CERTIFICATE OF DESIGNATION, PREFERENCES AND OTHER RIGHTS
OF THE
CLASS B-1 PREFERRED STOCK
OF
EVANS & SUTHERLAND
COMPUTER CORPORATION
Pursuant to Section 16-10a-1002 of the
Utah Revised Business Corporations Act
Evans & Sutherland Computer Corporation, a corporation organized and
existing under the laws of the State of Utah (the "Corporation"), hereby
certifies that, pursuant to the authority conferred upon the Board of Directors
of the Corporation (the "Board of Directors") by the Articles of Incorporation
of the Corporation, as amended (the "Articles of Incorporation"), and in
accordance with Section 16-10a-1002 of the Utah Revised Business Corporations
Act, the Board of Directors on July 19, 1998 duly adopted the following
resolution, which resolution remains in full force and effect as of the date
hereof:
RESOLVED, that pursuant to the authority granted to and vested in the
Board of Directors and in accordance with the provisions of the Articles of
Incorporation, there is hereby created and authorized a series of Preferred
Stock, no par value, of the Corporation, and the designation and amount thereof
and the powers, preferences and rights of the shares of such series, and the
qualifications, limitations or restrictions thereof are as follows:
CLASS B-1 PREFERRED STOCK
Section 1. Designation. The series of Preferred Stock hereby created
shall be designated and known as the "Class B-1 Preferred Stock." The number of
shares constituting such series shall be one million five hundred thousand
(1,500,000).
Section 2. Liquidation Rights. In the event of any voluntary or
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, each holder of shares of Class B-1 Preferred Stock shall be
entitled to receive on the date of payment of any liquidation amount to the
holders of the Corporation's common stock, $.20 par value ("Common Stock"), the
same cash or other property which the holder of shares of Class B-1 Preferred
Stock would have received if on such date such holder was the holder of record
of the number (including, for purposes of this Section 2, any fraction) of
shares of Common Stock into which the shares of Class B-1 Preferred Stock then
held by such holder are then convertible.
Section 3. Conversion.
3.1. Voluntary Conversion. At any time and from time to time after the
issuance of the Class B-1 Preferred Stock, any holder of Class B-1 Preferred
Stock may convert any or all of the shares of Class B-1 Preferred Stock held by
such holder into shares of Common Stock at the then effective conversion ratio.
The conversion ratio at which shares of Common Stock shall be deliverable upon
conversion of shares of Class B-1 Preferred Stock (the "Conversion Ratio") shall
initially be one-for-one. Such initial Conversion Ratio shall be subject to
adjustment, in order to adjust the number of shares of Common Stock into which
the Class B-1 Preferred Stock is convertible, as hereinafter provided.
3.2. Automatic Conversion. Each share of Class B-1 Preferred Stock
shall automatically be converted into shares of Common Stock at the then
effective Conversion Ratio upon (a) a consolidation or merger of this
Corporation with or into any other individual, corporation, partnership, limited
liability company, trust or other entity or organization, including a
governmental agency or political subdivision thereof (each a "Person"), in which
the holders of the Corporation's voting securities, immediately prior to such
consolidation or merger, fail to own, immediately after such consolidation or
merger, more than 50% of the surviving Person's voting securities; (b) a sale,
conveyance or disposition of all or substantially all of the assets of the
Corporation or (c) the effectuation by the Corporation of a transaction or
series of related transactions in which more than 50% of the voting power of the
Corporation is disposed of.
3.3. Mechanics of Conversion. No fractional shares of Common Stock
shall be issued upon conversion of Class B-1 Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the then fair
market value of one share of Common Stock, as reasonably determined in good
faith by the Board of Directors. Before any holder of Class B-1 Preferred Stock
shall be entitled to receive certificates for the shares of Common Stock issued
upon conversion, such holder shall surrender the certificate or certificates for
the shares of Class B-1 Preferred Stock being converted, duly endorsed, at the
principal office of the Corporation and shall state therein its name or the
name, or names, of its nominees in which it wishes the certificate or
certificates for shares of Common Stock to be issued. No voluntary conversion
shall be permitted unless and until the holder shall submit to the Corporation
either (a) evidence of compliance with the filing and waiting period
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended (the "HSR Act"), or (b) an opinion of the holder's legal counsel that
the conversion does not require any filing under the HSR Act, in a form
reasonably satisfactory to the Corporation (collectively, the "HSR Provisions").
The Corporation shall, as soon as practicable thereafter, issue and deliver at
such office to such holder of Class B-1 Preferred Stock or to such holder's
nominee or nominees, a certificate or certificates for the number of shares of
Common Stock to which such holder or such holder's nominee shall be entitled as
aforesaid, together with cash in lieu of any fraction of a share of Common
Stock. Subject to the foregoing, in the case of automatic conversion under
Section 3.2, such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such automatic conversion and upon
surrender of the certificate representing the shares of Class B-1 Preferred
Stock to be converted in the case of a voluntary conversion pursuant to Section
3.1. The Person or Persons entitled to receive the shares of Common Stock
issuable upon conversion shall be treated for all purposes as the record holder
or holders of such shares of Common Stock on such date.
3.4. Adjustments to Conversion Ratio. If the Corporation shall issue
shares of Common Stock to the holders of Common Stock as a dividend or stock
split, or in the event that the Corporation reduces the number of outstanding
shares of Common Stock in a reverse stock split or stock combination, then the
Conversion Ratio shall be adjusted such that the holders of shares of Class B-1
Preferred Stock shall receive, upon conversion of the Class B-1 Preferred Stock,
that number of shares of Common Stock that such holder would have owned
following such dividend, stock split, reverse stock split or stock combination
if such conversion had occurred immediately prior to the record date for such
stock split, stock dividend, reverse stock split or stock combination of the
Common Stock, as the case may be. If the Corporation shall issue shares of Class
B-1 Preferred Stock to the holders of Class B-1 Preferred Stock as a stock
dividend or stock split, or in the event that the Corporation reduces the number
of outstanding shares of Class B-1 Preferred Stock in a reverse stock split or
stock combination, then the Conversion Ratio shall be adjusted such that the
holder of shares of Class B-1 Preferred Stock shall receive, upon conversion of
the Class B-1 Preferred Stock, the number of shares of Common Stock that such
holder would have owned if such conversion had occurred immediately prior to the
record date for such stock split, stock dividend, reverse stock split or stock
combination of the Class B-1 Preferred Stock, as the case may be. In the event
of a reclassification or other similar transaction as a result of which shares
of Common Stock are converted into another security, then the Conversion Ratio
shall be determined such that the holders of shares of Class B-1 Preferred Stock
shall receive, upon conversion of such Class B-1 Preferred Stock, the number of
such securities that such holder would have owned following such conversion of
the Common Stock into another security if such conversion had occurred
immediately prior to the record date of such reclassification or other similar
transaction. No adjustments with respect to dividends (other than stock
dividends) shall be made upon conversion of any share of Class B-1 Preferred
Stock; provided, however, that if a share of Class B-1 Preferred Stock shall be
converted subsequent to the record date for the payment of a dividend (other
than a stock dividend) or other distribution on shares of Class B-1 Preferred
Stock but prior to such payment, then the registered holder of such share at the
close of business on such record date shall be entitled to receive the dividend
(other than a stock dividend) or other distribution payable on such share on
such date notwithstanding the conversion thereof or the Corporation's default in
payment of the dividend (other than a stock dividend) due on such date.
3.5. Common Stock Reserved. The Corporation shall reserve and keep
available out of its authorized but unissued Common Stock such number of shares
of Common Stock as shall, from time to time, be sufficient for conversion of all
outstanding Class B-1 Preferred Stock.
Section 4. No Redemption. The shares of Class B-1 Preferred Stock shall
not be redeemable. Notwithstanding the foregoing, the Corporation may acquire
shares of Class B-1 Preferred Stock in any other manner permitted by law,
contract, the Articles of Incorporation or herein.
Section 5. Voting Rights.
5.1. The holders of shares of Class B-1 Preferred Stock shall have no
voting rights except as provided in Section 5.2, the Articles of Incorporation
or by law.
5.2. In addition to any other rights provided by law or in the Articles
of Incorporation, so long as any shares of Class B-1 Preferred Stock shall be
outstanding, the Corporation shall not, without first obtaining the affirmative
vote or written consent of the holders of not less than a majority of the
outstanding shares of the Class B-1 Preferred Stock, take any action (including,
without limitation, any repeal, amendment or modification to the Articles of
Incorporation or the Bylaws of the Corporation) that alters or changes any of
the rights, privileges and preferences of the Class B-1 Preferred Stock.
Section 6. Dividend Rights. If any dividend or other distribution
payable in cash or other property is declared on the Common Stock (excluding any
dividend or other distribution for which adjustment to the Conversion Ratio is
provided by Section 3.4), each holder of Class B-1 Preferred Stock on the record
date for such dividend or distribution shall be entitled to receive on the date
of payment or distribution of such dividend or other distribution the same cash
or other property which such holder would have received if on such record date
such holder was the holder of record of the number (including for purposes of
this Section 6 any fraction) of shares of Common Stock into which the shares of
Class B-1 Preferred Stock then held by such holder are convertible.
Section 7. Notices. In addition to any other notices to which the
holders of Class B-1 Preferred Stock may be entitled pursuant to the Articles of
Incorporation, the Bylaws of the Corporation, law, contract or otherwise, the
Corporation shall cause to be sent to each holder all written communications
sent generally to the holders of Common Stock. The Corporation shall cause such
communications to be sent to holders of Class B-1 Preferred Stock concurrently
with the sending of such communications to the holders of Common Stock.
[The remainder of this page is intentionally left blank.]
IN WITNESS WHEREOF, the corporation has caused this Certificate of
Designation, Preferences and Other Rights to be executed by a duly authorized
officer on July 20, 1998.
EVANS & SUTHERLAND
COMPUTER CORPORATION
By: /s/ James R. Oyler
-------------------------
Name: James R. Oyler
-------------------------
Title: President & Chief Executive Officer
-----------------------------------