-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, GvYqPk4nGyiuZeORoiBMbFTzgZOydft2Fqp58D3R3slHbggoqBnKoZPkgi89vvFY /T2YyLQImtHPWOI4In9OMg== 0000891020-01-500330.txt : 20020411 0000891020-01-500330.hdr.sgml : 20020411 ACCESSION NUMBER: 0000891020-01-500330 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20011121 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CRAY INC CENTRAL INDEX KEY: 0000949158 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 930962605 STATE OF INCORPORATION: WA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3 SEC ACT: 1933 Act SEC FILE NUMBER: 333-73864 FILM NUMBER: 1797992 BUSINESS ADDRESS: STREET 1: 411 FIRST AVE SOUTH STREET 2: SUITE 600 CITY: SEATTLE STATE: WA ZIP: 98104-2860 BUSINESS PHONE: 2067012000 MAIL ADDRESS: STREET 1: 411 FIRST AVE SOUTH STREET 2: SUITE 600 CITY: SEATTLE STATE: WA ZIP: 98104-2860 FORMER COMPANY: FORMER CONFORMED NAME: TERA COMPUTER CO \WA\ DATE OF NAME CHANGE: 19950809 S-3 1 v77445s-3.txt FORM S-3 As filed with the Securities and Exchange Commission on November 21, 2001 Registration No. 333-_________ ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------- Form S-3 Registration Statement Under the Securities Act of 1933 ------------- CRAY INC. (Exact name of registrant as specified in its charter) ------------- WASHINGTON 93-0962605 (State or other jurisdiction (IRS Employer of incorporation or organization) Identification No.) 411 First Avenue South Suite 600 Seattle, WA 98104 (206) 701-2000 (telephone) (206) 701-2500 (facsimile) (Address, including zip code, and telephone and facsimile numbers, including area code, of principal executive offices) ------------- Kenneth W. Johnson, Chief Financial Officer Cray Inc. 411 First Avenue South Suite 600 Seattle, WA 98104 (206) 701-2000 (telephone) (206) 701-2500 (facsimile) (Name, address, including zip code, and telephone and facsimile numbers, including area code, of agent for service) Copy to: L. John Stevenson, Jr. Stoel Rives LLP One Union Square, 36th Floor Seattle, WA 98101-3197 (206) 624-0900 (telephone) (206) 386-7500 (facsimile) APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to time after this registration statement becomes effective If the only securities being registered on this Form are to be offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with a dividend or interest reinvestment plan, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] CALCULATION OF REGISTRATION FEE
===================================================================================================== Title of Each Class of Proposed Maximum Proposed Maximum Securities Amount to be Offering Price Aggregate Amount of Registered Registered (1) Per Share (2) Offering Price (2) Registration Fee - ------------- -------------- ---------------- ------------------ ---------------- Common Stock, 100,000 shares $2.15 $215,000.00 $54.00 $.01 par value =====================================================================================================
(1) Pursuant to Rule 416 under the Securities Act of 1933, there are also being registered such indeterminate number of additional shares of common stock as may be issuable upon exercise of the stock purchase warrant described herein pursuant to the provisions thereof regarding adjustment for stock dividends, a split, subdivision or combination of common stock or similar event. (2) The proposed maximum offering price per share and maximum aggregate offering price for the shares being registered hereby are calculated in accordance with Rule 457(c) under the Securities Act using the average of the high and low market prices on November 15, 2001. The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said section 8(a), may determine. PROSPECTUS, Subject to Completion, dated November 21, 2001 CRAY INC. 100,000 shares of common stock These shares of common stock are issuable upon exercise of the stock purchase warrant owned by the selling shareholder listed on page 3. The selling shareholder 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. We will not receive any proceeds from the sale of the shares, but we will bear the costs relating to the registration of the shares. Our common stock is traded on the Nasdaq National Market under the symbol "CRAY." On November 20, 2001, the closing price for our common stock was $2.22 per share. ------------------------------- THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE "FACTORS THAT COULD AFFECT FUTURE RESULTS" CONTAINED IN OUR QUARTERLY REPORT ON FORM 10-Q FOR THE QUARTER ENDING SEPTEMBER 30, 2001, AND SIMILAR DISCLOSURES 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. ------------------------------- The date of this prospectus is ____________, 2001. TABLE OF CONTENTS
Section Page ------- ---- Our Business................................................... 3 Selling Shareholder ........................................... 3 Plan of Distribution .......................................... 4 Legal Matters.................................................. 5 Experts ....................................................... 5 Limitation of Liability and Indemnification ................... 5 Information Incorporated by Reference ......................... 6 Available Information ......................................... 7
You should rely only on information contained or incorporated by reference in this prospectus. See "Information Incorporated by Reference" on page 6. Neither we nor the selling shareholder has 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. -2- OUR BUSINESS We design, build, sell and service 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 SHAREHOLDER On March 28, 2001, Foothill Capital Corporation, the selling shareholder, acquired a stock purchase warrant exercisable for an aggregate of 100,000 shares of our common stock at an initial exercise price of $1.76 per share in connection with a credit agreement with us. The warrant is exercisable until March 28, 2005. The number of shares issuable upon exercise and the exercise price are subject to adjustment in the event of a stock dividend, a split, subdivision or combination of our common stock or similar event. The warrant may also be exercised by means of a cashless exercise feature in which case we would not receive any proceeds upon exercise of the warrant. As of November 20, 2001, Foothill did not hold any shares of our common stock. All of the shares covered by this prospectus are being sold for the account of Foothill. The shares covered by this prospectus include only the shares of common stock issuable upon exercise of the warrant.
Ownership After Shares Offering if All Shares Owned Prior Shares Being Offered Hereby Are Selling Shareholder to Offering Offered Sold - ------------------- ----------- ------------ ---------------------- Shares Percent ------ ------- Foothill Capital 100,000 (1) 100,000 (1) 0 0 Corporation
- -------------------- (1) Consists of 100,000 shares of common stock issuable upon the exercise of the warrant. Foothill has not had any material relationship with us or any of our affiliates within the past three years. In recognition of the fact that Foothill may wish to be legally permitted to sell its shares when it deems appropriate, we have agreed with Foothill to file with the SEC, under the Securities Act of 1933, a registration statement on Form S-3, of which this prospectus forms a part, with respect to the resale of the shares, and we 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 earlier of (i) a period of 120 days or (ii) Foothill has completed the distribution described in this prospectus. -3- PLAN OF DISTRIBUTION We are registering the shares covered by this prospectus for Foothill. Foothill or its pledgees, donees, transferees or other successors in interest 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 shares may be sold by one or more of the following methods: - a block trade in which a broker or dealer so engaged will attempt to sell the shares as agent but may position and resell a portion of the block, as principal, in order to facilitate the transaction; - purchases by a broker or dealer, as principal, in a market maker capacity or otherwise and resale by the broker or dealer for its account pursuant to their prospectus; - ordinary brokerage transactions and transactions in which a broker solicits purchases; - privately negotiated transactions; - any combination of these methods of sale; or - any other legal method. We will pay the costs and fees of registering the shares, but Foothill will pay any brokerage commissions, discounts or other expenses relating to the sale of the shares. We and Foothill 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. Regulation M under the Securities Exchange Act of 1934 provides that during the period that any person is engaged in the distribution, as so defined in Regulation M, of our common stock, such person generally may not purchase shares of our common stock. Foothill is subject to applicable provisions of the Securities Act and the Securities Exchange Act of 1934 and the rules and regulations thereunder, including, without limitation, Regulation M, which provisions may limit the timing of purchases and sales of shares of our common stock by Foothill. The foregoing may affect the marketability of our common stock. Foothill may negotiate and pay brokers or dealers commissions, discounts or concessions for their services. In effecting sales, brokers or dealers engaged by Foothill may allow other brokers or dealers to participate. However, Foothill and any brokers or 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 brokers' or dealers' commissions, discounts or concessions may qualify as underwriters' compensation under the Securities Act. If Foothill qualifies as an "underwriter," it will be subject to the prospectus delivery requirements of section 5(b)(2) of the Securities Act. In addition to selling its shares under this prospectus, Foothill may: -4- - agree to indemnify any broker or dealer or agent against certain liabilities related to the selling of the shares, including liabilities arising under the Securities Act; - transfer its shares in other ways not involving market makers or established trading markets, including directly by gift, distribution, or other transfer; or - sell its shares under Rule 144 of the Securities Act rather than under this prospectus, if the transaction meets the requirements of Rule 144. Upon notification by Foothill that any material arrangement has been entered into with a broker or 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. LEGAL MATTERS For purposes of this offering, Kenneth W. Johnson, our General Counsel, is giving an opinion on the validity of the common shares. As of the date of this prospectus, Mr. Johnson held 40,914 shares of our common stock, options to purchase 270,000 shares of our common stock and warrants to purchase 21,637 shares of our common stock. EXPERTS The financial statements incorporated in this prospectus by reference from our Annual Report on Form 10-K/A for the year ended December 31, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is incorporated herein by reference. The statements of assets acquired and liabilities assumed of the Cray Research business unit of Silicon Graphics, Inc. as of March 31, 2000, and the related statements of revenue and direct operating expenses for the years ended June 30, 1998 and 1999 and the nine month period ended March 31, 2000 incorporated in this prospectus by reference from Form 8-K/A of Cray Inc. filed on June 16, 2000 have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report (which report expresses an unqualified opinion and includes an explanatory paragraph referring to note 1 which describes the expense allocations by Silicon Graphics, Inc), which is incorporated herein by reference. These financial statements have been so incorporated herein by reference in reliance upon 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 us or our 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 we will indemnify our directors and, by action of the Board of Directors, may indemnify our officers, employees and other agents to the fullest -5- 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 our directors, officers and controlling persons 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 Securities and Exchange Commission 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 Securities and Exchange Commission after the date of this prospectus will automatically update and supersede the information contained in this prospectus. We incorporate by reference the following documents filed with the Securities and Exchange Commission and any future filings made with the Securities and Exchange Commission under sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934: 1. Our annual report on Form 10-K/A for the year ended December 31, 2000, as filed on September 17, 2001; 2. Our quarterly reports on Form 10-Q for the quarters ended March 31, 2001, June 30, 2001, and September 30, 2001; 3. Our definitive proxy statement, as filed with the Securities and Exchange Commission on April 9, 2001; 4. Our current report on Form 8-K for the event of October 1, 2001 as filed on October 10, 2001; 5. Our current report on Form 8-K for the event of May 10, 2001, as filed on May 14, 2001; 6. Our current report on Form 8-K for the event of April 3, 2001, as filed on April 13, 2001; 7. Our current report on Form 8-K for the event of February 7, 2001, as filed on February 15, 2001; 8. Our current report on Form 8-K/A for the event of December 15, 2000, as filed on July 27, 2001; 9. Our current report on Form 8-K for the event of April 3, 2000, as filed on April 5, 2000 and amended on June 16, 2000; and 10. The description of our common stock as described in our registration statement on Form SB-2, registration no. 33-95460-LA, including any amendment or report -6- filed for the purpose of updating the description, as incorporated by reference in our registration statement on Form 8-A, registration no. 0-26820, including the amendment on Form 8-A/A. We will furnish without charge to you, on written or oral request, a copy, excluding exhibits, of any or all of the documents incorporated by reference. You should direct any requests for documents to Investor Relations, Cray Inc., 411 First Avenue South, Suite 600, Seattle, Washington 98104, telephone (206) 701-2000. The information relating to us contained in this prospectus is not comprehensive and should be read with the information contained in the incorporated documents. 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; 233 Broadway, 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. 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. -7- PART II INFORMATION NOT REQUIRED IN THE PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. We will pay all expenses in connection with the issuance and distribution of the securities being registered.. The following is an itemized statement of these expenses (all amounts are estimated except for the SEC fees): SEC Registration fee............................... $ 54 Legal fees......................................... $10,000 Accountant's Fees.................................. $ 3,000 Miscellaneous...................................... $ 1,946 Total.............................................. $15,000 =======
Item 15. Indemnification of Officers and Directors. Article XII of our Restated Articles of Incorporation and Section 11 of our Restated Bylaws require indemnification of our directors, officers, employees and agents to the fullest extent permitted by the Washington Business Corporation Act (the "Act"). Sections 23B.08.500 through 23B.08.600 of the Act authorize a court to award, or a corporation's board of directors to grant, indemnification to directors and officers on terms sufficiently broad to permit indemnification under certain circumstances for liabilities arising under the Securities Act. Section 23B.08.320 of the Act authorizes a corporation to limit a director's liability to the corporation or its shareholders for monetary damages for acts or omissions as a director, except in certain circumstances involving intentional misconduct, self-dealing or illegal corporate loans or distributions, or any transaction from which the director personally receives a benefit in money, property or services to which the director is not legally entitled. Article XI of our Restated Articles of Incorporation contains provisions implementing, to the fullest extent permitted by Washington law, such limitations on a director's liability to us and our shareholders. Item 16. Exhibits. 4 Warrant to Purchase Shares of Common Stock issued to Foothill Capital Corporation 5 Opinion on Legality 23 Consent of Deloitte & Touche LLP II-1 24 Power of Attorney (included on signature page hereof) Item 17. Undertakings. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (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 material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; 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 contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or Section 15(d) of the Exchange Act that are incorporated by reference in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof; and (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. II-2 (c) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question, whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. II-3 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Seattle, State of Washington, on November 21, 2001. CRAY INC. By: /S/ ----------------------------------------- Michael P. Haydock President and Chief Executive Officer Each of the undersigned hereby constitutes and appoints James E. Rottsolk, Michael P. Haydock and Kenneth W. Johnson, and each of them, the undersigned's true and lawful attorney-in-fact and agent, with full power of substitution, for the undersigned and in his or her 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 Cray Inc. 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, 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 the undersigned 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, this Registration Statement has been signed by the following persons in the capacities indicated below on the 21st day of November, 2001: Signature and Title /S/ /S/ - -------------------------------- -------------------------------- James E. Rottsolk, Chairman of Daniel J. Evans, Director the Board of Directors /S/ /S/ - -------------------------------- -------------------------------- Burton J. Smith, Director Stephen C. Kiely, Director /S/ /S/ - -------------------------------- -------------------------------- Terren S. Peizer, Director Kenneth W. Kennedy, Director /S/ /S/ - -------------------------------- -------------------------------- David N. Cutler, Director William A. Owens, Director /S/ /S/ - -------------------------------- -------------------------------- Dean D. Thornton, Director Kenneth W. Johnson Chief Financial Officer /S/ /S/ - -------------------------------- -------------------------------- Douglas C. Ralphs, Chief Michael P. Haydock, President, Accounting Officer Chief Executive Officer and Director
EX-4 3 v77445ex4.txt EXHIBIT 4 Exhibit 4 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER. CRAY INC. Warrant Right to Purchase 100,000 Certificate No. F-1 March 28, 2001 Shares of Common Stock Of Cray Inc. WARRANT TO PURCHASE SHARES OF COMMON STOCK CRAY INC., a Washington corporation (the "Company"), hereby certifies that, for value received, FOOTHILL CAPITAL CORPORATION, a California corporation, or registered assigns (the "Holder"), is entitled to purchase, subject to the terms and conditions set forth herein, One Hundred Thousand (100,000) fully paid and nonassessable shares of Common Stock of the Company, at an initial purchase price per share determined in accordance with the provisions set forth in Section 1 below (the "Purchase Price"), at any time or from time to time after March 28, 2001 and on or prior to 5:00 P.M. Pacific Standard Time on March 28, 2005 (the "Expiration Date"). The Purchase Price and the number and kind of securities of the Company purchasable upon the exercise of this Warrant are subject to modification and adjustment as provided herein. The Purchase Price shall be payable in cash or by check in lawful funds of the United States of America. Upon presentation and surrender of this Warrant Certificate, together with payment of the Purchase Price of the shares of Common Stock thereby purchased and the Form of Notice of Exercise duly executed, at the principal office of the Company, the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased (the "Shares"). 1. Purchase Price. The Purchase Price of the shares of Common Stock issuable upon the exercise of the Warrants shall $1.76 per share. 1 2. Registration and Transfer. 2.1 General. The Company shall maintain books for the registration and transfer of Warrant Certificates. Prior to due presentment for registration of transfer of this Warrant Certificate, the Company may deem and treat the registered Holder as the absolute owner thereof. 2.2 Compliance with Securities Laws. Notwithstanding the foregoing, the Warrant may not be assigned or transferred unless a Registration Statement is in effect covering these Warrants and the shares of Common Stock issuable hereunder pursuant to the Securities Act of 1933, as amended (the "Securities Act"), or an opinion of counsel reasonably satisfactory to the Company to the effect that such registration is not required has been received by the Company prior to such transfer; provided, however, that such opinion of counsel shall not be required for a transfer to an Affiliate (as hereinafter defined) in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act. For purposes of this Section 2(a), an "Affiliate" of any person is any other person which controls, is controlled by or is under common control with such person. 2.3 Registration. Subject to the foregoing, the Company shall register upon its books any transfer of a Warrant Certificate upon surrender of the same to the Company accompanied (if so required by the Company) by a written instrument of transfer duly executed by the registered Holder or by a duly authorized attorney-in-fact. Upon any such registration of transfer, a new Warrant Certificate shall be issued to the transferee and the surrendered Warrant Certificate shall be cancelled by the Company. 3. Loss or Mutilation. Upon receipt by the Company of reasonable evidence of the ownership of and the loss, theft, destruction or mutilation of any Warrant Certificate and, in the case of loss, theft or destruction, of indemnity reasonably satisfactory to the Company, or, in the case of mutilation, upon surrender and cancellation of the mutilated Warrant Certificate, the Company shall execute and deliver in lieu thereof a new Warrant Certificate representing an equal number of Warrants. 4. Adjustments 4.1 Split, Subdivision or Combination of Shares. If the Company at any time while this Warrant remains outstanding and unexpired shall split, subdivide or combine the securities as to which purchase rights under this Warrant exist, the 2 Purchase Price shall be proportionately decreased in the case of a split or subdivision or proportionately increased in the case of a combination. 4.2 Common Stock Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend with respect to Common Stock payable in, or make any other distribution with respect to the, shares of Common Stock, then the Purchase Price shall be adjusted, from and after the date of determination of the shareholders entitled to receive any dividend or distribution, to that price determined by multiplying the Purchase Price in effect immediately prior to such date of determination by a fraction (i) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such dividend or distribution, and (ii) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such dividend or distribution. 4.3 Other Dividends. If the Company at any time while this Warrant is outstanding and unexpired shall pay a dividend or make any other distribution with respect to Common Stock payable in stock (other than Common Stock) or other securities or property, the Holder hereof shall be entitled to receive, upon exercise of the Warrants, in addition to the shares of Common Stock otherwise receivable upon exercise hereof, the same number and kind of stock other securities and property which the Holder would have received had the holder then held the shares of Common Stock receivable on exercise hereof on and before the record date for such dividend or distribution. 4.4 Reclassifications and Recapitalizations. In the event of any reclassification or recapitalization of the Common Stock, the Purchase Price shall be appropriately adjusted in good faith by the Board of Directors of the Company to reflect such reclassification or recapitalization and to protect the rights of Holders of the Warrants to receive upon the exercise thereof the same amount of securities or property that they would have received had they exercised their Warrants immediately prior to the date for determination of holders of Common Stock entitled to receive securities or property as a result of such reclassification or recapitalization, and their rights to appropriate adjustments upon any further stock dividend, stock split, reclassification or recapitalization. 4.5 Adjustment of Number of Shares. Upon each adjustment in the Purchase Price pursuant to Section 4.1 or Section 4.2 above, the Holder shall thereafter, on the exercise of this Warrant, be entitled to receive that number of shares of Common Stock which would be issuable on such exercise as of immediately prior to such adjustment multiplied by a fraction of (i) the numerator of which shall be the Purchase Price immediately prior to such adjustment, and (ii) the denominator of which shall be the Purchase Price immediately after such adjustment. 4.6 Capital Reorganization, Merger or Sale of Assets. If at any time or from time to time there shall be a capital reorganization of the Common Stock (other than a subdivision, combination, reclassification or exchange of shares provided for elsewhere in this Section 4) or a merger or consolidation of the Company with or into 3 another corporation, or the sale of all or substantially all of the Company's properties and assets to any other person, after receiving a thirty (30) day prior written notice from the Company of such an event, the Holder of this Warrant Certificate shall thereafter be entitled to purchase (and it shall be a condition to the consummation of any such reorganization, merger, consolidation or sale, that appropriate provision be made so that the holders of the Warrants shall thereafter be entitled to purchase), upon exercise of the Warrants, the kind and amount of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such merger, consolidation or sale, to which a holder of Common Stock issuable upon exercise would have been entitled on such capital reorganization, merger, consolidation, or sale. In any such case, appropriate adjustment shall be made in the application of the provisions of this Section 4 with respect to the rights of the holders of the Warrants after the reorganization, merger, consolidation or sale to the end that the provisions of this Section 4 (including adjustment of the Purchase Price then in effect and the number of shares purchasable upon exercise of the Warrants) shall be applicable after that event in as nearly equivalent a manner as may be practicable. 4.7 Certificate as to Adjustment. Upon the occurrence of each adjustment or readjustment of the Purchase Price pursuant to this Section 4, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and cause its chief financial officer to verify such computation and prepare and furnish to each Holder of the Warrants a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of any Holder of the Warrants, furnish or cause to be furnished to such Holder a like certificate setting forth (A) such adjustment and readjustment, (B) the Purchase Price at the time in effect, and (C) the number of shares of Common Stock and the amount, if any, of other securities and/or property which at the time would be receivable upon the exercise of a Warrant. Such certificate shall set forth in reasonable detail such facts as may be necessary to show the reason for and manner of computing such adjustment. If demanded by the Holders of more than 10% of the total outstanding Warrants, the Company shall provide the Holders of the Warrants a verification or confirmation of the calculation of such adjustment signed by an independent certificate public accountant, which may be the firm of independent certified public accountants servicing the Company. 4.8 No Impairment. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, recapitalization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company, but will at all times in good faith assist in the carrying out of all the provisions of this Section 4 and in the taking of all such action as may be necessary or appropriate in order to protect the exercise rights of the Holders against impairment. 4.9 Notices of Record Date. In the event of 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 (other than a cash dividend) 4 or other distribution, any rights to subscribe for, purchase or otherwise acquire any shares of stock of any class or for any securities or property, or to receive any other right, this Company shall mail to each Holder, at least thirty (30) days prior to the date specified therein, a notice specifying the date on which any such record is to be taken for the purpose of such dividend, distribution or right, and the amount and character of such dividend, distribution or right. 4.10 No Fractional Shares. No fractional shares shall be issued upon exercise of the Warrants, and the number of shares of Common Stock to be issued shall be rounded to the nearest whole share. Such rounding shall be determined on the basis of the total number of Warrants the Holder is at the time exercising and the number of shares of Common Stock issuable upon such aggregate exercise. 5. Registration Rights. For purposes of this Section 5, the shares of Common Stock issuable upon exercise of these Warrants are referred to herein as the "Warrant Shares." 5.1 Piggyback Registration. If the Company proposes to register its common stock, or other type of the security purchasable upon exercise hereof, under the Act, other than a registration statement covering an employee benefit plan or a merger or acquisition or pursuant to registration rights in effect on the date hereof or pursuant to a registration rights agreement between the Company and NEC Corporation, it will give written notice, at least sixty (60) days prior to the filing of each such registration statement, to the Holder and the holders of any Warrant Shares. If the Holder and/or any holder of Warrant Shares notifies the Company within twenty (20) days after receipt of any such notice of its desire to include the Warrant Shares in such proposed registration statement, the Company shall afford the Holder and/or the holders of Warrant Shares the opportunity to have the Warrant Shares registered under such registration statement; provided, however, if the offering is underwritten, the underwriter shall have the right to limit the number of Warrant Shares to be included in the registration statement, but only pro rata to the extent that the registration of all other shares is reduced by the underwriter. Notwithstanding the provisions of this Section 5.1, the Company shall have the right at any time after it shall have given written notice pursuant to this Section 5.1 (irrespective of whether a written request for inclusion of Warrant Shares shall have been made) to elect not to file any such proposed registration statement, or to withdraw the same after the filing but prior to the effective date thereof. 5.2 Demand Registration. Six (6) months after March 28, 2001, Holder shall have a right to request that the Company effect any registration with respect to the resale by the Holders of its Warrant Shares. The Company shall as soon as practicable, effect such registration (including, without limitation, appropriate qualification under applicable state securities laws and appropriate compliance with applicable regulations issued under the Securities Act, and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution by the Holders of all or such portion of such Warrant Shares as are 5 specified in such request. 5.3 Covenants of the Company with respect to Registration. In connection with any registration under Sections 5.1 and 5.2 hereof, the Company covenants and agrees as follows: (a) The Company shall use its best efforts to have any registration statement declared effective at the earliest possible time, and shall furnish such number of prospectuses as shall reasonably be requested. (b) The Company shall pay all costs, fees and expenses in connection with all registration statements including, without limitation, the Company's legal and accounting fees, printing expenses, blue sky fees and expenses, except that the Company shall not pay for any of the following costs, fees or expenses: (i) underwriting discounts and commissions allocable to the Warrant Shares, (ii) state transfer taxes, and (iii) brokerage commissions. (c) The Company will take all necessary action which may be required in qualifying or registering the Warrant Shares included in a registration statement for offering and sale under the securities or blue sky laws of such states as are requested by the holders of the Warrant Shares, provided that the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any such jurisdiction. (d) The Company shall keep such registration effective for a period of 120 days or until the holders of Warrant Shares have completed the distribution described in the registration statement relating thereto, whichever first occurs. (e) In the event of any underwritten public offering, the Company shall perform its obligations under the underwriting agreement. (f) The Company shall notify each holder of Warrant Shares covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing. (g) In connection with any sale of securities involving an underwriter, the Company shall furnish, at the request of any holder of Warrant Shares on the date that such Warrant Shares are delivered to the underwriters for sale in connection with a registration, (i) an opinion dated such date, of the counsel representing the Company for the purposes of such registration, addressed to the underwriters and, if such counsel is also representing the holders requesting registration of Warrant Shares, to such holders, and (ii) a letter dated such date, from 6 the independent certified public accountants of the Company, addressed to the underwriters and such holders. The Holder shall not negotiate the foregoing opinion or letter, but shall accept the opinion and letter in the form acceptable to the Company. 5.4 Indemnification. (a) The Company shall indemnify the holders of Warrant Shares to be sold pursuant to any registration statement and each person, if any, who controls such holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended ("Exchange Act"), against all loss, claim, damage, expense or liability (including all attorneys' fees and expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any registration statement, prospectus, offering circular or other document, or any amendment or supplement thereto, incident to any such registration or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, or any violation by the Company of the Act or any rule or regulation promulgated under the Act applicable to the Company in connection with any such registration. (b) Each holder of the Warrant Shares to be sold pursuant to a registration statement, and their successors and assigns, shall indemnify the Company, its officers and directors and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or liability (including all attorneys' fees and expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any such registration statement, prospectus, offering circular or other document, or any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case only to the extent that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company by an instrument duly executed by such holder of Warrant Shares and stated to be specifically for use therein. Notwithstanding the foregoing, the liability of each holder of Warrant Shares under this subsection (b) shall be limited in an amount equal to the proceeds received by the Holder from the sale of the shares sold by such Holder, unless such liability arises out of or is based on willful misconduct by such Holder. (c) Each party entitled to indemnification under this Section 5.3 (the "Indemnified Party") shall give notice to the party required to provide indemnification (the "Indemnifying Party") promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought, and shall permit 7 the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom, provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld), and the Indemnified Party may participate in such defense at such party's expense, and provided further that the failure of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations under this Section 5.3 unless the failure to give such notice is materially prejudicial to an Indemnifying Party's ability to defend such action and provided further, that the Indemnifying Party shall not assume the defense for matters as to which the Indemnified Party shall reasonably conclude that there is a conflict of interest or separate and different defenses. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of each Indemnified Party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such Indemnified Party of a release from all liability in respect to such claim or litigation. 6. Exercise of Warrants. The purchase rights represented by this Warrant are exercisable by the Holder, in whole or in part, at any time and from time to time on or after the Exercise Date (as such is defined in this Section 1) and on or prior to the Expiration Date. The Warrants may be exercised by surrender of this Warrant Certificate, with the Notice of Exercise attached hereto duly executed, to the principal executive office of the Company, which presently is located at 411 First Avenue South, Suite 600, Seattle, WA 98104-2860 (Attention: Vice President- Finance)(or such other office or agency of the Company as it may designate by notice in writing to the registered Holder hereof at the address of such Holder appearing on the books of the Company), and shall be accompanied by payment in cash, check or bank draft, payable to the Company, in an amount equal to the full Purchase Price of such shares. The Company shall deliver a certificate or certificates representing the shares subject to such exercise as soon as practicable, and in any event within ten (10) days, after the notice shall be received. The certificate or certificates for the shares as to which the Warrants shall have been so exercised shall be registered in the name of the person or persons so exercising the Warrants and shall be delivered, as provided above, to or upon the written order of the person or persons exercising the Warrants. In the event the Warrants shall be exercised by any person or persons other than the Holder in accordance with the terms hereof, such notice shall be accompanied by appropriate proof of the right of such person or persons to exercise the Warrants. All shares of Common Stock which may be issued upon the exercise of the Warrants as provided herein shall be fully paid and nonassessable and free from all taxes, liens and charges with respect thereto. The holder of this Warrant Certificate shall not be entitled to the privileges of share ownership as to any shares of Common Stock not actually issued and delivered to it. The Holder hereby certifies that all shares of Common Stock in the Company purchased or to be purchased by it pursuant to the exercise of this Warrant Certificate are being, or are to be, acquired by it for investment, and not with a view to the distribution thereof. 6.1 Cashless Exercise. At the election of the Holder, in lieu of paying 8 some or all of the Purchase Price in cash, this Warrant may be exercised by reducing the number of shares of Common Stock received upon such exercise (a "Cashless Exercise"). The number of shares of Common Stock delivered upon a Cashless Exercise shall be determined based on the formula: N = E --- FMV where: N = the number of Shares which would otherwise have been received but are not to be received upon a Cashless Exercise E = the aggregate Purchase Price for the number of Warrants being exercised that would have been paid without the Cashless Exercise. FMV = the average closing bid price of the Common Stock on the principal market for the ten trading days prior to the date of the Notice of Exercise. For example, if the Holder is exercising 100 Warrants with a per Warrant Purchase Price of $1.25 per share through a Cashless Exercise when the Common Stock's FMV is $2.50 per share, upon such Cashless Exercise the Holder will receive 50 Shares rather than 100. As soon as practicable after the Company shall have received such Notice of Exercise and any required payment, the Company shall execute and deliver or cause to be executed and delivered, in accordance with such Notice of Exercise, to the Holder at the address set forth in such Notice of Exercise a certificate or certificates representing the number of shares of Common Stock specified in such Notice of Exercise. The Warrant shall be deemed to have been exercised and such share certificate or certificates shall be deemed to have been issued, and the Holder shall be deemed for all purposes to have become a holder of record of shares of Common Stock, as of the date that such Notice of Exercise and any required payment shall have been received by the Company. The Holder shall surrender this Warrant certificate of the Company when it delivers the Notice of Exercise, and in the event of a partial exercise of the Warrant, the Company shall execute and deliver to the Holder, at the time the Company delivers the share certificate or certificates issued pursuant to such Notice of Exercise, a new Warrant certificate for the unexercised portion of the Warrant, but in all other respect identical to this Warrant certificate. The Company shall pay all expenses, taxes and other charges payable in connection with the preparation, issuance and delivery of certificates for the Shares and any new Warrant certificates. 9 7. General. The Company shall at all times during the term of the Warrants reserve and keep available out of its authorized but unissued shares of Common Stock such number of shares of Common Stock as will be sufficient to satisfy the requirements of this Warrant Certificate; and if at any time the number of authorized but unissued shares of Common Stock shall be insufficient to effect the exercise of all then outstanding Warrants, in addition to such other remedies as shall be available to any Holder of such Warrants, the Company shall take such corporate action as may, in the opinion of its counsel, be necessary to increase its authorized but unissued shares of Common Stock to such number as shall be sufficient for such purposes. The Company shall pay all original issue and transfer taxes with respect to the issue and transfer of shares pursuant hereto and all other fees and expenses necessarily incurred by the Company in connection therewith, and will from time to time use its best efforts to comply with all laws and regulations, which, in the opinion of counsel for the Company, shall be applicable thereto. 8. Legends. It is understood that the certificates evidencing the Common Stock purchased upon exercise of this Warrant Certificate may bear the following legend: "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933; THEY HAVE BEEN ACQUIRED BY THE HOLDER FOR INVESTMENT AND MAY NOT BE PLEDGED, HYPOTHECATED, SOLD, TRANSFERRED, OR OTHERWISE DISPOSED OF EXCEPT AS MAY BE AUTHORIZED UNDER THE SECURITIES ACT OF 1933 AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER." 9. Notices. Any notice required by the provisions of this Warrant Certificate to be given to the Holders shall be deemed given three (3) days after it is deposited in the United States mail, certified or registered, return receipt requested, and addressed to each Holder of record at its address appearing on the books of this Company or on the date actually delivered in person. 10. Governing Law. This Warrant Certificate shall be governed by and construed in accordance with the laws of the State of California. [SIGNATURES ON THE FOLLOWING PAGE] 10 IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to be duly executed by its officer thereunto duly authorized as of the day and year first above written. CRAY INC., a Washington corporation By: /s/ KENNETH W. JOHNSON Name: Kenneth W. Johnson Title: Vice President - Finance 11 ANNEX A NOTICE OF EXERCISE TO: CRAY INC.: The undersigned hereby (1) elects to purchase ______ shares of Common Stock of Cray Inc. issuable upon the exercise of the attached Warrants, (2) tenders herewith payment of the Purchase Price of such shares in full, and requests that certificates representing such shares be issued in the name of and delivered to the following [please print]: -------------------------------------------------- Social Security or Other Identification Number -------------------------------------------------- Name -------------------------------------------------- Street Address or Post Office Box -------------------------------------------------- City, State and Zip Code Date: ------------------------------ --------------------- Print Name of Holder ------------------------------ Signature ------------------------------ Title 12 EX-5 4 v77445ex5.txt EXHIBIT 5 Exhibit 5 November 21, 2001 The Board of Directors Cray Inc. Dear Sirs: I am the general counsel of Cray Inc. (the "Company") and have supervised the corporate proceedings in connection with the filing of a Registration Statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933 relating to the issuance of up to 100,000 shares of common stock of the Company (the "Shares") upon the exercise of the stock purchase warrant issued to Foothill Capital Corporation. I have reviewed the corporate actions of the Company in connection with this matter and have examined those documents, corporate records, and other instruments that I deemed necessary for the purposes of this opinion. Based on the foregoing, it is my opinion that the Shares have been duly authorized and are legally issued, fully paid and nonassessable. I hereby consent to the filing of this opinion as an exhibit to the Registration Statement and to the reference to me under the caption "Legal Matters" in the prospectus. Very truly yours, /S/ Kenneth W. Johnson General Counsel EX-23 5 v77445ex23.txt EXHIBIT 23 Exhibit 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this form of Registration Statement of Cray Inc., formerly known as Tera Computer Company, on Form S-3 of our report dated February 9, 2001 (March 28, 2001 as to Note 15) appearing in the Annual Report on Form 10-K/A of Cray Inc. for the year ended December 31, 2000, and of our report dated June 15, 2000, which express an unqualified opinion and includes an explanatory paragraph describing the expense allocations by Silicon Graphics, Inc. appearing in the Form 8-K/A of Cray Inc. filed on June 16, 2000 and to the reference to us under the heading "Experts" in the Prospectus, which is part of such Registration Statement. DELOITTE & TOUCHE LLP /S/ Seattle, Washington November 21, 2001 -----END PRIVACY-ENHANCED MESSAGE-----