EVANS & SUTHERLAND COMPUTER CORPORATION INCENTIVE STOCK OPTION AWARD AGREEMENT

 

1.

Option Period. This Option shall remain in effect until «p3edate» subject to earlier expiration in the event that the Participant’s employment with the Company terminates prior to such date as provided for in Paragraph 3 of this Agreement.

 

2.

Exercise Rights. Subject to Paragraph 1 of this Agreement, this Option cannot be exercised until «p1vdate» and then only to the extent permitted by the following schedule and the other terms and conditions governing this Option:

 

 

3.

Continued Employment.  Except as may otherwise be provided by the Plan, this Option shall not be exercisable after:

 

a)

The Participant’s termination of employment for cause by the Company.  The term “cause” for this purpose shall mean:

 

(i)

The refusal of the Participant to implement or adhere to lawful policies or directives of the Board of Directors of the Company;

 

(ii)

The conviction of the Participant for committing a felony under federal law or the law of the state in which such action occurred,

 

(iii)

Conduct which is in violation of the Participant’s common law duty of loyalty to the Company; or

(iv)

 

b)

The Participant’s willful termination of employment with the Company other than as provided for in sub-paragraph (c) which follows.

 

c)

The option expiration date set forth in Paragraph 1, upon the Participant’s Retirement from the Company (as defined in paragraph 8(b) of this Agreement), provided that should the Participant elect to exercise this Option (or any portion thereof) more than 90 days following termination pursuant to this subparagraph (c), the Option shall not comply with Section 422 of the Code and shall be treated as a Non-Qualified Stock Option.

 

d)

The earlier of ninety days after the Company terminates the Participant’s employment for a reason other than for cause or the expiration date set forth in Paragraph 1, provided that this Option shall only be exercisable to the extent of the number of shares purchasable as of the date of the Participant’s termination of employment as provided under Paragraph 2 of this Agreement.

 

e)

The earlier of one year following the Participant’s termination of employment from the Company as a result of disability as defined in Section 22(e)(3) of the Code or the expiration date set forth in Paragraph 1 of this Agreement, provided that this Option shall only be exercisable to the extent of the number of shares purchasable as of the date of the Participant’s termination of employment as provided under Paragraph 2 of this Agreement.

 

f)

The earlier of one year following the Participant’s death while this Option is outstanding or the expiration date set forth in Paragraph 1 of this Agreement, provided that this Option shall only be exercisable to the extent of the number of shares purchasable as of the earlier of the Participant’s (1) death or (2) termination of employment from the Company.

 

4.

Purchase of Shares.  From time to time, but only to the extent this Option is then exercisable, the Participant may purchase shares of common stock covered by this Option by delivering to the Company a signed notice of the Participant’s election to purchase a designated number of shares.  The aggregate purchase price of the shares shall be paid in full at the time of exercise by delivery to the Company of cash or check, or if permitted by the Committee, such other means as provided for under the Plan.

 

5.

Leave of Absence.  If the Participant is officially granted a leave of absence for illness, military or governmental service or other reasons by the Company, for purposes of this Option, such leave of absence shall not be treated as termination of employment.

 

6.

Transferability.  This Option shall not be transferable or assignable by the Participant other than by will or the laws of descent and distribution as set forth in Section 10.4 of the Plan.

 

7.

Rights of Cancellation and Repurchase. The Company reserves the right to cancel this Option if the Participant engages in any of the activities listed under paragraphs 7(a) through 7(d).  The Company reserves the right to require the Participant to sell to it the number of shares acquired through exercise of this Option if, either one year before or after such exercise, the Participant has:

 

a)

Rendered services for any organization or engaged directly or indirectly in any business or activity which, in the judgment of the Committee, is in competition with the Company or is otherwise materially prejudicial to or in conflict with the best interests of the Company;

 

b)

Disclosed, without prior written authorization from the Company, other than in an official capacity as a part of the Participant’s responsibilities for the Company, or as required by law or legal process, any confidential information or materials relating to the Company business;

 

c)

Violated any agreement with the Company regarding rights, title and interest in any idea, patentable or not, made or conceived by the Participant or by the Participant and others, in conjunction with Participant’s employment with the Company which relates to the actual or anticipated business, research, or development work of the Company; or

 

d)

Acted in any other manner which is otherwise inimical and causes material damage to the Company, as determined by the Committee.

 

8.

 

a)

This Option shall become immediately exercisable in full as of the date upon which a Change in Control occurs.

 

b)

This Option shall become immediately exercisable in full upon the Participant’s termination of employment on account of Retirement.  Retirement shall mean the Participant’s termination of employment with the Company or Subsidiary after attaining any normal or early retirement age specified in any pension, profit sharing or other retirement program sponsored by the Company.

 

9.

Purchase for Investment.  As a condition to the exercise in whole or in part of the Option hereby granted, each written note of election shall include a representation and warrant in writing to the Company that the shares purchased are being acquired for investment and not with a view to the distribution or resale thereof, unless, at the time the Option is exercised, in whole or in part, there is in effect under the Securities Act of 1933 (the “1933 Act”) a registration Statement relating to the shares issuable upon exercise of this Option and available for delivery to the Participant a prospectus meeting the requirements of Section 10(a)(3) of the 1933 Act.  No shares shall be purchased upon the exercise of this Option unless and until any then applicable requirements of the United States Securities and Exchange Commission, any state having jurisdiction (and any other regulatory agencies having jurisdiction), and of any exchanges upon which shares of the common stock may be listed or regulatory bodies governing trading of the common stock shall have been fully complied with.

 

10.

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