<PAGE> 1
As filed with the Securities and Exchange Commission on September __, 1996
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
TERA COMPUTER COMPANY
(Exact name of registrant as specified in charter)
WASHINGTON 93-0962605
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2815 Eastlake Avenue East
Seattle, WA 98102-3027
(206) 325-0800
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
James E. Rottsolk, President
Tera Computer Company
2815 Eastlake Avenue
Seattle, WA 98102-3027
(206) 325-0800
(Name, address, including zip code, and
telephone number, including area code, of agent for service)
Copy to:
Kenneth W. Johnson
Stoel Rives LLP
One Union Square, 36th Floor
Seattle, WA 98101-3197
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this registration becomes effective
If the only securities being registered on this Form are to be offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with a dividend or
interest reinvestment plan, check the following box. /x/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
1 Page 1 of 23
<PAGE> 2
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------
Proposed Proposed
Maximum Maximum Amount
Amount Offering Aggregate of
Title of Each Class of to Be Price Per Offering Registration
Securities to Be Registered (1) Registered Security (2) Price (2) Fee
- ------------------------------------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Common Stock, $.01 par value(3)(7) 3,787,800 $ 4.50 $17,045,100 $ 5,877.62
Common Stock Purchase Warrants(4) 1,180,000 $ 1.375 $ 1,622,500 $ -0-
Common Stock issuable upon exercise
of Sales Agent's Warrant(5)(6)(7) 378,780 $ 4.50 $ 1,704,510 $ 587.76
Warrants issuable upon exercise of
Sales Agent's Warrant(4)(5) 118,000 $ 1.375 $ 162,250 $ -0-
----------- ----------- ----------- -----------
Totals $20,534,360 $ 6,465.38
=========== ===========
- ------------------------------------------------------------------------------------------------
</TABLE>
(1) All shares and Warrants are being registered for sale by the Selling
Shareholders (including H.J. Meyers & Co., Inc.) and their respective
assigns and transferees on a delayed or continuous basis pursuant to
Rule 415 under the Securities Act of 1933.
(2) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933. The
calculation of the registration fee is based on the last sale prices
for the Common Stock and Warrants on September 23, 1996 as reported on
the Nasdaq SmallCap Market.
(3) Includes an aggregate of 2,360,000 shares of Common Stock held by the
Selling Shareholders upon conversion of the Series A Convertible
Preferred Stock and an aggregate of 1,427,800 shares of Common Stock
issuable upon exercise of the Warrants.
(4) Pursuant to the last sentence of Rule 457(g), there is no separate
registration fee for the Warrants.
(5) In connection with the 1996 Private Placement, the Company issued a
Sales Agent's Warrant to the H.J. Meyers & Co., Inc., for 118,000
units, with an exercise price of $6.80 per unit, each unit consisting
of two shares of Series A Convertible Preferred Stock and one Warrant.
(6) Includes 236,000 shares of Common Stock issuable upon conversion of
the Series A Convertible Preferred Stock issuable upon exercise of the
Sales Agent's Warrant and 142,780 shares of Common Stock issuable upon
exercise of the Warrants issuable upon exercise of the Sales Agent's
Warrant.
(7) An indeterminate number of additional shares of Common Stock are to be
registered hereunder, as provided in the Warrants and the Warrant, in
the event provisions against dilution therein become operative.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said section 8(a),
may determine.
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<PAGE> 3
PROSPECTUS
TERA COMPUTER COMPANY
4,166,580 Shares of Common Stock
1,298,000 Common Stock Purchase Warrants
The Redeemable Common Stock Purchase Warrants (the "Warrants") and the
Common Stock, $.01 par value ("Common Stock"), including shares of Common Stock
issuable upon exercise of the Warrants, of Tera Computer Company (the "Company")
offered hereby (the "Securities") may be sold by certain shareholders of the
Company (the "Selling Shareholders") from time-to-time in the over-the-counter
market or otherwise. The Securities may be offered or sold from time to time by
the Selling Shareholders at market prices then prevailing, in negotiated
transactions or otherwise. Brokers or dealers will receive commissions or
discounts from Selling Shareholders in amounts to be negotiated immediately
prior to the sale. See "Selling Shareholders" and "Plan of Distribution." The
Securities were sold by the Company to the Selling Shareholders in a private
offering completed in July 1996 (the "1996 Private Placement"), including
Securities issuable upon exercise of Sales Agent's Warrant sold to H.J. Meyers &
Co., Inc., which acted as the Company's Sales Agent in the 1996 Private
Placement. The Company will not receive any of the proceeds from the resale of
the Common Stock or Warrants, although it will receive the proceeds from any
exercise of the Warrants and the Sales Agent's Warrant.
The terms of the Warrants are identical to the warrants which the
Company has issued publicly and are traded on the Nasdaq SmallCap Market. Each
Warrant entitles the registered holder thereof to purchase, at any time, 1.21
shares of Common Stock at an exercise price of $7.19 (a per share price of
$5.94) through March 24, 1998, and 1.25 shares of Common Stock at an exercise
price of $8.43 (a per share price of $6.74) thereafter through September 24,
2000. These exercise prices and exercise ratios reflect an adjustment pursuant
to antidilution provisions due to the Company's 1996 Private Placement and are
subject to further adjustment under certain circumstances. The Warrants are
subject to redemption by the Company at any time at $0.05 per Warrant on 30
days' prior written notice to the Warrantholders (i) if the closing bid price of
the Common Stock as reported on the National Association of Security Dealers,
Inc. Automated Quotation System ("Nasdaq") averages in excess of 150% of the
current exercise price of the Warrants for a period of 20 consecutive trading
days ending within 15 days prior to the notice of redemption, or (ii) with the
prior written consent of H.J. Meyers & Co., Inc.
The Common Stock and the Warrants are listed on the Nasdaq SmallCap
Market under the symbols TERA and TERAW, respectively. On September 23, 1996,
the closing prices for the Common Stock and the Warrants were $4.50 and $1.375,
respectively.
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 4 FOR CERTAIN FACTORS RELATED TO THIS OFFERING.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
No person has been authorized to give any information or to make any
representations in connection with this offering other than those contained in
this Prospectus. This Prospectus does not constitute an offering in any
jurisdiction in which such offering may not lawfully be made. Neither the
delivery of this Prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as to which information has
been given herein.
The date of this Prospectus is _____________,1996.
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<PAGE> 4
THE COMPANY
The Company was formed to design, develop and market high performance
general purpose parallel computer systems. Tera's Multithreaded Architecture
System ("MTA system") is designed to address a wide range of scientific and
engineering applications, such as simulation and visualization of complex
mechanical and biochemical systems, as well as emerging commercial applications,
such as database mining, information-ondemand and computer-aided design and
visualization. The Company believes that its MTA system architecture represents
a significant breakthrough in high performance computing that will enable the
Company to offer systems with several times the price/performance of currently
available commercial high performance computer systems. The Company believes
that the MTA system overcomes the limitations of currently available commercial
architectures by delivering a general purpose parallel, easy-to-program,
scalable, very high performance computer system. The MTA system is designed to
combine the very high computational price/performance levels of massively
parallel processing with the ease of use of conventional shared memory
programming. Typical MTA system configurations are expected to sell for between
$5 million and $40 million.
The Company has substantially completed the design of its hardware
components for inclusion in its initial prototype and has contracted with
third-party suppliers for the manufacture of these components, most of which
have been manufactured. The Company expects to complete its initial prototype in
1996 and, assuming receipt of a purchase order, to deliver its first production
system within six months thereafter. See "Risk Factors Development Status of the
MTA System; No Prototype" and "- Manufacturing Risks; Reliance on Third Party
Sole Source Suppliers."
The Company was incorporated in Washington in December 1987. The
Company's principal executive offices are located at 2815 Eastlake Avenue East,
Seattle, Washington 98102-3027, and its telephone number is (206) 325-0800.
--------------------
"Tera" and "MTA" are trademarks of the Company. This Prospectus also
contains and incorporates trademarks of other companies.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), are incorporated in this
Prospectus by reference:
(a) The Company's Annual Report on Form 10-KSB for the year ended
December 31, 1995;
(b) The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1996 and June 30, 1996;
(c) The Company's Current Report on Form 8-K, dated July 15,
1996; and
(d) The description of the Company's Common Stock contained in
the Company's Registration Statement on Form SB-2 (Registration No.
33-95460-LA), including any amendment or report filed for the purpose
of updating such description, as incorporated by reference in the
Company's Registration Statement on Form 8-A (Registration No.
0-26820), including the amendment thereto on Form 8-A/A filed by the
Company.
All reports and other documents subsequently filed by the Company
pursuant to sections 13(a), 13(c), 14, and 15(d) of the Exchange Act prior to
the termination of the offering shall be deemed to be incorporated by reference
herein and to be a part hereof from the date of the filing of such reports and
documents.
2 Page 4 of 23
<PAGE> 5
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-3 under the Securities Act of 1933, as amended (the "Securities Act")
with respect to the securities offered hereby. This Prospectus, which
constitutes a part of the Registration Statement, omits certain of the
information contained in the Registration Statement and the exhibits and
schedules thereto on file with the Commission pursuant to the Securities Act and
the rules and regulations of the Commission thereunder. For further information
with respect to the Company and the Securities, reference is made to the
Registration Statement and the exhibits and schedules thereto. The Registration
Statement, including exhibits thereto, may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street N.W., Washington, D.C. 20549, and at the Commission's Regional
Offices at 7 World Trade Center, Suite 1300, New York, New York 10048, and
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661,
and copies may be obtained at the prescribed rates from the Public Reference
Section of the Commission at its principal office in Washington, D.C. Statements
contained in this Prospectus as to the contents of any contract or other
document referred to are not necessarily complete and in each instance reference
is made to the copy of such contract or other document filed as an exhibit to
the Registration Statement, each such statement being qualified in its entirety
by such reference.
The Company's Common Stock and outstanding Warrants are registered
with the Commission under Section 12(g) of the Exchange Act and, in accordance
therewith, the Company files reports, proxy statements, and other information
with the Commission. Such filings can be inspected and copied at the
Commission's public reference rooms at the above-referenced addresses, at
prescribed rates, or from the Commission's Website at "http://www.sec.gov."
The Company hereby undertakes to provide without charge to each person
to whom a copy of this Prospectus has been delivered, including any beneficial
owner, on the written or oral request of any such person, a copy of any or all
of the incorporated documents, other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference therein. Requests shall
be directed to Tera Computer Company, 2815 Eastlake Avenue East, Seattle, WA
98102-3027, Attention: President (telephone number (206) 325-0800). The
information relating to the Company contained in this Prospectus does not
purport to be comprehensive and should be read together with the information
contained in the incorporated documents.
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<PAGE> 6
RISK FACTORS
In addition to the other information in or incorporated by reference
into this Prospectus, each prospective investor should carefully consider the
following factors in evaluating the Company and its business before purchasing
the securities offered hereby. No investor should purchase the Securities unless
such investor can afford a complete loss of his or her investment. This
Prospectus contains and incorporates by reference forwardlooking statements that
involve risks and uncertainties. The Company's actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including but not limited to those set forth in the
following Risk Factors and elsewhere in this Prospectus.
DEVELOPMENT STAGE ENTERPRISE; HISTORY OF LOSSES. The Company is a development
stage enterprise that had an accumulated loss of approximately $22.3 million as
of June 30, 1996. The Company has experienced net losses in each year of
operations and expects to incur substantial further losses while it builds its
MTA system prototype and commences production, and possibly thereafter. The
Company has had no revenue or earnings and does not expect to recognize revenue
from the sale of its initial MTA system sooner than the fourth quarter of 1996,
if ever. Whether the Company will achieve revenue or earnings will depend upon a
number of factors, including its ability to design, develop and contract for the
manufacture of and market the MTA system and to achieve broad market acceptance
thereof. In addition, profitability will be dependent on, among other things,
the level of revenue in any given period, the terms and conditions of sale or
lease for an MTA system, the system model or models sold, and the Company's
expense levels and manufacturing costs. There can be no assurance that the
Company will be successful in completing the development of, and delivering and
receiving payments for, the MTA system, or that it will be able to generate any
sales or achieve a profitable level of operations in the future.
DEVELOPMENT STATUS OF THE MTA SYSTEM; NO PROTOTYPE. The development of a new
very high performance computer system is a lengthy and technically challenging
process and requires a significant investment of capital and other resources.
Several companies in this market have recently experienced extreme financial
difficulty, including Thinking Machines Corporation, Cray Computer Corporation,
Kendall Square Research Corporation and Supercomputer Systems, Inc. Since its
inception through June 30, 1996, the Company has expended approximately $40.3
million to design and develop the MTA system. The hardware development effort
has included design of integrated circuits, packaging and cooling systems and
at-speed testing equipment. The software development effort has included design
of compilers, an operating system and input-output software technology. The MTA
system has been subject only to computer simulation, however, and the Company
has not yet built its initial prototype. While most of the hardware components
of the MTA system have been manufactured and tested, such components and
software remain to be integrated successfully into a full system.
Assuming an MTA system prototype can be successfully developed,
modifications to the hardware components, software and the integrated system
still may be required. Development of system software is a difficult process,
and there can be no assurance that the Company will be able to meet all of the
technical challenges required to integrate and complete an MTA system that
satisfies both internal and commercially acceptable performance specifications.
Significant delays in completing the various hardware components or software, or
in integrating the full system, would materially and adversely affect the
Company's business and results of operations. Even if the Company is successful
in developing its prototype, there can be no assurance that the Company's
products will be commercially successful.
MANUFACTURING RISKS; RELIANCE ON THIRD PARTY SOLE SOURCE SUPPLIERS. The Company
intends to subcontract the manufacture of substantially all of its hardware
components, including integrated circuits, printed circuit boards, flex circuits
and power supplies, the packaging of semiconductor components, and the assembly
of printed circuit boards, on a sole source basis to third party suppliers, and
there can be no assurance that such suppliers will be able to manufacture,
package and assemble the components to the Company's design specifications.
Manufacturing difficulties and limited yields, particularly of gallium arsenide
("GaAs") integrated circuits and advanced printed circuit boards and flex
circuits, could materially and adversely affect the
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<PAGE> 7
Company's ability to complete its prototype and deliver the MTA system. The
manufacture of integrated circuits, and in particular the manufacture of GaAs
integrated circuits, is a difficult and complex process. Minute impurities,
difficulties in the fabrication process, defects in the masks used to print
circuits on wafers or other factors can cause a substantial percentage of wafers
to be rejected or numerous die on each wafer to be non-functional. The Company's
suppliers may experience problems in achieving acceptable manufacturing yields
for these or other reasons, resulting in substantial delays in the delivery of
necessary hardware components to the Company and unacceptably high prices for
those components, with a resulting loss of profitability or loss of
competitiveness for the Company's products. The Company has experienced such
yield problems already and these failures have forced the Company to redesign
certain components for manufacture by alternative suppliers. This has caused
delays in the fabrication of the Company's prototype as well as increased
demands upon the Company's financial resources. There can be no assurance that
the Company's efforts to obtain components in a timely manner that meet its
design specifications will be successful.
Some of the Company's key suppliers are small companies with limited
financial and other resources, and may be more likely to experience financial
difficulties than larger, well established companies. Any or all of the
Company's suppliers may make strategic changes in their product lines or
services which may result in the delay or suspension of manufacture of the
Company's components or systems. In the event of a reduction or interruption of
supply of the Company's components, it could take the Company a considerable
period of time to identify and qualify alternative suppliers to redesign its
products as necessary and recommence manufacture. The Company currently uses
chip packaging services of Unisys Corporation but believes that it will need to
find an alternate provider of such packaging services. The Company's inability
to obtain sufficient sole or limited source components as required, or to
develop alternative sources of components or packaging services if and as
required in the future, could result in the Company finding itself without a
source of supply for its components or packaged components; this could
materially impair the Company's ability to deliver its products, which would
materially and adversely affect the Company's business and results of
operations.
FUTURE CAPITAL NEEDS. The Company has raised additional equity capital through a
private placement concluded in July 1996 which it believes will be sufficient
when combined with its existing capital resources and revenue it anticipates
receiving from the Department of Defense's Advanced Research Projects Agency
("ARPA") to satisfy its working capital requirements for ongoing operations
through 1996. If the Company obtains an order for the sale of an MTA system,
however, the Company anticipates that it may be required to raise additional
capital in order to finance inventory and accounts receivables. The Company's
actual capital needs, however, will depend upon numerous factors, including the
progress of the Company's research and development activities, the ability of
third-party suppliers to meet product commitments, the cost of increasing the
Company's sales and marketing activities, the amount of cash generated from
operations or government contracts, and the timing and terms of purchase orders
for MTA systems, none of which can be predicted with certainty. There can be no
assurance that the Company will not require additional capital sooner than
currently anticipated. In addition, the Company is unable to predict the precise
amount of future capital that it will require. There can be no assurance that
any additional financing will be available to the Company on acceptable terms,
or at all, when required by the Company. Consequently, the Company could be
required to significantly reduce or suspend its operations, seek a merger
partner or sell additional securities on terms that are highly dilutive to
current investors. The inability to obtain financing could materially and
adversely affect the Company's business and results of operations.
MARKETING RISKS; GOVERNMENT FUNDING AND REGULATION. The Company's first sales
targets will be U.S. and foreign government agencies and research laboratories,
which constitute more than one-half of the market for very high performance
computer systems. The United States government historically has facilitated the
development of, and has constituted a market for, new and enhanced very high
performance computer systems. A change of policy by the United States government
or foreign governments that results in a reduction of, or delays in, funding of
certain high technology programs employing high performance computing could have
a major impact on the market for very high performance computer systems, and
would materially and adversely affect the Company's business, results of
operations and need for capital.
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<PAGE> 8
Most of the Company's potential customers already own or lease very
high performance computer systems. Some of the Company's competitors may offer
trade-in allowances or discounts to potential customers, and the Company may not
be able to match such sales incentives. The Company may be required to provide
discounts in order to make sales or be required to finance the leasing of its
products, which would result in a deferral of the Company's receipt of cash for
such systems. These developments could materially and adversely affect the
Company's business and results of operations.
The United States government regulates the export of high performance
computing systems such as the anticipated MTA system. There can be no assurance
that the U.S. government will grant any necessary export licenses for the sale
of MTA systems to foreign buyers. The Company's prospects for growth will depend
in part on its ability to obtain export licenses for foreign sales, the delay or
denial of which could materially and adversely affect the Company's business and
results of operations.
In order to expand its market beyond the very high performance
scientific market, and particularly beyond government agencies and research
laboratories, to engineering and other commercial markets, the Company must be
able to attract independent software vendors ("ISV's") to port their software
application programs so that they will run on the MTA system. There can be no
assurance that the Company will be able to induce ISV's to port their
applications, and the failure to do so could materially and adversely affect the
Company's business and results of operations.
MANAGEMENT OF GROWTH; DEPENDENCE ON KEY PERSONNEL. If the Company is successful
in developing and marketing the MTA system, the Company believes it could
undergo a period of rapid growth which could place a significant strain on its
management, financial and other resources. The Company's ability to manage its
growth will require it to continue to improve its operational and financial
systems and to motivate and effectively manage its employees. If the Company
grows, it will have to implement new financial, budgeting, management
information and internal control systems. The success of the Company will depend
on the ability of management to implement effectively these changes and to
manage the Company's operations over the long term. Several senior management
personnel have not yet been identified, including a chief financial officer and
a chief sales executive. The Company's success also will depend in large part
upon its ability to attract and retain highly skilled technical personnel to
provide technological depth and support, to complete and enhance its first
products and to develop new products. In addition, marketing and sales personnel
will be needed. Competition for highly skilled management, technical, marketing
and sales personnel is intense. There can be no assurance that the Company will
be successful in attracting and retaining key management, technical, marketing
and sales personnel, and its failure to do so would materially and adversely
affect the Company's business and results of operations.
The Company is dependent on Burton J. Smith, the Company's Chairman of
the Board and Chief Scientist, and James E. Rottsolk, the Company's Chief
Executive Officer, and the loss of services of either could have a material
impact on the ability of the Company to achieve its business objectives. The
Company has key man life insurance policies on the lives of Messrs. Smith and
Rottsolk in the amount of $2 million and $1 million, respectively. The Company
has no employment contracts with either Mr. Smith or Mr. Rottsolk or with any
other employee.
QUARTERLY PERFORMANCE MAY VARY SIGNIFICANTLY. In the event that the Company is
able to attain broad market acceptance of the MTA system, one or a few system
sales may account for a substantial percentage of the Company's quarterly and
annual revenue because of the anticipated high average sales price of the MTA
system models and the timing of purchase orders and product acceptances. Because
a number of the Company's prospective customers receive funding from the U.S. or
foreign governments, the timing of orders from such customers may be subject to
the appropriation and funding schedules of the relevant government agencies. The
timing of orders and shipments also could be affected by other events outside
the control of the Company, such as changes in levels of customer capital
spending, the introduction or announcement of competitive products, the
availability of components, currency fluctuations and international conflicts or
economic crises. Because of these
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<PAGE> 9
factors, revenue, expenses, net income or loss and cash flow are likely to
fluctuate significantly from quarter to quarter.
RAPID TECHNOLOGICAL CHANGE AND NEW PRODUCTS. The market for the Company's
products is characterized by rapidly changing technology, accelerated product
obsolescence and rapidly changing industry standards. The Company's success will
depend upon its ability to complete development of the MTA system and to
introduce new products and features in a timely manner to meet evolving customer
requirements. There can be no assurance that the Company will be successful in
these efforts. The Company's business and results of operations will be
materially and adversely affected if the Company incurs delays in developing its
products or if such products do not gain broad market acceptance. In addition,
there can be no assurance that products or technologies developed by others will
not render the Company's products or technologies noncompetitive or obsolete.
COMPETITION. The Company's competitors can be divided into two general
categories: established companies that are well-known in the high performance
computer market and new entrants capitalizing on developments in parallel
processing and increased computer performance through networking.
The high performance computer market is highly competitive and is
dominated by Cray Research. Other participants in the market include IBM
Corporation ("IBM"), Intel Corporation ("Intel"), and foreign companies such as
Fujitsu, Ltd., Hitachi, Ltd., and NEC Corporation. Each of these competitors has
broader product lines and substantially greater research, engineering,
manufacturing, marketing and financial resources than the Company.
A number of companies, including IBM, Intel, Silicon Graphics, Inc.,
Cray Research, Fujitsu Ltd. and Convex Computer Corporation, have developed or
plan to develop massively parallel systems for the high performance computer
market. Although to date this kind of system architecture has been limited in
applicability and difficult to program, a breakthrough in architecture or
software technology could change this situation. There can be no assurance that
such a breakthrough will not occur, and such an advance would materially and
adversely affect the Company's business and results of operations.
There can be no assurance that the performance of the MTA system will
be competitive with the computer systems offered by the Company's competitors or
that the Company will be able to compete successfully over time against new
entrants or innovative competitors at the lower end of the market. Furthermore,
periodic announcements by the Company's competitors of new high performance
computer systems and price adjustments may materially and adversely affect the
Company's business and results of operations. The market has experienced a
recent consolidation as Convex Computer Corporation was absorbed by
Hewlett-Packard in 1995, Cray Research was acquired by Silicon Graphics, Inc. in
1996, and Intel has stated that it would cease directly marketing high
performance computer systems.
PROPRIETARY RIGHTS. The Company relies on a combination of copyright and trade
secret protection, nondisclosure agreements and licensing arrangements to
establish, protect and enforce its proprietary rights. Despite the Company's
efforts to safeguard and maintain its proprietary rights, there can be no
assurance that the Company will be successful in doing so or that the Company's
competitors will not independently develop or patent technologies that are
substantially equivalent or superior to the Company's technologies.
Although the Company is not a party to any present litigation
regarding proprietary rights, there can be no assurance that third parties will
not assert intellectual property claims against the Company in the future. Such
claims, if proved, could materially and adversely affect the Company's business
and results of operations. In addition, although any such claims may ultimately
prove to be without merit, the necessary management attention to and legal costs
associated with litigation or other resolution of such claims could materially
and adversely affect the Company's business and results of operations.
7 Page 9 of 23
<PAGE> 10
The laws of certain foreign countries do not protect intellectual
property rights to the same extent or in the same manner as do the laws of the
United States. Although the Company continues to implement protective measures
and intends to defend its proprietary rights vigorously, there can be no
assurance that these efforts will be successful.
SHARES ELIGIBLE FOR FUTURE SALE. Sale of substantial amounts of the Company's
Common Stock or Warrants in the public market or the prospect of such sales
could materially and adversely affect the market price of the Common Stock and
Warrants. As of September 20, 1996, the Company had outstanding 3,936,843 shares
of Common Stock and Warrants to purchase 3,071,461 shares of Common Stock. In
addition, as of such date, the Company had outstanding options under its option
plans to purchase an aggregate of 1,840,806 shares of Common Stock and had
granted H.J. Meyers & Co., Inc., an investment banking firm, the right to
purchase 170,000 shares of Common Stock and 85,000 Warrants exercisable for
102,850 shares of Common Stock (the "Representative's Warrant") and the right to
purchase 236,000 shares of Series A Convertible Preferred Stock, convertible
into 236,000 shares of Common Stock, and 118,000 Warrants exercisable for
142,780 shares of Common Stock (the "Sales Agent's Warrant"). Substantially all
of the stock options to purchase Common Stock and 1,996,823 shares of the
outstanding Common Stock are subject to lockup agreements under which the
holders of such shares and options have agreed that, until March 1997, they will
not sell, assign, hypothecate or pledge any of such shares of Common Stock of
the Company owned by them, directly or indirectly, except with the prior written
consent of H.J. Meyers & Co., Inc. Each employee of the Company is permitted,
however, to sell up to 2,000 shares of Common Stock free of such lockup
restrictions. H.J. Meyers & Co., Inc., in its discretion, may shorten or waive
entirely the lock-up period either for individual shareholders or all
shareholders. All of the shares purchased under the stock option plans are
available for sale in the public market, subject in some cases to volume and
other limitations, including the lock-up agreements referred to above.
Sales in the public market of substantial amounts of Common Stock
(including sales in connection with an exercise of certain registration rights
by one or more holders of approximately 1,705,000 shares of Common Stock) or the
perception that such sales could occur could depress prevailing market prices
for the Common Stock and Warrants. The existence of the Warrants, the
Representative's Warrant, the Sales Agent's Warrant and any other options or
warrants may prove to be a hindrance to future equity financing by the Company.
Further, the holders of such warrants and options may exercise them at a time
when the Company would otherwise be able to obtain additional equity capital on
terms more favorable to the Company.
POSSIBLE VOLATILITY OF STOCK PRICE. The trading price of the Company's Common
Stock and Warrants could be subject to significant fluctuations in response to
variations in quarterly operating results, changes in analysts' estimates,
announcements of technological innovations by the Company or its competitors,
general conditions in the very high performance computer industry and other
factors. In addition, the stock market is subject to price and volume
fluctuations that affect the market prices for companies in general, and small
capitalization, high technology companies in particular, and are often unrelated
to their operating performance.
REDEMPTION OF WARRANTS. The Warrants are subject to redemption at $0.05 per
Warrant on 30 days' prior written notice to the Warrantholders (i) if the
closing bid price of the Common Stock as reported on Nasdaq averages in excess
of 150% of the then current exercise price of the Warrants over a period of 20
consecutive trading days ending within 15 days of the notice of redemption, or
(ii) with the prior written consent of H.J. Meyers & Co., Inc. In the event the
Company elects to redeem the Warrants, such Warrants would be exercisable until
the close of business on the date fixed for redemption in such notice. If any
Warrant called for redemption is not exercised by such date, it will cease to be
exercisable and the holder will be entitled only to the redemption price. If the
Company chooses to exercise such right to redeem at a time which requires the
consent of H.J. Meyers & Co., Inc., H.J. Meyers & Co., Inc. may use its sole
discretion in determining whether to grant or withhold such consent. H.J. Meyers
& Co., Inc. is under no obligation to grant or withhold such consent under any
circumstances, regardless of the potential effect of such decision on the
Company, its shareholders or the Warrantholders. There can be no assurance that
if the Company chooses to exercise its right
8 Page 10 of 23
<PAGE> 11
to redeem the Warrants at a time that is not advantageous to the holders of the
Warrants, H.J. Meyers & Co., Inc. will withhold its consent to such redemption,
or that if the Company chooses to exercise its right to redeem the Warrants at a
time that is advantageous to the Company and the shareholders, H.J. Meyers &
Co., Inc. will grant such consent.
POSSIBLE ILLIQUIDITY OF TRADING MARKET; REDUCTION IN PUBLIC FLOAT. The Common
Stock and the Warrants are quoted on the Nasdaq SmallCap Market (the "Market").
The Market may be significantly less liquid than the Nasdaq National Market. The
number of shares of Common Stock and Warrants available for resale in the
trading market is limited because of trading restrictions on shares of Common
Stock and Warrants owned by affiliates and the lockup agreements. Moreover, if
the Company should continue to experience losses from operations, it may be
unable to maintain the standards for continued quotation on the Market, and the
Common Stock and the Warrants could be subject to removal therefrom. If such
removal were to occur, trading, if any, in the Common Stock and the Warrants
henceforth would be conducted in the over-the-counter market on an electronic
bulletin board established for securities that do not meet the listing
requirements for the Market, or in what are commonly referred to as the "pink
sheets." As a result, an investor would find it more difficult to dispose of, or
to obtain accurate quotations for the price of, the Company's securities. In
addition, such removal would subject the Company's securities to so-called
"penny stock" rules that impose additional sales practice and market making
requirements on broker-dealers who sell and/or make a market in such securities.
Consequently, removal from the Market could affect the ability or willingness of
broker-dealers to sell and/or make a market in the Company's securities and the
ability of purchasers of the Company's securities to sell their securities in
the secondary market. In addition, if the market price of the Company's Common
Stock falls to below $5.00 per share, the Company may become subject to certain
penny stock rules even if still quoted on the Market. While such penny stock
rules should not affect the quotation of the Company's Common Stock on the
Market, such rules may further limit the market liquidity of the Common Stock
and Warrants and the ability of investors to sell securities in the secondary
market.
NO ANTICIPATED DIVIDENDS. The Company has not previously paid any dividends on
its Common Stock and for the foreseeable future intends to continue its policy
of retaining any earnings to finance the development and expansion of its
business.
EFFECT OF ANTITAKEOVER PROVISIONS. Certain provisions of the Company's Restated
Articles of Incorporation and Restated Bylaws and the laws of the State of
Washington could have the effect of making it more difficult for a third party
to acquire, or of discouraging a third party from attempting to acquire, control
of the Company. Such provisions could limit the price that certain investors
might be willing to pay in the future for shares of Common Stock. The Company is
authorized to issue Preferred Stock, without shareholder approval, with rights
senior to those of the Common Stock and to impose various procedural and other
requirements that could make it more difficult for shareholders to effect
certain corporate actions.
LIMITATIONS ON LIABILITY AND INDEMNIFICATION MATTERS. As permitted by the
Washington Business Corporation Act, the Company has included in its Restated
Articles of Incorporation a provision to eliminate the personal liability of its
directors for monetary damages for breach or alleged breach of their fiduciary
duties as directors, subject to certain exceptions. In addition, the Bylaws of
the Company provide that the Company is required to indemnify its directors
under certain circumstances, including those in which indemnification would
otherwise be discretionary, and the Company is required to advance expenses to
its officers and directors as incurred in connection with proceedings against
them for which they may be indemnified.
9 Page 11 of 23
<PAGE> 12
SELLING SHAREHOLDERS
On July 11, 1996, the Company completed the 1996 Private Placement in
which the Company raised $8,024,000 through the sale of 1,180,000 units at $6.80
per unit, each unit consisting of two shares of Series A Convertible Preferred
Stock and one Warrant. H.J. Meyers & Co., Inc., acted as the Company's Sales
Agent, and in connection with this offering, the Company issued a Sales Agent's
Warrant to H.J. Meyers & Co., Inc.for 118,000 units, with an exercise price of
$6.80 per unit.
As part of the 1996 Private Placement, the Company stated that it
would register the resale of the shares of Common Stock underlying the shares of
Series A Convertible Preferred Stock and the Warrants, and the resale of the
Warrants, including the Series A Convertible Preferred Stock and Warrants
issuable upon exercise of the Sales Agent's Warrant. Pursuant to its terms, the
Series A Convertible Preferred Stock is automatically converted into shares of
Common Stock on a one-for-one basis upon the effectiveness of the Registration
Statement of which this Prospectus is part. Except as indicated below, no
Selling Shareholder is a director or executive officer of the Company or has a
material relationship with the Company.
<TABLE>
<CAPTION>
Selling Shareholder Common Stock Warrants(1)
- ------------------- ------------ --------
<S> <C> <C>
American High Growth Equities 147,058 73,529
Retirement Trust
Bobby V. Abraham 15,000 7,500
Banque Francais de L'Orient 99,558 49,779
Gerald V. Beemiller 7,352 3,676
BFG Investment Co. 400,000 200,000
George L. Black, Jr. Trust 7,352 3,676
C.B. Equities Retirement Trust 60,000 30,000
William Chan and Evelyn Chan 14,704 7,352
John Chenault 14,704 7,352
Robert M. Colkitt & Mary Jean 82,350 41,175
Colkitt
Comiteau Family Partnership 30,588 15,294
Diamond Import Group, Inc. 14,704 7,352
Daniel J. & Nancy B. Evans(2) 11,764 5,882
Philip Evans 3,822 1,911
Leon Feldan 7,352 3,676
George Fink 7,352 3,676
First Washington Profit Sharing Plan 15,000 7,500
William T. Frantz(3) 294,116 147,058
</TABLE>
10 Page 12 of 23
<PAGE> 13
<TABLE>
<S> <C> <C>
Earl Freeman 58,822 29,411
Phillip F. Frink, Jr. 10,000 5,000
David A. Gavrich 7,352 3,676
Charles A. Graven 7,352 3,676
Omkarnath R. Gupta 15,378 7,689
Omkarnath R. Gupta - IRA 43,726 21,863
Richard Hammons 23,694 11,847
Maxine L. Koblenz 3,000 1,500
Robert Kutnick 14,704 7,352
Charles M. Levin and Yvonne 14,704 7,352
Michelle Levin
Mike Levkovitz 7,352 3,676
Philip Markiewicz 7,352 3,676
Kenneth Mastrilli 14,704 7,352
Alan O. and Carrol W. Maxwell(3) 89,874 44,937
Alan O. Maxwell Keogh Plan & 69,998 34,999
Trust(3)
Carrol W. Maxwell 7,260 3,630
John McAuliffe 16,176 8,088
McMurtry Family Trust 88,234 44,117
Meinl Bank 41,176 20,588
Merit Partners 7,352 3,676
H.J. Meyers & Co., Inc.(4) 236,000 118,000
James E. Navarre & Sarah Navarre 7,352 3,676
Dorothy L. Nelson 8,000 4,000
Brian Ofria & Laura Ofria Family 14,704 7,352
Trust
Paribas Bank 35,294 17,647
Quentin K. And Virginia W. 14,000 7,000
Peterson
Jeffrey T. Pohlman and Linda J. 14,704 7,352
Pohlman
</TABLE>
11 Page 13 of 23
<PAGE> 14
<TABLE>
<S> <C> <C>
Charles Puglisi 7,352 3,676
James R. Ratliff 14,704 7,352
John H. Resing Retirement Plan 14,706 7,353
Robert H. Rosner IRA 7,352 3,676
Steven Rosner Money Purchase Plan 14,704 7,352
Alan J. Rubin 29,410 14,705
Richard M. Russell 14,704 7,352
Harry A. Salzman & Deborah R. 14,704 7,352
Salzman
Mike Smith 7,352 3,676
Steven F. Sommers 14,704 7,352
The Donald & Lucy Stoner Trust 14,704 7,352
Snehal Sutaria and Dipti Sutaria 14,704 7,352
Swiss Bank Corporation 88,234 44,117
Ronald C. Thomas & Nancy L. 7,352 3,676
Thomas Family Trust
Darwin Ting 29,410 14,705
Tolchin Family Trust 14,704 7,352
Jane and Larry Tucker 29,410 14,705
WBW Trust Number One(3) 60,000 30,000
John H. Waechter 13,560 6,780
Steve Weinberg 7,352 3,676
Dr. Lawrence S. Wiseman IRA 29,410 14,705
Donald G. Witmer 7,352 3,676
Arnold Wong 7,352 3,676
Menno van Wyk 7,020 3,510
Lina Suet Ming Yam 14,704 7,352
--------- ---------
TOTALS 2,596,000 1,298,000
========= =========
</TABLE>
- -----------------------
(1) Each Warrant presently is exercisable into 1.21 shares of Common Stock
at an exercise price of $7.19 (a per share price of $5.94) through
March 24, 1998, and 1.25 shares of Common Stock at an exercise price
of $8.43 (a per share price of $6.74) thereafter through September 24,
2000.
12 Page 14 of 23
<PAGE> 15
(2) Mr. Evans is a director of the Company.
(3) A "beneficial owner" of more than 5% of the Company's Common Stock
within the meaning of Item 403 of Regulation S-B.
(4) These shares of Common Stock and Warrants are issuable upon exercise
of the Sales Agent's Warrant, which may be exercised at $6.80 per
unit, each unit consists of two shares of Series A Convertible
Preferred Stock (convertible into shares of Common Stock on a
one-for-one basis) and one Warrant.
13 Page 15 of 23
<PAGE> 16
PLAN OF DISTRIBUTION
The Securities may be sold from time to time by the Selling
Shareholders or by pledgees, donees, transferees or other successors in
interest. Such sales may be made on stock exchanges (including the Nasdaq
SmallCap Market) or otherwise at prices and at terms then prevailing or at
prices related to the then current market price, or in negotiated transactions.
The Securities 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
Securities 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 the Selling Shareholders may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from the Selling Shareholders in amounts to be
negotiated immediately prior to the sale. The Selling Shareholders, such brokers
or dealers, and any other participating brokers or dealers may be deemed to be
"underwriters" within the meaning of 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.
EXPERTS
The financial statements of the Company as of December 31, 1994 and
1995 and for each of the two years in the period ended December 31, 1995,
incorporated by reference into this Prospectus, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports with respect
thereto. Such financial statements have been so incorporated in reliance on the
reports of such firm given upon their authority as experts in accounting and
auditing.
LIMITATION OF LIABILITY AND INDEMNIFICATION
The Company's Restated Articles of Incorporation provide that, to the
fullest extent permitted by the Washington Business Corporation Act, the
Company's directors will not be liable for monetary damages to the Company or
its shareholders. The Company's Restated Bylaws provide that the Company will
indemnify its directors and, by action of the Board of Directors, may indemnify
its officers, employees and other agents of the Company to the fullest extent
permitted by applicable law, except for any legal proceeding that is initiated
by such directors, officers, employees or agents without authorization of the
Board of Directors. See "Risk Factors - Limitations on Liability and
Indemnification Matters."
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
14 Page 16 of 23
<PAGE> 17
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
All expenses in connection with the issuance and distribution of the
securities being registered will be paid by the Company. The following is an
itemized statement of these expenses:
<TABLE>
<S> <C>
Registration fee........................ $ 6,465.38
Nasdaq listing fee..................... $ 7,500.00
Legal fees.............................. $ 5,000.00
Accountant's Fees...................... $ 3,000.00
Miscellaneous......................... $ 5,034.62
----------
Total.................................... $27,000.00
==========
</TABLE>
Item 15. Indemnification of Officers and Directors.
Article XII of the Company's Articles of Incorporation and Section 11
of the Company's Bylaws require indemnification of directors, officers,
employees and agents of the company to the fullest extent permitted by the
Washington Business Corporation Act (the "Act). Sections 23B.08.500 through
23B.08.000 of the Act authorize a court to award, or a corporation's board of
directors to grant, indemnification to directors and officers on terms
sufficiently broad to permit indemnification under certain circumstances for
liabilities arising under the Securities Act.
Section 23B.08.320 of the Act authorizes a corporation to limit a
director's liability to the corporation or its shareholders for monetary damages
for acts or omissions as a director, except in certain circumstances involving
intentional misconduct, self-dealing or illegal corporate loans or
distributions, or any transaction from which the director personally receives a
benefit in money, property or services to which the director is not legally
entitled. Article XI of the Company's Articles of Incorporation contains
provisions implementing, to the fullest extent permitted by Washington law, such
limitations on a director's liability to the Company and its shareholders.
Item 16. Exhibits.
3.1 Restated Articles of Incorporation of the Company(1)
3.2 Restated Bylaws of the Company(1)
3.3 Statement of Rights and Preferences of the Series A
Convertible Preferred Stock of the Registrant, as filed with
the Secretary of State of the State of Washington on May 14,
1996(2)
4.1 Warrant Agreement, dated as of September 25, 1995, between the
Company and First Interstate Bank of Washington, N.A.(1)
II-1 Page 17 of 23
<PAGE> 18
4.2 Warrant Agreement, dated May 14, 1996, between the Company and
First Interstate Bank of Washington, N.A.(2)
5 Opinion of Stoel Rives LLP
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of Stoel Rives LLP (included in Exhibit 5)
24 Power of Attorney (see signature page)
- ------------------
(1) Incorporated by reference to the Company's Registration Statement on
Form SB-2 (Registration No. 33- 95460-LA), filed on August 3, 1995
(2) Incorporated by reference to Post-Effective Amendment No. 2 to the
Company's Registration Statement on Form SB-2 (Registration No.
33-95460-LA), filed on August 14, 1996.
Item 17. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration
Statement
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of this Registration
Statement (or the most recent post-effective amendment
thereof) that, individually or in the aggregate,
represent a fundamental change in the information set
forth in this Registration Statement; and
(iii) To include any additional or changed material
information with respect to the plan of distribution;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii)
do not apply if the information required to be included in a
post-effective amendment by those paragraphs is incorporated
by reference from periodic reports filed by the registrant
pursuant to Section 13 or Section 15(d) of the Exchange Act.
(2) That, for the purpose of determining any liability under the
Securities Act, each post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered that remain
unsold at the termination of the offering.
II-2 Page 18 of 23
<PAGE> 19
(b) The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933,
each filing of the registrant's annual report pursuant to Section
13(a) or Section 15(d) of the Securities Exchange Act of 1934
that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in
the opinion of the Commission such indemnification is against
public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment
by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful
defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
II-3 Page 19 of 23
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the registrant certifies that it has reasonable grounds to believe that
it meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Seattle, State of Washington, on September 26,
1996.
TERA COMPUTER COMPANY
By: /s/ James E. Rottsolk
--------------------------
James E. Rottsolk
Chief Executive Officer
Each of the undersigned directors of TERA COMPUTER COMPANY hereby
constitutes and appoints James E. Rottsolk and Burton J. Smith, and each of
them, his true and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all amendments or post-effective amendments to this
Registration Statement, and any other instruments or documents that said
attorneys-in-fact and agents may deem necessary or advisable to enable Tera
Computer Company to comply with the Securities Act of 1933, as amended, and any
requirements of the Securities and Exchange Commission in respect thereof, and
to file the same, with all exhibits thereto, with the Securities and Exchange
Commission, in connection with the registration under the Securities Act of
1933, as amended, of shares of Common Stock and Redeemable Common Stock Purchase
Warrants of Tera Computer Company, granting unto said attorneys-in-fact and
agents and each of them full power and authority to do and perform each and
every act and thing requisite and necessary to be done, as fully to all intents
and purposes as he might or could do in person, hereby ratifying and confirming
all that each such attorney-in-fact and agent, or his substitute, may lawfully
do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registration Statement has been signed by the following persons in
the capacities indicated below on the 26th day of September, 1996:
Signature and Title
/s/ Burton J. Smith /s/ Daniel J. Evans
- ---------------------------------- -------------------
Burton J. Smith Daniel J. Evans, Director
Chairman of the Board of Directors
/s/ James E. Rottsolk /s/ Kenneth W. Kennedy
- ---------------------------------- -------------------
James E. Rottsolk Kenneth W. Kennedy, Director
Chief Executive Officer, Chief Financial Officer,
Chief Accounting Officer, and Director
/s/ David N. Cutler /s/ John W. Titcomb, Jr.
- ---------------------------------- -------------------
David N. Cutler, Director John W. Titcomb, Jr., Director
II-4 Page 20 of 23
<PAGE> 21
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EX. NO. DESCRIPTION PAGE NO.
<S> <C> <C> <C>
3.1 Restated Articles of Incorporation of the Company(1) --
3.2 Restated Bylaws of the Company(1) --
3.3 Statement of Rights and Preferences of the Series A Convertible
Preferred Stock of the Registrant, as filed with the Secretary of
State of the State of Washington on May 14, 1992(2) --
4.1 Warrant Agreement, dated as of September 25, 1995, between the
Company and First Interstate Bank of Washington, N.A.(1) --
4.2 Warrant Agreement, dated May 14, 1996, between the Company --
and First Interstate Bank of Washington, N.A.(2)
5 Opinion of Stoel Rives LLP 22
23.1 Consent of Deloitte & Touche LLP 23
23.2 Consent of Stoel Rives LLP (included in Exhibit 5) 22
24 Power of Attorney (see signature page) 20
</TABLE>
- -------------------
(1) Incorporated by reference to the Company's Registration Statement on
Form SB-2 (Registration No. 33-95460-LA), filed on August 3, 1995.
(2) Incorporated by reference to Post-Effective Amendment No. 2 to the
Company's Registration Statement on Form SB-2 (Registration No.
33-95460-LA), filed on August 14, 1996.
Page 21 of 23
<PAGE> 1
EXHIBIT 5
September 26, 1996
The Board of Directors
Tera Computer Company
Dear Sirs:
We have acted as counsel for Tera Computer Company (the "Company") in
connection with the filing of a Registration Statement on Form S-3 (the
"Registration Statement") under the Securities Act of 1933 relating to the
resale of shares of Common Stock and Redeemable Common Stock Purchase Warrants,
including the shares of Common Stock issuable upon exercise of the Warrants
(together, the "Securities") of the Company by the holders thereof (the "Selling
Shareholders"). We have reviewed the corporate actions of the Company in
connection with this matter and have examined those documents, corporate
records, and other instruments we deemed necessary for the purposes of this
opinion.
Based on the foregoing, it is our opinion that:
1. The Company is a corporation duly organized and validly existing
under the laws of the state of Washington; and
2. The Securities have been duly authorized and are or, when issued
pursuant to their terms, will be, legally issued, fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
STOEL RIVES LLP
Page 22 of 23
<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration
Statement of Tera Computer Company on Form S-3 of the reports of Deloitte &
Touche LLP dated January 30, 1996, incorporated by reference in the Annual
Report on Form 10-KSB of Tera Computer Company for the year ended December 31,
1995, and to the reference to Deloitte & Touche LLP under the heading "Experts"
in the Prospectus, which is part of this Registration Statement.
DELOITTE & TOUCHE LLP
Seattle, Washington
September 26, 1996
Page 23 of 23
