As Filed With the Securities and Exchange Commission on February 12, 1999
Registration Statement No. 333-67189
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
--------------------------------------------
AMENDMENT NO. 1 TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
--------------------------------------------
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
(801) 588-1000
(Address, including zip code, and
telephone number, including area code,
of principal executive offices)
--------------------------------------------
John T. Lemley
Chief Financial Officer
Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
(801) 588-1000
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
--------------------------------------------
Copies to:
Dawn M. Call
Snell & Wilmer L.L.P.
111 East Broadway, Suite 900
Salt Lake City, Utah 84111
(801) 237-1900
--------------------------------------------
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.
[ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. |X|
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
CALCULATION OF REGISTRATION FEE
- --------------------------- -------------------------- -------------------------- ------------------------ -------------------------
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered(2) Offering Price Aggregate Registration
Registered(1) Per Unit Offering Price Fee
- --------------------------- -------------------------- -------------------------- ------------------------ -------------------------
Common Stock, $.20 par 1,279,870 $ 18.6875(3) $ 23,917,571(3) $ 6,649
value 115,000 $17.625(4) $2,026,875(4) $563
Shares
=========================== ========================== ========================== ======================== =========================
</TABLE>
(1) This registration statement covers the resale by certain selling
shareholders of up to an aggregate of 1,394,870 shares of common stock,
$.20 par value, of Evans & Sutherland Computer Corporation ("E&S"),
901,408 shares of which may be acquired by such selling shareholders
upon conversion of shares of Class B-1 Preferred Stock into common
stock, 378,462 shares of which may be acquired by such selling
shareholders upon the exercise of presently outstanding warrants to
purchase shares of Class B-1 Preferred Stock and the conversion of such
stock into common stock, and 115,000 shares of which may be acquired by
such selling shareholders upon the exercise of presently outstanding
options to purchase common stock.
(2) In the event of a stock split, stock dividend, or similar transaction
involving E&S's common stock, to prevent dilution, the number of shares
of E&S's common stock registered shall be automatically increased to
cover the additional shares of common stock in accordance with Rule
416(a) under the Securities Act of 1933.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the closing price of the common stock
on November 5, 1998, as reported on the NASDAQ National Market.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c), based on the closing price of the common stock
on February 9, 1999, as reported on the NASDAQ National Market.
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act or until the registration statement shall become effective on
such date as the Securities and Exchange Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
PROSPECTUS
600 Komas Drive
Salt Lake City, Utah 84108
(801) 588-1000
1,394,870 SHARES COMMON STOCK
With this prospectus, the selling shareholders identified in this
prospectus or in the accompanying prospectus supplement are offering up to
1,394,870 shares of our common stock.
The selling shareholders may sell these shares through public or
private transactions, on or off the NASDAQ National Market, at prevailing market
prices or at privately negotiated prices. The selling shareholders will receive
all of the net proceeds from the sale of the shares offered with this
prospectus. The selling shareholders will pay all underwriting discounts and
selling commissions, if any, applicable to the sale of those shares. E&S will
not receive any proceeds from the sale of the shares.
Before purchasing any of the shares, you should consider very
carefully the information presented under the caption "Risk
Factors" on page 2 of this prospectus.
E&S's common stock is traded on the NASDAQ National Market under the
symbol "ESCC."
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is February 12, 1999.
<PAGE>
============================================
1,394,870 Shares of
Common Stock
EVANS & SUTHERLAND
COMPUTER CORPORATION
PROSPECTUS
============================================
<PAGE>
==================================================================
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful. The information in this
prospectus is current only as of its date.
---------------
TABLE OF CONTENTS
Page
RISK FACTORS.................................................2
THE COMPANY..................................................6
USE OF PROCEEDS..............................................6
SELLING SHAREHOLDER..........................................7
ABOUT THIS PROSPECTUS........................................7
WHERE YOU CAN FIND MORE INFORMATION..........................8
PLAN OF DISTRIBUTION.........................................8
EXPERTS.....................................................10
LEGAL MATTERS...............................................10
==================================================================
<PAGE>
RISK FACTORS
Before making an investment decision, you should carefully consider the
risk factors described below. If any of the following risks actually occurs, it
could materially adversely affect our business, financial condition, and results
of operations. The risks and uncertainties described below are not the only ones
we are facing. We may have other risks and uncertainties of which we are not yet
aware or which we currently believe are immaterial that may also impair our
business operations. As a prospective investor, you should consult independent
advisors as to the technical, tax, business and legal considerations regarding
an investment in the shares.
Success Dependent on Competitive Strategy
Our continued success depends on our ability to compete in an industry
that is highly competitive, with rapid technological advances and constantly
improving products in both price and performance. As most market areas in which
we operate continue to grow, we are experiencing increased competition, and we
expect this trend to continue. In recent years, we have been forced to adapt to
domestic and worldwide political, economic, and technological developments that
have strongly affected our markets. Under our current competitive strategy, we
endeavor to remain competitive by growing existing businesses, developing new
businesses internally, selectively acquiring businesses, increasing efficiency,
improving access to new markets, and reducing costs. Although our executive
management team and Board of Directors continue to review and monitor our
strategic plans, we have no assurance that we will be able to continue to follow
our current strategy or that this strategy will be successful.
Stock Price Volatility Related to Period-to-Period Fluctuations of Earnings
Our stock price is subject to significant volatility and will likely be
adversely affected if revenues or earnings in any quarter fail to meet the
investment community's expectations. Our revenues and earnings may fail to meet
expectations because they fluctuate and are difficult to predict. Our earnings
during 1997 and 1998 fluctuated by as much as 194% from quarter to quarter. One
of the reasons we experience such fluctuations is that the largest share of our
revenues and earnings is from our core simulation-related businesses, which
typically have long delivery cycles and contract lengths. In fact, well over
half of each quarter's revenues typically result from orders received in
previous quarters. The timing of customer acceptance of certain large-scale
commercial or government contracts may affect the timing and amount of revenue
that can be recognized; thus, causing our periodic operating results to
fluctuate. Our results may further fluctuate if United States and international
governments delay or even cancel production on large-scale contracts due to lack
of available funding.
Our earnings may not meet either investor or internal expectations
because our budgeted operating expenses are relatively fixed in the short term,
in light of expected revenue, and even a small revenue shortfall may cause a
period's results to be below expectations. Such a revenue shortfall could arise
from any number of factors, including delays in the availability of products,
delays from chip suppliers, discontinuance of key components from suppliers,
other supply constraints, transit interruptions, and overall economic
conditions. Another reason our earnings may not meet expectations is that our
gross margins are heavily influenced by mix considerations. These mix
considerations include the mix of lower-margin prime contracts versus
sub-contracts, the mix of new products and markets versus established products
and markets, the mix of high-end products versus low-end products, as well as
the mix of configurations within these product categories. Future margins may
not duplicate historical margins or growth rates.
<PAGE>
Significant Investment in Research and Development
We have no assurance that our significant investment in research and
development will generate future revenues or benefits. We currently make and
plan to continue to make a significant investment in research and development.
We expect total spending for research and development to increase to
approximately $31.5 million or 17% of sales in 1998 as compared to $25.5 million
or 16% of sales in 1997. This investment is necessary for us to be able to
compete in the graphics simulation industry. Developing new products and
software is expensive and often involves a long payback cycle. While we have
every reason to believe these investments will be rewarded with
revenue-generating products, customer acceptance ultimately dictates the success
of development and marketing efforts.
Success Dependent on Ability to Develop, Produce and Transition New Products
Our continued success depends on our ability to develop, produce and
transition technologically complex and innovative products that meet customer
needs. We have no assurance that we will be able to successfully continue such
development, production and transition.
The development of new technologies and products is increasingly
complex and expensive, which among other risks, increases the risk of product
introduction delays. The introduction of a new product requires close
collaboration and continued technological advancement involving multiple
hardware and software design and manufacturing teams within E&S as well as teams
at outside suppliers of key components. The failure of any one of these elements
could cause our new products to fail to meet specifications or to miss the
aggressive timetables that we establish.
As the variety and complexity of our product families increase, the
process of planning and managing production, inventory levels, and delivery
schedules also becomes increasingly complex. There is no assurance that
acceptance of and demand for our new products will not be affected by delays in
this process. Additionally, if we are unable to meet our delivery schedules, we
may be subject to the penalties, including liquidated damages, that are included
in some of our customer contracts.
Product transitions are a recurring part of our business. Our short
product life cycles require our ability to successfully manage the timely
transition from current products to new products. In fact, it is not unusual for
us to announce a new product while its predecessor is still in the final stages
of its development. Our transition results could be adversely affected by such
factors as development delays, late release of products to manufacturing,
quality or yield problems experienced by production or suppliers, variations in
product costs, delays in customer purchases of existing products in anticipation
of the introduction of new products, and excess inventories of older products
and components.
Significant Dependence on United States Government Contracts
In 1997, 29% of our sales were to agencies of the United States
government, either directly or through prime contractors or subcontractors, for
which there is intense competition. Accordingly, we have no assurance that we
will be able to maintain a significant portion of our sales. These sales are
subject to the inherent risks related to government contracts, including
uncertainty of economic conditions, changes in government policies and
requirements that may reflect rapidly changing military and political
developments, and unavailability of funds. These risks also include
technological uncertainties and obsolescence, and dependence on annual
Congressional appropriation and allotment of funds. In the past, some of our
programs have been delayed, curtailed, or terminated. Although we cannot predict
such uncertainties, in our opinion there are no spending reductions or funding
limitations pending that would impact our contracts.
Other characteristics of the government contract market that may affect
our operating results include the complexity of designs, the difficulty of
forecasting costs and schedules when bidding on developmental and highly
sophisticated technical work, and the speed with which product lines become
obsolete due to technological advances and other factors characteristic of the
market. Our earnings may vary materially on some contracts depending upon the
types of government long-term contracts undertaken, the costs incurred in their
<PAGE>
performance, and the achievement of other performance objectives. Furthermore,
due to the intense competition for available United States government business,
maintaining or expanding government business increasingly requires us to commit
additional working capital for long-term programs and additional investments in
company-funded research and development.
Our dependence on government contracts may lead to other perils as well
because as a United States government contractor or sub-contractor, our
contracts and operations are subject to government oversight. The government may
investigate and make inquiries of our business practices and conduct audits of
our contract performance and cost accounting. These investigations may lead to
claims against E&S. Under United States government procurement regulations and
practices, an indictment of a government contractor could result in that
contractor being fined and/or suspended for a period of time from eligibility
for bidding on, or for award of, new government contracts; a conviction could
result in debarment for a specified period of time.
Dependence on Certain Significant Customers
We currently derive a significant portion of our revenues from a
limited number of non-government customers. The loss of any one or more of these
customers could have a material adverse effect on our business, financial
condition and results of operations. In 1997 we were dependent on three of our
customers for approximately 26% of our consolidated revenues. In 1996 we were
dependent on the same three customers for approximately 34% of our consolidated
revenues. We expect that sales to a limited number of customers will continue to
account for a substantial portion of our revenues in the foreseeable future. We
have no assurance that revenues from this limited number of customers will
continue to reach or exceed historical levels in the future.
Significant Dependence on International Business
Any reduction of our international business could significantly affect
our revenues. Our international business accounted for 59% of our 1997 sales. We
expect that international sales will continue to be a significant portion of our
overall business in the foreseeable future.
Our international business experiences many of the same risks our
domestic business encounters as well as additional risks such as exposure to
currency fluctuations and changes in foreign economic and political
environments. Despite our exposure to currency fluctuations, we are not engaged
in any hedging activities to offset the risk of exchange rate fluctuations. The
current economic crisis affecting the Asian markets is an example of a change in
a foreign economic environment that could affect our international business. We
are currently unable to estimate the impact this crisis may have on our 1998
revenues. Any similar economic downturns may also decrease the number of orders
we receive and our receivable collections.
Our international transactions frequently involve increased financial
and legal risks arising from stringent contractual terms and conditions and
widely differing legal systems, customs, and standards in foreign countries. In
addition, our international sales often include sales to various foreign
government armed forces, with many of the same inherent risks associated with
United States government sales identified above.
Failure of Commercial Airline Business
We have no assurance that our commercial airline business will continue
to succeed. Our commercial airline business currently accounts for approximately
15% to 20% of our revenues and is subject to many of the risks related to the
commercial simulation market that may adversely affect our business. The
following risks are characteristic of the commercial simulation market:
uncertainty of economic conditions, dependence upon the strength of the
commercial airline industry, air pilot training requirements, competition,
timely performance by subcontractors on contracts in which E&S is the prime
contractor, and changes in technology.
<PAGE>
Failure of New Businesses
We have no assurance that our new businesses will gain market
acceptance or survive the intense competitive pressures of their respective
markets. Our new businesses currently account for approximately 12% to 15% of
our revenues in the aggregate; however, we project these businesses to grow to
approximately 18% to 20% of revenues by 1999. These businesses will not survive
and we will not meet our revenue projections if we are unable to (a) develop
strong partner relationships with manufacturers of computer chips and personal
computers in our desktop graphics business, (b) gain market acceptance of new
technology and increase market size and demand in a developing new market in our
digital theater business, and (c) gain market acceptance in a developing new
market in our digital studio business. Other factors that may also affect the
success of our new businesses include technological uncertainties and
obsolescence, uncertainty of economic conditions, unavailability of working
capital, and other risks inherent in new businesses.
Lack of Return on Investment in Private Finance Initiatives
We are currently involved in several private finance initiatives in
which we may not recover our investment. A private finance initiative is
designed to increase the involvement of the private sector in the provision of
services that have traditionally been provided by the public sector. Private
finance initiatives require the private sector to use its own capital to invest
in assets which then are used to provide a long term service, such as simulation
training, to a public sector customer. The number of programs being developed as
private finance initiatives is increasing worldwide. We are currently involved
in proposals to international military customers where we would be an equity
partner of the private finance initiative's prime contractor and program
manager. Private finance initiative programs, however, are subject to inherent
risks, including the commitment and resulting unavailability of working capital
and fixed assets, long cycles in which to receive a return on investment, and
termination or default of contracts. These risks also include technological
uncertainties and obsolescence, uncertainty of economic conditions,
unavailability of funds, and changes in United States and international
government policies and requirements that may reflect rapidly changing military
and political developments.
Year 2000 Noncompliance
We have no assurance that all of our internal systems, products and
services, and suppliers will be Year 2000 compliant and that the lack of
compliance will not significantly impact our operations and financial results
including our ability to continue as a going concern. The Year 2000 issue is the
result of potential problems with computer systems or any equipment with
computer chips that store the year portion of the date as just two digits (e.g.
98 for 1998). Systems using this two-digit approach will not be able to
determine whether "00" represents the year 2000 or 1900. The problem, if not
corrected, will make those systems fail altogether or, even worse, allow them to
generate incorrect calculations causing a disruption of normal operations.
Although we have created a company-wide Year 2000 team to identify and
resolve Year 2000 issues associated with our information and non-information
technology systems and our products and services, we have no assurance that we
will address all potential problems. There can be no assurance that there will
not be a delay in, or increased costs associated with, the implementation of
Year 2000 modifications, or that our suppliers will adequately prepare for the
Year 2000 issue. It is possible that any such delays, increased costs, or
supplier failures could have a material adverse impact on our operations and
financial results, by, for example, impacting our ability to deliver products or
services to our customers. We are currently developing a contingency plan to
cope with our unresolved Year 2000 problems.
For third-party products that we distribute with our products, we have
sought information from the product manufacturers regarding the products' Year
2000 readiness status. We direct customers who use the third-party products to
the product manufacturer for detailed Year 2000 status information. On our Year
2000 web site at www.es.com/investor/y2k_corp.html, we provide information
regarding which of our products is Year 2000 ready and other general information
related to our Year 2000 efforts. We have no assurance that the third-party
products will be Year 2000 ready or that a lack of readiness by such third
parties will not materially adversely impact our operations and financial
results.
<PAGE>
Anti-Takeover Effect of State Law
We are subject to the Utah Control Shares Acquisition Act which
provides that any person who acquires 20% or more of the outstanding voting
shares of a publicly held Utah corporation will not have voting rights with
respect to the acquired shares unless a majority of the disinterested
shareholders of the corporation votes to grant such rights. This could deprive
shareholders of opportunities to realize takeover premiums for their shares or
other advantages that large accumulations of stock would provide because anyone
interested in acquiring E&S could only do so with the cooperation of the board.
Forward-Looking Statements and Associated Risks
This prospectus, including all documents incorporated herein by
reference, 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, including, among others, those statements preceded by, followed by
or including the words "believes," "expects," "anticipates" 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. In
addition to the other risks described elsewhere in this "Risk Factors"
discussion, important factors to consider in evaluating such forward-looking
statements include risk of product demand, market acceptance, economic
conditions, competitive products and pricing, difficulties in product
development, commercialization and technology. In light of these risks and
uncertainties, many of which are described in greater detail elsewhere in this
"Risk Factors" discussion, there can be no assurance that the events
contemplated by the forward-looking statements contained in this prospectus
will, in fact, occur.
THE COMPANY
E&S develops and manufactures hardware and software for visual systems
that produce vivid and highly realistic three-dimensional (3-D) graphics and
synthetic environments. Our product offerings include a full range of
high-performance visual systems for simulation, training and virtual reality
applications, as well as graphic accelerator products for personal computer
workstations. We are organized into six business units. Each business unit
develops and markets its products to a worldwide customer base. These business
units can be grouped into two areas: core businesses and new businesses. The
core businesses are the simulation-related units where we have an established
market presence with significant market share and which represent the majority
of E&S's revenues and earnings. The new businesses are in high-growth markets
where we have superior technology, which can be directed to new applications.
E&S was founded in 1968 and is headquartered in Salt Lake City, Utah. E&S also
has offices located in Milpitas, California; Boston, Massachusetts; Dallas,
Texas; Orlando, Florida; Beijing, China; Dubai, United Arab Emirates; Horsham,
England; and Munich, Germany.
USE OF PROCEEDS
Other than the price the selling shareholders will pay to exercise
their warrants and options, we will not receive any of the proceeds from any
sale of shares offered with this prospectus. We will pay the costs of this
offering, which are estimated to be $39,212. The selling shareholders are not
obligated to exercise their warrants and options, and there can be no assurance
that they will choose to exercise all or any of such warrants and options. Our
gross proceeds if all of the warrants and options are exercised for cash would
be $14,149,438. However, we are unable to predict the exact amount of cash we
will receive upon exercise of the warrants and options because the warrants and
options have a cashless exercise provision. This provision allows the holder to
pay for the warrants or options by reducing the number of shares received upon
exercise. We will use any proceeds we receive from the exercise of warrants and
options to augment our working capital for general corporate purposes.
<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information as of February 12,
1999, with respect to the selling shareholders. Beneficial ownership after this
offering will depend on the number of shares actually sold by the selling
shareholders. To our knowledge, the selling shareholders have sole voting and
investment power with respect to these securities.
On July 22, 1998, we issued to Intel Corporation 901,408 shares of
E&S's Class B-1 Preferred Stock and a warrant to purchase 378,462 shares of the
Class B-1 Preferred Stock at a price per share of $33.28125. Intel paid us
$23,999,988 for the 901,408 shares and we used these funds to augment our
working capital for general corporate purposes. All of the shares of Class B-1
Preferred Stock may be converted into shares of common stock at any time,
initially on a one-for-one basis. This conversion ratio is subject to adjustment
if E&S issues common stock or Class B-1 Preferred Stock as a dividend or in a
stock split or reduces the outstanding stock in a reverse stock split or stock
combination. The conversion ratio may also be adjusted in the event of a
reclassification or similar transaction. Once Intel converts the Class B-1
Preferred Stock into shares, it may offer or sell to the general public any or
all of the shares with this prospectus. We have entered into an agreement with
Intel to accelerate the development of high-end graphics and video subsystems
for workstations.
On October 14, 1998 we granted 40,000 options to purchase shares of
common stock to Mr. Christiansen, a former E&S director and current E&S
consultant, at an exercise price of $14 per share. All of these options are
currently exercisable. On October 25, 1998, we granted 75,000 options to
purchase shares of common stock to Mr. Gibbs, an E&S officer, at an exercise
price of $13.25 per share. Of these options, 25,000 are currently exercisable,
25,000 will be exercisable on October 25, 1999, and 25,000 will be exercisable
on October 25, 2000.
<TABLE>
<CAPTION>
Name of Selling Shares of Common Stock Shares of Common Shares of Common Stock
Shareholder Beneficially Owned Prior Stock Being Registered Beneficially Owned After
to the Offering For Resale the Offering(2)
- ---------------------------- ------------------------------- -------------------------- ------------------------------
Number % of Class(1) Number Number Percent(3)
------------ -------------- -------------------------- ------------ --------------
<S> <C> <C> <C> <C> <C>
Intel Corporation 1,282,128 11.46% 1,279,870 2,258 *
Henry N. Christiansen 40,000 * 40,000 0 *
William C. Gibbs 75,000 * 75,000 0 *
</TABLE>
* Represents less than 1% of the total issued and outstanding shares of
common stock.
(1) Includes all common stock beneficially owned by the selling
shareholder as a percentage of the 9,910,236 shares of common stock outstanding
on February 12, 1999, together with all options, warrants or other securities
which the selling shareholder may convert into common stock.
(2) Assumes that the selling shareholder disposes of all of the shares
covered by this prospectus and does not acquire any additional common stock.
Assumes no other exercise of options, warrants, conversion rights or additional
securities, if any.
(3) Includes all common stock beneficially owned by the selling
shareholder as a percentage of the 11,305,106 shares of common stock outstanding
after the offering and exercise of all options and warrants and conversion of
securities into common stock.
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement we have filed with
the Securities and Exchange Commission to register 1,394,870 shares of our
common stock, par value $.20. This prospectus does not include all of the
information contained in the registration statement and the exhibits to the
registration statement. For further information about E&S and the shares, you
should read the registration statement and the exhibits to the registration
statement. Statements contained in this prospectus concerning documents we have
filed with the SEC as exhibits to the registration statement or otherwise are
not necessarily complete and, in each instance, you should refer to the actual
filed document. Nevertheless, we have provided all material information from the
exhibits that is relevant to this prospectus.
<PAGE>
We have not authorized anyone to provide you with any information that
is different from the information contained in this prospectus. The selling
shareholders are offering to sell and seeking offers to buy the shares only in
jurisdictions where offers and sales are permitted. The information contained in
this prospectus is accurate only as of the date of this prospectus, regardless
of the time of delivery of this prospectus or of the sale of any shares.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms at 450 Fifth Street, Mail Stop 1-2, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from our web site at "http://www.es.com" or at the SEC's website at
"http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
an important part of this prospectus and information that we file later with the
SEC will automatically update and supersede this information. We incorporate by
reference the documents listed below, and any future filings made by us with the
SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934:
(1) Annual Report on Form 10-K for the fiscal year ended December
31, 1997, as amended through the date hereof;
(2) Proxy Statement dated April 20, 1998;
(3) Quarterly Report on Form 10-Q for the quarter ended March 27,
1998;
(4) Quarterly Report on Form 10-Q for the quarter ended June 26,
1998, as amended through the date hereof;
(5) Quarterly Report on Form 10-Q for the quarter ended September
25, 1998, as amended through the date hereof;
(6) Current Report on Form 8-K dated July 13, 1998; and
(7) Description of E&S's capital stock contained in its
registration statement on Form 8-A filed September 27, 1978,
including all amendments or reports filed for the purpose of
updating such description.
You may request a copy of these filings, at no cost, by writing or
telephoning John T. Lemley, Chief Financial Officer, at Evans & Sutherland
Computer Corporation, 600 Komas Drive, Salt Lake City, Utah 84108, telephone
(801) 588-1000.
PLAN OF DISTRIBUTION
The selling shareholders, their pledgees, donees, transferees,
distributees or successors-in-interest may sell any or all of the shares from
time to time while the registration statement of which this prospectus is a part
remains effective. E&S has agreed that it will use its best efforts to keep the
registration statement effective for three years (or a shorter period if all the
shares have been sold or disposed of prior to such time).
The selling shareholders may sell shares on the NASDAQ National Market,
in privately negotiated transactions or otherwise, at any price. Shares may be
sold by one or more of the following methods, without limitation:
<PAGE>
(a) block trades in which the broker or dealer so engaged will attempt
to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction,
(b) purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this prospectus,
(c) ordinary brokerage transactions and transactions in which the
broker solicits purchasers,
(d) privately negotiated transactions, and
(e) a combination of any such methods of sale.
In effecting sales, brokers and dealers engaged by the selling shareholders may
arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from the selling shareholder in amounts to be
negotiated which are not expected to exceed those customary in the types of
transactions involved. Broker-dealers may agree with the selling shareholders to
sell a specified number of shares at a stipulated price per share, and, to the
extent such broker-dealer is unable to do so acting as agent for the selling
shareholders, to purchase as principal any unsold shares at the price required
to fulfill the broker-dealer commitment to the selling shareholders.
Broker-dealers who acquire shares as principal may thereafter resell such
shares. The selling shareholders may also sell shares in accordance with Rule
144 under the Securities Act, rather than pursuant to this prospectus.
In connection with distributions of shares or otherwise, the selling
shareholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with such transactions, broker-dealers or
other financial institutions may engage in short sales of E&S's common stock in
the course of hedging the positions they assume with the selling shareholders.
The selling shareholders may also sell E&S's common stock short and deliver
shares to close out such short positions. The selling shareholders may also
enter into option or other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealers or other
financial institutions of shares offered hereby, which shares such
broker-dealers or other financial institutions may resell pursuant to this
prospectus. The selling shareholders may also pledge shares to a broker-dealer
or other financial institution, and, upon default, such broker-dealer or other
financial institution may effect sales of the pledged shares pursuant to this
prospectus.
The selling shareholders and any brokers and dealers through whom sales
of the shares are made may be deemed to be "underwriters" within the meaning of
the Securities Act, and the commissions or discounts and other compensation paid
to such persons may be regarded as underwriters' compensation. E&S will pay all
expenses of registration (including the fees and expenses of the selling
shareholders' counsel) incurred in connection with this offering, but the
selling shareholders will pay all underwriting discounts, brokerage commissions
and other similar expenses incurred by the selling shareholders. E&S has agreed
to indemnify the selling shareholders against certain losses, claims, damages
and liabilities, including those arising under the Securities Act.
At the time a particular offer of the shares is made, to the extent
required, E&S will distribute a supplement to this prospectus which will
identify and set forth the aggregate amount of shares being offered and the
terms of the offering.
Sales of the shares at less than market prices may depress the market
price of E&S's common stock. Moreover, generally the selling shareholders are
not restricted as to the number of shares that may be sold at any one time, and
it is possible that a significant number of shares could be sold at the same
time. However, to the extent a selling shareholder is an affiliate of E&S, the
selling shareholder would be subject to the volume limitations of Rule 144 under
the Securities Act.
The selling shareholder and any other person participating in such
distribution will be subject to applicable provisions of the Exchange Act and
the rules and regulations thereunder, including, without limitation, Regulation
M, which may limit the timing of purchases and sales of the shares by the
selling shareholders and any other such person. Furthermore, Regulation M of the
Exchange Act may restrict the ability of any person engaged in the distribution
of the shares to engage in market-making activities with respect to the
particular shares being distributed for a period of up to five business days
prior to the commencement of such distribution. All of the foregoing may affect
the marketability of the shares and the ability of any person or entity to
engage in market-making activities with respect to the shares.
<PAGE>
To comply with certain states' securities laws, if applicable, the
shares may be sold in any such jurisdictions only through registered or licensed
brokers or dealers. The shares may not be sold in certain states unless the
seller meets the applicable state notice and filing requirements.
EXPERTS
The financial statements and schedule of Evans & Sutherland Computer
Corporation as of December 31, 1997 and December 27, 1996 and for each of the
years in the three-year period ended December 31, 1997, have been incorporated
by reference herein and in the registration statement in reliance upon the
report of KPMG LLP, independent certified public accountants, incorporated by
reference herein, and upon the authority of said firm as experts in accounting
and auditing.
LEGAL MATTERS
For purposes of this offering, Snell & Wilmer L.L.P., Salt Lake City,
Utah, counsel to E&S, is giving its opinion on the validity of the shares.
<PAGE>
II-1
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
E&S estimates that expenses in connection with the transactions
described in this registration statement will be as follows. E&S will pay all
expenses incurred with respect to the transactions.
SEC Registration Fee....................................................$ 7,212
Printing Expenses.........................................................1,000
Accounting Fees and Expenses..............................................5,000
Legal Fees and Expenses..................................................25,000
Transfer Agent Fees and Expenses..........................................1,000
Total.........................................................$ 39,212
ITEM 15. Indemnification of Directors and Officers
Section 15-10a-901, et seq., of the Utah Revised Business Corporations
Act authorizes a court to award, or a corporation's board of directors to grant,
indemnify to directors and officers in terms sufficiently broad to permit such
indemnification under certain circumstances for liabilities (including
reimbursement for expenses incurred) arising under the Securities Act. The E&S
Bylaws require E&S to indemnify its directors and officers, including
circumstances in which indemnification is otherwise discretionary under Utah
law. E&S has entered into indemnification agreements with its directors
containing provisions which are in some respects broader than the specific
indemnification provisions contained in Utah law. The indemnification agreements
may require E&S, among other things, to indemnify its directors and officers
against certain liabilities that may arise by reason of their status or service
as directors or officers (other than liabilities arising from willful misconduct
of a culpable nature), to advance their expenses incurred as a result of any
proceeding against them as to which they could be indemnified, and to obtain
director and officer insurance, if available on reasonable terms. E&S's Articles
of Incorporation provide for indemnification of its directors and officers to
the maximum extent permitted by Utah law, and E&S's Bylaws provide for
indemnification of its directors, officers, employees and other agents as
permitted by Utah law.
ITEM 16. Exhibits
<TABLE>
<CAPTION>
Exhibit Number Exhibit
<S> <C>
4.1 Series B Preferred Stock and Warrant Purchase Agreement dated July 20, 1998, between
E&S and Intel, filed with the Form 10-Q for the quarter ended September 25, 1998,
incorporated herein by reference
4.2 Warrant to Purchase Series B Preferred Stock dated July 22, 1998, between E&S and
Intel, filed with the Form 10-Q for the quarter ended September 25, 1998, incorporated
herein by reference
4.3 Certificate of Designation, Preferences and Other
Rights of the Class B-1 Preferred Stock of E&S,
filed with the Form 10-Q for the quarter ended
September 25, 1998, incorporated herein by
reference
4.4 Option to purchase shares of E&S common stock dated October 14, 1998 between E&S and
Henry Christiansen
4.5 Option to purchase shares of E&S common stock dated October 25, 1998 between E&S and
William Gibbs
5.1 Opinion of Snell & Wilmer, LLP
23.1 Consent of KPMG LLP
23.2 Consent of Snell & Wilmer, LLP (included in Exhibit 5.1)
24 Power of Attorney (included on signature page of registration statement)
</TABLE>
<PAGE>
II-2
ITEM 17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by
Section 10(a)(3) of the Securities Act;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a twenty percent (20%) change in the
maximum aggregate offering price set forth in the "Calculation
of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8, or Form F-3 and the information
required to be included in a post-effective amendment by those paragraphs is
contained in periodic reports filed by the registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the registrant's annual report pursuant
to Section 13(a) or Section 15(d) of the Exchange Act (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(5) To deliver or cause to be delivered with the prospectus,
to each person to whom the prospectus is sent or given, the latest
annual report, to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where interim
financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause
to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by
reference in the prospectus to provide such interim financial
information.
<PAGE>
(6) That, insofar as indemnification for liabilities arising
under the Securities Act may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the
opinion of the Commission such indemnification is against public policy
as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred or paid
by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such
issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Salt Lake City, State of Utah on the 12th day of
February, 1999.
EVANS & SUTHERLAND COMPUTER CORPORATION
By: ______/s/_____________________________
Mark C. McBride
Vice President, Corporate Controller and
Corporate Secretary
Pursuant to the requirements of the Securities Act, this
registration statement has been signed below by the following persons in the
capacity and on the dates indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
February 12, 1999
_______*_________________________ Chairman of the Board of Directors
Stewart Carrell
_______*________________________ Director and President (Chief Executive February 12, 1999
-
James R. Oyler Officer)
_______*_________________________ Vice President and Chief Financial February 12, 1999
-
John T. Lemley Officer (Principal Financial Officer)
Vice President, Corporate Controller and
_______*__________________________ Corporate Secretary (Principal February 12, 1999
-
Mark C. McBride Accounting Officer)
_______*__________________________ Director February 12, 1999
Gerald S. Casilli
_______*_________________________ Director February 12,1999
Peter O. Crisp
_____ *_________________________ Director February 12, 1999
---
Ivan E. Sutherland
______ /s/__________________________ February 12, 1999
----
Mark C. McBride
* Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Exhibit
<S> <C>
4.1 Series B Preferred Stock and Warrant Purchase Agreement dated July 20, 1998, between
E&S and the selling shareholder, filed with the Form 10-Q for the quarter ended
September 25, 1998, incorporated herein by reference
4.2 Warrant to Purchase Series B Preferred Stock dated July 22, 1998, between E&S and the
selling shareholder, filed with the Form 10-Q for the quarter ended September 25, 1998,
incorporated herein by reference
4.3 Certificate of Designation, Preferences and Other
Rights of the Class B-1 Preferred Stock of E&S,
filed with the Form 10-Q for the quarter ended
September 25, 1998, incorporated herein by
reference
4.4 Option to purchase shares of E&S common stock dated October 14, 1998 between E&S and
Henry Christiansen
4.5 Option to purchase shares of E&S common stock dated October 25, 1998 between E&S and
William Gibbs
5.1 Opinion of Snell & Wilmer, LLP
23.1 Consent of KPMG LLP
23.2 Consent of Snell & Wilmer, LLP (included in Exhibit 5.1)
24 Power of Attorney (included on signature page of registration statement)
</TABLE>
EXHIBIT 4.4
OPTION TO PURCHASE COMMON STOCK--CHRISTIANSEN
<PAGE>
Neither this Option nor the Common Stock to be issued upon exercise hereof, has
been registered under the Securities Act of 1933, as amended (the "Act"), or
qualified under any state securities law (the "Law"), and this Option has been,
and the Common Stock to be issued upon exercise hereof will be, acquired for
investment and not with a view to, or for resale in connection with, any
distribution thereof. No such sale or other disposition may be made without an
effective registration statement under the Act and qualification under the law
related thereto or an opinion of counsel reasonably satisfactory to Evans &
Sutherland Computer Corporation and its counsel, that said registration and
qualifications are not required under the Act and Law, respectively.
EVANS & SUTHERLAND COMPUTER CORPORATION
STOCK OPTION AGREEMENT
1. NOTICE OF STOCK OPTION GRANT
Optionee: Henry N. Christiansen
You have been granted an option (the "Option") to purchase Common Stock
of Evans & Sutherland Computer Corporation (the "Company"), subject to the
following terms and conditions:
Date of Grant October 14, 1998
Exercise Price per Share $14.00
Total Number of Shares 40,000
Type of Option: Nonstatutory Stock Option
Term/Expiration Date: October 14, 2008
Vesting Schedule:
This Option may be exercised, in whole or in part, subject to the terms
of this Agreement, at any time after the Date of Grant and prior to the
Expiration Date.
<PAGE>
2. AGREEMENT
(a) Grant of Option. Evans & Sutherland Computer Corporation, a Utah
corporation (the "Company"), hereby grants to the Optionee named in the
Notice of Stock Option Grant in Section 1 above (the "Optionee"), an
option (the "Option") to purchase a total number of shares of Common
Stock (the "Shares") set forth in Section 1, at the exercise price per
share set forth in Section 1 (the "Exercise Price").
(b) Right to Exercise.
(i) This Option may not be exercised for a fraction of a share.
(ii) In the event of Optionee's death, the exercisability of the
Option is governed by Section 5 below.
(iii) In no event may this Option be exercised after the date of
expiration of the term of this Option as set forth in Section 1.
(c) Method of Exercise. This Option shall be exercisable by written notice
(in the form attached as Exhibit A) which shall state the election to
exercise the Option, the number of Shares in respect of which the
Option is being exercised, and such other representations and
agreements as to the holder's investment intent with respect to such
shares of Common Stock as may be required by the Company. Such written
notice shall be signed by the Optionee and shall be delivered in
person or by certified mail to the Corporate Secretary of the Company.
The written notice shall be accompanied by payment of the Exercise
Price. This Option shall be deemed to be exercised upon receipt by the
Company of such written notice accompanied by the Exercise Price.
No Shares will be issued pursuant to the exercise of an Option
unless such issuance and such exercise shall comply with all relevant
provisions of law and the requirements of any stock exchange upon which
the Shares may then be listed. Assuming such compliance, for income tax
purposes the Shares shall be considered transferred to the Optionee on
the date on which the Option is exercised with respect to such Shares.
3. OPTIONEE'S REPRESENTATIONS. In the event the Shares purchasable pursuant to
the exercise of this Option have not been registered under the Securities Act of
1933, as amended ("1933 Act"), at the time this Option is exercised, Optionee
shall, if required by the Company, concurrently with the exercise of all or any
portion of this Option, deliver to the Company his Investment Representation
Statement in the form attached hereto as Exhibit B.
4. METHOD OF PAYMENT. Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(a) Cash;
<PAGE>
(b) Check;
(c) In lieu of exercising this Option by delivery of cash or check, the Optionee
may make a valid Option exercise by electing to receive shares equal to the
value of this Option (or the portion thereof being canceled) by surrendering
this Option at the principal office of the Company together with the Exercise
Notice (a "Net Exercise"), in which event the Company shall transfer to the
Optionee a number of Shares computed using the following formula:
X = Y (A-B)
-------
A
Where X = the number of Option Shares to be issued to such
Optionee.
Y = the number of Option Shares purchasable by such
Optionee under this Option
Agreement, the rights to which are surrendered
pursuant to the Net Exercise.
A = the Fair Market Value of one Option Share, (as
determined by the average of the
high and low prices of the Company's Common
Stock on the trading day immediately preceding
the date the Option is exercise, as reported by
The Nasdaq National Market or other exchange
upon which the Company's stock is quoted).
B = the Exercise Price (as adjusted to the
date of such calculation).
5. DEATH OF OPTIONEE. In the event of the death of Optionee, this Option shall
terminate on the earlier of (i) the date on which the Option would have lapsed
had the Optionee lived; or (ii) 15 months after the date of the Optionee's
death. Upon the Optionee's death, any exercisable Options may be exercised by
the Optionee's legal representative or representatives, by the person or persons
entitled to do so under the Optionee's last will and testament, or, if the
Optionee shall fail to make testamentary disposition of the Option or shall die
intestate, by the person or persons entitled to receive said Option under the
applicable laws of descent and distribution.
6. NON-TRANSFERABILITY OF OPTION. This Option may not be transferred in any
manner otherwise than by will or by the laws of descent or distribution and may
be exercised during the lifetime of Optionee only by him. The terms of this
Option shall be binding upon the executors, administrators, heirs, successors
and assigns of the Optionee.
7. TERM OF OPTION. This Option may be exercised only within the term set out in
Section 1, and may be exercised during such term only in accordance with the
terms of this Option.
8. TAXATION UPON EXERCISE OF OPTION. Optionee understands that, upon exercising
a nonstatutory Option, he or she will recognize income for tax purposes in an
amount equal to the excess of the then fair market value of the Shares over the
exercise price. However, the timing of this income recognition may be deferred
for up to six months if Optionee is subject to Section 16 of the Securities
<PAGE>
Exchange Act of 1934, as amended (the "Exchange Act"). If the Optionee is an
employee, the Company will be required to withhold from Optionee's compensation,
or collect from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income.
9. DILUTION PROTECTION.
(a) In the event the Company shall (i) declare a dividend on its Common Stock
in shares of Common Stock or make a distribution in shares of Common Stock,
(ii) declare a stock split or reverse stock split of its outstanding shares
of Common Stock, (iii) combine its outstanding shares of Common Stock into
a smaller number of shares of Common Stock or (iv) issue by
reclassification of its shares of Common Stock other securities (including
any such reclassification in connection with a consolidation or merger in
which the Company or any of its subsidiaries is the continuing
corporation), then the number of shares of Common Stock of the Company,
deliverable to Optionee hereunder and the exercise price related thereto
shall be adjusted so that Optionee shall be entitled to receive the kind
and number of shares of Common Stock of the Company which the Optionee has
the right to receive, upon the happening of any of the events described
above, with respect to the shares of the Company Stock which were otherwise
deliverable pursuant hereto. An adjustment made pursuant to this paragraph
shall become effective immediately after the effective date of such event;
(b) Whenever the number of Shares or the exercise price of this Option is
adjusted pursuant to this paragraph, the Company shall promptly mail by
first class mail, postage prepaid, to Optionee, notice of such adjustment
or adjustments.
10. REGISTRATION UNDER THE SECURITIES ACT.
(a) Piggyback Registration. If at any time the Company shall propose to file
with the Securities and Exchange Commission (the "Commission") on behalf of
the Company or any other stockholder a registration statement under the
Securities Act of 1933, as amended (the "Act"), with respect to any class
of security (as defined in Section 3(a)(10) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act")), other than a registration
statement approved by the Board of Directors on Form S-4 or S-8, or such
amended or alternative form for Form S-4 or S-8 as the Commission may from
time to time require, the Company shall in each case timely notify Optionee
and include in such registration statement any or all of the Shares as
Optionee may request within twenty (20) days after the Company's giving of
such notice, subject to the conditions set forth herein.
(b) Duties of Company. In connection with the preparation and filing of a
registration statement, the Company agrees to (i) use its best efforts to
cause such registration statement to become and remain effective; (ii)
furnish to the Optionee such number of copies of a prospectus, including a
preliminary prospectus, in conformity with the requirements of the Act, and
<PAGE>
such other documents as Optionee may reasonably request in order to
facilitate the disposition of the Shares; and (iii) use its best efforts to
register and qualify the shares in such jurisdictions as shall be
identified by the Optionee for the distribution of the securities covered
by the registration statement.
(c) Indemnification by Optionee. To the extent permitted by law, Optionee will
indemnify and hold harmless the Company, and its directors, officers,
employees, agents and representatives, as well as its controlling persons
(within the meaning of the Act) against any losses, claims, damages,
liabilities, or expenses, including without limitation, attorneys' fees and
disbursements, which arise out of or are based upon any violation by
Optionee of the Act, or any rule or regulation promulgated thereunder
applicable to Optionee or arise out of or are based upon any untrue
statement of any material fact contained in the registration statement, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only to the extent that such
untrue statement or alleged untrue statement or omission, or alleged
omission was made in such registration statement in reliance upon and in
conformity with information furnished by Optionee in writing expressly for
use in connection with such registration statement.
(d) Indemnification by Company. To the extent permitted by law, the Company
will indemnify and hold harmless Optionee against any losses, claims,
damages, liabilities, or expenses, including without limitation attorneys'
fees and disbursements, to which Optionee may become subject under the Act
to the extent that such losses, claims, damages or liabilities arise out of
or are based upon any violation by the Company of the Act, or any rule or
regulation promulgated thereunder applicable to the Company, or arise out
of or are based upon any untrue or alleged untrue statement of any material
fact contained in the registration statement, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or arise out of any violation by the Company of any rule or
regulation promulgated under the Act applicable to the Company and relating
to action or inaction of the Company in connection with such registration
statement; provided, however, that the indemnity agreement contained in
this paragraph shall not apply to any loss, damage or liability to the
extent that same arises out of or is based upon an untrue statement or
omission made in connection with such registration statement in reliance
upon and in conformity with information furnished in writing expressly for
use in connection with such registration by Optionee.
(e) Undertaking by Optionee. Optionee undertakes to comply with all applicable
laws governing the distribution of securities in connection with Optionee's
sale of the Shares, and to notify the Company of any changes in Optionee's
plan of distribution so that the Company can sticker or amend the
registration statement as the Company deems appropriate in its sole
discretion.
(f) Conditions to Registration. In the event that the proposed registration by
the Company is, in whole or in part, an underwritten public offering of
common stock of the Company, any request pursuant to these registration
rights to register shares may specify that such shares are to be included
<PAGE>
in the underwriting on the same terms and conditions as such other shares
of common stock, if any, otherwise being sold through underwriters under
such registration; provided, however, that if the managing underwriter
determines and advises in writing that the inclusion of all shares proposed
to be included in the underwritten public offering would interfere with the
successful marketing of the public offering, then the number of shares
intended to be included by Optionee shall be reduced pro rata among the
holders of other shares who have a right to have their shares included in
the offering. In each case, those shares which are excluded from the
underwritten public offering shall be withheld from the market by Optionee
for a period, not to exceed 120 days, which the managing underwriter
reasonably determines as necessary in order to effect the underwritten
public offering. Under no circumstances may Optionee transfer or otherwise
convey the registration rights herein set forth without the written consent
of the Company. No holder of Shares shall have any right to take any action
to restrain, enjoin or otherwise delay any registration as a result of any
controversy that might arise with respect to the interpretation or
implementation of these registration rights.
EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation
By: _____________________________
Print Name: ______________________
Title: ____________________________
Optionee hereby accepts this Option subject to all of the terms and
provisions thereof. Optionee has reviewed this Option in its entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option
and fully understands all provisions of the Option.
Dated: _______________ _____________________________________
Optionee
<PAGE>
EXHIBIT A
STOCK OPTION
EXERCISE NOTICE
Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
Attn: Corporate Secretary
1. EXERCISE OF OPTION. Effective as of today, ___________, ____, the undersigned
("Optionee") hereby elects to exercise Optionee's option to purchase _________
shares of the Common Stock (the "Shares") of Evans & Sutherland Computer
Corporation (the "Company") under and pursuant to the Nonstatutory Stock Option
Agreement dated ____________ (the "Option Agreement").
2. REPRESENTATIONS OF OPTIONEE. Optionee acknowledges that Optionee has
received, read and understood the Option Agreement and agrees to abide by and be
bound by its terms and conditions.
3. RIGHTS AS SHAREHOLDER. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of
a duly authorized transfer agent of the Company), no right to vote or receive
dividends or any other rights as a shareholder shall exist with respect to the
optioned Stock, notwithstanding the exercise of the Option. The Company shall
issue (or cause to be issued) such stock certificate promptly after the Option
is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued.
4. TAX CONSULTATION. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee's purchase or disposition of the Shares.
Optionee represents that Optionee has consulted with any tax consultants
Optionee deems advisable in connection with the purchase or disposition of the
Shares and that Optionee is not relying on the Company for any tax advice.
5. RESTRICTIVE LEGEND. Optionee understands and agrees that in the event the
Shares are not registered, the Company shall cause the legend set forth below or
legends substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Shares together with any other legends that may be
required by state or federal securities laws:
<PAGE>
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 (THE "1933 ACT") OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE 1933 ACT OR SUCH APPLICABLE STATE
SECURITIES LAWS, OR, IN THE OPINION OF COUNSEL IN FORM AND
SUBSTANCE SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH
OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN
COMPLIANCE THEREWITH.
6. SUCCESSORS AND ASSIGNS. The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the
benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth, this Agreement shall be binding upon
Optionee and his or her heirs, executors, administrators, successors and
assigns.
7. GOVERNING LAW; SEVERABILITY. This Agreement shall be governed by and
construed in accordance with the laws of the State of Utah excluding that body
of law pertaining to conflicts of law. Should any provision of this Agreement be
determined by a court of law to be illegal or unenforceable, the other
provisions shall nevertheless remain effective and shall remain enforceable.
8. NOTICES. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery or upon deposit in
the United States mail by certified mail, with postage and fees prepaid,
addressed to the other party at its address as shown below beneath its
signature, or to such other address as such party may designate in writing from
time to time to the other party.
9. FURTHER INSTRUMENTS. The parties agree to execute such further instruments
and to take such further action as may be reasonably necessary to carry out the
purposes and intent of this Agreement.
10. DELIVERY OF PAYMENT. Optionee herewith delivers to the Company the full
Exercise Price for the Shares.
11. ENTIRE AGREEMENT. The Option Agreement is incorporated herein by reference.
This Agreement, the Option Agreement and the Investment Representation Statement
constitute the entire agreement of the parties and supersede in their entirety
all prior undertakings and agreements of the Company and Optionee with respect
to the subject matter hereof.
<PAGE>
Submitted by: Accepted by:
OPTIONEE: ___________________________________
By:________________________________
Its:_______________________________
- --------------------------------------
(Signature)
Address: Address:
- --------------------------- ------------------------------
- --------------------------- ------------------------------
<PAGE>
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE : Henry N. Christiansen
COMPANY : Evans & Sutherland Computer Corporation
SECURITY : Common Stock
AMOUNT :
DATE :
In connection with the purchase of the above-listed Securities, the undersigned
Optionee represents to the Company the following:
1. Optionee is aware of the Company's business affairs and
financial condition and has acquired sufficient information about the
Company to reach an informed and knowledgeable decision to acquire the
securities. Optionee is acquiring these securities for investment for
Optionee's own account only and not with a view to, or for resale in
connection with, any "distribution" thereof within the meaning of the
Securities Act of 1933, as amended (the "1933 Act").
2. Optionee acknowledges and understands that the securities
constitute "restricted securities" under the 1933 Act and have not been
registered under the 1933 Act in reliance upon a specific exemption
therefrom, which exemption depends upon, among other things, the bona
fide nature of Optionee's investment intent as expressed herein. In
this connection, Optionee understands that, in the view of the
Securities and Exchange Commission, the statutory basis for such
exemption may be unavailable if Optionee's representation was
predicated solely upon a present intention to hold these Securities for
the minimum capital gains period specified under tax statutes, for a
deferred sale, for or until an increase or decrease in the market price
of the Securities, or for a period of one year or any other fixed
period in the future. Optionee further understands that the Securities
must be held indefinitely unless they are subsequently registered under
the 1933 Act or an exemption from such registration is available.
Optionee understands that the certificate evidencing the securities
will be imprinted with a legend which prohibits the transfer of the
Securities unless they are registered or such registration is not
required under federal and applicable state securities laws, in the
opinion of counsel satisfactory to the Company.
3. Optionee is familiar with the provisions of Rule 701 and
Rule 144, each promulgated under the 1933 Act, which, in substance,
permit limited public resale of "restricted securities" acquired,
directly or indirectly from the issuer thereof, in a non-public
offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of the
<PAGE>
grant of the Option to the Optionee, the exercise will be exempt from
registration under the 1933 Act. In the event the Company becomes
subject to the reporting requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, ninety (90) days thereafter (or such
longer period as any market stand-off agreement may require) the
securities exempt under Rule 701 may be resold, subject to the
satisfaction of certain of the conditions specified by Rule 144,
including: (1) the resale being made through a broker in an unsolicited
"broker's transaction" or in transactions directly with a market maker
(as said term is defined under the Securities Exchange Act of 1934);
and, in the case of an affiliate, (2) the availability of certain
public information about the Company, (3) the amount of securities
being sold during any three month period not exceeding the limitations
specified in Rule 144(e), and (4) the timely filing of a Form 144, if
applicable.
In the event that the Company does not qualify under Rule 701
at the time of grant of the Option, then the securities may be resold
in certain limited circumstances subject to the provisions of Rule 144,
which requires the resale to occur not less than two years after the
party has purchased, and made full payment for, within the meaning of
Rule 144, the securities to be sold; and, in the case of an affiliate,
or of a non-affiliate who has held the securities less than three
years, the satisfaction of the conditions set forth in sections (1),
(2), (3) and (4) of the paragraph immediately above.
4. Optionee further understands that in the event all of the
applicable requirements of Rule 701 or 144 are not satisfied,
registration under the 1933 Act, compliance with Regulation A, or some
other registration exemption will be required; and that,
notwithstanding the fact that Rules 144 and 701 are not exclusive, the
Staff of the Securities and Exchange Commission has expressed its
opinion that persons proposing to sell private placement securities
other than in a registered offering and otherwise than pursuant to
Rules 144 or 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk. Optionee
understands that no assurances can be given that any such other
registration exemption will be available in such event.
Signature of Optionee:
---------------------------
Date:________________
EXHIBIT 4.5
OPTION TO PURCHASE COMMON STOCK--GIBBS
<PAGE>
Neither this Option nor the Common Stock to be issued upon exercise hereof, has
been registered under the Securities Act of 1933, as amended (the "Act"), or
qualified under any state securities law (the "Law"), and this Option has been,
and the Common Stock to be issued upon exercise hereof will be, acquired for
investment and not with a view to, or for resale in connection with, any
distribution thereof. No such sale or other disposition may be made without an
effective registration statement under the Act and qualification under the law
related thereto or an opinion of counsel reasonably satisfactory to Evans &
Sutherland Computer Corporation and its counsel, that said registration and
qualifications are not required under the Act and Law, respectively.
EVANS & SUTHERLAND COMPUTER CORPORATION
STOCK OPTION AGREEMENT
This stock option (the "Option" or the "Agreement") is being granted
pursuant to certain resolutions of the Board of Directors of Evans & Sutherland
Computer Corporation, dated October 13, 1998.
NOTICE OF STOCK OPTION GRANT
Optionee:
William C. Gibbs
You have been granted an Option to purchase shares of Common Stock of
Evans & Sutherland Computer Corporation (the "Company"). This Option shall be
subject to the following terms and conditions:
Date of Grant: October 25, 1998
Exercise Price Per Share: $ 13.25
Number of Shares: 75,000
Type of Option: Nonqualified Stock Option
Expiration Date: October 25, 2008, unless
sooner terminated as set
forth in paragraph 7
herein.
Exercise Price:
The exercise price of this Option is $ 13.25 per share as may be
adjusted from time as provided below ("Exercise Price").
<PAGE>
Vesting Schedule:
This Option may be exercised, in whole or in part, subject to
the terms of this Agreement, in accordance with the following vesting schedule:
(i) 1/3 of the Options at any time after the Date of Grant and prior to the
Expiration Date; (ii) 1/3 of the Options at any time on or after October 25,
1999 and prior to the Expiration Date; and (iii) 1/3 of the Options at any time
on or after October 25, 2000 and prior to the Expiration Date.
AGREEMENT
1. Grant Of Option. The Company hereby grants to William C. Gibbs (the
"Optionee"), an option (the "Option") to purchase the number of shares (the
"Shares") as set forth in the Notice of Grant attached as Part I of this
Agreement at the Exercise Price per share set forth in the Notice of Grant,
subject to the terms and conditions set forth herein.
2. Exercise Of Option.
(a) Right to Exercise. This Option is exercisable during its term as set forth
in the Notice of Grant and the applicable provisions of this Option
Agreement. In the event of Optionee's death, disability or other
termination of Optionee's employment, the exercisability of the Option is
governed by the applicable provisions of this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an exercise
notice, in the form attached as Exhibit A (the "Exercise Notice"), which
shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"),
and such other representations and agreements as may be required by the
Company. The Exercise Notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares. This Option shall be deemed to
be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price.
3. Method Of Payment. Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(a) Cash;
(b) Check;
(c) In lieu of exercising this Option by delivery of cash or check, the
Optionee may make a valid Option exercise by electing to receive
shares equal to the value of this Option (or the portion thereof being
canceled) by surrendering this Option at the principal office of the
Company together with the Exercise Notice (a "Net Exercise"), in which
event the Company shall transfer to the Optionee a number of Shares
computed using the following formula:
X = Y (A-B)
-------------
A
<PAGE>
Where X = the number of Option Shares to be issued to such
Optionee.
Y = the number of Option Shares purchasable by
such Optionee under this Option Agreement, the
rights to which are surrendered pursuant to the
Net Exercise.
A = the Fair Market Value of one Option Share, (as
determined by the Closing price of the Company's
Common Stock on the trading day immediately
preceding the date the Option is exercised, as
reported by The Nasdaq National Market or other
exchange upon which the Company's stock is
quoted).
B = the Exercise Price (as adjusted to the
date of such calculation).
4. Registration Under The Securities Act.
(a) Demand Rights. Provided that the Company is eligible to
file a registration statement on Form S-3 or Form S-8 (in connection
with this Option), if at any time after December 31, 1998 the Company
shall receive from the Optionee a written request that the Company
effect a registration on Form S-3 or Form S-8 to permit the sale or
disposition of the Shares, the Company shall file a registration
statement on Form S-3 or Form S-8, as the case may be, as expeditiously
as possible covering the Shares. However, the Optionee is limited to
only one (1) demand upon the Company to effect a registration on Form
S-3 or Form S-8 to permit the sale or disposition of the Shares (the
"Demand Right"), so long as the Form S-3 or Form S-8 first demanded
remains effective. If such registration statement lapses or Optionee is
unable to sell all shares covered hereby, this Demand Right shall be
reinstated so long as Optionee owns any Shares. Once filed, the
registration statement covering the Shares shall remain current and
effective until expiration or exercise and sale of all shares subject
to options herein.
(b) Duties of Company. In connection with the preparation and
filing of a registration statement, the Company agrees to (i) use its
best efforts to cause such registration statement to become and remain
effective; (ii) furnish to the Optionee such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as
Optionee may reasonably request in order to facilitate the disposition
of the Shares; and (iii) use its best efforts to register and qualify
the shares in such jurisdictions as shall be identified by the Optionee
for the distribution of the securities covered by the registration
statement.
(c) Indemnification by Optionee. To the extent permitted by
law, Optionee will indemnify and hold harmless the Company, and its
directors, officers, employees, agents and representatives, as well as
its controlling persons (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities, or expenses,
including without limitation, attorneys' fees and disbursements, which
arise out of or are based upon any violation by Optionee of the
Securities Act, or any rule or regulation promulgated thereunder
<PAGE>
applicable to Optionee or arise out of or are based upon any untrue
statement of any material fact contained in the registration statement,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or alleged untrue statement or
omission, or alleged omission was made in such registration statement
in reliance upon and in conformity with information furnished by
Optionee in writing expressly for use in connection with such
registration statement.
(d) Indemnification by Company. To the extent permitted by
law, the Company will indemnify and hold harmless Optionee against any
losses, claims, damages, liabilities, or expenses, including without
limitation attorneys' fees and disbursements, to which Optionee may
become subject under the Securities Act to the extent that such losses,
claims, damages or liabilities arise out of or are based upon any
violation by the Company of the Securities Act, or any rule or
regulation promulgated thereunder applicable to the Company, or arise
out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the registration statement, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or arise out of any violation by the
Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction of the
Company in connection with such registration statement; provided,
however, that the indemnity agreement contained in this paragraph shall
not apply to any loss, damage or liability to the extent that same
arises out of or is based upon an untrue statement or omission made in
connection with such registration statement in reliance upon and in
conformity with information furnished in writing expressly for use in
connection with such registration by Optionee.
(e) Undertaking by Optionee. Optionee undertakes to comply
with all applicable laws governing the distribution of securities in
connection with Optionee's sale of the Shares, and to notify the
Company of any changes in Optionee's plan of distribution so that the
Company can sticker or amend the registration statement as the Company
deems appropriate in its sole discretion.
5. Assignability Of Option. This Option may be assigned by the holder
upon the giving of written notice to the Company of (i) the name of the assignee
("Assignee") and (ii) the number of Options assigned to any Assignee.
Upon any assignment of the Option or portion thereof, the Registration
Rights granted pursuant to Section 4 of this Option Agreement can only be
exercised upon the unanimous written consent of all holders of the Options at
the time the Demand Right is exercised. The terms of this Option Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of
the Optionee.
<PAGE>
6. Term Of Option. This Option must be exercised within ten (10) years
from the date hereof, and may be exercised during such term only in accordance
with the terms of this Option Agreement.
7. Termination Of Option. The Option shall terminate under the
following circumstances:
(a) The Option shall terminate on the Expiration Date;
(b) If the Optionee dies before the Option terminates pursuant
to paragraph 7(a), above, the Option shall terminate on the earlier of
(i) the date on which the Option would have lapsed had the Optionee
lived; or (ii) 15 months after the date of the Optionee's death. Upon
the Optionee's death, any exercisable Options may be exercised by the
Optionee's legal representative or representatives, by the person or
persons entitled to do so under the Optionee's last will and testament,
or, if the Optionee shall fail to make testamentary disposition of the
Option or shall die intestate, by the person or persons entitled to
receive said Option under the applicable laws of descent and
distribution.
8. Acceleration of Vesting of Option. This Option shall vest
immediately in full upon a Change of Control (as herein defined) of the Company.
A "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:
(a) 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;
(b) A change in ownership of the Company through a transaction or
series of transactions, such that 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 (other than any current officer of the Company or member of the
Company's Board of Directors) is (are) or become(s), in the aggregate,
the Beneficial Owner (as defined in Rule 13d-3 of the General Rules
and Regulations of the Securities Exchange Act of 1934 , directly or
indirectly, of securities of the Company representing twenty percent
(20%) or more of the Company's then outstanding securities;
(c) 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 an 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 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;
(d) 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 an 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;
<PAGE>
(e) 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;
(f) 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;
(g) 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 8(g), 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).
9. Dilution Protection.
(a) In the event the Company shall (i) declare a dividend on
its Common Stock in shares of Common Stock or make a distribution in
shares of Common Stock, (ii) declare a stock split or reverse stock
split of its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of Common
Stock other securities (including any such reclassification in
connection with a consolidation or merger in which the Company or any
of its subsidiaries is the continuing corporation), then the number of
shares of Common Stock of the Company, deliverable to Optionee
hereunder and the exercise price related thereto shall be adjusted so
that Optionee shall be entitled to receive the kind and number of
shares of Common Stock of the Company which the Optionee has the right
to receive, upon the happening of any of the events described above,
with respect to the shares of the Company stock which were otherwise
deliverable pursuant hereto. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date
of such event;
(b) Whenever the number of Shares or the exercise price of
this Option is adjusted pursuant to this paragraph, the Company shall
promptly mail by first class mail, postage prepaid, to Optionee, notice
of such adjustment or adjustments.
<PAGE>
10. Availability Of Company Stock. The Company hereby agrees and
covenants that at all times during the term of this Option it shall reserve for
issuance a sufficient number of shares of Common Stock as would be required upon
full exercise of the rights represented by this Agreement.
11. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option. The Optionee may incur regular
federal income tax liability upon exercise of the Option. The Optionee
may be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee, the Company
will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of
exercise.
(b) Disposition of Shares. If the Optionee holds the Shares
for at least one year, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal income tax
purposes.
12. Governing Law. This Agreement is governed by the laws of the
State Utah.
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first set forth above.
EVANS & SUTHERLAND COMPUTER CORPORATION
By:___________________________________
Its:___________________________________
OPTIONEE:
--------------------------------------
<PAGE>
EXHIBIT A
EVANS & SUTHERLAND COMPUTER CORPORATION
EXERCISE NOTICE
Evans & Sutherland Computer Corporation
c/o __________________________
600 Komas Drive
Salt Lake City, Utah 84108
1. EXERCISE OF OPTION. Effective as of today, ________________, ___, the
undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
"Shares") of the non-voting Common Stock of Evans & Sutherland Computer
Corporation (the "Company") under and pursuant to the Stock Option Agreement
dated _____________ (the "Option Agreement"). The purchase price for the Shares
shall be as set forth in the Option Agreement, as adjusted.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the full
purchase price for the Shares either |_| in cash or check or |_| by Net
Exercise.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser has
received, read and understood the Option Agreement and agrees to abide by and be
bound by its terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing the Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Shares, notwithstanding the exercise of the Option. A stock certificate
for the number of Shares so acquired shall be issued to the Purchaser as soon as
practicable after exercise of the Option.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser's purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted with any tax consultants
Purchaser deems advisable in connection with the purchase or disposition of the
Shares and that Purchaser is not relying on the Company for any tax advice.
6. ENTIRE AGREEMENT. The Option Agreement is incorporated herein by reference.
This Exercise Notice and the Option Agreement constitute the entire agreement of
the parties and supersede in their entirety all prior undertakings and
agreements of the Company and the Purchaser with respect to the subject matter
hereof.
<PAGE>
Submitted by: Accepted by:
PURCHASER: EVANS & SUTHERLAND COMPUTER CORPORATION
By: _______________________________
Signature Its: _______________________________
Print Name
Address:
- -----------------
EXHIBIT 5.1
OPINION OF SNELL & WILMER, LLP
February 12, 1999
Evans & Sutherland Computer Corporation
600 Komas Drive
Salt Lake City, Utah 84108
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
We have acted as counsel to Evans & Sutherland Computer Corporation, a
Utah corporation (the "Company"), and in such capacity have examined the
Company's Registration Statement on Form S-3 (the Form S-3, including the
amendments thereto being referred to collectively herein as the "Registration
Statement"), filed by the Company with the Securities and Exchange Commission
("Commission") on November 12, 1998 under the Securities Act of 1933, as amended
("Act"). The Registration Statement relates to the proposed registration for
resale by certain selling shareholders ("Selling Shareholders") of up to an
aggregate of 1,394,870 shares of common stock, $.20 par value per share of E&S,
901,408 shares which may be acquired by such Selling Shareholders upon
conversion of shares of Class B-1 Preferred Stock, 378,462 shares which may be
acquired by such Selling Shareholders upon the exercise of presently outstanding
warrants to purchase shares of Class B-1 Preferred Stock and conversion of such
shares, and 115,000 shares which may be acquired by such Selling Shareholders
upon the exercise of presently outstanding options to purchase common stock.
As counsel for the Company and for purposes of this opinion, we have
made those examinations and investigations of legal and factual matters we
deemed advisable and have examined originals or copies, certified or otherwise
identified to our satisfaction as true copies of the originals, of those
corporate records, certificates, documents and other instruments which, in our
judgment, we considered necessary or appropriate to enable us to render the
opinion expressed below, including the Company's Articles of Incorporation, as
amended to date, the Company's Bylaws, as amended to date, and the minutes of
meetings of the Company's Board of Directors and other corporate proceedings
relating to the authorization and issuance of the Selling Shareholders' shares.
We have assumed the genuineness and authorization of all signatures and the
conformity to the originals of all copies submitted to us or inspected by us as
certified, conformed or photostatic copies. Also, we have assumed the proper
exercise and payment for the warrants and options underlying the shares being
registered in the Registration Statement. Further, we have assumed the due
execution and delivery of certificates representing the Selling Shareholders'
shares.
<PAGE>
Based upon the foregoing, and assuming payment of the exercise price,
satisfaction of the other conditions of the Selling Shareholders' warrants and
options and conversion of all of the Class B-1 Preferred Stock, and relying
solely thereon, we are of the opinion the shares that will be issued upon
exercise of the outstanding warrants and options and conversion of all of the
Class B-1 Preferred Stock, will be duly authorized and will be legally and
validly issued, fully paid and nonassessable.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the caption "Legal
Matters" in the Prospectus included in the Registration Statement. In giving
this consent we do not hereby admit that we are in the category of persons whose
consent is required under Section 7 of the Act or the rules and regulations of
the Commission thereunder.
Very truly yours,
Snell & Wilmer, L.L.P.
/s/
EXHIBIT 23.1
CONSENT OF KPMG LLP
Independent Accountants' Consent
The Board of Directors and Stockholders
Evans & Sutherland Computer Corporation:
We consent to incorporation by reference in Registration Statement No. 333-67189
on Form S-3 of Evans & Sutherland Computer Corporation of our report dated
February 11, 1998, relating to the consolidated balance sheets of Evans &
Sutherland Computer Corporation and subsidiaries as of December 31, 1997 and
December 27, 1996, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the years in the three-year
period ended December 31, 1997, and related schedule, which report appears in
the December 31, 1997 Annual Report on Form 10-K of Evans & Sutherland Computer
Corporation and to the reference to our firm under the heading "Experts" in the
prospectus.
KPMG LLP
/S/ KPMG LLP
Salt Lake City, Utah
February 12, 1999
