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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JUNE 23, 2006
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SILICON GRAPHICS, INC.
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(Exact Name of Registrant as Specified in Charter)
DELAWARE 001-10441 94-2789662
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(State or Other Jurisdiction (Commission File Number) (IRS Employer
of Incorporation) Identification No.)
1500 CRITTENDEN LANE
MOUNTAIN VIEW, CA 94043-1351
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(Address of Principal Executive (Zip Code)
Offices)
Registrant's telephone number, including area code: (650) 960-1980
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N/A
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On June 23, 2006, Silicon Graphics, Inc. ("SGI") entered into a Global
Settlement Agreement (the "Settlement Agreement") with representatives of (i)
the official committee of unsecured creditors in the SGI's chapter 11 cases (the
"Creditors' Committee"), (ii) the lenders under SGI's DIP Facility (the "DIP
Lenders") and certain holders of Senior Secured Convertible Notes (the "6.50%
Plan Sponsors"), and (iii) Lampe Conway & Co., LLC ("Lampe Conway"), the largest
holder of the 6 1/8% Convertible Subordinated Debentures due 2011 (the
"Subordinated Debentures"). Pursuant to the Settlement Agreement, SGI will
settle certain claims and disputes relating to SGI's previously announced
financial reorganization process (the "Global Settlement") and the Creditors'
Committee, the DIP Lenders, the 6.50% Plan Sponsors and Lampe Conway will
support the Global Settlement. The Settlement Agreement requires the parties to
support and not object to an amended plan of reorganization (the "Plan") to be
filed with the Court on the terms and subject to the conditions set forth in the
term sheet ("Plan Term Sheet") annexed to the Settlement Agreement, as it may be
amended. Specifically, subject to the term of the Settlement Agreement and the
Plan, the 6.50% Plan Sponsors and Lampe Conway will vote in favor of the Plan.
In addition, Lampe Conway and the Creditors' Committee will withdraw their
respective objections to SGI's DIP Facility.
The Plan Term Sheet provides, among other things, that under the Plan
SGI's unsecured creditors will collectively receive $9 million in cash. Holders
of SGI's Subordinated Debentures will receive $1.2 million of cash in the
aggregate and will have the opportunity to acquire, in exchange for claims and
cash, their pro rata share of 700,000 shares of new equity to be issued by SGI
upon emergence from chapter 11 by participating in a previously announced $50
million rights offering (the "Rights Offering"), as detailed in the Plan Term
Sheet. Lampe Conway shall have the option to purchase the shares not otherwise
acquired by those holders of the Subordinated Debentures who fail to participate
in the Rights Offering. The Plan Term Sheet does not contain a complete
description of all of the terms and conditions that will be contained in the
Plan that will be filed by SGI. Accordingly, the foregoing description of the
anticipated terms of the Plan is subject to, and qualified in its entirety by
reference to the Plan, which SGI anticipates filing with the United States
Bankruptcy Court for the Southern District of New York on or about June 30,
2006.
The Settlement Agreement may be terminated by the written consent of
the parties, if the Plan has not been confirmed by October 31, 2006, or upon the
material breach of the Settlement Agreement.
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The foregoing description of the Settlement Agreement and the Plan Term
Sheet is qualified in its entirety by reference to the Settlement Agreement and
Plan Term Sheet, which are incorporated herein by reference and attached hereto
as Exhibit 10.1.
On June 27, 2006, the Company issued a press release announcing that it
had entered into the Global Settlement. A copy of the press release is
incorporated herein by reference and attached hereto as Exhibit 99.1.
In addition to historical information, this Current Report on Form 8-K
contains "forward-looking statements" within the meaning of the Securities Act
of 1933, as amended, and the Securities Exchange Act of 1934, as amended. These
statements involve risks and uncertainties that could cause the Company's actual
results to differ materially from the future results expressed or implied by the
forward-looking statements. All statements other than statements of historical
facts included in this Current Report on Form 8-K, including statements
regarding the Company's future financial position and results, are
forward-looking statements. Factors that might cause such a difference in
results include, but are not limited to: the effects of our chapter 11 filing;
our ability to maintain adequate liquidity; our ability to obtain and maintain
normal terms with customers, suppliers and service providers; our ability to
continue as a going concern; our ability to operate pursuant to the terms of our
credit agreement; our ability to obtain Court approval and any other required
approvals with respect to motions in the chapter 11 case prosecuted by us from
time to time; our ability to develop, prosecute, confirm and consummate one or
more plans of reorganization with respect to our chapter 11 case; risks
associated with third parties seeking and obtaining Court approval to either
terminate or shorten the exclusivity period that we have to propose and confirm
one or more plans of reorganization; risks associated with third parties seeking
and obtaining Court approval to appoint a chapter 11 trustee; risks, although
not likely, associated with third parties seeking and obtaining Court approval
to convert the chapter 11 filing to a chapter 7 filing; our ability to maintain
contracts that are critical to our operation; our ability to conclude our
exploration of strategic alternatives; risks associated with the volatility of
our stock price; risks associated with the timely development, production and
acceptance of new products and services; increased competition; dependence on
third party partners and suppliers; the failure to achieve expected product mix
and revenue levels; failure to manage costs and generate improved operating
results and cash flows; failure to maintain compliance with debt covenants; and
failure to maintain adequate cash resources for the operation of the business.
Additionally, due to material uncertainties, it is not possible to predict the
length of time we will operate under chapter 11 protection, the outcome of the
proceeding in general, whether we will continue to operate under our current
organizational structure, or the effect of the proceeding on our businesses and
the interests of various creditors and security holders.
All information set forth herein is current as of the date of this
Current Report on Form 8-K. The Company undertakes no duty to update any
statement in light of new information or future events. For further information
regarding risks and uncertainties associated with the Company's business, please
refer to the "Risk Factors" section of the
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Company's SEC filings, including, but not limited to, its Form 10-Q for the
quarter ended December 30, 2005.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
Exhibit
No. Description
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10.1 Global Settlement Agreement dated June 23, 2006.
99.1 Press Release dated June 27, 2006.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
Silicon Graphics, Inc.
Dated: June 27, 2006 By: /s/ Barry Weinert
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Barry Weinert
Vice President and
General Counsel
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EXHIBIT INDEX
Exhibit
No. Description
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10.1 Global Settlement Agreement dated June 23, 2006.
99.1 Press Release dated June 27, 2006.
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