Schedule 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant | |
Check the appropriate box:
| | Preliminary Proxy Statement | | Confidential, For
Use of the Commission
Only (as permitted by
Rule 14a-6(e)(2))
|X| Definitive Proxy Statement
| | Definitive Additional Materials
| | Soliciting Material Under Rule 14a-12
EVANS & SUTHERLAND COMPUTER CORPORATION
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(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
| | Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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| | Fee paid previously with preliminary materials:
- --------------------------------------------------------------------------------
| | Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
EVANS & SUTHERLAND (Logo)
April 24, 2000
Dear Evans & Sutherland Shareholder:
You are cordially invited to attend Evans & Sutherland's 2000 annual
meeting of shareholders to be held on Wednesday, May 17, 2000 at 11:00 a.m.,
local time, at our principal executive offices located at 600 Komas Drive, Salt
Lake City, Utah 84108.
An outline of the business to be conducted at the meeting is given in
the accompanying Notice of Annual Meeting of Shareholders and Proxy Statement.
In addition to the matters to be voted on, there will be a report on our
progress and an opportunity for shareholders to ask questions.
I hope you will be able to join us. To ensure your representation at
the meeting, I encourage you to complete, sign, and return the enclosed proxy
card as soon as possible. Your vote is very important. Whether you own a few or
many shares of stock, it is important that your shares be represented.
Sincerely,
/s/ James R. Oyler
James R. Oyler
President and
Chief Executive Officer
|_| 600 Komas Drive |_| Salt Lake City, Utah 84108 |_| tel 801-588-1000 |_|
fax 801-588-4500 |_| web es.com
<PAGE>
EVANS & SUTHERLAND
COMPUTER CORPORATION
---------------------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
MAY 17, 2000
TO THE SHAREHOLDERS:
The annual meeting of shareholders of Evans & Sutherland Computer
Corporation will be held on Wednesday, May 17, 2000 at 11:00 a.m., local time,
at 600 Komas Drive, Salt Lake City, Utah 84108. At the meeting, you will be
asked:
1. To elect two directors to serve until the 2003 annual meeting of
shareholders;
2. To approve an amendment to the 1998 Stock Option Plan;
3. To ratify the appointment of KPMG LLP as independent auditors of
Evans & Sutherland for the fiscal year ending December 31, 2000;
and
4. To transact such other business as may properly be presented at
the annual meeting.
The foregoing items of business are more fully described in the proxy
statement accompanying this notice.
If you were a shareholder of record at the close of business on April
14, 2000, you may vote at the annual meeting and any adjournment(s) thereof.
We invite all shareholders to attend the meeting in person. If you
attend the meeting, you may vote in person even if you previously signed and
returned a proxy.
FOR THE BOARD OF DIRECTORS
Mark C. McBride
Vice President and
Corporate Secretary
Salt Lake City, Utah
April 24, 2000
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YOUR VOTE IS IMPORTANT. TO ASSURE REPRESENTATION OF YOUR SHARES, PLEASE
COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED
ENVELOPE.
- --------------------------------------------------------------------------------
<PAGE>
EVANS & SUTHERLAND
COMPUTER CORPORATION
600 Komas Drive
Salt Lake City, Utah 84108
PROXY STATEMENT
FOR THE ANNUAL MEETING OF SHAREHOLDERS
GENERAL
Evans & Sutherland Computer Corporation, a Utah corporation, is
soliciting this proxy on behalf of its Board of Directors to be voted at the
2000 annual meeting of shareholders to be held on Wednesday, May 17, 2000 at
11:00 a.m., local time, or at any adjournment or postponement thereof. The
annual meeting of shareholders will be held at Evans & Sutherland's principal
executive offices located at 600 Komas Drive, Salt Lake City, Utah 84108.
METHOD OF PROXY SOLICITATION
These proxy solicitation materials were mailed on or about April 24,
2000 to all shareholders entitled to vote at the meeting. Evans & Sutherland
will pay the cost of soliciting these proxies. These costs include the expenses
of preparing and mailing proxy materials for the annual meeting and
reimbursement paid to brokerage firms and others for their expenses incurred in
forwarding the proxy material. Evans & Sutherland has engaged the firm of Morrow
& Company, Inc., a proxy solicitation firm, to assist Evans & Sutherland in the
solicitation of proxies for the meeting. Evans & Sutherland will pay
approximately $7,500 in fees for Morrow's services and will reimburse Morrow for
reasonable out of pocket expenses. Directors, officers, or employees of Evans &
Sutherland may also solicit proxies without additional compensation.
VOTING OF PROXIES
Your shares will be voted as you direct on your signed proxy card. If
you do not specify on your proxy card how you want to vote your shares, we will
vote signed returned proxies:
FOR the election of the Board of Director's nominees for directors;
FOR the amendment to the 1998 Stock Option Plan; and
FOR ratification of the appointment of KPMG LLP as Evans &
Sutherland's independent auditors for the fiscal year ending
December 31, 2000.
We do not know of any other business that may be presented at the
annual meeting. If a proposal other than those listed in the notice is presented
at the annual meeting, your signed proxy card gives authority to the persons
named in the proxy to vote your shares on such matters in their discretion.
REQUIRED VOTE
Record holders of shares of Evans & Sutherland's common stock, par
value $.20 per share, at the close of business on April 14, 2000 may vote at the
meeting. Each shareholder has one vote for each share of common stock the
shareholder owns. At the close of business on April 14, 2000, there were
9,348,329 shares of common stock outstanding.
The affirmative vote of a majority of a quorum of shareholders is
required for approval of all items being submitted to the shareholders for their
consideration, except for the election of directors, which is determined by a
simple plurality of the votes cast. Evans & Sutherland's bylaws provide that a
majority of the shares entitled to vote, represented in person or by proxy,
constitutes a quorum for transaction of business. An automated system
administered by Evans & Sutherland's transfer agent tabulates the votes.
Abstentions and broker non-votes are counted as present for purposes of
establishing a quorum. Each is tabulated separately. Abstentions are counted as
voted and broker non-votes are counted as unvoted for determining the approval
of any matter submitted to the shareholders for a vote. A broker non-vote occurs
when a broker votes on some matters on the proxy card but not on others because
he does not have the authority to do so.
1
<PAGE>
REVOCABILITY OF PROXIES
You may revoke your proxy by giving written notice to the Corporate
Secretary of Evans & Sutherland, by delivering a later proxy to the Corporate
Secretary, either of which must be received prior to the annual meeting, or by
attending the meeting and voting in person.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Board of Directors is divided into three classes, currently
consisting of one or two directors each, whose terms expire at successive annual
meetings. Two directors will be elected at the 2000 annual meeting to serve for
a three-year term expiring at Evans & Sutherland's annual meeting in the year
2003. The nominees elected as directors will continue in office until their
respective successors are duly elected and qualified.
The Board of Directors has nominated Mr. Peter O. Crisp and Mr. Ivan E.
Sutherland for election as directors at the 2000 annual meeting. Unless you
specify otherwise, your returned signed proxy will be voted in favor of each of
the nominees. In the event a nominee is unable to serve, your proxy may vote for
another person nominated by the Board of Directors to fill that vacancy. The
Board of Directors has no reason to believe that the nominees will be
unavailable. All directors have served continuously since first elected as a
director.
VOTE REQUIRED
A plurality of the votes represented at the meeting is required to
elect a director.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
NOMINEES LISTED ABOVE.
DIRECTORS
Set forth below is the principal occupation of, and certain other
information regarding, the nominees and other directors whose terms of office
will continue after the annual meeting.
DIRECTOR NOMINEES - TERMS ENDING IN 2003
Peter O. Crisp, Director of Evans & Sutherland since 1980. Mr. Crisp is Vice
Chairman of Rockefeller Financial Services, Inc. From 1969 to October 1997, Mr.
Crisp was a General Partner of Venrock Associates, a venture capital firm based
in New York. He is also a Director of American Superconductor Corporation,
Lexent Inc., Thermedics, Inc., Thermo Electron Corporation, Thermo Power
Corporation, ThermoTrex Corporation and United States Trust Corporation. Age: 67
Ivan E. Sutherland, Co-founder and Director of Evans & Sutherland since 1968.
Mr. Sutherland is Vice President and Fellow for Sun Microsystems, Inc. From 1980
to late 1990, he served as Vice President and Technical Director for Sutherland,
Sproull and Associates, Inc. Also during this period, Mr. Sutherland was
associated with ATV as a partner and advisor in venture capital activities. From
March 1976 to July 1980, he served as Fletcher Jones Professor of Computer
Science and head of the Computer Science Department at the California Institute
of Technology. Mr. Sutherland served as a Vice President and Chief Scientist of
Evans & Sutherland from 1968 until June 1974, as Vice President of Picture
Design Group from July 1974 to December 1974 and as a Senior Scientist for the
Rand Corporation from January 1975 to May 1976. Age: 61.
DIRECTORS CONTINUING IN OFFICE - TERMS ENDING IN 2001
Gerald S. Casilli, Director of Evans & Sutherland since 1997. Mr. Casilli is
Chairman of the Board of Ikos Systems, Inc. and has served in such capacity
since July 1989 and has served as a Director of Ikos since 1986. He was also
Chief Executive Officer of Ikos from April 1989 to August 1995. From January
1986 to December 1989, Mr. Casilli was a general partner of Trinity Ventures,
Ltd., a venture capital firm and from February 1982 to 1990, he was a general
partner of Genesis Capital, a venture capital firm. Mr. Casilli founded
Millenium Systems in 1973, a manufacturer of microprocessor development systems
and served as its President and Chief Executive Officer until 1982. Age: 60.
2
<PAGE>
James R. Oyler, President, Chief Executive Officer and Director of Evans &
Sutherland since December 1994. Mr. Oyler is also a Director of Ikos Systems,
Inc. and Silicon Light Machines. Previously, he served as President of AMG, Inc.
from mid-1990 through 1994 and as Senior Vice President of Harris Corporation
from 1976 through mid-1990. Age: 54.
DIRECTOR CONTINUING IN OFFICE - TERM ENDING IN 2002
Stewart Carrell, Chairman of the Board of Evans & Sutherland since March 1991
and Director of Evans & Sutherland since 1984. Mr. Carrell also serves as
Chairman of Seattle Silicon Corporation and as a Director of Tripos, Inc. From
mid-1984 until October 1993, he was Chairman and Chief Executive Officer of
Diasonics, Inc., a medical imaging company. From November 1983 until early 1987,
Mr. Carrell was also a General Partner in Hambrecht & Quist LLC, an investment
banking and venture capital firm. Age: 66.
BOARD MEETINGS AND COMMITTEES
In fiscal year 1999 the Board of Directors held four board meetings
either in person or telephonically. Each member of the Board of Directors
attended at least 75% of the meetings of the Board of Directors. The Board of
Directors has established three committees, the Audit Committee, the
Compensation and Stock Options Committee and the Nomination Committee.
The principal functions of the Audit Committee are to monitor the
integrity of Evans & Sutherland's financial reporting process and systems of
internal controls regarding finance, accounting, and legal compliance; monitor
the independence and performance of Evans & Sutherland's independent auditors;
provide an avenue of communication among the independent auditors, management
and the Board of Directors; encourage adherence to, and continuous improvement
of, Evans & Sutherland's policies, procedures and practices at all levels;
review areas of potential significant financial risk to Evans & Sutherland; and
monitor compliance with legal and regulatory requirements. The Audit Committee
consists of Ivan E. Sutherland, Gerald S. Casilli, and Peter O. Crisp and held
two meetings in 1999.
The Compensation and Stock Options Committee reviews compensation and
benefits for Evans & Sutherland's executives and administers the grant of stock
options under Evans & Sutherland's existing plans. Pursuant to delegated
authority from the Board of Directors, James R. Oyler, as Chief Executive
Officer, determines all salaries except for Evans & Sutherland's executive
officers. The Compensation and Stock Options Committee consists of Stewart
Carrell, Gerald S. Casilli, Peter O. Crisp, and Ivan E. Sutherland and held one
meeting in 1999.
The Nomination Committee makes recommendations to the Board of Directors
concerning candidates for election as directors. The Nomination Committee
considers nominees recommended by shareholders for election as a director. Such
recommendations should be sent to the Corporate Secretary of Evans & Sutherland
for presentation to the Nomination Committee. The Nomination Committee consists
of Stewart Carrell, Gerald S. Casilli, Peter O. Crisp and Ivan E. Sutherland.
There were no separate meetings of the Nomination Committee held in 1999.
COMPENSATION OF DIRECTORS
Members of the Board of Directors employed by Evans & Sutherland do not
receive any separate compensation for services performed as a director. Evans &
Sutherland's non-employee directors receive a $20,000 annual retainer per year
plus $1,000 for each board meeting attended. There is no separate compensation
for committee meeting attendance.
On February 2, 1989, the Board of Directors adopted the 1989 Stock
Option Plan for Non-Employee Directors, which was approved by the shareholders
on May 16, 1989. The Non-Employee Directors Plan was subsequently amended on
February 20, 1996 and May 20, 1998. Under the Non-Employee Directors Plan,
400,000 shares have been reserved for issuance of options. Pursuant to the
Non-Employee Directors Plan, each non-employee director of Evans & Sutherland,
serving at such time, received an option on May 16, 1989 to purchase 10,000
shares, which option was immediately exercisable. Each person, who becomes an
eligible director (non-employee) subsequent to the date of adoption of the plan,
receives an automatic grant, on the date of his first appointment or election to
the Board of Directors, of an option to purchase 10,000 shares. Such options are
exercisable in three annual installments on the first, second and third
anniversaries of the date of the grant.
In addition to the initial grants, each eligible director is
automatically granted additional options to purchase 10,000 shares of Evans &
Sutherland's common stock on the first day of each fiscal year, provided,
however, that in no event shall an eligible director be granted options under
the Non-Employee Directors Plan to purchase more than 100,000 shares in the
aggregate. Each option, after the initial option, becomes exercisable in three
installments on the first, second and third anniversaries of the date of the
grant. Currently, the Board of Directors consists of three non-employee
directors. As of April 14, 2000, 190,550 shares remain available for future
option grants under the Non-Employee Directors Plan.
3
<PAGE>
The exercise price for options granted under the Non-Employee Directors
Plan is equal to the fair market value of Evans & Sutherland's common stock as
of the last trading day immediately prior to the date the option is granted. The
options have a term of ten years. However, each option expires on the earlier of
its expiration date or 90 days from the date the grantee ceased to be a
non-employee director for any reason other than retirement from the Board of
Directors after attaining age 57, or employment by Evans & Sutherland. In the
event of retirement, each option shall become fully vested and exercisable until
the expiration date of such option. In the event of employment, each option
shall continue to be exercisable until the expiration of the option or 90 days
after termination of employment of such individual.
Options granted pursuant to the Non-Employee Directors Plan are
nonqualified stock options. Nonqualified stock options have no special tax
status. An optionee generally recognizes no taxable income as the result of the
grant of such an option. Upon exercise of a nonqualified stock option, the
optionee normally recognizes ordinary income on the excess of the fair market
value on the date of exercise over the option exercise price. Upon the sale of
stock acquired by the exercise of a nonqualified stock option, any gain or loss,
based on the difference between the sale price and the fair market value on the
date of recognition of income, will be taxed as a capital gain or loss. In the
event of a sale of the option, the optionee recognizes ordinary income on the
difference between the option exercise price and the sale price. No tax
deduction is available to Evans & Sutherland with respect to the grant of the
option or the sale of stock acquired upon exercise of the option. Evans &
Sutherland should be entitled to a deduction equal to the amount of ordinary
income recognized by the optionee as a result of the exercise of the
nonqualified stock option. Generally, option recipients will be subject to the
restrictions of Section 16(b) of the 1934 Act.
PROPOSAL TWO
AMENDMENT TO THE
EVANS & SUTHERLAND COMPUTER CORPORATION
1998 STOCK OPTION PLAN
The Board of Directors of Evans & Sutherland has approved and
recommends that the shareholders approve an amendment to the Evans & Sutherland
Computer Corporation 1998 Stock Option Plan to (1) increase the aggregate number
of shares of Evans & Sutherland's common stock available for grant under the
1998 Stock Option Plan from 850,000 shares to 1,250,000 shares and (2) prohibit
the committee and Board of Directors from having the authority or discretion to
adjust the exercise price of outstanding options granted under the 1998 Stock
Option Plan, whether through an amendment of an existing option agreement or
through the cancellation and replacement of outstanding options granted under
the 1998 Stock Option Plan.
The 1998 Stock Option Plan is an essential element of Evans &
Sutherland's compensation package that it uses to attract and retain employees
in the highly competitive computer industry. Furthermore, such options promote
the success and enhance the value of Evans & Sutherland by linking the personal
interests of its employees, officers, executives, consultants and advisors to
those of its shareholders and by providing such individuals with an incentive to
work to maximize shareholder value. The 1998 Stock Option Plan utilizes vesting
periods to encourage key employees to continue in the employ of Evans &
Sutherland and thereby acts as a retention device for those employees as well as
encourages them to maintain a long-term perspective.
The Board of Directors believes that the potential dilutive effect of
the issuance of stock options under the 1998 Stock Option Plan is mitigated by
the stock repurchase program currently in effect, which is designed to offset
options issued. During 1999, Evans & Sutherland repurchased 402,500 shares of
its common stock, largely offsetting grants made in 1999. Evans & Sutherland
currently has 463,500 shares remaining under the Board of Director's repurchase
authorization to offset the 400,000 shares available for grant under this
proposal.
During the past three years, a majority of options granted under the
1998 Stock Option Plan and the 1995 Long-Term Incentive Plan have been issued to
non-executive employees, with a minority to executives. In 1995, every employee
of Evans & Sutherland was granted stock options and since then every new
employee has received options when starting employment. Since 1996, options have
been granted to key contributors below the executive level. Evans & Sutherland
believes that these practices have had a positive effect on performance and
plans to continue them in the future.
4
<PAGE>
The amendment to the 1998 Stock Option Plan, if approved by
shareholders, will increase the number of shares available for grant under the
1998 Stock Option Plan. Evans & Sutherland intends to register the new 400,000
shares available under the 1998 Stock Option Plan on Form S-8 under the
Securities Act of 1933 as soon as practicable after receiving shareholder
approval. The 1998 Stock Option Plan is described in more detail under the
heading "Evans & Sutherland Computer Corporation 1998 Stock Option Plan,"
beginning on page 10 of this proxy statement and is qualified in its entirety by
reference to the 1998 Stock Option Plan, a copy of which is attached hereto as
Appendix A.
VOTE REQUIRED
The affirmative vote of a majority of a quorum of shareholders is required
for the amendment of the Evans & Sutherland 1998 Stock Option Plan.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR"
APPROVAL OF THIS PROPOSAL.
PROPOSAL THREE
RATIFICATION OF APPOINTMENT
OF INDEPENDENT AUDITORS
KPMG LLP, independent certified public accountants, has been selected
by the Board of Directors as the accounting firm to audit the accounts and to
report on the financial statements of Evans & Sutherland for the fiscal year
ending December 31, 2000 and the Board of Directors recommends that the
shareholders vote for ratification of such selection. Shareholder ratification
of the selection of KPMG as Evans & Sutherland's independent auditors is not
required by Evans & Sutherland's bylaws or otherwise. However, the Board of
Directors is submitting the selection of KPMG for shareholder ratification as a
matter of good corporate practice. KPMG has audited Evans & Sutherland's
financial statements since 1968. Notwithstanding the selection, the Board of
Directors, in its discretion, may direct the appointment of a new independent
accounting firm at any time during the year if the Board of Directors feels that
such a change would be in the best interests of Evans & Sutherland and its
shareholders.
Neither KPMG, nor any of its members has any financial interest, direct
or indirect, in Evans & Sutherland, nor has KPMG, nor any of its members ever
been connected with Evans & Sutherland as promoter, underwriter, voting trustee,
director, officer, or employee. In the event the shareholders do not ratify such
appointment, the Board of Directors will reconsider its selection.
Representatives of KPMG are expected to attend the meeting with the opportunity
to make a statement if they desire to do so and are expected to be available to
respond to appropriate questions.
VOTE REQUIRED
The affirmative vote of a majority of a quorum of shareholders is
required for the ratification of the appointment of KPMG.
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS EVANS & SUTHERLAND'S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31, 2000.
5
<PAGE>
OTHER INFORMATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding beneficial
ownership of Evans & Sutherland's common stock as of April 14, 2000, (i) by each
person who is known by Evans & Sutherland to own beneficially more than five
percent of Evans & Sutherland's common stock, (ii) by each of Evans &
Sutherland's directors and director nominees, (iii) by the Chief Executive
Officer and each of Evans & Sutherland's four most highly compensated executive
officers who served as executive officers at December 31, 1999 and (iv) by all
directors and executive officers as a group.
<TABLE>
<CAPTION>
Directors, Officers and Shares Beneficially Owned(1)
Principal Shareholders
----------------------- Number Percent
------------- ---------
<S> <C> <C>
PRINCIPAL SHAREHOLDERS
Intel Corporation (2) 1,282,128 12.1%
----------------------------------------------
2200 Mission College Blvd., Santa Clara, California 95052-8119
State of Wisconsin Investment Board (3) 1,014,750 10.9%
----------------------------
P.O. Box 7842, Madison, Wisconsin 53707
Vanguard/PRIMECAP Fund, Inc. (4) 840,000 9.0%
-----------------------------------
P.O. Box 2600, Valley Forge, Pennsylvania 19482-2600
Dimensional Funds Advisors (5) 681,000 7.3%
-------------------------------------
1299 Ocean Avenue, 11th Floor, Santa Monica, California 90401
M.J. Whitman Advisers, Inc. (6) 587,000 6.3%
------------------------------------
767 Third Avenue, New York, New York 10017-2023
The TCW Group, Inc. (7) 564,700 6.0%
--------------------------------------------
865 South Figueroa Street, Los Angeles, California 90017
EQSF Advisers, Inc. (6) 502,200 5.4%
--------------------------------------------
767 Third Avenue, New York, New York 10017-2023
DIRECTORS
Stewart Carrell (8) 43,757 *
------------------------------------------------
Gerald S. Casilli (9) 16,592 *
----------------------------------------------
Peter O. Crisp (10) 66,504 *
------------------------------------------------
James R. Oyler (11) 315,114 3.3%
------------------------------------------------
Ivan E. Sutherland (12) 91,555 1.0%
--------------------------------------------
OTHER EXECUTIVE OFFICERS
David Figgins (13) 13,334 *
-------------------------------------------------
Robert Ard (14) 17,810 *
----------------------------------------------------
William C. Gibbs (15) 50,000 *
----------------------------------------------
George Saul (16) 14,267 *
---------------------------------------------------
All directors and executive officers as a group - 11 persons (17) 650,493 6.6%
--------
</TABLE>
* Less than one percent.
(1) Applicable percentage ownership is based on 9,348,329 shares of Common
Stock outstanding as of the record date, April 14, 2000. Pursuant to the
rules of the Securities and Exchange Commission, shares shown as
"beneficially" owned include (a) shares subject to options or warrants
currently exercisable or which will be exercisable within 60 days of the
record date, (b) shares attainable through conversion of other securities,
(c) shares held by unincorporated entities and in trusts and estates over
which an individual holds at least shared voting or investment powers and
(d) shares held in trusts and estates of which at least 10 percent of the
beneficial interest of such trust is attributable to specified persons in
the immediate family of the individual(s) involved. This information is
not necessarily indicative of beneficial ownership for any other purpose.
The directors and executive officers of Evans & Sutherland have sole
voting and investment power over the shares of Evans & Sutherland's common
stock held in their names, except as noted in the following footnotes.
6
<PAGE>
(2) Intel Corporation has sole voting power and sole dispositive power as to
1,282,128 shares, according to Schedule 13D filed with the Securities and
Exchange Commission dated August 3, 1998. The number of shares
attributable to Intel includes 901,408 shares of common stock that Intel
has a right to acquire upon conversion of 901,408 shares of Series B
Preferred Stock and 378,462 shares of common stock that Intel has a right
to acquire upon exercise of a warrant for 378,462 shares of Series B
Preferred Stock and upon conversion of such Series B Preferred Stock.
(3) State of Wisconsin Investment Board has sole voting power and sole
dispositive power as to 1,014,750 shares according to Schedule 13G/A filed
with the Securities and Exchange Commission dated January 26, 2000.
(4) Vanguard/PRIMECAP Fund, Inc. has sole voting power and shared dispositive
power as to 840,000 shares according to Schedule 13G/A filed with the
Securities and Exchange Commission dated February 4, 2000.
(5) Dimensional Fund Advisors has sole voting power and sole dispositive power
as to 681,000 shares according to Schedule 13G filed with the Securities
and Exchange Commission dated February 3, 2000.
(6) EQSF Advisers, Inc. has sole voting power and sole dispositive power as to
502,200 shares and M.J. Whitman Advisers, Inc. has sole voting power and
sole dispositive power as to 587,000 shares according to Schedule 13G/A
filed with the Securities and Exchange Commission dated February 14, 2000.
EQSF Advisers, Inc., M.J. Whitman Advisers, Inc. and Martin J. Whitman,
Chief Executive Officer and controlling person of EQSF Advisors and M.J.
Whitman Advisors, Inc., filed a joint Schedule 13G/A.
(7) The TCW Group, Inc. has shared voting power and shared dispositive power
as to 546,700 shares according to a Schedule 13G filed with the Securities
and Exchange Commission dated February 14, 2000.
(8) In addition to being a director, Mr. Carrell is also Chairman of the Board
of Evans & Sutherland. The number of shares attributable to Mr. Carrell
includes 10,000 shares of common stock, 200 shares which are issuable upon
conversion of $200,000 of convertible debentures at a conversion rate of
$42.10 per share and acquired by Mr. Carrell on March 7, 1995, and 33,557
shares subject to outstanding stock options which are currently
exercisable or will be exercisable on or before June 13, 2000.
(9) The number of shares attributed to Mr. Casilli includes 6,592 shares of
common stock and 10,000 shares subject to outstanding stock options that
are currently exercisable or will be exercisable on or before June 13,
2000.
(10) The number of shares attributable to Mr. Crisp includes 42,437 shares of
common stock and 24,067 shares subject to outstanding stock options that
are currently exercisable or will be exercisable on or before June 13,
2000.
(11) In addition to being a director, Mr. Oyler is also President and Chief
Executive Officer of Evans & Sutherland. The number of shares attributable
to Mr. Oyler includes 12,000 shares of common stock and 303,114 shares
subject to outstanding stock options that are currently exercisable or
will be exercisable on or before June 13, 2000.
(12) The number of shares attributable to Mr. Ivan E. Sutherland includes
63,555 shares of common stock and 28,000 shares subject to outstanding
stock options that are currently exercisable or will be exercisable on or
before June 13, 2000. Of the 63,555 shares of common stock, 11,300 shares
are held by the Sutherland Family Trust of 1980 as to which Mr. Sutherland
is a co-trustee with Marcia Sutherland, with each trustee having sole
voting and dispositive power.
(13) Mr. Figgins commenced employment with Evans & Sutherland in April 1998 as
Vice President of PC Simulation in the Simulation Group. The number of
shares attributable to Mr. Figgins is 13,334 shares subject to outstanding
stock options that are currently exercisable or will be exercisable on or
before June 13, 2000.
(14) Mr. Ard commenced employment with Evans & Sutherland in June 1998 as Vice
President and General Manager in the Applications Group. The number of
shares attributable to Mr. Ard includes 1,143 shares of common stock and
16,667 shares subject to outstanding stock options that are currently
exercisable or will be exercisable on or before June 13, 2000.
(15) As of December 31, 1999, Mr. Gibbs was Vice President of Corporate
Development of Evans & Sutherland. Mr. Gibbs terminated his employment
with Evans & Sutherland in February 2000. The number of shares
attributable to Mr. Gibbs is 50,000 shares subject to outstanding stock
options that are currently exercisable or will be exercisable on or before
June 13, 2000.
(16) Mr. Saul commenced employment with Evans & Sutherland in June 1998 as a
result of Evans & Sutherland's acquisition of Silicon Realty, Inc. The
number of shares attributable to Mr. Saul includes 1,000 shares of common
stock and 13,267 shares subject to outstanding stock options that are
currently exercisable or will be exercisable on or before June 13, 2000.
(17) The total for directors and officers as a group includes 138,727 shares of
common stock and 511,766 shares subject to outstanding stock options that
are currently exercisable or will be exercisable on or before June 13,
2000.
7
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth information regarding the compensation
of the Chief Executive Officer and the four other most highly compensated
executive officers of Evans & Sutherland for the fiscal years ended December 31,
1999, 1998 and 1997 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
----------------------------------------
Annual Compensation Awards Payouts
---------------------------------- ------------------------- -------
Other Restricted Securities
Name and Annual Stock Underlying LTIP All Other
Principal Position Year Salary Bonus (1) Compensation Awards Options/SARS Payouts Compensation (2)
------------------- ---- ------ --------- ------------ ---------- ------------ ------- ----------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
James R. Oyler 1999 $361,600 $ - - - 30,000 - $50,173
President and 1998 344,400 - - - 137,000 - 50,912
Chief Executive 1997 328,000 194,500 - - 70,000 - 46,854
Officer
David Figgins (3) 1999 195,000 23,574 - - 49,000 - 30,915
Vice President, 1998 150,000 18,073 - - 16,000 - 67,236
Simulation Group 1997 - - - - - - -
William C. Gibbs (4) 1999 275,000 - - - - - -
Vice President of 1998 13,800 - - - 75,000 - -
Corporate Development 1997 - - - - - - -
Robert Ard (5) 1999 191,000 - - - 18,000 - 58,931
Vice President 1998 100,385 16,881 - - 32,000 - 70,185
Applications Group 1997 - - - - - - -
George Saul (6) 1999 215,000 - - - - - 82,076
Vice President 1998 92,596 - - - 39,800 - 25,527
REALimage Solutions 1997 - - - - - - -
Group
</TABLE>
(1) Represents incentive bonuses for the year indicated that were paid in the
subsequent year. Amount of bonus is for achievement of corporate,
individual and organizational objectives for fiscal years 1999, 1998 and
1997.
(2) All other compensation for fiscal year 1999 includes (i) premiums paid for
executive life insurance policies (Mr. Oyler $34,545, Mr. Figgins $22,727,
and Mr. Ard $ 13,909); (ii) matching contribution to Evans & Sutherland's
Executive Savings Plan (Mr. Oyler $10,828, Mr. Figgins $5,798, Mr. Ard
$6,292, and Mr. Saul $8,335); (iii) matching contribution to Evans &
Sutherland's 401(k) Deferred Savings Plan (Mr. Oyler $4,800, Mr. Figgins
$2,390, and Mr. Saul $4,391); and (iv) reimbursement for relocation
expenses (Mr. Ard $38,730, and Mr. Saul $69,350).
All other compensation for fiscal year 1998 includes (i) premiums paid for
executive life insurance policies (Mr. Oyler $29,091, Mr. Ard $13,002, and
Mr. Saul $18,545); (ii) matching contribution to Evans & Sutherland's
Executive Savings Plan (Mr. Oyler $17,021, Mr. Figgins $2,942, and Mr. Ard
$3,298); (iii) matching contribution to Evans & Sutherland's 401(k)
Deferred Savings Plan (Mr. Oyler $4,800, and Mr. Saul $2,677); and (iv)
reimbursement for relocation expenses (Mr. Figgins $64,294, Mr. Ard
$53,885, and Mr. Saul $4,305).
All other compensation for Mr. Oyler in fiscal year 1997 includes (i)
premiums paid for executive life insurance policies of $27,491; (ii)
matching contribution to Evans & Sutherland's Executive Savings Plan of
$13,160; (iii) matching contribution to Evans & Sutherland's 401(k)
Deferred Savings Plan of $4,750; and (iv) premiums paid for group term
life insurance policies of $1,453.
(3) Mr. Figgins commenced his employment with Evans & Sutherland in April 1998
as Vice President of PC Simulation in the Simulation Group.
(4) Mr. Gibbs commenced his employment with Evans & Sutherland in December 1998
and terminated his employment with Evans & Sutherland in February 2000.
8
<PAGE>
(5) Mr. Ard commenced his employment with Evans & Sutherland in June 1998, as
Vice President and General Manager in the Applications Group.
(6) Mr. Saul commenced his employment with Evans & Sutherland in June 1998 as a
result of Evans & Sutherland's acquisition of Silicon Reality, Inc.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options
granted during fiscal year 1999 to the Named Executive Officers. No stock
appreciation rights ("SARs") were granted in 1999.
<TABLE>
<CAPTION>
Individual Grants
--------------------------------------------------------------
Number of Percent of Exercise Of Expiration Potential Realizable Value at
Securities Total Base Date Assumed Annual Rates of Stock
Underlying Options/SARs Price(1) Price Appreciation for Option
Options/ Granted to Term (2)
SARs Employees In ----------------------------
Name Granted Fiscal Year At 5% At 10%
- -------------------- ----------- ------------ ---------- --------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
James R. Oyler 30,000 6.4% $14.75 2/24/09 $278,286 $705,231
David Figgins 24,000 5.1% 14.75 2/24/09 222,629 564,185
25,000 5.3% 12.50 8/16/09 196,530 498,045
Robert Ard 8,000 1.7% 14.75 2/24/09 74,210 188,062
10,000 2.1% 13.69 6/09/09 86,080 218,143
</TABLE>
(1) The options are all granted to employees under Evans & Sutherland's 1995
Long-Term Incentive Equity Plan or 1998 Stock Option Plan and become
exercisable in three equal installments on the first, second and third
anniversaries of the date of the grant. The options have a 10-year term,
subject to earlier termination in the event of the optionee's cessation of
service with Evans & Sutherland. The total number of options granted to
employees during fiscal year 1999 was 471,605 shares.
(2) These potential realizable values are based on an assumed annual rate of
increase in the value of Evans & Sutherland's common stock over the
ten-year term of the options of five percent and ten percent, compounded
annually, as required by the rules of the Securities and Exchange
Commission. These rates of increase in value are not indicative of the
past performance of Evans & Sutherland's common stock and are not intended
to be a forecast of future appreciation in value of Evans & Sutherland's
common stock. The actual realizable value, if any, of these options is
dependent upon the actual future value of Evans & Sutherland's common
stock, which cannot be predicted with any assurance at this time.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
The following table sets forth information concerning the exercise of
stock options during fiscal year 1999 by each of the Named Executive Officers
and lists the value of their unexercised options on December 31, 1999. None of
the Named Executive Officers exercised any stock options during 1999.
<TABLE>
<CAPTION>
Number Of Securities Underlying Value Of Unexercised
Unexercised Options/SARs At In-The-Money Options/SARs At
Name Fiscal Year-End Fiscal Year-End
- ---------------------- ----------------------------------- ---------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
James R. Oyler 293,114 78,889 - -
David Figgins 5,334 59,667 - -
Robert Ard 10,667 39,333 - -
William C. Gibbs 50,000 25,000 - -
George Saul 13,267 26,553 - -
</TABLE>
Based on the closing price of Evans & Sutherland's common stock as reported on
the Nasdaq Stock Market on December 31, 1999 of $11.44.
9
<PAGE>
10-YEAR OPTION/SAR REPRICINGS
The following table sets forth information regarding stock options that
were repriced during fiscal year 1998 that were previously awarded to the named
executive officers. No SARs were repriced during 1998. Except for the options
that were repriced during fiscal year 1998, no other options have been repriced.
<TABLE>
<CAPTION>
Number of Length of
Securities Market Price Original Term
Underlying of Stock Exercise Price New Remaining at
Options/SARs at Time of at Time of Exercise Date of
Name Date Repriced Repricing Repricing Price Repricing
- --------------------- -------- ----------- ------------ ------------- --------- ----------------
<S> <C> <C> <C> <C> <C> <C>
James R. Oyler 09/29/98 56,000 $ 13.56 $ 22.38 $ 13.56 8 years 5 months
36,000 13.56 22.50 13.56 9 years 8 months
Ronald R. Sutherland (1) 09/29/98 40,000 13.56 20.88 13.56 7 years 4 months
20,000 13.56 22.38 13.56 8 years 5 months
20,000 13.56 22.50 13.56 9 years 8 months
John T. Lemley (2) 09/29/98 80,000 13.56 20.50 13.56 7 years 2 months
16,000 13.56 22.38 13.56 8 years 5 months
16,000 13.56 22.50 13.56 9 years 8 months
Charles R. Maule (3) 09/29/98 32,000 13.56 20.88 13.56 7 years 2 months
8,000 13.56 22.38 13.56 8 years 5 months
28,000 13.56 22.50 13.56 9 years 8 months
Robert Ard 09/29/98 32,000 13.56 25.00 13.56 9 years 8 months
George Saul 09/29/98 4,800 13.56 23.63 13.56 9 years 9 months
David Figgins 09/29/98 16,000 13.56 25.50 13.56 9 years 8 months
- -----------------
</TABLE>
(1) Mr. Sutherland retired from Evans & Sutherland in February 1999.
(2) Mr. Lemley retired from Evans & Sutherland in July 1999.
(3) Mr. Maule terminated his employment with Evans & Sutherland in August 1999.
EVANS & SUTHERLAND COMPUTER CORPORATION
1998 STOCK OPTION PLAN
The Board of Directors of Evans & Sutherland has approved, and
recommends that the shareholders approve, an amendment of the Evans & Sutherland
Computer Corporation 1998 Stock Option Plan for employees, officers and
executives of, and consultants and independent contractors to, Evans &
Sutherland and any subsidiary. The plan authorizes grants of Incentive Stock
Options ("ISOs") or Non-qualified Stock Options ("NQSOs"). The plan was
established to provide a simplified mechanism for the granting of stock options
to eligible individuals and operates in conjunction with and in addition to the
Evans & Sutherland 1995 Long-Term Incentive Equity Plan, which expires on May
18, 2000. See Proposal Two, "Amendment to the Evans & Sutherland Computer
Corporation 1998 Stock Option Plan," on page 4 of this proxy statement.
The Board of Directors believes that the issuance of stock options
under the plan is beneficial to Evans & Sutherland as a means to promote the
success and enhance the value of Evans & Sutherland by linking the personal
interests of its employees, officers, executives, consultants and independent
contractors to those of its shareholders and by providing such individuals with
an incentive for outstanding performance. These incentives also provide Evans &
Sutherland flexibility in its ability to attract and retain the services of
individuals upon whose judgement, interest and special effort the successful
conduct of Evans & Sutherland's operation is largely dependent. The following
summary is qualified by reference to the 1998 Stock Option Plan, a copy of which
is attached hereto as Appendix A.
10
<PAGE>
ADMINISTRATION
The plan is administered by either the Board of Directors or a
committee appointed by the Board of Directors consisting of at least two (2)
non-employee directors who also qualify as "outside directors" under section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). If the
Board of Directors does not appoint a committee, any reference herein to the
committee shall be to the Board of Directors. Additionally, Evans & Sutherland's
CEO is permitted to grant options under the plan except to those individuals who
are subject to Section 16 of the Securities Exchange Act of 1934 (i.e.
insiders). The committee (and the CEO when granting options) will have the
exclusive authority to administer the plan, including the power to determine
eligibility, the types and sizes of options and the price and timing of options.
ELIGIBILITY
Persons eligible to participate in the plan include all employees,
officers and executives of, and consultants and independent contractors to,
Evans & Sutherland and its subsidiaries, as determined by the committee,
including employees who are members of the Board of Directors, but excluding
directors who are not employees.
RETIREMENT PROVISION
The plan provides that in the event an individual ceases to be employed
due to normal retirement from Evans & Sutherland, each option shall become fully
vested and exercisable and shall remain exercisable after such termination until
the expiration date of such option.
LIMITATION ON OPTIONS AND SHARES AVAILABLE
An aggregate of 850,000 shares of Evans & Sutherland's common stock are
available for grant under the plan. The proposed amendment would increase to
1,250,000 the aggregate shares of Evans & Sutherland's common stock available
for grant under the plan. The maximum number of shares of stock that may be
subject to one or more options to a single participant under the plan during any
fiscal year is 250,000.
DESCRIPTION OF THE AVAILABLE OPTIONS
INCENTIVE STOCK OPTIONS
An ISO is a stock option that satisfies the requirements specified in
Code Section 422. Under the Code, ISOs may only be granted to employees. In
order for an option to qualify as an ISO, the price payable to exercise the
option must equal or exceed the fair market value of the stock at the date of
the grant, the option must lapse no later than 10 years from the date of the
grant and the stock subject to ISOs that are first exercisable by an employee in
any calendar year must not have a value of more than $100,000 as of the date of
grant. Certain other requirements must also be met.
An optionee will not be treated as receiving taxable income upon either
the grant of an ISO or upon the exercise of an ISO. However, the difference
between the exercise price and the fair market value on the date of exercise
will be an item of tax preference at the time of exercise in determining
liability for the alternative minimum tax, assuming that the stock is either
transferable or is not subject to a substantial risk of forfeiture under Section
83 of the Code.
If stock acquired by the exercise of an ISO is not sold or otherwise
disposed of within two years from the date of its grant and is held for at least
one year after the date such stock is transferred to the optionee, any gain or
loss resulting from its disposition will be treated as capital gain or loss. If
such stock is disposed of before the expiration of the above-mentioned holding
periods, a "disqualifying disposition" will occur. If a disqualifying
disposition occurs, the optionee will realize ordinary income in the year of the
disposition in an amount equal to the difference between the fair market value
of the stock on the date of exercise and the exercise price, or the selling
price of the stock and the exercise price, whichever is less. The balance of the
optionee's gain on a disqualifying disposition, if any, will be taxed as capital
gain.
In the event an optionee exercises an ISO using stock acquired by a
previous exercise of an ISO, unless the stock exchange occurs after the required
holding periods, such exchange shall be deemed a disqualifying disposition of
the stock exchanged.
Evans & Sutherland will not be entitled to any tax deduction as a
result of the grant or exercise of an ISO, or on a later disposition of the
stock received, except that in the event of a disqualifying disposition, Evans &
Sutherland will be entitled to a deduction equal to the amount of ordinary
income realized by the optionee.
11
<PAGE>
NON-QUALIFIED STOCK OPTIONS
An NQSO is any stock option other than an incentive stock option. Such
options are referred to as "non-qualified" because they do not meet the
requirements of and are not eligible for, the favorable tax treatment provided
by Section 422 of the Code.
No taxable income will be realized by an optionee upon the grant of an
NQSO, nor is Evans & Sutherland entitled to a tax deduction by reason of such
grant. Upon the exercise of an NQSO, the optionee will realize ordinary income
in an amount equal to the excess of the fair market value of the stock on the
date of exercise over the exercise price and Evans & Sutherland will be entitled
to a corresponding tax deduction.
Upon a subsequent sale or other disposition of stock acquired through
exercise of an NQSO, the optionee will realize capital gain or loss to the
extent of any intervening appreciation or depreciation. Such a resale by the
optionee will have no tax consequence to Evans & Sutherland.
RECENT TAX CHANGES
Section 162(m) of the Code, adopted as part of the Revenue
Reconciliation Act of 1993, generally limits to $1 million the deduction that
can be claimed by any publicly-held corporation for compensation paid to any
covered employee in any taxable year. Performance-based compensation is outside
the scope of the $1 million limitation and, hence, generally can be deducted by
a publicly-held corporation without regard to amount, provided that, among other
requirements, such compensation is approved by shareholders. Among the items of
performance-based compensation that can be deducted without regard to amount
(assuming shareholder approval and other applicable requirements are satisfied)
is compensation associated with the exercise price of a stock option so long as
the option has an exercise price equal to or greater than the fair market value
of the underlying stock at the time of the option grant. All options granted
under the plan that are intended to qualify as performance-based compensation
will have an exercise price at least equal to the fair market value of the
underlying stock on the date of grant.
AMENDMENT AND TERMINATION
The committee, subject to approval of the Board of Directors, may
terminate, amend, or modify the plan at any time; provided, however, that
shareholder approval is required for any amendment to the extent necessary or
desirable to comply with any applicable law, regulation, or stock exchange rule.
CHANGE OF CONTROL
In the event of a change of control of Evans & Sutherland, all options
under the 1998 Stock Option Plan shall become immediately exercisable. Under the
plan, a change in control occurs upon any of the following events: (a) any
person becoming the beneficial owner of 30% or more of Evans & Sutherland's
stock; (b) during any two-year period, the persons who are on Evans &
Sutherland's Board of Directors at the beginning of such period and any new
person elected by two-thirds of such directors cease to constitute a majority of
the persons serving on the Board of Directors; (c) Evans & Sutherland undergoes
a change of control required to be reported in response to item 6(e) of Schedule
14A under the Securities Exchange Act of 1934; or (d) Evans & Sutherland's
shareholders approve (1) a merger or consolidation of Evans & Sutherland with
another corporation where Evans & Sutherland is not the surviving entity, or (2)
any sale of substantially all of Evans & Sutherland's assets.
12
<PAGE>
PENSION PLAN AND SERP
Evans & Sutherland supports a Defined Benefit Pension Plan ("Pension
Plan") and Supplemental Executive Retirement Plan ("SERP") with contributions
based upon actuarial computations which take into account many assumptions and
factors including, among others, projected average salary and time in service.
Directors of Evans & Sutherland who are not employees are not eligible to
participate in the Pension Plan and SERP. Evans & Sutherland's 1999 expense for
the Pension Plan of $2,685,000 was 6% of the total remuneration of those
participants covered by the Pension Plan for the fiscal year 1999. Under the
pension provisions, the credited years of service for the Named Executive
Officers listed in the preceding Summary Compensation Table are as follows:
Messrs. James R. Oyler, 5 years; David Figgins, 2 years; Robert Ard, 2 years;
William C. Gibbs, 1 year; and George Saul, 2 years.
Evans & Sutherland maintains a non-qualified deferred compensation plan
or SERP for certain executives selected by the Compensation Committee of the
Board of Directors. Under the SERP, an executive's annual retirement income
commencing at age 65 (and having at least three years of service under the SERP)
equals 66.7% of the executive's average base salary reduced by the executive's
annual benefit under the Pension Plan multiplied by a fraction the numerator of
which is the total number of years of service with Evans & Sutherland (up to a
maximum of ten) and the denominator of which is ten. For purposes of the SERP,
the term "average base salary" is defined as the average of the executive's base
compensation over a three year period, excluding all other forms of compensation
except amounts deferred under Evans & Sutherland's 401(k) Plan and the SERP.
Messrs. James R. Oyler, David Figgins, Robert Ard, and George Saul are
currently participating in the SERP and have 5, 2, 2 and 2 years of service,
respectively, credited under the SERP and are expected to have at least 10 years
of service credited under the Pension Plan at age 65. Mr. Gibbs terminated his
employment with Evans & Sutherland in February 2000 and has 2 years of service
credited under the SERP. Evans & Sutherland has purchased life insurance for its
benefit on the lives of some or all of the participants. It is anticipated that
the life insurance proceeds payable upon the death of plan participants will
reimburse Evans & Sutherland for the after-tax cost of benefit payments,
premiums, and a factor for the cost of money.
The following table illustrates the approximate annual retirement
benefits (not including social security benefits) under the Pension Plan and the
SERP, assuming retirement at age 65, based upon years of accredited service and
final qualifying earnings as defined in the Pension Plan and SERP, and also
assuming that the employee elects a straight life annuity.
<TABLE>
<CAPTION>
Years of Service
----------------------------------------------------------
Remuneration (1) 15 20 25 30 35
------------ -------- -------- -------- ------- -----
<S> <C> <C> <C> <C> <C>
$125,000 .................................... $83,375 $83,375 $83,375 $83,375 $83,375
150,000 .................................... 100,050 100,050 100,050 100,050 100,050
175,000 .................................... 116,725 116,725 116,725 116,725 116,725
200,000 .................................... 133,400 133,400 133,400 133,400 133,400
225,000 .................................... 150,075 150,075 150,075 150,075 150,075
250,000 .................................... 166,750 166,750 166,750 166,750 166,750
300,000 .................................... 200,100 200,100 200,100 200,100 200,100
400,000 .................................... 266,800 266,800 266,800 266,800 266,800
450,000 .................................... 300,150 300,150 300,150 300,150 300,150
500,000 .................................... 333,500 333,500 333,500 333,500 333,500
</TABLE>
(1) For purposes of determining benefits at normal retirement, remuneration is
based upon the average qualifying earnings of the employee. Under the
Pension Plan, this is the average of the five consecutive calendar years
that will produce the highest average earnings out of the last ten
calendar years of employment. Under the SERP, this is the average of the
three consecutive calendar years of employment with Evans & Sutherland
that produces the highest annual average. For 1999, compensation taken
into account under the Pension Plan for any individual in any year was
limited to $160,000.
13
<PAGE>
REPORT OF THE COMPENSATION AND STOCK OPTIONS COMMITTEE
OF THE BOARD OF DIRECTORS
GENERAL
The following report shall not be deemed incorporated by reference into
any filing under the Securities Act of 1933 or under the Securities Exchange Act
of 1934, except to the extent that Evans & Sutherland specifically incorporates
this information by reference and shall not otherwise be deemed filed under
either the 1933 Act or the 1934 Act.
The Compensation and Stock Options Committee of the Board of Directors
establishes and oversees the general compensation policies of Evans &
Sutherland, which include specific compensation levels for executive officers,
cash incentive initiatives for executives and the technical staff and stock
option grants from the stock option plans. The committee is composed of the
Chairman of the Board of Directors and all of the independent outside directors.
Evans & Sutherland operates in highly competitive businesses and
competes nationally for personnel at the executive and technical staff level.
Outstanding candidates are aggressively recruited, often at premium salaries.
Highly qualified employees are essential to the success of Evans & Sutherland.
Evans & Sutherland is committed to providing competitive compensation that helps
attract, retain and motivate the highly skilled people it requires. The
committee strongly believes that a considerable portion of the compensation for
the Chief Executive Officer and other top executives must be tied to the
achievement of business objectives and to business segment and overall company
performance, both current and long-term.
EXECUTIVE COMPENSATION
The salary of the Chief Executive Officer is established solely by the
committee, while the salary of other executives is recommended by the Chief
Executive Officer for review and approval of the committee. Prime sources of
information in determining executive salaries are a survey published by the
American Electronics Association entitled "Executive Compensation in the
Electronics Industry," and a survey published by Radford Associates entitled
"Management Total Compensation Report." The committee has determined that, as a
general rule, executive, management and top technical salaries should be at or
near the 50th percentile of these surveys.
In 1995, the committee approved a management incentive plan, which
provided financial incentives for certain key executives and managers of Evans &
Sutherland to achieve profitable growth. In 1999, participation was expanded to
include all employees of Evans & Sutherland. The plan incentive is based on
achievement of operating profit and other measures relative to the annual
operating plan. Measurement for corporate (functional) employees is total
corporate performance, while measurement for business segment employees is both
corporate and business segment performance. The plan incorporates an operating
profit level that must be attained before bonuses may be earned, as well as
individual maximums on annual incentive amounts. This provision ensures a return
to shareholders prior to any incentive payments being made.
Other than Evans & Sutherland's pension plan and SERP, the long-term
components of compensation for the Chief Executive Officer and other executives
are the 1995 Long-Term Incentive Plan, which expires May 18, 2000, and the 1998
Stock Option Plan. The plans do not provide for automatically-timed option
grants, but rather provides for grants at the discretion of the committee. In
general, stock options are granted to executives, key managers and technical
staff whose individual assignments are anticipated to have high leverage in
terms of achieving the long-term objectives of Evans & Sutherland.
This report is submitted by the members of the Compensation and Stock
Options Committee.
Stewart Carrell Ivan E. Sutherland
Gerald S. Casilli Peter O. Crisp
<PAGE>
COMPARATIVE STOCK PERFORMANCE CHART
The following graph presents a five year comparison of total cumulative
shareholder return on Evans & Sutherland's common stock for the period December
31, 1994 through December 31, 1999 with the total cumulative return on the (a)
Chase H & Q Computer Hardware Index, (b) the Standard & Poor's 500 Index, and
(c) the Standard & Poor's Smallcap 600 Index. Evans & Sutherland believes that
the Standard & Poor's 500 Index is no longer an adequate comparison.
Accordingly, Evans & Sutherland has elected to compare its total return of a
broad equity market index with the Standard & Poor's Smallcap 600 Index. Evans &
Sutherland has included the Standard & Poor's 500 Index as required by SEC
rules. The comparison assumes the investment of $100 on December 31, 1994 in
stock or index, including reinvestment of dividends. Total shareholder returns
for prior periods are not an indication of future investment returns.
COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN
[GRAPHIC]
<TABLE>
<CAPTION>
Cumulative Total Return
----------------------------------------------------
1994 1995 1996 1997 1998 1999
---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
EVANS & SUTHERLAND COMPUTER CORPORATION 100 168 189 219 133 86
S & P 500 100 138 169 226 290 351
S & P SMALLCAP 600 100 130 158 198 203 229
CHASE H & Q COMPUTER HARDWARE 100 144 191 260 499 914
</TABLE>
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Evans & Sutherland had purchases of $0.4 million during the fiscal year
1999 from a supplier for which Mr. Oyler, Evans & Sutherland's Chief Executive
Officer, serves as a director and Mr. Casilli, a director of Evans & Sutherland,
serves as Chairman of the Board of such supplier.
TERMINATION OF EMPLOYMENT AND CHANGE OF CONTROL ARRANGEMENTS
Evans & Sutherland has entered into an agreement with James R. Oyler
regarding severance and termination issues. This agreement provides that Evans &
Sutherland will pay Mr. Oyler two and one-half times his gross income for the
year preceding the termination date if (1) during a change of control, Mr.
Oyler's employment is terminated by him for good reason or by Evans & Sutherland
for any reason other than death, disability or cause, or (2) Mr. Oyler
terminates his employment within one hundred eighty days of a change of control
that has not been approved by a majority of directors in office immediately
preceding the change of control.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires Evans & Sutherland's directors, executive officers and persons who own
more than ten percent of a registered class of Evans & Sutherland's equity
securities to file with the Securities and Exchange Commission initial reports
of ownership and reports of changes in ownership of common stock and other
equity securities of Evans & Sutherland. Officers, directors and greater than
ten percent beneficial owners are required by SEC regulation to furnish Evans &
Sutherland with copies of all Section 16(a) reports they file.
Based solely upon review of the copies of such reports furnished to
Evans & Sutherland and written representations that no other reports were
required, Evans & Sutherland believes that there was compliance for the fiscal
year ended December 31, 1999 with all Section 16(a) filing requirements
applicable to Evans & Sutherland's officers, directors and greater than ten
percent beneficial owners.
SHAREHOLDER PROPOSALS
If you wish to submit proposals to be included in Evans & Sutherland's
year 2001 proxy statement, we must receive them on or before Friday, December
15, 2000. Please address your proposals to Corporate Secretary, Evans &
Sutherland Computer Corporation, 600 Komas Drive, Salt Lake City, Utah 84108.
If you wish to raise a matter before the shareholders at the year 2001
annual meeting, you must notify the Corporate Secretary in writing by not later
than February 28, 2001. Please note that this requirement relates only to
matters you wish to bring before your fellow shareholders at the annual meeting.
It is separate from the SEC's requirements to have your proposal included in the
proxy statement.
OTHER MATTERS
The Board of Directors knows of no other matters to be acted upon at
the meeting. However, if any other matters properly come before the meeting, it
is intended that the persons voting the proxies will vote them in accordance
with their best judgment.
ADDITIONAL INFORMATION
Evans & Sutherland has included with this proxy statement a copy of our
annual report on Form 10-K dated December 31, 1999, which is incorporated by
reference in its entirety. Evans & Sutherland will provide without charge to
each person solicited, upon oral or written request of any such person, an
additional copy of Evans & Sutherland's annual report on Form 10-K, including
the consolidated financial statements and the financial statement schedules
required to be filed with the Securities and Exchange Commission pursuant to
Rule 13a-1 under the Securities Exchange Act of 1934. Direct any such
correspondence to the Corporate Secretary of Evans & Sutherland.
EVANS & SUTHERLAND COMPUTER CORPORATION
Mark C. McBride
Vice President and
Corporate Secretary
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APPENDIX A
EVANS & SUTHERLAND COMPUTER CORPORATION
1998 STOCK OPTION PLAN
ARTICLE 1 - PURPOSE
1.1 GENERAL. The purpose of the Evans & Sutherland Computer Corporation
1998 Stock Option Plan (the "Plan") is to promote the success, and enhance the
value, of Evans & Sutherland Computer Corporation (the "Company") by linking the
personal interests of its officers, employees, and consultants or independent
contractors to those of Company stockholders and by providing its officers,
employees, and consultants or independent contractors with an incentive for
outstanding performance. The Plan is further intended to provide flexibility to
the Company in its ability to motivate, attract, and retain the services of
officers, employees, and consultants or independent contractors upon whose
judgment, interest, and special effort the successful conduct of the Company's
operation is largely dependent. Accordingly, the Plan permits the grant of stock
options from time to time to officers, employees, and consultants or independent
contractors.
ARTICLE 2 - EFFECTIVE DATE
2.1 EFFECTIVE DATE. The Plan is effective as of April 13, 1998
(the "Effective Date").
ARTICLE 3 - DEFINITIONS AND CONSTRUCTION
3.1 DEFINITIONS. When a word or phrase appears in this Plan with the
initial letter capitalized, and the word or phrase does not commence a sentence,
the word or phrase shall generally be given the meaning ascribed to it in this
Section or in Sections 1.1 or 2.1 unless a clearly different meaning is required
by the context. The following words and phrases shall have the following
meanings:
(a) "Board" means the Board of Directors of the Company.
(b) "Change of Control" means any of the following: (i) the
Company executes a definitive agreement to merge or consolidate with or
into another corporation in which the Company is not the surviving
corporation and the Company's common stock is converted into or
exchanged for stock or securities of any other corporation, cash, or
any other thing of value; (ii) the Company executes a definitive
agreement to sell or otherwise dispose of substantially all its assets;
(iii) the Company undergoes a change of control of the nature required
to be reported in response to item 6(e) of Schedule 14A promulgated
under the Securities Exchange Act of 1934, as amended; (iv) a public
announcement that more than thirty percent (30%) of the Company's then
outstanding voting stock has been acquired by any person or group; or
(v) a change is made in the membership of the Board resulting in a
membership of which less than a majority were also members of the Board
on the date two years prior to such change, unless the election, or the
nomination for election by the stockholders of the Company, of each new
director was approved by the vote of at last two-thirds of the
directors then still in office who were directors on the date two years
prior to such change.
(c) "Code" means the Internal Revenue Code of 1986, as
amended.
(d) "Committee" means the committee of the Board described in
Article 4.
(e) "Disability" shall mean any illness or other physical or
mental condition of a Participant which renders the Participant
incapable of performing his customary and usual duties for the Company,
or any medically determinable illness or other physical or mental
condition resulting from a bodily injury, disease or mental disorder
which in the judgment of the Committee is permanent and continuous in
nature. The Committee may require such medical or other evidence as it
deems necessary to judge the nature and permanency of the Participant's
condition.
(f) "Fair Market Value" means, as of any given date, the fair
market value of stock or other property on a particular date determined
by such methods or procedures as may be established from time to time
by the Committee. Unless otherwise determined by the Committee, the
Fair Market Value of stock as of any date shall be the closing price
for the stock as reported on the NASDAQ National Market System (or on
any national securities exchange on which the stock is then listed) for
that date or, if no closing price is so reported for that date, the
closing price on the next preceding date for which a closing price was
reported.
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(g) "Incentive Stock Option" means an option that is intended
to meet the requirements of Section 422 of the Code or any successor
provision thereto.
(h) "Non-Employee Director" means a member of the Board who
qualifies as a "Non-Employee Director" as defined in Rule 16b-3(b)(3)
of the Exchange Act, or any successor definition adopted by the Board.
(i) "Non-Qualified Stock Option" means an option that is not
intended to be an Incentive Stock Option.
(j) "Option" means a right granted to a Participant under
Article 7 of the Plan to purchase stock at a specified price during
specified time periods. An option may be either an Incentive Stock
Option or a Non-Qualified Stock Option.
(k) "Option Agreement" means any written agreement, contract,
or other instrument or document evidencing an option.
(l) "Participant" means a person, who as an officer, employee,
consultant or independent contractor of the Company or a Subsidiary,
including an individual who is also a member of the Board, has been
granted an option under the Plan.
(m) "Plan" means the Evans & Sutherland Computer Corporation
1998 Stock Option Plan, as amended from time to time.
(n) "Retirement" means a Participant's termination of
employment with the Company after attaining any normal or early
retirement age specified in any pension, profit sharing or other
retirement program sponsored by the Company or such other event
designated as a Retirement by the Committee in an Option Agreement.
(o) "Stock" means the common stock of the Company and such
other securities of the Company that may be substituted for stock
pursuant to Article 9.
(p) "Subsidiary" means any corporation of which a majority of
the outstanding voting stock or voting power is beneficially owned
directly or indirectly by the Company.
ARTICLE 4 - ADMINISTRATION
4.1 COMMITTEE. The Plan shall be administered by the Board or a
Committee appointed by, and which serves at the discretion of, the Board. If the
Board appoints a Committee, the Committee shall consist of at least two
individuals, each of whom qualifies as (i) a Non-Employee Director, and (ii) an
"outside director" under Code Section 162(m) and the regulations issued
thereunder; provided, however, that the Chief Executive Officer of the Company
shall have the authority to grant options to individuals who are not subject to
Section 16 of the Securities Exchange Act of 1934. When the Chief Executive
Officer is acting to grant options under this Plan, solely for purposes of this
Plan, the Chief Executive Officer shall be deemed to be acting as the Board or
the Committee, as the case may be. Additionally, reference to the Committee
shall also refer to the Board if the Board does not appoint a Committee.
4.2 ACTION BY THE COMMITTEE. A majority of the Committee shall
constitute a quorum. The acts of a majority of the members present at any
meeting at which a quorum is present and acts approved in writing by a majority
of the Committee in lieu of a meeting shall be deemed the acts of the Committee.
Each member of the Committee is entitled to, in good faith, rely or act upon any
report or other information furnished to that member by any officer or other
employee of the Company or any Subsidiary, the Company's independent certified
public accountants, or any executive compensation consultant or other
professional retained by the Company to assist in the administration of the
Plan.
4.3 AUTHORITY OF COMMITTEE. The Committee has the exclusive
power, authority and discretion to:
(a) Designate Participants to receive options;
(b) Determine the type or types of options to be granted
to each Participant;
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(c) Determine the number of options to be granted and the
number of shares of stock to which an option will relate;
(d) Determine the terms and conditions of any option granted
under the Plan including but not limited to, the exercise price, grant
price, or purchase price, any restrictions or limitations on the
option, any schedule for lapse of forfeiture restrictions or
restrictions on the exercisability of an option, and accelerations or
waivers thereof, based in each case on such considerations as the
Committee in its sole discretion determines;
(e) Determine whether, to what extent, and under what
circumstances an option may be settled in, or the exercise price of an
option may be paid in, cash, stock, other options, or other property,
or an option may be canceled, forfeited, or surrendered;
(f) Prescribe the form of each Option Agreement, which need
not be identical for each Participant;
(g) Decide all other matters that must be determined in
connection with an option;
(h) Establish, adopt or revise any rules and regulations as it
may deem necessary or advisable to administer the Plan; and
(i) Make all other decisions and determinations that may be
required under the Plan or as the Committee deems necessary or
advisable to administer the Plan.
4.4 DECISIONS BINDING. The Committee's interpretation of the Plan, any
options granted under the Plan, any Option Agreement and all decisions and
determinations by the Committee with respect to the Plan are final, binding, and
conclusive on all parties.
ARTICLE 5 - SHARES SUBJECT TO THE PLAN
5.1 NUMBER OF SHARES. Subject to adjustment as provided in Article 9.1
below, the maximum aggregate number of shares of stock that may be subject to
options under the Plan is 400,000. The shares may be authorized but unissued or
reacquired shares of stock.
5.2 LAPSED OPTIONS. To the extent that an option terminates, expires or
lapses for any reason, any shares of stock subject to the option will again be
available for the grant under the Plan.
5.3 STOCK DISTRIBUTED. Any stock distributed pursuant to an option may
consist, in whole or in part, of authorized and unissued stock, treasury stock
or stock purchased on the open market.
5.4 LIMITATION ON NUMBER OF SHARES SUBJECT TO OPTIONS. Notwithstanding
any provision in the Plan to the contrary, and subject to the adjustment in
Article 9.1, the maximum number of shares of stock with respect to one or more
options that may be granted to any one Participant during the Company's fiscal
year shall be 250,000.
ARTICLE 6 - ELIGIBILITY AND PARTICIPATION
6.1 ELIGIBILITY. Persons eligible to participate in this Plan include
all officers, employees, and consultants or independent contractors of the
Company or a Subsidiary, as determined by the Committee, including officers,
employees, and consultants or independent contractors who are also members of
the Board. In order to assure the viability of options granted to Participants
employed in foreign countries, the Committee may provide for such special terms
as it may consider necessary or appropriate to accommodate differences in local
law, tax policy, or custom. Moreover, the Committee may approve such supplements
to, or amendments, restatements, or alternative versions of the Plan as it may
consider necessary or appropriate for such purposes without thereby affecting
the terms of the Plan as in effect for any other purpose; provided, however,
that no such supplements, amendments, restatements, or alternative versions
shall increase the share limitations contained in Section 5 of the Plan. For
purposes of this Plan, a change in status from (i) an Employee to a consultant
or advisor, or (ii) a consultant or advisor to an Employee will not constitute a
termination of employment.
6.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the
Committee may, from time to time, select from among all eligible individuals,
those to whom options shall be granted and shall determine the nature and amount
of each option. No individual shall have any right to be granted an option under
this Plan.
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ARTICLE 7 - STOCK OPTIONS
7.1 GENERAL. The Committee is authorized to grant options to
Participants on the following terms and conditions:
(a) EXERCISE PRICE. The exercise price per share of stock
under an option shall be determined by the Committee and set forth in
the Option Agreement. It is the intention under the Plan that the
exercise price for any option shall not be less than the Fair Market
Value as of the date of grant; provided, however that the Committee
may, in its discretion, grant options (other than options that are
intended to be Incentive Stock Options) with an exercise price of less
than Fair Market Value on the date of grant.
(b) TIME AND CONDITIONS OF EXERCISE. The Committee shall
determine the time or times at which an option may be exercised in
whole or in part. The Committee also shall determine the performance or
other conditions, if any, that must be satisfied before all or part of
an option may be exercised. Notwithstanding anything in the Plan to the
contrary, a Participant's Option shall become fully vested and
exercisable and any restrictions shall lapse once the Participant
terminates employment on account of Retirement and such options shall
remain exercisable after such termination of employment until the
expiration of the option.
(c) PAYMENT. The Committee shall determine the methods by
which the exercise price of an option may be paid, the form of payment,
including, without limitation, cash, shares of stock (through actual
tender or by attestation), or other property (including broker-assisted
"cashless exercise" arrangements), and the methods by which shares of
stock shall be delivered or deemed to be delivered to Participants.
(d) EVIDENCE OF GRANT. All options shall be evidenced by a
written Option Agreement between the Company and the Participant. The
Option Agreement shall include such provisions as may be specified by
the Committee.
7.2 INCENTIVE STOCK OPTIONS. Incentive Stock Options shall be granted
only to employees and the terms of any Incentive Stock Options granted under the
Plan must comply with the following additional rules:
(a) EXERCISE PRICE. The exercise price per share of stock
shall be set by the Committee, provided that the exercise price for any
Incentive Stock Option may not be less than the Fair Market Value as of
the date of the grant.
(b) EXERCISE. In no event, may any Incentive Stock Option be
exercisable for more than ten years from the date of its grant.
(c) LAPSE OF OPTION. An Incentive Stock Option shall lapse
under the following circumstances:
(1) The Incentive Stock Option shall lapse ten years
from the date it is granted, unless an earlier time is set in
the Option Agreement.
(2) Subject to Section 6.1, if the Participant
separates from employment for any reason other than Disability
or death, the Incentive Stock Option shall lapse three months
following the Participant's termination of employment, or such
other time as specified in the Participant's Option Agreement.
Notwithstanding anything in the Plan to the contrary, a
Participant's ISO shall become fully vested and exercisable
and any restrictions shall lapse once the Participant
terminates employment on account of Retirement and such ISO
shall remain exercisable after such termination of employment
until the expiration of the ISO; provided, however, that to
the extent such option is not exercised within three months
after such termination, such option shall thereafter be
considered a Non-Qualified Stock Option. To the extent that
this provision causes Incentive Stock Options to become first
exercisable by a Participant in excess of the limitation in
Section 7.2(d), the excess shall be considered Non-Qualified
Stock Options.
(3) If the Participant terminates employment on
account of Disability or death before the option lapses
pursuant to paragraph (1) or (2) above, the Incentive Stock
Option shall lapse, unless it is previously exercised, on the
earlier of (i) the date on which the option would
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have lapsed had the Participant not become Disabled or lived and
had his employment status (i.e., whether the Participant was
employed by the Company on the date of his Disability or death or
had previously terminated employment) remained unchanged; or (ii)
12 months after the date of the Participant's termination of
employment on account of Disability or death. Upon the
Participant's Disability or death, any Incentive Stock Options
exercisable at the Participant's Disability or death may be
exercised by the Participant's legal representative or
representatives, by the person or persons entitled to do so under
the Participant's last will and testament, or, if the Participant
shall fail to make testamentary disposition of such Incentive
Stock Option or shall die intestate, by the person or persons
entitled to receive said Incentive Stock Option under the
applicable laws of descent and distribution.
(d) INDIVIDUAL DOLLAR LIMITATION. The aggregate Fair Market
Value (determined as of the time an option is made) of all shares of
stock with respect to which Incentive Stock Options are first
exercisable by a Participant in any calendar year may not exceed
$100,000.00 or such other limitation as imposed by Section 422(d) of
the Code, or any successor provision. To the extent that Incentive
Stock Options are first exercisable by a Participant in excess of such
limitation, the excess shall be considered Non-Qualified Stock Options.
(e) TEN PERCENT OWNERS. An Incentive Stock Option shall be
granted to any individual who, at the date of grant, owns stock
possessing more than ten percent of the total combined voting power of
all classes of stock of the Company only if such option is granted at a
price that is not less than 110% of Fair Market Value on the date of
grant and the option is exercisable for no more than five years from
the date of grant.
(f) EXPIRATION OF INCENTIVE STOCK OPTIONS. No option of an
Incentive Stock Option may be made pursuant to this Plan after the
tenth anniversary of the Effective Date.
(g) RIGHT TO EXERCISE. During a Participant's lifetime, an
Incentive Stock Option may be exercised only by the Participant.
ARTICLE 8 - PROVISIONS APPLICABLE TO OPTIONS
8.1 EXCHANGE PROVISIONS. The Committee may at any time offer to
exchange or buy out any previously granted option for a payment in cash, stock,
or another option (subject to Section 8.1), based on the terms and conditions
the Committee determines and communicates to the Participant at the time the
offer is made.
8.2 TERM OF OPTION. The term of each option shall be for the period as
determined by the Committee, provided that in no event shall the term of any
Incentive Stock Option exceed a period of ten years from the date of its grant.
8.3 FORM OF PAYMENT FOR OPTIONS. Subject to the terms of the Plan and
any applicable law or Option Agreement, payments or transfers to be made by the
Company or a Subsidiary on the grant or exercise of an option may be made in
such forms as the Committee determines at or after the time of grant, including
without limitation, cash, stock, other options, or other property, or any
combination, and may be made in a single payment or transfer, in installments,
or on a deferred basis, in each case determined in accordance with rules adopted
by, and at the discretion of, the Committee.
8.4 LIMITS ON TRANSFER. No right or interest of a Participant in any
option may be pledged, encumbered, or hypothecated to or in favor of any party
other than the Company or a Subsidiary, or shall be subject to any lien,
obligation, or liability of such Participant to any other party other than the
Company or a Subsidiary. Except as otherwise provided by the Committee, no
option shall be assignable or transferable by a Participant other than by will
or the laws of descent and distribution.
8.5 BENEFICIARIES. Notwithstanding Section 8.4, a Participant may, in
the manner determined by the Committee, designate a beneficiary to exercise the
rights of the Participant and to receive any distribution with respect to any
option upon the Participant's death. A beneficiary, legal guardian, legal
representative, or other person claiming any rights under the Plan is subject to
all terms and conditions of the Plan and any Option Agreement applicable to the
Participant, except to the extent the Plan and Option Agreement otherwise
provide, and to any additional restrictions deemed necessary or appropriate by
the Committee. If the Participant is married, a designation of a person other
than the Participant's spouse as his beneficiary with respect to more than 50
percent of the Participant's interest in the option shall not be effective
without the written consent of the Participant's spouse. If no beneficiary has
been designated or survives the Participant, payment shall be made to the person
entitled thereto under the Participant's will or the laws of descent and
distribution. Subject to the foregoing, a beneficiary designation may be changed
or revoked by a Participant at any time provided the change or revocation is
filed with the Committee.
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8.6 STOCK CERTIFICATES. All stock certificates delivered under the Plan
are subject to any stop-transfer orders and other restrictions as the Committee
deems necessary or advisable to comply with Federal or state securities laws,
rules and regulations and the rules of any national securities exchange or
automated quotation system on with the stock is listed, quoted, or traded. The
Committee may place legends on any stock certificate to reference restrictions
applicable to the stock.
8.7 TENDER OFFERS. In the event of a public tender for all or any
portion of the stock, or in the event that a proposal to merge, consolidate, or
otherwise combine with another company is submitted for stockholder approval,
the Committee may in its sole discretion declare previously granted options to
be immediately exercisable. To the extent that this provision causes Incentive
Stock Options to exceed the dollar limitation set forth in Section 7.2(d), the
excess options shall be deemed to be Non-Qualified Stock Options.
8.8 ACCELERATION UPON A CHANGE OF CONTROL. If a Change of Control
occurs, all outstanding options shall become fully exercisable. To the extent
that this provision causes Incentive Stock Options to exceed the dollar
limitation set forth in Section 7.2(d), the excess options shall be deemed to be
Non-Qualified Stock Options. Upon, or in anticipation of, such an event, the
Committee may cause every option outstanding hereunder to terminate at a
specific time in the future and shall give each Participant the right to
exercise options during a period of time as the Committee, in its sole and
absolute discretion, shall determine, except in the event that the surviving or
resulting entity agrees to assume the options on terms and conditions that
substantially preserve the Participant's rights and benefits of the option then
outstanding.
ARTICLE 9 - CHANGES IN CAPITAL STRUCTURE
9.1 GENERAL. In the event a stock dividend is declared upon the stock,
the shares of stock then subject to each option (and the number of shares
subject thereto) shall be increased proportionately without any change in the
aggregate purchase price therefor. In the event the stock shall be changed into
or exchanged for a different number or class of shares of stock or of another
corporation, whether through reorganization, recapitalization, stock split-up,
combination of shares, merger or consolidation, there shall be substituted for
each such share of stock then subject to each option the number and class of
shares of stock into which each outstanding share of stock shall be so
exchanged, all without any change in the aggregate purchase price for the shares
then subject to each option.
ARTICLE 10 - AMENDMENT, MODIFICATION AND TERMINATION
10.1 AMENDMENT, MODIFICATION AND TERMINATION. With the approval of the
Board, at any time and from time to time, the Committee may terminate, amend or
modify the Plan; provided, however, that to the extent necessary and desirable
to comply with any applicable law, regulation, or stock exchange rule, the
Company shall obtain shareholder approval of any Plan amendment in such a manner
and to such a degree as required.
10.2 OPTIONS PREVIOUSLY GRANTED. No termination, amendment, or
modification of the Plan shall adversely affect in any material way any option
previously granted under the Plan, without the written consent of the
Participant.
ARTICLE 11 - GENERAL PROVISIONS
11.1 NO RIGHTS TO OPTIONS. No Participant, employee, or other person
shall have any claim to be granted any option under the Plan, and neither the
Company nor the Committee is obligated to treat Participants, employees, and
other persons uniformly.
11.2 NO STOCKHOLDERS RIGHTS. No option gives the Participant any of the
rights of a stockholder of the Company unless and until shares of stock are in
fact issued to such person in connection with such option.
11.3 WITHHOLDING. The Company or any Subsidiary shall have the
authority and the right to deduct or withhold, or require a Participant to remit
to the Company, an amount sufficient to satisfy Federal, state, and local taxes
(including the Participant's FICA obligation) required by law to be withheld
with respect to any taxable event arising as a result of this Plan.
11.4 NO RIGHT TO EMPLOYMENT. Nothing in the Plan or any Option
Agreement shall interfere with or limit in any way the right of the Company or
any Subsidiary to terminate any Participant's employment at any time, nor confer
upon any Participant any right to continue in the employ of the Company or any
Subsidiary.
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11.5 UNFUNDED STATUS OF OPTIONS. The Plan is intended to be an
"unfunded" plan for incentive compensation. With respect to any payments not yet
made to a Participant pursuant to an option, nothing contained in the Plan or
any Option Agreement shall give the Participant any rights that are greater than
those of a general creditor of the Company or any Subsidiary.
11.6 INDEMNIFICATION. To the extent allowable under applicable law,
each member of the Committee or of the Board shall be indemnified and held
harmless by the Company from any loss, cost, liability, or expense that may be
imposed upon or reasonably incurred by such member in connection with or
resulting from any claim, action, suit, or proceeding to which he or she may be
a party or in which he or she may be involved by reason of any action or failure
to act under the Plan and against and from any and all amounts paid by him or
her in satisfaction of judgment in such action, suit, or proceeding against him
or her provided he or she gives the Company an opportunity, at its own expense,
to handle and defend the same before he or she undertakes to handle and defend
it on his or her own behalf. The foregoing right of indemnification shall not be
exclusive of any other rights of indemnification to which such persons may be
entitled under the Company's Articles of Incorporation or By-Laws, as a matter
of law, or otherwise, or any power that the Company may have to indemnify them
or hold them harmless.
11.7 RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
savings, profit sharing, group insurance, welfare or other benefit plan of the
Company or any Subsidiary.
11.8 EXPENSES. The expenses of administering the Plan shall be borne by
the Company and its Subsidiaries.
11.9 TITLES AND HEADINGS. The titles and headings of the Sections in
the Plan are for convenience of reference only, and in the event of any
conflict, the text of the Plan, rather than such titles or headings, shall
control.
11.10 FRACTIONAL SHARES. No fractional shares of stock shall be issued
and the Committee shall determine, in its discretion, whether cash shall be
given in lieu of fractional shares or whether such fractional shares shall be
eliminated by rounding up.
11.11 SECURITIES LAW COMPLIANCE. With respect to any person who is, on
the relevant date, obligated to file reports under Section 16 of the 1934 Act,
transactions under this Plan are intended to comply with all applicable
conditions of Rule 16b-3 or its successors under the 1934 Act. To the extent any
provision of the Plan or action by the Committee fails to so comply, it shall be
void to the extent permitted by law and voidable as deemed advisable by the
Committee.
11.12 GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company
to make payment of options in stock or otherwise shall be subject to all
applicable laws, rules, and regulations, and to such approvals by government
agencies as may be required. The Company shall be under no obligation to
register under the Securities Act of 1933, as amended (the "1933 Act"), any of
the shares of stock paid under the Plan. If the shares paid under the Plan may
in certain circumstances be exempt from registration under the 1933 Act, the
Company may restrict the transfer of such shares in such manner as it deems
advisable to ensure the availability of any such exemption.
11.13 GOVERNING LAW. The Plan and all Option Agreements shall be
construed in accordance with and governed by the laws of the State of Utah.
Adopted May 21, 1998
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AMENDMENT 1
TO THE EVANS & SUTHERLAND COMPUTER CORPORATION
1998 STOCK OPTION PLAN
On April 13, 1998, Evans & Sutherland Computer Corporation (the
"Corporation") adopted the Evans & Sutherland Computer Corporation 1998 Stock
Option Plan (the "Plan"), which was approved by the shareholders on May 21,
1998. By this instrument, the Corporation desires to amend the Plan effective as
of May 20, 1999.
1. This Amendment shall amend only those provisions specified herein
and those provisions amended hereby shall remain in full force and effect.
2. Section 5.1 of the Plan is hereby amended and restated in its
entirety as follows:
NUMBER OF SHARES. Subject to adjustment as provided in Article
9.1 below, the maximum aggregate number of shares of stock
that may be subject to options under the Plan is 850,000. The
shares may be authorized but unissued or reacquired shares of
stock.
3. This Amendment shall be effective May 20, 1999.
A-8
<PAGE>
AMENDMENT 2
TO THE EVANS & SUTHERLAND COMPUTER CORPORATION
1998 STOCK OPTION PLAN
On April 13, 1998, Evans & Sutherland Computer Corporation (the
"Corporation") adopted the Evans & Sutherland Computer Corporation 1998 Stock
Option Plan (the "Plan"), which was approved by the shareholders on May 21,
1998, and amended effective as of May 2, 1999. By this instrument, the
Corporation desires to amend the Plan effective as of May 17, 2000.
1. This Amendment shall amend only those provisions specified herein
and those provisions amended hereby shall remain in full force and effect.
2. Section 4.3 of the Plan is amended by adding the following
sentence to the end thereof:
Except as provided in Section 9.1, neither the Committee, nor
the Board, shall have the authority or discretion to adjust
the exercise price of outstanding Options granted under the
Plan, whether through an amendment of an existing Option
Agreement or through the cancellation and replacement of
outstanding Options.
3. Section 5.1 of the Plan is hereby amended and restated in its
entirety as follows:
NUMBER OF SHARES. Subject to adjustment as provided in Article
9.1 below, the maximum aggregate number of shares of stock
that may be subject to options under the Plan is 1,250,000.
The shares may be authorized but unissued or reacquired shares
of stock.
4. This Amendment shall be effective May 17, 2000.
A-9
<PAGE>
SIDE 1
PROXY
EVANS & SUTHERLAND COMPUTER CORPORATION
ANNUAL MEETING OF SHAREHOLDERS TO BE HELD MAY 17, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints James R. Oyler, Richard J. Gaynor, and Mark
C. McBride and each of them, as proxies, with full power of substitution, and
hereby authorizes them to represent and vote, as designated on the reverse, all
shares of common stock of Evans & Sutherland Computer Corporation, a Utah
corporation, held of record by the undersigned, on April 14, 2000, at the annual
meeting of shareholders to be held on Wednesday, May 17, 2000 at 11:00 a.m.,
local time, at Evans & Sutherland's principal executive offices located at 600
Komas Drive, Salt Lake City, Utah 84108, or at any adjournment or postponement
thereof, upon the matters set forth on the reverse, all in accordance with and
as more fully described in the accompanying Notice of Annual Meeting of
Shareholders and Proxy Statement, receipt of which is hereby acknowledged.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED "FOR" THE ELECTION OF THE DIRECTOR NOMINEES NAMED ON THE REVERSE, "FOR"
THE PROPOSAL TO AMEND THE 1998 STOCK OPTION PLAN AND "FOR" RATIFICATION OF THE
APPOINTMENT OF KPMG LLP AS EVANS & SUTHERLAND'S INDEPENDENT AUDITORS FOR FISCAL
YEAR 2000. PLEASE COMPLETE, SIGN, AND DATE THIS PROXY WHERE INDICATED AND RETURN
PROMPTLY IN THE ACCOMPANYING PREPAID ENVELOPE.
(To be Signed on Reverse Side.)
SIDE 2
1. ELECTION OF DIRECTORS, Peter O. Crisp and Ivan E. Sutherland, to serve
for three year terms expiring at the Company's annual meeting to be held
in the year 2003 and until their successors are duly elected and
qualified.
|_| For all Nominees
|_| Withhold Authority to Vote for the Nominees
listed at right (To withhold authority for
one or more individual Nominees, cross out
the name of each such person)
Peter O. Crisp
Ivan E. Sutherland
|_| Abstain
2. Proposal to amend the Evans & Sutherland 1998 Stock Option Plan.
|_| For |_| Against |_| Abstain
3. Proposal to ratify the appointment of KPMG LLP as independent auditors of
the Company for the fiscal year ending December 31, 2000.
|_| For |_| Against |_| Abstain
4. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any
adjournment or postponement thereof.
PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY CARD USING THE ENCLOSED ENVELOPE.
Signature Date Signature Date
-------------- -------- -------------- --------
<PAGE>
Note: Please sign above exactly as the shares are issued. When shares are held
by joint tenants, both should sign. When signing as an attorney,
executor, administrator, trustee, or guardian, please give full title as
such. If a corporation, please sign in full corporate name by president
or other authorized officer.
If a partnership, please sign in partnership name by authorized person.
