THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. THE SALE TO THE
HOLDER OF THIS SECURITY OF THE SHARES OF COMMON STOCK ISSUABLE UPON EXERCISE OF
THIS SECURITY ARE NOT COVERED BY A REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OR REGISTRATION UNDER STATE SECURITIES LAWS. THIS SECURITY HAS BEEN
ACQUIRED, AND SUCH SHARES OF COMMON STOCK MUST BE ACQUIRED, FOR INVESTMENT ONLY
AND MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION OF
THE RESALE THEREOF OR AN OPINION OF COUNSEL REASONABLY ACCEPTABLE IN FORM, SCOPE
AND SUBSTANCE TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED.
SECTION 1.1(C) HEREOF PERMITS THE HOLDER OF THIS WARRANT TO EXERCISE THIS
WARRANT WITHOUT BEING REQUIRED TO SURRENDER THIS WARRANT TO THE COMPANY UNLESS
THIS WARRANT IS EXERCISED FOR ALL OF THE SHARES OF COMMON STOCK ISSUABLE UPON
EXERCISE HEREOF. CONSEQUENTLY, FOLLOWING EXERCISE OF ANY PORTION OF THIS
WARRANT, THE NUMBER OF SHARES OF COMMON STOCK FOR WHICH THIS WARRANT IS THEN
EXERCISABLE MAY BE LESS THAN THE NUMBER OF SHARES STATED HEREON.
Right to Purchase _______Shares of
Common Stock of Tera Computer Company
TERA COMPUTER COMPANY
Common Stock Purchase Warrant
No. _____
TERA COMPUTER COMPANY, a Washington corporation (the "Company"),
hereby certifies that, for value received, __________________________________,
or registered assigns (the "Holder"), is entitled, subject to the terms set
forth below, to purchase from the Company at any time or from time to time after
the date hereof, and before 5:00 p.m., New York City time, on the Expiration
Date (as defined herein), ________ fully paid and nonassessable shares
1
of Common Stock, $.01 par value, of the Company at a purchase price per share
equal to the Purchase Price (as hereinafter defined). The number of such shares
of Common Stock and the Purchase Price are subject to adjustment as provided in
this Warrant.
As used herein the following terms, unless the context otherwise
requires, have the following respective meanings:
(a) The term "Business Day" as used herein shall mean a day on which
the New York Stock Exchange is open for business.
(b) The term "Common Stock" includes the Company's Common Stock, $.01
par value per share, as authorized on the date hereof, and any other
securities into which or for which the Common Stock may be converted or
exchanged pursuant to a plan of recapitalization, reorganization, merger,
sale of assets or otherwise.
(c) The term "Company" shall include Tera Computer Company and any
corporation that shall succeed to or assume the obligations of Tera
Computer Company hereunder.
(d) The term "Expiration Date" refers to [INSERT DATE WHICH IS TEN
YEARS AFTER THE DATE OF ISSUANCE OF THIS WARRANT].
(e) The term "Other Securities" refers to any capital stock (other
than Common Stock) and other securities of the Company or any other person
(corporate or otherwise) which the Holder of this Warrant at any time shall
be entitled to receive, or shall have received, on the exercise of this
Warrant, in lieu of or in addition to Common Stock, or which at any time
shall be issuable or shall have been issued in exchange for or in
replacement of Common Stock or Other Securities pursuant to Section 4.
(f) The term "Purchase Price" shall mean $.01 or such higher amount
which shall be the par value per share of the Common Stock at the time of
exercise of this Warrant, subject to adjustment as provided in this
Warrant.
(g) The term "Purchase Price Reserve" means the funds received from
time to time by the Company from the Holder pursuant to Section 1.1(b) as
prepayments of the Purchase Price which funds are held in trust by the
Company for the account of the Holder unless and until required to be paid
to the Company as the Purchase Price per share upon exercise of this
Warrant.
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(h) The term "Subscription Agreement" means the Subscription
Agreement, dated as of December 16, 1998, between the original Holder of
this Warrant, the Company, and the other party thereto, as amended by the
Amendment Agreement dated as of September 30, 1998, between the original
Holder of this Warrant, the Company, and the other party thereto, as
amended by the Amendment Agreement dated as of March __, 1999, between the
original Holder of this Warrant, the Company and the other party thereto,
and as further amended or modified from time to time.
(i) The term "Subscription Form" means the Form of Subscription
annexed hereto pursuant to which the Holder may exercise this Warrant.
1. Exercise of Warrant.
1.1 Exercise at Option of Holder. (a) This Warrant may be exercised by
the Holder hereof in full or in part at any time or from time to time during the
exercise period specified in the first paragraph hereof until the Expiration
Date by delivering the Subscription Form (duly executed by such Holder) to the
Company's transfer agent and registrar for the Common Stock and, if insufficient
funds are then held in the Purchase Price Reserve, by making payment, in cash or
by certified or official bank check payable to the Company, or by wire transfer
to an account designated by the Company, in the amount equal to the difference
between (1) the product of (A) the number of shares of Common Stock designated
by the Holder in the Subscription Form times (B) the Purchase Price then in
effect and (2) the amount of funds held in the Purchase Price Reserve.
(b) The Holder may from time to time prepay the Purchase Price for
some or all of the shares of Common Stock issuable upon exercise of this Warrant
by making payment to the Company in the manner specified in Section 1.1(a). Such
prepayments shall be held by the Company in trust for the account of the Holder
in the Purchase Price Reserve. Upon each exercise of this Warrant, the Holder
hereby authorizes and directs the Company to deduct from the Purchase Price
Reserve the aggregate Purchase Price due to the Company pursuant to Section
1.1(a)(1). Upon request, the Company will provide the Holder with a statement of
the balance held in the Purchase Price Reserve. The company shall return to the
Holder all amounts held in the Purchase Price Reserve (which are not then due to
the Company in connection with any exercise of this Warrant) within ten Business
Days of receiving a request therefor from the Holder.
(c) If the Holder elects to exercise this Warrant, the Holder shall
not be required to surrender this Warrant to the Company unless the remaining
balance of this Warrant is being exercised in full. The Holder and the Company
shall maintain records showing the number of shares of Common Stock for which
this Warrant has been exercised and the dates of such exercises or shall use
such other method, satisfactory to the Holder and the Company, so as not to
require physical delivery of this Warrant upon each such exercise. In the event
of any dispute or discrepancy, such records of the Company shall be controlling
and determinative in the absence of manifest error. The
3
Holder acknowledges and agrees that (1) by reason of the provisions of this
Section 1.1(c), following exercise of any portion of this Warrant, the number of
shares of Common Stock issuable upon exercise of this Warrant may be less than
the number of shares stated hereon, and (2) the Company may place a legend on
this Warrant which refers to or describes the provisions of this Section 1.1(c).
If the Holder elects to surrender this Warrant on any partial exercise, the
Company will forthwith issue and deliver to or upon the order of the Holder
hereof a new Warrant or Warrants of like tenor, in the name of the Holder hereof
or as such Holder (upon payment by such Holder of any applicable transfer taxes)
may request, providing in the aggregate on the face or faces thereof for the
purchase of the number of shares of Common Stock for which such Warrant or
Warrants may still be exercised.
(d) Notwithstanding any other provision of this Warrant, in no event
shall the Holder be entitled at any time to purchase a number of shares of
Common Stock on exercise of this Warrant in excess of that number of shares upon
purchase of which the sum of (1) the number of shares of Common Stock
beneficially owned by the Holder and all persons whose beneficial ownership of
shares of Common Stock would be aggregated with the Holder's beneficial
ownership of shares of Common Stock for purposed of Section 13(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and Regulation
13D-G thereunder, (each such person other than the Holder an "Aggregated Person"
and all such persons other than the Holder, collectively, the "Aggregated
Persons") (other than shares of Common Stock deemed beneficially owned through
the ownership by the Holder and all Aggregated Persons of the Holder of the
unexercised portion of this Warrant and any other security of the Company which
contains similar provisions) and (2) the number of shares of Common Stock
issuable upon exercise of the portion of this Warrant with respect to which the
determination in this sentence is being made, would result in beneficial
ownership by the Holder and all Aggregated Persons of the Holder of more than
4.9% of the outstanding shares of Common Stock. For purposes of the immediately
preceding sentence, beneficial ownership shall be determined in accordance with
Section 13(d) of the Exchange Act and Regulation 13D-G thereunder, except as
otherwise provided in clause (1) of the immediately preceding sentence. For
purposes of the second preceding sentence, the Company shall be entitled to
rely, and shall be fully protected in relying, on any statement or
representation made by the Holder to the Company in connection with a particular
exercise of this Warrant, without any obligation on the part of the Company to
make any inquiry or investigation or to examine its records or the records of
any transfer agent for the Common Stock.
1.2 Net Issuance. Notwithstanding anything to the contrary contained
in Section 1.1, the Holder may elect to exercise this Warrant in whole or in
part by receiving shares of Common Stock equal to the net issuance value (as
determined below) of this Warrant, or any part hereof, upon surrender of this
Warrant at the principal office of the Company together with the Subscription
Form (duly executed by the Holder), in which event the Company shall issue to
the Holder a number of shares of Common Stock computed using the following
formula:
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X = Y (A-B)
-------
A
Where: X = the number of shares of Common Stock to be issued to
the Holder
Y = the number of shares of Common Stock as to which this
Warrant is to be exercised
A = the current fair market value of one share of Common
Stock calculated as of the last trading day immediately
preceding the exercise of this Warrant
B = the Purchase Price
As used herein, current fair market value of Common Stock as of a specified
date shall mean with respect to each share of Common Stock the average of the
closing bid prices of the Common Stock on the principal securities market on
which the Common Stock may at the time be traded over a period of five Business
Days consisting of the day as of which the current fair market value of a share
of Common Stock is being determined (or if such day is not a Business Day, the
Business Day next preceding such day) and the four consecutive Business Days
prior to such day. If on the date for which current fair market value is to be
determined the Common Stock is not eligible for trading on any securities
market, the current fair market value of Common Stock shall be the highest price
per share which the Company could then obtain from a willing buyer (other than a
current employee or director) for shares of Common Stock sold by the Company,
from authorized but unissued shares, as determined in good faith by the Board of
Directors of the Company, unless prior to such date the Company has become
subject to a merger, acquisition or other consolidation pursuant to which the
Company is not the surviving party, in which case the current fair market value
of the Common Stock shall be deemed to be the value received by the holders of
the Company's Common Stock for each share thereof pursuant to the Company's
acquisition.
2. Delivery of Stock Certificates, etc., on Exercise. As soon as
practicable after the exercise of this Warrant, and in any event within three
Business Days thereafter, the Company at its expense (including the payment by
it of any applicable issue or stamp taxes) will cause to be issued in the name
of and delivered to the Holder hereof, or as such Holder (upon payment by such
Holder of any applicable transfer taxes) may direct, a certificate or
certificates for the number of fully paid and nonassessable shares of Common
Stock (or Other Securities) to which such Holder shall be entitled on such
exercise, in such denominations as may be requested by such Holder, plus, in
lieu of any fractional share to which such Holder would otherwise be entitled,
cash equal to such fraction multiplied by the then current fair market value (as
determined
5
in accordance with subsection 1.2) of one full share, together with any other
stock or other securities or property (including cash, where applicable) to
which such Holder is entitled upon such exercise pursuant to Section 1 or
otherwise. In lieu of delivering physical certificates representing such shares,
provided that the Company's transfer agent is participating in the Depository
Trust Company ("DTC") Fast Automated Securities Transfer program, upon request
of the Holder, the Company shall cause its transfer agent to electronically
transmit such shares by crediting the account of the Holder or the Holder's
broker with the DTC through its Deposit Withdrawal Agent Commission system. Upon
exercise of this Warrant as provided herein, the Company's obligation to issue
and deliver the certificates for Common Stock shall be absolute and
unconditional, irrespective of any action or inaction by the Holder to enforce
the same, any waiver or consent with respect to any provision hereof, the
recovery of any judgment against any person or any action to enforce the same,
any failure or delay in the enforcement of any other obligation of the Company
to the Holder, or any setoff, counterclaim, recoupment, limitation or
termination, or any breach or alleged breach by the Holder or any other person
of any obligation to the Company or any violation or alleged violation of law by
the Holder or any other person, and irrespective of any other circumstance which
might otherwise limit such obligation of the Company to the Holder in connection
with such exercise. If the Company fails to issue and deliver the certificates
for the Common Stock to the Holder pursuant to the first sentence of this
paragraph as and when required to do so, in addition to any other liabilities
the Company may have hereunder and under applicable law, (a) the Company shall
pay or reimburse the Holder on demand for all out-of-pocket expenses including,
without limitation, fees and expenses of legal counsel incurred by the Holder as
a result of such failure and (b) the Adjustment Price shall be reduced in
accordance with Section 3(e) of the Subscription Agreement.
3. Adjustment for Dividends in Other Stock, Property, etc.;
Reclassification, etc. In case at any time or from time to time, all the holders
of Common Stock (or Other Securities) shall have received, or (on or after the
record date fixed for the determination of shareholders eligible to receive)
shall have become entitled to receive, without payment therefor,
(a) other or additional stock or other securities or property (other
than cash) by way of dividend, or
(b) any cash (excluding cash dividends payable solely out of earnings
or earned surplus of the Company), or
(c) other or additional stock or other securities or property
(including cash) by way of spin-off, split-up, reclassification,
recapitalization, combination of shares or similar corporate rearrangement,
other than additional shares of Common Stock (or Other Securities) issued as a
stock dividend or in a stock-split (adjustments in respect of which are provided
for in Section 5), then and in each such
6
case the Holder of this Warrant, on the exercise hereof as provided in Section
1, shall be entitled to receive the amount of stock and other securities and
property (including cash in the cases referred to in subdivisions (b) and (c) of
this Section 3) which such Holder would hold on the date of such exercise if on
the date hereof the Holder had been the holder of record of the number of shares
of Common Stock called for on the face of this Warrant and had thereafter,
during the period from the date hereof to and including the date of such
exercise, retained such shares and all such other or additional stock and other
securities and property (including cash in the case referred to in subdivisions
(b) and (c) of this Section 3) receivable by the Holder as aforesaid during such
period, giving effect to all adjustments called for during such period by
Section 4.
4. Exercise upon Reorganization, Consolidation, Merger, etc. In case at any
time or from time to time, the Company shall (a) effect a reorganization, (b)
consolidate with or merge into any other person, (c) effect an exchange of
outstanding shares of the Company for securities of any other person or (d)
transfer all or substantially all of its properties or assets to any other
person under any plan or arrangement contemplating the dissolution of the
Company, then, in each such case, as a condition of such reorganization,
consolidation, merger, share exchange, sale or conveyance, the Company shall
cause effective provisions to be made so that the Holder shall have the right
thereafter, by exercising this Warrant (in lieu of the shares of Common Stock of
the Company purchasable and receivable upon exercise of the rights represented
hereby immediately prior to such transaction) to purchase the kind and amount of
shares of stock and other securities and property (including cash) receivable
upon such reorganization, consolidation, merger, share exchange, sale or
conveyance by a holder of the number of shares of Common Stock that might have
been received upon exercise of this Warrant immediately prior to such
reorganization, consolidation, merger, share exchange, sale or conveyance;
provided, however, that in the event (x) the value of the stock, securities or
other assets or property (determined in good faith by the Board of Directors of
the Company) issuable or payable with respect to one share of Common Stock of
the Company purchasable and receivable upon the exercise of the rights
represented hereby immediately prior to such transaction is in excess of the
Purchase Price hereof in effect at the time of such reorganization,
consolidation, merger, share exchange, sale or conveyance (after giving effect
to any adjustment in such Purchase Price required to be made under the terms of
this Warrant), and (y) the securities, if any, to be received in such
reorganization, consolidation, merger, share exchange, sale or conveyance are
publicly traded, then if the Company gives the Holder at least 20 Business Days
(or such lesser period as the Company gives notice of such transaction to the
holders of the outstanding shares of Common Stock) prior notice of such
reorganization, merger, share exchange, sale or conveyance this Warrant shall
expire unless exercised prior to such reorganization, consolidation, merger,
share exchange, sale or conveyance. Any such provision shall include provisions
for adjustments in respect of such shares of stock and other securities and
property that shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Warrant. The provisions of this Section shall
apply to successive reorganizations, consolidations, mergers, share exchanges,
sales and conveyances.
7
5. Adjustment for Extraordinary Events. In the event that the Company shall
(a) issue additional shares of the Common Stock as a dividend or other
distribution on outstanding Common Stock, (b) subdivide or reclassify its
outstanding shares of Common Stock, or (c) combine its outstanding shares of
Common Stock into a smaller number of shares of Common Stock, then, in each such
event, the Purchase Price shall, simultaneously with the happening of such
event, be adjusted by multiplying the Purchase Price in effect immediately prior
to such event by a fraction, the numerator of which shall be the number of
shares of Common Stock outstanding immediately prior to such event and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such event, and the product so obtained shall thereafter be
the Purchase Price then in effect. The Purchase Price, as so adjusted, shall be
readjusted in the same manner upon the happening of any successive event or
events described herein in this Section 5. The Holder of this Warrant shall
thereafter, on the exercise hereof as provided in Section 1, be entitled to
receive that number of shares of Common Stock determined by multiplying the
number of shares of Common Stock which would be issuable on such exercise as of
immediately prior to such issuance by a fraction of which (x) the numerator is
the Purchase Price in effect immediately prior to such issuance and (y) the
denominator is the Purchase Price in effect on the date of such exercise.
6. Further Assurances. The Company will take all action that may be
necessary or appropriate in order that the Company may validly and legally issue
fully paid and nonassessable shares of stock, free from all taxes, liens and
charges with respect to the issue thereof, on the exercise of all or any portion
of this Warrant from time to time outstanding.
7. Notices of Record Date, etc. In the event of
(a) any taking by the Company of a record of the holders of any class
of securities for the purpose of determining the holders thereof who are
entitled to receive any dividend on, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, or
(b) any capital reorganization of the Company, any reclassification or
recapitalization of the capital stock of the Company or any transfer of all
or substantially all of the assets of the Company to or consolidation or
merger of the Company with or into any other person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Company,
then and in each such event the Company will mail or cause to be mailed to the
Holder, at least ten days prior to such record date, a notice specifying (i) the
date on which any such record is to be taken for the purpose of such dividend,
distribution or right, and stating the amount and character of such
8
dividend, distribution or right; (ii) the date on which any such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up is to take place, and the time, if any is
to be fixed, as of which the holders of record of Common Stock (or Other
Securities) shall be entitled to exchange their shares of Common Stock (or Other
Securities) for securities or other property deliverable on such reorganization,
reclassification, recapitalization, transfer, consolidation, merger,
dissolution, liquidation or winding-up; and (iii) the amount and character of
any stock or other securities, or rights or options with respect thereto,
proposed to be issued or granted, the date of such proposed issue or grant and
the persons or class of persons to whom such proposed issue or grant is to be
offered or made. Such notice shall also state that the action in question or the
record date is subject to the effectiveness of a registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), or a favorable
vote of shareholders, if either is required. Such notice shall be mailed at
least ten days prior to the date specified in such notice on which any such
action is to be taken or the record date, whichever is earlier.
8. Reservation of Stock, etc., Issuable on Exercise of Warrants. The
Company will at all times reserve and keep available, solely for issuance and
delivery on the exercise of this Warrant, all shares of Common Stock (or Other
Securities) from time to time issuable on the exercise of this Warrant.
9. Transfer of Warrant. This Warrant shall inure to the benefit of the
successors to and assigns of the Holder. This Warrant and all rights hereunder,
in whole or in part, is registrable at the office or agency of the Company
referred to below by the Holder hereof in person or by his duly authorized
attorney, upon surrender of this Warrant properly endorsed.
10. Register of Warrants. The Company shall maintain, at the principal
office of the Company (or such other office as it may designate by notice to the
Holder hereof), a register in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as the
name and address of each successor and prior owner of such Warrant. The Company
shall be entitled to treat the person in whose name this Warrant is so
registered as the sole and absolute owner of this Warrant for all purposes.
11. Exchange of Warrant. This Warrant is exchangeable, upon the surrender
hereof by the Holder hereof at the office or agency of the Company referred to
in Section 10, for one or more new Warrants of like tenor representing in the
aggregate the right to subscribe for and purchase the number of shares of Common
Stock which may be subscribed for purchase hereunder, each of such new Warrants
to represent the right to subscribe for and purchase such number of shares as
shall be designated by said Holder hereof at the time of such surrender.
12. Replacement of Warrant. On receipt of evidence reasonably satisfactory
to the Company of the loss, theft, destruction or mutilation of this Warrant
and, in the case of any such
9
loss, theft or destruction of this Warrant, on delivery of an indemnity
agreement or security reasonably satisfactory in form and amount to the Company
or, in the case of any such mutilation, on surrender and cancellation of this
Warrant, the Company at its expense will execute and deliver, in lieu thereof, a
new Warrant of like tenor.
13. Warrant Agent. Prior to the issuance of this Warrant, the Company will
instruct ChaseMellon Shareholder Services, L.L.C. (the "Transfer Agent") to act
as the exercise agent for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1. The Company
may, by written notice to the Holder, appoint an agent having an office in the
United States of America, for the purpose of issuing Common Stock (or Other
Securities) on the exercise of this Warrant pursuant to Section 1, exchanging
this Warrant pursuant to Section 11, and replacing this Warrant pursuant to
Section 12, or any of the foregoing, and thereafter any such issuance, exchange
or replacement, as the case may be, shall be made at such office by such agent.
14. Remedies. The Company stipulates that the remedies at law of the Holder
of this Warrant in the event of any default or threatened default by the Company
in the performance of or compliance with any of the terms of this Warrant are
not and will not be adequate, and that such terms may be specifically enforced
by a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
15. No Rights or Liabilities as a Shareholder. This Warrant shall not
entitle the Holder hereof to any voting rights or other rights as a shareholder
of the Company. No provision of this Warrant, in the absence of affirmative
action by the Holder hereof to purchase Common Stock, and no mere enumeration
herein of the rights or privileges of the Holder hereof, shall give rise to any
liability of such Holder for the Purchase Price or as a shareholder of the
Company, whether such liability is asserted by the Company or by creditors of
the Company.
16. Notices, etc. All notices and other communications from the Company to
the registered Holder of this Warrant shall be mailed by first class certified
mail, postage prepaid, at such address as may have been furnished to the Company
in writing by such Holder or at the address shown for such Holder on the
register of Warrants referred to in Section 10.
17. Investment Representations. By acceptance of this Warrant, the Holder
represents to the Company that this Warrant is being acquired for the Holder's
own account and for the purpose of investment and not with a view to, or for
sale in connection with, the distribution thereof, nor with any present
intention of distributing or selling this Warrant or the Common Stock issuable
upon exercise of the Warrant. The Holder acknowledges that the Holder has been
afforded the opportunity to meet with the management of the Company and to ask
questions of, and receive answers from, such management and the Company's
counsel about the business and affairs of the Company and concerning the terms
and conditions of the offering of this Warrant, and to obtain any additional
10
information, to the extent that the Company possessed such information or could
acquire it without unreasonable effort or expense, necessary to verify the
accuracy of the information otherwise obtained by or furnished to the Holder in
connection with the offering of this Warrant. The Holder asserts that it may be
considered to be a sophisticated investor, is familiar with the risks inherent
in speculative investments such as in the Company, has such knowledge and
experience in financial and business matters that it is capable of evaluating
the merits and risks of the investment in this Warrant and the Common Stock
issuable upon exercise of this Warrant, and is able to bear the economic risk of
the investment. The Holder acknowledges and agrees that this Warrant and, except
as otherwise provided in the Registration Rights Agreement between the original
Holder of this Warrant and the Company, as amended or modified from time to time
(the "Registration Rights Agreement"), the shares of Common Stock issuable upon
exercise of this Warrant (if any) have not been (and at the time of acquisition
by the Holder, will not have been or will not be) registered under the
Securities Act or under the securities laws of any state, in reliance upon
certain exemptive provisions of such statutes. The Holder recognizes and
acknowledges that such claims of exemption are based, in part, upon the
representations of the Holder contained herein. The Holder further recognizes
and acknowledges that because this Warrant and, except as provided in the
Registration Rights Agreement, the Common Stock issuable upon exercise of this
Warrant (if any) are unregistered, they may not be eligible for resale, and may
only be resold in the future pursuant to an effective registration statement
under the Securities Act and any applicable state securities laws, or pursuant
to a valid exemption from such registration requirements. Unless the shares of
Common Stock have theretofore been registered for resale or are otherwise exempt
from registration under the Securities Act, the Company may require, as a
condition to the issuance of Common Stock upon the exercise of this Warrant (i)
in the case of an exercise in accordance with Section 1.1 hereof, a confirmation
as of the date of exercise of the Holder's representations pursuant to this
Section 17 or (ii) in the case of an exercise in accordance with Section 1.2
hereof, an opinion of counsel (in form, scope and substance reasonably
satisfactory to the Company) that the shares of Common Stock to be issued upon
such exercise may be issued without registration under the Securities Act.
18. Legend. Unless theretofore registered for resale under the Securities
Act or otherwise exempt from registration under the Securities Act when issued
upon exercise of this Warrant and when resold thereafter, each certificate for
shares issued upon exercise of this Warrant shall bear the following legend:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended. The
securities have been acquired for investment and may not be
sold, transferred or assigned in the absence of an effective
registration statement for the securities under the
Securities Act of 1933, as amended, or an opinion of counsel
reasonably satisfactory in form, scope and substance to the
Company that registration is not required under said Act.
11
19. Amendment; Waiver. This Warrant and any terms hereof may be changed,
waived, discharged or terminated only by an instrument in writing signed by the
party against which enforcement or such change, waiver, discharge or termination
is sought. Notwithstanding any other provision of this Warrant, the Subscription
Agreement or any other agreement between the Company and the Holder, in addition
to the requirements of the immediately preceding sentence, any amendment of (x)
Section 1.1(d), (y) the definition of the term Aggregated Person or (z) this
sentence shall require approval by the affirmative vote of the holders of a
majority of the outstanding shares of Common Stock, present in person or
represented by proxy at a duly convened meeting of stockholders of the Company
and entitled to vote, or the consent thereto in writing by holders of a majority
of the outstanding shares of Common Stock, and the stockholders of the Company
are hereby expressly made third party beneficiaries of this sentence.
20. Miscellaneous. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws of the State of Washington.
The headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof. The invalidity or
unenforceability of any provision hereof shall in no way affect the validity or
enforceability of any other provision.
IN WITNESS WHEREOF, Tera Computer Company has caused this Warrant to be
executed on its behalf by one of its officers thereunto duly authorized.
Dated: ____________
TERA COMPUTER COMPANY
By:
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Name:
Title:
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FORM OF SUBSCRIPTION
COMMON STOCK PURCHASE WARRANT
OF TERA COMPUTER COMPANY
(To be signed only on exercise of Warrant)
TO: ChaseMellon Shareholder Services, LLC,
as Exercise Agent
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, Xxxxxxxxxx 00000
1. The undersigned Holder of Warrant No. _____ dated _________ hereby
elects to exercise its purchase right under such Warrant with respect to
______________ shares of Common Stock, (as defined in the Warrant) of Tera
Computer Company, a Washington corporation (the "Company").
2. The undersigned Holder (check one):
[ ] (a) elects to pay the aggregate purchase price for such shares of
Common Stock (i) by lawful money of the United States or the enclosed certified
or official bank check payable in United States dollars to the order of the
Company in the amount of $___________, or (ii) by wire transfer of United States
funds to the account of the Company in the amount of $____________, which
transfer has been made before or simultaneously with the delivery of this Form
of Subscription pursuant to the instructions of the Company;
[ ] (b) elects to pay the aggregate purchaser price for such shares of
Common Stock by authorizing the Company to deduct such amount from the Holder's
Purchase Price Reserve (as defined in the Warrant); or
[ ] (c) elects to receive shares of Common Stock having a value equal to
the value of the Warrant calculated in accordance with Section 1.2 of the
Warrant.
3. Please issue a stock certificate or certificates representing the
appropriate number of shares of Common Stock in the name of the undersigned or
in such other names as is specified below:
Name:
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Address:
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Dated:
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(Signature must conform to name of Holder
as specified on the face of the Warrant)
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Print Name
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(Address)
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