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EXHIBIT 4.6
AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT, dated as of September 30, 1998, is by and
among TERA COMPUTER COMPANY, a Washington corporation (the "Company"), and
ADVANTAGE FUND II LTD., a British Virgin Islands corporation ("Advantage"), and
XXXX INDUSTRIES, INC., a Kansas corporation ("Xxxx" and, collectively with
Advantage, the "Buyers").
WHEREAS, the Company and the Buyers entered into a Subscription
Agreement, dated as of September 30, 1998 (the "Subscription Agreement"),
pursuant to which the Company issued to the Buyers certain shares of the
Company's common stock, $.01 par value ("Common Stock"), and warrants to
purchase shares of Common Stock, and in connection therewith the Company and
each of the Buyers entered into separate Registration Rights Agreements, dated
as of September 30, 1998 (the "Registration Rights Agreements"); and
WHEREAS, the Company and the Buyers have been informed that certain
provisions of the Subscription Agreement may be construed, under generally
accepted accounting principles and rules and regulations of the Securities and
Exchange Commission, as requiring that the Company classify the shares of Common
Stock issued or issuable to the Buyers as "redeemable" shares of Common Stock on
the Company's financial statements; and
WHEREAS, neither the Company nor the Buyers intended that the shares of
Common Stock issued or issuable to the Buyers be so classified; and
WHEREAS, the parties desire to correctly state their intent and
understanding;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants contained herein, the parties hereby agree as follows:
1. The Subscription Agreement is hereby amended by adding the following clauses
to the end of Section 7(b) thereof:
"Notwithstanding Sections 7(a), 7(c) and any other provision of this
Agreement, if a Repurchase Event occurs by reason of the occurrence of an event
described in clause (i), (ii) or (v) of Section 7(b) above, and such occurrence
is by reason of events which are not solely within the control of the Company,
then the Company, in its sole discretion, may elect not to repurchase any or all
of the Common Shares and, if the Company so elects, each Buyer hereby waives any
and all rights to require the Company to so repurchase such Common Shares under
such clauses. In order to make such
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election, the Company shall so notify each Buyer which has submitted a
Repurchase Notice with respect to such event and shall deliver to each such
Buyer an Auditor's Determination (as defined below) within ten (10) Business
Days after the Company's receipt of the Repurchase Notice. If the Company so
elects and notifies each such Buyer, then for each thirty (30) days that such
Repurchase Event continues to exist, which period shall commence as of the first
Business Day of the event which gave rise to such Repurchase Event, the Company
shall issue to each such Buyer shares of Common Stock (the "Repurchase Shares")
equal to six percent (6%) of the number of Common Shares acquired hereunder and
beneficially held on the Determination Date (as defined below) by the Buyer (pro
rated for any period of, or in case the Repurchase Event ceases to exist in,
less than thirty (30) days). For purposes of this Section 7(b), a "Determination
Date" means the last day of each calendar month in which the Repurchase Event
continues. Such Repurchase Shares shall be issued by the Company within three
Business Days after each Determination Date. When issued and delivered to such
Buyer, the Repurchase Shares shall be duly authorized, validly issued, fully
paid and nonassessable.
"For purposes of this Section 7, (A) a Repurchase Event described in
clause (i), (ii) or (v) of the definition of the term "Repurchase Event" in
Section 7(b) or (B) a requirement of the Company to make a payment pursuant
Section 7(f), shall be deemed to have occurred by reason of events which are not
solely within the control of the Company if a requirement of the Company to
repurchase, or a right of any holder of Common Shares to require repurchase of,
Common Shares pursuant to such clauses of Section 7(b), or the requirement of
the Company to make a payment pursuant to Section 7(f), would result in the
Company being required to classify the Common Shares as redeemable common stock
on a balance sheet of the Company prepared in accordance with generally accepted
accounting principles and Regulation S-X of the Securities and Exchange
Commission.
"For purposes of this Section 7, the term "Auditor's Determination"
shall mean a written determination signed by the Auditors concurring with the
Company's conclusion that (A) the Repurchase Event described in the applicable
clause (i), (ii) or (v) of the definition of Repurchase Event in Section 7(b) or
(B) the requirement of the Company to make a payment pursuant to Section 7(f),
was due to the occurrence of events which were not solely within the control of
the Company, as such phrase is defined in the immediately preceding paragraph.
The Auditors' Determination shall (i) set forth in reasonable detail all
relevant facts considered by the Auditors in connection therewith, (ii) set
forth all applicable accounting principles and assumptions used, and (iii) set
forth in reasonable detail or attach copies of all legal, expert and other
advice or information used by the Auditors in reaching their conclusion. To the
extent any facts are assumed for purposes of the Auditor's Determination, the
validity of such conclusion or
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determination shall depend upon such assumed facts being true and complete in
all material respects.
"For purposes of this Section 7, the term "Auditors" shall mean the
nationally recognized independent accounting firm then serving as the Company's
auditors or such other "big five" nationally recognized independent accounting
firm (including successors thereto) as the Company may designate. The fees and
expenses of the Auditors shall be paid by the Company."
2. The Subscription Agreement is hereby amended by adding a new Section 7(h) at
the end of Section 7 thereof:
(h) SHARE LIMITATION EVENTS. Notwithstanding any other provision
of this Agreement, if a Share Limitation Event (as defined below) occurs by
reason of events which are not solely within the control of the Company, the
Company shall have the right to give a notice (a "Share Limitation Notice"),
accompanied by an Auditor's Determination, to the Buyer at any time after such
Share Limitation Event occurs and prior to the earlier of (1) the date on which
the Buyer's right (other than as limited by this Section 7(h)) to receive a cash
payment pursuant to Section 7(f) by reason of the occurrence of such Share
Limitation Event expires and (2) the date on which the Company is obligated to
make a payment to the Buyer pursuant to Section 7(f). If the Company timely
gives a Share Limitation Notice and an Auditor's Determination to the Buyer,
then, in lieu of making the payment required by Section 7(f) or issuing
Repurchase Shares pursuant to Section 7(b), pursuant to a notice given by the
Buyer by reason of such Share Limitation Event, on the next Adjustment Date to
occur the Adjustment Price shall be reduced to 80% of the amount such Adjustment
Price would otherwise be. On or after the date the Company gives such Share
Limitation Notice, upon notice from the Buyer, the Company promptly shall call a
special meeting of its shareholders, to be held not later than 60 days after
such notice is given, to seek the Shareholder Approval for the issuance of all
shares of Common Stock issuable in accordance with this Agreement without regard
to the Rule and shall use its best efforts to obtain the Shareholder Approval.
The Company shall prepare and file with the SEC within 20 days after such notice
is given preliminary proxy materials which set forth a proposal to seek such
Shareholder Approval. The Company shall provide the Buyer an opportunity to
consult with the Company regarding the content of such proxy materials insofar
as it relates to the Shareholder Approval by providing copies of such
preliminary proxy materials and any revised preliminary proxy materials to the
Buyer a reasonable period of time prior to their filing with the SEC. The
Company shall furnish to the Buyer a copy of its definitive proxy materials for
such special meeting and any amendments or supplements thereto promptly after
the same are mailed to shareholders or filed with the SEC. Upon the earlier of
(i) the failure to obtain Shareholder
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Approval in accordance with Section 7(f), (ii) the failure to obtain the
Shareholder Approval at the special meeting provided in this paragraph or (ii)
the failure to hold such special meeting within such 60-day period provided in
this paragraph, the Company shall so notify the Buyer and such of the following
as shall be specified by notice to the Company from the Buyer shall occur: (1)
on the next Adjustment Date to occur the Adjustment Price shall be reduced to
70% of the amount such Adjustment Price would otherwise be and (2) the Company
shall promptly file applications and take all other actions necessary to (i)
list the Common Stock for trading and quotation on the OTC Bulletin Board or
such other securities market or exchange which will not restrict the number of
shares of Common Stock issuable under this Agreement and (ii) upon filing such
applications, request the immediate removal of the Common Stock from listing on
the securities market on which it is then listed which restricts the issuance of
shares of Common Stock under this Agreement without the Shareholder Approval.
Upon obtaining such Shareholder Approval or listing, as the case may be, the
Company shall promptly issue all Adjustment Shares and Repurchase Shares due
through the date of such issuance.
For purposes of this Section 7, the term "Share Limitation Event" means
a time at which the Company is unable to issue all Adjustment Shares or
Repurchase Shares otherwise required to be issued by this Agreement by reason of
the restrictions set forth in the Rule and the Company has not obtained a waiver
thereof.
3. Each of the respective Registration Rights Agreements is hereby amended as
follows:
(a) The definition of "Registrable Securities" in Section 1 thereof is
amended to read in its entirety as follows: "Registrable Securities" means the
Common Shares, the Warrant Shares and the Repurchase Shares."
(b) Clause (i) of Section 2(a) is hereby amended to change the term
"150%" to "170%."
(c) The third sentence of Section 2(a) is hereby amended to insert the
words "and Repurchase Shares" after each of the two references to "Adjustment
Shares" in such sentence.
4. This Agreement is binding upon each Buyer, any holder which acquires the
Common Shares from the Buyers (other than by transfers consummated pursuant to
the Registration Statement and Prospectus or pursuant to Rule 144 or another
exemption from registration under the 1933 Act), and any and all successors and
assigns of the Buyers. The Buyers hereby agree to deliver this document to all
assignees of the Subscription Agreement, the Registration Rights Agreements and
of the Common Shares (other than
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pursuant to transfers consummated pursuant to the Registration Statement and
Prospectus, or pursuant to Rule 144 or another exemption from registration under
the 1933 Act).
5. The recitals made above are an integral part of this Agreement and are hereby
incorporated herein and made a part hereof as though set forth in full in this
Section.
6. This Agreement is effective as of September 30, 1998.
7. All defined terms not defined herein are used as defined in the Subscription
Agreement.
8. The Company shall pay each Buyer's reasonable expenses, including attorney's
fees and costs, incurred in connection with the preparation of this Agreement.
9. This Agreement constitutes the entire agreement among the parties with
respect to the subject matter hereof. Any change or modification of this
Agreement shall not be valid unless the same shall be in writing and executed by
all of the parties hereto. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Washington.
10. This Agreement may be executed in counterparts and by the parties hereto on
separate counterparts, all of which together shall constitute one and the same
instrument. A telephone line facsimile copy of the Agreement bearing a signature
on behalf of a party hereto shall be legal and binding on such party.
11. Except to the extent expressly amended hereby, the terms and provisions of
the Subscription Agreement and the Registration Rights Agreements are hereby
confirmed.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the Buyers
and the Company by their respective officers thereunto duly authorized as of the
date first set forth above.
TERA COMPUTER COMPANY ADVANTAGE FUND II LTD.
By /s/ Xxxxx X. Xxxxxxxx By /s/ Xxxxxx Xxxxx
Xxxxx X. Xxxxxxxx Name: Xxxxxx Xxxxx
President Title: Secretary
XXXX INDUSTRIES, INC.
By /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Vice President- Equity Arb.
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