-----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, QCqGcoibA+s0nI0+fwp2IQgaqcBxmUpZ3WwU/+MYPen/Kb0gnbWSXmcaToTRNb/2 D5NbBAsRdVlNB5Qh5YexjQ== /in/edgar/work/20000814/0000276283-00-000012/0000276283-00-000012.txt : 20000921 0000276283-00-000012.hdr.sgml : 20000921 ACCESSION NUMBER: 0000276283-00-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 15 CONFORMED PERIOD OF REPORT: 20000630 FILED AS OF DATE: 20000814 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EVANS & SUTHERLAND COMPUTER CORP CENTRAL INDEX KEY: 0000276283 STANDARD INDUSTRIAL CLASSIFICATION: [3690 ] IRS NUMBER: 870278175 STATE OF INCORPORATION: UT FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-14677 FILM NUMBER: 699999 BUSINESS ADDRESS: STREET 1: 600 KOMAS DR CITY: SALT LAKE CITY STATE: UT ZIP: 84108 BUSINESS PHONE: 8015881815 MAIL ADDRESS: STREET 1: 600 KOMAS DR CITY: SALT LAKE CITY STATE: UT ZIP: 84108 10-Q 1 0001.txt QUARTERLY REPORT FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------------------------------------- FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, For the quarterly period ended June 30, 2000 or [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, For the transition period from _____ to _____ Commission file number 0-8771 -------------------------------------------------- EVANS & SUTHERLAND COMPUTER CORPORATION (Exact Name of Registrant as Specified in Its Charter) Utah 87-0278175 (State or Other Jurisdiction of (I.R.S. Employer Incorporation or Organization) Identification No.) 600 Komas Drive, Salt Lake City, Utah 84108 (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, Including Area Code: (801) 588-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ____ The number of shares of the registrant's common stock, par value $0.20 per share, outstanding at August 4, 2000 was 9,380,696. FORM 10-Q Evans & Sutherland Computer Corporation Quarter Ended June 30, 2000
Page No. PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets as of June 30, 2000 and December 31, 1999 3 Consolidated Statements of Operations for the three months ended June 30, 2000 and July 2, 1999 4 Consolidated Statements of Operations for the six months ended June 30, 2000 and July 2, 1999 5 Consolidated Statements of Comprehensive Loss for the three and six months ended June 30, 2000 and July 2, 1999 6 Consolidated Statements of Cash Flows for the six months ended June 30, 2000 and July 2, 1999 7 Notes to Consolidated Financial Statements 8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 PART II - OTHER INFORMATION Item 1. Legal Proceedings 22 Item 4. Submission of Matters to a Vote of Security Holders 22 Item 5. Other Information 23 Item 6. Exhibits and Reports on Form 8-K 23 SIGNATURES 24
2 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts)
June 30, December 31, 2000 1999 ---------------- ---------------- (Unaudited) Assets: Cash and cash equivalents $ 19,355 $ 22,110 Short-term investments - 748 Accounts receivable, less allowance for doubtful receivables of $4,583 at June 30, 2000 and $1,338 at December 31, 1999 31,043 28,743 Inventories 39,713 40,588 Costs and estimated earnings in excess of billings on uncompleted contracts 67,490 80,457 Deferred income taxes - 15,923 Prepaid expenses and deposits 7,023 7,844 ---------------- ---------------- Total current assets 164,624 196,413 Property, plant and equipment, net 50,256 52,184 Investment securities 6,198 4,467 Deferred income taxes - 4,418 Goodwill and other intangible assets, net 463 552 Other assets 941 430 ---------------- ---------------- Total assets $ 222,482 $ 258,464 ================ ================ Liabilities and stockholders' equity: Notes payable $ 4,920 $ 2,657 Accounts payable 21,625 19,575 Accrued expenses 41,057 39,057 Customer deposits 1,681 4,720 Income taxes payable - 1,062 Billings in excess of costs and estimated earnings on uncompleted contracts 29,641 12,412 ---------------- ---------------- Total current liabilities 98,924 79,483 ---------------- ---------------- Long-term debt 18,015 18,015 ---------------- ---------------- Commitments and contingencies Redeemable convertible preferred stock, class B-1, no par value; authorized 1,500,000 shares; issued and outstanding 901,408 shares 23,886 23,772 ---------------- ---------------- Stockholders' equity: Preferred stock, no par value; authorized 8,500,000 shares; no shares issued and outstanding - - Common stock, $.20 par value; authorized 30,000,000 shares; issued 9,725,711 shares at June 30, 2000 and 9,678,938 shares at December 31, 1999 1,945 1,936 Additional paid-in capital 24,473 24,086 Common stock in treasury, at cost; 352,500 shares (4,709) (4,709) Retained earnings 60,335 115,816 Accumulated other comprehensive income (387) 65 ---------------- ---------------- Total stockholders' equity 81,657 137,194 ---------------- ---------------- Total liabilities and stockholders' equity $ 222,482 $ 258,464 ================ ================
See accompanying notes to consolidated financial statements. 3 EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
Three Months Ended -------------------------------------- June 30, July 2, 2000 1999 ------------ -------------- Sales $ 25,589 $ 44,023 Cost of sales 37,892 26,420 ------------ -------------- Gross profit (loss) (12,303) 17,603 ------------ -------------- Operating expenses: Selling, general and administrative 8,703 11,943 Research and development 10,984 10,949 Amortization of goodwill and other intangibles 44 713 ------------ -------------- Operating expenses 19,731 23,605 ------------ -------------- (32,034) (6,002) Gain on sale of business unit 816 - ------------ -------------- Operating loss (31,218) (6,002) Other income (expense), net (380) 1,022 ------------ -------------- Loss before income taxes (31,598) (4,980) Income tax expense (benefit) 20,598 (1,544) ------------ -------------- Net loss (52,196) (3,436) Accretion of preferred stock 57 57 ------------ -------------- Net loss applicable to common stock $ (52,253) $ (3,493) ============ ============== Net loss per common share: Basic and Diluted $ (5.58) $ (0.36) Weighted average common and common equivalent shares outstanding: Basic and Diluted 9,360 9,601
See accompanying notes to consolidated financial statements. 4 EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share amounts)
Six Months Ended ------------------------------------- June 30, July 2, 2000 1999 ------------ ------------ Sales $ 71,544 $ 93,769 Cost of sales 67,734 53,788 ------------ ------------ Gross profit 3,810 39,981 ------------ ------------ Operating expenses: Selling, general and administrative 18,992 22,164 Research and development 22,516 22,029 Amortization of goodwill and other intangibles 89 1,426 ------------ ------------ Operating expenses 41,597 45,619 ------------ ------------ (37,787) (5,638) Gain on sale of business unit 1,918 - ------------ ------------ Operating loss (35,869) (5,638) Other income (expense), net (556) 1,037 ------------ ------------ Loss before income taxes (36,425) (4,601) Income tax expense (benefit) 18,943 (1,426) ------------ ------------ Net loss (55,368) (3,175) Accretion of preferred stock 114 114 ------------ ------------ Net loss applicable to common stock $ (55,482) $ (3,289) ============ ============ Net loss per common share: Basic and Diluted $ (5.93) $ (0.34) Weighted average common and common equivalent shares outstanding: Basic and Diluted 9,349 9,602
See accompanying notes to consolidated financial statements. 5 EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited) (In thousands)
Three Months Ended ------------------------------------- June 30, July 2, 2000 1999 ------------ ------------ Net loss $ (52,196) $ (3,436) Other comprehensive income (loss): Foreign currency translation adjustments 15 (442) Unrealized gains (losses) on securities (637) 10 ------------ ------------ Other comprehensive loss before income taxes (622) (432) Income tax benefit related to items of other comprehensive loss (223) (134) ------------ ------------ Other comprehensive loss, net of income taxes (399) (298) ------------ ------------ Comprehensive loss $ (52,595) $ (3,734) ============ ============ Six Months Ended -------------------------------------- June 30, July 2, 2000 1999 ------------ ------------ Net loss $ (55,368) $ (3,175) Other comprehensive income (loss): Foreign currency translation adjustments 50 (197) Unrealized gains (losses) on securities (772) 10 ------------ ------------ Other comprehensive loss before income taxes (722) (187) Income tax benefit related to items of other comprehensive loss (270) (58) ------------ ------------ Other comprehensive loss, net of income taxes (452) (129) ------------ ------------ Comprehensive loss $ (55,820) $ (3,304) ============ ============
See accompanying notes to consolidated financial statements. 6 EVANS & SUTHERLAND COMPUTER CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (In thousands)
Six Months Ended ---------------------------- June 30, July 2, 2000 1999 ------------ ------------ Cash flows from operating activities: Net loss $ (55,368) $ (3,175) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 6,473 8,019 Gain on sale of business unit (1,918) - Provision for losses on accounts receivable 3,457 241 Provision for write down of inventories 2,288 459 Provision for warranty expense 513 389 Deferred income taxes 20,598 (205) Other (32) 223 Changes in assets and liabilities: Accounts receivable (5,418) 15,255 Inventories (1,994) (5,242) Costs and estimated earnings in excess of billings on uncompleted contracts, net 30,199 (11,193) Prepaid expenses and deposits 707 (952) Accounts payable 2,066 (9,729) Accrued expenses 843 599 Customer deposits (3,039) 926 Income taxes (1,677) 2,690 ------------ ------------ Net cash used in operating activities (2,302) (1,695) ------------ ------------ Cash flows from investing activities: Purchases of short-term investments - (3,450) Proceeds from sale of short-term investments 752 25,651 Purchase of investment securities - (636) Proceeds from sale of business unit 1,250 - Purchases of property, plant and equipment (4,641) (5,373) Proceeds from sale of property, plant and equipment 52 6,010 Increase in other assets (528) (37) ------------ ------------ Net cash provided by (used in) investing activities (3,115) 22,165 ------------ ------------ Cash flows from financing activities: Borrowings from notes payable 11,193 - Payments of notes payable (8,786) (629) Proceeds from issuance of common stock 343 881 Payments for repurchase of common stock - (769) ------------ ------------ Net cash provided by (used in) financing activities 2,750 (517) ------------ ------------ Effect of foreign exchange rates on cash and cash equivalents (88) (348) ------------ ------------ Net change in cash and cash equivalents (2,755) 19,605 Cash and cash equivalents at beginning of year 22,110 1,834 ------------ ------------ Cash and cash equivalents at end of period $ 19,355 $ 21,439 ============ ============ Supplemental Disclosures of Cash Flow Information Cash paid during the period for: Interest $ 641 $ 664 Income taxes (15) (3,635) Accretion of preferred stock 114 114
See accompanying notes to consolidated financial statements. 7 EVANS & SUTHERLAND COMPUTER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, therefore, do not include all information and footnotes necessary for a complete presentation of the results of operations, the financial position, and cash flows, in conformity with generally accepted accounting principles. This report on Form 10-Q for the three months and six months ended June 30, 2000 should be read in conjunction with the Company's annual report on Form 10-K for the year ended December 31, 1999. The accompanying unaudited consolidated balance sheets and statements of operations, comprehensive loss and cash flows reflect all normal recurring adjustments which are, in the opinion of management, necessary for a fair presentation of the Company's financial position, results of operations and cash flows. The results of operations for the interim three and six month periods ended June 30, 2000 are not necessarily indicative of the results to be expected for the full year. Recent Accounting Pronouncements In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging Activities" ("SFAS 133"). SFAS 133, as amended by SFAS 137 and SFAS 138, is effective for all fiscal years beginning after June 15, 2000. SFAS 133 establishes new accounting and reporting standards for companies to report information about derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives), and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the balance sheet and measure those instruments at fair value. For a derivative not designated as a hedging instrument, changes in the fair value of the derivative are recognized in earnings in the period of change. The Company intends to adopt SFAS 133 by January 1, 2001. The impact of adopting SFAS 133 is not anticipated to be material to the financial statements. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 101"). SAB 101 provides guidance on the recognition, presentation and disclosure of revenue in financial statements. In June 2000, the Securities and Exchange Commission issued SAB 101B which extends the implementation date of SAB 101 to the Company's fourth quarter of 2000. The Company is currently evaluating the impact, if any, that SAB 101 will have on its financial statements. 2. BUSINESS DIVESTITURE On March 28, 2000, the Company sold certain assets of its Applications Group relating to digital video products to RT-SET Real Time Synthesized Entertainment Technology Ltd. and its subsidiary, RT-SET America Inc., for $1.4 million in cash, common stock of RT-SET Real Time Synthesized Entertainment Technology Ltd. valued at approximately $1.0 million, and the assumption of certain liabilities. On June 15, 2000, the Company received additional common stock of RT-SET Real Time Synthesized Entertainment Technology Ltd. valued at $1.5 million related to the successful development of a product included in the purchased assets. 8 EVANS & SUTHERLAND COMPUTER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 3. INVENTORIES Inventories consist of the following (in thousands): June 30, December 31, 2000 1999 ----------------- ----------------- (Unaudited) Raw materials $ 26,593 $ 26,803 Work-in-process 11,142 11,479 Finished goods 1,978 2,306 ----------------- ----------------- $ 39,713 $ 40,588 ================= ================= 4. INCOME TAXES During the second quarter of 2000, the Company increased its deferred tax asset valuation allowance by $20.6 million. As a result of the net operating loss in the second quarter of 2000, the cumulative net operating losses for 2000, 1999 and 1998, and the cancellation of a significant contract and the related civil complaint filed by Lockheed Martin Corporation as discussed in Note 9 to the consolidated financial statements, the Company fully reserved its net deferred tax assets which previously existed at the end of the first quarter of 2000 and those deferred tax assets recognized during the second quarter of 2000. These net deferred tax assets relate to temporary differences, tax credit carry forwards and net operating loss carry forwards. The valuation allowance was recorded in accordance with SFAS 109, which requires that a valuation allowance be established when there is significant uncertainty as to the realizability of the deferred tax assets. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. If the deferred tax assets are realized in the future, or if a portion or all of the valuation allowance is no longer deemed to be necessary, the related tax benefits will reduce future income tax provisions. 5. NOTES PAYABLE On March 31, 2000, the Company entered into a financing facility (the "Facility") with Zions First National Bank. The Facility provides for borrowings of up to $15.0 million, which included a $7.0 million sublimit for the issuance of letters of credit. Effective as of June 30, 2000, the Facility was amended to allow the entire Facility amount to be used for the issuance of letters of credit, modify certain covenants, increase the interest rate and allow for the cash collateralization of up to $6.0 million of additional letter of credit capacity beyond the $15.0 million Facility amount pursuant to the terms and conditions of a supplemental letter of credit and reimbursement agreement and a managed agency account assignment agreement. Borrowings under the Facility bear interest at an indexed prime rate plus 4% per annum. The issuance of letters of credit under the Facility and cash collateralized letters of credit outside the Facility bear an annual issuance fee of 4% and 2%, respectively. The Facility expires on March 30, 2001. Except for certain permitted exceptions as identified in the Facility, among other things, the Facility prevents the Company from (a) declaring or paying any dividends except as are mandatorily required on the Company's preferred stock, (b) making any distribution of assets to the Company's shareholders, investors, or equity holders, whether in cash, assets, or in obligations of the Company, (c) allocating or otherwise setting apart any sum for the payment of any dividend or distribution on, or for the purchase, redemption, or retirement of any shares of its capital stock or equity interests in excess of $2.0 million for any year, (d) making any other distribution by reduction of capital or otherwise in respect of any shares of its capital stock or equity interests in excess of $250,000, or (e) creating, incurring, assuming, or suffering to exist any debt or any encumbrance, mortgage or lien upon certain real and personal property of the Company. The Company's obligations under the Facility are secured by substantially all of the Company's assets, subject to certain liens permitted under the Facility. As of June 30, 2000, borrowings of $4.9 million were outstanding under the Facility and an additional $7.4 million was reserved under the Facility, due to outstanding letters of credit. Such amounts shall continue to be reserved and shall not otherwise be available to be advanced to the Company, until the expiration or termination of such letters of credit. 9 EVANS & SUTHERLAND COMPUTER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company has a $5.0 million unsecured letter of credit facility with First Security Bank, N.A., of which approximately $2.6 million was unused and available as of June 30, 2000. First Security Bank has notified the Company that it must deposit cash collateral in the amount of $2.4 million with First Security Bank to secure the Company's reimbursement obligation for all outstanding letters of credit. Any additional issuance of letters of credit by First Security Bank would also require cash collateral equal to the face amount of the letter of credit issued. The First Security Bank letter of credit facility matures on September 30, 2000, after which no further letters of credit may be issued, and requires the Company to pay letter of credit fees. In addition, the Company has unsecured letters of credit totaling approximately $3.3 million outstanding with U.S. Bank, N.A. and Lloyds TSB Bank plc ("Lloyds") that expire between September 2000 and June 2001. On June 19, 2000, Evans & Sutherland Computer Limited, a wholly owned subsidiary of Evans & Sutherland Computer Corporation, executed a $5.0 million overdraft facility (the "Overdraft Facility") with Lloyds. Borrowings under the Overdraft Facility bear interest at the bank's short-term offered rate plus 1.75% per annum. The Overdraft Facility is subject to reduction or demand repayment for any reason at any time at Lloyds' discretion and expires on November 30, 2000. Evans & Sutherland Computer Corporation provided a parent guarantee to Lloyds to cover the principal and interest and other costs under the Overdraft Facility and agreed to maintain a one million Pound Sterling letter of credit in support of the Overdraft Facility. Evans & Sutherland Computer Limited executed a letter of negative pledge in favor of Lloyds against its assets. Covenants in the agreement restrict dividend payments from Evans & Sutherland Computer Limited and require maintenance of certain financial covenants. 6. NET INCOME (LOSS) PER COMMON SHARE Net income (loss) per common share is computed based on the weighted-average number of common shares and, as appropriate, dilutive common stock equivalents outstanding during the period. Stock options, warrants, Class B-1 Preferred Stock and Convertible Subordinated Debentures are considered to be common stock equivalents. Basic net income (loss) per common share is the amount of net income (loss) for the period available to each share of common stock outstanding during the reporting period. Diluted net income (loss) per share is the amount of net income (loss) for the period available to each share of common stock outstanding during the reporting period and to each share that would have been outstanding assuming the issuance of common shares for all dilutive potential common shares outstanding during the period. In calculating net income (loss) per common share, net income (loss) was the same for both the basic and diluted calculations for all periods presented. For the three and six months ended June 30, 2000, outstanding options to purchase 2,465,210 shares of common stock, 428,000 shares of common stock issuable upon conversion of the 6% Convertible Subordinated Debentures, 901,000 shares of common stock issuable upon conversion of the Company's Class B-1 Preferred Stock and 378,000 shares of common stock upon the exercise and conversion of warrants to purchase additional Class B-1 Preferred Stock were excluded from the computation of the diluted net income (loss) per common share because to include them would have been anti-dilutive. For the three and six months ended July 2, 1999, outstanding options to purchase 2,261,997 shares of common stock, 428,000 shares of common stock issuable upon conversion of the 6% Convertible Subordinated Debentures, 901,000 shares of common stock issuable upon conversion of the Company's Class B-1 Preferred Stock and 378,000 shares of common stock upon the exercise and conversion of warrants to purchase additional Class B-1 Preferred Stock were excluded from the computation of the diluted net income (loss) per common share because to include them would have been anti-dilutive. 10 EVANS & SUTHERLAND COMPUTER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 7. SEGMENT AND RELATED INFORMATION The Company's business units have been aggregated into three reportable segments: Simulation, REALimage Solutions, and Applications. These reportable segments offer different products and services and are managed and evaluated separately because each segment uses different technologies and requires different marketing strategies. The Simulation segment provides a broad line of visual systems for flight and ground simulators for training purposes to government, aerospace and commercial airline customers. The REALimage Solutions segment provides graphics accelerator products, including graphics chips and subsystems, to the personal PC workstation marketplace. The Applications segment provides products for the entertainment, educational and real-estate planning industries that use technologies from the Simulation and REALimage Solutions segments. The Company evaluates segment performance based on income (loss) from operations before income taxes, interest income and expense, other income and expense and foreign exchange gains and losses. The Company's assets are not identifiable by segment.
(in thousands, unaudited) Simulation REALimage Applications Total Solutions --------------- --------------- -------------- ------------ Three months ended June 30, 2000 Sales $ 21,734 $ 1,545 $ 2,310 $ 25,589 Operating income (loss) (30,251) (1,090) 123 (31,218) Three months ended July 2, 1999 Sales $ 35,492 $ 6,751 $ 1,780 $ 44,023 Operating income (loss) 331 (4,724) (1,609) (6,002) Six months ended June 30, 2000 Sales $ 62,122 $ 3,036 $ 6,386 $ 71,544 Operating income (loss) (33,971) (2,522) 624 (35,869) Six months ended July 2, 1999 Sales $ 75,755 $ 14,870 $ 3,144 $ 93,769 Operating income (loss) 3,632 (6,239) (3,031) (5,638)
8. GEOGRAPHIC INFORMATION The following table presents sales by geographic location based on the location of the use of the product or services. Sales to individual countries greater than 10% of consolidated sales are shown separately (in thousands):
Three Months Ended Six Months Ended --------------------------------- ---------------------------------- June 30, July 2, June 30, July 2, 2000 1999 2000 1999 -------------- -------------- --------------- --------------- (Unaudited) (Unaudited) United States $ 16,075 $ 21,461 $ 44,040 $ 46,952 United Kingdom 2,553 10,465 11,026 25,797 Europe (excluding United Kingdom) 3,681 7,590 9,043 13,869 Pacific Rim 2,567 4,267 5,577 6,726 Other 713 240 1,858 425 -------------- -------------- --------------- --------------- 25,589 44,023 71,544 93,769 ============== ============== =============== ===============
11 EVANS & SUTHERLAND COMPUTER CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table presents property, plant and equipment by geographic location based on the location of the assets (in thousands): June 30, December 31, 2000 1999 ----------------- ----------------- (Unaudited) United States $ 49,697 $ 51,715 Europe 559 469 ----------------- ----------------- $ 50,256 $ 52,184 ================= ================= 9. LEGAL PROCEEDINGS On May 23, 2000, Lockheed Martin Corporation (the "Plaintiff") served the Company with a civil complaint filed in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida. The Plaintiff alleged in the complaint that the Company breached a contract to provide certain visual systems for the Combined Arms Tactical Trainer program for the United Kingdom Ministry of Defence. The contract has an original value of $33.9 million. In the complaint, the Plaintiff seeks compensatory damages of $8.5 million plus interest as well as consequential damages and attorneys' fees. The $8.5 million being sought from the Company by the Plaintiff was paid to the Company from May 1999 to March 2000 and was recognized as revenue by the Company during 1999. On June 12, 2000, the Company filed its answer and counterclaim. In the counterclaim, the Company alleges as grounds for recovery against the Plaintiff (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) unjust enrichment, (4) unfair competition, (5) misappropriation of trade secrets, (6) intentional interference with advantageous business relationship, (7) replevin, and (8) promissory estoppel. In its counterclaim, the Company seeks compensatory damages of not less than $10.0 million and not more than $25.4 million. On June 14, 2000, the case was removed to the Orlando Division of the United States District Court for the District of Florida where it currently remains. On July 7, 2000, the Plaintiff answered the Company's counterclaim but also filed a motion for dismissal of the Company's counterclaims for unjust enrichment, unfair competition, promissory estoppel, and incidental damages. On July 24, 2000, the Company filed its opposition to the Plaintiff's motion to dismiss these certain counterclaims of the Company. The Company anticipates that the court will render a decision regarding the Plaintiff's motion within the next six weeks. Management disputes the Plaintiff's allegations in the complaint and is vigorously defending the action and asserting its counterclaims. Although management believes the Company will ultimately prevail in defending the claims against it, an unfavorable outcome of these matters would have a material adverse impact on the Company's financial condition. Except as discussed in the preceding paragraph, the Company is not a party to any material legal proceeding. However, the Company from time to time is involved in ordinary, routine litigation incidental to its business. 12 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the condensed consolidated financial statements and notes included in Item 1 of Part I of this Form 10-Q. Except for the historical information contained herein, this quarterly report on Form 10-Q includes certain "forward-looking statements" within the meaning of that term in Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934, including, among others, those statements preceded by, followed by or including the words "estimates," "believes," "expects," "anticipates," "plans," "projects" or similar expressions. These forward-looking statements are based largely on our current expectations and are subject to a number of risks and uncertainties. Our actual results could differ materially from these forward-looking statements. Important factors to consider in evaluating such forward-looking statements include risk of product demand, market acceptance, economic conditions, competitive products and pricing, cancellation of contracts or significant penalties due to delays in the timely delivery of the Company's products, difficulties in product development, commercialization and technology and other risks detailed in this filing and in the Company's most recent Form 10-K. Although the Company believes it has the product offerings and resources for continuing success, future revenue and margin trends cannot be reliably predicted. Factors external to the Company can result in volatility of the Company's common stock price. Because of the foregoing factors, recent trends are not necessarily reliable indicators of future stock prices or financial performance and there can be no assurance that the events contemplated by the forward-looking statements contained in this quarterly report will, in fact, occur. OVERVIEW Evans & Sutherland Computer Corporation ("Evans & Sutherland," "E&S(R)," or the "Company"), is an established high-technology company with outstanding computer graphics technology and a worldwide presence in high-performance 3D visual simulation. In addition, E&S is now applying this core technology into higher-growth personal computer ("PC") products for both simulation and workstations. The Company's core computer graphics technology is shared among the Company's Simulation, REALimage Solutions, and Applications Groups. Simulation Group The Simulation Group provides a broad line of visual systems for flight and ground training and related services to the United States and international armed forces, NASA and aerospace companies. E&S remains an industry leader for visual systems sales to various United States government agencies and more than 20 foreign governments for the primary purpose of training military vehicle operators. The Simulation Group is also a leading independent supplier of visual systems for flight simulators for commercial airlines. This group provides over 50 percent of the visual systems installed in full-flight training simulators for civil airlines, training centers, simulator manufacturers and aircraft manufacturers. The group's visual systems create dynamic, high quality, out-the-window scenes that simulate the view vehicle operators see when performing tasks under actual operating conditions. The visual systems are an integral part of full mission simulators, which incorporate a number of other components, including cockpits or vehicle cabs and large hydraulic motion systems. REALimage Solutions Group The REALimage Solutions Group develops and sells graphics chips and graphics subsystems for the personal workstation marketplace. This group sells to personal workstation OEMs and to end-users. In February 2000, the Company changed the strategic focus of the REALimage Solutions Group to the high-end digital content creation ("DCC") segment. The group will provide the base graphics and video processing technology to leading hardware system-solution providers in the high-end DCC segment. The goal of the group is to provide a "studio-on-a-chip" to bring together real-time graphics and video in a unique and effective way to support all aspects of visual content creation for broadcasting and netcasting applications. 13 Applications Group The Applications Group is composed of synergistic businesses that use E&S core technology in growth markets. The group's products are applications that leverage the technology of the Company's Simulation and REALimage Solutions Groups and apply them to other growth markets. The Applications Group's digital theater products include hardware, software, and content for both the entertainment and educational marketplaces. Digital theater focuses on immersive all-dome theater applications combining colorful digitally-produced imagery, full-spectrum audio, and audience-participation capability. The group provides turnkey solutions incorporating visual systems and sub-systems from the Simulation and REALimage Solutions Groups. E&S integrates these systems with projection equipment, audio components, and audience-participation systems from other suppliers. Products include Digistar(R), a calligraphic projection system designed to compete with analog star projectors in planetariums, and StarRider(R), a full-color, interactive, domed theater experience. The group is a leading supplier of digital display systems in the planetarium marketplace. The Applications Group's E&S RAPIDsite(TM) product is a photo-realistic visualization tool designed for use by real-estate developers, consulting engineers, architects and municipal planners involved with urban, suburban and environmentally sensitive development projects. E&S RAPIDsite features fast 3D-model construction, accelerated graphics rendering performance and easy-to-use interactive exploration of a proposed development on a Windows NT computer with an Open GL(R) graphics accelerator. Until March 28, 2000, the Application Group's digital video products provided Windows NT, open system, standard platform based virtual studio systems for digital content production in the television broadcast, film, video, corporate training and multimedia industries. The E&S solution offered significant improvement in cost, ease of use and flexibility compared with the traditional, proprietary UNIX-based systems common in this developing market. The group's products were all-inclusive system solutions that incorporated visual system components and subsystems from the Simulation and REALimage Solutions Groups. E&S MindSet(TM), Virtual Studio System(TM) and the FuseBox(TM) controlled software with real-time, frame-accurate camera tracking and enabled live talent to perform in real time on a virtual set generated using E&S 3D computer technology. On March 28, 2000, certain assets of this business unit were sold to RT-SET Real Time Synthesized Entertainment Technology Ltd. and its subsidiary, RT-SET America Inc. 14 RESULTS OF OPERATIONS The following table presents the percentage of total sales represented by certain items of the Company for the periods presented:
Three Months Ended Six Months Ended ---------------------------- ------------------------------ June 30, July 2, June 30, July 2, 2000 1999 2000 1999 ------------ ----------- ------------ ------------- (Unaudited) (Unaudited) Sales 100.0% 100.0% 100.0% 100.0% Cost of sales 148.1 60.0 94.7 57.4 ------------ ----------- ------------ ------------- Gross profit (48.1) 40.0 5.3 42.6 ------------ ----------- ------------ ------------- Operating expenses: Selling, general and administrative 34.0 27.1 26.5 23.6 Research and development 42.9 24.9 31.5 23.5 Amortization of goodwill and other intangible assets 0.2 1.6 0.1 1.5 ------------ ----------- ------------ ------------- Operating expenses 77.1 53.6 58.1 48.6 ------------ ----------- ------------ ------------- (125.2) (13.6) (52.8) (6.0) Gain on sale of business unit 3.2 - 2.7 ------------ ----------- ------------ ------------- Operating loss (122.0) (13.6) (50.1) (6.0) Other income (expense), net (1.5) 2.3 (0.8) 1.1 ------------ ----------- ------------ ------------- Loss before income taxes (123.5) (11.3) (50.9) (4.9) Income tax expense (benefit) 80.5 (3.5) 26.5 (1.5) ------------ ----------- ------------ ------------- Net loss (204.0) (7.8) (77.4) (3.4) Accretion of preferred stock 0.2 0.1 0.2 0.1 ------------ ----------- ------------ ------------- Net loss applicable to common stock (204.2%) (7.9%) (77.6%) (3.5%) ============ =========== ============ =============
Second Quarter 2000 Compared to Second Quarter 1999 Sales In the second quarter of 2000, sales decreased $18.4 million, or 42% ($25.6 million in the second quarter of 2000 compared to $44.0 million in the second quarter of 1999). Sales in the Simulation Group decreased $13.8 million, or 39% ($21.7 million in the second quarter of 2000 compared to $35.5 million in the second quarter of 1999). Sales in the REALimage Solutions Group decreased $5.3 million, or 77% ($1.5 million in the second quarter of 2000 compared to $6.8 million in the second quarter of 1999). Sales in the Applications Group increased $0.5 million, or 30% ($2.3 million in the second quarter of 2000 compared to $1.8 million in the second quarter of 1999). The decline in sales in the Simulation Group is due to the cancellation of the contract with Lockheed Martin Corporation ("Lockheed") for the delivery of visual systems to the United Kingdom Ministry of Defence ("UK MOD") for the Combined Arms Tactical Trainer program ("UK CATT"), and an adjustment to revenue on percent complete contracts where a review of the estimated costs to complete the contracts resulted in a negative adjustment to revenue. The cancellation of the UK CATT contract by Lockheed resulted in minimal revenue being recognized on this contract in the second quarter of 2000. The review of those contracts that are based on percent complete accounting resulted in a negative adjustment to revenue of $10.9 million. With percent complete contracts, an increase in the estimated actual costs at completion of contract means that the contract is proportionally less complete, and the revenue must be adjusted downward. The revenue adjusted downward should be recoverable as those contracts are completed in the future. The decline in sales in the REALimage Solutions Group is due to a decrease in 15 the number of units sold and decreased selling prices of existing products due to increased competition and delays in the introduction of new products. Management anticipates sales in the REALimage Solutions Group for the remaining quarters of 2000 will continue to decline due to similar factors that caused the decline in the second quarter of 2000. The increase in sales in the Applications Group is due to an increase in sales volume of large-format entertainment products and planetarium systems. Gross Profit Gross profit declined $29.9 million (a loss of $12.3 million in the second quarter of 2000 compared to gross profit of $17.6 million in the second quarter of 1999). As a percent of sales, gross profit declined to a negative 48.1% in the second quarter of 2000 compared to a positive 40.0% in the second quarter of 1999. Gross profit in the second quarter of 2000 was negatively impacted by the cancellation of the UK CATT contract due to the loss of revenue and the write-off of obsolete and excess inventory specific to the UK CATT contract. The gross profit impact of the adjustment for estimated actual costs at completion of contract on percent complete contracts was $16.7 million ($10.9 million as a reduction in revenue as discussed above, and $5.8 million as an increase in cost of sales relating to contracts with total estimated actual costs that exceed the contract value). The gross profit for the REALimage Solutions Group declined due to lower revenue attributed to a decrease in the number of units sold and decreased selling prices of existing products due to increased competition and delays in the introduction of new products. The gross profit in the Applications Group increased due to increased revenue from sales of large-format entertainment products and planetarium systems. Selling, General and Administrative Selling, general and administrative expenses decreased $3.2 million, or 27% ($8.7 million in the second quarter of 2000 compared to $11.9 million in the second quarter of 1999). As a percent of sales, selling, general and administrative expenses were 34.0% in the second quarter of 2000 compared to 27.1% in the second quarter of 1999. The increase in selling, general and administrative expenses as a percent of sales is due to a significant decrease in sales for the second quarter of 2000 compared to the second quarter of 1999. Selling, general and administrative expenses in the Simulation Group remained relatively unchanged in the second quarter of 2000 compared to the second quarter of 1999. The decrease in these expenses is due to decreased expenses in the REALimage Solutions Group and Applications Group. The decreased expenses in the REALimage Solutions Group is due to decreased sales volumes resulting in decreased commissions and other selling-related costs and decreased general and administrative expenses due to the restructuring in the third quarter of 1999. The decreased expenses in the Applications Group is due to the reduction of employees and related expenses as a result of the sale of certain assets of the Company's digital video products business to RT-SET Real Time Synthesized Entertainment Technology Ltd., and its subsidiary RT-SET America Inc. (together "RT-SET"). Research and Development Research and development expenses remained essentially unchanged ($11.0 million in the second quarter of 2000 compared to $10.9 million in the second quarter of 1999). As a percent of sales, research and development expenses increased to 42.9% in the second quarter of 2000 from 24.9% in the second quarter of 1999. The increase in research and development expenses as a percent of sales is due to a significant decrease in sales for the second quarter of 2000 compared to the second quarter of 1999. Research and development expenses relating to the Simulation Group increased in the second quarter of 2000 compared to the second quarter of 1999 due to increased efforts of the continued development of the Company's SimFusion PC-simulation products. Research and development expenses relating to the REALimage Solutions Group decreased in the second quarter of 2000 compared to the second quarter of 1999 due to significantly lower headcount as a result of the group's restructuring in the third quarter of 1999. Amortization of Goodwill and Other Intangible Assets Amortization of goodwill and other intangible assets decreased $0.7 million, or 94% ($44,000 in the first quarter of 2000 compared to $0.7 million in the first quarter of 1999). The decrease in this expense is due to the write-off of $9.3 million of goodwill and other intangible assets during the third quarter of 1999. 16 Gain on Sale of Business Unit During the first quarter of 2000, the Company sold certain assets of its Applications Group relating to its digital video products business. In the first quarter of 2000, the Company recognized $1.1 million of gain on the transaction. In the second quarter of 2000 the Company recognized $0.8 million of gain as certain contingent events were met subsequent to the transaction. There was no such event in 1999. Other Income (Expense), Net Other income (expense), net decreased $1.4 million (net expense of $0.4 million in the second quarter of 2000 compared to net income of $1.0 million in the second quarter of 1999). The decrease is due to a decrease in interest income and an increase in miscellaneous expenses. Interest income was $0.1 million and $1.2 million in the second quarter of 2000 and the second quarter of 1999, respectively. The decrease in interest income is due to interest received in 1999 for delayed income tax refunds. Income Taxes Income tax expense (benefit) increased $22.1 million (expense of $20.6 million in the second quarter of 2000 compared to a benefit of $1.5 million in the second quarter of 1999). During the second quarter of 2000, the Company increased its deferred tax asset valuation allowance by $20.6 million. As a result of the net operating loss in the second quarter of 2000, the cumulative net operating losses for 2000, 1999 and 1998, and the cancellation of a significant contract and the related civil complaint filed by Lockheed Martin Corporation as discussed in Note 9 to the consolidated financial statements, the Company fully reserved its net deferred tax assets which previously existed at the end of the first quarter of 2000 and those deferred tax assets recognized during the second quarter of 2000. These net deferred tax assets relate to temporary differences, tax credit carry forwards and net operating loss carry forwards. The valuation allowance was recorded in accordance with SFAS 109, which requires that a valuation allowance be established when there is significant uncertainty as to the realizability of the deferred tax assets. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. If the deferred tax assets are realized in the future, or if a portion or all of the valuation allowance is no longer deemed to be necessary, the related tax benefits will reduce future income tax provisions. Six Months Ended June 30, 2000 Compared to Six Months Ended July 2, 1999 Sales In the first six months of 2000, sales decreased $22.3 million, or 24% ($71.5 million in the first six months of 2000 compared to $93.8 million in the first six months of 1999). Sales in the Simulation Group decreased $13.7 million, or 18% ($62.1 million in the first six months of 2000 compared to $75.8 million in the first six months of 1999). Sales in the REALimage Solutions Group decreased $11.9 million, or 80% ($3.0 million in the first six months of 2000 compared to $14.9 million in the first six months of 1999). Sales in the Applications Group increased $3.3 million, or 103% ($6.4 million in the first six months of 2000 compared to $3.1 million in the first six months of 1999). The decline in sales in the Simulation Group is due to the cancellation of the contract with Lockheed for the delivery of visual systems to the UK MOD for the UK CATT program, and an adjustment to revenue on percent complete contracts where a review of the estimated costs to complete the contracts resulted in a negative adjustment to revenue of $10.9 million. The decline in sales in the REALimage Solutions Group is due to a decrease in the number of units sold and decreased selling prices of existing products due to increased competition and delays in the introduction of new products. Management anticipates sales in the REALimage Solutions Group for the remaining quarters of 2000 will continue to decline due to similar factors that caused the decline in the first six months of 2000. The increase in sales in the Applications Group is due to an increase in sales volume of large-format entertainment products and planetarium systems. 17 Gross Profit Gross profit declined $36.2 million, or 90% ($3.8 million in the first six months of 2000 compared to $40.0 million in the first six months of 1999). As a percent of sales, gross profit declined to 5.3% in the first six months of 2000 compared to 42.6% in the first six months of 1999. Gross profit in the first six months of 2000 was negatively impacted by the cancellation of the UK CATT contract due to the loss of revenue and the write-off of obsolete and excess inventory specific to the UK CATT contract. The gross profit impact of the adjustment for estimated actual costs at completion of contract on percent complete contracts was $16.7 million ($10.9 million as a reduction in revenue as discussed above, and $5.8 million as an increase in cost of sales relating to contracts with total estimated actual costs that exceed the contract value). The gross profit for the REALimage Solutions Group declined due to lower revenue attributed to a decrease in the number of units sold and decreased selling prices of existing products due to increased competition and delays in the introduction of new products. The gross profit in the Applications Group increased due to increased revenues from sales of large-format entertainment products and planetarium systems. Selling, General and Administrative Selling, general and administrative expenses decreased $3.2 million, or 14% ($19.0 million in the first six months of 2000 compared to $22.2 million in the first six months of 1999). As a percent of sales, selling, general and administrative expenses were 26.5% in the first six months of 2000 compared to 23.6% in the first six months of 1999. The increase in selling, general and administrative expenses as a percent of sales is due to a significant decrease in sales for the second quarter of 2000 compared to the second quarter of 1999. The decrease in these expenses is due to decreased expenses in the REALimage Solutions Group and Applications Group. The decreased expenses in the REALimage Solutions Group is due to decreased sales volumes resulting in decreased commissions and other selling-related costs and decreased general and administrative expenses due to the restructuring in the third quarter of 1999. The decreased expenses in the Applications Group is due to the reduction of employees and related expenses as a result of the sale of certain assets of the Company's digital video products business to RT-SET. Research and Development Research and development expenses increased $0.5 million, or 2% ($22.5 million in the first six months of 2000 compared to $22.0 million in the first six months of 1999). As a percent of sales, research and development expenses were 31.5% in the first six months of 2000 compared to 23.5% in the first six months of 1999. The increase in research and development expenses as a percent of sales is due to a significant decrease in sales for the second quarter of 2000 compared to the second quarter of 1999. Research and development expenses relating to the Simulation Group increased in the first six months of 2000 compared to the first six months of 1999 due to increased efforts of the continued development of the Company's SimFusion PC-simulation products. Research and development expenses relating to the REALimage Solutions Group decreased in the first six months of 1999 due to significantly decreased headcount as a result of the Group's restructuring in the third quarter of 1999. Amortization of Goodwill and Other Intangible Assets Amortization of goodwill and other intangible assets decreased $1.3 million, or 94% ($89,000 in the first six months of 2000 compared to $1.4 million in the first six months of 1999). The decrease in this expense is due to the write-off of $9.3 million of goodwill and other intangible assets during the third quarter of 1999. Gain on Sale of Business Unit During the first quarter of 2000, the Company sold certain assets of its Applications Group relating to its digital video business. In the first quarter of 2000, the Company recognized $1.1 of gain on the transaction. In the second quarter of 2000 the Company recognized $0.8 million of gain as certain contingent events were met subsequent to the close of the transaction. There was no such event in 1999. 18 Other Income (Expense), Net Other income (expense), net decreased $1.6 million (net expense of $0.6 million in the first six months of 2000 compared to net income of $1.0 in the first six months of 1999). The decrease is due to a decrease in interest income and an increase in miscellaneous expenses. Interest income was $0.3 million and $1.5 million in the first six months of 2000 and the first six months of 1999, respectively. The decrease in interest income is due to interest received in 1999 for delayed income tax refunds. Income Taxes Income tax expense (benefit) increased $20.3 million (expense of $18.9 million in the first six months of 2000 compared to a benefit of $1.4 million in the first six months of 1999). During the second quarter of 2000, the Company increased its deferred tax asset valuation allowance by $20.6 million. As a result of the net operating loss in the second quarter of 2000, the cumulative net operating losses for 2000, 1999 and 1998, and the cancellation of a significant contract and the related civil complaint filed by Lockheed Martin Corporation as discussed in Note 9 to the consolidated financial statements, the Company fully reserved its net deferred tax assets which previously existed at the end of the first quarter of 2000 and those deferred tax assets recognized during the second quarter of 2000. These net deferred tax assets relate to temporary differences, tax credit carry forwards and net operating loss carry forwards. The valuation allowance was recorded in accordance with SFAS 109, which requires that a valuation allowance be established when there is significant uncertainty as to the realizability of the deferred tax assets. The Company evaluates the realizability of its deferred tax assets on a quarterly basis. If the deferred tax assets are realized in the future, or if a portion or all of the valuation allowance is no longer deemed to be necessary, the related tax benefits will reduce future income tax provisions. LIQUIDITY & CAPITAL RESOURCES At June 30, 2000, the Company had working capital of $65.7 million, including cash and cash equivalents of $19.4 million, compared to working capital of $116.9 million at December 31, 1999 including cash, cash equivalents and short-term investments of $22.9 million. During the first six months of 2000, the Company used $2.3 million in its operating activities, used $3.1 million in its investing activities and generated $2.8 million in its financing activities. The primary uses of cash from the Company's operating activities included a net loss for the six months ended June 30, 2000 of $55.4 million, a $5.4 million increase in accounts receivable, a $3.0 million decrease in customer deposits, a $2.0 million increase in inventory and a $1.7 million decrease in income taxes payable. These uses of cash were offset by a $30.2 million decrease in net costs and estimated earnings in excess of billings on uncompleted contracts, a $20.6 million decrease in deferred income taxes, and a $2.1 million increase in accounts payable. The decrease in net costs and estimated earnings in excess of billings on uncompleted contracts was due to the achievement of billing milestones during the six months and the adjustment to revenue on percent complete contracts due to the change in estimated actual costs to complete the contracts. The Company's investing activities included capital expenditures of $4.6 million for building improvements and equipment and proceeds of $1.3 million for the sale of certain assets of its digital video business. The Company's financing activities during the first six months of 2000 included borrowings, net of repayments of notes payable of $2.4 million. On March 31, 2000, the Company entered into a financing facility (the "Facility") with Zions First National Bank. The Facility provides for borrowings of up to $15.0 million, which included a $7.0 million sublimit for the issuance of letters of credit. Effective as of June 30, 2000, the Facility was amended to allow the entire Facility amount to be used for the issuance of letters of credit, modify certain covenants, increase the interest rate and allow for the cash collateralization of up to $6.0 million of additional letter of credit capacity beyond the $15.0 million Facility amount pursuant to the terms and conditions of a supplemental letter of credit and reimbursement agreement and a managed agency account assignment agreement. Borrowings under the Facility bear interest at an indexed prime rate plus 4% per annum. The issuance of letters of credit under the Facility and cash collateralized letters of credit outside the Facility bear an annual issuance fee of 4% and 2%, respectively. The Facility 19 expires on March 30, 2001. Except for certain permitted exceptions as identified in the Facility, among other things, the Facility prevents the Company from (a) declaring or paying any dividends except as are mandatorily required on the Company's preferred stock, (b) making any distribution of assets to the Company's shareholders, investors, or equity holders, whether in cash, assets, or in obligations of the Company, (c) allocating or otherwise setting apart any sum for the payment of any dividend or distribution on, or for the purchase, redemption, or retirement of any shares of its capital stock or equity interests in excess of $2.0 million for any year, (d) making any other distribution by reduction of capital or otherwise in respect of any shares of its capital stock or equity interests in excess of $250,000, or (e) creating, incurring, assuming, or suffering to exist any debt or any encumbrance, mortgage or lien upon certain real and personal property of the Company. The Company's obligations under the Facility are secured by substantially all of the Company's assets, subject to certain liens permitted under the Facility. As of June 30, 2000, borrowings of $4.9 million were outstanding under the Facility and an additional $7.4 million was reserved under the Facility, due to outstanding letters of credit. Such amounts shall continue to be reserved and shall not otherwise be available to be advanced to the Company, until the expiration or termination of such letters of credit. The Company has a $5.0 million unsecured letter of credit facility with First Security Bank, N.A., of which approximately $2.6 million was unused and available as of June 30, 2000. First Security Bank has notified the Company that it must deposit cash collateral in the amount of $2.4 million with First Security Bank to secure the Company's reimbursement obligation for all outstanding letters of credit. Any additional issuance of letters of credit by First Security Bank would also require cash collateral equal to the face amount of the letter of credit issued. The First Security Bank letter of credit facility matures on September 30, 2000, after which no further letters of credit may be issued, and requires the Company to pay letter of credit fees. In addition, the Company has unsecured letters of credit totaling approximately $3.3 million outstanding with U.S. Bank, N.A. and Lloyds TSB Bank plc ("Lloyds") that expire between September 2000 and June 2001. On June 19, 2000, Evans & Sutherland Computer Limited, a wholly owned subsidiary of Evans & Sutherland Computer Corporation, executed a $5.0 million overdraft facility (the "Overdraft Facility") with Lloyds. Borrowings under the Overdraft Facility bear interest at the bank's short-term offered rate plus 1.75% per annum. The Overdraft Facility is subject to reduction or demand repayment for any reason at any time at Lloyds' discretion and expires on November 30, 2000. Evans & Sutherland Computer Corporation provided a parent guarantee to Lloyds to cover the principal and interest and other costs under the Overdraft Facility and agreed to maintain a one million Pound Sterling letter of credit in support of the Overdraft Facility. Evans & Sutherland Computer Limited executed a letter of negative pledge in favor of Lloyds against its assets. Covenants in the agreement restrict dividend payments from Evans & Sutherland Computer Limited and require maintenance of certain financial covenants. On February 18, 1998, the Company's Board of Directors authorized the repurchase of up to 600,000 shares of the Company's common stock, including the 327,000 shares still available from the repurchase authorization approved by the Board of Directors on November 11, 1996. On September 8, 1998, the Company's Board of Directors authorized the repurchase of an additional 1,000,000 shares of the Company's common stock. Subsequent to February 18, 1998 through December 1999, the Company repurchased 1,136,500 shares of its common stock, leaving 463,500 shares available for repurchase as of August 4, 2000. Stock may be acquired in the open market or through negotiated transactions. Under the program, repurchases may be made from time to time, depending on market conditions, share price, and other factors. As of June 30, 2000, the Company had approximately $18.0 million of 6% Convertible Subordinated Debentures due in 2012 (the "6% Debentures"). The 6% Debentures are unsecured and are convertible at each bondholder's option into shares of the Company's common stock at a conversion price of $42.10 or 428,000 shares of the Company's common stock subject to adjustment. The 6% Debentures are redeemable at the Company's option, in whole or in part, at par. Management believes that existing cash, cash equivalents, borrowings available under its various borrowing facilities and expected cash from future operations will be sufficient to meet the Company's anticipated working capital needs, routine capital expenditures and current debt service obligations for the next 20 twelve months provided that the Company will be able to renegotiate its existing borrowing facilities or secure replacement financing. The Company's cash and cash equivalents, subject to various restrictions previously set forth, are available for working capital needs, capital expenditures, strategic investments, mergers and acquisitions, stock repurchases and other potential cash needs as they may arise. There can be no assurances that the Company would be successful in renegotiating its existing borrowing facilities or obtaining additional debt or equity financing. TRADEMARKS USED IN THIS FORM 10-Q Digistar, E&S, E&S RAPIDsite, REALimage, and StarRider are trademarks or registered trademarks of Evans & Sutherland Computer Corporation. All other product, service, or trade names or marks are the properties of their respective owners. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The principal market risks to which the Company is exposed are changes in foreign currency exchange rates and changes in interest rates. The Company's international sales, which accounted for 38% of the Company's total sales in the six months ended June 30, 2000 are concentrated in the United Kingdom, continental Europe and Asia. The Company manages its exposure to changes in foreign currency exchange rates by entering into most of its sales and purchase contracts for products and materials in U.S. dollars. Occasionally, the Company enters into sales and purchase contracts for products and materials denominated in currencies other than U.S. dollars and in those cases the Company may enter into foreign exchange forward sales or purchase contracts to offset those exposures. Foreign currency purchase and sales contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. As of June 30, 2000, the Company had no material sales or purchase contracts in currencies other than U.S. dollars and had no foreign currency sales or purchase contracts. The Company reduces its exposure to changes in interest rates by maintaining a high proportion of its debt in fixed-rate instruments. As of June 30, 2000, 79% of the Company's total debt was in fixed-rate instruments; however, the Company has revolving facilities that provide for borrowings by the Company of up to $20.0 million at variable rates of interest. If the Company were to draw on all remaining revolving facilities availability, 59% of the Company's total debt would be in fixed-rate instruments. In addition, the Company maintains an average maturity of its short-term investment portfolio under twelve months to avoid large changes in its market value. 21 PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS On May 23, 2000, Lockheed Martin Corporation (the "Plaintiff") served the Company with a civil complaint filed in the Circuit Court of the Ninth Judicial Circuit in and for Orange County, Florida. The Plaintiff alleged in the complaint that the Company breached a contract to provide certain visual systems for the Combined Arms Tactical Trainer program for the United Kingdom Ministry of Defence. The contract has an original value of $33.9 million. In the complaint, the Plaintiff seeks compensatory damages of $8.5 million plus interest as well as consequential damages and attorneys' fees. The $8.5 million being sought from the Company by the Plaintiff was paid to the Company from May 1999 to March 2000 and was recognized as revenue by the Company during 1999. On June 12, 2000, the Company filed its answer and counterclaim. In the counterclaim, the Company alleges as grounds for recovery against the Plaintiff (1) breach of contract, (2) breach of implied covenant of good faith and fair dealing, (3) unjust enrichment, (4) unfair competition, (5) misappropriation of trade secrets, (6) intentional interference with advantageous business relationship, (7) replevin, and (8) promissory estoppel. In its counterclaim, the Company seeks compensatory damages of not less than $10.0 million and not more than $25.4 million. On June 14, 2000, the case was removed to the Orlando Division of the United States District Court for the District of Florida where it currently remains. On July 7, 2000, the Plaintiff answered the Company's counterclaim but also filed a motion for dismissal of the Company's counterclaims for unjust enrichment, unfair competition, promissory estoppel, and incidental damages. On July 24, 2000, the Company filed its opposition to the Plaintiff's motion to dismiss these certain counterclaims of the Company. The Company anticipates that the court will render a decision regarding the Plaintiff's motion within the next six weeks. Management disputes the Plaintiff's allegations in the complaint and is vigorously defending the action and asserting its counterclaims. Although management believes the Company will ultimately prevail in defending the claims against it, an unfavorable outcome of these matters would have a material adverse impact on the Company's financial condition. Except as discussed in the preceding paragraph, the Company is not a party to any material legal proceeding. However, the Company from time to time is involved in ordinary, routine litigation incidental to its business. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Company held its Annual Meeting of Shareholders on May 17, 2000. Proxies for the meeting were solicited pursuant to Regulation 14A. The Company's Board of Directors is divided into three classes whose terms expire at successive annual meetings. Accordingly, not all Directors are elected at each Annual Meeting of Shareholders. Mr. Peter O. Crisp and Mr. Ivan E. Sutherland were re-elected as Directors and other continuing Directors are: Stewart Carrell, Gerald S. Casilli and James R. Oyler. The matters described below were voted on at the meeting and the results are as follows: 1. Election of Peter O. Crisp and Ivan E. Sutherland to serve until the 2003 Annual Meeting of Shareholders For Withheld --- -------- Peter O. Crisp 8,293,330 1,027,592 Ivan E. Sutherland 8,293,328 1,027,594 22 2. Amendment to the Evans & Sutherland Computer Corporation 1998 Stock Option Plan (the "Plan") to (1) increase the aggregate number of shares of common stock available for grant under the Plan from 850,000 shares to 1,250,000 shares and (2) prohibit the committee and Board of Directors from having the authority or discretion to adjust the exercise price of outstanding options granted under the Plan For Against Abstain Non-Vote --- ------- ------- -------- 5,014,273 4,012,047 294,602 - 3. The ratification of KPMG LLP as independent auditors of the Company for the fiscal year ending December 31, 2000 For Against Abstain Non-Vote --- ------- ------- -------- 9,313,876 4,043 3,003 - Item 5. OTHER INFORMATION On June 7, 2000, the Company and American Stock Transfer and Trust Company (the "Rights Agent") executed the First Amendment (the "Amendment") to the Rights Agreement dated November 19, 1998 between the Company and the Rights Agent (as amended, modified or supplemental from time to time, the "Rights Agreement"). At the request of the State of Wisconsin Investment Board ("SWIB"), and as permitted by the Rights Agreement, the Company amended the Rights Agreement to exclude SWIB from the definition of "Acquiring Person" unless and until such time as SWIB becomes the Beneficial Owner of more than 19.9% of the then outstanding common shares of the Company. The Amendment and the Rights Agreement, specifying the terms of the Rights, as amended, are exhibits to this report on Form 10-Q. The foregoing description of the Amendment does not purport to be complete and is qualified in its entirety by reference to such exhibits. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit No. Description ----------- ------------------------------------------------------ 10.1 Letter of Credit and Reimbursement Agreement between Evans & Sutherland Computer Corporation and Zions First National Bank, dated April 24, 2000. 10.2 Supplemental Letter of Credit and Reimbursement Agreement between Evans & Sutherland Computer Corporation and Zions First National Bank, dated May 31, 2000. 10.3 Managed Agency Account Assignment Agreement between Evans & Sutherland Computer Corporation and Zions First National Bank, dated May 31, 2000. 10.4 Second Loan Modification Agreement made and entered into effective June 30, 2000 by and among Evans & Sutherland Computer Corporation, Evans & Sutherland Computer GmbH, Evans & Sutherland Computer Limited, Evans & Sutherland Graphics Corporation and Zions First National Bank, a national banking association. 10.5 $15,000,000 Renewal and Substitute Promissory Note in favor of Zions First National Bank, a national banking association, dated June 30, 2000. 10.6 Employment agreement between Evans & Sutherland Computer Corporation and James R. Oyler, dated May 16, 2000. 23 10.7 Employment agreement between Evans & Sutherland Computer Corporation and Richard J. Gaynor, dated May 16, 2000. 10.8 Employment agreement between Evans & Sutherland Computer Corporation and David B. Figgins, dated May 16, 2000. 10.9 Employment agreement between Evans & Sutherland Computer Corporation and George K. Saul, dated May 16, 2000. 10.10 Employment agreement between Evans & Sutherland Computer Corporation and Robert H. Ard, dated May 16, 2000. 10.11 Employment agreement between Evans & Sutherland Computer Corporation and Thomas Atchison, dated July 25, 2000. 10.12 Overdraft Facility dated June 15, 2000 between Evans & Sutherland Computer Limited and Lloyds TSB Bank plc. 10.13 Form of Rights Agreement dated as of November 19, 1998 between Evans & Sutherland Computer Corporation and American Stock Transfer & Trust Company which includes as Exhibit A, the form of Certificate of Designation for the Rights, as Exhibit B, the form of Rights Certificate, and as Exhibit C, a Summary of Rights, filed as Exhibit 1 to the Company's Registration Statement on Form 8-A filed December 8, 1998, and incorporated herein by this reference. 10.14 First Amendment to Rights Agreement dated as of June 7, 2000 between Evans & Sutherland Computer Corporation and American Stock Transfer & Trust Company. 27.1 Financial Data Schedule (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. EVANS & SUTHERLAND COMPUTER CORPORATION Date August 14, 2000 By: /S/ Richard J. Gaynor ------------------------------------------- Richard J. Gaynor, Vice President and Chief Financial Officer (Principal Financial Officer) 24 EX-10.1 2 0002.txt LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this "Agreement") dated April 24, 2000 is between Evans & Sutherland Computer Corporation, a Utah corporation (the "Borrower") and Zions First National Bank ("Bank"). In consideration for Bank issuing irrevocable letters of credit during the term provided in Section 2.6 of that certain Loan Agreement dated March 31, 2000 by and between Borrower and Bank (the "Loan Agreement") in an amount not to exceed $ 7,000,000.00 (the "Letters of Credit"), Borrower and Bank agree to the following provisions: 1. Reimbursement. Borrower shall reimburse Bank, at Bank's office in immediately available United States currency, the amount paid or to be paid by Bank or Bank's agent, or any party on Bank's behalf on each draft or other order, instrument or demand drawn or presented under the Letters of Credit (an "Item"). Items shall be reimbursed on demand. Upon full and timely reimbursement according to the terms of this Agreement and the Loan Agreement, the full face amount of the Letters of Credit shall be available to Borrower throughout the remainder of the stated term of the Letters of Credit. 2. Commission and Charges. Borrower agrees to pay Bank an issuance fee in the amount set forth in Section 2.6 of the Loan Agreement, payable on the date of the issuance of such Letter of Credit and any subsequent anniversary of the date of issuance. Borrower also agrees to pay Bank (i) a negotiation fee in the amount of 1/8% of the amount of each draw under each Letter of Credit, payable on the date of such drawing, and (ii) an amendment fee in the amount of $35.00 for each amendment to each Letter of Credit, payable on the effective date of each such amendment. 3. Interest. Borrower shall pay Bank on demand interest at a fluctuating rate (equal to the rates set forth in Section 2.2 of the Loan Agreement) on any reserved amount of the proceeds of the Loan extended pursuant to the Loan Agreement which bears interest in accordance with Section 2.6 of the Loan Agreement, until such drawn amount is fully repaid pursuant to Section 1 above. 4. Set Off. Borrower authorizes Bank to charge any account or other funds in Bank's possession for the payment of the Liabilities (as defined in Section 8 of this Agreement). 5. Continuation of Liability. Regardless of the expiration date of any Letter of Credit, Borrower shall remain liable hereunder for any draw or payment made by Bank under the Letter of Credit, (i) timely received but paid by the Bank within ten (10) days after the expiration date of the Letter of Credit; or (ii) paid by Bank pursuant to an order of a court of competent jurisdiction; or (iii) as otherwise authorized by Borrower. 2 6. Documentation. Unless specified to the contrary in any Letter of Credit application, or any amendment to any Letter of Credit, Borrower agrees that Bank and Bank's correspondents may receive and accept (a) any Items or documents otherwise in order, issued or purportedly issued by an agent, executor, trustee in bankruptcy, receiver or other representative of the party who is authorized under such Letter of Credit to issue such items or other documents, as complying with the terms of such Letter of Credit and (b) documents which comply with the UCP (as defined in Section 19 of this Agreement). The provisions of clause (a) above shall in no way be deemed to preclude the beneficiary of any Letter of Credit from issuing and presenting Items or documents under the terms of such Letter of Credit. Borrower agrees to indemnify and hold Bank harmless from each and every claim, demand, liability, loss, cost or expense (including, but not limited to, reasonable attorneys' fees and legal costs) which may arise or be created by Bank's acceptance of telecommunication instructions in connection with any Letter of Credit, including, but not limited to, telephonic instructions in connection with any waiver of discrepancies. 7. Increased Cost/Taxes. If, as a result of any governing law, regulation, treaty or directive, or any change therein, or in the interpretation or application thereof or compliance with any request or directive (whether or not having the force of law) from any court or governmental authority, agency or instrumentality, any reserve, premium, special deposit, special assessment or similar requirements against Bank's assets, deposits with Bank or for Bank's account, or credit extended by Bank, are imposed, modified or deemed applicable and Bank reasonably determines that, by reason thereof, the cost to Bank of issuing or maintaining the Letters of Credit is increased, Borrower agrees to pay Bank upon demand (which demand shall be accompanied by a statement setting forth the basis for the calculation thereof) such additional amount or amounts as will compensate Bank for such additional cost. Determinations by Bank for purposes of this Section of the additional amounts required to compensate Bank in respect of the foregoing shall be conclusive, absent manifest error. Borrower further agrees to pay any applicable levies or other taxes imposed in connection with the Letters of Credit other than net income taxes payable by Bank, and otherwise comply with all domestic and foreign laws and regulations applicable to all transactions under or in connection with the Letters of Credit. 3 8. Collateral. As security for the performance of all obligations of this Agreement, Borrower has conveyed security interests in certain real and personal property described in and evidenced by those instruments executed concurrently with the Loan Agreement as set forth in Section 2.4 therein. In addition thereto, Borrower hereby pledges (a) all balances, credits, deposits, accounts or moneys now or hereafter held by Bank which Borrower owns or in which Borrower may have an interest, (b) all Items, all shipping documents, warehouse receipts, policies or certificates of insurance and other documents accompanying or relating to any Items, and all property covered by any such documents or shipped or stored under or in connection with any Letter of Credit or any Items (whether or not such documents or property is released to Borrower or upon Borrower's request), and (c) all dividends, distributions and other right in or with respect to, and substitutions for and products and proceeds of, any of the foregoing (being referred to collectively as the "Collateral"). In addition, Borrower hereby incorporates all of Borrower's covenants and obligations concerning the collateral as set forth in the Loan Agreement and the other Loan Documents identified The security interest granted by this Section shall continue, and the provisions of any this Agreement, the Loan Agreement, and any other instrument or document which secures the Liabilities in favor of Bank shall continue, until such time as all Liabilities have been paid in full and discharged and this Agreement has been terminated. 9. Risks/Indemnification. Borrower agrees that any action or omission by Bank under or in connection with any Letter of Credit or any Items, documents or property shall, unless in breach of good faith, be binding on Borrower and shall not put Bank under any resulting liability to Borrower. Borrower will indemnify Bank and hold Bank harmless from and against each and every claim, demand, liability, loss, cost or expense (including, but not limited to, reasonable attorneys' fees and legal costs) to which Bank may be subjected or which Bank may incur by reason of any such action or omission, or by reason of any action taken pursuant to this Agreement (including, but not limited to, by reason of (i) Bank honoring Borrower's request not to make payment under any Item or (ii) Borrower's actions to restrain Bank from making payment under any Item), unless in breach of good faith. In no event shall Bank be liable for incidental, consequential or special damages. The indemnities and obligations of Borrower contained in this Section shall survive the payment in full of amounts payable to Sections 1 through 3 hereof and termination of the Letters of Credit. 10. Discrepancies. Borrower will promptly examine the copy of each Letter of Credit (and any amendments thereto) sent to Borrower by Bank, as well as any and all instruments and documents delivered to Borrower from time to time, and, in the event Borrower has any claim of non-compliance with Borrower's instructions or of discrepancies or other irregularity, Borrower will immediately notify Bank thereof in writing, and Borrower will conclusively be deemed to have waived any such claim against Bank unless such notice is given within two business days. 4 11. Exculpation. In addition to the exculpatory provisions contained in the UPC (as defined hereafter in Section 19), Bank or its correspondents shall not be responsible for, and Borrower's obligation to reimburse Bank shall not be affected by: (a) compliance with any laws, customs or regulations in effect in countries of negotiation or payment of any Letter of Credit; (b) failure of any Item to refer adequately to any Letter of Credit, or failure of documents to accompany any Item at negotiation/payment, or failure to note the amount of any Item on the reverse of such Letter of Credit or to surrender or to take up such Letter of Credit or to forward required documents with Items, each of which provisions, if contained in such Letter of Credit itself, it is agreed may be waived by Bank, (c) any refusal by Bank to honor Items because of an applicable law, regulation or ruling of any governmental agency whether valid or invalid, or now or hereafter in effect, (d) acts or the failure to act of Bank's agents or correspondents including, but not limited to, their failure to pay Items because of any law, decree, regulation, ruling or interpretation of any governmental agency (domestic or foreign), (e) the identity of any transferee of any Letter of Credit or the sufficiency of the transfer if such Letter of Credit is transferable, (f) the use which may be made of any Letter of Credit or any acts or omissions by any beneficiary of transferee in connection therewith, or (g) the validity, sufficiency or genuineness of documents, or of any endorsements thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged. In furtherance of, and not in limitation of the foregoing, Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. Bank shall not be liable or responsible for (a) the time, place, manner or order in which shipment is made or partial or incomplete shipment, (b) insurance of any property or any risk connected with insurance, (c) delay in arrival or failure to arrive of any property or any documents relating thereto, (d) delay in giving or failure to give notice of arrival or any other notice, (e) the validity, form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or the validity, genuineness, falsification or legal effect of any Items, (f) general or particular conditions stipulated in documents or superimposed thereon, (g) the description, existence, character, quantity, weight, quality, condition, packing, shipment, arrival, delivery or value of any property purportedly represented by any documents, or any difference therein from that expressed in the documents, (h) the acts or omissions, good faith, solvency, performance or standing of any vendor, shipper, issuer, consignor, carrier, insurer, user of the Letter of Credit, correspondent or other bank (whether or not selected by Bank) or anyone else, (i) loss of, or errors, omissions, interruptions or delays in transmission or delivery of, any messages, letters or documents by mail, cable, telegraph, telex, facsimile or otherwise and whether or not in cipher, (j) the translation of, or errors in translation or interpretation of, credit or technical terms, (k) transmission of credit terms without translating them, or (l) consequences arising out of acts of God, interruptions of communication facilities, war disturbances, abnormal or emergency conditions, or other causes beyond Bank's control, or out of strikes or lockouts and none of the foregoing shall affect or impair, or prevent the vesting of any of Bank's rights and remedies or Borrower's obligations hereunder. 12. Costs and Expenses. Borrower agrees to pay on demand all reasonable costs and expenses (including, but not limited to, reasonable attorney's fees and legal costs) in connection with (i) the Letters of Credit or this Agreement or its enforcement or (ii) any action or proceeding restraining or seeking to restrain Bank from paying, or seeking to compel Bank to pay, any amount under any Letter of Credit. 5 13. Amendments and/or Modification of Letters of Credit. If Borrower requests Bank to increase the amount of any Letter of Credit, extend or renew any Letter of Credit, or otherwise modify the terms of any Letter of Credit, Borrower agrees that this Agreement shall continue to bind Borrower with respect to any action taken by Bank or any of its correspondents in accordance with such increase, extension, renewal or other modification. 14. Events of Default. The occurrence of any of the following events shall constitute an "Event of Default" hereunder: (a) Borrower shall fail to pay any amount payable under this Agreement when due; (b) Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement; (c) the filing by or against Borrower or any guarantor of the Liabilities ("Guarantor") of a request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, relief as debtor or other relief under the bankruptcy, insolvency or similar laws of the United States or any state or territory thereof or any foreign jurisdiction, now or hereafter in effect; (d) the making of any general assignment by Borrower or any Guarantor for the benefit of creditors; the appointment of a receiver or trustee for Borrower or any Guarantor, or for any assets of Borrower or any Guarantor including, without limitation, the appointment of or taking possession by a "custodian", as defined in the federal Bankruptcy Code or otherwise; the making of any, or sending notice of any intended bulk sale; or the institution by or against Borrower or any Guarantor of any other type of insolvency proceeding under the federal Bankruptcy Code or otherwise, or of any formal or informal proceeding for the dissolution or liquidation or settlement of claims against or winding up of affairs of Borrower or any Guarantor; (e) any provision of this Agreement shall at any time for any reason cease to be valid and binding on Borrower, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by Borrower, or a proceeding shall be commenced by any governmental agency or authority having jurisdiction over Borrower seeking to establish the invalidity or unenforceability thereof, or Borrower shall deny that it has any or further liability or obligation under this Agreement; or (f) any default shall occur under any agreement by and among Borrower and Bank. If any Event of Default shall have occurred and be continuing, Bank may: (a) by written notice to Borrower direct Borrower to pay immediately to Bank an amount equal to Bank's potential liability under all Letters of Credit, whether or not any Item shall have been presented thereunder; (b) offset any funds of Borrower held by Bank; (c) pursue any other remedy available to it under this Agreement, the Loan Agreement or pursuant to the terms of any other documents executed in accordance herewith; or (d) take any and all actions with respect to the Collateral as allowed by applicable law. 6 15. Documents. Borrower agrees that (a) Bank may accept as "bills of lading" under Letters of Credit any documents issued or purportedly issued by or on behalf of any carrier which acknowledge receipt of property for transportation, whatever the specific provisions of such documents, (b) Bank may accept as documents of insurance either insurance policies or insurance certificates, (c) Bank may accept as sufficient and controlling the description of any property contained in any invoice notwithstanding that any bills of lading, insurance or other documents (which Bank may also accept) may contain a description different from that contained in such invoice, and (d) Bank may accept any document containing stamped, written or typewritten provisions thereon, whether or not signed or initialed, and may assume conclusively that the same were placed with authority on the document at the time of its issuance by the carrier or other issuer or any agent thereof. 16. Release of Documents or Property. In the event that Bank receives some but not all of the documents against which drawings may be made and, at Borrower's request, Bank delivers such documents to Borrower or to anyone else, or in the event that Bank, at Borrower's request, releases or consents to the release of some or all of the property shipped or purported to have been shipped under any Letter of Credit prior to the presentation of the relative Item, Borrower agrees to pay Bank on demand the amount of any claim made against Bank by reason thereof and authorizes Bank to honor such Item when it is presented regardless of whether or not such Item or any document which may accompany it complies with the terms of such Letter of Credit. 17. Delay and Waiver. No delay in the exercise of Bank's rights or remedies shall be deemed a waiver, and no partial exercise of Bank's rights or remedies shall preclude the further exercise of any right or remedy. No waiver shall be effective unless in writing and then only as to the specific subject waived. 18. Notice. All Notices to required shall be given to the parties shall be delivered in accordance with the provisions of Section 9.6 of the Loan. "Notice" shall include any request, demand or other communication. 19. Construction and Interpretation. The Letters of Credit and this Agreement shall be governed by the laws of the State of Utah, including the Uniform Commercial Code. Unless inconsistent with Utah law, the Letters of Credit and this Agreement are subject to the terms of the Uniform Customs and Practice for Documentary Credits (1993 Revision), the International Chamber of Commerce Publication No. 500 ("UCP"), as hereby expressly incorporated by reference. 20. Assigns. This Agreement is binding upon the parties hereto and their respective successors and assigns. 21. Severability. If any term or provision set forth in this Agreement shall be invalid or unenforceable, the remainder of this Agreement, or the application of such terms or provisions to persons or circumstances, other than those to which it is held invalid or unenforceable, shall be construed in all respects as if such invalid or unenforceable term or provision were omitted. 7 22. ARBITRATION DISCLOSURES: A. ARBITRATION IS FINAL AND BINDING ON BORROWER AND BANK (COLLECTIVELY, THE "PARTIES") AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT. B. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL. C. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT. D. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR SEEK MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED. E. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY. F. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION. (a) Any claim or controversy ("Dispute") between or among the Parties and their assigns, including but not limited to Disputes arising out of or relating to the Letters of Credit, this Agreement, this arbitration provision ("arbitration clause"), or any related agreements or instruments relating hereto or delivered in connection herewith ("Related Documents"), and including but not limited to a Dispute based on or arising from an alleged tort, shall at the request of any Party be resolved by binding arbitration in accordance with the applicable arbitration rules of the American Arbitration Association ("the Administrator"). The provisions of this arbitration clause shall survive any termination, amendment, or expiration of this Agreement or the Related Documents. The provisions of this arbitration clause shall supersede any prior arbitration agreement between or among the Parties. If any provision of this arbitration clause should be determined to be unenforceable, all other provisions of this arbitration clause shall remain in full force and effect. 8 (b) The arbitration proceedings shall be conducted in Salt Lake City, Utah, at a place to be determined by the Administrator. The Administrator and the arbitrator(s) shall have the authority to the extent practicable to take any action to require the arbitration proceeding to be completed and the arbitrator(s)' award issued within one-hundred-fifty (150) days of the filing of the Dispute with the Administrator. The arbitrator(s) shall have the authority to impose sanctions on any Party that fails to comply with time periods imposed by the Administrator or the arbitrator(s), including the sanction of summarily dismissing any Dispute or defense with prejudice. The arbitrator(s) shall have the authority to resolve any Dispute regarding the terms of this Agreement, this arbitration clause or the Related Documents, including any claim or controversy regarding the arbitrability of any Dispute. All limitations periods applicable to any Dispute or defense, whether by statute or agreement, shall apply to any arbitration proceeding hereunder and the arbitrator(s) shall have the authority to decide whether any Dispute or defense is barred by a limitations period and, if so, to summarily enter an award dismissing any Dispute or defense on that basis. The doctrines of compulsory counterclaim, res judicata, and collateral estoppel shall apply to any arbitration proceeding hereunder so that a Party must state as a counterclaim in the arbitration proceeding any claim or controversy which arises out of the transaction or occurrence that is the subject matter of the Dispute. The arbitrator(s) may in the arbitrator(s)' discretion and at the request of any Party: (1) consolidate in a single arbitration proceeding any other claim or controversy involving another Party that is substantially related to the Dispute where that other Party is bound by an arbitration clause with the Bank, such as borrowers, guarantors, sureties, and owners of collateral; (2) consolidate in a single arbitration proceeding any other claim or controversy that is substantially similar to the Dispute; and (3) administer multiple arbitration claims or controversies as class actions in accordance with the provisions of Rule 23 of the Federal Rules of Civil Procedure. (c) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitrator shall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by a majority vote of the three arbitrators, at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be a practicing attorney. The arbitrator(s) shall award to the prevailing Party recovery of all costs and fees (including attorneys' fees and costs, arbitration administration fees and costs, and arbitrator(s)' fees). The arbitrator(s), either during the pendency of the arbitration proceeding or as part of the arbitration award, also may grant provisional or ancillary remedies including but not limited to an award of injunctive relief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. (d) Judgment upon an arbitration award may be entered in any court having jurisdiction, subject to the following limitation: the arbitration award is binding upon the Parties only if the amount does not exceed Four Million Dollars ($4,000,000.00); if the award exceeds that limit, any Party may demand the right to a court trial. Such a demand must be filed with the Administrator within thirty (30) days following the date of the arbitration award; if such a demand is not made within that time period, the amount of the arbitration award shall be binding. The computation of the total amount of an arbitration award shall include amounts awarded for attorneys' fees and costs, arbitration administration fees and costs, and arbitrator(s)' fees. 9 (e) No provision of this arbitration clause, nor the exercise of any rights hereunder, shall limit the right of any Party to: (1) judicially or non-judicially foreclose against any real or personal property collateral or other security; (2) exercise self-help remedies, including but not limited to repossession and setoff rights; or (3) obtain from a court having jurisdiction thereover any provisional or ancillary remedies including but not limited to injunctive relief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. Such rights can be exercised at any time, before or during initiation of an arbitration proceeding, except to the extent such action is contrary to the arbitration award. The exercise of such rights shall not constitute a waiver of the right to submit any Dispute to arbitration, and any claim or controversy related to the exercise of such rights shall be a Dispute to be resolved under the provisions of this arbitration clause. Any Party may initiate arbitration with the Administrator; however, if any Party initiates litigation and another Party disputes any allegation in that litigation, the disputing Party--upon the request of the initiating Party--must file a demand for arbitration with the Administrator and pay the Administrator's filing fee. The Parties may serve by mail a notice of an initial motion for an order of arbitration. (f) Notwithstanding the applicability of any other law to this Agreement, the arbitration clause, or Related Documents between or among the Parties, the Federal Arbitration Act, 9 U.S.C.ss.1 et seq., shall apply to the construction and interpretation of this arbitration clause. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers or representatives thereto duly authorized as of the date first above written. EVANS & SUTHERLAND ZIONS FIRST NATIONAL BANK COMPUTER CORPORATION, a Utah corporation By: /s/ Mark Steele By: /s/ Michael Brough ---------------------------- -------------------------- Title: Vice President & Treasurer Title: Vice President EX-10.2 3 0003.txt SUPPLEMENTAL LETTER OF CREDIT AND REIMBURSEMENT SUPPLEMENTAL LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT SUPPLEMENTAL LETTER OF CREDIT AND REIMBURSEMENT AGREEMENT (this "Agreement") dated May 31, 2000 is between Evans & Sutherland Computer Corporation, a Utah corporation (the "Borrower") and Zions First National Bank ("Bank"). In consideration for Bank issuing additional irrevocable letters of credit during the term provided in Section 2.6 of that certain Loan Agreement dated March 31, 2000 by and between Borrower and Bank (the "Loan Agreement") in an aggregate amount of not more than $3,000,000 in excess of the $7,000,000.00 Sublimit set forth in the Loan Agreement (the "Additional Letters of Credit"), Borrower and Bank agree to the following provisions: 1. Reimbursement. Borrower shall reimburse Bank, at Bank's office in immediately available United States currency, the amount paid or to be paid by Bank or Bank's agent, or any party on Bank's behalf on each draft or other order, instrument or demand drawn or presented under the Additional Letters of Credit (an "Item"). Items shall be reimbursed on demand. Upon full and timely reimbursement according to the terms of this Agreement and the Loan Agreement, the full face amount of the Additional Letters of Credit shall be available to Borrower throughout the remainder of the stated term of the Additional Letters of Credit. 2. Commission and Charges. Borrower agrees to pay Bank an issuance fee in the amount set forth in Section 2.6 of the Loan Agreement, payable on the date of the issuance of such Additional Letter of Credit and any subsequent anniversary of the date of issuance. Borrower also agrees to pay Bank (i) a negotiation fee in the amount of 1/8% of the amount of each draw under each Additional Letter of Credit, payable on the date of such drawing, and (ii) an amendment fee in the amount of $35.00 for each amendment to each Additional Letter of Credit, payable on the effective date of each such amendment. 3. Interest. Borrower shall pay Bank on demand interest at a fluctuating rate (equal to the rates set forth in Section 2.2 of the Loan Agreement) on any reserved amount of the proceeds of the Loan extended pursuant to the Loan Agreement which bears interest in accordance with Section 2.6 of the Loan Agreement, until such drawn amount is fully repaid pursuant to Section 1 above. 4. Set Off. Borrower authorizes Bank to charge any account or other funds in Bank's possession for the payment of the Liabilities (as defined in Section 8 of this Agreement). 5. Continuation of Liability. Regardless of the expiration date of any Additional Letter of Credit, Borrower shall remain liable hereunder for any draw or payment made by Bank under the Additional Letter of Credit, (i) timely received but paid by the Bank within ten (10) days after the expiration date of the Additional Letter of Credit; or (ii) paid by Bank pursuant to an order of a court of competent jurisdiction; or (iii) as otherwise authorized by Borrower. 6. Documentation. Unless specified to the contrary in any Additional Letter of Credit application, or any amendment to any Additional Letter of Credit, Borrower agrees that Bank and Bank's correspondents may receive and accept (a) any Items or documents otherwise in order, issued or purportedly issued by an agent, executor, trustee in bankruptcy, receiver or other representative of the party who is authorized under such Additional Letter of Credit to issue such items or other documents, as complying with the terms of such Additional Letter of Credit and (b) documents which comply with the UCP (as defined in Section 19 of this Agreement). The provisions of clause (a) above shall in no way be deemed to preclude the beneficiary of any Additional Letter of Credit from issuing and presenting Items or documents under the terms of such Additional Letter of Credit. Borrower agrees to indemnify and hold Bank harmless from each and every claim, demand, liability, loss, cost or expense (including, but not limited to, reasonable attorneys' fees and legal costs) which may arise or be created by Bank's acceptance of telecommunication instructions in connection with any Additional Letter of Credit, including, but not limited to, telephonic instructions in connection with any waiver of discrepancies. 7. Increased Cost/Taxes. If, as a result of any governing law, regulation, treaty or directive, or any change therein, or in the interpretation or application thereof or compliance with any request or directive (whether or not having the force of law) from any court or governmental authority, agency or instrumentality, any reserve, premium, special deposit, special assessment or similar requirements against Bank's assets, deposits with Bank or for Bank's account, or credit extended by Bank, are imposed, modified or deemed applicable and Bank reasonably determines that, by reason thereof, the cost to Bank of issuing or maintaining the Additional Letters of Credit is increased, Borrower agrees to pay Bank upon demand (which demand shall be accompanied by a statement setting forth the basis for the calculation thereof) such additional amount or amounts as will compensate Bank for such additional cost. Determinations by Bank for purposes of this Section of the additional amounts required to compensate Bank in respect of the foregoing shall be conclusive, absent manifest error. Borrower further agrees to pay any applicable levies or other taxes imposed in connection with the Additional Letters of Credit other than net income taxes payable by Bank, and otherwise comply with all domestic and foreign laws and regulations applicable to all transactions under or in connection with the Additional Letters of Credit. 8. Collateral. As security for the performance of all obligations of this Agreement, Borrower has conveyed security interests in certain real and personal property described in and evidenced by those instruments executed concurrently with the Loan Agreement as set forth in Section 2.4 therein, and certain Investment Property held in Bank's managed account no. 2587850 as set forth in that certain Managed Agency Account Assignment Agreement. In addition thereto, Borrower hereby pledges (a) all balances, credits, deposits, accounts or moneys now or hereafter held by Bank which Borrower owns or in which Borrower may have an interest, (b) all Items, all shipping documents, warehouse receipts, policies or certificates of insurance and other documents accompanying or relating to any Items, and all property covered by any such documents or shipped 2 or stored under or in connection with any Additional Letter of Credit or any Items (whether or not such documents or property is released to Borrower or upon Borrower's request), and (c) all dividends, distributions and other right in or with respect to, and substitutions for and products and proceeds of, any of the foregoing (being referred to collectively as the "Collateral"). In addition, Borrower hereby incorporates all of Borrower's covenants and obligations concerning the collateral as set forth in the Loan Agreement and the other Loan Documents identified therein, as well as those provided in the Managed Agency Account Agreement. The security interest granted by this Section shall continue, and the provisions of any this Agreement, the Loan Agreement, and any other instrument or document which secures the Liabilities in favor of Bank shall continue, until such time as all Liabilities have been paid in full and discharged and this Agreement has been terminated. 9. Risks/Indemnification. Borrower agrees that any action or omission by Bank under or in connection with any Additional Letter of Credit or any Items, documents or property shall, unless in breach of good faith, be binding on Borrower and shall not put Bank under any resulting liability to Borrower. Borrower will indemnify Bank and hold Bank harmless from and against each and every claim, demand, liability, loss, cost or expense (including, but not limited to, reasonable attorneys' fees and legal costs) to which Bank may be subjected or which Bank may incur by reason of any such action or omission, or by reason of any action taken pursuant to this Agreement (including, but not limited to, by reason of (i) Bank honoring Borrower's request not to make payment under any Item or (ii) Borrower's actions to restrain Bank from making payment under any Item), unless in breach of good faith. In no event shall Bank be liable for incidental, consequential or special damages. The indemnities and obligations of Borrower contained in this Section shall survive the payment in full of amounts payable to Sections 1 through 3 hereof and termination of the Additional Letters of Credit. 10. Discrepancies. Borrower will promptly examine the copy of each Additional Letter of Credit (and any amendments thereto) sent to Borrower by Bank, as well as any and all instruments and documents delivered to Borrower from time to time, and, in the event Borrower has any claim of non-compliance with Borrower's instructions or of discrepancies or other irregularity, Borrower will immediately notify Bank thereof in writing, and Borrower will conclusively be deemed to have waived any such claim against Bank unless such notice is given within two business days. 11. Exculpation. In addition to the exculpatory provisions contained in the UPC (as defined hereafter in Section 19), Bank or its correspondents shall not be responsible for, and Borrower's obligation to reimburse Bank shall not be affected by: (a) compliance with any laws, customs or regulations in effect in countries of negotiation or payment of any Additional Letter of Credit; (b) failure of any Item to refer adequately to any Additional Letter of Credit, or failure of documents to accompany any Item at negotiation/payment, or failure to note the amount of any Item on the reverse of such Additional Letter of Credit or to surrender or to take up such Additional Letter of Credit or to forward 3 required documents with Items, each of which provisions, if contained in such Additional Letter of Credit itself, it is agreed may be waived by Bank, (c) any refusal by Bank to honor Items because of an applicable law, regulation or ruling of any governmental agency whether valid or invalid, or now or hereafter in effect, (d) acts or the failure to act of Bank's agents or correspondents including, but not limited to, their failure to pay Items because of any law, decree, regulation, ruling or interpretation of any governmental agency (domestic or foreign), (e) the identity of any transferee of any Additional Letter of Credit or the sufficiency of the transfer if such Additional Letter of Credit is transferable, (f) the use which may be made of any Additional Letter of Credit or any acts or omissions by any beneficiary of transferee in connection therewith, or (g) the validity, sufficiency or genuineness of documents, or of any endorsements thereon, even if such documents should prove to be in any or all respects invalid, insufficient, fraudulent or forged. In furtherance of, and not in limitation of the foregoing, Bank may accept documents that appear on their face to be in order, without responsibility for further investigation, regardless of any notice or information to the contrary. Bank shall not be liable or responsible for (a) the time, place, manner or order in which shipment is made or partial or incomplete shipment, (b) insurance of any property or any risk connected with insurance, (c) delay in arrival or failure to arrive of any property or any documents relating thereto, (d) delay in giving or failure to give notice of arrival or any other notice, (e) the validity, form, sufficiency, accuracy, genuineness, falsification or legal effect of any documents, or the validity, genuineness, falsification or legal effect of any Items, (f) general or particular conditions stipulated in documents or superimposed thereon, (g) the description, existence, character, quantity, weight, quality, condition, packing, shipment, arrival, delivery or value of any property purportedly represented by any documents, or any difference therein from that expressed in the documents, (h) the acts or omissions, good faith, solvency, performance or standing of any vendor, shipper, issuer, consignor, carrier, insurer, user of the Additional Letter of Credit, correspondent or other bank (whether or not selected by Bank) or anyone else, (i) loss of, or errors, omissions, interruptions or delays in transmission or delivery of, any messages, letters or documents by mail, cable, telegraph, telex, facsimile or otherwise and whether or not in cipher, (j) the translation of, or errors in translation or interpretation of, credit or technical terms, (k) transmission of credit terms without translating them, or (l) consequences arising out of acts of God, interruptions of communication facilities, war disturbances, abnormal or emergency conditions, or other causes beyond Bank's control, or out of strikes or lockouts and none of the foregoing shall affect or impair, or prevent the vesting of any of Bank's rights and remedies or Borrower's obligations hereunder. 12. Costs and Expenses. Borrower agrees to pay on demand all reasonable costs and expenses (including, but not limited to, reasonable attorney's fees and legal costs) in connection with (i) the Additional Letters of Credit or this Agreement or its enforcement or (ii) any action or proceeding restraining or seeking to restrain Bank from paying, or seeking to compel Bank to pay, any amount under any Additional Letter of Credit. 4 13. Amendments and/or Modification of Additional Letters of Credit. If Borrower requests Bank to increase the amount of any Additional Letter of Credit, extend or renew any Additional Letter of Credit, or otherwise modify the terms of any Additional Letter of Credit, Borrower agrees that this Agreement shall continue to bind Borrower with respect to any action taken by Bank or any of its correspondents in accordance with such increase, extension, renewal or other modification. 14. Events of Default. The occurrence of any of the following events shall constitute an "Event of Default" hereunder: (a) Borrower shall fail to pay any amount payable under this Agreement when due; (b) Borrower shall fail to perform or observe any other term, covenant or agreement contained in this Agreement; (c) the filing by or against Borrower or any guarantor of the Liabilities ("Guarantor") of a request or petition for liquidation, reorganization, arrangement, adjustment of debts, adjudication as a bankrupt, relief as debtor or other relief under the bankruptcy, insolvency or similar laws of the United States or any state or territory thereof or any foreign jurisdiction, now or hereafter in effect; (d) the making of any general assignment by Borrower or any Guarantor for the benefit of creditors; the appointment of a receiver or trustee for Borrower or any Guarantor, or for any assets of Borrower or any Guarantor including, without limitation, the appointment of or taking possession by a "custodian", as defined in the federal Bankruptcy Code or otherwise; the making of any, or sending notice of any intended bulk sale; or the institution by or against Borrower or any Guarantor of any other type of insolvency proceeding under the federal Bankruptcy Code or otherwise, or of any formal or informal proceeding for the dissolution or liquidation or settlement of claims against or winding up of affairs of Borrower or any Guarantor; (e) any provision of this Agreement shall at any time for any reason cease to be valid and binding on Borrower, or shall be declared to be null and void, or the validity or enforceability thereof shall be contested by Borrower, or a proceeding shall be commenced by any governmental agency or authority having jurisdiction over Borrower seeking to establish the invalidity or unenforceability thereof, or Borrower shall deny that it has any or further liability or obligation under this Agreement; or (f) any default shall occur under any agreement by and among Borrower and Bank. If any Event of Default shall have occurred and be continuing, Bank may: (a) by written notice to Borrower direct Borrower to pay immediately to Bank an amount equal to Bank's potential liability under all Additional Letters of Credit, whether or not any Item shall have been presented thereunder; (b) offset any funds of Borrower held by Bank; (c) pursue any other remedy available to it under this Agreement, the Loan Agreement or pursuant to the terms of any other documents executed in accordance herewith; or (d) take any and all actions with respect to the Collateral as allowed by applicable law. 15. Documents. Borrower agrees that (a) Bank may accept as "bills of lading" under Additional Letters of Credit any documents issued or purportedly issued by or on behalf of any carrier which acknowledge receipt of property for transportation, whatever the specific provisions of such documents, (b) Bank may accept as documents of insurance either insurance policies or insurance certificates, (c) Bank may accept as sufficient and controlling the description 5 of any property contained in any invoice notwithstanding that any bills of lading, insurance or other documents (which Bank may also accept) may contain a description different from that contained in such invoice, and (d) Bank may accept any document containing stamped, written or typewritten provisions thereon, whether or not signed or initialed, and may assume conclusively that the same were placed with authority on the document at the time of its issuance by the carrier or other issuer or any agent thereof. 16. Release of Documents or Property. In the event that Bank receives some but not all of the documents against which drawings may be made and, at Borrower's request, Bank delivers such documents to Borrower or to anyone else, or in the event that Bank, at Borrower's request, releases or consents to the release of some or all of the property shipped or purported to have been shipped under any Additional Letter of Credit prior to the presentation of the relative Item, Borrower agrees to pay Bank on demand the amount of any claim made against Bank by reason thereof and authorizes Bank to honor such Item when it is presented regardless of whether or not such Item or any document which may accompany it complies with the terms of such Additional Letter of Credit. 17. Delay and Waiver. No delay in the exercise of Bank's rights or remedies shall be deemed a waiver, and no partial exercise of Bank's rights or remedies shall preclude the further exercise of any right or remedy. No waiver shall be effective unless in writing and then only as to the specific subject waived. 18. Notice. All Notices to required shall be given to the parties shall be delivered in accordance with the provisions of Section 9.6 of the Loan Agreement. "Notice" shall include any request, demand or other communication. 19. Construction and Interpretation. The Additional Letters of Credit and this Agreement shall be governed by the laws of the State of Utah, including the Uniform Commercial Code. Unless inconsistent with Utah law, the Additional Letters of Credit and this Agreement are subject to the terms of the Uniform Customs and Practice for Documentary Credits (1993 Revision), the International Chamber of Commerce Publication No. 500 ("UCP"), as hereby expressly incorporated by reference. 20. Assigns. This Agreement is binding upon the parties hereto and their respective successors and assigns. 21. Severability. If any term or provision set forth in this Agreement shall be invalid or unenforceable, the remainder of this Agreement, or the application of such terms or provisions to persons or circumstances, other than those to which it is held invalid or unenforceable, shall be construed in all respects as if such invalid or unenforceable term or provision were omitted. 6 22. ARBITRATION DISCLOSURES: A. ARBITRATION IS FINAL AND BINDING ON BORROWER AND BANK (COLLECTIVELY, THE "PARTIES") AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT. B. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL. C. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT. D. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR SEEK MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED. E. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY. F. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION. (a) Any claim or controversy ("Dispute") between or among the Parties and their assigns, including but not limited to Disputes arising out of or relating to the Additional Letters of Credit, this Agreement, this arbitration provision ("arbitration clause"), or any related agreements or instruments relating hereto or delivered in connection herewith ("Related Documents"), and including but not limited to a Dispute based on or arising from an alleged tort, shall at the request of any Party be resolved by binding arbitration in accordance with the applicable arbitration rules of the American Arbitration Association ("the Administrator"). The provisions of this arbitration clause shall survive any termination, amendment, or expiration of this Agreement or the Related Documents. The provisions of this arbitration clause shall supersede any prior arbitration agreement between or among the Parties. If any provision of this arbitration clause should be determined to be unenforceable, all other provisions of this arbitration clause shall remain in full force and effect. (b) The arbitration proceedings shall be conducted in Salt Lake City, Utah, at a place to be determined by the Administrator. The Administrator and the arbitrator(s) shall have the authority to the extent practicable to take any action to require the arbitration proceeding to be completed and the arbitrator(s)' award issued within one-hundred-fifty (150) days of the filing of the Dispute with the Administrator. The arbitrator(s) shall have the authority 7 to impose sanctions on any Party that fails to comply with time periods imposed by the Administrator or the arbitrator(s), including the sanction of summarily dismissing any Dispute or defense with prejudice. The arbitrator(s) shall have the authority to resolve any Dispute regarding the terms of this Agreement, this arbitration clause or the Related Documents, including any claim or controversy regarding the arbitrability of any Dispute. All limitations periods applicable to any Dispute or defense, whether by statute or agreement, shall apply to any arbitration proceeding hereunder and the arbitrator(s) shall have the authority to decide whether any Dispute or defense is barred by a limitations period and, if so, to summarily enter an award dismissing any Dispute or defense on that basis. The doctrines of compulsory counterclaim, res judicata, and collateral estoppel shall apply to any arbitration proceeding hereunder so that a Party must state as a counterclaim in the arbitration proceeding any claim or controversy which arises out of the transaction or occurrence that is the subject matter of the Dispute. The arbitrator(s) may in the arbitrator(s)' discretion and at the request of any Party: (1) consolidate in a single arbitration proceeding any other claim or controversy involving another Party that is substantially related to the Dispute where that other Party is bound by an arbitration clause with the Bank, such as borrowers, guarantors, sureties, and owners of collateral; (2) consolidate in a single arbitration proceeding any other claim or controversy that is substantially similar to the Dispute; and (3) administer multiple arbitration claims or controversies as class actions in accordance with the provisions of Rule 23 of the Federal Rules of Civil Procedure. (c) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitrator shall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by a majority vote of the three arbitrators, at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be a practicing attorney. The arbitrator(s) shall award to the prevailing Party recovery of all costs and fees (including attorneys' fees and costs, arbitration administration fees and costs, and arbitrator(s)' fees). The arbitrator(s), either during the pendency of the arbitration proceeding or as part of the arbitration award, also may grant provisional or ancillary remedies including but not limited to an award of injunctive relief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. (d) Judgment upon an arbitration award may be entered in any court having jurisdiction, subject to the following limitation: the arbitration award is binding upon the Parties only if the amount does not exceed Four Million Dollars ($4,000,000.00); if the award exceeds that limit, any Party may demand the right to a court trial. Such a demand must be filed with the Administrator within thirty (30) days following the date of the arbitration award; if such a demand is not made within that time period, the amount of the arbitration award shall be binding. The computation of the total amount of an arbitration award shall include amounts awarded for attorneys' fees and costs, arbitration administration fees and costs, and arbitrator(s)' fees. (e) No provision of this arbitration clause, nor the exercise of any rights hereunder, shall limit the right of any Party to: (1) judicially or non-judicially foreclose against any real or personal property collateral or 8 other security; (2) exercise self-help remedies, including but not limited to repossession and setoff rights; or (3) obtain from a court having jurisdiction thereover any provisional or ancillary remedies including but not limited to injunctive relief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. Such rights can be exercised at any time, before or during initiation of an arbitration proceeding, except to the extent such action is contrary to the arbitration award. The exercise of such rights shall not constitute a waiver of the right to submit any Dispute to arbitration, and any claim or controversy related to the exercise of such rights shall be a Dispute to be resolved under the provisions of this arbitration clause. Any Party may initiate arbitration with the Administrator; however, if any Party initiates litigation and another Party disputes any allegation in that litigation, the disputing Party--upon the request of the initiating Party--must file a demand for arbitration with the Administrator and pay the Administrator's filing fee. The Parties may serve by mail a notice of an initial motion for an order of arbitration. (f) Notwithstanding the applicability of any other law to this Agreement, the arbitration clause, or Related Documents between or among the Parties, the Federal Arbitration Act, 9 U.S.C.ss.1 et seq., shall apply to the construction and interpretation of this arbitration clause. IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers or representatives thereto duly authorized as of the date first above written. EVANS & SUTHERLAND ZIONS FIRST NATIONAL BANK COMPUTER CORPORATION, a Utah corporation By: /s/ Richard Gaynor By: /s/ Michael Brough ------------------------------- --------------------------- Title: Vice President and CFO Title: Vice President ---------------------------- ------------------------ 9 EX-10.3 4 0004.txt MANAGED AGENCY ACCOUNT ASSIGNMENT AGREEMENT MANAGED AGENCY ACCOUNT ASSIGNMENT AGREEMENT This Managed Agency Account Assignment Agreement (the "Agreement") is made and entered into by and between Evans & Sutherland Computer Corporation, a Utah corporation ("Principal") and Zions First National Bank, a national banking association ("Zions"). RECITALS A. Principal has established a managed agency account at the Trust and Investment Management Department of Zions ("Managed Agent"), managed agency account no. 2587850 (the "Account"), for custody and control of certain securities, financial assets, and security entitlements held thereunder, and other investments. All such property, including the Account, shall be referred to herein as "Investment Property." B. Principal has committed to Zions to pledge as Investment Property certain fixed interest investments with less than 90-day maturities (A1/P. or higher) held in the Account to secure amounts which may be owing to Zions consisting of a revolving line of credit, business credit card obligations, and all letters of credit issued by Zions for the benefit of Principal together with all modifications, renewals, and extensions of any such credit extensions (the "Obligations"). C. Pursuant to paragraph 2.6 of that certain Loan Agreement dated March 31, 2000, Zions provided a Letter of Credit facility to Principal whereby Principal could obtain the issuance of Letters of Credit up to a limit of $7,000,000 (the "$7,000,000 Sublimit"). D. Principal desired the ability to obtain additional Letters of Credit in excess of the $7,000,000 Sublimit by as much as $3,000,000. E. As a condition to allowing the issuance of letters of credit in excess of the $7,000,000 Letter of Credit Facility, Zions requires Principal to assign the Investment Property in the Account to Zions as collateral during the term of the Obligations. F. Principal and Zions desire to enter into this Agreement to assign the Investment Property to Zions. AGREEMENT In exchange for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, Principal and Zions agree as follows: 1. Assignment of Investment Property. Principal hereby assigns to Zions all of Principal's rights in and to the Account. This assignment will be effective until all amounts owing to Zions under the Obligations are paid in full and commitments for any future advances under the Obligations have been terminated. The Investment Property specifically includes, but without limitation, the following: a. All Investment Property held in the Account or for the benefit of Principal, including financial assets in the name of Principal, together with any and all notes, instruments, certificates, and shares issued in renewal or replacement of such Investment Property. b. Any and all Investment Property related shares issued as a stock dividend or issued in connection with any increase or decrease of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off, or split-off. c. Any and all Investment Property related options, warrants, or rights, whether as an addition to, or in substitution or exchange for any of such stock or otherwise. d. Any and all Investment Property related income, interest, profits, rents, dividends, or distributions, whether payable in cash or in property, including, without limitation, stock issued by any corporation. Principal agrees to maintain the balance of Investment Property in the Account in a sufficient amount so as to be at least 105.26% of the face value of all Letters of Credit issued in excess of the $7,000,000 Sublimit up to the maximum addition available Letters of Credit amount of $3,000,000. Accordingly, in the event that there are no outstanding issued Letters of Credit in excess of the $7,000,000 Sublimit, Principal may withdraw some or all of the Investment Property from the Account (which withdrawal will decrease or eliminate the ability of Principal to obtain the issuance additional Letters of Credit from Zions in excess of the $7,000,000 Sublimit). 2. Security Interest. Principal and Zions agree and acknowledge that it is their intent to, and Principal does hereby, grant control of the Investment Property to Zions under the Utah Uniform Commercial Code and create a security interest in the Investment Property. In connection with the granting of the security interest, Principal agrees to execute and deliver to Zions a UCC-1 financing statement and that Zions may file such financing statement with the Utah Department of Commerce, Division of Corporations and Commercial Code. Principal also directs and authorizes Managed Agent to (a) grant to Zions control of and a security interest in the Investment Property and execute such other agreements required by Zions to effect control, including agreements with custodians of the Investment Property and (b) execute and deliver a UCC-1 financing statement, if the same are required by Zions of Managed Agent. 3. No Delegation of Duties. Notwithstanding anything to the contrary in this Agreement, the assignment of Principal's rights under the Account does not include, and it is the intent of the parties to this Agreement that Principal is not delegating and assigning to Zions, any of its obligations under the Account and the agreement between Managed Agent and Principal regarding the Account. 2 4. Assignment of Account to Principal. Upon the payment in full of all amounts owing under the Obligations and the termination of any commitments for future advances. Zions agrees to assign back to Principal all of Principal's rights in and to the Investment Property which are assigned to Zions under this Agreement. 5. Trading Authority. In the sole and absolute discretion of the department of Zions originating the Loan (the "Lending Department"), Principal may sell the Investment Property and buy Investment Property with the proceeds of any such sales or additional money deposited by Principal into the Collateral Account. Trading activity shall be effected through and by the Lending Department. As set forth in paragraph no. 11 below, Principal's rights to purchase and sell Investment Property held, or to be held, in the Account will immediately terminate upon the occurrence of a default under this Agreement. 6. Proceeds of Investment Property. Principal and Zions agree that all cash dividends, stock dividends, distributions, interest payments, other cash payments, and any other proceeds or benefits received from Investment Property will be retained in the Account until all amounts owing to Zions under the Obligations are paid in full and any commitments for future advances of any Obligations are terminated. Zions has no obligation to collect any such amounts owing to Principal or Managed Agent. 7. |X| /s/ Michael Brough -------------------------------------- Lending Department officer signature required for this optional provision Investment Property Income. If the preceding line is checked and signed by an officer of the Lending Department, Managed Agent is authorized and directed to pay to the order of Principal all interest and dividend income received by Managed Agent on Investment Property. Such income shall not include stock issued upon splits of Investment Property, stock or cash paid as an extraordinary dividend, or cash paid for surrender or upon maturity of Investment Property. Zions retains the right to terminate Principal's receipt of income hereunder by written notice to Managed Agent and Principal, which notice may be hand delivered or sent by facsimile, and shall be effective upon Managed Agent's and Principal's receipt thereof. 8. Further Assurances. Principal agrees to execute and deliver, and directs and authorizes Managed Agent to execute and deliver, to Zions all documents requested by Zions in connection with the assignment of Investment Property and to take all other action reasonably requested by Zions in connection with such assignment. Zions is authorized to file, record, or otherwise utilize such documents in order to perfect and maintain its security interest or otherwise carry out the rights and obligations of the parties as set forth in this Agreement. 9. Appointment As Attorney in Fact. Principal does hereby make, constitute, and appoint Zions and its designees as Principal's true and lawful attorney in fact, with full power of substitution, to transfer any and all Investment Property on the books of issuing corporations or any transfer agent to the name of Zions or such other name as designated by Zions. Principal agrees to give full cooperation and to use its best efforts to cause any issuer, transfer agent, or registrar of Investment Property to take all such actions and to execute all such documents as may be necessary or appropriate to effect any sale, transfer, or other disposition of such Investment Property. 3 10. Representations and Warranties. Principal represents and warrants the following to Zions that the Investment Property has not been assigned, nor has any interest therein been assigned or pledged to any person or entity other than Zions. 11. Default. Upon the occurrence of a default under this Agreement or under any of the Obligations, then, in addition to all other rights and remedies available to Zions at law, in equity, or by statute, all of Principal's rights under this Agreement will immediately terminate and Zions may immediately sell, and direct Managed Agent to sell, all of the Investment Property. The proceeds of the sale of the Investment Property will be applied first to the payment of all expenses incurred by Zions in exercising its rights under this Agreement and any documents evidencing or relating to any of the Obligations, including all expenses incurred by Zions in selling the Investment Property, second, to the payment of the Obligations, third, to the payment of all other amounts owing by Principal to Zions in any manner, and, fourth, the balance will be paid to Principal. 12. Disclosure of Agreement. Principal agrees that Zions may disclose this Agreement and any and all of the terms and conditions of this Agreement to Managed Agent. 13. Indemnification. Principal agrees to indemnify and hold harmless Zions, its affiliates (including Managed Agent), officers, directors, employees, attorneys, and other agents from and against any and all claims, causes of action, and judgments, of any nature, arising under, or in connection with, this Agreement, the assignment of Principal's rights under the Investment Property, the sale of any of the Investment Property by Zions or Managed Agent after the occurrence of a default under this Agreement, or any other claim made by any person or entity in connection with this Agreement unless said claim was caused by the gross negligence or intentional misconduct of Zions. This indemnification specifically includes, without limitation, the payment of all expenses incurred by Zions, including reasonable attorneys fees and expenses. 14. Notices. All notices or demands by any party hereto shall be in writing and may be sent by regular mail. Notices shall be deemed received when deposited in a United States post office box, postage prepaid, properly addressed to Principal, Managed Agent, or Zions at the mailing addresses stated below or to such other addresses as Principal, Managed Agent, or Zions may from time to time specify in writing. Any notice otherwise delivered shall be deemed to be given when actually received by the addressee. Principal: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, UT 84108 Attn: Chief Financial Officer Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, UT 84108 Attn: Treasurer 4 Managed Agent: Trust and Investment Management Zions First National Bank One South Main Street, Suite 660 Salt Lake City, UT 84111 Attn: Stephen W. Koch Zions: Zions First National Bank Commercial Loan Department P.O. Box 25822 One South Main Street, Suite 200 Salt Lake City, UT 84125 Attn: Michael R. Brough 15. Arbitration Provision. 1. ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY VERY LIMITED REVIEW BY A COURT. 2. IN ARBITRATION THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL. 3. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT. 4. ARBITRATORS ARE NOT REQUIRED TO INCLUDE FACTUAL FINDINGS OR LEGAL REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR TO SEEK MODIFICATION OF ARBITRATORS' RULINGS IS VERY LIMITED. 5. A PANEL OF ARBITRATORS MIGHT INCLUDE AN ARBITRATOR WHO IS OR WAS AFFILIATED WITH THE BANKING INDUSTRY. 6. IF YOU HAVE QUESTIONS ABOUT ARBITRATION, CONSULT YOUR ATTORNEY OR THE AMERICAN ARBITRATION ASSOCIATION. (a) Any claim or controversy ("Dispute") between or among the parties and their assigns, including, but not limited to, Disputes arising out of or relating to this Agreement, this arbitration provision ("arbitration clause"), or any related agreements or instruments relating hereto or delivered in connection herewith ("Related Documents"), and including, but not limited to, a Dispute based on or arising from an alleged tort, shall at the request of any party be resolved by binding arbitration in accordance with the applicable arbitration rules of the American Arbitration Association (the "Administrator"). The provisions of this arbitration clause shall survive any termination, amendment, or expiration of this Agreement or Related Documents. The provisions of this arbitration clause shall supersede any prior arbitration agreement between or among the parties. If any provision of this arbitration clause should be determined to be unenforceable, all other provisions of this arbitration clause shall remain in full force and effect. (b) The arbitration proceedings shall be conducted in Salt Lake City, Utah, at a place to be determined by the Administrator. The Administrator and the arbitrator(s) shall have the authority to the extent practicable to take any action to require the arbitration proceeding to be completed and the arbitrator(s)' award issued within one hundred fifty (150) days of the filing of the Dispute with the Administrator. The arbitrator(s) shall have the authority 5 to impose sanctions on any party that fails to comply with time periods imposed by the Administrator or the arbitrator(s), including the sanction of summarily dismissing any Dispute or defense with prejudice. The arbitrator(s) shall have the authority to resolve any Dispute regarding the terms of this agreement, this arbitration clause, or Related Documents, including any claim or controversy regarding the arbitrability of any Dispute. All limitations periods applicable to any Dispute or defense, whether by statute or agreement, shall apply to any arbitration proceeding hereunder and the arbitrator(s) shall have the authority to decide whether any Dispute or defense is barred by a limitations period and, if so, to summarily enter an award dismissing any Dispute or defense on that basis. The doctrines of compulsory counterclaim, res judicata, and collateral estoppel shall apply to any arbitration proceeding hereunder so that a party must state as a counterclaim in the arbitration proceeding any claim or controversy which arises out of the transaction or occurrence that is the subject matter of the Dispute. The arbitrator(s) may in the arbitrator(s)' discretion and at the request of any party: (1) consolidate in a single arbitration proceeding any other claim or controversy involving another party that is substantially related to the Dispute where that other party is bound by an arbitration clause with Lender, such as borrowers, guarantors, sureties, and owners of collateral; (2) consolidate in a single arbitration proceeding any other claim or controversy that is substantially similar to the Dispute; and (3) administer multiple arbitration claims or controversies as class actions in accordance with the provisions of Rule 23 of the Federal Rules of Civil Procedure. (c) The arbitrator(s) shall be selected in accordance with the rules of the Administrator from panels maintained by the Administrator. A single arbitrator shall have expertise in the subject matter of the Dispute. Where three arbitrators conduct an arbitration proceeding, the Dispute shall be decided by a majority vote of the three arbitrators, at least one of whom must have expertise in the subject matter of the Dispute and at least one of whom must be a practicing attorney. The arbitrator(s) shall award to the prevailing party recovery of all costs and fees (including attorneys' fees and costs, arbitration administration fees and costs, and arbitrator(s)' fees). The arbitrator(s), either during the pendency of the arbitration proceeding or as part of the arbitration award, also may grant provisional or ancillary remedies including but not limited to an award of injunctive relief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. (d) Judgment upon an arbitration award may be entered in any court having jurisdiction, subject to the following limitation: the arbitration award is binding upon the parties only if the amount does not exceed Four Million Dollars ($4,000,000.00); if the award exceeds that limit, any party may demand the right to a court trial. Such a demand must be filed with the Administrator within thirty (30) days following the date of the arbitration award; if such a demand is not made within that time period, the amount of the arbitration award shall be binding. The computation of the total amount of an arbitration award shall include amounts awarded for attorneys' fees and costs, arbitration administration fees and costs, and arbitrator(s)' fees. 6 (e) No provision of this arbitration clause, nor the exercise of any rights hereunder, shall limit the right of any party to: (1) judicially or non-judicially foreclose against any real or personal property collateral or other security; (2) exercise self-help remedies, including but not limited to repossession and setoff rights; or (3) obtain from a court having jurisdiction there over any provisional or ancillary remedies including but not limited to injunctive relief, foreclosure, sequestration, attachment, replevin, garnishment, or the appointment of a receiver. Such rights can be exercised at any time, before or during initiation of an arbitration proceeding, except to the extent such action is contrary to the arbitration award. The exercise of such rights shall not constitute a waiver of the right to submit any Dispute to arbitration, and any claim or controversy related to the exercise of such rights shall be a Dispute to be resolved under the provisions of this arbitration clause. Any party may initiate arbitration with the Administrator; however, if any party initiates litigation and another party disputes any allegation in that litigation, the disputing party--upon the request of the initiating party--must file a demand for arbitration with the Administrator and pay the Administrator's filing fee. The parties may serve by mail a notice of an initial motion for an order of arbitration. (f) Notwithstanding the applicability of any other law to this agreement, the arbitration clause, or Related Documents between or among the parties, the Federal Arbitration Act, 9 U.S.C.ss.1 et seq., shall apply to the construction and interpretation of this arbitration clause. 16. Entire Agreement. This Agreement constitutes the entire agreement between Principal and Zions with respect to the assignment of the Investment Property. This Agreement may not be modified or amended except in writing signed by both parties. All prior and contemporaneous oral and written agreements regarding the assignment of the Investment Property are merged herein. 17. Utah Law Governs. This Agreement shall be governed by and construed in accordance with the laws of the state of Utah. 18. No Third Party Beneficiaries. This Agreement is for the benefit of Zions, Principal and the Managed Agent only and is not intended to benefit any third party. 19. Assignment of Agreement. This Agreement may be assigned by Zions with the prior consent of Principal. This Agreement may not be assigned by Principal. DATED: May 31, 2000. ZIONS FIRST NATIONAL BANK By: /s/ Michael Brough --------------------------------- Its: Vice President ------------------------------- 7 EVANS & SUTHERLAND COMPUTER CORPORATION By: /s/ Richard Gaynor --------------------------------- Its: Vice President Managed Agent acknowledges receipt of the foregoing and agrees to act consistent with the foregoing directions of Principal. Managed Agent will, among all other acts requested of it, transfer the Investment Property to the Account and accept entitlement orders issued by the Loan Department with regard to the Investment Property. TRUST AND INVESTMENT MANAGEMENT DEPARTMENT OF ZIONS FIRST NATIONAL BANK By: /s/ Stephen Koch -------------------------------- Its: Vice President 8 EX-10.4 5 0005.txt SECOND LOAN MODIFICATION AGREEMENT WHEN RECORDED, RETURN TO: Zions First National Bank Commercial Loan Department P.O. Box 25822 One South Main Street Salt Lake City, Utah 84125 Attention: Michael R. Brough SECOND LOAN MODIFICATION AGREEMENT This Second Loan Modification Agreement (the "Agreement") is made and entered into effective this 30th day of June, 2000 (the "Effective Date"), by and between Evans & Sutherland Computer Corporation, a Utah corporation, whose address is 600 Komas Drive, Salt Lake City, Utah 84108 ("Borrower"); Evans & Sutherland, GMBH, a German limited company, Evans & Sutherland, Ltd., a U.K. public limited company, and Evans & Sutherland Graphics Corporation, a Utah corporation (collectively "Additional Obligors") and Zions First National Bank, a national banking association, whose address is P.O. Box 25822, One South Main Street, Salt Lake City, Utah 84125 ("Lender"). RECITALS A. Lender and Borrower entered into a Loan Agreement dated March 31, 2000 (the "Loan Agreement"), whereby Lender agreed to make a loan to Borrower in the original principal amount of Fifteen Million Dollars ($15,000,000.00) (the "Loan"), which Loan is further evidenced by a Promissory Note dated March 31, 2000 executed by Borrower for the benefit of Lender, and which Promissory Note is in the original principal amount of $15,000,000.00 (the "Original Note"). B. Borrower's obligations under the Original Note are secured by the collateral described in the following documents: (1) A Trust Deed, Assignment of Rents, Security Agreement and Fixture Filing dated March 31, 2000 executed by Borrower, as "Trustor," to Lender, as "Trustee", for the benefit of Lender, as "Beneficiary," and which was recorded in the office of the County Recorder of Salt Lake County, State of Utah, on March 31, 2000, as Entry No. 7608227 (the "Trust Deed"). The Trust Deed encumbers Borrower's leasehold interest in real property located in Salt Lake County, State of Utah, and more particularly described in Exhibit A attached hereto and incorporated herein by this reference (the "Property"); (2) An Assignment of Leases dated March 31, 2000 entered into between Borrower, as "Assignor" and Lender, as "Assignee", and which was recorded in the office of the County Recorder of Salt Lake County, State of Utah, on March 31, 2000, as Entry No. 7608229 (the "Assignment of Leases"), and which encumbers the Property; and (3) An Assignment of Tenant's Interest in Ground Lease for Security dated March 31, 2000 entered into between Borrower, as "Borrower" and Lender, as "Lender", and which was recorded in the office of the County Recorder of Salt Lake County, State of Utah, on March 31, 2000, as Entry No. 7608228 (the "Assignment of Ground Lease"), and which encumbers the Property. The Loan Agreement, Original Note, Trust Deed, Assignment of Leases, Assignment of Ground Lease, and all other documents defined as Loan Documents in the Loan Agreement, are hereinafter collectively referred to as the "Loan Documents". C. On or about May 11, 2000, Lender and Borrower entered into that certain Modification Agreement and Consent, whereby Lender consented to a particular and limited waiver of the provisions of Section 5.14 of the Loan Agreement. D. On or about May 31, 2000. Lender and Borrower entered into that certain Supplemental Letter of Credit and Reimbursement Agreement (the "LC Agreement") and a Managed Agency Account Assignment (the "MAA Assignment"), whereby Borrower could obtain the issuance of letters of credit beyond the amount established in the Loan Agreement, securing said additional letters of credit with investment property held by Lender in the Managed Account according to the terms set forth in said documents. E. Lender and Borrower now again desire to modify the Loan Documents on the terms set forth below, which include among other things the assumption of joint and several liability of Borrower's repayment obligations under the Original Note (as hereby modified), by the Additional Obligors. AGREEMENT In exchange for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, Borrower, Additional Obligors and Lender agree as follows: 1. Reaffirmation of the Trust Deed. Borrower and Lender agree and acknowledge that it was their intention at the time of the execution of the Trust Deed, that the Trust Deed encumber the Property, and it continues to be the intention of all parties hereto that the Trust Deed, as amended, supplemented and extended, continue, without interruption, to encumber the Property. 2 2. Renewal Note. In connection with this Agreement, Borrower and Additional Obligors agree to execute and deliver to Lender a Renewal and Substitute Promissory Note in a form and substance acceptable to Lender dated the Effective Date, in the original principal amount of Fifteen Million Dollars ($15,000,000.00) (the "Renewal Note"), which Renewal Note replaces the Original Note. 3. Amendment to Loan Agreement. The Loan Agreement is hereby amended as follows: (a) Section 1.1.27 of the Loan Agreement shall be deleted in its entirety and replaced with the following: 1.1.27 "Note" means the Renewal and Substitute Promissory Note dated June 30, 2000, and executed in connection with the Loan. (b) Section 2.2, Interest Rate and Payment, of the Loan Agreement shall be deleted in its entirety and replaced with the following: 2.2 Interest Rate and Payment. The Loan shall be payable on the date and upon the terms and conditions set forth in the Note. (c) Section 2.3.2, Quarterly Fees, of the Loan Agreement shall be deleted in its entirety. A one-time extension fee shall be paid in accordance with paragraph 8(a) below. (d) Section 2.6, Letter of Credit Facility, of the Loan Agreement shall be deleted in its entirety and replaced with the following: 2.6 Letter of Credit Facility. Borrower is authorized to utilize the Loan for the purpose of obtaining the issuance of one or more letter(s) of credit by Lender, up to Fifteen Million Dollars ($15,000,000), the full original principal balance of the Loan, for use in Borrower's business operations. Upon issuance of any letter of credit and continuing until the cancellation or termination thereof, Lender shall reserve the amount of the letter of credit from the Loan proceeds, which reserved amount shall not be available for other Borrower draws or advances, whether or not any claim is actually made against the letter of credit. Any amount reserved for a letter of credit shall not bear interest unless and until any amounts are drawn thereon and then only to the extent of said draws. In addition to any fees assessed under the Letter of Credit Reimbursement Agreement to be executed by Borrower with issuance of any letter of credit, Borrower shall pay to Lender a fee upon the issuance of any letter of credit which shall be calculated as follows: (a) Upon the issuance of any Letter of Credit issued up to the aggregate amount of the Loan and secured pursuant to the terms of this Loan Agreement, Borrower shall pay a fee equal to four percent (4%) per annum of the amount of said letter of credit. 3 (b) Upon the issuance of any Letter of Credit issued by Lender in the aggregate amount of not more than $6,000,000 in excess of the $15,000,000 Loan amount, which additional Letter of Credit is secured by that certain Managed Account Assignment Agreement dated May 31, 2000 as amended, Borrower shall pay a fee equal to two percent (2%) per annum of the amount of said Letter of Credit. The maturity of any letter of credit issued pursuant to this Section 2.6 may extend at the election of Borrower up to ninety (90) days beyond the maturity date of the Loan. However, any such extension shall not effect any extension upon any other obligation or other covenant under taken by Borrower in the Loan Documents, except as specifically set forth in those certain documents executed concurrently with the issuance of the letter of credit. (e) Section 5.13, Dividends and Loans, of the Loan Agreement shall be deleted in its entirety and replaced with the following: 5.13 Dividends and Loans. Borrower shall not (a) declare or pay any dividends except as are mandatorily required on Borrower's preferred stock, (b) purchase, redeem, retire or otherwise acquire for value any of its capital stock now or hereafter outstanding in excess of $2,000,000.00 for any year, (c) make any distribution of assets to its stockholders, investors, or equity holders, whether in cash, assets, or in obligations of Borrower, (d) allocate or otherwise set apart any sum for the payment of any dividend or distribution on, or for the purchase, redemption, or retirement of any shares of its capital stock or equity interests in excess of $2,000,000.00 for any year, or (e) make any other distribution by reduction of capital or otherwise in respect of any shares of its capital stock or equity interests, in excess of $250,000.00. It is expressly agreed upon between Borrower and Lender that this covenant does not apply to any distributions or loans made by Borrower to any of the Additional Obligors. Borrower shall not make any loans or pay any advances of any nature whatsoever to any person or entity, except advances in the ordinary course of business to vendors, suppliers, and contractors. It is expressly agreed upon between Borrower and Lender that this covenant does not apply to any distributions or loans made by Borrower to any of the Additional Obligors. (f) Based upon Borrower's projected preliminary financial information which has been disclosed to Lender prior to and in an effort to avoid any event of default under the Loan Documents, Section 5.15, Net Earnings, of the Loan Agreement shall be deleted in its entirety and replaced with the following: 4 5.15 Maximum Cumulative Year-to-Date Loss. Borrower shall provide Lender with evidence satisfactory to Lender that Borrower's maximum cumulative net year to date operating loss before taxes and extraordinary gains or other income as of (i) June 30, 2000 is no greater than $38,500,000, (ii) September 30, 2000 is no greater than $40,000,000, and (iii) December 31, 2000 is no greater than $40,000,000. (g) Based upon Borrower's projected preliminary financial information which has been disclosed to lender prior to and in an effort to avoid any default under the Loan Documents, Section 5.16 Net Working Capital, of the Loan Agreement shall be deleted in its entirety and replaced with the following: 4. Net Working Capital. Borrower shall achieve and maintain minimum Net Working Capital at the end of the second, third and fourth calendar quarters of the year 2000 in the amount of at least $60,000,000. For purposes of this Section 5.16, net working capital is defined as adjusted current assets less current liabilities. Adjusted current assets is defined as current assets less that portion of unbilled costs which exceeds the maximum unbilled costs allowed in each quarter as shown below, and less all current portions of deferred income taxes:
- ------------------------------ ---------------------------- --------------------------- ---------------------------- Second Quarter Third Quarter Fourth Quarter 2000 2000 2000 - ------------------------------ ---------------------------- --------------------------- ---------------------------- - ------------------------------ ---------------------------- --------------------------- ---------------------------- Maximum Unbilled Costs $70,000,000 $67,500,000 $65,000,000 - ------------------------------ ---------------------------- --------------------------- ----------------------------
5. Inclusion of the Renewal Note in the Indebtedness Secured by the Trust Deed. The Trust Deed is hereby amended to include in the indebtedness secured by the Trust Deed, and any other obligations of Borrower under and pursuant to the Loan Documents, the Renewal Note (which replaces the Original Note). Specifically, the second paragraph on Page 1 of the Trust Deed is hereby amended to read in its entirety as follows: Beneficiary has made a loan to Trustor in the amount of Fifteen Million Dollars ($15,000,000.00) (the "Loan"). The Loan is evidenced by a Renewal and Substitute Promissory Note dated June 30, 2000, in the original principal amount of the Loan (the "Note"). The Loan will be advanced from time to time under a Loan Agreement between Trustor and Beneficiary dated the Closing Date (the "Loan Agreement"). 6. Amendment to Assignment of Leases. Recital A of the Assignment of Leases is hereby deleted in its entirety and replaced by the following: 5 Pursuant to the Renewal and Substitute Promissory Note dated June 30, 2000, in which Assignor appears as "Borrower" and Assignee appears as "Lender" and which is in the original principal amount of Fifteen Million Dollars ($15,000,000.00) (the "Note"), and pursuant to the Loan Agreement dated the Closing Date wherein Assignor appears as "Borrower" and Assignee appears as "Lender" (the "Loan Agreement"), Assignee has loaned the proceeds of the Note to Assignor. 7. Amendment to Assignment of Ground Lease. Recital A of the Assignment of Ground Lease is hereby deleted in its entirety and replaced by the following: Pursuant to the Renewal and Substitute Promissory Note dated June 30, 2000, in which Borrower appears as "Borrower" and Lender appears as "Lender" and which is in the original principal amount of Fifteen Million Dollars ($15,000,000.00) (the "Note"), and pursuant to the Loan Agreement dated the Closing Date wherein Borrower appears as "Borrower" and Lender appears as "Lender" (the "Loan Agreement"), Assignee has loaned the proceeds of the Note to Borrower. 8. Amendment to Loan Documents. The Loan Documents are hereby amended as follows: (a) Renewal Note. To the extent not otherwise provided in this Agreement, the Loan Documents are hereby amended to include in the indebtedness secured by the Collateral for the Loan Documents, and any other obligations of Borrower under and pursuant to the Loan Documents, the Renewal Note (which replaces the Original Note). Lender, Borrower and Additional Obligors agree and acknowledge that the Renewal Note is secured by the Trust Deed, as amended, supplemented and modified. (b) Amendments. To the extent not otherwise provided in this Agreement, the Loan Documents are hereby amended to be consistent with all of the terms and conditions of this Agreement. 9. Conditions to Loan Modification. This Agreement shall become effective from and after the satisfaction of each of the following conditions to Lender's satisfaction: (a) Prior to or concurrently with the execution of this Agreement, Borrower shall have paid to Lender a loan extension fee in the amount of $320,000.00, and an amount equal to all legal fees and expenses incurred by Lender in connection with this Agreement. (b) Borrower shall have provided Lender an endorsement to the Title Policy, which endorsement must be acceptable in form and content to Lender and Lender's counsel and must provide that (1) the Trust Deed continues to constitute a first lien against the Property subject only to the exceptions to title listed on Schedule B - Part I of the Title Policy; and (2) the Trust Deed, as amended, supplemented and extended, continues to secure the Renewal Note pursuant to this Agreement. 6 (c) Borrower and Additional Obligors shall have executed and delivered this Agreement and the Renewal Note to Lender and this Agreement has been recorded in the office of the County Recorder of Salt Lake County, State of Utah. 10. Clarification of terms "Accounts" and "Inventory". Borrower and Lender agree and acknowledge that any and all references to the word "accounts" in the Trust Deed and other Loan Documents was intended and does include all accounts as defined in the Uniform Commercial Code, including, but not limited to, accounts receivable of Borrower. Borrower and Lender further agree and acknowledge that any and all references to the word "inventory" in the Trust Deed and other Loan Documents was intended and does include all inventory of Borrower, as defined in the Uniform Commercial Code, including, but not limited to, all inventory which is not related to the Property, except to the extent that certain inventory is expressly exempted from the security interest created in the Loan Documents. 11. Waiver and Release of Claims. Borrower (i) represents that Borrower has no defenses to or setoffs against any indebtedness or other obligations owning to Lender or Lender's affiliates, nor claims against Lender or Lender's affiliates for any matter whatsoever, related or unrelated to any indebtedness or other obligations owing to Lender or Lender's affiliates, and (ii) releases Lender and Lender's affiliates from all claims, causes of action, and costs, in law or equity, existing as of the date of this Agreement, which Borrower has or may have by reason of any matter of any conceivable kind or character whatsoever, related or unrelated to any indebtedness or other obligations owing to Lender or Lender's affiliates, including the subject matter of this Agreement. This provision shall not apply to claims for performance of express contractual obligations owing to Borrower by Lender o Lender's affiliates. 12. Survival of Obligations; Continuation of Terms of Loan Documents. Lender and Borrower agree that the Trust Deed, together with all of Borrower's obligations thereunder, shall, except to the extent expressly modified by this Agreement, remain in full force and effect and survive the execution of this Agreement. Except as expressly modified by this Agreement, all terms and conditions of the Loan Documents shall continue in full force and effect. 13. Execution of Additional Documents. Borrower hereby agrees to sign such further and additional documents and instruments as Lender may require to give full effect to this Agreement. 7 14. Representations, Warranties, Covenants and Agreements. Borrower represents, warrants, and agrees that, except as heretofore communicated to Lender in writing, the representations, warranties, covenants and agreements of Borrower contained in the Loan Documents as modified herein (a) are true and accurate as of the date of this Agreement, (b) are hereby remade and reaffirmed by Borrower, and (c) are in full force and effect as of the date of this Agreement, enforceable in accordance with their terms. Borrower further represents and warrants that Borrower is not in default under any of the terms and conditions of the Loan Documents, and no conditions exist which, with the passage of time, the giving of notice, or both, would constitute a default under the Loan Documents. 15. Defined Terms. Unless otherwise defined in this Agreement, capitalized terms hereinafter used have the meaning given them in the Loan Agreement. 16. Governing Law. This Agreement and all matters relating to this Agreement shall be governed exclusively by and construed in accordance with the applicable laws of the State of Utah. 17. Integrated Agreement and Subsequent Amendment. This Agreement, the Loan Documents, the Renewal Note, and the other agreements, documents, obligations, and transactions contemplated by the Loan Agreement and this Agreement constitute the entire agreement between Lender and Borrower with respect to the subject matter of the agreements, and may not be altered or amended except by written agreement signed by Lender and Borrower. PURSUANT TO UTAH CODE SECTION 25-5-4, BORROWER IS NOTIFIED THAT THESE AGREEMENTS ARE A FINAL EXPRESSION OF THE AGREEMENTS BETWEEN LENDER AND BORROWER AND THESE AGREEMENTS MAY NOT BE CONTRADICTED BY EVIDENCE OF ANY ALLEGED ORAL AGREEMENT. DATED: June 30, 2000. BORROWER EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation By: /s/ Richard J. Gaynor ----------------------- Richard J. Gaynor Vice President and Chief Financial Officer ADDITIONAL OBLIGORS EVANS & SUTHERLAND, GMBH, a German limited company By: /s/ David Janke ----------------------- David Janke Its: Managing Director 8 EVANS & SUTHERLAND, LTD., a U.K. public limited company By: /s/ Stuart Anderson ----------------------- Stuart Anderson Its: Managing Director EVANS & SUTHERLAND GRAPHICS CORPORATION, a Utah corporation By: /s/ Mark McBride ----------------------- Mark McBride Its: Secretary LENDER ZIONS FIRST NATIONAL BANK, a national banking association By: /s/ Michael R. Brough ----------------------- Michael R. Brough Vice President 9 STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing instrument was acknowledged before me this day of July, 2000, by Richard J. Gaynor, Vice President and Chief Financial Officer of Evans & Sutherland Computer Corporation, a Utah corporation. NOTARY PUBLIC My Commission Expires: Residing At: STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing instrument was acknowledged before me this day of July, 2000, by David Janke, Managing Director of Evans & Sutherland, GMBH, a German limited company. NOTARY PUBLIC My Commission Expires: Residing At: 10 STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing instrument was acknowledged before me this day of July, 2000, by Stuart Anderson, Managing Director of Evans & Sutherland, Ltd., a U.K. public limited company. NOTARY PUBLIC My Commission Expires: Residing At: STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing instrument was acknowledged before me this day of July, 2000, by Mark McBride, Secretary of Evans & Sutherland Graphics Corporation, a Utah corporation. NOTARY PUBLIC My Commission Expires: Residing At: 11 STATE OF UTAH ) : ss. COUNTY OF SALT LAKE ) The foregoing instrument was acknowledged before me this day of July, 2000, by Michael R. Brough, Vice President of Zions First National Bank, a national banking association. NOTARY PUBLIC My Commission Expires: Residing At: 12 EXHIBIT A REAL PROPERTY DESCRIPTION The real property located in Salt Lake County, State of Utah, and more particularly described as follows: [see attached] A-1 EX-10.5 6 0006.txt $15,000,000 RENEWAL AND SUBSTITUTE PROMISSORY NOTE Loan No. ____________ RENEWAL AND SUBSTITUTE PROMISSORY NOTE Salt Lake City, Utah June 30, 2000 $15,000,000.00 1. Promise to Pay. For value received, Evans & Sutherland Computer Corporation, a Utah corporation ( "Borrower"), and Evans & Sutherland, GMBH, a German limited company; Evans & Sutherland, Ltd., a U.K. public limited company; and Evans & Sutherland Graphics Corporation, a Utah corporation (collectively "Additional Obligors"), jointly and severally, promise to pay to the order of Zions First National Bank, a national banking association ("Lender"), at its office at P.O. Box 25822 One South Main Street, in Salt Lake City, Utah 84125, or at such other place as Lender may from time to time designate, in lawful money of the United States of America, the principal sum of Fifteen Million Dollars ($15,000,000.00), or so much of that sum as may be advanced under this Renewal and Substitute Promissory Note (the "Promissory Note") by any holder, together with all other advances made pursuant to this Promissory Note (collectively the "Principal Indebtedness"), plus interest as computed below. This Promissory Note is referred to in and arises out of a Loan Agreement dated the Closing Date (the "Loan Agreement") between Borrower and Lender and is secured by the Collateral. 2. Interest. The outstanding balance of the Principal Indebtedness shall bear interest from the Closing Date at a variable interest rate of four percent (4%) per annum above Lender's Prime Rate (as defined below). Interest shall accrue daily on the outstanding balance of the Principal Indebtedness both before and after judgment, and shall be calculated on the basis of a 360-day year. Interest is computed on a 360-day year simple interest basis by applying the ratio for the annual interest rate over a year of 360 days (365/360), multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding. The applicable annual total interest rate, as computed in accordance with the foregoing, shall be adjusted with each change of the Prime Rate, effective on the date of the change in the Prime Rate. 2 As used in this Promissory Note, the term "Prime Rate" shall be deemed to mean an index which is determined daily by the published commercial loan variable rate index held by any two of the following banks: Chase Manhattan Bank, Wells Fargo Bank N.A., and Bank of America N.A. In the event no two of the above banks have the same published rate, the bank having the median rate will establish Lender's Prime Rate. If, for any reason beyond the control of Lender, any of the aforementioned banks becomes unacceptable as a reference for the purpose of determining the Prime Rate used herein, Lender may, five days after posting notice in Lender's bank offices, substitute another comparable bank for the one determined unacceptable. As used in this paragraph, "comparable bank" shall mean one of the ten largest commercial banks headquartered in the United States of America. This definition of Prime Rate is to be strictly interpreted and is not intended to serve any purpose other than providing an index to determine the variable interest rate used herein. It is not the lowest rate at which Lender may make loans to any of its customers, either now or in the future. 3. Payments. Accrued interest computed in accordance with the foregoing shall be due and payable on May 1, 2000 and thereafter on the first day of each and every month thereafter to and including March 30, 2001, when the total unpaid Principal Indebtedness and all accrued and unpaid interest thereon shall be due and payable in full. Checks will constitute payment only when collected. 4. Lender's Expenditures. Borrower and Additional Obligors agree to pay on demand any reasonable expenditures made by Lender in accordance with the Loan Documents, including, but not limited to, the payment of taxes, insurance premiums, costs of maintenance and preservation of the Property, common expense and other assessments relating to the Property, and attorney fees and costs incurred in connection with any matter pertaining hereto or to the security pledged to secure the Principal Indebtedness or any portion thereof (collectively the "Lender Expenditures"). At the election of Lender, all Lender Expenditures may be added to the unpaid balance of this Promissory Note and become a part of and on a parity with the Principal Indebtedness secured by the Trust Deed and shall accrue interest at such rate as may be computed from time to time in the manner prescribed in this Promissory Note. 5. Prepayment. Borrower and Additional Obligors shall have the right, from time to time and at any time, to prepay all, or any part, of the Loan at any time or times prior to the maturity of the Loan without payment of any premium or penalty. Borrower and Additional Obligors agree that any prepayment shall be made to Lender in the form of cash or equivalent prior to 3:00 p.m. Mountain Time to facilitate investment of such prepayment funds for account of Lender. In the event this deadline is not met, interest will continue to accrue on the unpaid loan balance at the rate specified herein through and including Lender's next regular banking day. 6. Late Charge. If any payment is fifteen (15) days or more late, Borrower and Additional Obligors will be charged five percent (5%) of the regularly scheduled payment or $50.00, whichever is greater. The imposition of a late charge does not in any way extend any payment date or the maturity date of the Note. 3 7. Default Interest Rate. If default occurs in the payment of any principal or interest past any applicable grace or cure period, or if any Event of Default occurs under the Loan Documents, time being the essence hereof, then (a) the entire unpaid balance, shall, at the election of the holder of this Promissory Note and without notice of such election, become immediately due and payable in full, and (b) without notice and whether or not the principal balance has been accelerated, all outstanding principal shall bear interest at a default rate from the date when due until paid, both before and after judgment, which default rate shall be six percent (6%) per annum above Lender's Prime Rate. If this Promissory Note becomes in default or payment is accelerated, Borrower and Additional Obligors agree to pay to the holder of this Promissory Note all collection costs, including reasonable attorney fees and legal expenses, in addition to all other sums due under this Promissory Note. 8. Application of Payments. Any and all payments by Borrower and/or Additional Obligors under this Promissory Note shall be applied as follows: first, to the repayment of any Lender Expenditures advanced by Lender under this Promissory Note or pursuant to the Loan Documents; second, to the payment of any late charges; third, to the payment of accrued interest on the Principal Indebtedness; and fourth, to the payment of the Principal Indebtedness. 9. Extension. The time for any payment required under this Promissory Note may be extended from time to time at the election of Lender. Acceptance by Lender of additional security or guarantees for the performance of the terms and provisions contained in this Promissory Note shall not in any way affect the liability of Borrower or Additional Obligors. 10. Governing Law. This Promissory Note shall be governed by and construed in accordance with the laws of the State of Utah. 11. Interest Limitation. All agreements between the parties to this Promissory Note and the holder of this Promissory Note are hereby expressly limited so that in no contingency or event whatsoever, whether by reason of deferment or advancement of the proceeds of the Loan evidenced by this Promissory Note, acceleration of maturity of the Loan, or otherwise shall the amount paid or agreed to be paid to holder for the use, forbearance or detention of the money to be loaned under this Promissory Note exceed the maximum interest rate permissible under applicable law. If, from any circumstance whatsoever, fulfillment of any provision of this Promissory Note or of any other agreement between the parties to this Promissory Note and the holder, at the time performance of such provision shall be due, shall involve transcending the limit of validity prescribed by law, then, ipso facto, the obligation to be fulfilled shall be reduced to the limit of such validity. In the event that any payment is received by the holder of this Promissory Note which would otherwise be deemed to be a payment of interest in excess of the maximum allowed by law, such payment shall be deemed to have been paid on account of principal at the time of receipt. This provision shall never be superseded or waived and shall control every other provision of this Promissory Note and all agreements between the parties and the holder of this Promissory Note. 12. Defined Terms. Unless otherwise defined in this Promissory Note, capitalized terms hereinafter used have the meanings given them in the Loan Agreement. 13. Renewal Note. This Renewal and Substitute Promissory Note replaces and renews the Promissory Note dated March 31, 2000 executed by Borrower in the amount of $15,000,000.00 and is being executed in connection with the Second Loan Modification Agreement dated June 30, 2000 and entered into between Borrower, Additional Obligors and Lender. 4 DATED: June 30, 2000. BORROWER EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation By: /s/ Richard J. Gaynor --------------------------- Richard J. Gaynor Vice President and Chief Financial Officer ADDITIONAL OBLIGORS EVANS & SUTHERLAND, GMBH, a German limited company By: /s/ David Janke --------------------------- David Janke Its: Managing Director EVANS & SUTHERLAND, LTD., a U.K. public limited company By: /s/ Stuart Anderson --------------------------- Stuart Anderson Its: Managing Director EVANS & SUTHERLAND GRAPHICS CORPORATION, a Utah corporation By: /s/ Mark McBride --------------------------- Mark McBride Its: Secretary EX-10.6 7 0007.txt EMPLOYMENT AGREEMENT WITH JAMES R. OYLER EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into effective as of the 16th day of May, 2000, by and between EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation (the "Company") and JAMES R. OYLER (the "Executive"). W I T N E S S E T H: WHEREAS, the Executive has been providing services to the Company in an executive capacity and desires to continue to provide such services; WHEREAS, the Company desires to have the benefit of the Executive's efforts and services; and WHEREAS, the Company has determined that it is appropriate and in the best interests of the Company to provide to the Executive protection in the event of certain terminations of the Executive's employment relationship with the Company in accordance with the terms and conditions contained herein and the Executive desires to have such protection. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby mutually covenant and agree as follows: 1. DEFINITIONS. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Accrued Benefits" shall mean the amount payable not later than ten (10) days following an applicable Termination Date and which shall be equal to the sum of the following amounts: (i) All salary earned or accrued through the Termination Date; (ii) Reimbursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; (iii) Any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect; (iv) The full amount of any stated bonus payable to the Executive in accordance with Sections 6(b)-(c) herein with respect to the year in which termination occurs; and (v) All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company. 2 (b) "Act" shall mean the Securities Exchange Act of 1934; (c) "Affiliate" shall have the same meaning as given to that term in Rule 12b-2 of Regulation 12B promulgated under the Act; (d) "Base Period Income" shall be an amount equal to the Executive's "annualized includable compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder; (e) "Beneficial Owner" shall have the same meaning as given to that term in Rule 13d-3 of the General Rules and Regulations of the Act, provided that any pledgee of Company voting securities shall not be deemed to be the Beneficial Owner thereof prior to its disposition of, or acquisition of voting rights with respect to, such securities; (f) "Board" shall mean the Board of Directors of the Company; (g) "Cause" shall mean any of the following: (i) The engaging by the Executive in fraudulent conduct, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (ii) Conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (iii) Neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless significantly changed without the Executive's consent); or (iv) A significant violation by the Executive of the Company's established policies and procedures; Notwithstanding the foregoing, Cause shall not exist under Sections 1(g)(iii) and (iv) herein unless the Company furnishes written notice to the Executive of the specific offending conduct and the Executive fails to correct such offending conduct within the thirty (30) day period commencing on the receipt of such notice. (h) "Change of Control" shall mean a change in ownership or managerial control of the stock, assets or business of the Company resulting from one or more of the following circumstances: 3 (i) A change of control of the Company, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, or any successor regulation of similar import, regardless of whether the Company is subject to such reporting requirement; (ii) A change in ownership of the Company through a transaction or series of transactions, such that any Person or Persons (other than any current officer of the Company or member of the Board) is (are) or become(s), in the aggregate, the Beneficial Owner(s), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the Company's then outstanding securities; (iii) Any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company would be converted into cash (other than cash attributable to dissenters' rights), securities or other property provided by a Person or Persons other than the Company, other than a consolidation or merger of the Company in which the holders of the common stock of the Company immediately prior to the consolidation or merger have approximately the same proportionate ownership of common stock of the surviving corporation immediately after the consolidation or merger; (iv) The shareholders of the Company approve a sale, transfer, liquidation or other disposition of all or substantially all of the assets of the Company to a Person or Persons; (v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period; (vi) The filing of a proceeding under Chapter 7 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for liquidation with respect to the Company; or (vii) The filing of a proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for reorganization with respect to the Company if in connection with any such proceeding, this Agreement is rejected, or a plan of reorganization is approved an element of which plan entails the liquidation of all or substantially all the assets of the Company. A "Change of Control" shall be deemed to occur on the actual date on which any of the foregoing circumstances shall occur; provided, however, that in connection with a "Change of Control" specified in 4 Section 1(h)(vii), a "Change of Control" shall be deemed to occur on the date of the filing of the relevant proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import). (i) "Change of Control Period" shall mean the period commencing on the date a Change of Control occurs and ending on the second anniversary of such Change of Control; (j) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time; (k) "Disability" shall mean a physical or mental condition whereby the Executive is unable to perform on a full-time basis the customary duties of the Executive under this Agreement; (l) "Federal Short Term-Rate" shall mean the rate defined in Section 1274(d)(1)(C)(i) of the Code; (m) "Good Reason" shall mean: (i) The required relocation of the Executive, without the Executive's consent, to an employment location which is more than seventy-five (75) miles from the Executive's employment location on the day preceding the date of this Agreement; (ii) The removal of the Executive from or any failure to reelect the Executive to any of the positions held by the Executive as of the date of this Agreement or any other positions to which the Executive shall thereafter be elected or assigned except in the event that such removal or failure to reelect relates to the termination by the Company of the Executive's employment for Cause or by reason of death, Disability or voluntary retirement; (iii) A significant adverse change, without the Executive's written consent, in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities, or a material reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that which was provided to the Executive on the day preceding the date of this Agreement and that which is necessary to perform any additional duties assigned to the Executive following the date of this Agreement, which change or reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category; or (iv) Breach or violation of any material provision of this Agreement by the Company; (n) "Gross Income" shall mean the Executive's average targeted compensation (base salary plus cash bonus) for the prior two (2) taxable years, plus any other compensation payable to the Executive by the Company for the same period, whether taxable or non-taxable; (o) "Notice of Termination" shall mean the notice described in Section 14 herein; 5 (p) "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an employee benefit plan of the Company or an entity organized, appointed or established pursuant to the terms of any such benefit plan; (q) "Termination Date" shall mean, except as otherwise provided in Section 14 herein, (i) The Executive's date of death; (ii) Thirty (30) days after the delivery of the Notice of Termination terminating the Executive's employment on account of Disability pursuant to Section 9 herein, unless the Executive returns on a full-time basis to the performance of his or her duties prior to the expiration of such period; (iii) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Executive voluntarily; or (iv) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company for any reason other than death or Disability; (r) "Termination Payment" shall mean the payment described in Section 13 herein; (s) "Total Payments" shall mean the sum of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. 2. EMPLOYMENT. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein. 3. TERM. The employment of the Executive by the Company pursuant to the provisions of this Agreement shall commence on the date hereof and end on December 31, 2002, unless further extended or sooner terminated as hereinafter provided. On December 31, 2002, and on the last day of December each year thereafter, the term of the Executive's employment shall, unless sooner terminated as hereinafter provided, be automatically extended for an additional one year period from the date thereof unless, at least six (6) months before such December 31, the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive's employment hereunder will not be extended beyond its existing duration. 4. POSITIONS AND DUTIES. The Executive shall serve as President and Chief Executive Officer of the Company and in such additional capacities as set forth in Section 7 herein. 6 In connection with the foregoing positions, the Executive shall have such duties, responsibilities and authority as may from time to time be assigned to the Executive by the Board. The Executive shall devote substantially all the Executive's working time and efforts to the business and affairs of the Company. 5. PLACE OF PERFORMANCE. In connection with the Executive's employment by the Company, the Executive shall be based at the principal executive offices of the Company in Salt Lake City, Utah except for required travel on Company business. 6. COMPENSATION AND RELATED MATTERS. (a) Salary. The Company shall pay to the Executive his annualized base salary (as in effect on the effective date of this Agreement and subject to adjustment as provided herein) in equal installments (as nearly as practicable), in accordance with the Company's standard payroll policy (as in effect from time to time), which currently provides for payments to be made every two weeks, in arrears. Such annualized base salary may be increased from time to time in accordance with normal business practices of the Company. The annualized base salary of the Executive shall not be decreased below its then existing amount during the term of this Agreement. (b) ESIP. The Executive shall be entitled to participate in the Evans & Sutherland Incentive Program. (c) SERP. The Executive shall be entitled to participate in the Company's Supplemental Executive Retirement Plan. (d) Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services hereunder, including all expenses for travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established from time to time by the Company. (e) Other Benefits. The Company shall provide Executive with all other benefits normally provided to an employee of the Company similarly situated to Executive, including being added as a named officer on the Company's existing directors' and officers' liability insurance policy. (f) Vacations. The Executive shall be entitled to the number of vacation days in each calendar year, and to compensation in respect of earned but unused vacation days, determined in accordance with the Company's vacation plan, but in no event less than fifteen (15) days. The Executive shall also be entitled to all paid holidays given by the Company to its executives. (g) Services Furnished. The Company shall furnish the Executive with office space, and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of the Executive's duties as set forth in Section 4 hereof. 7 7. OFFICES. The Executive agrees to serve without additional compensation, if elected or appointed thereto, in one or more executive offices of the Company, or any affiliate or subsidiary of the Company, or as a member of the board of directors of any subsidiary or affiliate of the Company; provided, however, that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided in the Company's bylaws, or otherwise. 8. TERMINATION AS A RESULT OF DEATH. If the Executive shall die during the term of this Agreement, the Executive's employment shall terminate on the Executive's date of death and the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse, shall be entitled to the Executive's Accrued Benefits as of the Termination Date and any applicable Termination Payment. 9. TERMINATION FOR DISABILITY. If, as a result of the Executive's Disability, the Executive shall have been unable to perform the Executive's duties hereunder on a full-time basis for four (4) consecutive months and within thirty (30) days after the Company provides the Executive with a Termination Notice, the Executive shall not have returned to the performance of the Executive's duties on a full-time basis, the Company may terminate the Executive's employment, subject to Section 14 herein. During the term of the Executive's Disability prior to termination, the Executive shall continue to receive all salary and benefits payable under Section 6 herein, including participation in all employee benefit plans, programs and arrangements in which the Executive was entitled to participate immediately prior to the Disability; provided, however, that the Executive's continued participation is permitted under the terms and provisions of such plans, programs and arrangements. In the event that the Executive's participation in any such plan, program or arrangement is barred as the result of such Disability, the Executive shall be entitled to receive an amount equal to the contributions, payments, credits or allocations which would have been paid by the Company to the Executive, to the Executive's account or on the Executive's behalf under such plans, programs and arrangements. In the event the Executive's employment is terminated on account of the Executive's Disability in accordance with this Section 9, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall remain eligible for all benefits provided by any long-term disability programs of the Company in effect at the time of such termination. The Executive shall also be entitled to the Termination Payment described in Section 13(a). 10. TERMINATION FOR CAUSE. If the Executive's employment with the Company is terminated by the Company for Cause, subject to the procedures set forth in Section 14 herein, the Executive shall be entitled to receive the Executive's Accrued Benefits as of the Termination Date. The Executive shall not be entitled to receipt of any Termination Payment. 11. OTHER TERMINATION BY COMPANY. If the Executive's employment with the Company is terminated by the Company other than by reason of death, Disability or Cause, subject to the procedures set forth in Section 14 herein, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving 8 spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 11, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 12. VOLUNTARY TERMINATION BY EXECUTIVE. Provided that the Executive furnishes thirty (30) days prior written notice to the Company, the Executive shall have the right to voluntarily terminate this Agreement at any time. If the Executive's voluntary termination is without Good Reason, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall not be entitled to any Termination Payment. If the Executive's voluntary termination is for Good Reason, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 12, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 13. TERMINATION PAYMENT. (a) If the Executive's employment is terminated as a result of death or disability, the lump sum Termination Payment payable to the Executive shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (b) If the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, disability or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be two (2.0) times the Executive's Gross Income for the year preceding the Termination Date. (c) If, during a Change of Control Period, the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, Disability, or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be two (2.0) times the Executive's Gross Income for the year preceding the Termination Date. (d) If the Executive's employment is terminated by the Executive within one hundred eighty (180) days of a Change of Control, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be two and one-half (2.5) times the Executive's Gross Income for the year preceding the Termination Date. (e) It is the intention of the Company and the Executive that no portion of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive under this Agreement, or under any other agreement, plan or arrangement, be deemed to be an "excess parachute payment" as defined in Section 280G of the Code. It is agreed that the present value of the Total Payments shall not exceed an amount equal to two and ninety-nine hundredths (2.99) times the Executive's Base Period 9 Income, which is the maximum amount which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code. Present value for purposes of this Agreement shall be calculated in accordance with the regulations issued under Section 280G of the Code. Within sixty (60) days following delivery of the Notice of Termination or notice by the Company to the Executive of its belief that there is a payment or benefit due the Executive which will result in an excess parachute payment as defined in Section 280G of the Code, the Executive and the Company shall, at the Company's expense, obtain such opinions as more fully described hereafter, which need not be unqualified, of legal counsel and certified public accountants or a firm of recognized executive compensation consultants. The Executive shall select said legal counsel, certified public accountants and executive compensation consultants; provided, however, that if the Company does not accept one (1) or more of the parties selected by the Executive, the Company shall provide the Executive with the names of such legal counsel, certified public accountants and/or executive compensation consultants as the Company may select; provided, further, however, that if the Executive does not accept the party or parties selected by the Company, the legal counsel, certified public accountants and/or executive compensation consultants selected by the Executive and the Company, respectively, shall select the legal counsel, certified public accountants and/or executive compensation consultants, whichever is applicable, who shall provide the opinions required by this Section 13(e). The opinions required hereunder shall set forth (a) the amount of the Base Period Income of the Executive, (b) the present value of Total Payments and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the Termination Payment or any other payment determined by such counsel to be includable in Total Payments shall be reduced or eliminated as specified by the Executive in writing delivered to the Company within thirty (30) days of his or her receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no excess parachute payment. The provisions of this Section 13(e), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation and other benefits, including but not limited to the Accrued Benefits, earned on or after the date of Change of Control by the Executive pursuant to the Company's compensation programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable compensation for services rendered prior to the Change of Control; provided, however, that in the event legal counsel so requests in connection with the opinion required by this Section 13(e), a firm of recognized executive compensation consultants, selected by the Executive and the Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered prior to the Change of Control by the Executive. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 13(e) shall be of no further force or effect. (f) The Termination Payment shall be payable in a lump sum not later than ten (10) days following the Executive's Termination Date. Such lump sum payment shall not be reduced by any present value or similar factor. Further, the Executive shall not be required to mitigate the amount of such payment by securing other employment or otherwise and such payment shall not be reduced by reason of the Executive securing other employment or for any other reason. 10 14. TERMINATION NOTICE AND PROCEDURE. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, if such Notice of Termination is delivered by the Executive, all in accordance with the following procedures: (a) The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination; (b) Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office; (c) If the Executive shall in good faith furnish a Notice of Termination for Good Reason and the Company notifies the Executive that a dispute exists concerning the termination, within the fifteen (15) day period following the Company's receipt of such notice, the Executive shall continue the Executive's employment during such dispute. If it is thereafter determined that (i) Good Reason did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or pursuant to Section 19, (B) the date of the Executive's death or (C) one day prior to the second (2nd) anniversary of a Change of Control, and the Executive's Termination Payment, if applicable, shall reflect events occurring after the Executive delivered the Executive's Notice of Termination; or (ii) Good Reason did not exist, the employment of the Executive shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason; and (d) If the Executive gives notice to terminate his or her employment for Good Reason and a dispute arises as to the validity of such dispute, and the Executive does not continue his employment during such dispute, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by the Executive, the Executive shall be deemed to have voluntarily terminated the Executive's employment other than for Good Reason. 15. ACCELERATION AND EXERCISE OF OPTIONS ON CERTAIN TERMINATIONS Notwithstanding anything to the contrary in this Agreement, should the Executive's employment hereunder be terminated by the Company without Cause, or by the Executive for Good Reason, then (i) vesting of all options previously granted by the Company to the Executive, exercisable for shares of the Company's Common Stock (the "Options"), shall be accelerated so that the Options become fully exercisable, and (ii) the Executive shall have the right and option to exercise all Options (in addition to any methods of exercise and payment otherwise permitted) by delivery of his full recourse promissory note in the principal amount equal to the exercise price, secured by the shares to be purchased with such note, with interest to accrue on the outstanding principal balance of the note at the rate determined as set forth below, and with the entire outstanding principal amount of the note and all accrued interest to become due and payable upon the fifth anniversary of the exercise date. Interest will be charged with respect to a promissory note given an exercise of an Option at the monthly applicable federal rate published by the Internal Revenue Service for the month in which the Option is exercised. 11 16. NONDISCLOSURE OF PROPRIETARY INFORMATION. Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes, the manufacturing of products or performance of services, which involve experimental and inventive work and that the success of its business depends upon the protection of the processes, products and services by patent, copyright or by secrecy and that the Executive has had, or during the course of his engagement may have, access to Proprietary Information, as hereinafter defined, of the Company or other information and data of a secret or proprietary nature of the Company which the Company wishes to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees that: (a) "Proprietary Information" shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive's engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors; (b) The Executive acknowledges that the Company has exclusive property rights to all Proprietary Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary Information to the Company. Except as required in the performance of his duties to the Company, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling; (c) All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or compiled by the Executive at any time or made available to him or her prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him or her in trust solely for the benefit of the Company, and shall be delivered to the Company by him or her on the termination of his or her engagement or at any other time on the request of the Company; and (d) The Executive will not assert any rights under any inventions, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him or her prior to his or her being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary Information. 12 17. ASSIGNMENT OF INVENTIONS. (a) For purposes of this Section 17, the term "Inventions" shall mean discoveries, concepts, and ideas, whether patentable or copyrightable or not, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement or with the use of the Company's facilities, materials or personnel), either solely or jointly with others during his or her engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement. All Inventions shall be the sole property of the Company, and Executive agrees to perform the provisions of this Section 17 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an employee or consultant. (b) The Executive shall maintain written notebooks in which he or she shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company's behalf. The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his or her engagement or, upon request of the Company, at any time prior thereto. (c) The Executive shall apply, at the Company's request and expense, for United States and foreign letters patent or copyrights either in the Executive's name or otherwise as the Company shall desire. (d) The Executive hereby assigns to the Company all of his or her rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions. (e) The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive's inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company or its nominee. The Executive acknowledges and agrees that any copyright developed or conceived of by the Executive during the term of Executive's employment which is related to the business of the Company shall be a "work for hire" under the copyright law of the United States and other applicable jurisdictions. (f) The Executive represents that his or her performance of all the terms of this Agreement and as an employee of or consultant to the Company does not and will not breach any trust prior to his or her employment by the Company. The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents and agrees that he or she has not brought and will not bring with him 13 to the Company or use in the performance of his or her responsibilities at the Company any materials or documents of a former employer which are not generally available to the public, unless he or she has obtained written authorization from the former employer for their possession and use, a copy of which has been provided to the Company. (g) No provisions of this Section shall be deemed to limit the restrictions applicable to the Executive under Section 16. (h) No provision of this Section shall be deemed or construed to require the Executive to assign to the Company any rights or intellectual property with respect to any invention which (i) is created by the Executive entirely on his own time, (ii) does not constitute an "employment invention" as defined in the Utah Employment Inventions Act, and (iii) is not exempted from the application of the Utah Employment Inventions Act. 18. SHOP RIGHTS. The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined in Section 16 but which are conceived or made by the Executive during the period he or she is engaged by the Company or with the use or assistance of the Company's facilities, materials or personnel. 19. NON-COMPETE. The Executive hereby agrees that during the term of this Agreement and for the period of one year from the termination hereof, that the Executive will not: (a) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, own, manage, operate or control any business of the type and character engaged in and competitive with the Company or any subsidiary thereof. For purposes of this Section, ownership of securities of not in excess of five percent (5%) of any class of securities of a public company shall not be considered to be competition with the Company or any subsidiary thereof; or (b) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, act as, or become employed as, an officer, director, employee, consultant or agent of any business of the type and character engaged in and competitive with the Company or any of its subsidiaries; or (c) Solicit any similar business to that of the Company's for, or sell any products that are in competition with the Company's products to, any company in the United States, which is, as of the date hereof, a customer or client of the Company or any of its subsidiaries, or was such a customer or client thereof within two years prior to the date of this Agreement; or 14 (d) Solicit the employment of any full time employee employed by the Company or its subsidiaries as of the date of termination of this Agreement. 20. REMEDIES AND JURISDICTION. (a) The Executive hereby acknowledges and agrees that a breach of the agreements contained in this Agreement will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of the agreements set forth in this Agreement will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company shall be entitled to injunctive relief for any breach or threatened breach of the agreements contained in this Agreement. (b) All claims, disputes and other matters in question between the parties arising under this Agreement, shall, unless otherwise provided herein, be decided by arbitration in Salt Lake City, Utah, in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association (including such procedures governing selection of the specific arbitrator or arbitrators), unless the parties mutually agree otherwise. The Company shall pay the costs of any such arbitration. The award by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any state or Federal court having jurisdiction thereof. 21. ATTORNEYS' FEES. In the event that either party hereunder institutes any legal proceedings in connection with its rights or obligations under this Agreement, the prevailing party in such proceeding shall be entitled to recover from the other party, all costs incurred in connection with such proceeding, including reasonable attorneys' fees, together with interest thereon from the date of demand at the rate of twelve percent (12%) per annum. 22. SUCCESSORS. This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the business and assets of the Company shall be transferred whether by merger, consolidation, transfer or sale. 23. ENFORCEMENT. The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby. 24. AMENDMENT OR TERMINATION. This Agreement may not be amended or terminated during its term, except by written instrument executed by the Company and the Executive. 15 25. SURVIVABILITY. The provisions of Sections 15, 16, 17, 18, 19, 20 and 21 shall survive termination of this Agreement. 26. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written agreements, negotiations, commitments and understandings with respect thereto. 27. VENUE; GOVERNING LAW. This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Utah without giving effect to the provisions, principles, or policies thereof relating to choice or conflicts of laws. 28. NOTICE. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received, and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to: Company: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Attn: Fax: (801) 588-4500 Executive: James R. Oyler 600 Komas Drive Salt Lake City, Utah 84108 Fax: (801) 588-4500 or to such other address as the Company shall have given to the Executive or, if to the Executive, to such address as the Executive shall have given to the Company. 29. NO WAIVER. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 30. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. 31. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 16 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written. "COMPANY" EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation By:___________________________ Its:__________________________ "EXECUTIVE" ------------------------------ James R. Oyler EX-10.7 8 0008.txt EMPLOYMENT AGREEMENT WITH RICHARD J. GAYNOR EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into effective as of the 16th day of May, 2000, by and between EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation (the "Company") and RICHARD GAYNOR (the "Executive"). W I T N E S S E T H: WHEREAS, the Executive has been providing services to the Company in an executive capacity and desires to continue to provide such services; WHEREAS, the Company desires to have the benefit of the Executive's efforts and services; and WHEREAS, the Company has determined that it is appropriate and in the best interests of the Company to provide to the Executive protection in the event of certain terminations of the Executive's employment relationship with the Company in accordance with the terms and conditions contained herein and the Executive desires to have such protection. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby mutually covenant and agree as follows: 1. DEFINITIONS. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Accrued Benefits" shall mean the amount payable not later than ten (10) days following an applicable Termination Date and which shall be equal to the sum of the following amounts: (i) All salary earned or accrued through the Termination Date; (ii) Reimbursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; (iii) Any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect; (iv) The full amount of any stated bonus payable to the Executive in accordance with Sections 6(b)-(c) herein with respect to the year in which termination occurs; and (v) All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company. 2 (b) "Act" shall mean the Securities Exchange Act of 1934; (c) "Affiliate" shall have the same meaning as given to that term in Rule 12b-2 of Regulation 12B promulgated under the Act; (d) "Base Period Income" shall be an amount equal to the Executive's "annualized includable compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder; (e) "Beneficial Owner" shall have the same meaning as given to that term in Rule 13d-3 of the General Rules and Regulations of the Act, provided that any pledgee of Company voting securities shall not be deemed to be the Beneficial Owner thereof prior to its disposition of, or acquisition of voting rights with respect to, such securities; (f) "Board" shall mean the Board of Directors of the Company; (g) "Cause" shall mean any of the following: (i) The engaging by the Executive in fraudulent conduct, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (ii) Conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (iii) Neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless significantly changed without the Executive's consent); or (iv) A significant violation by the Executive of the Company's established policies and procedures; Notwithstanding the foregoing, Cause shall not exist under Sections 1(g)(iii) and (iv) herein unless the Company furnishes written notice to the Executive of the specific offending conduct and the Executive fails to correct such offending conduct within the thirty (30) day period commencing on the receipt of such notice. (h) "Change of Control" shall mean a change in ownership or managerial control of the stock, assets or business of the Company resulting from one or more of the following circumstances: 3 (i) A change of control of the Company, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, or any successor regulation of similar import, regardless of whether the Company is subject to such reporting requirement; (ii) A change in ownership of the Company through a transaction or series of transactions, such that any Person or Persons (other than any current officer of the Company or member of the Board) is (are) or become(s), in the aggregate, the Beneficial Owner(s), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the Company's then outstanding securities; (iii) Any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company would be converted into cash (other than cash attributable to dissenters' rights), securities or other property provided by a Person or Persons other than the Company, other than a consolidation or merger of the Company in which the holders of the common stock of the Company immediately prior to the consolidation or merger have approximately the same proportionate ownership of common stock of the surviving corporation immediately after the consolidation or merger; (iv) The shareholders of the Company approve a sale, transfer, liquidation or other disposition of all or substantially all of the assets of the Company to a Person or Persons; (v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period; (vi) The filing of a proceeding under Chapter 7 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for liquidation with respect to the Company; or (vii) The filing of a proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for reorganization with respect to the Company if in connection with any such proceeding, this Agreement is rejected, or a plan of reorganization is approved an element of which plan entails the liquidation of all or substantially all the assets of the Company. A "Change of Control" shall be deemed to occur on the actual date on which any of the foregoing circumstances shall occur; provided, however, that in connection with a "Change of Control" specified in Section 1(h)(vii), a "Change of Control" shall be deemed to occur on the date of the filing of the relevant proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import). 4 (i) "Change of Control Period" shall mean the period commencing on the date a Change of Control occurs and ending on the second anniversary of such Change of Control; (j) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time; (k) "Disability" shall mean a physical or mental condition whereby the Executive is unable to perform on a full-time basis the customary duties of the Executive under this Agreement; (l) "Federal Short Term-Rate" shall mean the rate defined in Section 1274(d)(1)(C)(i) of the Code; (m) "Good Reason" shall mean: (i) The required relocation of the Executive, without the Executive's consent, to an employment location which is more than seventy-five (75) miles from the Executive's employment location on the day preceding the date of this Agreement; (ii) The removal of the Executive from or any failure to reelect the Executive to any of the positions held by the Executive as of the date of this Agreement or any other positions to which the Executive shall thereafter be elected or assigned except in the event that such removal or failure to reelect relates to the termination by the Company of the Executive's employment for Cause or by reason of death, Disability or voluntary retirement; (iii) A significant adverse change, without the Executive's written consent, in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities, or a material reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that which was provided to the Executive on the day preceding the date of this Agreement and that which is necessary to perform any additional duties assigned to the Executive following the date of this Agreement, which change or reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category; or (iv) Breach or violation of any material provision of this Agreement by the Company; (n) "Gross Income" shall mean the Executive's average targeted compensation (base salary plus cash bonus) for the prior two (2) taxable years, plus any other compensation payable to the Executive by the Company for the same period, whether taxable or non-taxable; (o) "Notice of Termination" shall mean the notice described in Section 14 herein; 5 (p) "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an employee benefit plan of the Company or an entity organized, appointed or established pursuant to the terms of any such benefit plan; (q) "Termination Date" shall mean, except as otherwise provided in Section 14 herein, (i) The Executive's date of death; (ii) Thirty (30) days after the delivery of the Notice of Termination terminating the Executive's employment on account of Disability pursuant to Section 9 herein, unless the Executive returns on a full-time basis to the performance of his or her duties prior to the expiration of such period; (iii) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Executive voluntarily; or (iv) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company for any reason other than death or Disability; (r) "Termination Payment" shall mean the payment described in Section 13 herein; (s) "Total Payments" shall mean the sum of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. 2. EMPLOYMENT. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein. 3. TERM. The employment of the Executive by the Company pursuant to the provisions of this Agreement shall commence on the date hereof and end on December 31, 2001, unless further extended or sooner terminated as hereinafter provided. On December 31, 2001, and on the last day of December each year thereafter, the term of the Executive's employment shall, unless sooner terminated as hereinafter provided, be automatically extended for an additional one year period from the date thereof unless, at least six (6) months before such December 31, the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive's employment hereunder will not be extended beyond its existing duration. 6 4. POSITIONS AND DUTIES. The Executive shall serve as Chief Financial Officer of the Company and in such additional capacities as set forth in Section 7 herein. In connection with the foregoing positions, the Executive shall have such duties, responsibilities and authority as may from time to time be assigned to the Executive by the Board. The Executive shall devote substantially all the Executive's working time and efforts to the business and affairs of the Company. 5. PLACE OF PERFORMANCE. In connection with the Executive's employment by the Company, the Executive shall be based at the principal executive offices of the Company in Salt Lake City, Utah except for required travel on Company business. 6. COMPENSATION AND RELATED MATTERS. (a) Salary. The Company shall pay to the Executive his annualized base salary (as in effect on the effective date of this Agreement and subject to adjustment as provided herein) in equal installments (as nearly as practicable), in accordance with the Company's standard payroll policy (as in effect from time to time), which currently provides for payments to be made every two weeks, in arrears. Such annualized base salary may be increased from time to time in accordance with normal business practices of the Company. The annualized base salary of the Executive shall not be decreased below its then existing amount during the term of this Agreement. (b) ESIP. The Executive shall be entitled to participate in the Evans & Sutherland Incentive Program. (c) SERP. The Executive shall be entitled to participate in the Company's Supplemental Executive Retirement Plan. (d) Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services hereunder, including all expenses for travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established from time to time by the Company. (e) Other Benefits. The Company shall provide Executive with all other benefits normally provided to an employee of the Company similarly situated to Executive, including being added as a named officer on the Company's existing directors' and officers' liability insurance policy. (f) Vacations. The Executive shall be entitled to the number of vacation days in each calendar year, and to compensation in respect of earned but unused vacation days, determined in accordance with the Company's vacation plan, but in no event less than fifteen (15) days. The Executive shall also be entitled to all paid holidays given by the Company to its executives. (g) Services Furnished. The Company shall furnish the Executive with office space, and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of the Executive's duties as set forth in Section 4 hereof. 7 7. OFFICES. The Executive agrees to serve without additional compensation, if elected or appointed thereto, in one or more executive offices of the Company, or any affiliate or subsidiary of the Company, or as a member of the board of directors of any subsidiary or affiliate of the Company; provided, however, that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided in the Company's bylaws, or otherwise. 8. TERMINATION AS A RESULT OF DEATH. If the Executive shall die during the term of this Agreement, the Executive's employment shall terminate on the Executive's date of death and the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse, shall be entitled to the Executive's Accrued Benefits as of the Termination Date and any applicable Termination Payment. 9. TERMINATION FOR DISABILITY. If, as a result of the Executive's Disability, the Executive shall have been unable to perform the Executive's duties hereunder on a full-time basis for four (4) consecutive months and within thirty (30) days after the Company provides the Executive with a Termination Notice, the Executive shall not have returned to the performance of the Executive's duties on a full-time basis, the Company may terminate the Executive's employment, subject to Section 14 herein. During the term of the Executive's Disability prior to termination, the Executive shall continue to receive all salary and benefits payable under Section 6 herein, including participation in all employee benefit plans, programs and arrangements in which the Executive was entitled to participate immediately prior to the Disability; provided, however, that the Executive's continued participation is permitted under the terms and provisions of such plans, programs and arrangements. In the event that the Executive's participation in any such plan, program or arrangement is barred as the result of such Disability, the Executive shall be entitled to receive an amount equal to the contributions, payments, credits or allocations which would have been paid by the Company to the Executive, to the Executive's account or on the Executive's behalf under such plans, programs and arrangements. In the event the Executive's employment is terminated on account of the Executive's Disability in accordance with this Section 9, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall remain eligible for all benefits provided by any long-term disability programs of the Company in effect at the time of such termination. The Executive shall also be entitled to the Termination Payment described in Section 13(a). 10. TERMINATION FOR CAUSE. If the Executive's employment with the Company is terminated by the Company for Cause, subject to the procedures set forth in Section 14 herein, the Executive shall be entitled to receive the Executive's Accrued Benefits as of the Termination Date. The Executive shall not be entitled to receipt of any Termination Payment. 11. OTHER TERMINATION BY COMPANY. If the Executive's employment with the Company is terminated by the Company other than by reason of death, Disability or Cause, or as described in paragraph 13(g) below, subject to the procedures set forth in Section 14 herein, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable 8 Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 11, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 12. VOLUNTARY TERMINATION BY EXECUTIVE. Provided that the Executive furnishes thirty (30) days prior written notice to the Company, the Executive shall have the right to voluntarily terminate this Agreement at any time. If the Executive's voluntary termination is without Good Reason, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall not be entitled to any Termination Payment. If the Executive's voluntary termination (other than a termination described in paragraph 13(g) below) is for Good Reason, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 12, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 13. TERMINATION PAYMENT. (a) If the Executive's employment is terminated as a result of death or disability, the lump sum Termination Payment payable to the Executive shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (b) If the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, disability or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (c) If, during a Change of Control Period, the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, Disability, or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be two (2.0) times the Executive's Gross Income for the year preceding the Termination Date. (d) It is the intention of the Company and the Executive that no portion of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive under this Agreement, or under any other agreement, plan or arrangement, be deemed to be an "excess parachute payment" as defined in Section 280G of the Code. It is agreed that the present value of the Total Payments shall not exceed an amount equal to two and ninety-nine hundredths (2.99) times the Executive's Base Period Income, which is the maximum amount which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code. Present value for purposes of this Agreement shall be calculated in accordance with the regulations issued under Section 280G of the Code. Within sixty (60) days following delivery of the Notice of Termination or notice by the 9 Company to the Executive of its belief that there is a payment or benefit due the Executive which will result in an excess parachute payment as defined in Section 280G of the Code, the Executive and the Company shall, at the Company's expense, obtain such opinions as more fully described hereafter, which need not be unqualified, of legal counsel and certified public accountants or a firm of recognized executive compensation consultants. The Executive shall select said legal counsel, certified public accountants and executive compensation consultants; provided, however, that if the Company does not accept one (1) or more of the parties selected by the Executive, the Company shall provide the Executive with the names of such legal counsel, certified public accountants and/or executive compensation consultants as the Company may select; provided, further, however, that if the Executive does not accept the party or parties selected by the Company, the legal counsel, certified public accountants and/or executive compensation consultants selected by the Executive and the Company, respectively, shall select the legal counsel, certified public accountants and/or executive compensation consultants, whichever is applicable, who shall provide the opinions required by this Section 13(e). The opinions required hereunder shall set forth (a) the amount of the Base Period Income of the Executive, (b) the present value of Total Payments and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the Termination Payment or any other payment determined by such counsel to be includable in Total Payments shall be reduced or eliminated as specified by the Executive in writing delivered to the Company within thirty (30) days of his or her receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no excess parachute payment. The provisions of this Section 13(e), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation and other benefits, including but not limited to the Accrued Benefits, earned on or after the date of Change of Control by the Executive pursuant to the Company's compensation programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable compensation for services rendered prior to the Change of Control; provided, however, that in the event legal counsel so requests in connection with the opinion required by this Section 13(e), a firm of recognized executive compensation consultants, selected by the Executive and the Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered prior to the Change of Control by the Executive. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 13(e) shall be of no further force or effect. (f) The Termination Payment shall be payable in a lump sum not later than ten (10) days following the Executive's Termination Date. Such lump sum payment shall not be reduced by any present value or similar factor. Further, the Executive shall not be required to mitigate the amount of such payment by securing other employment or otherwise and such payment shall not be reduced by reason of the Executive securing other employment or for any other reason. 10 (g) Notwithstanding anything to the contrary herein, in no event will a termination of Executive's employment with the Company be deemed to trigger a right to receive a Termination Payment if the termination is effected by the mutual agreement of the Company and Executive to accommodate a reassignment of Executive to an entity created or acquired by the Company, or to which the Company has contributed rights to technology, assets or business plans, if at the time of such termination the Company owns or is acquiring a minimum of a 19% equity interest in such entity. In the event of any such termination, the Executive shall only be entitled to receive the Executive's Accrued Benefits as of the Termination Date. 14. TERMINATION NOTICE AND PROCEDURE. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, if such Notice of Termination is delivered by the Executive, all in accordance with the following procedures: (a) The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination; (b) Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office; (c) If the Executive shall in good faith furnish a Notice of Termination for Good Reason and the Company notifies the Executive that a dispute exists concerning the termination, within the fifteen (15) day period following the Company's receipt of such notice, the Executive shall continue the Executive's employment during such dispute. If it is thereafter determined that (i) Good Reason did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or pursuant to Section 19, (B) the date of the Executive's death or (C) one day prior to the second (2nd) anniversary of a Change of Control, and the Executive's Termination Payment, if applicable, shall reflect events occurring after the Executive delivered the Executive's Notice of Termination; or (ii) Good Reason did not exist, the employment of the Executive shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason; and (d) If the Executive gives notice to terminate his or her employment for Good Reason and a dispute arises as to the validity of such dispute, and the Executive does not continue his employment during such dispute, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by the Executive, the Executive shall be deemed to have voluntarily terminated the Executive's employment other than for Good Reason. 15. NONDISCLOSURE OF PROPRIETARY INFORMATION. Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes, the manufacturing of products or performance of services, which involve experimental 11 and inventive work and that the success of its business depends upon the protection of the processes, products and services by patent, copyright or by secrecy and that the Executive has had, or during the course of his engagement may have, access to Proprietary Information, as hereinafter defined, of the Company or other information and data of a secret or proprietary nature of the Company which the Company wishes to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees that: (a) "Proprietary Information" shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive's engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors; (b) The Executive acknowledges that the Company has exclusive property rights to all Proprietary Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary Information to the Company. Except as required in the performance of his duties to the Company, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling; (c) All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or compiled by the Executive at any time or made available to him or her prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him or her in trust solely for the benefit of the Company, and shall be delivered to the Company by him or her on the termination of his or her engagement or at any other time on the request of the Company; and (d) The Executive will not assert any rights under any inventions, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him or her prior to his or her being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary Information. 12 16. ASSIGNMENT OF INVENTIONS. (a) For purposes of this Section 16, the term "Inventions" shall mean discoveries, concepts, and ideas, whether patentable or copyrightable or not, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement or with the use of the Company's facilities, materials or personnel), either solely or jointly with others during his or her engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement. All Inventions shall be the sole property of the Company, and Executive agrees to perform the provisions of this Section 16 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an employee or consultant. (b) The Executive shall maintain written notebooks in which he or she shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company's behalf. The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his or her engagement or, upon request of the Company, at any time prior thereto. (c) The Executive shall apply, at the Company's request and expense, for United States and foreign letters patent or copyrights either in the Executive's name or otherwise as the Company shall desire. (d) The Executive hereby assigns to the Company all of his or her rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions. (e) The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive's inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company or its nominee. The Executive acknowledges and agrees that any copyright developed or conceived of by the Executive during the term of Executive's employment which is related to the business of the Company shall be a "work for hire" under the copyright law of the United States and other applicable jurisdictions. (f) The Executive represents that his or her performance of all the terms of this Agreement and as an employee of or consultant to the Company does not and will not breach any trust prior to his or her employment by the Company. The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents and agrees that he or she has not brought and will not bring with him to the Company or use in the performance of his or her 13 responsibilities at the Company any materials or documents of a former employer which are not generally available to the public, unless he or she has obtained written authorization from the former employer for their possession and use, a copy of which has been provided to the Company. (g) No provisions of this Section shall be deemed to limit the restrictions applicable to the Executive under Section 15. (h) No provisions of this Section shall be deemed or construed to require the Executive to assign to the Company any rights or intellectual property with respect to any invention which (i) is created by the Executive entirely on his own time, (ii) does not constitute an "employment invention" as defined in the Utah Employment Inventions Act, and (iii) is not exempted from the application f the Utah Employment Inventions Act. 17. SHOP RIGHTS. The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined in Section 16 but which are conceived or made by the Executive during the period he or she is engaged by the Company or with the use or assistance of the Company's facilities, materials or personnel. 18. NON-COMPETE. The Executive hereby agrees that during the term of this Agreement and for the period of one year from the termination hereof, that the Executive will not: (a) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, own, manage, operate or control any business of the type and character engaged in and competitive with the Company or any subsidiary thereof. For purposes of this Section, ownership of securities of not in excess of five percent (5%) of any class of securities of a public company shall not be considered to be competition with the Company or any subsidiary thereof; or (b) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, act as, or become employed as, an officer, director, employee, consultant or agent of any business of the type and character engaged in and competitive with the Company or any of its subsidiaries; or (c) Solicit any similar business to that of the Company's for, or sell any products that are in competition with the Company's products to, any company in the United States, which is, as of the date hereof, a customer or client of the Company or any of its subsidiaries, or was such a customer or client thereof within two years prior to the date of this Agreement; or (d) Solicit the employment of any full time employee employed by the Company or its subsidiaries as of the date of termination of this Agreement. 14 19. REMEDIES AND JURISDICTION. (a) The Executive hereby acknowledges and agrees that a breach of the agreements contained in this Agreement will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of the agreements set forth in this Agreement will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company shall be entitled to injunctive relief for any breach or threatened breach of the agreements contained in this Agreement. (b) All claims, disputes and other matters in question between the parties arising under this Agreement, shall, unless otherwise provided herein, be decided by arbitration in Salt Lake City, Utah, in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association (including such procedures governing selection of the specific arbitrator or arbitrators), unless the parties mutually agree otherwise. The Company shall pay the costs of any such arbitration. The award by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any state or Federal court having jurisdiction thereof. 20. ATTORNEYS' FEES. In the event that either party hereunder institutes any legal proceedings in connection with its rights or obligations under this Agreement, the prevailing party in such proceeding shall be entitled to recover from the other party, all costs incurred in connection with such proceeding, including reasonable attorneys' fees, together with interest thereon from the date of demand at the rate of twelve percent (12%) per annum. 21. SUCCESSORS. This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the business and assets of the Company shall be transferred whether by merger, consolidation, transfer or sale. 22. ENFORCEMENT. The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby. 23. AMENDMENT OR TERMINATION. This Agreement may not be amended or terminated during its term, except by written instrument executed by the Company and the Executive. 15 24. SURVIVABILITY. The provisions of Sections 15, 16, 17, 18, 19, and 20 shall survive termination of this Agreement. 25. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written agreements, negotiations, commitments and understandings with respect thereto. 26. VENUE; GOVERNING LAW. This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Utah without giving effect to the provisions, principles, or policies thereof relating to choice or conflicts of laws. 27. NOTICE. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received, and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to: Company: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Attn: Fax: (801) 588-4500 Executive: Richard Gaynor 600 Komas Drive Salt Lake City, Utah 84108 Fax: (801) 588-4500 or to such other address as the Company shall have given to the Executive or, if to the Executive, to such address as the Executive shall have given to the Company. 28. NO WAIVER. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 29. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. 30. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 16 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written. "COMPANY" EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation By:/s/ James R. Oyler -------------------------------- James R. Oyler, President and CEO "EXECUTIVE" /s/ Richard Gaynor -------------------------------- Richard Gaynor EX-10.8 9 0009.txt EMPLOYMENT AGREEMENT WITH DAVID B. FIGGINS EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into effective as of the 16th day of May, 2000, by and between EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation (the "Company") and DAVID FIGGINS (the "Executive"). W I T N E S S E T H: WHEREAS, the Executive has been providing services to the Company in an executive capacity and desires to continue to provide such services; WHEREAS, the Company desires to have the benefit of the Executive's efforts and services; and WHEREAS, the Company has determined that it is appropriate and in the best interests of the Company to provide to the Executive protection in the event of certain terminations of the Executive's employment relationship with the Company in accordance with the terms and conditions contained herein and the Executive desires to have such protection. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby mutually covenant and agree as follows: 1. DEFINITIONS. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Accrued Benefits" shall mean the amount payable not later than ten (10) days following an applicable Termination Date and which shall be equal to the sum of the following amounts: (i) All salary earned or accrued through the Termination Date; (ii) Reimbursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; (iii) Any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect; (iv) The full amount of any stated bonus payable to the Executive in accordance with Sections 6(b)-(c) herein with respect to the year in which termination occurs; and (v) All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company. 2 (b) "Act" shall mean the Securities Exchange Act of 1934; (c) "Affiliate" shall have the same meaning as given to that term in Rule 12b-2 of Regulation 12B promulgated under the Act; (d) "Base Period Income" shall be an amount equal to the Executive's "annualized includable compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder; (e) "Beneficial Owner" shall have the same meaning as given to that term in Rule 13d-3 of the General Rules and Regulations of the Act, provided that any pledgee of Company voting securities shall not be deemed to be the Beneficial Owner thereof prior to its disposition of, or acquisition of voting rights with respect to, such securities; (f) "Board" shall mean the Board of Directors of the Company; (g) "Cause" shall mean any of the following: (i) The engaging by the Executive in fraudulent conduct, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (ii) Conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (iii) Neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless significantly changed without the Executive's consent); or (iv) A significant violation by the Executive of the Company's established policies and procedures; Notwithstanding the foregoing, Cause shall not exist under Sections 1(g)(iii) and (iv) herein unless the Company furnishes written notice to the Executive of the specific offending conduct and the Executive fails to correct such offending conduct within the thirty (30) day period commencing on the receipt of such notice. (h) "Change of Control" shall mean a change in ownership or managerial control of the stock, assets or business of the Company resulting from one or more of the following circumstances: 3 (i) A change of control of the Company, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, or any successor regulation of similar import, regardless of whether the Company is subject to such reporting requirement; (ii) A change in ownership of the Company through a transaction or series of transactions, such that any Person or Persons (other than any current officer of the Company or member of the Board) is (are) or become(s), in the aggregate, the Beneficial Owner(s), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the Company's then outstanding securities; (iii) Any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company would be converted into cash (other than cash attributable to dissenters' rights), securities or other property provided by a Person or Persons other than the Company, other than a consolidation or merger of the Company in which the holders of the common stock of the Company immediately prior to the consolidation or merger have approximately the same proportionate ownership of common stock of the surviving corporation immediately after the consolidation or merger; (iv) The shareholders of the Company approve a sale, transfer, liquidation or other disposition of all or substantially all of the assets of the Company to a Person or Persons; (v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period; (vi) The filing of a proceeding under Chapter 7 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for liquidation with respect to the Company; or (vii) The filing of a proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for reorganization with respect to the Company if in connection with any such proceeding, this Agreement is rejected, or a plan of reorganization is approved an element of which plan entails the liquidation of all or substantially all the assets of the Company. A "Change of Control" shall be deemed to occur on the actual date on which any of the foregoing circumstances shall occur; provided, however, that in 4 connection with a "Change of Control" specified in Section 1(h)(vii), a "Change of Control" shall be deemed to occur on the date of the filing of the relevant proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import). (i) "Change of Control Period" shall mean the period commencing on the date a Change of Control occurs and ending on the second anniversary of such Change of Control; (j) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time; (k) "Disability" shall mean a physical or mental condition whereby the Executive is unable to perform on a full-time basis the customary duties of the Executive under this Agreement; (l) "Federal Short Term-Rate" shall mean the rate defined in Section 1274(d)(1)(C)(i) of the Code; (m) "Good Reason" shall mean: (i) The required relocation of the Executive, without the Executive's consent, to an employment location which is more than seventy-five (75) miles from the Executive's employment location on the day preceding the date of this Agreement; (ii) The removal of the Executive from or any failure to reelect the Executive to any of the positions held by the Executive as of the date of this Agreement or any other positions to which the Executive shall thereafter be elected or assigned except in the event that such removal or failure to reelect relates to the termination by the Company of the Executive's employment for Cause or by reason of death, Disability or voluntary retirement; (iii) A significant adverse change, without the Executive's written consent, in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities, or a material reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that which was provided to the Executive on the day preceding the date of this Agreement and that which is necessary to perform any additional duties assigned to the Executive following the date of this Agreement, which change or reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category; or (iv) Breach or violation of any material provision of this Agreement by the Company; (n) "Gross Income" shall mean the Executive's average targeted compensation (base salary plus cash bonus) for the prior two (2) taxable years, plus any other compensation payable to the Executive by the Company for the same period, whether taxable or non-taxable; (o) "Notice of Termination" shall mean the notice described in Section 14 herein; 5 (p) "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an employee benefit plan of the Company or an entity organized, appointed or established pursuant to the terms of any such benefit plan; (q) "Termination Date" shall mean, except as otherwise provided in Section 14 herein, (i) The Executive's date of death; (ii) Thirty (30) days after the delivery of the Notice of Termination terminating the Executive's employment on account of Disability pursuant to Section 9 herein, unless the Executive returns on a full-time basis to the performance of his or her duties prior to the expiration of such period; (iii) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Executive voluntarily; or (iv) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company for any reason other than death or Disability; (r) "Termination Payment" shall mean the payment described in Section 13 herein; (s) "Total Payments" shall mean the sum of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. 2. EMPLOYMENT. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein. 3. TERM. The employment of the Executive by the Company pursuant to the provisions of this Agreement shall commence on the date hereof and end on December 31, 2001, unless further extended or sooner terminated as hereinafter provided. On December 31, 2001, and on the last day of December each year thereafter, the term of the Executive's employment shall, unless sooner terminated as hereinafter provided, be automatically extended for an additional one year period from the date thereof unless, at least six (6) months before such December 31, the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive's employment hereunder will not be extended beyond its existing duration. 6 4. POSITIONS AND DUTIES. The Executive shall serve as Group Executive of the Company and in such additional capacities as set forth in Section 7 herein. In connection with the foregoing positions, the Executive shall have such duties, responsibilities and authority as may from time to time be assigned to the Executive by the Board. The Executive shall devote substantially all the Executive's working time and efforts to the business and affairs of the Company. 5. PLACE OF PERFORMANCE. In connection with the Executive's employment by the Company, the Executive shall be based at the principal executive offices of the Company in Salt Lake City, Utah except for required travel on Company business. 6. COMPENSATION AND RELATED MATTERS. (a) Salary. The Company shall pay to the Executive his annualized base salary (as in effect on the effective date of this Agreement and subject to adjustment as provided herein) in equal installments (as nearly as practicable), in accordance with the Company's standard payroll policy (as in effect from time to time), which currently provides for payments to be made every two weeks, in arrears. Such annualized base salary may be increased from time to time in accordance with normal business practices of the Company. The annualized base salary of the Executive shall not be decreased below its then existing amount during the term of this Agreement. (b) ESIP. The Executive shall be entitled to participate in the Evans & Sutherland Incentive Program. (c) SERP. The Executive shall be entitled to participate in the Company's Supplemental Executive Retirement Plan. (d) Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services hereunder, including all expenses for travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established from time to time by the Company. (e) Other Benefits. The Company shall provide Executive with all other benefits normally provided to an employee of the Company similarly situated to Executive, including being added as a named officer on the Company's existing directors' and officers' liability insurance policy. (f) Vacations. The Executive shall be entitled to the number of vacation days in each calendar year, and to compensation in respect of earned but unused vacation days, determined in accordance with the Company's vacation plan, but in no event less than fifteen (15) days. The Executive shall also be entitled to all paid holidays given by the Company to its executives. (g) Services Furnished. The Company shall furnish the Executive with office space, and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of the Executive's duties as set forth in Section 4 hereof. 7 7. OFFICES. The Executive agrees to serve without additional compensation, if elected or appointed thereto, in one or more executive offices of the Company, or any affiliate or subsidiary of the Company, or as a member of the board of directors of any subsidiary or affiliate of the Company; provided, however, that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided in the Company's bylaws, or otherwise. 8. TERMINATION AS A RESULT OF DEATH. If the Executive shall die during the term of this Agreement, the Executive's employment shall terminate on the Executive's date of death and the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse, shall be entitled to the Executive's Accrued Benefits as of the Termination Date and any applicable Termination Payment. 9. TERMINATION FOR DISABILITY. If, as a result of the Executive's Disability, the Executive shall have been unable to perform the Executive's duties hereunder on a full-time basis for four (4) consecutive months and within thirty (30) days after the Company provides the Executive with a Termination Notice, the Executive shall not have returned to the performance of the Executive's duties on a full-time basis, the Company may terminate the Executive's employment, subject to Section 14 herein. During the term of the Executive's Disability prior to termination, the Executive shall continue to receive all salary and benefits payable under Section 6 herein, including participation in all employee benefit plans, programs and arrangements in which the Executive was entitled to participate immediately prior to the Disability; provided, however, that the Executive's continued participation is permitted under the terms and provisions of such plans, programs and arrangements. In the event that the Executive's participation in any such plan, program or arrangement is barred as the result of such Disability, the Executive shall be entitled to receive an amount equal to the contributions, payments, credits or allocations which would have been paid by the Company to the Executive, to the Executive's account or on the Executive's behalf under such plans, programs and arrangements. In the event the Executive's employment is terminated on account of the Executive's Disability in accordance with this Section 9, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall remain eligible for all benefits provided by any long-term disability programs of the Company in effect at the time of such termination. The Executive shall also be entitled to the Termination Payment described in Section 13(a). 10. TERMINATION FOR CAUSE. If the Executive's employment with the Company is terminated by the Company for Cause, subject to the procedures set forth in Section 14 herein, the Executive shall be entitled to receive the Executive's Accrued Benefits as of the Termination Date. The Executive shall not be entitled to receipt of any Termination Payment. 11. OTHER TERMINATION BY COMPANY. If the Executive's employment with the Company is terminated by the Company other than by reason of death, Disability or Cause, or as described in paragraph 13(g) below, subject to the procedures set forth in Section 14 herein, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable 8 Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 11, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 12. VOLUNTARY TERMINATION BY EXECUTIVE. Provided that the Executive furnishes thirty (30) days prior written notice to the Company, the Executive shall have the right to voluntarily terminate this Agreement at any time. If the Executive's voluntary termination is without Good Reason, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall not be entitled to any Termination Payment. If the Executive's voluntary termination (other than a termination described in paragraph 13(g) below) is for Good Reason, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 12, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 13. TERMINATION PAYMENT. (a) If the Executive's employment is terminated as a result of death or disability, the lump sum Termination Payment payable to the Executive shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (b) If the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, disability or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (c) If, during a Change of Control Period, the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, Disability, or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be two (2.0) times the Executive's Gross Income for the year preceding the Termination Date. (d) It is the intention of the Company and the Executive that no portion of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive under this Agreement, or under any other agreement, plan or arrangement, be deemed to be an "excess parachute payment" as defined in Section 280G of the Code. It is agreed that the present value of the Total Payments shall not exceed an amount equal to two and ninety-nine hundredths (2.99) times the Executive's Base Period Income, which is the maximum amount which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code. Present value for purposes of this Agreement shall be calculated in accordance with the regulations issued under Section 280G of the Code. Within sixty (60) days following delivery of the Notice of Termination or notice by the 9 Company to the Executive of its belief that there is a payment or benefit due the Executive which will result in an excess parachute payment as defined in Section 280G of the Code, the Executive and the Company shall, at the Company's expense, obtain such opinions as more fully described hereafter, which need not be unqualified, of legal counsel and certified public accountants or a firm of recognized executive compensation consultants. The Executive shall select said legal counsel, certified public accountants and executive compensation consultants; provided, however, that if the Company does not accept one (1) or more of the parties selected by the Executive, the Company shall provide the Executive with the names of such legal counsel, certified public accountants and/or executive compensation consultants as the Company may select; provided, further, however, that if the Executive does not accept the party or parties selected by the Company, the legal counsel, certified public accountants and/or executive compensation consultants selected by the Executive and the Company, respectively, shall select the legal counsel, certified public accountants and/or executive compensation consultants, whichever is applicable, who shall provide the opinions required by this Section 13(e). The opinions required hereunder shall set forth (a) the amount of the Base Period Income of the Executive, (b) the present value of Total Payments and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the Termination Payment or any other payment determined by such counsel to be includable in Total Payments shall be reduced or eliminated as specified by the Executive in writing delivered to the Company within thirty (30) days of his or her receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no excess parachute payment. The provisions of this Section 13(e), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation and other benefits, including but not limited to the Accrued Benefits, earned on or after the date of Change of Control by the Executive pursuant to the Company's compensation programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable compensation for services rendered prior to the Change of Control; provided, however, that in the event legal counsel so requests in connection with the opinion required by this Section 13(e), a firm of recognized executive compensation consultants, selected by the Executive and the Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered prior to the Change of Control by the Executive. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 13(e) shall be of no further force or effect. (f) The Termination Payment shall be payable in a lump sum not later than ten (10) days following the Executive's Termination Date. Such lump sum payment shall not be reduced by any present value or similar factor. Further, the Executive shall not be required to mitigate the amount of such payment by securing other employment or otherwise and such payment shall not be reduced by reason of the Executive securing other employment or for any other reason. 10 (g) Notwithstanding anything to the contrary herein, in no event will a termination of Executive's employment with the Company be deemed to trigger a right to receive a Termination Payment if the termination is effected by the mutual agreement of the Company and Executive to accommodate a reassignment of Executive to an entity created or acquired by the Company, or to which the Company has contributed rights to technology, assets or business plans, if at the time of such termination the Company owns or is acquiring a minimum of a 19% equity interest in such entity. In the event of any such termination, the Executive shall only be entitled to receive the Executive's Accrued Benefits as of the Termination Date. 14. TERMINATION NOTICE AND PROCEDURE. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, if such Notice of Termination is delivered by the Executive, all in accordance with the following procedures: (a) The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination; (b) Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office; (c) If the Executive shall in good faith furnish a Notice of Termination for Good Reason and the Company notifies the Executive that a dispute exists concerning the termination, within the fifteen (15) day period following the Company's receipt of such notice, the Executive shall continue the Executive's employment during such dispute. If it is thereafter determined that (i) Good Reason did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or pursuant to Section 19, (B) the date of the Executive's death or (C) one day prior to the second (2nd) anniversary of a Change of Control, and the Executive's Termination Payment, if applicable, shall reflect events occurring after the Executive delivered the Executive's Notice of Termination; or (ii) Good Reason did not exist, the employment of the Executive shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason; and (d) If the Executive gives notice to terminate his or her employment for Good Reason and a dispute arises as to the validity of such dispute, and the Executive does not continue his employment during such dispute, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by the Executive, the Executive shall be deemed to have voluntarily terminated the Executive's employment other than for Good Reason. 15. NONDISCLOSURE OF PROPRIETARY INFORMATION. Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes, the manufacturing of products or performance of services, which involve experimental 11 and inventive work and that the success of its business depends upon the protection of the processes, products and services by patent, copyright or by secrecy and that the Executive has had, or during the course of his engagement may have, access to Proprietary Information, as hereinafter defined, of the Company or other information and data of a secret or proprietary nature of the Company which the Company wishes to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees that: (a) "Proprietary Information" shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive's engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors; (b) The Executive acknowledges that the Company has exclusive property rights to all Proprietary Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary Information to the Company. Except as required in the performance of his duties to the Company, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling; (c) All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or compiled by the Executive at any time or made available to him or her prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him or her in trust solely for the benefit of the Company, and shall be delivered to the Company by him or her on the termination of his or her engagement or at any other time on the request of the Company; and (d) The Executive will not assert any rights under any inventions, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him or her prior to his or her being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary Information. 12 16. ASSIGNMENT OF INVENTIONS. (a) For purposes of this Section 16, the term "Inventions" shall mean discoveries, concepts, and ideas, whether patentable or copyrightable or not, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement or with the use of the Company's facilities, materials or personnel), either solely or jointly with others during his or her engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement. All Inventions shall be the sole property of the Company, and Executive agrees to perform the provisions of this Section 16 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an employee or consultant. (b) The Executive shall maintain written notebooks in which he or she shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company's behalf. The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his or her engagement or, upon request of the Company, at any time prior thereto. (c) The Executive shall apply, at the Company's request and expense, for United States and foreign letters patent or copyrights either in the Executive's name or otherwise as the Company shall desire. (d) The Executive hereby assigns to the Company all of his or her rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions. (e) The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive's inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company or its nominee. The Executive acknowledges and agrees that any copyright developed or conceived of by the Executive during the term of Executive's employment which is related to the business of the Company shall be a "work for hire" under the copyright law of the United States and other applicable jurisdictions. (f) The Executive represents that his or her performance of all the terms of this Agreement and as an employee of or consultant to the Company does not and will not breach any trust prior to his or her employment by the Company. The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents 13 and agrees that he or she has not brought and will not bring with him to the Company or use in the performance of his or her responsibilities at the Company any materials or documents of a former employer which are not generally available to the public, unless he or she has obtained written authorization from the former employer for their possession and use, a copy of which has been provided to the Company. (g) No provisions of this Section shall be deemed to limit the restrictions applicable to the Executive under Section 15. (h) No provisions of this Section shall be deemed or construed to require the Executive to assign to the Company any rights or intellectual property with respect to any invention which (i) is created by the Executive entirely on his own time, (ii) does not constitute an "employment invention" as defined in the Utah Employment Inventions Act, and (iii) is not exempted from the application f the Utah Employment Inventions Act. 17. SHOP RIGHTS. The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined in Section 16 but which are conceived or made by the Executive during the period he or she is engaged by the Company or with the use or assistance of the Company's facilities, materials or personnel. 18. NON-COMPETE. The Executive hereby agrees that during the term of this Agreement and for the period of one year from the termination hereof, that the Executive will not: (a) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, own, manage, operate or control any business of the type and character engaged in and competitive with the Company or any subsidiary thereof. For purposes of this Section, ownership of securities of not in excess of five percent (5%) of any class of securities of a public company shall not be considered to be competition with the Company or any subsidiary thereof; or (b) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, act as, or become employed as, an officer, director, employee, consultant or agent of any business of the type and character engaged in and competitive with the Company or any of its subsidiaries; or (c) Solicit any similar business to that of the Company's for, or sell any products that are in competition with the Company's products to, any company in the United States, which is, as of the date hereof, a customer or client of the Company or any of its subsidiaries, or was such a customer or client thereof within two years prior to the date of this Agreement; or (d) Solicit the employment of any full time employee employed by the Company or its subsidiaries as of the date of termination of this Agreement. 14 19. REMEDIES AND JURISDICTION. (a) The Executive hereby acknowledges and agrees that a breach of the agreements contained in this Agreement will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of the agreements set forth in this Agreement will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company shall be entitled to injunctive relief for any breach or threatened breach of the agreements contained in this Agreement. (b) All claims, disputes and other matters in question between the parties arising under this Agreement, shall, unless otherwise provided herein, be decided by arbitration in Salt Lake City, Utah, in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association (including such procedures governing selection of the specific arbitrator or arbitrators), unless the parties mutually agree otherwise. The Company shall pay the costs of any such arbitration. The award by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any state or Federal court having jurisdiction thereof. 20. ATTORNEYS' FEES. In the event that either party hereunder institutes any legal proceedings in connection with its rights or obligations under this Agreement, the prevailing party in such proceeding shall be entitled to recover from the other party, all costs incurred in connection with such proceeding, including reasonable attorneys' fees, together with interest thereon from the date of demand at the rate of twelve percent (12%) per annum. 21. SUCCESSORS. This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the business and assets of the Company shall be transferred whether by merger, consolidation, transfer or sale. 22. ENFORCEMENT. The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby. 23. AMENDMENT OR TERMINATION. This Agreement may not be amended or terminated during its term, except by written instrument executed by the Company and the Executive. 15 24. SURVIVABILITY. The provisions of Sections 15, 16, 17, 18, 19, and 20 shall survive termination of this Agreement. 25. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written agreements, negotiations, commitments and understandings with respect thereto. 26. VENUE; GOVERNING LAW. This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Utah without giving effect to the provisions, principles, or policies thereof relating to choice or conflicts of laws. 27. NOTICE. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received, and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to: Company: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Attn: Fax: (801) 588-4500 Executive: David Figgins 600 Komas Drive Salt Lake City, Utah 84108 Fax: (801) 588-4500 or to such other address as the Company shall have given to the Executive or, if to the Executive, to such address as the Executive shall have given to the Company. 28. NO WAIVER. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 29. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. 30. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 16 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written. "COMPANY" EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation By:/s/ James R. Oyler --------------------------------- James R. Oyler, President and CEO "EXECUTIVE" /s/ David Figgins --------------------------------- David Figgins EX-10.9 10 0010.txt EMPLOYMENT AGREEMENT WITH GEORGE K. SAUL EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into effective as of the 16th day of May, 2000, by and between EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation (the "Company") and GEORGE SAUL (the "Executive"). W I T N E S S E T H: WHEREAS, the Executive has been providing services to the Company in an executive capacity and desires to continue to provide such services; WHEREAS, the Company desires to have the benefit of the Executive's efforts and services; and WHEREAS, the Company has determined that it is appropriate and in the best interests of the Company to provide to the Executive protection in the event of certain terminations of the Executive's employment relationship with the Company in accordance with the terms and conditions contained herein and the Executive desires to have such protection. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby mutually covenant and agree as follows: 1. DEFINITIONS. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Accrued Benefits" shall mean the amount payable not later than ten (10) days following an applicable Termination Date and which shall be equal to the sum of the following amounts: (i) All salary earned or accrued through the Termination Date; (ii) Reimbursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; (iii) Any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect; (iv) The full amount of any stated bonus payable to the Executive in accordance with Sections 6(b)-(c) herein with respect to the year in which termination occurs; and (v) All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company. (b) "Act" shall mean the Securities Exchange Act of 1934; (c) "Affiliate" shall have the same meaning as given to that term in Rule 12b-2 of Regulation 12B promulgated under the Act; (d) "Base Period Income" shall be an amount equal to the Executive's "annualized includable compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder; (e) "Beneficial Owner" shall have the same meaning as given to that term in Rule 13d-3 of the General Rules and Regulations of the Act, provided that any pledgee of Company voting securities shall not be deemed to be the Beneficial Owner thereof prior to its disposition of, or acquisition of voting rights with respect to, such securities; (f) "Board" shall mean the Board of Directors of the Company; (g) "Cause" shall mean any of the following: ----- (i) The engaging by the Executive in fraudulent conduct, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (ii) Conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (iii) Neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless significantly changed without the Executive's consent); or (iv) A significant violation by the Executive of the Company's established policies and procedures; Notwithstanding the foregoing, Cause shall not exist under Sections 1(g)(iii) and (iv) herein unless the Company furnishes written notice to the Executive of the specific offending conduct and the Executive fails to correct such offending conduct within the thirty (30) day period commencing on the receipt of such notice. 2 (h) "Change of Control" shall mean a change in ownership or managerial control of the stock, assets or business of the Company resulting from one or more of the following circumstances: (i) A change of control of the Company, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, or any successor regulation of similar import, regardless of whether the Company is subject to such reporting requirement; (ii) A change in ownership of the Company through a transaction or series of transactions, such that any Person or Persons (other than any current officer of the Company or member of the Board) is (are) or become(s), in the aggregate, the Beneficial Owner(s), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the Company's then outstanding securities; (iii) Any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company would be converted into cash (other than cash attributable to dissenters' rights), securities or other property provided by a Person or Persons other than the Company, other than a consolidation or merger of the Company in which the holders of the common stock of the Company immediately prior to the consolidation or merger have approximately the same proportionate ownership of common stock of the surviving corporation immediately after the consolidation or merger; (iv) The shareholders of the Company approve a sale, transfer, liquidation or other disposition of all or substantially all of the assets of the Company to a Person or Persons; (v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period; (vi) The filing of a proceeding under Chapter 7 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for liquidation with respect to the Company; or (vii) The filing of a proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for reorganization with respect to the Company if in connection with any such proceeding, this Agreement is rejected, or a plan of reorganization is approved an element of which plan entails the liquidation of all or substantially all the assets of the Company. 3 A "Change of Control" shall be deemed to occur on the actual date on which any of the foregoing circumstances shall occur; provided, however, that in connection with a "Change of Control" specified in Section 1(h)(vii), a "Change of Control" shall be deemed to occur on the date of the filing of the relevant proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import). (i) "Change of Control Period" shall mean the period commencing on the date a Change of Control occurs and ending on the second anniversary of such Change of Control; (j) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time; (k) "Disability" shall mean a physical or mental condition whereby the Executive is unable to perform on a full-time basis the customary duties of the Executive under this Agreement; (l) "Federal Short Term-Rate" shall mean the rate defined in Section 1274(d)(1)(C)(i) of the Code; (m) "Good Reason" shall mean: (i) The required relocation of the Executive, without the Executive's consent, to an employment location which is more than seventy-five (75) miles from the Executive's employment location on the day preceding the date of this Agreement; (ii) The removal of the Executive from or any failure to reelect the Executive to any of the positions held by the Executive as of the date of this Agreement or any other positions to which the Executive shall thereafter be elected or assigned except in the event that such removal or failure to reelect relates to the termination by the Company of the Executive's employment for Cause or by reason of death, Disability or voluntary retirement; (iii) A significant adverse change, without the Executive's written consent, in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities, or a material reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that which was provided to the Executive on the day preceding the date of this Agreement and that which is necessary to perform any additional duties assigned to the Executive following the date of this Agreement, which change or reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category; or (iv) Breach or violation of any material provision of this Agreement by the Company; 4 (n) "Gross Income" shall mean the Executive's average targeted compensation (base salary plus cash bonus) for the prior two (2) taxable years, plus any other compensation payable to the Executive by the Company for the same period, whether taxable or non-taxable; (o) "Notice of Termination" shall mean the notice described in Section 14 herein; (p) "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an employee benefit plan of the Company or an entity organized, appointed or established pursuant to the terms of any such benefit plan; (q) "Termination Date" shall mean, except as otherwise provided in Section 14 herein, (i) The Executive's date of death; (ii) Thirty (30) days after the delivery of the Notice of Termination terminating the Executive's employment on account of Disability pursuant to Section 9 herein, unless the Executive returns on a full-time basis to the performance of his or her duties prior to the expiration of such period; (iii) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Executive voluntarily; or (iv) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company for any reason other than death or Disability; (r) "Termination Payment" shall mean the payment described in Section 13 herein; (s) "Total Payments" shall mean the sum of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. 2. EMPLOYMENT. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein. 5 3. TERM. The employment of the Executive by the Company pursuant to the provisions of this Agreement shall commence on the date hereof and end on December 31, 2001, unless further extended or sooner terminated as hereinafter provided. On December 31, 2001, and on the last day of December each year thereafter, the term of the Executive's employment shall, unless sooner terminated as hereinafter provided, be automatically extended for an additional one year period from the date thereof unless, at least six (6) months before such December 31, the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive's employment hereunder will not be extended beyond its existing duration. 4. POSITIONS AND DUTIES. The Executive shall serve as Group Executive of the Company and in such additional capacities as set forth in Section 7 herein. In connection with the foregoing positions, the Executive shall have such duties, responsibilities and authority as may from time to time be assigned to the Executive by the Board. The Executive shall devote substantially all the Executive's working time and efforts to the business and affairs of the Company. 5. PLACE OF PERFORMANCE. In connection with the Executive's employment by the Company, the Executive shall be based at the principal executive offices of the Company in Salt Lake City, Utah except for required travel on Company business. 6. COMPENSATION AND RELATED MATTERS. (a) Salary. The Company shall pay to the Executive his annualized base salary (as in effect on the effective date of this Agreement and subject to adjustment as provided herein) in equal installments (as nearly as practicable), in accordance with the Company's standard payroll policy (as in effect from time to time), which currently provides for payments to be made every two weeks, in arrears. Such annualized base salary may be increased from time to time in accordance with normal business practices of the Company. The annualized base salary of the Executive shall not be decreased below its then existing amount during the term of this Agreement. (b) ESIP. The Executive shall be entitled to participate in the Evans & Sutherland Incentive Program. (c) SERP. The Executive shall be entitled to participate in the Company's Supplemental Executive Retirement Plan. (d) Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services hereunder, including all expenses for travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established from time to time by the Company. 6 (e) Other Benefits. The Company shall provide Executive with all other benefits normally provided to an employee of the Company similarly situated to Executive, including being added as a named officer on the Company's existing directors' and officers' liability insurance policy. (f) Vacations. The Executive shall be entitled to the number of vacation days in each calendar year, and to compensation in respect of earned but unused vacation days, determined in accordance with the Company's vacation plan, but in no event less than fifteen (15) days. The Executive shall also be entitled to all paid holidays given by the Company to its executives. (g) Services Furnished. The Company shall furnish the Executive with office space, and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of the Executive's duties as set forth in Section 4 hereof. 7. OFFICES. The Executive agrees to serve without additional compensation, if elected or appointed thereto, in one or more executive offices of the Company, or any affiliate or subsidiary of the Company, or as a member of the board of directors of any subsidiary or affiliate of the Company; provided, however, that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided in the Company's bylaws, or otherwise. 8. TERMINATION AS A RESULT OF DEATH. If the Executive shall die during the term of this Agreement, the Executive's employment shall terminate on the Executive's date of death and the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse, shall be entitled to the Executive's Accrued Benefits as of the Termination Date and any applicable Termination Payment. 9. TERMINATION FOR DISABILITY. If, as a result of the Executive's Disability, the Executive shall have been unable to perform the Executive's duties hereunder on a full-time basis for four (4) consecutive months and within thirty (30) days after the Company provides the Executive with a Termination Notice, the Executive shall not have returned to the performance of the Executive's duties on a full-time basis, the Company may terminate the Executive's employment, subject to Section 14 herein. During the term of the Executive's Disability prior to termination, the Executive shall continue to receive all salary and benefits payable under Section 6 herein, including participation in all employee benefit plans, programs and arrangements in which the Executive was entitled to participate immediately prior to the Disability; provided, however, that the Executive's continued participation is permitted under the terms and provisions of such plans, programs and arrangements. In the event that the Executive's participation in any such plan, program or arrangement is barred as the result of such Disability, the Executive shall be entitled to receive an amount equal to the contributions, payments, credits or allocations which would have been paid by the Company to the Executive, to the Executive's account or on the 7 Executive's behalf under such plans, programs and arrangements. In the event the Executive's employment is terminated on account of the Executive's Disability in accordance with this Section 9, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall remain eligible for all benefits provided by any long-term disability programs of the Company in effect at the time of such termination. The Executive shall also be entitled to the Termination Payment described in Section 13(a). 10. TERMINATION FOR CAUSE. If the Executive's employment with the Company is terminated by the Company for Cause, subject to the procedures set forth in Section 14 herein, the Executive shall be entitled to receive the Executive's Accrued Benefits as of the Termination Date. The Executive shall not be entitled to receipt of any Termination Payment. 11. OTHER TERMINATION BY COMPANY. If the Executive's employment with the Company is terminated by the Company other than by reason of death, Disability or Cause, or as described in paragraph 13(g) below, subject to the procedures set forth in Section 14 herein, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 11, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 12. VOLUNTARY TERMINATION BY EXECUTIVE. Provided that the Executive furnishes thirty (30) days prior written notice to the Company, the Executive shall have the right to voluntarily terminate this Agreement at any time. If the Executive's voluntary termination is without Good Reason, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall not be entitled to any Termination Payment. If the Executive's voluntary termination (other than a termination described in paragraph 13(g) below) is for Good Reason, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 12, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 13. TERMINATION PAYMENT. (a) If the Executive's employment is terminated as a result of death or disability, the lump sum Termination Payment payable to the Executive shall be equal to the Executive's Gross Income for the year preceding the Termination Date. 8 (b) If the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, disability or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (c) If, during a Change of Control Period, the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, Disability, or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be two (2.0) times the Executive's Gross Income for the year preceding the Termination Date. (d) It is the intention of the Company and the Executive that no portion of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive under this Agreement, or under any other agreement, plan or arrangement, be deemed to be an "excess parachute payment" as defined in Section 280G of the Code. It is agreed that the present value of the Total Payments shall not exceed an amount equal to two and ninety-nine hundredths (2.99) times the Executive's Base Period Income, which is the maximum amount which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code. Present value for purposes of this Agreement shall be calculated in accordance with the regulations issued under Section 280G of the Code. Within sixty (60) days following delivery of the Notice of Termination or notice by the Company to the Executive of its belief that there is a payment or benefit due the Executive which will result in an excess parachute payment as defined in Section 280G of the Code, the Executive and the Company shall, at the Company's expense, obtain such opinions as more fully described hereafter, which need not be unqualified, of legal counsel and certified public accountants or a firm of recognized executive compensation consultants. The Executive shall select said legal counsel, certified public accountants and executive compensation consultants; provided, however, that if the Company does not accept one (1) or more of the parties selected by the Executive, the Company shall provide the Executive with the names of such legal counsel, certified public accountants and/or executive compensation consultants as the Company may select; provided, further, however, that if the Executive does not accept the party or parties selected by the Company, the legal counsel, certified public accountants and/or executive compensation consultants selected by the Executive and the Company, respectively, shall select the legal counsel, certified public accountants and/or executive compensation consultants, whichever is applicable, who shall provide the opinions required by this Section 13(e). The opinions required hereunder shall set forth (a) the amount of the Base Period Income of the Executive, (b) the present value of Total Payments and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the Termination Payment or any other payment determined by such counsel to be includable in Total Payments shall be reduced or eliminated as specified by the Executive in writing delivered to the Company within thirty (30) days of his or her receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no excess parachute payment. The provisions of this Section 13(e), including the calculations, notices 9 and opinions provided for herein shall be based upon the conclusive presumption that the compensation and other benefits, including but not limited to the Accrued Benefits, earned on or after the date of Change of Control by the Executive pursuant to the Company's compensation programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable compensation for services rendered prior to the Change of Control; provided, however, that in the event legal counsel so requests in connection with the opinion required by this Section 13(e), a firm of recognized executive compensation consultants, selected by the Executive and the Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered prior to the Change of Control by the Executive. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 13(e) shall be of no further force or effect. (f) The Termination Payment shall be payable in a lump sum not later than ten (10) days following the Executive's Termination Date. Such lump sum payment shall not be reduced by any present value or similar factor. Further, the Executive shall not be required to mitigate the amount of such payment by securing other employment or otherwise and such payment shall not be reduced by reason of the Executive securing other employment or for any other reason. (g) Notwithstanding anything to the contrary herein, in no event will a termination of Executive's employment with the Company be deemed to trigger a right to receive a Termination Payment if the termination is effected by the mutual agreement of the Company and Executive to accommodate a reassignment of Executive to an entity created or acquired by the Company, or to which the Company has contributed rights to technology, assets or business plans, if at the time of such termination the Company owns or is acquiring a minimum of a 19% equity interest in such entity. In the event of any such termination, the Executive shall only be entitled to receive the Executive's Accrued Benefits as of the Termination Date. 14. TERMINATION NOTICE AND PROCEDURE. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, if such Notice of Termination is delivered by the Executive, all in accordance with the following procedures: (a) The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination; 10 (b) Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office; (c) If the Executive shall in good faith furnish a Notice of Termination for Good Reason and the Company notifies the Executive that a dispute exists concerning the termination, within the fifteen (15) day period following the Company's receipt of such notice, the Executive shall continue the Executive's employment during such dispute. If it is thereafter determined that (i) Good Reason did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or pursuant to Section 19, (B) the date of the Executive's death or (C) one day prior to the second (2nd) anniversary of a Change of Control, and the Executive's Termination Payment, if applicable, shall reflect events occurring after the Executive delivered the Executive's Notice of Termination; or (ii) Good Reason did not exist, the employment of the Executive shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason; and (d) If the Executive gives notice to terminate his or her employment for Good Reason and a dispute arises as to the validity of such dispute, and the Executive does not continue his employment during such dispute, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by the Executive, the Executive shall be deemed to have voluntarily terminated the Executive's employment other than for Good Reason. 15. NONDISCLOSURE OF PROPRIETARY INFORMATION. Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes, the manufacturing of products or performance of services, which involve experimental and inventive work and that the success of its business depends upon the protection of the processes, products and services by patent, copyright or by secrecy and that the Executive has had, or during the course of his engagement may have, access to Proprietary Information, as hereinafter defined, of the Company or other information and data of a secret or proprietary nature of the Company which the Company wishes to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees that: (a) "Proprietary Information" shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive's engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors; 11 (b) The Executive acknowledges that the Company has exclusive property rights to all Proprietary Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary Information to the Company. Except as required in the performance of his duties to the Company, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling; (c) All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or compiled by the Executive at any time or made available to him or her prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him or her in trust solely for the benefit of the Company, and shall be delivered to the Company by him or her on the termination of his or her engagement or at any other time on the request of the Company; and (d) The Executive will not assert any rights under any inventions, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him or her prior to his or her being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary Information. 16. ASSIGNMENT OF INVENTIONS. (a) For purposes of this Section 16, the term "Inventions" shall mean discoveries, concepts, and ideas, whether patentable or copyrightable or not, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement or with the use of the Company's facilities, materials or personnel), either solely or jointly with others during his or her engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement. All Inventions shall be the sole property of the Company, and Executive agrees to perform the provisions of this Section 16 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an employee or consultant. 12 (b) The Executive shall maintain written notebooks in which he or she shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company's behalf. The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his or her engagement or, upon request of the Company, at any time prior thereto. (c) The Executive shall apply, at the Company's request and expense, for United States and foreign letters patent or copyrights either in the Executive's name or otherwise as the Company shall desire. (d) The Executive hereby assigns to the Company all of his or her rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions. (e) The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive's inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company or its nominee. The Executive acknowledges and agrees that any copyright developed or conceived of by the Executive during the term of Executive's employment which is related to the business of the Company shall be a "work for hire" under the copyright law of the United States and other applicable jurisdictions. (f) The Executive represents that his or her performance of all the terms of this Agreement and as an employee of or consultant to the Company does not and will not breach any trust prior to his or her employment by the Company. The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents and agrees that he or she has not brought and will not bring with him to the Company or use in the performance of his or her responsibilities at the Company any materials or documents of a former employer which are not generally available to the public, unless he or she has obtained written authorization from the former employer for their possession and use, a copy of which has been provided to the Company. (g) No provisions of this Section shall be deemed to limit the restrictions applicable to the Executive under Section 15. (h) No provisions of this Section shall be deemed or construed to require the Executive to assign to the Company any rights or intellectual property with respect to any invention which (i) is created by the Executive entirely on his own time, (ii) does not constitute an "employment invention" as defined in the Utah Employment Inventions Act, and (iii) is not exempted from the application f the Utah Employment Inventions Act. 13 17. SHOP RIGHTS. The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined in Section 16 but which are conceived or made by the Executive during the period he or she is engaged by the Company or with the use or assistance of the Company's facilities, materials or personnel. 18. NON-COMPETE. The Executive hereby agrees that during the term of this Agreement and for the period of one year from the termination hereof, that the Executive will not: (a) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, own, manage, operate or control any business of the type and character engaged in and competitive with the Company or any subsidiary thereof. For purposes of this Section, ownership of securities of not in excess of five percent (5%) of any class of securities of a public company shall not be considered to be competition with the Company or any subsidiary thereof; or (b) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, act as, or become employed as, an officer, director, employee, consultant or agent of any business of the type and character engaged in and competitive with the Company or any of its subsidiaries; or (c) Solicit any similar business to that of the Company's for, or sell any products that are in competition with the Company's products to, any company in the United States, which is, as of the date hereof, a customer or client of the Company or any of its subsidiaries, or was such a customer or client thereof within two years prior to the date of this Agreement; or (d) Solicit the employment of any full time employee employed by the Company or its subsidiaries as of the date of termination of this Agreement. 19. REMEDIES AND JURISDICTION. (a) The Executive hereby acknowledges and agrees that a breach of the agreements contained in this Agreement will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of the agreements set forth in this Agreement will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company shall be entitled to injunctive relief for any breach or threatened breach of the agreements contained in this Agreement. 14 (b) All claims, disputes and other matters in question between the parties arising under this Agreement, shall, unless otherwise provided herein, be decided by arbitration in Salt Lake City, Utah, in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association (including such procedures governing selection of the specific arbitrator or arbitrators), unless the parties mutually agree otherwise. The Company shall pay the costs of any such arbitration. The award by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any state or Federal court having jurisdiction thereof. 20. ATTORNEYS' FEES. In the event that either party hereunder institutes any legal proceedings in connection with its rights or obligations under this Agreement, the prevailing party in such proceeding shall be entitled to recover from the other party, all costs incurred in connection with such proceeding, including reasonable attorneys' fees, together with interest thereon from the date of demand at the rate of twelve percent (12%) per annum. 21. SUCCESSORS. This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the business and assets of the Company shall be transferred whether by merger, consolidation, transfer or sale. 22. ENFORCEMENT. The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby. 23. AMENDMENT OR TERMINATION. This Agreement may not be amended or terminated during its term, except by written instrument executed by the Company and the Executive. 24. SURVIVABILITY. The provisions of Sections 15, 16, 17, 18, 19, and 20 shall survive termination of this Agreement. 15 25. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written agreements, negotiations, commitments and understandings with respect thereto. 26. VENUE; GOVERNING LAW. This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Utah without giving effect to the provisions, principles, or policies thereof relating to choice or conflicts of laws. 27. NOTICE. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received, and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to: Company: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Attn: Fax: (801) 588-4500 Executive: George Saul 600 Komas Drive Salt Lake City, Utah 84108 Fax: (801) 588-4500 or to such other address as the Company shall have given to the Executive or, if to the Executive, to such address as the Executive shall have given to the Company. 28. NO WAIVER. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 29. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. 30. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 16 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written. "COMPANY" EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation By:/s/ James R. Oyler --------------------------------- James R. Oyler, President and CEO "EXECUTIVE" /s/ George Saul --------------------------------- George Saul 17 EX-10.10 11 0011.txt EMPLOYMENT AGREEMENT WITH ROBERT H. ARD EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into effective as of the 16th day of May, 2000, by and between EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation (the "Company") and ROBERT ARD (the "Executive"). W I T N E S S E T H: WHEREAS, the Executive has been providing services to the Company in an executive capacity and desires to continue to provide such services; WHEREAS, the Company desires to have the benefit of the Executive's efforts and services; and WHEREAS, the Company has determined that it is appropriate and in the best interests of the Company to provide to the Executive protection in the event of certain terminations of the Executive's employment relationship with the Company in accordance with the terms and conditions contained herein and the Executive desires to have such protection. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby mutually covenant and agree as follows: 1. DEFINITIONS. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Accrued Benefits" shall mean the amount payable not later than ten (10) days following an applicable Termination Date and which shall be equal to the sum of the following amounts: (i) All salary earned or accrued through the Termination Date; (ii) Reimbursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; (iii) Any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect; (iv) The full amount of any stated bonus payable to the Executive in accordance with Sections 6(b)-(c) herein with respect to the year in which termination occurs; and (v) All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company. (b) "Act" shall mean the Securities Exchange Act of 1934; (c) "Affiliate" shall have the same meaning as given to that term in Rule 12b-2 of Regulation 12B promulgated under the Act; (d) "Base Period Income" shall be an amount equal to the Executive's "annualized includable compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder; (e) "Beneficial Owner" shall have the same meaning as given to that term in Rule 13d-3 of the General Rules and Regulations of the Act, provided that any pledgee of Company voting securities shall not be deemed to be the Beneficial Owner thereof prior to its disposition of, or acquisition of voting rights with respect to, such securities; (f) "Board" shall mean the Board of Directors of the Company; (g) "Cause" shall mean any of the following: (i) The engaging by the Executive in fraudulent conduct, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (ii) Conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (iii) Neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless significantly changed without the Executive's consent); or (iv) A significant violation by the Executive of the Company's established policies and procedures; Notwithstanding the foregoing, Cause shall not exist under Sections 1(g)(iii) and (iv) herein unless the Company furnishes written notice to the Executive of the specific offending conduct and the Executive fails to correct such offending conduct within the thirty (30) day period commencing on the receipt of such notice. 2 (h) "Change of Control" shall mean a change in ownership or managerial control of the stock, assets or business of the Company resulting from one or more of the following circumstances: (i) A change of control of the Company, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, or any successor regulation of similar import, regardless of whether the Company is subject to such reporting requirement; (ii) A change in ownership of the Company through a transaction or series of transactions, such that any Person or Persons (other than any current officer of the Company or member of the Board) is (are) or become(s), in the aggregate, the Beneficial Owner(s), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the Company's then outstanding securities; (iii) Any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company would be converted into cash (other than cash attributable to dissenters' rights), securities or other property provided by a Person or Persons other than the Company, other than a consolidation or merger of the Company in which the holders of the common stock of the Company immediately prior to the consolidation or merger have approximately the same proportionate ownership of common stock of the surviving corporation immediately after the consolidation or merger; (iv) The shareholders of the Company approve a sale, transfer, liquidation or other disposition of all or substantially all of the assets of the Company to a Person or Persons; (v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period; (vi) The filing of a proceeding under Chapter 7 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for liquidation with respect to the Company; or (vii) The filing of a proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for reorganization with respect to the Company if in connection with any such proceeding, this Agreement is rejected, or a plan of reorganization is approved an element of which plan entails the liquidation of all or substantially all the assets of the Company. 3 A "Change of Control" shall be deemed to occur on the actual date on which any of the foregoing circumstances shall occur; provided, however, that in connection with a "Change of Control" specified in Section 1(h)(vii), a "Change of Control" shall be deemed to occur on the date of the filing of the relevant proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import). (i) "Change of Control Period" shall mean the period commencing on the date a Change of Control occurs and ending on the second anniversary of such Change of Control; (j) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time; (k) "Disability" shall mean a physical or mental condition whereby the Executive is unable to perform on a full-time basis the customary duties of the Executive under this Agreement; (l) "Federal Short Term-Rate" shall mean the rate defined in Section 1274(d)(1)(C)(i) of the Code; (m) "Good Reason" shall mean: (i) The required relocation of the Executive, without the Executive's consent, to an employment location which is more than seventy-five (75) miles from the Executive's employment location on the day preceding the date of this Agreement; (ii) The removal of the Executive from or any failure to reelect the Executive to any of the positions held by the Executive as of the date of this Agreement or any other positions to which the Executive shall thereafter be elected or assigned except in the event that such removal or failure to reelect relates to the termination by the Company of the Executive's employment for Cause or by reason of death, Disability or voluntary retirement; (iii) A significant adverse change, without the Executive's written consent, in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities, or a material reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that which was provided to the Executive on the day preceding the date of this Agreement and that which is necessary to perform any additional duties assigned to the Executive following the date of this Agreement, which change or reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category; or (iv) Breach or violation of any material provision of this Agreement by the Company; 4 (n) "Gross Income" shall mean the Executive's average targeted compensation (base salary plus cash bonus) for the prior two (2) taxable years, plus any other compensation payable to the Executive by the Company for the same period, whether taxable or non-taxable; (o) "Notice of Termination" shall mean the notice described in Section 14 herein; (p) "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an employee benefit plan of the Company or an entity organized, appointed or established pursuant to the terms of any such benefit plan; (q) "Termination Date" shall mean, except as otherwise provided in Section 14 herein, (i) The Executive's date of death; (ii) Thirty (30) days after the delivery of the Notice of Termination terminating the Executive's employment on account of Disability pursuant to Section 9 herein, unless the Executive returns on a full-time basis to the performance of his or her duties prior to the expiration of such period; (iii) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Executive voluntarily; or (iv) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company for any reason other than death or Disability; (r) "Termination Payment" shall mean the payment described in Section 13 herein; (s) "Total Payments" shall mean the sum of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. 2. EMPLOYMENT. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein. 3. TERM. The employment of the Executive by the Company pursuant to the provisions of this Agreement shall commence on the date hereof and end on December 31, 2001, unless further extended or sooner terminated as hereinafter 5 provided. On December 31, 2001, and on the last day of December each year thereafter, the term of the Executive's employment shall, unless sooner terminated as hereinafter provided, be automatically extended for an additional one year period from the date thereof unless, at least six (6) months before such December 31, the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive's employment hereunder will not be extended beyond its existing duration. 4. POSITIONS AND DUTIES. The Executive shall serve as Group Executive of the Company and in such additional capacities as set forth in Section 7 herein. In connection with the foregoing positions, the Executive shall have such duties, responsibilities and authority as may from time to time be assigned to the Executive by the Board. The Executive shall devote substantially all the Executive's working time and efforts to the business and affairs of the Company. 5. PLACE OF PERFORMANCE. In connection with the Executive's employment by the Company, the Executive shall be based at the principal executive offices of the Company in Salt Lake City, Utah except for required travel on Company business. 6. COMPENSATION AND RELATED MATTERS. (a) Salary. The Company shall pay to the Executive his annualized base salary (as in effect on the effective date of this Agreement and subject to adjustment as provided herein) in equal installments (as nearly as practicable), in accordance with the Company's standard payroll policy (as in effect from time to time), which currently provides for payments to be made every two weeks, in arrears. Such annualized base salary may be increased from time to time in accordance with normal business practices of the Company. The annualized base salary of the Executive shall not be decreased below its then existing amount during the term of this Agreement. (b) ESIP. The Executive shall be entitled to participate in the Evans & Sutherland Incentive Program. (c) SERP. The Executive shall be entitled to participate in the Company's Supplemental Executive Retirement Plan. (d) Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services hereunder, including all expenses for travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established from time to time by the Company. (e) Other Benefits. The Company shall provide Executive with all other benefits normally provided to an employee of the Company similarly situated to Executive, including being added as a named officer on the Company's existing directors' and officers' liability insurance policy. 6 (f) Vacations. The Executive shall be entitled to the number of vacation days in each calendar year, and to compensation in respect of earned but unused vacation days, determined in accordance with the Company's vacation plan, but in no event less than fifteen (15) days. The Executive shall also be entitled to all paid holidays given by the Company to its executives. (g) Services Furnished. The Company shall furnish the Executive with office space, and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of the Executive's duties as set forth in Section 4 hereof. 7. OFFICES. The Executive agrees to serve without additional compensation, if elected or appointed thereto, in one or more executive offices of the Company, or any affiliate or subsidiary of the Company, or as a member of the board of directors of any subsidiary or affiliate of the Company; provided, however, that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided in the Company's bylaws, or otherwise. 8. TERMINATION AS A RESULT OF DEATH. If the Executive shall die during the term of this Agreement, the Executive's employment shall terminate on the Executive's date of death and the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse, shall be entitled to the Executive's Accrued Benefits as of the Termination Date and any applicable Termination Payment. 9. TERMINATION FOR DISABILITY. If, as a result of the Executive's Disability, the Executive shall have been unable to perform the Executive's duties hereunder on a full-time basis for four (4) consecutive months and within thirty (30) days after the Company provides the Executive with a Termination Notice, the Executive shall not have returned to the performance of the Executive's duties on a full-time basis, the Company may terminate the Executive's employment, subject to Section 14 herein. During the term of the Executive's Disability prior to termination, the Executive shall continue to receive all salary and benefits payable under Section 6 herein, including participation in all employee benefit plans, programs and arrangements in which the Executive was entitled to participate immediately prior to the Disability; provided, however, that the Executive's continued participation is permitted under the terms and provisions of such plans, programs and arrangements. In the event that the Executive's participation in any such plan, program or arrangement is barred as the result of such Disability, the Executive shall be entitled to receive an amount equal to the contributions, payments, credits or allocations which would have been paid by the Company to the Executive, to the Executive's account or on the Executive's behalf under such plans, programs and arrangements. In the event the Executive's employment is terminated on account of the Executive's Disability in accordance with this Section 9, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall remain eligible for all 7 benefits provided by any long-term disability programs of the Company in effect at the time of such termination. The Executive shall also be entitled to the Termination Payment described in Section 13(a). 10. TERMINATION FOR CAUSE. If the Executive's employment with the Company is terminated by the Company for Cause, subject to the procedures set forth in Section 14 herein, the Executive shall be entitled to receive the Executive's Accrued Benefits as of the Termination Date. The Executive shall not be entitled to receipt of any Termination Payment. 11. OTHER TERMINATION BY COMPANY. If the Executive's employment with the Company is terminated by the Company other than by reason of death, Disability or Cause, or as described in paragraph 13(g) below, subject to the procedures set forth in Section 14 herein, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 11, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 12. VOLUNTARY TERMINATION BY EXECUTIVE. Provided that the Executive furnishes thirty (30) days prior written notice to the Company, the Executive shall have the right to voluntarily terminate this Agreement at any time. If the Executive's voluntary termination is without Good Reason, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall not be entitled to any Termination Payment. If the Executive's voluntary termination other than a termination described in paragraph 13(g) below) is for Good Reason, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 12, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 13. TERMINATION PAYMENT. (a) If the Executive's employment is terminated as a result of death or disability, the lump sum Termination Payment payable to the Executive shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (b) If the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, disability or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be equal to the Executive's Gross Income for the year preceding the Termination Date. 8 (c) If, during a Change of Control Period, the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, Disability, or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be two (2.0) times the Executive's Gross Income for the year preceding the Termination Date. (d) It is the intention of the Company and the Executive that no portion of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive under this Agreement, or under any other agreement, plan or arrangement, be deemed to be an "excess parachute payment" as defined in Section 280G of the Code. It is agreed that the present value of the Total Payments shall not exceed an amount equal to two and ninety-nine hundredths (2.99) times the Executive's Base Period Income, which is the maximum amount which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code. Present value for purposes of this Agreement shall be calculated in accordance with the regulations issued under Section 280G of the Code. Within sixty (60) days following delivery of the Notice of Termination or notice by the Company to the Executive of its belief that there is a payment or benefit due the Executive which will result in an excess parachute payment as defined in Section 280G of the Code, the Executive and the Company shall, at the Company's expense, obtain such opinions as more fully described hereafter, which need not be unqualified, of legal counsel and certified public accountants or a firm of recognized executive compensation consultants. The Executive shall select said legal counsel, certified public accountants and executive compensation consultants; provided, however, that if the Company does not accept one (1) or more of the parties selected by the Executive, the Company shall provide the Executive with the names of such legal counsel, certified public accountants and/or executive compensation consultants as the Company may select; provided, further, however, that if the Executive does not accept the party or parties selected by the Company, the legal counsel, certified public accountants and/or executive compensation consultants selected by the Executive and the Company, respectively, shall select the legal counsel, certified public accountants and/or executive compensation consultants, whichever is applicable, who shall provide the opinions required by this Section 13(e). The opinions required hereunder shall set forth (a) the amount of the Base Period Income of the Executive, (b) the present value of Total Payments and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the Termination Payment or any other payment determined by such counsel to be includable in Total Payments shall be reduced or eliminated as specified by the Executive in writing delivered to the Company within thirty (30) days of his or her receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no excess parachute payment. The provisions of this Section 13(e), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation and other benefits, including but not limited to the Accrued Benefits, earned on or after the date of Change of Control by the Executive pursuant to the Company's compensation programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable compensation for services rendered prior to the Change of Control; provided, however, that in the event legal counsel so requests in connection with the 9 opinion required by this Section 13(e), a firm of recognized executive compensation consultants, selected by the Executive and the Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered prior to the Change of Control by the Executive. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 13(e) shall be of no further force or effect. (f) The Termination Payment shall be payable in a lump sum not later than ten (10) days following the Executive's Termination Date. Such lump sum payment shall not be reduced by any present value or similar factor. Further, the Executive shall not be required to mitigate the amount of such payment by securing other employment or otherwise and such payment shall not be reduced by reason of the Executive securing other employment or for any other reason. (g) Notwithstanding anything to the contrary herein, in no event will a termination of Executive's employment with the Company be deemed to trigger a right to receive a Termination Payment if the termination is effected by the mutual agreement of the Company and Executive to accommodate a reassignment of Executive to an entity created or acquired by the Company, or to which the Company has contributed rights to technology, assets or business plans, if at the time of such termination the Company owns or is acquiring a minimum of a 19% equity interest in such entity. In the event of any such termination, the Executive shall only be entitled to receive the Executive's Accrued Benefits as of the Termination Date. 14. TERMINATION NOTICE AND PROCEDURE. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, if such Notice of Termination is delivered by the Executive, all in accordance with the following procedures: (a) The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination; (b) Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office; 10 (c) If the Executive shall in good faith furnish a Notice of Termination for Good Reason and the Company notifies the Executive that a dispute exists concerning the termination, within the fifteen (15) day period following the Company's receipt of such notice, the Executive shall continue the Executive's employment during such dispute. If it is thereafter determined that (i) Good Reason did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or pursuant to Section 19, (B) the date of the Executive's death or (C) one day prior to the second (2nd) anniversary of a Change of Control, and the Executive's Termination Payment, if applicable, shall reflect events occurring after the Executive delivered the Executive's Notice of Termination; or (ii) Good Reason did not exist, the employment of the Executive shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason; and (d) If the Executive gives notice to terminate his or her employment for Good Reason and a dispute arises as to the validity of such dispute, and the Executive does not continue his employment during such dispute, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by the Executive, the Executive shall be deemed to have voluntarily terminated the Executive's employment other than for Good Reason. 15. NONDISCLOSURE OF PROPRIETARY INFORMATION. Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes, the manufacturing of products or performance of services, which involve experimental and inventive work and that the success of its business depends upon the protection of the processes, products and services by patent, copyright or by secrecy and that the Executive has had, or during the course of his engagement may have, access to Proprietary Information, as hereinafter defined, of the Company or other information and data of a secret or proprietary nature of the Company which the Company wishes to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees that: (a) "Proprietary Information" shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive's engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors; (b) The Executive acknowledges that the Company has exclusive property rights to all Proprietary Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary Information to the Company. Except as required in the performance of his duties to the Company, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company 11 as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling; (c) All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or compiled by the Executive at any time or made available to him or her prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him or her in trust solely for the benefit of the Company, and shall be delivered to the Company by him or her on the termination of his or her engagement or at any other time on the request of the Company; and (d) The Executive will not assert any rights under any inventions, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him or her prior to his or her being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary Information. 16. ASSIGNMENT OF INVENTIONS. (a) For purposes of this Section 16, the term "Inventions" shall mean discoveries, concepts, and ideas, whether patentable or copyrightable or not, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement or with the use of the Company's facilities, materials or personnel), either solely or jointly with others during his or her engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement. All Inventions shall be the sole property of the Company, and Executive agrees to perform the provisions of this Section 16 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an employee or consultant. (b) The Executive shall maintain written notebooks in which he or she shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company's behalf. The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his or her engagement or, upon request of the Company, at any time prior thereto. 12 (c) The Executive shall apply, at the Company's request and expense, for United States and foreign letters patent or copyrights either in the Executive's name or otherwise as the Company shall desire. (d) The Executive hereby assigns to the Company all of his or her rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions. (e) The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive's inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company or its nominee. The Executive acknowledges and agrees that any copyright developed or conceived of by the Executive during the term of Executive's employment which is related to the business of the Company shall be a "work for hire" under the copyright law of the United States and other applicable jurisdictions. (f) The Executive represents that his or her performance of all the terms of this Agreement and as an employee of or consultant to the Company does not and will not breach any trust prior to his or her employment by the Company. The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents and agrees that he or she has not brought and will not bring with him to the Company or use in the performance of his or her responsibilities at the Company any materials or documents of a former employer which are not generally available to the public, unless he or she has obtained written authorization from the former employer for their possession and use, a copy of which has been provided to the Company. (g) No provisions of this Section shall be deemed to limit the restrictions applicable to the Executive under Section 15. (h) No provisions of this Section shall be deemed or construed to require the Executive to assign to the Company any rights or intellectual property with respect to any invention which (i) is created by the Executive entirely on his own time, (ii) does not constitute an "employment invention" as defined in the Utah Employment Inventions Act, and (iii) is not exempted from the application f the Utah Employment Inventions Act. 13 17. SHOP RIGHTS. The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined in Section 16 but which are conceived or made by the Executive during the period he or she is engaged by the Company or with the use or assistance of the Company's facilities, materials or personnel. 18. NON-COMPETE. The Executive hereby agrees that during the term of this Agreement and for the period of one year from the termination hereof, that the Executive will not: (a) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, own, manage, operate or control any business of the type and character engaged in and competitive with the Company or any subsidiary thereof. For purposes of this Section, ownership of securities of not in excess of five percent (5%) of any class of securities of a public company shall not be considered to be competition with the Company or any subsidiary thereof; or (b) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, act as, or become employed as, an officer, director, employee, consultant or agent of any business of the type and character engaged in and competitive with the Company or any of its subsidiaries; or (c) Solicit any similar business to that of the Company's for, or sell any products that are in competition with the Company's products to, any company in the United States, which is, as of the date hereof, a customer or client of the Company or any of its subsidiaries, or was such a customer or client thereof within two years prior to the date of this Agreement; or (d) Solicit the employment of any full time employee employed by the Company or its subsidiaries as of the date of termination of this Agreement. 19. REMEDIES AND JURISDICTION. (a) The Executive hereby acknowledges and agrees that a breach of the agreements contained in this Agreement will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of the agreements set forth in this Agreement will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company shall be entitled to injunctive relief for any breach or threatened breach of the agreements contained in this Agreement. 14 (b) All claims, disputes and other matters in question between the parties arising under this Agreement, shall, unless otherwise provided herein, be decided by arbitration in Salt Lake City, Utah, in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association (including such procedures governing selection of the specific arbitrator or arbitrators), unless the parties mutually agree otherwise. The Company shall pay the costs of any such arbitration. The award by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any state or Federal court having jurisdiction thereof. 20. ATTORNEYS' FEES. In the event that either party hereunder institutes any legal proceedings in connection with its rights or obligations under this Agreement, the prevailing party in such proceeding shall be entitled to recover from the other party, all costs incurred in connection with such proceeding, including reasonable attorneys' fees, together with interest thereon from the date of demand at the rate of twelve percent (12%) per annum. 21. SUCCESSORS. This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the business and assets of the Company shall be transferred whether by merger, consolidation, transfer or sale. 22. ENFORCEMENT. The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby. 23. AMENDMENT OR TERMINATION. This Agreement may not be amended or terminated during its term, except by written instrument executed by the Company and the Executive. 24. SURVIVABILITY. The provisions of Sections 15, 16, 17, 18, 19, and 20 shall survive termination of this Agreement. 15 25. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written agreements, negotiations, commitments and understandings with respect thereto. 26. VENUE; GOVERNING LAW. This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Utah without giving effect to the provisions, principles, or policies thereof relating to choice or conflicts of laws. 27. NOTICE. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received, and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to: Company: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Attn: Fax: (801) 588-4500 Executive: Robert Ard 600 Komas Drive Salt Lake City, Utah 84108 Fax: (801) 588-4500 or to such other address as the Company shall have given to the Executive or, if to the Executive, to such address as the Executive shall have given to the Company. 28. NO WAIVER. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 29. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. 30. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 16 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written. "COMPANY" EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation By: /s/ James R. Oyler -------------------------------- James R. Oyler, President and CEO "EXECUTIVE" /s/ Robert Ard -------------------------------- Robert Ard 17 EX-10.11 12 0012.txt EMPLOYMENT AGREEMENT WITH THOMAS ATCHISON EMPLOYMENT AGREEMENT THIS EMPLOYMENT AGREEMENT (the "Agreement") is made and entered into effective as of the 25th day of July, 2000, by and between EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation (the "Company") and THOMAS ATCHISON (the "Executive"). W I T N E S S E T H: WHEREAS, the Executive has been providing services to the Company in an executive capacity and desires to continue to provide such services; WHEREAS, the Company desires to have the benefit of the Executive's efforts and services; and WHEREAS, the Company has determined that it is appropriate and in the best interests of the Company to provide to the Executive protection in the event of certain terminations of the Executive's employment relationship with the Company in accordance with the terms and conditions contained herein and the Executive desires to have such protection. NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements hereinafter set forth, the Company and the Executive hereby mutually covenant and agree as follows: 1. DEFINITIONS. Whenever used in this Agreement, the following terms shall have the meanings set forth below: (a) "Accrued Benefits" shall mean the amount payable not later than ten (10) days following an applicable Termination Date and which shall be equal to the sum of the following amounts: (i) All salary earned or accrued through the Termination Date; (ii) Reimbursement for any and all monies advanced in connection with the Executive's employment for reasonable and necessary expenses incurred by the Executive through the Termination Date; (iii) Any and all other cash benefits previously earned through the Termination Date and deferred at the election of the Executive or pursuant to any deferred compensation plans then in effect; (iv) The full amount of any stated bonus payable to the Executive in accordance with Sections 6(b)-(c) herein with respect to the year in which termination occurs; and (v) All other payments and benefits to which the Executive may be entitled under the terms of any benefit plan of the Company. 2 (b) "Act" shall mean the Securities Exchange Act of 1934; (c) "Affiliate" shall have the same meaning as given to that term in Rule 12b-2 of Regulation 12B promulgated under the Act; (d) "Base Period Income" shall be an amount equal to the Executive's "annualized includable compensation" for the "base period" as defined in Sections 280G(d)(1) and (2) of the Code and the regulations adopted thereunder; (e) "Beneficial Owner" shall have the same meaning as given to that term in Rule 13d-3 of the General Rules and Regulations of the Act, provided that any pledgee of Company voting securities shall not be deemed to be the Beneficial Owner thereof prior to its disposition of, or acquisition of voting rights with respect to, such securities; (f) "Board" shall mean the Board of Directors of the Company; (g) "Cause" shall mean any of the following: (i) The engaging by the Executive in fraudulent conduct, as evidenced by a determination in a binding and final judgment, order or decree of a court or administrative agency of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, in an action, suit or proceeding, whether civil, criminal, administrative or investigative, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (ii) Conviction of a felony, as evidenced by a binding and final judgment, order or decree of a court of competent jurisdiction, in effect after exhaustion or lapse of all rights of appeal, which the Board determines, in its sole discretion, has a significant adverse impact on the Company in the conduct of the Company's business; (iii) Neglect or refusal by the Executive to perform the Executive's duties or responsibilities (unless significantly changed without the Executive's consent); or (iv) A significant violation by the Executive of the Company's established policies and procedures; Notwithstanding the foregoing, Cause shall not exist under Sections 1(g)(iii) and (iv) herein unless the Company furnishes written notice to the Executive of the specific offending conduct and the Executive fails to correct such offending conduct within the thirty (30) day period commencing on the receipt of such notice. (h) "Change of Control" shall mean a change in ownership or managerial control of the stock, assets or business of the Company resulting from one or more of the following circumstances: 3 (i) A change of control of the Company, of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Act, or any successor regulation of similar import, regardless of whether the Company is subject to such reporting requirement; (ii) A change in ownership of the Company through a transaction or series of transactions, such that any Person or Persons (other than any current officer of the Company or member of the Board) is (are) or become(s), in the aggregate, the Beneficial Owner(s), directly or indirectly, of securities of the Company representing thirty percent (30%) or more of the Company's then outstanding securities; (iii) Any consolidation or merger of the Company in which the Company is not the continuing or surviving corporation or pursuant to which shares of the common stock of the Company would be converted into cash (other than cash attributable to dissenters' rights), securities or other property provided by a Person or Persons other than the Company, other than a consolidation or merger of the Company in which the holders of the common stock of the Company immediately prior to the consolidation or merger have approximately the same proportionate ownership of common stock of the surviving corporation immediately after the consolidation or merger; (iv) The shareholders of the Company approve a sale, transfer, liquidation or other disposition of all or substantially all of the assets of the Company to a Person or Persons; (v) During any period of two (2) consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of the Company cease, for any reason, to constitute at least a majority thereof, unless the election or nomination for election of each new director was approved by the vote of at least two-thirds (2/3) of the directors then still in office who were directors at the beginning of the period; (vi) The filing of a proceeding under Chapter 7 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for liquidation with respect to the Company; or (vii) The filing of a proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import) for reorganization with respect to the Company if in connection with any such proceeding, this Agreement is rejected, or a plan of reorganization is approved an element of which plan entails the liquidation of all or substantially all the assets of the Company. A "Change of Control" shall be deemed to occur on the actual date on which any of the foregoing circumstances shall occur; provided, however, that in connection with a "Change of Control" specified in Section 1(h)(vii), a "Change of Control" shall be deemed to occur on the date of the filing of the relevant proceeding under Chapter 11 of the Federal Bankruptcy Code (or any successor or other statute of similar import). 4 (i) "Change of Control Period" shall mean the period commencing on the date a Change of Control occurs and ending on the second anniversary of such Change of Control; (j) "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time; (k) "Disability" shall mean a physical or mental condition whereby the Executive is unable to perform on a full-time basis the customary duties of the Executive under this Agreement; (l) "Federal Short Term-Rate" shall mean the rate defined in Section 1274(d)(1)(C)(i) of the Code; (m) "Good Reason" shall mean: (i) The required relocation of the Executive, without the Executive's consent, to an employment location which is more than seventy-five (75) miles from the Executive's employment location on the day preceding the date of this Agreement; (ii) The removal of the Executive from or any failure to reelect the Executive to any of the positions held by the Executive as of the date of this Agreement or any other positions to which the Executive shall thereafter be elected or assigned except in the event that such removal or failure to reelect relates to the termination by the Company of the Executive's employment for Cause or by reason of death, Disability or voluntary retirement; (iii) A significant adverse change, without the Executive's written consent, in the nature or scope of the Executive's authority, powers, functions, duties or responsibilities, or a material reduction in the level of support services, staff, secretarial and other assistance, office space and accoutrements available to a level below that which was provided to the Executive on the day preceding the date of this Agreement and that which is necessary to perform any additional duties assigned to the Executive following the date of this Agreement, which change or reduction is not generally effective for all executives employed by the Company (or its successor) in the Executive's class or category; or (iv) Breach or violation of any material provision of this Agreement by the Company; (n) "Gross Income" shall mean the Executive's average targeted compensation (base salary plus cash bonus) for the prior two (2) taxable years, plus any other compensation payable to the Executive by the Company for the same period, whether taxable or non-taxable; (o) "Notice of Termination" shall mean the notice described in Section 14 herein; 5 (p) "Person" shall mean any individual, partnership, joint venture, association, trust, corporation or other entity, other than an employee benefit plan of the Company or an entity organized, appointed or established pursuant to the terms of any such benefit plan; (q) "Termination Date" shall mean, except as otherwise provided in Section 14 herein, (i) The Executive's date of death; (ii) Thirty (30) days after the delivery of the Notice of Termination terminating the Executive's employment on account of Disability pursuant to Section 9 herein, unless the Executive returns on a full-time basis to the performance of his or her duties prior to the expiration of such period; (iii) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Executive voluntarily; or (iv) Thirty (30) days after the delivery of the Notice of Termination if the Executive's employment is terminated by the Company for any reason other than death or Disability; (r) "Termination Payment" shall mean the payment described in Section 13 herein; (s) "Total Payments" shall mean the sum of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive, the receipt of which is contingent on a Change of Control and to which Section 280G of the Code applies. 2. EMPLOYMENT. The Company hereby agrees to employ the Executive and the Executive hereby agrees to serve the Company, on the terms and conditions set forth herein. 3. TERM. The employment of the Executive by the Company pursuant to the provisions of this Agreement shall commence on the date hereof and end on December 31, 2001, unless further extended or sooner terminated as hereinafter provided. On December 31, 2001, and on the last day of December each year thereafter, the term of the Executive's employment shall, unless sooner terminated as hereinafter provided, be automatically extended for an additional one year period from the date thereof unless, at least six (6) months before such December 31, the Company shall have delivered to the Executive or the Executive shall have delivered to the Company written notice that the term of the Executive's employment hereunder will not be extended beyond its existing duration. 6 4. POSITIONS AND DUTIES. The Executive shall serve as Group Executive of the Company and in such additional capacities as set forth in Section 7 herein. In connection with the foregoing positions, the Executive shall have such duties, responsibilities and authority as may from time to time be assigned to the Executive by the Board. The Executive shall devote substantially all the Executive's working time and efforts to the business and affairs of the Company. 5. PLACE OF PERFORMANCE. In connection with the Executive's employment by the Company, the Executive shall be based at the principal executive offices of the Company in Salt Lake City, Utah except for required travel on Company business. 6. COMPENSATION AND RELATED MATTERS. (a) Salary. The Company shall pay to the Executive his annualized base salary (as in effect on the effective date of this Agreement and subject to adjustment as provided herein) in equal installments (as nearly as practicable), in accordance with the Company's standard payroll policy (as in effect from time to time), which currently provides for payments to be made every two weeks, in arrears. Such annualized base salary may be increased from time to time in accordance with normal business practices of the Company. The annualized base salary of the Executive shall not be decreased below its then existing amount during the term of this Agreement. (b) ESIP. The Executive shall be entitled to participate in the Evans & Sutherland Incentive Program. (c) SERP. The Executive shall be entitled to participate in the Company's Supplemental Executive Retirement Plan. (d) Expenses. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive in performing services hereunder, including all expenses for travel and living expenses while away from home on business or at the request of and in the service of the Company, provided that such expenses are incurred and accounted for in accordance with the policies and procedures established from time to time by the Company. (e) Other Benefits. The Company shall provide Executive with all other benefits normally provided to an employee of the Company similarly situated to Executive, including being added as a named officer on the Company's existing directors' and officers' liability insurance policy. (f) Vacations. The Executive shall be entitled to the number of vacation days in each calendar year, and to compensation in respect of earned but unused vacation days, determined in accordance with the Company's vacation plan, but in no event less than fifteen (15) days. The Executive shall also be entitled to all paid holidays given by the Company to its executives. (g) Services Furnished. The Company shall furnish the Executive with office space, and such other facilities and services as shall be suitable to the Executive's position and adequate for the performance of the Executive's duties as set forth in Section 4 hereof. 7 7. OFFICES. The Executive agrees to serve without additional compensation, if elected or appointed thereto, in one or more executive offices of the Company, or any affiliate or subsidiary of the Company, or as a member of the board of directors of any subsidiary or affiliate of the Company; provided, however, that the Executive is indemnified for serving in any and all such capacities on a basis no less favorable than is currently provided in the Company's bylaws, or otherwise. 8. TERMINATION AS A RESULT OF DEATH. If the Executive shall die during the term of this Agreement, the Executive's employment shall terminate on the Executive's date of death and the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse, shall be entitled to the Executive's Accrued Benefits as of the Termination Date and any applicable Termination Payment. 9. TERMINATION FOR DISABILITY. If, as a result of the Executive's Disability, the Executive shall have been unable to perform the Executive's duties hereunder on a full-time basis for four (4) consecutive months and within thirty (30) days after the Company provides the Executive with a Termination Notice, the Executive shall not have returned to the performance of the Executive's duties on a full-time basis, the Company may terminate the Executive's employment, subject to Section 14 herein. During the term of the Executive's Disability prior to termination, the Executive shall continue to receive all salary and benefits payable under Section 6 herein, including participation in all employee benefit plans, programs and arrangements in which the Executive was entitled to participate immediately prior to the Disability; provided, however, that the Executive's continued participation is permitted under the terms and provisions of such plans, programs and arrangements. In the event that the Executive's participation in any such plan, program or arrangement is barred as the result of such Disability, the Executive shall be entitled to receive an amount equal to the contributions, payments, credits or allocations which would have been paid by the Company to the Executive, to the Executive's account or on the Executive's behalf under such plans, programs and arrangements. In the event the Executive's employment is terminated on account of the Executive's Disability in accordance with this Section 9, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall remain eligible for all benefits provided by any long-term disability programs of the Company in effect at the time of such termination. The Executive shall also be entitled to the Termination Payment described in Section 13(a). 10. TERMINATION FOR CAUSE. If the Executive's employment with the Company is terminated by the Company for Cause, subject to the procedures set forth in Section 14 herein, the Executive shall be entitled to receive the Executive's Accrued Benefits as of the Termination Date. The Executive shall not be entitled to receipt of any Termination Payment. 11. OTHER TERMINATION BY COMPANY. If the Executive's employment with the Company is terminated by the Company other than by reason of death, Disability or Cause, or as described in paragraph 13(g) below, subject to the procedures set forth in Section 14 herein, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable 8 Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 11, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 12. VOLUNTARY TERMINATION BY EXECUTIVE. Provided that the Executive furnishes thirty (30) days prior written notice to the Company, the Executive shall have the right to voluntarily terminate this Agreement at any time. If the Executive's voluntary termination is without Good Reason, the Executive shall receive the Executive's Accrued Benefits as of the Termination Date and shall not be entitled to any Termination Payment. If the Executive's voluntary termination (other than a termination described in paragraph 13(g) below) is for Good Reason, the Executive (or in the event of the Executive's death following the Termination Date, the Executive's surviving spouse or the Executive's estate if the Executive dies without a surviving spouse) shall receive the applicable Termination Payment. The Executive shall not, in connection with any consideration receivable in accordance with this Section 12, be required to mitigate the amount of such consideration by securing other employment or otherwise and such consideration shall not be reduced by reason of the Executive securing other employment or for any other reason. 13. TERMINATION PAYMENT. (a) If the Executive's employment is terminated as a result of death or disability, the lump sum Termination Payment payable to the Executive shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (b) If the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, disability or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be equal to the Executive's Gross Income for the year preceding the Termination Date. (c) If, during a Change of Control Period, the Executive's employment is terminated by the Executive for Good Reason or by the Company for any reason other than death, Disability, or Cause, the Termination Payment payable to the Executive by the Company or an affiliate of the Company shall be two (2.0) times the Executive's Gross Income for the year preceding the Termination Date. (d) It is the intention of the Company and the Executive that no portion of the Termination Payment and any other "payments in the nature of compensation" (as defined in Section 280G of the Code and the regulations adopted thereunder) to or for the benefit of the Executive under this Agreement, or under any other agreement, plan or arrangement, be deemed to be an "excess parachute payment" as defined in Section 280G of the Code. It is agreed that the present value of the Total Payments shall not exceed an amount equal to two and ninety-nine hundredths (2.99) times the Executive's Base Period Income, which is the maximum amount which the Executive may receive without becoming subject to the tax imposed by Section 4999 of the Code or which the Company may pay without loss of deduction under Section 280G(a) of the Code. Present value for purposes of this Agreement shall be calculated in accordance with the regulations issued under Section 280G of the Code. Within sixty (60) days following delivery of the Notice of Termination or notice by the Company to the Executive of its belief 9 that there is a payment or benefit due the Executive which will result in an excess parachute payment as defined in Section 280G of the Code, the Executive and the Company shall, at the Company's expense, obtain such opinions as more fully described hereafter, which need not be unqualified, of legal counsel and certified public accountants or a firm of recognized executive compensation consultants. The Executive shall select said legal counsel, certified public accountants and executive compensation consultants; provided, however, that if the Company does not accept one (1) or more of the parties selected by the Executive, the Company shall provide the Executive with the names of such legal counsel, certified public accountants and/or executive compensation consultants as the Company may select; provided, further, however, that if the Executive does not accept the party or parties selected by the Company, the legal counsel, certified public accountants and/or executive compensation consultants selected by the Executive and the Company, respectively, shall select the legal counsel, certified public accountants and/or executive compensation consultants, whichever is applicable, who shall provide the opinions required by this Section 13(e). The opinions required hereunder shall set forth (a) the amount of the Base Period Income of the Executive, (b) the present value of Total Payments and (c) the amount and present value of any excess parachute payments. In the event that such opinions determine that there would be an excess parachute payment, the Termination Payment or any other payment determined by such counsel to be includable in Total Payments shall be reduced or eliminated as specified by the Executive in writing delivered to the Company within thirty (30) days of his or her receipt of such opinions or, if the Executive fails to so notify the Company, then as the Company shall reasonably determine, so that under the bases of calculation set forth in such opinions there will be no excess parachute payment. The provisions of this Section 13(e), including the calculations, notices and opinions provided for herein shall be based upon the conclusive presumption that the compensation and other benefits, including but not limited to the Accrued Benefits, earned on or after the date of Change of Control by the Executive pursuant to the Company's compensation programs if such payments would have been made in the future in any event, even though the timing of such payment is triggered by the Change of Control, are reasonable compensation for services rendered prior to the Change of Control; provided, however, that in the event legal counsel so requests in connection with the opinion required by this Section 13(e), a firm of recognized executive compensation consultants, selected by the Executive and the Company pursuant to the procedures set forth above, shall provide an opinion, upon which such legal counsel may rely, as to the reasonableness of any item of compensation as reasonable compensation for services rendered prior to the Change of Control by the Executive. In the event that the provisions of Sections 280G and 4999 of the Code are repealed without succession, this Section 13(e) shall be of no further force or effect. (f) The Termination Payment shall be payable in a lump sum not later than ten (10) days following the Executive's Termination Date. Such lump sum payment shall not be reduced by any present value or similar factor. Further, the Executive shall not be required to mitigate the amount of such payment by securing other employment or otherwise and such payment shall not be reduced by reason of the Executive securing other employment or for any other reason. 10 (g) Notwithstanding anything to the contrary herein, in no event will a termination of Executive's employment with the Company be deemed to trigger a right to receive a Termination Payment if the termination is effected by the mutual agreement of the Company and Executive to accommodate a reassignment of Executive to an entity created or acquired by the Company, or to which the Company has contributed rights to technology, assets or business plans, if at the time of such termination the Company owns or is acquiring a minimum of a 19% equity interest in such entity. In the event of any such termination, the Executive shall only be entitled to receive the Executive's Accrued Benefits as of the Termination Date. 14. TERMINATION NOTICE AND PROCEDURE. Any termination by the Company or the Executive of the Executive's employment during the Employment Period shall be communicated by written Notice of Termination to the Executive, if such Notice of Termination is delivered by the Company, and to the Company, if such Notice of Termination is delivered by the Executive, all in accordance with the following procedures: (a) The Notice of Termination shall indicate the specific termination provision in this Agreement relied upon and shall set forth in reasonable detail the facts and circumstances alleged to provide a basis for termination; (b) Any Notice of Termination by the Company shall be approved by a resolution duly adopted by a majority of the directors of the Company then in office; (c) If the Executive shall in good faith furnish a Notice of Termination for Good Reason and the Company notifies the Executive that a dispute exists concerning the termination, within the fifteen (15) day period following the Company's receipt of such notice, the Executive shall continue the Executive's employment during such dispute. If it is thereafter determined that (i) Good Reason did exist, the Executive's Termination Date shall be the earlier of (A) the date on which the dispute is finally determined, either by mutual written agreement of the parties or pursuant to Section 19, (B) the date of the Executive's death or (C) one day prior to the second (2nd) anniversary of a Change of Control, and the Executive's Termination Payment, if applicable, shall reflect events occurring after the Executive delivered the Executive's Notice of Termination; or (ii) Good Reason did not exist, the employment of the Executive shall continue after such determination as if the Executive had not delivered the Notice of Termination asserting Good Reason; and (d) If the Executive gives notice to terminate his or her employment for Good Reason and a dispute arises as to the validity of such dispute, and the Executive does not continue his employment during such dispute, and it is finally determined that the reason for termination set forth in such Notice of Termination did not exist, if such notice was delivered by the Executive, the Executive shall be deemed to have voluntarily terminated the Executive's employment other than for Good Reason. 15. NONDISCLOSURE OF PROPRIETARY INFORMATION. Recognizing that the Company is presently engaged, and may hereafter continue to be engaged, in the research and development of processes, the manufacturing of products or performance of services, which involve experimental 11 and inventive work and that the success of its business depends upon the protection of the processes, products and services by patent, copyright or by secrecy and that the Executive has had, or during the course of his engagement may have, access to Proprietary Information, as hereinafter defined, of the Company or other information and data of a secret or proprietary nature of the Company which the Company wishes to keep confidential and the Executive has furnished, or during the course of his engagement may furnish, such information to the Company, the Executive agrees that: (a) "Proprietary Information" shall mean any and all methods, inventions, improvements or discoveries, whether or not patentable or copyrightable, and any other information of a similar nature related to the business of the Company disclosed to the Executive or otherwise made known to him as a consequence of or through his engagement by the Company (including information originated by the Executive) in any technological area previously developed by the Company or developed, engaged in, or researched, by the Company during the term of the Executive's engagement, including, but not limited to, trade secrets, processes, products, formulae, apparatus, techniques, know-how, marketing plans, data, improvements, strategies, forecasts, customer lists, and technical requirements of customers, unless such information is in the public domain to such an extent as to be readily available to competitors; (b) The Executive acknowledges that the Company has exclusive property rights to all Proprietary Information and the Executive hereby assigns all rights he might otherwise possess in any Proprietary Information to the Company. Except as required in the performance of his duties to the Company, the Executive will not at any time during or after the term of his engagement, which term shall include any time in which the Executive may be retained by the Company as a consultant, directly or indirectly use, communicate, disclose or disseminate any Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company, its products, customers, processes and services, including information relating to testing, research, development, manufacturing, marketing and selling; (c) All documents, records, notebooks, notes, memoranda and similar repositories of, or containing, Proprietary Information or any other information of a secret, proprietary, confidential or generally undisclosed nature relating to the Company or its operations and activities made or compiled by the Executive at any time or made available to him or her prior to or during the term of his engagement by the Company, including any and all copies thereof, shall be the property of the Company, shall be held by him or her in trust solely for the benefit of the Company, and shall be delivered to the Company by him or her on the termination of his or her engagement or at any other time on the request of the Company; and (d) The Executive will not assert any rights under any inventions, copyrights, discoveries, concepts or ideas, or improvements thereof, or know-how related thereto, as having been made or acquired by him or her prior to his or her being engaged by the Company or during the term of his engagement if based on or otherwise related to Proprietary Information. 12 16. ASSIGNMENT OF INVENTIONS. (a) For purposes of this Section 16, the term "Inventions" shall mean discoveries, concepts, and ideas, whether patentable or copyrightable or not, including but not limited to improvements, know-how, data, processes, methods, formulae, and techniques, as well as improvements thereof or know-how related thereto, concerning any past, present or prospective activities of the Company which the Executive makes, discovers or conceives (whether or not during the hours of his engagement or with the use of the Company's facilities, materials or personnel), either solely or jointly with others during his or her engagement by the Company or any affiliate and, if based on or related to Proprietary Information, at any time after termination of such engagement. All Inventions shall be the sole property of the Company, and Executive agrees to perform the provisions of this Section 16 with respect thereto without the payment by the Company of any royalty or any consideration therefor other than the regular compensation paid to the Executive in the capacity of an employee or consultant. (b) The Executive shall maintain written notebooks in which he or she shall set forth, on a current basis, information as to all Inventions, describing in detail the procedures employed and the results achieved as well as information as to any studies or research projects undertaken on the Company's behalf. The written notebooks shall at all times be the property of the Company and shall be surrendered to the Company upon termination of his or her engagement or, upon request of the Company, at any time prior thereto. (c) The Executive shall apply, at the Company's request and expense, for United States and foreign letters patent or copyrights either in the Executive's name or otherwise as the Company shall desire. (d) The Executive hereby assigns to the Company all of his or her rights to such Inventions, and to applications for United States and/or foreign letters patent or copyrights and to United States and/or foreign letters patent or copyrights granted upon such Inventions. (e) The Executive shall acknowledge and deliver promptly to the Company, without charge to the Company, but at its expense, such written instruments (including applications and assignments) and do such other acts, such as giving testimony in support of the Executive's inventorship, as may be necessary in the opinion of the Company to obtain, maintain, extend, reissue and enforce United States and/or foreign letters patent and copyrights relating to the Inventions and to vest the entire right and title thereto in the Company or its nominee. The Executive acknowledges and agrees that any copyright developed or conceived of by the Executive during the term of Executive's employment which is related to the business of the Company shall be a "work for hire" under the copyright law of the United States and other applicable jurisdictions. (f) The Executive represents that his or her performance of all the terms of this Agreement and as an employee of or consultant to the Company does not and will not breach any trust prior to his or her employment by the Company. The Executive agrees not to enter into any agreement either written or oral in conflict herewith and represents and agrees that he or she has not brought and will not bring with him to the Company or use in the performance of his or her responsibilities 13 at the Company any materials or documents of a former employer which are not generally available to the public, unless he or she has obtained written authorization from the former employer for their possession and use, a copy of which has been provided to the Company. (g) No provisions of this Section shall be deemed to limit the restrictions applicable to the Executive under Section 15. (h) No provisions of this Section shall be deemed or construed to require the Executive to assign to the Company any rights or intellectual property with respect to any invention which (i) is created by the Executive entirely on his own time, (ii) does not constitute an "employment invention" as defined in the Utah Employment Inventions Act, and (iii) is not exempted from the application f the Utah Employment Inventions Act. 17. SHOP RIGHTS. The Company shall also have the royalty-free right to use in its business, and to make, use and sell products, processes and/or services derived from any inventions, discoveries, concepts and ideas, whether or not patentable, including but not limited to processes, methods, formulas and techniques, as well as improvements thereof or know-how related thereto, which are not within the scope of Inventions as defined in Section 16 but which are conceived or made by the Executive during the period he or she is engaged by the Company or with the use or assistance of the Company's facilities, materials or personnel. 18. NON-COMPETE. The Executive hereby agrees that during the term of this Agreement and for the period of one year from the termination hereof, that the Executive will not: (a) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, own, manage, operate or control any business of the type and character engaged in and competitive with the Company or any subsidiary thereof. For purposes of this Section, ownership of securities of not in excess of five percent (5%) of any class of securities of a public company shall not be considered to be competition with the Company or any subsidiary thereof; or (b) Within any jurisdiction or marketing area in the United States in which the Company or any subsidiary thereof is doing business, act as, or become employed as, an officer, director, employee, consultant or agent of any business of the type and character engaged in and competitive with the Company or any of its subsidiaries; or (c) Solicit any similar business to that of the Company's for, or sell any products that are in competition with the Company's products to, any company in the United States, which is, as of the date hereof, a customer or client of the Company or any of its subsidiaries, or was such a customer or client thereof within two years prior to the date of this Agreement; or (d) Solicit the employment of any full time employee employed by the Company or its subsidiaries as of the date of termination of this Agreement. 14 19. REMEDIES AND JURISDICTION. (a) The Executive hereby acknowledges and agrees that a breach of the agreements contained in this Agreement will cause irreparable harm and damage to the Company, that the remedy at law for the breach or threatened breach of the agreements set forth in this Agreement will be inadequate, and that, in addition to all other remedies available to the Company for such breach or threatened breach (including, without limitation, the right to recover damages), the Company shall be entitled to injunctive relief for any breach or threatened breach of the agreements contained in this Agreement. (b) All claims, disputes and other matters in question between the parties arising under this Agreement, shall, unless otherwise provided herein, be decided by arbitration in Salt Lake City, Utah, in accordance with the Model Employment Arbitration Procedures of the American Arbitration Association (including such procedures governing selection of the specific arbitrator or arbitrators), unless the parties mutually agree otherwise. The Company shall pay the costs of any such arbitration. The award by the arbitrator or arbitrators shall be final, and judgment may be entered upon it in accordance with applicable law in any state or Federal court having jurisdiction thereof. 20. ATTORNEYS' FEES. In the event that either party hereunder institutes any legal proceedings in connection with its rights or obligations under this Agreement, the prevailing party in such proceeding shall be entitled to recover from the other party, all costs incurred in connection with such proceeding, including reasonable attorneys' fees, together with interest thereon from the date of demand at the rate of twelve percent (12%) per annum. 21. SUCCESSORS. This Agreement and all rights of the Executive shall inure to the benefit of and be enforceable by the Executive's personal or legal representatives, estates, executors, administrators, heirs and beneficiaries. In the event of the Executive's death, all amounts payable to the Executive under this Agreement shall be paid to the Executive's surviving spouse, or the Executive's estate if the Executive dies without a surviving spouse. This Agreement shall inure to the benefit of, be binding upon and be enforceable by, any successor, surviving or resulting corporation or other entity to which all or substantially all of the business and assets of the Company shall be transferred whether by merger, consolidation, transfer or sale. 22. ENFORCEMENT. The provisions of this Agreement shall be regarded as divisible, and if any of said provisions or any part hereof are declared invalid or unenforceable by a court of competent jurisdiction, the validity and enforceability of the remainder of such provisions or parts hereof and the applicability thereof shall not be affected thereby. 23. AMENDMENT OR TERMINATION. This Agreement may not be amended or terminated during its term, except by written instrument executed by the Company and the Executive. 15 24. SURVIVABILITY. The provisions of Sections 15, 16, 17, 18, 19, and 20 shall survive termination of this Agreement. 25. ENTIRE AGREEMENT. This Agreement sets forth the entire agreement between the Executive and the Company with respect to the subject matter hereof, and supersedes all prior oral or written agreements, negotiations, commitments and understandings with respect thereto. 26. VENUE; GOVERNING LAW. This Agreement and the Executive's and Company's respective rights and obligations hereunder shall be governed by and construed in accordance with the laws of the State of Utah without giving effect to the provisions, principles, or policies thereof relating to choice or conflicts of laws. 27. NOTICE. Notices given pursuant to this Agreement shall be in writing and shall be deemed given when received, and if mailed, shall be mailed by United States registered or certified mail, return receipt requested, addressee only, postage prepaid, if to the Company, to: Company: Evans & Sutherland Computer Corporation 600 Komas Drive Salt Lake City, Utah 84108 Attn: Fax: (801) 588-4500 Executive: Thomas Atchison 2886 Elk Horn Lane Sandy, Utah 84093 Phone: (801) 733-9235 or to such other address as the Company shall have given to the Executive or, if to the Executive, to such address as the Executive shall have given to the Company. 28. NO WAIVER. No waiver by either party at any time of any breach by the other party of, or compliance with, any condition or provision of this Agreement to be performed by the other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same time or any prior or subsequent time. 29. HEADINGS. The headings herein contained are for reference only and shall not affect the meaning or interpretation of any provision of this Agreement. 30. COUNTERPARTS. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. 16 IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by its duly authorized officer, and the Executive has executed this Agreement, on the date and year first above written. "COMPANY" EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation By: /s/ James R. Oyler --------------------------------- James R. Oyler, President and CEO "EXECUTIVE" /s/ Thomas Atchison ------------------------------------ Thomas Atchison EX-10.12 13 0013.txt LLOYDS OVERDRAFT FACILITY Lloyds TSB Commercial - ---------- Lloyds TSB Commercial Berkshire Lloyds TSB Bank plc 1/2 Market Place Reading Berkshire RG1 2EQ Telephone 0118 950 7045 Facsimile 0118 950 2402 The Directors Evans & Sutherland Computer Limited 2 Horsham Gates North Street HORSHAM West Sussex RH13 5PJ 15th June 2000 Dear Sirs OVERDRAFT FACILITY We Lloyds TSB Bank plc (the "Bank") are pleased to offer to Evans & Sutherland Computer Limited an overdraft facility in such foreign currencies and on such accounts as we may from time to time agree on the following terms and conditions. Amount The maximum aggregate amount outstanding under the facility at any time (calculated on the basis of cleared funds) shall not exceed USD 3,000,000 although prior to 1st August 2000 excesses will be permitted provided that the maximum aggregate amount owing at any time does not exceed USD 5,000,000. For the purpose of determining whether the total amount owing is at any particular time within or in excess of the agreed limit, amounts owing in a currency other than US Dollars shall be notionally converted into US Dollars on the basis of the Bank's exchange rate for buying that currency with US Dollars at that time. Availability Any amounts from time to time owing under the facility are repayable on demand but it is the Bank's present intention to make the facility available until 30th November 2000. All moneys from time to time owing to the Bank under the facility shall be repaid no later than this date or such later date as may from time to time be advised in writing by the Bank. The amounts owing at any time may include interest or costs debited to one or more of the accounts in accordance with the terms of this letter. The Bank shall have the right at the time of making demand or at any time thereafter to convert all amounts then due and payable under the facility into sterling at the Bank's exchange rate for selling that currency against sterling at that time. The Bank shall as soon as possible after such conversion advise you of the sterling amount then owing. Interest Interest is calculated on the cleared daily balance of each account and will be payable on amounts owing up to the aforesaid limit at 1.75% per annum over the Bank's short term offered rate from time to time for the relevant currency. Continuation of a letter from Lloyds TSB Bank plc to: Evans & Sutherland Computer Limited 2 If at any time the Bank allows the amounts owing to exceed the agreed limit, interest will be payable on the excess at the Bank's unauthorised currency borrowing rate from time to time (currently 12% per annum above the Bank's relevant short term offered rate) for such currency or currencies as the Bank shall determine. Interest will be debited to the relevant account or, in the case of interest calculated in accordance with the previous paragraph, to such account as the Bank shall determine, semi-annually in arrears (normally on the l0th of June and December). Interest may also be debited on the date upon which the facility ceases to be available. The Bank's short term offered rate for each currency may vary from day to day and upon request the Bank will advise you of the rates then applicable. Interest will be calculated on the basis of the actual number of days elapsed and a 360 day year or a 365 day year as is in the Bank's reasonable opinion usual market practice for the relevant currency. Costs and Charges A 30 sterling pound semi-annual charges will be payable on each currency account in March and September. An arrangement fee of USD 11,250 is payable. This will be debited to your USD account number 11119338 in the next few days. All costs and expenses incurred by the Bank in creating, preserving or enforcing the security referred to below shall be debited to. Security It is a condition of the facility that amounts owing shall be secured by the following. Any security which is not already in place is to be provided to the Bank in a form acceptable to the Bank and, if so requested by the Bank, shall be accompanied by evidence of the value of the security. (a) an all moneys joint and several guarantee from Evans and Sutherland Computer Corporation for a principal amount of USD 5,000,000 plus interest and other costs as detailed in the guarantee, (b) a letter of negative pledge from you, (c) a letter of set off dated 23rd April 1996 from you, and (d) a standby letter of credit dated 2nd October 1997 from US Bank of Utah for (pound) 1,000,000. Financial Information Whilst the facility remains available you should provide to the Bank as soon as possible after the end of the period to which they relate copies of any financial infom1ation that the Bank may from time to time reasonably request, including. (a) your audited annual accounts within 210 days of the end of your financial year , (b) your quarterly management accounts within 45 days of the end of each quarter, and (c) the quarterly 10-Q reports of Evans and Sutherland Computer Corporation within 60 days of the end of each quarter and the annual 10-K reports of Evans and Sutherland Computer Corporation within 120 days of the end of their financial year. Continuation of a letter from Lloyds TSB Bank plc to: Evans & Sutherland Computer Limited 3 You should also provide to the Bank, at least 10 days prior to the commencement of each month, copies of your cash flows and budgets for the month then commencing. The figures so provided should demonstrate that:(i) your profit before taxation and interest paid and payable is equal to or greater than 300% of the total interest paid and payable, (ii) your profit before taxation and interest paid and payable is equal to or greater than 4% of the your turnover and, (iii) no dividends have been paid or are payable. Other Terms of Offer This letter is for the benefit of the contracting parties only and shall not confer any benefit on or be enforceable by a third party. Please confirm your acceptance of the facility offered by returning the attached duplicate of this letter with the acknowledgement signed in accordance with the bank mandate currently held by the Bank. If such confirmation is not received by the Bank (at the address given at the heading of this letter) by 15th July 2000 the offer will lapse. Yours faithfully For and on behalf of Lloyds TSB Bank plc /s/ R. Wood James A Riddall Manager Lloyds TSB Commercial We hereby acknowledge and accept the terms of your offer dated 15th June 2000 of which this is a duplicate and agree all the terms and conditions therein contained. In accepting this letter we confirm that neither the execution by us of this letter nor the utilisation by us of the facility being made available will conflict with or breach any requirement or limitation set out in our Memorandum and Articles of Association. For and on behalf of Evans & Sutherland Computer Limited (company registered number no 1750202) Signed by /s/ Stuart J. Anderson /s/ David J. Rushton date 19 June 2000 date 19 June 2000 This letter creates legal obligations. Before signing you may wish to take independent advice. Board Resolution EVANS & SUTHERLAND COMPUTER LIMITED EXTRACT from the Minutes of a Meeting of the Board of Directors of the above named Company duly convened and held on 19 June 2000 at 2 Horsham Gates. 1. Opening formalities 1.1 It was noted that a quorum was present. 2. Transaction and tabled documents 2.1 The Chairman reported that in connection with banking facilities granted or to be granted by Lloyds TSB Bank plc (the "Bank") to the Company, the Bank required the Company to execute and deliver to the Bank an Undertaking in the form of a Letter of Negative Pledge in the form produced to the meeting. 2.2 It was explained that the meeting had been called for the purpose of considering, and if thought fit, approving the execution of the Undertaking in the form of a Letter of Negative Pledge. 3. Disclosure of interests 3.1 All the Directors present confirmed that they were not in any way, whether directly or indirectly, interested in the creation of the proposed security. 4. Consideration of the relevant matters 4.1 The directors carefully considered the terms of the proposed security and unanimously decided that for the purpose of carrying on the business of the Company it would be in the commercial interests of and to the benefit of the Company to give the Bank the security which it required. 5. Resolutions IT WAS UNANIMOUSLY RESOLVED THAT: 5.1 the form of the Undertaking in the form of a Letter of Negative Pledge now produced to the meeting be and the same is hereby approved; 5.2 the Common Seal of the Company be affixed to the Undertaking in the form of a Letter of Negative Pledge and duly witnessed in the presence of any two directors or anyone director and the Secretary of the Company or that any two directors or anyone director and the Secretary of the Company be authorised to execute the security without affixing the Common Seal; 5.3 any one director or the Secretary of the Company be and is hereby authorised to do all such other things and to execute or to cause the execution of all such other documents as he may in his absolute and unfettered discretion think fit in connection with the facilities granted or to be granted by the Bank and/or in connection with the documents; 5.4 (without prejudice to the authority of any other person to do so) the Bank or its agent is hereby irrevocably authorised to date the security on behalf of the Company at any time after the security shall have been received by the Bank or its agent; and 5.5 the foregoing resolutions do not in any way prejudice or affect the instructions to the Bank contained in resolutions of the board constituting the Company's bank mandate. 6. Certificate IT IS HEREBY CERTIFIED THAT: 6.1 the foregoing is a true extract from the minutes of a meeting of the board of directors of the Company; 6.2 the resolutions set out in the extract were duly passed in accordance with the Memorandum and Articles of Association of the Company; 6.3 the passing of the resolutions and the completion of the transactions thereby contemplated do not, and will not, contravene any provision of the Memorandum and Articles of Association of the Company or of any trust deed, bond, mortgage, charge, contract, loan agreement, facility letter or other instrument binding upon the Company or its directors. /s/ Stuart J. Anderson /s/ Mike Wright /s/ David J. Rushton - ----------------------- -------------------- ------------------- CHAIRMAN SECRETARY DIRECTOR NEGATIVE PLEDGE TO: Lloyds TSB Bank plc 19th June 2000 In consideration of your granting or continuing to grant from time to time advances or other banking facilities and accommodation to us and/or anyone or more of our subsidiaries (within the meaning given to subsidiary undertaking in Section 258 of the Company Act 1985) for the time being, we hereby agreed that we will not and, we will procure that none of our subsidiary undertakings for the time being will, without your prior written consent: (a) materially change the nature of our or their business as now conducted; or (b) create or permit to subsist or arise any mortgage, charge, pledge, or lien or any other security interest or encumbrance ( other than a lien arising solely by operation of law in the ordinary course of business and those encumbrances disclosed to you in writing prior to the date hereof) over any of our , or such subsidiary's present or future undertaking, property, revenue or assets; or (c) permit to extend or increase the amount secured by any mortgage charge pledge or lien or any other security interest or encumbrance existing at and, disclosed to you in writing prior to, the date hereof; or (d) enter into or permit to subsist any transaction which, in legal terms, is not a secured borrowing but which has or could have an economic or a commercial or financial effect similar to that of a secured borrowing; or (e) part with, sell, transfer, lease or otherwise dispose of ( or attempt or agree to do any such thing) the whole or any material part of our or such subsidiary's undertaking, property, revenue or assets ( either by a single transaction or a number of transactions whether related or not) other than for full value on an arm's length basis and in the ordinary course of business as now conducted; or (f) factor or otherwise assign or deal with any book or other debts or securities for money now and from time to time due or owing to us or them otherwise than by getting in and realising the same in the ordinary course of trading as now conducted; or (g) save in respect of trade debts incurred in the ordinary course of business as now conducted give any guarantee or indemnity or any other form of undertaking or warranty to or for the benefit of, or lend any moneys to, any person. /s/ Darren Cosshall - ------------------------------ FOR AND ON BEHALF OF EVANS & SUTHERLAND COMPUTER LTD TO: Lloyds TSB Bank plc 19th June 2000 With reference to the above undertaking and for the consideration therein mentioned we jointly and severally agree that we will not do or suffer anything to be done which will be a breach of the express terms or of the spirit of the above undertaking and that in the event of any new directors of the company being appointed we shall use our best endeavours to obtain from such new directors their joint and several agreement to be similarly personally bound by this undertaking. David J. Rushton Stuart J. Anderson /s/ David J. Rushton /s/ Stuart J. Anderson - ---------------------- ---------------------- Commercial Director Managing Director EX-10.14 14 0014.txt FIRST AMENDMENT TO RIGHTS AGREEMENT FIRST AMENDMENT TO RIGHTS AGREEMENT This First Amendment to Rights Agreement (the "Amendment") is made and entered into effective as of the 7th day of June, 2000, by and between Evans & Sutherland Computer Corporation, a Utah corporation (the "Company"), and American Stock Transfer & Trust Company, as Rights Agent (the "Rights Agent"). Recitals A. Effective as of November 19, 1998 (the "Record Date"), the Company and the Rights Agent entered into a Rights Agreement (the "Agreement"), and the Board of Directors of the Company authorized and declared a dividend of one preferred share purchase right as described in the Agreement (a "Right") for each share of Common Stock of the Company outstanding as of the Record Date. B. The Agreement sets forth certain matters with respect to the nature, terms, exercise, modification and redemption of the Rights. C. The rights are currently redeemable, as provided in Section 23 of the Agreement, because no "Flip-In Event" (as defined in the Agreement) has yet occurred (meaning that no person has become an "Acquiring Person" as defined in the Agreement). D. As provided in Section 27 of the Agreement, so long as the Rights are redeemable, the Company may in its sole and absolute discretion, and the Rights Agent shall if the Company so directs, amend any provisions of the Agreement in any respect without the approval of any holders of the Rights, so long as no such amendment changes the Redemption Price (as defined in the Agreement) of the Rights. E. The Company desires to amend the terms of the Agreement to allow State of Wisconsin Investment Board ("SWIB"), a current shareholder of the Company, to increase its equity interest in the Company to up to 19.9%, without becoming an Acquiring Person, such as would trigger various rights and obligations under the Agreement. F. As contemplated by Section 30 of the Agreement, the Board of Directors of the Company has approved the foregoing amendments to the Agreement. G. Pursuant to the terms of the Agreement, the Rights Agent will implement the amendment to the Agreement described herein. Agreement NOW THEREFORE, the Company and the Rights Agent agree as follows: 1. Amendment of Agreement to Modify Definition of "Acquiring Person". The Agreement is hereby amended and modified to provide that SWIB will not be deemed to be an Acquiring Person until it becomes the Beneficial Owner (as defined in the Agreement) of more than 19.9% of the shares of Common Stock (as defined in the Agreement) then outstanding, and all inconsistent provisions of the Agreement shall be construed to reflect such modification. Unless otherwise defined herein, all capitalized terms herein shall have the meanings given to them in the Agreement. 2. Modification of Section 1(a) of Agreement. The definition of "Acquiring Person" as set forth in Section 1(a) of the Agreement is hereby modified to reflect the modification referenced above, to read in its entirety as follows: "(a) "Acquiring Person" shall mean (Y) any Person (as such term is hereinafter defined) other than State of Wisconsin Investment Board ("SWIB") who or which shall be the Beneficial Owner (as such term is hereinafter defined) of 15% or more of the shares of Common Stock then outstanding, or (Z) SWIB on such date as it becomes the Beneficial Owner of more than 19.9% of the shares of Common Stock then outstanding, but shall not include an Exempt Person (as such term is hereinafter defined); provided, however, that (i) if the Board of Directors of the Company determines in good faith that a Person who would otherwise be an Acquiring Person became such inadvertently (including, without limitation, because (A) such Person was unaware that it beneficially owned a percentage of Common Stock that would otherwise cause such Person to be an Acquiring Person or (B) such Person was aware of the extent of its Beneficial Ownership of Common Stock but had no actual knowledge of the consequences of such Beneficial Ownership under this Agreement) and without any intention of changing or influencing control of the Company, then such person shall not be deemed to be or to have become an Acquiring Person for any purposes of this Agreement unless and until such Person shall have failed to divest itself, as soon as practicable (as determined, in good faith, by the Board of Directors of the Company), of Beneficial Ownership of a sufficient number of shares of Common Stock so that such Person would no longer otherwise qualify as an Acquiring Person; (ii) if, as of the date hereof or prior to the first public announcement of the adoption of this Agreement, any Person is or becomes the Beneficial Owner of 15% or more of the shares of Common Stock outstanding, such Person shall not be deemed to be or to become an Acquiring Person unless and until such time as such Person shall, after the first public announcement of the adoption of this Agreement, become the Beneficial Owner of additional shares of Common Stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the outstanding Common Stock), unless, upon becoming the Beneficial Owner of such additional shares of Common Stock, such Person is not then the Beneficial Owner of 15% or more of the shares of Common Stock then outstanding; and (iii) no Person shall become an Acquiring Person as the result of an acquisition of shares of Common Stock by the Company which, by reducing the number of shares outstanding, increases the proportionate number of shares of Common Stock beneficially owned by such Person to (i) 15% or more of the shares of Common Stock then outstanding in the case of any Person other than SWIB, or (ii) more than 19.9% of the shares of Common Stock then outstanding in the case of SWIB, provided, however, that if a Person shall become the Beneficial Owner of (i) 15% or more of the shares of Common Stock then 2 outstanding, in the case of any person other than SWIB, or (ii) more than 19.9% of the shares of Common Stock outstanding, in the case of SWIB, by reason of such share acquisitions by the Company and shall thereafter become the Beneficial Owner of any additional shares of Common Stock (other than pursuant to a dividend or distribution paid or made by the Company on the outstanding Common Stock or pursuant to a split or subdivision of the outstanding Common Stock), then such Person shall be deemed to be an Acquiring Person unless upon becoming the Beneficial Owner of such additional shares of Common Stock such Person does not beneficially own either (i) 15% or more (in the case of any Person other than SWIB), or (ii) more than 19.9% (in the case of SWIB) of the shares of Common Stock then outstanding. For all purposes of this Agreement, any calculation of the number of shares of Common Stock outstanding at any particular time, including for purposes of determining the particular percentage of such outstanding shares of Common Stock of which any Person is the Beneficial Owner, shall be made in accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as in effect on the date hereof." 3. Modification of Section 3(a) of the Agreement. The reference in the first sentence of Section 3(a) of the Agreement to 15%, representing the threshold Beneficial Ownership of Common Stock by any Person other than an Exempt Person that would trigger a Distribution Date on the terms set forth in such Section, is hereby modified to be 15% or more in the case of any Person other than SWIB, and more than 19.9% in the case of SWIB. 4. Agreement, as Modified, to Continue in Full Force and Effect; Application of General Provisions. Except as specifically modified hereby, the Agreement shall continue in full force and effect. This Amendment shall be considered to be and construed as a part of the Agreement, and the general provisions of the Agreement, including those set forth in Sections 26 through 34 of the Agreement, shall apply equally to this Amendment. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed, effective as of the date first set forth above. EVANS & SUTHERLAND COMPUTER CORPORATION By: /s/ James R. Oyler ------------------------------------ Name: James R. Oyler ---------------------------------- Title: President and CEO --------------------------------- AMERICAN STOCK TRANSFER & TRUST COMPANY, as Rights Agent By: /s/ Herbert J. Lemmer ------------------------------------ Name: Herbert J. Lemmer ---------------------------------- Title: Vice President --------------------------------- 4 EX-27.1 15 0015.txt FINANCIAL DATA SCHEDULE
5 0000276283 EVANS & SUTHERLAND COMPUTER CORPORATION 1,000 6-MOS DEC-31-2000 JAN-01-2000 JUN-30-2000 19,355 0 35,626 (4,583) 39,713 164,624 140,408 (90,152) 222,482 98,924 18,015 23,886 0 1,945 79,712 222,482 71,544 71,544 67,734 67,734 41,597 3,457 647 (36,425) 18,943 (55,368) 0 0 0 (55,482) (5.93) (5.93)
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