Filed pursuant to Rule 424(b)(3)
Registration No. 333-83521
PROSPECTUS
TERA COMPUTER COMPANY
15,859,336 shares of Common Stock
These shares of Common Stock are being offered and sold from time to time
by certain of our current shareholders.
The selling shareholders may sell the shares from time to time at fixed
prices, market prices, prices computed with formulas based on market prices, or
at negotiated prices, and may engage a broker or dealer to sell the shares. For
additional information on the selling shareholders' possible methods of sale,
you should refer to the section of this prospectus entitled "Plan of
Distribution" on page 6. We will not receive any proceeds from the sale of the
shares, but will bear the costs relating to the registration of the shares.
Concurrent with this offering, several shareholders, including selling
shareholders named in this prospectus, are offering an aggregate of 4,892,766
shares of our common stock under other prospectuses contained in registration
statements filed by us.
Our Common Stock is traded on the Nasdaq National Market under the symbol
"TERA." On September 1, 1999, the closing price for our Common Stock was $4.75
per share.
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The shares offered in this prospectus involve a high degree of risk. You
should carefully consider the "Risk Factors" contained in our Quarterly Report
on Form 10-Q for the quarterly period ended June 30, 1999 filed with the
Securities and Exchange Commission on August 16, 1999 and in our future filings
made with the Securities and Exchange Commission, which are incorporated by
reference in this prospectus, in determining whether to purchase shares of our
Common Stock.
-------------------------------
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved the shares, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
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The date of this Prospectus is September 2, 1999.
<PAGE>
TABLE OF CONTENTS
Section Page
------- ----
Our Business .......................................... 3
Selling Shareholders .................................. 3
Plan of Distribution .................................. 7
Experts ............................................... 9
Limitation of Liability and Indemnification ........... 9
Information Incorporated by Reference ................. 9
Available Information ................................. 11
You should rely only on information contained or incorporated by reference
in this prospectus. See "Information Incorporated by Reference" on page 10.
Neither Tera nor the selling shareholders have authorized any other person to
provide you with information different from that contained in this prospectus.
The shares of Common Stock are not being offered in any jurisdiction where
the offering is not permitted.
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<PAGE>
OUR BUSINESS
Tera Computer Company designs, builds and sells high-performance computer
systems, sometimes referred to as "supercomputers." Our executive offices are
located at Merrill Place, Suite 600, 411 First Avenue South, Seattle, WA
98104-2860, and our telephone number is (206) 701-2000.
SELLING SHAREHOLDERS
The following table sets forth certain information as of August 12, 1999
regarding the selling shareholders ownership of our common stock and as adjusted
to reflect the selling shareholders ownership of out common stock if all shares
covered by this prospectus are sold. The shares covered by this prospectus
include:
o shares of common stock issued to certain of the selling shareholders
in a private placement in June 1999;
o shares of common stock issuable upon exercise of warrants issued to
certain of the selling shareholders as part of the private placement
in June 1999 for no additional consideration. All warrants are
exercisable only for cash at $4.72 per share and expire in three
years;
o shares of common stock issuable upon exercise of warrants issued to
certain of the selling shareholders as payment for services and fees
in connection with the June 1999 private placement;
o shares of common stock issuable upon exercise of warrants issued to
certain of the selling shareholders in exchange for their agreement to
eliminate their rights to receive additional shares of common stock
pursuant to certain "reset" rights granted by us;
o shares of common stock, and shares of common stock issuable upon
exercise of warrants, issued to certain selling shareholders in June
1999 in exchange for our 8% subordinated convertible promissory notes
and warrants held thereby; and
o shares of common stock issuable upon exercise of a warrant and
conversion of a promissory note issued to Compunetics, Inc., a selling
shareholder and supplier to the Company, as payment for parts and
services.
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<PAGE>
The selling shareholders' percentage of ownership after this offering is
based on 23,797,854 shares of common stock that were outstanding as of August
12, 1999, and assumes no exercise of any outstanding options or warrants after
August 12, 1999.
<TABLE>
<CAPTION>
Ownership After Offering
Shares if All Shares Offered
Owned Shares Hereby Are Sold
Prior to Being -------------------------
Selling Shareholder Offering Offered Shares Percent
- ------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Douglas D. Adkins 21,642 43,284 -0- -0-
Advantage Fund II Ltd. 723,729 1,149,675 300,000 *
Ramsey M. Al-Salam 1,941 3,882 -0- -0-
Robert M. Arnold 21,628 43,256 -0- -0-
Paul Asnes -0- 3,000 -0- -0-
Banca del Gottardo 2,301,695 3,401,404 1,200,000 3.0%
Robert J. Baynham 1,941 3,882 -0- -0-
Robert W. Bellano and 21,186 42,372 -0- -0-
Suzanne Bellano
Harvey Bibicoff 25,000 50,000 -0- -0-
Edward W. Bulchis 8,195 16,390 -0- -0-
James A. Capwill 211,864 423,728 -0- -0-
David V. Carlson 4,745 9,490 -0- -0-
Castle Creek Technology 1,059,322 2,118,644 -0- -0-
Partners, LLC
Compunetics, Inc. -0- 130,137 -0- -0-
David N. Cutler 26,927 43,134 5,360 *
Christopher J. Daly-Watson 216 432 -0- -0-
James J. Darr 21,186 42,373 -0- -0-
Elliott Associates, L.P. 105,932 211,864 -0- -0-
Jack Erlanger 32,000 73,000 -0- -0-
Meryl Erlanger 3,000 6,000 -0- -0-
Daniel J. Evans 31,143 21,636 20,325 *
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Ownership After Offering
Shares if All Shares Offered
Owned Shares Hereby Are Sold
Prior to Being -------------------------
Selling Shareholder Offering Offered Shares Percent
- ------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
S. Marcus Finkle 60,000 120,000 -0- -0-
William T. Frantz 1,822,007 434,688 1,604,663 4.0%
Friedlander International Limited 1,059,322 2,118,644 -0- -0-
Friedlander Limited Partnership 105,932 211,864 -0- -0-
Richard J. Garibaldi 31,780 63,560 -0- -0-
Genesee Fund Limited - Portfolio B 523,729 1,005,580 100,000 *
Harpel Family Partnership 46,610 93,220 -0- -0-
Harpel International Ltd. 46,610 93,220 -0- -0-
Harpel Partners, L.P. 237,289 474,578 -0- -0-
Harpel Select Growth, L.P. 105,932 211,864 -0- -0-
Harpel Ventures Partners 42,373 84,746 -0- -0-
Iver Heath 10,000 20,000 -0- -0-
John B. Jacobs 10,784 21,568 -0- -0-
Koch Industries, Inc. 400,000 271,289 400,000 1.0%
Laura M. Limber 36,017 72,034 -0- -0-
David J. Maki 1,510 3,020 -0- -0-
Alan O. Maxwell 266,260 43,180 244,670 *
Paul T. Meikeljohn 3,019 6,038 -0- -0-
Merrill Place LLC 34,771 69,542 -0- -0-
Montrose Investments Ltd. 635,593 1,271,186 -0- -0-
Karen G. Olah 20,000 40,000 -0- -0-
Timothy R. Pask 52,966 105,932 -0- -0-
Dov Perlysky 15,890 31,780 -0- -0-
Elizabeth Reisen Executrix 12,009 24,018 -0- -0-
Elizabeth Reisen Investment Ltd. 8,226 16,452 -0- -0-
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<PAGE>
Ownership After Offering
Shares if All Shares Offered
Owned Shares Hereby Are Sold
Prior to Being -------------------------
Selling Shareholder Offering Offered Shares Percent
- ------------------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Reisen Family Investment 30,612 61,224 -0- -0-
Partnership
Ruki D. Renov 52,966 105,932 -0- -0-
Gary W. Schiele 21,186 42,372 -0- -0-
Esther Stahler 15,890 31,780 -0- -0-
Stoel Rives Retirement 38,744 43,274 17,107 *
Plan FBO Kenneth W. Johnson
Strong River Investments, Inc. 211,864 423,728 -0- -0-
John W. Titcomb, Jr. 221,564 43,246 199,941 *
Gary Voigt 31,780 63,560 -0- -0-
WBW Trust Number One 402,300 86,770 358,915 *
Westgate International, L.P. 105,932 211,864 -0- -0-
- --------------
* Less than 1%
</TABLE>
The shares of common stock listed as owned by Banca del Gottardo after this
offering, together with 1,311,111 shares issuable upon exercise of warrants,
have been registered for offer and sale by Banca del Gottardo in a Registration
Statement on Form S-3, Registration No. 333-76223. Banca del Gottardo has
represented to us that it purchased our common stock and warrants for its own
account and on behalf of its private banking and other clients, and that no
client or group of affiliated clients owns more than one percent of our
outstanding common stock.
The shares of common stock listed as owned by Advantage Fund II Ltd.,
Genesee Fund Limited-Portfolio B, and Koch Industries, Inc. after this offering
have been registered for offer and sale by these selling shareholders in a
Registration Statement on Form S-3, Registration No. 333-83523.
The shares of common stock listed as owned by David N. Cutler, Daniel J.
Evans, John W. Titcomb, and Stoel Rives Retirement Plan FBO Kenneth W. Johnson
after this offering excludes shares issuable upon exercise of outstanding
options that are or will be fully exercisable by Messrs. Cutler, Evans, Titcomb,
and Johnson within sixty days after the date of this prospectus. The shares of
common stock listed as owned by William T. Frantz after this offering excludes
shares issuable upon exercise of outstanding warrants held by Mr. Frantz.
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<PAGE>
Except as set forth below, none of the selling shareholders has held any
positions or office or had any other material relationship with us or any of our
affiliates within the past three years:
o David N. Cutler, Daniel J. Evans, and John W. Titcomb, Jr., are
directors of Tera.
o Kenneth W. Johnson, the beneficiary of the Stoel Rives Retirement Plan
account listed as a selling shareholder, is an executive officer of
Tera.
o William T. Frantz beneficially owned more than ten percent, and each
of Alan O. Maxwell and the WBW Trust Number One beneficially owned
more than five percent, of our outstanding common stock within the
past three years.
o In March 1999 Tera issued an option to purchase additional shares of
Common Stock to Banca del Gottardo. This option was cancelled in
connection with the June 1999 private placement.
In recognition of the fact that the selling shareholders may wish to be
legally permitted to sell their shares when they deem appropriate, we have
agreed with the selling shareholders to file with the Securities and Exchange
Commission ("SEC"), under the Securities Act of 1933 (the "Securities Act"), a
registration statement on Form S-3, of which this prospectus forms a part, with
respect to the resale of the shares, and have agreed to prepare and file such
amendments and supplements to the registration statement as may be necessary to
keep the registration statement effective until the shares are no longer
required to be registered for sale by the selling shareholders.
PLAN OF DISTRIBUTION
Tera is registering the shares covered by this prospectus for the selling
shareholders. As used in this prospectus, "selling shareholders" includes the
pledgees, donees, transferees or others who may later hold the selling
shareholders' interest. Tera will pay the costs and fees of registering the
shares, but the selling shareholders will pay any brokerage commissions,
discounts or other expenses relating to the sale of the shares. Tera and the
selling shareholders each have agreed to indemnify the other against certain
liabilities, including liabilities arising under the Securities Act, that relate
to statements or omissions in the registration statement of which this
prospectus forms a part.
The selling shareholders may sell the shares in the over-the-counter market
or otherwise, at market prices prevailing at the time of sale, at prices related
to prevailing market prices, or at negotiated prices. In addition, the selling
shareholders may sell some or all of their shares through:
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<PAGE>
o a block trade in which a broker-dealer may resell a portion of the
block, as principal, in order to facilitate the transaction;
o purchases by a broker-dealer, as principal, and resale by the
broker-dealer for its account; or
o ordinary brokerage transactions and transactions in which a broker
solicits purchases.
When selling the shares, the selling shareholders may enter into hedging
transactions. For example, the selling shareholders may:
o enter into transactions involving short sales of the shares by
broker-dealers;
o sell shares short themselves and redeliver such shares to close out
their short positions;
o enter into option or other types of transactions that require the
selling shareholder to deliver shares to a broker-dealer, who will
then resell or transfer the shares under this prospectus; or
o loan or pledge the shares to a broker-dealer, who may sell the loaned
shares or, in the event of default, sell the pledged shares.
The selling shareholders may negotiate and pay broker-dealers commissions,
discounts or concessions for their services. Broker-dealers engaged by the
selling shareholders may allow other broker-dealers to participate in resales.
However, the selling shareholders and any broker-dealers involved in the sale or
resale of the shares may qualify as "underwriters" within the meaning of the
Section 2(a)(11) of the Securities Act. In addition, the broker-dealers'
commissions, discounts or concessions may qualify as underwriters' compensation
under the Securities Act. If the selling shareholders qualify as "underwriters,"
they will be subject to the prospectus delivery requirements of Section 5(b)(2)
of the Securities Act.
In addition to selling their shares under this prospectus, the selling
shareholders may:
o agree to indemnify any broker-dealer or agent against certain
liabilities related to the selling of the shares, including
liabilities arising under the Securities Act;
o transfer their shares in other ways not involving market makers or
established trading markets, including directly by gift, distribution,
or other transfer; or
o sell their shares under Rule 144 of the Securities Act rather than
under this prospectus, if the transaction meets the requirements of
Rule 144.
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<PAGE>
Upon notification by a selling shareholder that any material arrangement
has been entered into with a broker-dealer for the sale of the shares through a
block trade, special offering, exchange distribution or secondary distribution
or a purchase by a broker or dealer, we will file a supplement to this
prospectus, if required, pursuant to Rule 424(b) under the Securities Act,
disclosing the material terms of the transaction. In addition, we will file a
supplement to this prospectus if a selling shareholder notifies us that a donee
or pledgee intends to sell more than 500 shares.
EXPERTS
The balance sheets of Tera Computer Company as of December 31, 1997 and
1998 and the related statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 31, 1998,
incorporated by reference into this prospectus, have been audited by Deloitte &
Touche LLP, independent auditors, as stated in their reports with respect
thereto, which includes an explanatory paragraph concerning our ability to
continue as a going-concern. These financial statements have been incorporated
in reliance on the reports of such firm given upon their authority as experts in
accounting and auditing.
LIMITATION OF LIABILITY AND INDEMNIFICATION
Our Restated Articles of Incorporation provide that, to the fullest extent
permitted by the Washington Business Corporation Act, our directors will not be
liable for monetary damages to Tera or its shareholders, excluding, however,
liability for acts or omissions involving intentional misconduct or knowing
violations of law, illegal distributions or transactions from which the director
receives benefits to which the director is not legally entitled. Our Restated
Bylaws provide that Tera will indemnify its directors and, by action of the
Board of Directors, may indemnify its officers, employees and other agents 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of Tera pursuant
to the foregoing provisions, or otherwise, we have been advised that, in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" our publicly-filed reports
into this prospectus, which means that information included in those reports is
considered part of this prospectus. Information that we file with the SEC
subsequent to the date of this prospectus will automatically update and
supersede the information contained in this prospectus. We incorporate by
reference the documents listed below and any future filings made with the SEC
under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934
until the selling shareholders have sold all the shares.
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<PAGE>
The following documents filed with the SEC are incorporated by reference in
this prospectus:
1. Our Annual Report on Form 10-K for the year ended December 31, 1998
and Amendments 1 and 2 thereto as filed with the SEC on August 17,
1999 and August 26, 1999, respectively;
2. Our Quarterly Report on Form 10-Q for the quarterly period ended March
31, 1999 and Amendment No. 1 thereto filed with the SEC on August 16,
1999;
3. Our Quarterly Report on Form 10-Q for the quarterly period ended June
30, 1999;
4. Our Current Report on Form 8-K for the event of May 21, 1999, as filed
with the SEC on July 21, 1999;
5. Our Current Report on Form 8-K for the event of June 25, 1999, as
filed with the SEC on June 29, 1999;
6. Our Current Report on Form 8-K for the event of June 21, 1999, as
filed with the SEC on June 30, 1999;
7. Our Current Report on Form 8-K for the event of March 22, 1999, as
filed with the SEC on March 25, 1999;
8. Our Current Report on Form 8-K for the event of March 10, 1999, as
filed with the SEC on March 25, 1999; and
9. The description of our common stock set forth in our 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 our Registration
Statement on Form 8-A (Registration No. 0-26820), including the
amendment thereto on Form 8-A/A.
We will furnish without charge to you, on written or oral request, a copy
of any or all of the documents incorporated by reference, other than exhibits to
such documents. You should direct any requests for documents to Investor
Relations, Tera Computer Company, 411 First Avenue South, Suite 600, Seattle,
Washington 98104, Telephone (206) 701-2000.
The information relating to Tera contained in this prospectus is not
comprehensive and should be read together with the information contained in the
incorporated documents.
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<PAGE>
AVAILABLE INFORMATION
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the SEC. Certain information in the Registration Statement has been
omitted from this prospectus in accordance with SEC rules.
We file annual, quarterly and special reports and other information with
the SEC. You may read and copy the Registration Statement and any other document
that we file at the SEC's public reference rooms located at Room 1024, Judiciary
Plaza, 450 Fifth Street N.W., Washington, D.C. 20549; 7 World Trade Center,
Suite 1300, New York, New York 10048; and Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at
1-800-SEC-0330 for further information on the public reference rooms. Our SEC
filings are also available to you free of charge at the SEC's web site at
http://www.sec.gov or through our web site at http://www.tera.com.
Statements contained in this prospectus as to the contents of any contract
or other document referred to are not necessarily complete. You should refer to
the copy of such contract or other document filed as an exhibit to the
Registration Statement.
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