EXHIBIT 4.5
OPTION TO PURCHASE COMMON STOCK--GIBBS
Neither this Option nor the Common Stock to be issued upon exercise hereof, has
been registered under the Securities Act of 1933, as amended (the "Act"), or
qualified under any state securities law (the "Law"), and this Option has been,
and the Common Stock to be issued upon exercise hereof will be, acquired for
investment and not with a view to, or for resale in connection with, any
distribution thereof. No such sale or other disposition may be made without an
effective registration statement under the Act and qualification under the law
related thereto or an opinion of counsel reasonably satisfactory to Evans &
Sutherland Computer Corporation and its counsel, that said registration and
qualifications are not required under the Act and Law, respectively.
EVANS & SUTHERLAND COMPUTER CORPORATION
STOCK OPTION AGREEMENT
This stock option (the "Option" or the "Agreement") is being granted
pursuant to certain resolutions of the Board of Directors of Evans & Sutherland
Computer Corporation, dated October 13, 1998.
NOTICE OF STOCK OPTION GRANT
Optionee:
William C. Gibbs
You have been granted an Option to purchase shares of Common Stock of
Evans & Sutherland Computer Corporation (the "Company"). This Option shall be
subject to the following terms and conditions:
Date of Grant: October 25, 1998
Exercise Price Per Share: $ 13.25
Number of Shares: 75,000
Type of Option: Nonqualified Stock Option
Expiration Date: October 25, 2008, unless
sooner terminated as set
forth in paragraph 7
herein.
Exercise Price:
The exercise price of this Option is $ 13.25 per share as may be
adjusted from time as provided below ("Exercise Price").
Vesting Schedule:
This Option may be exercised, in whole or in part, subject to
the terms of this Agreement, in accordance with the following vesting schedule:
(i) 1/3 of the Options at any time after the Date of Grant and prior to the
Expiration Date; (ii) 1/3 of the Options at any time on or after October 25,
1999 and prior to the Expiration Date; and (iii) 1/3 of the Options at any time
on or after October 25, 2000 and prior to the Expiration Date.
AGREEMENT
1. Grant Of Option. The Company hereby grants to William C. Gibbs (the
"Optionee"), an option (the "Option") to purchase the number of shares (the
"Shares") as set forth in the Notice of Grant attached as Part I of this
Agreement at the Exercise Price per share set forth in the Notice of Grant,
subject to the terms and conditions set forth herein.
2. Exercise Of Option.
(a) Right to Exercise. This Option is exercisable during its term as set forth
in the Notice of Grant and the applicable provisions of this Option
Agreement. In the event of Optionee's death, disability or other
termination of Optionee's employment, the exercisability of the Option is
governed by the applicable provisions of this Option Agreement.
(b) Method of Exercise. This Option is exercisable by delivery of an exercise
notice, in the form attached as Exhibit A (the "Exercise Notice"), which
shall state the election to exercise the Option, the number of Shares in
respect of which the Option is being exercised (the "Exercised Shares"),
and such other representations and agreements as may be required by the
Company. The Exercise Notice shall be signed by the Optionee and shall be
delivered in person or by certified mail to the Secretary of the Company.
The Exercise Notice shall be accompanied by payment of the aggregate
Exercise Price as to all Exercised Shares. This Option shall be deemed to
be exercised upon receipt by the Company of such fully executed Exercise
Notice accompanied by such aggregate Exercise Price.
3. Method Of Payment. Payment of the aggregate Exercise Price shall be by any of
the following, or a combination thereof, at the election of the Optionee:
(a) Cash;
(b) Check;
(c) In lieu of exercising this Option by delivery of cash or check, the
Optionee may make a valid Option exercise by electing to receive
shares equal to the value of this Option (or the portion thereof being
canceled) by surrendering this Option at the principal office of the
Company together with the Exercise Notice (a "Net Exercise"), in which
event the Company shall transfer to the Optionee a number of Shares
computed using the following formula:
X = Y (A-B)
-------------
A
Where X = the number of Option Shares to be issued to such
Optionee.
Y = the number of Option Shares purchasable by
such Optionee under this Option Agreement, the
rights to which are surrendered pursuant to the
Net Exercise.
A = the Fair Market Value of one Option Share, (as
determined by the Closing price of the Company's
Common Stock on the trading day immediately
preceding the date the Option is exercised, as
reported by The Nasdaq National Market or other
exchange upon which the Company's stock is
quoted).
B = the Exercise Price (as adjusted to the
date of such calculation).
4. Registration Under The Securities Act.
(a) Demand Rights. Provided that the Company is eligible to
file a registration statement on Form S-3 or Form S-8 (in connection
with this Option), if at any time after December 31, 1998 the Company
shall receive from the Optionee a written request that the Company
effect a registration on Form S-3 or Form S-8 to permit the sale or
disposition of the Shares, the Company shall file a registration
statement on Form S-3 or Form S-8, as the case may be, as expeditiously
as possible covering the Shares. However, the Optionee is limited to
only one (1) demand upon the Company to effect a registration on Form
S-3 or Form S-8 to permit the sale or disposition of the Shares (the
"Demand Right"), so long as the Form S-3 or Form S-8 first demanded
remains effective. If such registration statement lapses or Optionee is
unable to sell all shares covered hereby, this Demand Right shall be
reinstated so long as Optionee owns any Shares. Once filed, the
registration statement covering the Shares shall remain current and
effective until expiration or exercise and sale of all shares subject
to options herein.
(b) Duties of Company. In connection with the preparation and
filing of a registration statement, the Company agrees to (i) use its
best efforts to cause such registration statement to become and remain
effective; (ii) furnish to the Optionee such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as
Optionee may reasonably request in order to facilitate the disposition
of the Shares; and (iii) use its best efforts to register and qualify
the shares in such jurisdictions as shall be identified by the Optionee
for the distribution of the securities covered by the registration
statement.
(c) Indemnification by Optionee. To the extent permitted by
law, Optionee will indemnify and hold harmless the Company, and its
directors, officers, employees, agents and representatives, as well as
its controlling persons (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities, or expenses,
including without limitation, attorneys' fees and disbursements, which
arise out of or are based upon any violation by Optionee of the
Securities Act, or any rule or regulation promulgated thereunder
applicable to Optionee or arise out of or are based upon any untrue
statement of any material fact contained in the registration statement,
or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to
the extent that such untrue statement or alleged untrue statement or
omission, or alleged omission was made in such registration statement
in reliance upon and in conformity with information furnished by
Optionee in writing expressly for use in connection with such
registration statement.
(d) Indemnification by Company. To the extent permitted by
law, the Company will indemnify and hold harmless Optionee against any
losses, claims, damages, liabilities, or expenses, including without
limitation attorneys' fees and disbursements, to which Optionee may
become subject under the Securities Act to the extent that such losses,
claims, damages or liabilities arise out of or are based upon any
violation by the Company of the Securities Act, or any rule or
regulation promulgated thereunder applicable to the Company, or arise
out of or are based upon any untrue or alleged untrue statement of any
material fact contained in the registration statement, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or arise out of any violation by the
Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction of the
Company in connection with such registration statement; provided,
however, that the indemnity agreement contained in this paragraph shall
not apply to any loss, damage or liability to the extent that same
arises out of or is based upon an untrue statement or omission made in
connection with such registration statement in reliance upon and in
conformity with information furnished in writing expressly for use in
connection with such registration by Optionee.
(e) Undertaking by Optionee. Optionee undertakes to comply
with all applicable laws governing the distribution of securities in
connection with Optionee's sale of the Shares, and to notify the
Company of any changes in Optionee's plan of distribution so that the
Company can sticker or amend the registration statement as the Company
deems appropriate in its sole discretion.
5. Assignability Of Option. This Option may be assigned by the holder
upon the giving of written notice to the Company of (i) the name of the assignee
("Assignee") and (ii) the number of Options assigned to any Assignee.
Upon any assignment of the Option or portion thereof, the Registration
Rights granted pursuant to Section 4 of this Option Agreement can only be
exercised upon the unanimous written consent of all holders of the Options at
the time the Demand Right is exercised. The terms of this Option Agreement shall
be binding upon the executors, administrators, heirs, successors and assigns of
the Optionee.
6. Term Of Option. This Option must be exercised within ten (10) years
from the date hereof, and may be exercised during such term only in accordance
with the terms of this Option Agreement.
7. Termination Of Option. The Option shall terminate under the
following circumstances:
(a) The Option shall terminate on the Expiration Date;
(b) If the Optionee dies before the Option terminates pursuant
to paragraph 7(a), above, the Option shall terminate on the earlier of
(i) the date on which the Option would have lapsed had the Optionee
lived; or (ii) 15 months after the date of the Optionee's death. Upon
the Optionee's death, any exercisable Options may be exercised by the
Optionee's legal representative or representatives, by the person or
persons entitled to do so under the Optionee's last will and testament,
or, if the Optionee shall fail to make testamentary disposition of the
Option or shall die intestate, by the person or persons entitled to
receive said Option under the applicable laws of descent and
distribution.
8. Acceleration of Vesting of Option. This Option shall vest
immediately in full upon a Change of Control (as herein defined) of the Company.
A "Change of Control" shall mean a change in ownership or managerial control of
the stock, assets or business of the Company resulting from one or more of the
following circumstances:
(a) A change of control of the Company, of a nature that
would be required to be reported in response to Item 6(e) of Schedule
14A of Regulation 14A promulgated under the Act, or any successor
regulation of similar import, regardless of whether the Company is
subject to such reporting requirement;
(b) A change in ownership of the Company through a transaction or
series of transactions, such that any individual, partnership, joint
venture, association, trust, corporation or other entity, other than
an employee benefit plan of the Company or an entity organized,
appointed or established pursuant to the terms of any such benefit
plan (other than any current officer of the Company or member of the
Company's Board of Directors) is (are) or become(s), in the aggregate,
the Beneficial Owner (as defined in Rule 13d-3 of the General Rules
and Regulations of the Securities Exchange Act of 1934 , directly or
indirectly, of securities of the Company representing twenty percent
(20%) or more of the Company's then outstanding securities;
(c) Any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to
which shares of the common stock of the Company would be converted into
cash (other than cash attributable to dissenters' rights), securities
or other property provided by an individual, partnership, joint
venture, association, trust, corporation or other entity, other than an
employee benefit plan of the Company or an entity organized, appointed
or established pursuant to the terms of any such benefit plan other
than the Company, other than a consolidation or merger of the Company
in which the holders of the common stock of the Company immediately
prior to the consolidation or merger have approximately the same
proportionate ownership of common stock of the surviving corporation
immediately after the consolidation or merger;
(d) The shareholders of the Company approve a sale, transfer,
liquidation or other disposition of all or substantially all of the
assets of the Company to an individual, partnership, joint venture,
association, trust, corporation or other entity, other than an
employee benefit plan of the Company or an entity organized, appointed
or established pursuant to the terms of any such benefit plan;
(e) During any period of two (2) consecutive years, individuals
who, at the beginning of such period, constituted the Board of
Directors of the Company cease, for any reason, to constitute at least
a majority thereof, unless the election or nomination for election of
each new director was approved by the vote of at least two-thirds
(2/3) of the directors then still in office who were directors at the
beginning of the period;
(f) The filing of a proceeding under Chapter 7 of the Federal
Bankruptcy Code (or any successor or other statute of similar import)
for liquidation with respect to the Company;
(g) The filing of a proceeding under Chapter 11 of the Federal
Bankruptcy Code (or any successor or other statute of similar import)
for reorganization with respect to the Company if in connection with
any such proceeding, this Agreement is rejected, or a plan of
reorganization is approved an element of which plan entails the
liquidation of all or substantially all the assets of the Company.
A "Change of Control" shall be deemed to occur on the actual date on
which any of the foregoing circumstances shall occur; provided,
however, that in connection with a "Change of Control" specified in
Section 8(g), a "Change of Control" shall be deemed to occur on the
date of the filing of the relevant proceeding under Chapter 11 of the
Federal Bankruptcy Code (or any successor or other statute of similar
import).
9. Dilution Protection.
(a) In the event the Company shall (i) declare a dividend on
its Common Stock in shares of Common Stock or make a distribution in
shares of Common Stock, (ii) declare a stock split or reverse stock
split of its outstanding shares of Common Stock, (iii) combine its
outstanding shares of Common Stock into a smaller number of shares of
Common Stock or (iv) issue by reclassification of its shares of Common
Stock other securities (including any such reclassification in
connection with a consolidation or merger in which the Company or any
of its subsidiaries is the continuing corporation), then the number of
shares of Common Stock of the Company, deliverable to Optionee
hereunder and the exercise price related thereto shall be adjusted so
that Optionee shall be entitled to receive the kind and number of
shares of Common Stock of the Company which the Optionee has the right
to receive, upon the happening of any of the events described above,
with respect to the shares of the Company stock which were otherwise
deliverable pursuant hereto. An adjustment made pursuant to this
paragraph shall become effective immediately after the effective date
of such event;
(b) Whenever the number of Shares or the exercise price of
this Option is adjusted pursuant to this paragraph, the Company shall
promptly mail by first class mail, postage prepaid, to Optionee, notice
of such adjustment or adjustments.
10. Availability Of Company Stock. The Company hereby agrees and
covenants that at all times during the term of this Option it shall reserve for
issuance a sufficient number of shares of Common Stock as would be required upon
full exercise of the rights represented by this Agreement.
11. Tax Consequences. Some of the federal tax consequences relating to
this Option, as of the date of this Option, are set forth below. THIS SUMMARY IS
NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE.
THE OPTIONEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THIS OPTION OR
DISPOSING OF THE SHARES.
(a) Exercising the Option. The Optionee may incur regular
federal income tax liability upon exercise of the Option. The Optionee
may be treated as having received compensation income (taxable at
ordinary income tax rates) equal to the excess, if any, of the Fair
Market Value of the Exercised Shares on the date of exercise over their
aggregate Exercise Price. If the Optionee is an Employee, the Company
will be required to withhold from Optionee's compensation or collect
from Optionee and pay to the applicable taxing authorities an amount
equal to a percentage of this compensation income at the time of
exercise.
(b) Disposition of Shares. If the Optionee holds the Shares
for at least one year, any gain realized on disposition of the Shares
will be treated as long-term capital gain for federal income tax
purposes.
12. Governing Law. This Agreement is governed by the laws of the
State Utah.
IN WITNESS WHEREOF, this Agreement is executed effective as of the date
first set forth above.
EVANS & SUTHERLAND COMPUTER CORPORATION
By:___________________________________
Its:___________________________________
OPTIONEE:
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EXHIBIT A
EVANS & SUTHERLAND COMPUTER CORPORATION
EXERCISE NOTICE
Evans & Sutherland Computer Corporation
c/o __________________________
600 Komas Drive
Salt Lake City, Utah 84108
1. EXERCISE OF OPTION. Effective as of today, ________________, ___, the
undersigned ("Purchaser") hereby elects to purchase ______________ shares (the
"Shares") of the non-voting Common Stock of Evans & Sutherland Computer
Corporation (the "Company") under and pursuant to the Stock Option Agreement
dated _____________ (the "Option Agreement"). The purchase price for the Shares
shall be as set forth in the Option Agreement, as adjusted.
2. DELIVERY OF PAYMENT. Purchaser herewith delivers to the Company the full
purchase price for the Shares either |_| in cash or check or |_| by Net
Exercise.
3. REPRESENTATIONS OF PURCHASER. Purchaser acknowledges that Purchaser has
received, read and understood the Option Agreement and agrees to abide by and be
bound by its terms and conditions.
4. RIGHTS AS SHAREHOLDER. Until the issuance (as evidenced by the appropriate
entry on the books of the Company or of a duly authorized transfer agent of the
Company) of the stock certificate evidencing the Shares, no right to vote or
receive dividends or any other rights as a shareholder shall exist with respect
to the Shares, notwithstanding the exercise of the Option. A stock certificate
for the number of Shares so acquired shall be issued to the Purchaser as soon as
practicable after exercise of the Option.
5. TAX CONSULTATION. Purchaser understands that Purchaser may suffer adverse tax
consequences as a result of Purchaser's purchase or disposition of the Shares.
Purchaser represents that Purchaser has consulted with any tax consultants
Purchaser deems advisable in connection with the purchase or disposition of the
Shares and that Purchaser is not relying on the Company for any tax advice.
6. ENTIRE AGREEMENT. The Option Agreement is incorporated herein by reference.
This Exercise Notice and the Option Agreement constitute the entire agreement of
the parties and supersede in their entirety all prior undertakings and
agreements of the Company and the Purchaser with respect to the subject matter
hereof.
Submitted by: Accepted by:
PURCHASER: EVANS & SUTHERLAND COMPUTER CORPORATION
By: _______________________________
Signature Its: _______________________________
Print Name
Address:
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