, its subsidiaries, affiliates, successors and
assigns, and its and their respective directors, officers, members,
shareholders, agents and employees (collectively, the "Service Provider
Indemnitees"), against and from any and all claims, demands, complaints,
liabilities, losses, damages and all costs and expenses arising from or relating
to (i) the use of any Service by such Party, or (ii) the presence of such Party
or its employees, agents or

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subcontractors on the Service Provider's premises; provided, however, that no
Service Provider Indemnitee shall be entitled to indemnification hereunder to
the extent its claim for indemnification shall be finally adjudged to be
attributable to its gross negligence, bad faith or willful misconduct, as may be
finally determined by a court of competent jurisdiction.

                                    SECTION 6
                                   TERMINATION

        6.1 Termination. This Services Agreement shall terminate on the earliest
to occur of (i) with respect to any individual Service, the date of termination
as provided in Schedule A or B hereto, (ii) the date on which the provision of
all Services has been terminated pursuant to Section 6.1 (i), or has been
canceled pursuant to Section 3, and (iii) the date on which this Services
Agreement is terminated pursuant to Section 6.2 below.

        6.2 Breach of Services Agreement. If any Party shall cause or suffer to
exist any material breach of any of its obligations under this Services
Agreement, including, but not limited to, any failure to deliver Services or to
make payments when due, and said Party does not cure such default within twenty
(20) days (or, in the case of any payment default, within fifteen (15) days)
after receiving written notice thereof from the non-breaching Party (unless the
Party receiving the notice of default disputes the existence of such default, in
which case the cure periods referred to above shall begin to run from and after
the date of a final decision by a court of competent jurisdiction finding that a
default exists hereunder), the non-breaching Party may terminate this Services
Agreement including the provision of Services pursuant hereto, immediately by
providing written notice of termination.

        6.3 Sums Due. In the event of a termination of this Services Agreement,
the Service Provider shall be entitled to all outstanding amounts due from the
other Party for Services provided under this Services Agreement up to the date
of termination.

        6.4 Effect of Termination. Sections 2.2, 5.1, 5.2, 5.3, 5.4, 6.3, 7.5,
7.7, 7.8 and this Section 6.4 shall survive any termination of this Services
Agreement.

                                    SECTION 7
                                  MISCELLANEOUS

        7.1 Notices. All notices or other communications made in connection with
this Services Agreement shall be in writing, except as otherwise expressly
permitted herein. Any notice or other communication in connection herewith shall
be duly given: (a) on the day of delivery, if personally delivered to the person
identified below; (b) three (3) days after mailing if mailed by certified or
registered mail, postage prepaid, return receipt requested; (c) one business day
after delivery to any overnight express courier service; and (d) on the business
day of receipt if sent by facsimile or other customary means of
telecommunication, provided receipt thereof is orally confirmed and a copy
thereof is sent in the manner provided by clause (a) or (b) hereof, addressed as
follows:

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               (a)    If to SGI:

                      Silicon Graphics, Inc.
                      2011 North Shoreline Boulevard
                      Mountain View, California 94043-1398
                      Attention:  Legal Services
                      Telecopier:  (650) 932-0652

               (b)    If to Tera:

                      Tera Computer Company
                      411 First Avenue South, Suite 600
                      Seattle, Washington 98104-2860
                      Attention: Kenneth W. Johnson
                      Telecopier: (206) 701-2218

Such addresses may be changed, from time to time, by means of a written notice
given in the manner provided in this Section. Copies delivered to outside or
in-house counsel shall not constitute notice.

        7.2 Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. Except as specifically agreed herein, no Party may assign
either this Agreement or any of its rights, interests, or obligations hereunder
without the prior written approval of the other Party; provided, however, that
without the consent of the other Party, (i) a Party may assign any or all of its
rights and obligations hereunder to any of its subsidiaries, in which event the
assigning Party shall remain fully liable for the performance of all its
obligations hereunder; and (ii) subject to the limitations of Section 16.3 of
the Asset Purchase Agreement, a successor in interest by merger, by operation of
law, or by assignment, purchase or other acquisition of all or substantially all
the business of a Party may acquire the respective rights and obligations of
such Party under this Agreement. Any prohibited assignment shall be null and
void.

        7.3 No Third-Party Beneficiaries. Except as provided in Section 5.4 with
respect to release and indemnity, nothing in this Services Agreement shall
confer any rights upon any person or entity other than the Parties, and each
such Party's respective successors and permitted assigns.

        7.4 Amendment, Waivers, Etc. No amendment, modification or discharge of
this Agreement, and no waiver hereunder, shall be valid or binding unless set
forth in writing and duly executed by an executive officer of the Party against
whom enforcement of the amendment, modification, discharge or waiver is sought.
Any such waiver shall constitute a

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waiver only with respect to the specific matter described in such writing and
shall in no way impair the rights of the Party granting such waiver in any other
respect or at any other time.

        7.5    Confidential Information; Title to Date.

               (a) Each of the Parties acknowledges that any information of the
other Party received in the course of performance under this Services Agreement
shall be confidential information and shall be subject to the restrictions on
disclosure set forth in the Mutual Nondisclosure Agreement, dated as of August
4, 1999, as amended by Amendment No. 1 thereto, dated as of December 13, 1999,
and as further amended by Section 16.2 of the Asset Purchase Agreement, between
the Company and Service Provider.

               (b) The Company acknowledges that, except as expressly provided
in the Asset Purchase Agreement, it will acquire no right, title or interest
(including without limitation any license rights or rights of use) in any
software or the licenses therefor which are owned or used by the Service
Provider, solely by reason of the Service Provider's provision of the Services
provided hereunder.

        7.6 Governing Law. THIS SERVICES AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF WASHINGTON, WITHOUT GIVING
EFFECT TO THE CONFLICT OF LAWS RULES THEREOF.

        7.7 Dispute Resolution.

               (a) Negotiation. The Parties shall attempt in good faith to
resolve any dispute arising out of or relating to this Agreement promptly by
negotiation between executives who have authority to settle the controversy and
who are at a higher level of management than the persons with direct
responsibility for administration of this contract. Any Party may give the other
Party written notice of any dispute not resolved in the normal course of
business. Within fifteen (15) days after delivery of the disputing Party's
notice, the executives of both Parties shall meet at a mutually acceptable time
and place, and thereafter as often as they reasonably deem necessary, to attempt
to resolve the dispute. All reasonable requests for information made by one
Party to the other will be honored. If the matter has not been resolved by these
persons within fifteen (15) days of the first meeting, the dispute shall be
referred to more senior executives of both Parties who have authority to settle
the dispute and who shall likewise meet to attempt to resolve the dispute.

               (b) Mediation. If the Parties are unable to resolve the matter
within thirty (30) days of the delivery of the disputing Party's notice, or if
the Parties fail to meet within twenty (20) days, the Parties shall endeavor to
settle the dispute by mediation. The Parties shall select a neutral mediator
that is acceptable to both Parties. The Parties shall have forty-five (45) days
from the date a neutral mediator is selected to gather information and perform

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discovery relating to the dispute (the "Discovery Period"). The costs of
mediation shall be split evenly by the Parties.

               (c) Litigation. If the Parties are unable to resolve the dispute
after a reasonable period of mediation, either party may seek resolution through
the judicial process, consistent with the terms of this Agreement.

               (d) Confidentiality. All discussions and negotiations pursuant to
this Section are confidential and shall be treated as compromise and settlement
discussions for purposes of the applicable rules of evidence. Notwithstanding
the foregoing, materials gathered during the Discovery Period shall not be
excluded from any subsequent litigation in the event that mediation is not
successful.

        7.8 Schedules. All Schedules to this Services Agreement and all terms
and conditions contained therein shall be construed with and as integral parts
of this Services Agreement to the same extent as if they were set forth verbatim
herein.

        7.9 Entire Agreement. This Services Agreement constitutes the entire
agreement and supersedes all prior agreements and understandings, both written
and oral, between the Parties with respect to the subject matter hereof.

        7.10 Counterparts. This Services Agreement maybe executed in
counterparts, each of which shall be deemed an original and all of which shall
together constitute one and the same instrument.

        7.11 Headings. The headings contained in this Services Agreement are for
purposes of convenience only and shall not affect the meaning or interpretation
of this Services Agreement.

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        IN WITNESS WHEREOF, the Parties have executed this Services Agreement as
of the date first written above.

                                            SILICON GRAPHICS, INC.

                                            By:
                                               ---------------------------------
                                               Its:
                                                   -----------------------------

                                            TERA COMPUTER COMPANY

                                            By:
                                               ---------------------------------
                                               Its:
                                                   -----------------------------

[Transition Services Agreement]

                                       10<PAGE>   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.

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               "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.

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               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.

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               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

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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
<PAGE>   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 8-K, SGI 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
<PAGE>   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
<PAGE>   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
<PAGE>   9

               (a)    If to SGI:

                      Silicon Graphics, Inc.
                      2011 North Shoreline Boulevard
                      Mountain View, California  94043-1389
                      Attention:  Legal Services
                      Telecopier:  (650) 932-0652

               (b)    If to Tera:

                      Tera Computer Company
                      411 First Avenue South, Suite 600
                      Seattle, Washington  98104-2860
                      Attention:  Kenneth W. Johnson
                      Telecopier:  (206) 701-2218

                      with a copy to:

                      Robert J. Moorman
                      Stoel Rives LLP
                      900 SW Fifth Avenue, Suite 2600
                      Portland, Oregon  97204
                      Telecopier:  (503) 220-2480

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
<PAGE>   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
<PAGE>   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
<PAGE>   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

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