<PAGE> 1
Registration No. 333-____________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------
TERA COMPUTER COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
WASHINGTON 93-0962605
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
--------------------
2815 EASTLAKE AVENUE EAST
SEATTLE, WASHINGTON 98102-3027
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
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1996 EMPLOYEE STOCK PURCHASE PLAN
(FULL TITLE OF PLAN)
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JAMES E. ROTTSOLK
CHIEF EXECUTIVE OFFICER
TERA COMPUTER COMPANY
2815 EASTLAKE AVENUE EAST
SEATTLE, WASHINGTON 98102-3027
(NAME AND ADDRESS OF AGENT FOR SERVICE)
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(206) 325-0800
(TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------
WITH COPY TO:
KENNETH W. JOHNSON, ESQ.
STOEL RIVES LLP
ONE UNION SQUARE, 36TH FLOOR
600 UNIVERSITY STREET
SEATTLE, WASHINGTON 98101-3197
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CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
===============================================================================================================================
Amount Proposed Maximum Proposed Maximum Amount of
Title of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share(1) Offering Price(1) Fee
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value $.01 per share 1,000,000 shares $4.50 $4,500,000 $1,551.72
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and based on the last sale price of the Common
Stock of Tera Computer Company as reported on September 23, 1996, on the
NASDAQ SmallCap Market.
================================================================================
Page 1 of 15 Pages
<PAGE> 2
INTRODUCTION
This Registration Statement on Form S-8 is filed by Tera Computer
Company (the "Company") relating to 1,000,000 shares of the Company's common
stock, par value $0.01 per share (the "Common Stock"), issuable upon exercise of
stock purchase rights granted or to be granted pursuant to the Company's 1996
Employee Stock Purchase Plan (the "Plan").
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information. *
Item 2. Registrant Information and Employee Plan Annual Information. *
* Information required by Part I of Form S-8 to be contained in the
Section 10(a) prospectus is omitted from this Registration Statement in
accordance with Rule 428 under the Securities Act of 1933, as amended,
and the Note to Part I of Form S-8.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents, which previously have been filed by the
Company with the Securities and Exchange Commission (the "Commission"), are
incorporated herein by reference and made a part hereof:
(i) The Company's Form 10-KSB report for the year ended December
31, 1995;
(ii) The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1996 and June 30, 1996;
(iii) The Company's Current Report on Form 8-K, dated July 15, 1996;
and
(iv) 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 documents filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, subsequent to
the date of this Registration Statement and prior to the filing of a
post-effective amendment hereto which indicates that all securities offered
hereunder have been sold or which deregisters all securities then remaining
unsold, shall be deemed to be incorporated by reference herein and to be a part
hereof from the date of filing of such documents.
2 Page 2 of 15 Pages
<PAGE> 3
Form S-8
For purposes of this Registration Statement, any statement contained in
a document incorporated or deemed to be incorporated herein by reference shall
be deemed to be modified or superseded to the extent that a statement contained
herein or in any other subsequently filed document which also is or is deemed to
be incorporated herein by reference modifies or supersedes such statement in
such document. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Registration
Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Director and Officers.
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 of 1933, as amended.
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 7. Exemption from Registration Claimed.
Not applicable.
Item 8. Exhibits.
4.1 Restated Articles of Incorporation of the Company
(incorporated by reference to Exhibit 3.2 of the Company's
Registration Statement on Form SB-2 (Registration No.
33-95460-LA), filed on August 3, 1995, including any amendment
filed for the purpose of updating such Registration
Statement).
4.2 Restated Bylaws of the Company (incorporated by reference to
Exhibit 3.2 of the Company's Registration Statement on Form
SB-2 (Registration No. 33-95460-LA), filed on August 3, 1995,
including any amendment filed for the purpose of updating such
Registration Statement).
4.3 Tera Computer Company 1996 Employee Stock Purchase Plan.
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)
3 Page 3 of 15 Pages
<PAGE> 4
Item 9. 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 material
information with respect to the plan of
distribution not previously disclosed in
this Registration Statement or any material
change to information contained herein;
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 Securities Exchange Act of
1934, as amended.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, as amended, 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.
(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 of 1933 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 Securities and Exchange
Commission such indemnification is against public policy as
expressed in the 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 Act and will be
governed by the final adjudication of such issue.
4 Page 4 of 15 Pages
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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-8 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 25,
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 of Tera Computer Company, issuable
pursuant to the 1996 Employee Stock Purchase Plan, 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 25th 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
5 Page 5 of 15 Pages
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Form S-8
EXHIBIT INDEX
Exhibit Sequentially
Number Description Numbered Page
- ------- ----------- --------------
4.1 Restated Articles of Incorporation of the Company.......... *
4.2 Restated Bylaws of the Company............................. *
4.3 Tera Computer Company 1996 Employee Stock Purchase Plan.... 7
5 Opinion of Stoel Rives LLP................................. 14
23.1 Consent of Deloitte & Touche LLP........................... 15
23.2 Consent of Stoel Rives LLP (included in Exhibit 5)......... 14
24 Power of Attorney (signature page) ........................ 5
* Incorporated by reference. See sequentially numbered page 3.
6 Page 6 of 15 Pages
<PAGE> 1
Exhibit 4.3
TERA COMPUTER COMPANY
1996 EMPLOYEE STOCK PURCHASE PLAN
1. Purposes.
The Tera Computer Company 1996 Employee Stock Purchase Plan (the
"Plan") is intended to provide additional incentives to employees and a
convenient means by which eligible employees of the Company may purchase the
Company's shares of Common Stock and a method by which the Company may assist
and encourage such employees to become shareholders of the Company.
2. Definitions
As used herein, the following definitions apply:
a. "Base Salary" means the gross amount of the
participant's base salary for each payroll period, including incentive
bonuses, overtime, commissions and any pre-tax contributions made by
the Participant to any Code Section 401(k) salary deferral plan or any
Code Section 125 cafeteria benefit program, but excluding any severance
pay, hiring or relocation bonuses and pay in lieu of vacation and sick
leave.
b. "Board" means the Company's Board of Directors.
c. "Code" means the Internal Revenue Code of 1986, as
amended from time to time.
d. "Common Stock" means the Company's common stock.
e. "Company" means Tera Computer Company, a Washington
corporation, and all subsidiaries of Tera Computer Company designated
by the Plan Administrator as participating in the Plan and any
corporate successor to all or substantially all of the assets or voting
stock of Tera Computer Company which shall by appropriate action adopt
the Plan.
f. "Eligible Employee" means any person who is engaged,
on a regularly-scheduled basis of more than 20 hours per week and more
than 5 months per calendar year, in the rendition of personal services
to the Company for earnings considered wages under Section 3121(a) of
the Code. No employee who would after an offering pursuant to the Plan
own or be deemed (under Section 425(d) of the Code) to own stock
(including any stock that may be purchased under any outstanding
options) possessing 5% or more of the total combined voting power or
value of all classes of stock of the Company shall be eligible to
participate in the Plan.
g. Enrollment Date" means the first day of each Offering
Period.
h. "Offering Period" shall mean the six-month period
selected by the Plan Administrator during which Participants may
purchase shares of the Common Stock. Unless otherwise determined by the
Plan Administrator, Offering Periods generally shall run from April 1
to September 30 and for October 1 through March 31, with the first
Offering period running from September 15, 1996 through March 31, 1997.
i. "Participant" means any Eligible Employee of the
Company who is actively participating in the Plan.
j. "Plan Administrator" shall mean the Compensation
Committee of the Board, as appointed from time to time by the Board.
1 Page 7 of 15 Pages
<PAGE> 2
3. Administration.
a. Powers. The Plan Administrator shall have full
authority to administer this Plan, including, without limitation,
authority to interpret and construe any provision of this Plan; to
determine the Offering Periods and the maximum number of shares of
Common Stock which may be purchased in any one Offering Period; to
determine, in accordance with Section 7(c), the fair market value of
the Common Stock on any date; to prescribe, amend and rescind rules and
regulations relating to this Plan; within law, to waive or modify any
term or provision contained in this Plan or in any right to purchase
shares of Common Stock under this Plan; to authorize any person to
execute on behalf of the Company any instrument required to effectuate
this Plan; and to make all other determinations deemed necessary or
advisable for the administration for this Plan. The interpretation and
construction by the Plan Administrator of any terms or provisions of
this Plan, any right issued hereunder or of any rule or regulation
promulgated in connection herewith and all actions taken by the Plan
Administrator shall be conclusive and binding on all interested
parties. The Plan Administrator may delegate administrative functions
to individuals who are officers or employees of the Company.
b. Limited Liability. No member of the Board of
Directors or the Plan Administrator or officer of the Company shall be
liable for any action or inaction of the entity or body, or another
person or, except in circumstances involving bad faith, of himself or
herself. Subject only to compliance with explicit provisions hereof,
the Board and Plan Administrator may act in their absolute discretion
in all matters related to this Plan.
4. Offering Periods.
a. Determination. Shares of Common Stock shall be
offered for purchase under this Plan through a series of successive
Offering Periods, each to be of a duration of 6 months, provided that
the first Offering Period shall be from September 15, 1996, through
March 31, 1997, all as selected by the Plan Administrator, until such
time as the maximum number of shares of Common Stock available for
issuance under the Plan shall have been purchased or the Plan shall
have been sooner terminated in accordance with Sections 10 and 11(b).
b. Separate Purchase Rights. The Participant shall be
granted a separate purchase right for each Offering Period in which
he/she participates. The purchase right shall be granted on the
Enrollment Date on which such individual first joins the Offering
Period in effect under the Plan and shall be automatically exercised
for successive Offering Periods, unless the Participant withdraws from
the Plan.
5. Eligibility and Participation.
a. Enrollment Dates. An individual who is an Eligible
Employee on the start date of the Offering Period may enter that
Offering Period on such start date, provided he/she enrolls in the
Offering Period before such date in accordance with Section 5(b) below.
That start date shall then become such individual's Enrollment Date for
the Offering Period, and on that date such individual shall be granted
his/her purchase right for the Offering Period. Should such Eligible
Employee not enter the Offering Period on the start date, then he/she
may not subsequently join that particular Offering Period on any later
date.
b. Enrollment Forms. To participate for a particular
Offering Period, the Eligible Employee must complete the enrollment
forms prescribed in the Plan Administrator (including the payroll
deduction authorization) and file such forms with the Plan
Administrator at least 10 business days before his/her scheduled
Enrollment Date unless the Participant has participated in the previous
Offering Period and has not submitted a withdrawal form to the Company.
c. Payroll Deductions. The payroll deduction authorized
by the Participant for purposes of acquiring shares of Common Stock
under the Plan shall be at a rate of not less than $25.00 per
semi-monthly pay period nor more than 15% of the Base Salary paid to
the Participant during each Offering Period, unless the Plan
Administrator consents to a lower amount or higher rate for all
Participants. The deduction rate so authorized shall continue in effect
for the remainder of the Offering Period.
2 Page 8 of 15 Pages
<PAGE> 3
A Participant may change the amount of his or her payroll deduction for
a subsequent Offering Period by filing an amended payroll deduction form at
least 10 business days prior to the commencement of such subsequent Offering
Period.
Payroll deductions will automatically cease upon the termination of the
Participant's purchase right in accordance with the applicable provisions of
Section 7 below.
d. Rule 16b-3. Employees who are officers of the Company
may participate only in accordance with Rule 16b-3 under the Securities
Exchange Act of 1934, as in effect from time to time.
e. Participation Voluntary. Participation in this Plan
shall be voluntary.
6. STOCK SUBJECT TO PLAN
a. Total Number. The total number of shares of Common
Stock which may be issued under this Plan shall not exceed 1,000,000
shares (subject to adjustment under Section 6(b) below).
b. Changes to Capitalization. In the event any change is
made to the Company's outstanding Common Stock by reason of any stock
dividend, stock split, combination of shares or other change affecting
such outstanding Common Stock as a class without receipt of
consideration, then appropriate adjustments shall be made by the Plan
Administrator to (i) the class and maximum number of shares issuable
over the term of this Plan, (ii) the class and maximum number of shares
purchasable per Participant during each Offering Period, (iii) the
class and maximum number of shares purchasable in the aggregate by all
Participants on any one purchase date under the Plan and (iv) the class
and number of shares and the price per share of the Common Stock
subject to each purchase right at the time outstanding under this Plan.
Such adjustments shall be designed to preclude the dilution or
enlargement of rights and benefits under this Plan.
7. Purchase Rights.
a. Terms and Conditions. An Employee who participates in
this Plan for a particular Offering Period shall have the right to
purchase shares of Common Stock during such Offering Period, upon the
terms and conditions set forth below and shall execute a subscription
agreement embodying such terms and conditions and such other provisions
(not inconsistent with the Plan) as the Plan Administrator may deem
advisable.
b. Purchase Price. Common Stock shall be issuable at the
end of each Offering Period at a purchase price equal to the lower of
(i) 85% of the fair market value per share on the Participant's
Enrollment Date for such Offering Period or (ii) the fair market value
per share on the date on which such Offering Period ends.
c. Valuation. For purposes of determining the fair
market value per share of Common Stock on any relevant date, the
following procedures shall be in effect:
(i) The fair market value on any date shall be
equal to the closing price of the Common Stock on such date, as
reported in The Wall Street Journal or other comparable sources. If
there is no quoted price for such date, then the closing price on the
next preceding day for which there does exist such a quotation, as so
reported, shall be determinative of fair market value.
(ii) If Section 7(c)(1) is not applicable, the
fair market value shall be determined by the Plan Administrator in good
faith. Such determination shall be conclusive and binding on all
persons.
d. Number of Purchasable Shares. The number of shares
purchasable per Participant for each Offering Period shall be the
number of whole shares obtained by dividing the amount collected from
the Participant through payroll deductions during such Offering Period
by the purchase price in effect for the Offering Period. No
Participant, however, may purchase shares in violation of Section 8(a).
3 Page 9 of 15 Pages
<PAGE> 4
e. Payment. Payment for the Common Stock purchased under
the Plan shall be effected only by means of the Participant's
authorized payroll deductions. Such deductions shall begin on the first
day coincident with or immediately following the Participant's
Enrollment Date into the Offering Period and shall continue through the
pay period ending with or immediately prior to the last day of the
Offering Period. The amounts so collected shall be credited to the
Participant's book account under the Plan, but no interest shall be
paid on the balance from time to time outstanding in such account. The
amounts collected from a Participant may be commingled with the general
assets of the Company and may be used for general corporate purposes.
f. Termination of Purchase Right. The following
provisions shall govern the termination of outstanding purchase rights:
(i) A Participant may terminate his or her
payroll deductions in a current Offering Period by filing a withdrawal
form with the Plan Administrator at least 10 business days prior to the
payroll period for which it is to be effective. The Participant will
not receive the funds then accumulated in his or her account, and any
such funds will be applied to the purchase of shares at the end of such
Offering Period. If such withdrawal is filed at least 10 business days
prior to the beginning of the next Offering Period, then such
withdrawal will constitute a termination of participation in the Plan
with respect to such successive Offering Periods as contemplated by
Section 7(f)(ii).
(ii) A Participant may terminate his or her
participation in the Plan with respect to the next successive Offering
Period by filing, at any time prior to 10 business days before the
commencement of the next successive Offering Period, the prescribed
notification form with the Plan Administrator (or its designate). No
payroll deductions shall be collected from the Participant with respect
to the terminated purchase right for such successive Offering Period.
(iii) The withdrawal and termination of such
purchase right shall be irrevocable, and the Participant may not
subsequently rejoin the Offering Period for which such withdrawn or
terminated purchase right was granted. In order to resume participation
in any subsequent Offering Period, such individual must re-enroll in
the Plan by making a timely filing of a new subscription agreement and
payroll withholding authorization.
(iv) If the Participant ceases to remain an
Eligible Employee while his/her purchase right remains outstanding,
then such individual (or the personal representative of the estate of a
deceased Participant) shall have the following election, exercisable
until the earlier of 3 months following the termination of employment
or the end of the Offering Period in which the Participant ceases
Eligible Employee status:
(i) to withdraw all of the
Participant's payroll deductions for such Offering Period, without
interest, or
(ii) to have such funds held for the
purchase of shares at the end of the Offering Period in which
his or her status as an Eligible Employee ceased.
If no such election is made, then such funds shall be refunded,
without interest, as soon as possible after the close of such Offering
Period. In no event, however, may any payroll deductions be made on the
Participant's behalf following his/her cessation of Eligible Employee
status.
g. Stock Purchase. Shares of Common Stock shall
automatically be purchased on behalf of each Participant at the end of
each Offering Period and for all purposes shares of Common Stock
purchased pursuant to the Plan shall be deemed to have been issued and
sold at the close of business on the last date of each Offering Period.
The purchase shall be effected by applying such Participant's payroll
deductions for the Offering Period to the purchase of whole shares of
Common Stock (subject to the limitation on the maximum number of
purchasable shares) at the purchase price in effect for such Offering
Period. Any payroll deductions not applied to such purchase because
they are not sufficient to purchase a whole share shall be carried over
for application in the successive Offering Period unless the
Participant has withdrawn from the Plan, in which event such amount
will be refunded to the Participant, without interest.
4 Page 10 of 15 Pages
<PAGE> 5
h. Proration of Purchase Rights. Subject to the
limitations set forth in Section 6(a), the Plan Administrator may determine the
number of shares of Common Stock, subject to periodic adjustment under Section
6(b), which may be purchased in the aggregate by all Participants in any one
Offering Period under the Plan. Should the total number of shares of Common
Stock which are to be purchased pursuant to outstanding purchase rights on any
particular date exceed either (i) the maximum limitation on the number of shares
purchasable in the aggregate on such date or (ii) the number of shares then
available for issuance under the Plan, the Plan Administrator shall make a pro
rata allocation of the available shares on a uniform and nondiscriminatory
basis, and the payroll deductions of each Participant, to the extent in excess
of the aggregate purchase price payable for the Common Stock pro rated to such
individual, shall be refunded to such Participant, without interest.
i. Rights as Shareholder. A Participant shall have no
rights as a shareholder with respect to the shares subject to his/her
outstanding purchase right until the shares are actually purchased on the
Participant's behalf in accordance with the applicable provisions of the Plan.
No adjustments shall be made for dividends, distributions or other rights for
which the record date is prior to the date of such purchase.
A Participant shall be entitled to receive, as soon as practicable
after each Offering Period, a stock certificate for the number of shares
purchased on the Participant's behalf. Such certificate may, upon the
Participant's request, be issued in the names of the Participant and his/her
spouse as tenants-in-common or as joint tenants with right of survivorship.
j. Assignability. Purchase rights granted under this
Plan shall not be assignable or transferable by the Participant other than by
will or by the laws of descent and distribution following the Participant's
death, shall not be subject to execution, attachment or similar process, and
shall be exercised during the Participant's lifetime only by the Participant.
k. Change in Ownership. Should the Company or its
shareholders enter into an agreement to dispose of all or substantially all of
the assets or outstanding capital stock of the Company by means of:
(i) a sale, merger or other reorganization in
which the Company will not be the surviving corporation (other than a
reorganization effected primarily to change the state in which the Company is
incorporated), or
(ii) a reverse merger in which the Company is the
surviving corporation but in which more than 50% of the Company's outstanding
voting stock is transferred to holders different from those who held the stock
immediately prior to the reverse merger,
then, unless the successor shall continue this Plan and assume all the
obligations evidenced by the outstanding rights to purchase shares of Common
Stock or shall provide equivalent rights with respect to the successor's
securities, all to the reasonable satisfaction of the Board, all outstanding
purchase rights under the Plan shall automatically be exercised immediately
prior to the consummation of such sale, merger, reorganization or reverse merger
by applying the payroll deductions of each Participant for the Offering Period
in which such transaction occurs to the purchase of whole shares of Common Stock
at the lower of (i) 85% of the fair market value of the Common Stock on the
Participant's Enrollment Date into the Offering Period in which such transaction
occurs or (ii) the fair market value of the Common Stock immediately prior to
the consummation of such transaction. However, the applicable share limitations
of Sections 7 and 8 shall continue to apply to any such purchase.
The Company shall use its best efforts to provide at least 10 days'
advance written notice of the occurrence of any such sale, merger,
reorganization or reverse merger, and Participants shall, following the receipt
of such notice, have the right to terminate their outstanding purchase rights in
accordance with the applicable provisions of this Section 7.
8. Accrual Limitations.
5 Page 11 of 15 Pages
<PAGE> 6
a. Dollar Limit. No Participant shall be entitled to
accrue rights to acquire Common Stock pursuant to any purchase right outstanding
under this Plan if and to the extent such accrual, when aggregated with rights
to purchase Common Stock accrued under any other purchase right outstanding
under this Plan and similar rights accrued under other employee stock purchase
plans (within the meaning of Section 423 of the Code) of the Company, would
otherwise permit such Participant to purchase more than $25,000 worth of stock
of the Company (determined on the basis of the fair market value of such stock
on the date or dates such rights are granted to the Participant) for each
calendar year such rights are at any time outstanding.
b. Application. For purposes of applying such accrual
limitations, the right to acquire Common Stock pursuant to each purchase right
outstanding under the Plan shall accrue as follows:
(i) No right to acquire Common Stock under any
outstanding purchase right shall accrue to the extent the Participant has
already accrued in the same calendar year the right to acquire $25,000 worth of
Common Stock (determined on the basis of the fair market value on the date or
dates of grant) pursuant to one or more purchase rights held by the Participant
during such calendar year.
(ii) If by reason of such accrual limitations,
any purchase right of a Participant does not accrue for a particular Offering
Period, then the payroll deductions which the Participant made during that
Offering Period with respect to such purchase right shall be refunded, without
interest.
c. Controlling Provision. In the event there is any
conflict between the provisions of this Section 8 and one or more provisions of
the Plan or any instrument issued thereunder, the provisions of this Section 8
shall be controlling.
9. Status of Plan Under Federal Tax Laws.
This Plan is designed to qualify as an employee stock purchase plan
under Code Section 423, and shall be governed and construed accordingly.
10. Amendment and Termination.
a. Amendments, Suspension, Discontinuation. The Board
may alter, amend, suspend or discontinue this Plan immediately following the
close of any Offering Period. However, the Board may not, without the approval
of the Company's shareholders:
(i) materially increase the number of shares
issuable under this Plan or the maximum number of shares which may be purchased
per Participant or in the aggregate during any one Offering Period under this
Plan, except that the Plan Administrator shall have the authority, exercisable
without such shareholder approval, to effect adjustments to the extent necessary
to effect changes in the Company's capital structure pursuant to Section 6(b);
(ii) alter the purchase price formula so as to
reduce the purchase price payable for the shares of Common Stock issuable under
this Plan;
(iii) materially increase the benefits accruing to
Participants under the Plan or materially modify the requirements for
eligibility to participate in this Plan; or
(iv) adopt amendments which require shareholder
approval under applicable law, including Section 16(b) of the Securities
Exchange Act of 1934.
b. Termination of Purchase Rights. The Company shall
have the right, exercisable in the sole discretion of the Plan Administrator, to
terminate all outstanding purchase rights under this Plan immediately following
the close of any Offering Period. Should the Company elect to exercise such
right, then this Plan shall
6 Page 12 of 15 Pages
<PAGE> 7
terminate in its entirety. No further purchase rights shall thereafter be
granted or exercised, and no further payroll deductions shall thereafter be
collected, under this Plan.
11. General Provisions.
a. Requirements. No shares of Common Stock shall be
issued hereunder, until (i) this Plan shall have been approved by the Company's
shareholders and (ii) the Company shall have complied with all relevant
provisions of law, including, without limitation, any applicable state
securities laws, the Securities Act of 1933, as amended, the Securities Exchange
Act of 1934, as amended, the rules and regulations promulgated thereunder,
applicable laws of foreign countries and other jurisdictions, the requirements
of any quotation service or stock exchange upon which the shares may then be
listed, and all other applicable requirements established by law or regulation.
b. Plan Termination. This Plan shall terminate upon the
earlier of (i) September 30, 2007 or (ii) the date on which all shares available
for issuance under the Plan shall have been sold pursuant to purchase rights
exercised under this Plan. In the event shareholder approval is not obtained, or
such legal compliance is not effected, within 12 months after the date on which
the Plan is adopted by the Board, the Plan shall terminate and have no further
force or effect, and all funds collected by the Company shall be returned to all
subscribers, without interest.
c. Costs. All costs and expenses incurred in the
administration of this Plan shall be paid by the Company.
d. No Status as Employee. Neither the action of the
Company in establishing the Plan, or any action taken under this Plan by the
Board or the Plan Administrator, nor any provision of this Plan itself shall be
construed so as to grant any person the right to remain in the employ of the
Company for any period of specific duration, and such person's employment may be
terminated at any time, with or without cause.
e. No Segregation of Funds. All payroll deductions
received or held by the Company under this Plan may be used by the Company for
any corporate purposes and the Company shall not be obligated to segregate the
payroll deductions.
f. No Interest. No Participant shall be entitled, at any
time, to any payment or credit for interest with respect to or on the payroll
deductions contemplated herein, or on any other assets held hereunder for the
Participant's account.
g. Governing Law. The provisions of this Plan shall be
governed by the laws of the State of Washington.
7 Page 13 of 15 Pages
<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-8 (the
"Registration Statement") under the Securities Act of 1933 relating to the
issuance of 1,000,000 shares of Common Stock (the "Shares") of the Company
pursuant to the Company's 1996 Employee Stock Purchase Plan (the "Plan"). 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 Shares have been duly authorized and the Shares, when
issued pursuant to the Plan, 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
8 Page 14 of 15 Pages
<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-8 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.
DELOITTE & TOUCHE LLP
Seattle, Washington
September 26, 1996
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