**Exhibit 10.29**

 

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT (this “Agreement”) is enteredinto as of December 1, 2004, by and between EVANS & SUTHERLANDCOMPUTER CORPORATION, a Utah corporation (“Borrower’), and WELLSFARGO BANK, NATIONAL ASSOCIATION (“Bank”).

 

RECITALS

 

Borrower has requested that Bank extend or continuecredit to Borrower as described below, and Bank has agreed to provide suchcredit to Borrower on the terms and conditions contained herein.

 

NOW, THEREFORE, for valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, Bank and Borrower hereby agree as follows:

 

ARTICLE ICREDIT TERMS

 

SECTION 1.1.LETTER OF CREDIT LINE.

 

(a)                                  Letter of Credit Line. Subject to the terms and conditions of thisAgreement, Bank hereby agrees to establish a letter of credit line (“Letter ofCredit Line) under which Bank shall issue or cause an affiliate to issuestandby letters of credit for the account of Borrower to support delivery ofsimulation software packages to customers (a Performance Letter of Credit”) andto support financial obligations of Borrower (a “Financial Letter of Credit’)(each, a “Letter of Credit” and collectively, “Letters of Credit”) from time totime up to and including December 1, 2006; provided however, that the aggregateof all undrawn amounts, and all amounts drawnand unreimbursed, under any Letters of Credit issued under the Letter ofCredit Line shall not at any time exceed the principal amount of Ten MillionDollars ($10,000,000.00). The form and substance of each Letter of Credit shallbe subject to approval by Bank, in its sole discretion. No Letter of Creditshall have an expiration date greater than 365 days past the maturity date ofthe Letter of Credit Line. Each Letter of Credit shall be subject to the additionalterms of the Letter of Credit agreements, applications and any relateddocuments required by Bank in connection with the issuance thereof (each, a “Letterof Credit Agreement”). Bank has issued thirteen (13) standby letters of creditfor the account of the Borrower in the aggregate amount of Three Million OneHundred Forty One Thousand NineHundred Forty Eight and 05/100 Dollars ($3,141,948.05), each of which isoutstanding as of the date hereof and shall be deemed Included within thedefinition of Letters of Credit set forth herein.

 

(b)                                 Repayment of Drafts. Each drawing paid under any Letter of Creditshall be repaid by Borrower in accordance with the provisions of the applicableLetter of Credit Agreement.

 

SECTION 1.2.FOREIGN EXCHANGE FACILITY.

 

(a)Foreign Exchange Facility. Subject to the terms and conditions of thisAgreement, Bank hereby agrees to make available to Borrower a facility (the “ForeignExchange Facility”), the extension of which shall not be subject to a fee, andunder which Bank, from time to time up to and including December 1, 2005,will enter into foreign exchange spot contracts (contracts

 

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witha value date of not more than two calendar days after the contract is entered into)for the account of Borrower for the purchase and/or sale by Borrower in UnitedStates dollars of foreign currencies designated by Borrower; provided however,that the maximum amount of all outstanding foreign exchange contracts shall notat any time exceed an aggregate of Two Hundred Thousand United States Dollars(US$200,000.00). No foreign exchange spot contract shall be executed for a termwhich extends beyond December 1, 2005. All foreign exchange transactionsshall be subject to the additional terms of a Foreign Exchange Agreement datedas of December 1, 2004 (“Foreign Exchange Agreement”), all terms of whichare incorporated herein by this reference.

 

(b)                                 Settlement. Each foreign exchange contract under the Foreign Exchange Facilityshall be settled on its maturity date by Bank’s debit to any deposit accountmaintained by Borrower with Bank.

 

SECTION 1.3.INTEREST/FEES.

 

(a)                                  Interest.    Theoutstanding principal balance of each credit subject hereto shall bearinterest, and the amount of each drawing paid under any Letter of Credit shallbear interest from the date such drawing is paid to the date such amount isfully repaid by Borrower, at the rate of interest set forth in each promissorynote or other instrument or document executed in connection therewith.

 

(b)                                 Computation and Payment. Interest shall be computed on the basis of a360-day year, actual days elapsed. Interest shall be payable at the times andplace set forth in each promissory note or other instrument or documentrequired hereby.

 

(c)                                  Commitment Fee. Borrower shall pay to Bank a non-refundable commitment fee for the Letter ofCredit Line equal to $37,500.00, which fee shall be due and payable in full on December 1,2004.

 

(d)                                 Unused Commitment Fee. Borrower shall pay to Bank a fee equal toone quarter of one percent (.25%) per annum (computed on the basis of a 360-dayyear, actual days elapsed) on the average daily unused amount of the Letter ofCredit Line, which fee shall be calculated on aquarterly basis by Bank and shall be due and payable by Borrower in arrears within ten (10) days after eachbilling is sent by Bank.

 

(e)                                  Letter of Credit Fees. Borrower shall pay to Bank (i) fees upon theissuance of each Performance Letter of Credit, as determined by Bank, equal toone percent (1%) per annum (computed on the basis of a 360-day year, actualdays elapsed) of the face amount thereof, and (ii) fees upon the issuance ofeach Financial Letter of Credit, as determined by Bank, equal to one percent(1.5%) per annum (computed on the basis of a 360-day year, actual days elapsed)of the face amount thereof, and (iii) fees upon the payment or negotiation ofeach drawing under any Letter of Credit and fees upon the occurrence of anyother activity with respect to any Letter of Credit (including withoutlimitation, the transfer, amendment or cancellation of any Letter of Credit)determined in accordance with Bank’s standard fees and charges then in effectfor such activity.

 

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SECTION 1.4.COLLATERAL.

 

Assecurity for all indebtedness of Borrower to Bank subject hereto and arisingpursuant to any deposit or treasury management services provided by Bank toBorrower, Borrower hereby grants to Bank security interests of first priorityin all Borrower’s interest in that certain money market savings account#3801563101, over which Borrower shall have no control (the °Cash CollateralAccount”). All of the foregoing shall be evidenced by and subject to the termsof such security agreements, financing statements, and other documents as Bankshall reasonably require, all in form and substance satisfactory to Bank.Borrower shall reimburse Bank immediately upon demand for all costs andexpenses incurred by Bank in connection with any of the foregoing security.

 

Thebalance in the Cash Collateral Account shall at all times be equal to orgreater than one hundred percent (100%) of the aggregate of (i) all issued andoutstanding, unpaid and unreimbursed Letters of Credit, plus (ii) such amountsas Bank may determine, in its sole discretion, are required to adequatelysecure Borrower’s liability and performance of any foreign exchange spotcontracts under the Foreign Exchange Facility and deposit and treasurymanagement services provided to Borrower by Bank. In the event that the balanceof the Cash Collateral Account, for any reason and at any time, is less thanthe required amount, Debtor shall, within five (5) Business Days after Bank gives Borrower verbalor written notice of such deficiency, deposit additional monies into the CashCollateral Account in amounts sufficient to achieve the required amount. Asused herein, “Business Day” means any day except a Saturday, Sunday or anyother day on which commercial banks in Utah are authorized or required by lawto dose.

 

ARTICLE IIREPRESENTATIONS AND WARRANTIES

 

Borrowermakes the following representations and warranties to Bank, whichrepresentations and warranties shall survive the execution of this Agreementand shall continue in full force and effect until the full and final payment,and satisfaction and discharge, of all obligations of Borrower to Bank subjectto this Agreement.

 

SECTION 2.1.LEGAL STATUS. Borrower is a corporation, duly organized and existing and ingood standing under the laws of the State of Utah, and is qualified or licensedto do business (and is in good standing as a foreign corporation, ifapplicable) in all jurisdictions in which such qualification or licensing isrequired or in which the failure to so qualify or to be so licensed could have amaterial adverse effect on Borrower.

 

SECTION 2.2.AUTHORIZATION AND VALIDITY. This Agreement and each promissory note, contract,instrument and other document required hereby or at any time hereafterdelivered to Bank in connection herewith (collectively, the “Loan Documents”)have been duly authorized, and upon their execution and delivery in accordancewith the provisions hereof will constitute legal, valid and binding agreementsand obligations of Borrower or the party which executes the same, enforceablein accordance with their respective terms.

 

SECTION 2.3.NO VIOLATION. The execution, delivery and performance by Borrower of each ofthe Loan Documents do not violate any provision of any law or regulation, orcontravene any provision of the Articles of Incorporation or By-Laws ofBorrower, or result in any breach of or default under any contract, obligation,indenture or other instrument to which Borrower is a party or by which Borrowermay be bound.

 

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SECTION 2.4.LITIGATION. There are no pending, or to the best of Borrower’s knowledgethreatened, actions, claims, investigations, suits or proceedings by or beforeany governmental authority, arbitrator, court or administrative agency whichcould have a material adverse effect on the financial condition or operation ofBorrower other than those disclosed by Borrower to Bank in writing prior to thedate hereof.

 

SECTION 2.5.CORRECTNESS OF FINANCIAL STATEMENT. The financial statement of Borrower dated October 1,2004, a true copy of which has been delivered by Borrower to Bank prior to thedate hereof, (a) is complete and correct and presents fairly the financialcondition of Borrower, (b) discloses all liabilities of Borrower that arerequired to be reflected or reserved against under generally acceptedaccounting principles, whether liquidated or unliquidated, fixed or contingent,and (c) has been prepared in accordance with generally accepted accountingprinciples consistently applied. Since the date of such financial statementthere has been no material adverse change in the financial condition ofBorrower, nor has Borrower mortgaged, pledged, granted a security interest inor otherwise encumbered any of Its assets or properties except in favor of Bankor as otherwise permitted by Bank in writing.

 

SECTION 2.6.INCOME TAX RETURNS. Borrower has no knowledge of any pending assessments oradjustments of its income tax payable with respect to any year.

 

SECTION 2.7. NO SUBORDINATION. Thereis no agreement, indenture, contract or instrument to which Borrower is a partyor by which Borrower may be bound that requires the subordination in right ofpayment of any of Borrower’s obligations subject to this Agreement to any otherobligation of Borrower.

 

SECTION 2.8. PERMITS, FRANCHISES.Borrower possesses, and will hereafter possess, all permits, consents,approvals, franchises and licenses required and rights to all trademarks, tradenames, patents, and fictitious names, if any, necessary to enable it to conductthe business in which it is now engaged in compliance with applicable law.

 

SECTION 2.9.ERISA. Borrower is in compliance in all material respects with all applicableprovisions of the Employee Retirement Income Security Act of 1974, as amendedor recodified from time to time (“ERISA”); Borrower has not violated anyprovision of any defined employee pension benefit plan (as defined in ERISA)maintained or contributed to by Borrower (each, a °Plan”); no Reportable Eventas defined in ERISA has occurred and is continuing with respect to any Planinitiated by Borrower, Borrower has met its minimum funding requirements underERISA with respect to each Plan; and each Plan will be able to fulfill itsbenefit obligations as they come due in accordance with the Plan documents andunder generally accepted accounting principles.

 

SECTION 2.10.OTHER OBLIGATIONS. Borrower is not in default on any obligation for borrowedmoney, any purchase money obligation or any other material lease, commitment,contract, instrument or obligation.

 

SECTION 2.11.ENVIRONMENTAL MATTERS. Except as disclosed by Borrower to Bank in writing priorto the date hereof, Borrower is in compliance in all material respects with allapplicable federal or state environmental, hazardous waste, health and safetystatutes, and any

 

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rulesor regulations adopted pursuant thereto, which govern or affect any of Borrower’soperations and/or properties, including without limitation, the ComprehensiveEnvironmental Response, Compensation and Liability Act of 1980, the SuperfundAmendments and Reauthorization Act of 1986, the Federal Resource Conservationand Recovery Act of 1976, and the Federal Toxic Substances Control Act, as anyof the same may be amended, modified or supplemented from time to time. None ofthe operations of Borrower is the subject of any federal or state investigationevaluating whether any remedial action involving a material expenditure isneeded to respond to a release of any toxic or hazardous waste or substanceinto the environment. Borrower has no material contingent liability inconnection with any release of any toxic or hazardous waste or substance intothe environment.

 

ARTICLE IIICONDITIONS

 

SECTION 3.1.CONDITIONS OF INITIAL EXTENSION OF CREDIT. The obligation of Bank to extend anycredit contemplated by this Agreement is subject to the fulfillment to Bank’ssatisfaction of all of the following conditions:

 

(a)                                  Approval of Bank Counsel. All legal matters incidental to theextension of credit by Bank shall be satisfactory to Bank’s counsel.

 

(b)                                 Documentation. Bank shall have received, in form andsubstance satisfactory to Bank, each of the following, duly executed:

 

(i)                                     This Agreement and each promissory note orother instrument or document required hereby.

(ii)                                  Certificate of Incumbency.

(iii)                               Corporate Resolution: Borrowing.

(iv)                              S/A; Borrower. Specific Rights to Payment

(v)                                 Foreign Exchange Agreement.

(vi)                              Such other documents as Bank may require under any other Section ofthis Agreement.

 

(c)                                  Financial Condition. There shall have been no material adversechange, as determined by Bank, in the financial condition or business ofBorrower, nor any material decline, as determined by Bank, in the market valueof any collateral required hereunder or a substantial or material portion ofthe assets of Borrower.

 

SECTION 3.2.CONDITIONS OF EACH EXTENSION OF CREDIT. The obligation of Bank to make eachextension of credit requested by Borrower hereunder shall be subject to thefulfillment to Bank’s satisfaction of each of the following conditions:

 

(a)                                  Compliance. The representations and warranties contained herein and in each of theother Loan Documents shall be true on and as of the date of the signing of thisAgreement and on the date of each extension of credit by Bank pursuant hereto,with the same effect as though such representations and warranties had beenmade on and as of each such date, and on each such date, no Event of Default asdefined herein, and no condition, event or act which with the giving of noticeor the passage of time or both would constitute such an Event of Default, shallhave occurred and be continuing or shall exist.

 

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(b)                                 Documentation. Bank shall have received all additionaldocuments which may be required in connection with such extension of credit.

 

(c)                                  Additional Letter of Credit Documentation. Prior to the issuance of each Letter ofCredit, Bank shall have received a Letter of Credit Agreement, properlycompleted and duly executed by Borrower.

 

ARTICLE IVAFFIRMATIVE COVENANTS

 

Borrowercovenants that so long as Bank remains committed to extend credit to Borrowerpursuant hereto, or any liabilities (whether direct or contingent, liquidatedor unliquidated) of Borrower to Bank under any of the Loan Documents remainoutstanding, and until payment in full of all obligations of Borrower subjecthereto, Borrower shall, unless Bank otherwise consents in writing:

 

SECTION 4.1.PUNCTUAL PAYMENTS. Punctually pay all principal, interest, fees or otherliabilities due under any of the Loan Documents at the times and place and inthe manner specified therein.

 

SECTION 4.2.ACCOUNTING RECORDS. Maintain adequate books and records in accordance withgenerally accepted accounting principles consistently applied, and permit anyrepresentative of Bank, at any reasonable time, to inspect, audit and examinesuch books and records, to make copies of the same, and to inspect theproperties of Borrower.

 

SECTION 4.3. FINANCIAL STATEMENTS.Provide to Bank all of the following, in form and detail satisfactory to Bank:

 

(a)                                  not later than 120 days after and as of theend of each fiscal year, an audited financial statement of Borrower, prepared by a certified public accountantacceptable to Bank, to include balance sheet, income statement and statement ofcash flows;

 

(b)                                 not later than 45 days after and as of theend of each quarter, a financial statement of Borrower, prepared by Borrower,to include balance sheet and income statement;

 

(c)                                  from time to time such other information asBank may reasonably request

 

SECTION 4.4. COMPLIANCE. Preserve andmaintain all licenses, permits, governmental approvals, rights, privileges andfranchises necessary for the conduct of Its business; and comply with the provisionsof all documents pursuant to which Borrower is organized and/or which governBorrowers continued existence and with the requirements of all laws, rules,regulations and orders of any governmental authority applicable to Borrower and/or its business.

 

SECTION 4.5. INSURANCE. Maintain andkeep in force insurance of the types and in amounts customarily carried inlines of business similar to that of Borrower, including but not limited totire, extended coverage, public liability, flood, property damage and workers’compensation, with all such insurance carried with companies and in amountssatisfactory to

 

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Bank,and deliver to Bank from timeto time at Bank’s request schedules setting forth all insurance then in effect.

 

SECTION 4.6.FACILITIES. Keep all properties useful or necessary to Borrower’s business ingood repair and condition, and from time to time make necessary repairs,renewals and replacements thereto so that such properties shall be fully andefficiently preserved and maintained.

 

SECTION 4.7.TAXES AND OTHER LIABILITIES. Pay anddischarge when due any and all indebtedness, obligations, assessments andtaxes, both real or personal, including without limitation federal and stateincome taxes and state and local property taxes and assessments, except such(a) as Borrower may in good faith contest or as to which a bona fide disputemay arise, and (b) for which Borrower has made provision, to Bank’ssatisfaction, for eventual payment thereof in the event Borrower is obligatedto make such payment.

 

SECTION 4.8.LITIGATION. Promptly give notice in writing to Bank of any litigation pendingor threatened against Borrower.

 

SECTION 4.9.NOTICE TO BANK. Promptly (but in no event more than five (5) days after the occurrence of each such event or matter)give written notice to Bank inreasonable detail of: (a) the occurrence of any Event of Default, or anycondition, event or act which with the giving of notice or the passage of timeor both would constitute an Event of Default; (b) any change in the name or theorganizational structure of Borrower; (c) the occurrence and nature of anyReportable Event or Prohibited Transaction, each as defined In ERISA, or anyfunding deficiency with respect to any Plan; or (d) any termination orcancellation of any insurance policy which Borrower is required to maintain, orany uninsured or partially uninsured loss through liability or property damage,or through fire, theft or anyother cause affecting Borrower’s property.

 

ARTICLE VNEGATIVE COVENANTS

 

Borrowerfurther covenants that so long as Bank remains committed to extend credit toBorrower pursuant hereto, or any liabilities (whether direct or contingent,liquidated or unliquidated) of Borrower to Bank under any of the Loan Documentsremain outstanding, and until payment in full of all obligations of Borrowersubject hereto, Borrower will not without Bank’s prior written consent:

 

SECTION 5.1.USE OF FUNDS.. Use any of the proceeds of any credit extended hereunder exceptfor the purposes stated in Article I hereof.

 

SECTION 5.2.OTHER INDEBTEDNESS. Create, incur, assume or permit to exist any indebtednessor liabilities resulting from borrowings, loans or advances, whether secured orunsecured, matured or unmatured, liquidated or unliquidated, joint or several,except (a) the liabilities of Borrower to Bank, and (b) any other liabilitiesof Borrower existing as of, and disclosed to Bank prior to, the date hereof.

 

SECTION 5.3.MERGER, CONSOLIDATION, TRANSFER OF ASSETS. Merge into or consolidate with anyother entity; make any substantial change in the nature of Borrower’s

 

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businessas conducted as of the date hereof; acquire all or substantially all of theassets of any other entity; nor sell, lease, transferor otherwise dispose ofall or a substantial or material portion of Borrowers assets except in theordinary course of its business.

 

SECTION 5.4.LOANS, ADVANCES, INVESTMENTS. Make any loans or advances to or investments inany person or entity, except any of the foregoing existing as of, and disclosedto Bank prior to, the date hereof.

 

ARTICLE VIEVENTS OF DEFAULT

 

SECTION 6.1.The occurrence of any of the following shall constitute an “Event of Default”under this Agreement:

 

(a)                                  Borrower shall fail to pay when due anyprincipal, interest, fees or other amounts payable under any of the LoanDocuments.

 

(b)                                 Any financial statement or certificatefurnished to Bank in connection with, or any representation or warranty made byBorrower or any other party under this Agreement or any other Loan Documentshall prove to be incorrect, false or misleading in any material respect whenfurnished or made.

 

(c)                                  Any default in the performance of orcompliance with any obligation, agreement or other provision contained hereinor in any other Loan Document (other than those referred to in subsections (a)and (b) above), and with respect to any such default which by its nature can becured,such default shall continue fora period of twenty (20) days from its occurrence.

 

(d)                                 Any default in the payment or performance ofany obligation, or any defined event of default, under the terms of anycontract or instrument (other than any of the Loan Documents) pursuant to whichBorrower, any guarantor hereunder or any general partner or joint venturer inany Borrower which is a partnership or joint venture (with each such guarantor, general partner and/orjoint venturer referred to herein as a “Third Party Obligor”) has incurred anydebt or other liability to any person or entity, including Bank.

 

(e)                                  The filing of a notice of judgment lienagainst Borrower or any Third Party Obligor, or the recording of any abstractof judgment against Borrower or any Third Party Obligor in any county in whichBorrower or such Third Party Obligor has an interest in real property; or theservice of a notice of levy and/or of a writ ofattachment or execution, or other like process, against the assets of Borroweror any Third Party Obligor; or the entry of a judgment against Borrower or anyThird Party Obligor.

 

(f)                                    Borrower or any Third Party Obligor shallbecome insolvent, or shall suffer or consent to or apply for the appointment ofa receiver, trustee, custodian or liquidator of itself or any of its property, or shall generally fail to pay its debts asthey become due, or shall make a general assignment for the benefit ofcreditors; Borrower or any Third Party Obligor shall file a voluntary petitionin bankruptcy, or seeking reorganization, in order to effect a plan or otherarrangement with creditors or any other relief under the Bankruptcy Reform Act,Title 11 of the United States Code, as amended or recodified from time to time(“Bankruptcy Code”), or under

 

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anystate or federal law granting relief to debtors, whether now or hereafter ineffect; or any involuntary petition or proceeding pursuant to the BankruptcyCode or any other applicable slate or federal law relating to bankruptcy,reorganization or other relief for debtors is filed or commenced againstBorrower or any Third Party Obligor, or Borrower or any Third Party Obligor shall file an answer admitting the jurisdiction of the courtand the material allegations of any involuntary petition; or Borrower or anyThird Party Obligor shall be adjudicated a bankrupt, or an order for reliefshall be entered against Borrower or any Third Party Obligor by any court ofcompetent jurisdiction under the Bankruptcy Code or any other applicable stateor federal law relating to bankruptcy, reorganization or other relief fordebtors.

 

(g)                                 There shall exist or occur any event orcondition which Bank in good faith believes impairs, or is substantially likelyto impair, the prospect of payment or performance by Borrower of itsobligations under any of the Loan Documents.

 

(h)                                 The death or incapacity of any individual Borrower or Third PartyObligor. The dissolution or liquidation of any Borrower or Third Party Obligorwhich is a corporation, partnership, joint venture or other type of entity; orBorrower or any such Third Party Obligor, or any of its directors, stockholdersor members, shall take action seeking to effect the dissolution or liquidationof such Borrower or Third Party Obligor.

 

(i)                                     Any change in ownership of an aggregate oftwenty-five percent (25%) or more of the common stock of Borrower.

 

SECTION 6.2. REMEDIES. Upon theoccurrence of any Event of Default: (a) all indebtedness of Borrower under eachof the Loan Documents, any term thereof to the contrary notwithstanding, shallat Bank’s option and without notice become immediately due and payable withoutpresentment, demand, protest ornotice of dishonor, all of which are hereby expressly waived by each Borrower;(b) the obligation, if any, of Bank to extend any further credit under any ofthe Loan Documents shall immediately cease and terminate; and (c) Bank shallhave all rights, powers and remedies available under each of the LoanDocuments, or accorded by law,including without limitation the right to resort to any or all security for anycredit subject hereto and to exercise any or all of the rights of a beneficiaryor secured party pursuant to applicable law. All rights, powers and remedies ofBank may be exercised at any time by Bank and from time to time after theoccurrence of an Event of Default, are cumulative and not exclusive, and shallbe in addition to any other rights, powers or remedies provided by law orequity.

 

ARTICLE VIIMISCELLANEOUS

 

SECTION 7.1.NO WAIVER. No delay, failure or discontinuance of Bank in exercising any right,power or remedy under any of the Loan Documents shall affect or operate as awaiver of such right, power or remedy; nor shall any single or partial exerciseof any such right, power or remedy preclude, waive or otherwise affect any other or further exercise thereofor the exercise of any other right, power or remedy, Any waiver, permit,consent or approval of any kind by Bank ofany breach of or default under anyof the Loan Documents must be in writing and shall be effective only tothe extent set forth in such writing.

 

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SECTION 7.2.NOTICES. All notices, requests and demands which any party is required or maydesire to give to any other party under any provision of this Agreement must bein writing delivered to each party at the following address:

 
| BORROWER: | EVANS  & SUTHERLAND COMPUTER CORPORATION |
|-----------|----------------------------------------------|
|      | 600  Komas Drive, P.O. Box 58700             |
|      | Salt  Lake City, Utah 84108                  |
|      |                                         |
| BANK:     | WELLS  FARGO BANK, NATIONAL ASSOCIATION      |
|      | Utah  RCBO                                   |
|      | 299  South Main, 9th Floor                   |
|      | Salt  Lake City, Utah 84111                  |

 

orto such other address as any party may designate by written notice to all otherparties. Each such notice, request and demand shall be deemed given or made asfollows: (a) if sent by hand delivery, upon delivery; (b) if sent by mail, uponthe earlier of the date of receipt or three (3) days after deposit in the U.S.mail, first class and postage prepaid; and (c) if sent by telecopy, uponreceipt.

 

SECTION 7.3.COSTS, EXPENSES AND ATTORNEYS’ FEES. Borrower shall pay to Bank immediately upon demand the fullamount of all payments, advances, charges, costs and expenses, includingreasonable attorneys’ fees (to include outside counsel fees and all allocatedcosts of Bank’s in-house counsel), expended or incurred by Bank in connectionwith (a) the negotiation and preparation of this Agreement and the other LoanDocuments, Bank’s continued administration hereof and thereof, and thepreparation of any amendments and waivers hereto and thereto, (b) the enforcementof Bank’s rights and/or the collection of any amounts which become due to Bankunder any of the Loan Documents, and (c) the prosecution or defense of anyaction in any way related to any ofthe Loan Documents, including without limitation, any action for declaratoryrelief, whether incurred at the trial or appellate level, in an arbitrationproceeding or otherwise, and including any of the foregoing incurred inconnection with any bankruptcy proceeding (including without limitation, anyadversary proceeding, contested matter or motion brought by Bank or any otherperson) relating to any Borrower or any other person or entity.

 

SECTION 7.4.SUCCESSORS, ASSIGNMENT. This Agreement shall be binding upon and inure to thebenefit of the heirs, executors, administrators, legal representatives,successors and assigns of the parties; provided however, that Borrower may notassign or transfer its interest hereunder without Bank’s prior written consent.Bank reserves the right to sell, assign, transfer, negotiate or grantparticipations in all or any part of, or any interest in, Bank’s rights andbenefits under each of the Loan Documents. In connection therewith, Bank maydisclose all documents and information which Bank now has or may hereafteracquire relating to any credit subject hereto, Borrower or its business, or anycollateral required hereunder.

 

SECTION 7.5.ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other Loan Documentsconstitute the entire agreement between Borrower and Bank with respect to eachcredit subject hereto and supersede all prior negotiations, communications,discussions and correspondence concerning the subject matter hereof. ThisAgreement may be amended or modified only in writing signed by each partyhereto.

 

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SECTION 7.6.NO THIRD PARTY BENEFICIARIES. This Agreement is made and entered into for thesole protection and benefit of the parties hereto and their respectivepermitted successors and assigns, and no other person or entity shall be athird party beneficiary of, or have any direct or indirect cause of action orclaim in connection with, this Agreement or any other of the Loan Documents towhich it is not a party.

 

SECTION 7.7.TIME. Time is of the essence of each and every provision of this Agreement andeach other of the Loan Documents.

 

SECTION 7.8.SEVERABILITY OF PROVISIONS. If any provision of this Agreement shall beprohibited by or Invalid under applicable law, such provision shall beIneffective only to the extent of such prohibition or invalidity withoutinvalidating the remainder of such provision or any remaining provisions ofthis Agreement.

 

SECTION 7.9.COUNTERPARTS. This Agreement may be executed in any number of counterparts,each of which when executed and delivered shall be deemed to be an original,and all of which when taken together shall constitute one and the sameAgreement.

 

SECTION 7.10.GOVERNING LAW. This Agreement shall be governed by and construed in accordancewith the laws of the State of Utah.

 

SECTION 7.11.ARBITRATION.

 

(a)                                  Arbitration. The parties hereto agree, upon demand by anyparty, to submit to binding arbitration all claims, disputes and controversiesbetween or among them (and their respective employees, officers, directors,attorneys, and other agents), whether in tort, contract or otherwise arisingout of or relating to in any way (i) the loan and related Loan Documents whichare the subject of this Agreement and its negotiation, execution,collateralization, administration, repayment, modification, extension,substitution, formation, inducement, enforcement, default or termination; or(ii) requests for additional credit.

 

(b)                                 Governing Rules. Any arbitration proceeding will (i) proceedin a location in Utah selected by the American Arbitration Association (“AAA”):(ii) be governed by the Federal Arbitration Act (Title 9 of the United StatesCode), notwithstanding any conflicting choice of law provision in any of thedocuments between the parties; and (iii) be conducted by the AAA’s, or suchother administrator as the parties shall mutually agree upon, in accordancewith the AAA’s commercial dispute resolution procedures, unless the claim orcounterclaim is at least $1,000,000.00 exclusive of claimed interest,arbitration fees and costs in which case the arbitration shall be conducted inaccordance with the AAA’s optional procedures for large, complex commercialdisputes (the commercial dispute resolution procedures or the optionalprocedures for large, complex commercial disputes to be referred to, asapplicable, as the `Rules”). If there is any inconsistency between the termshereof and the Rules, the terms and procedures set forth herein shall control.Any party who fails or refuses to submit to arbitration following a demand byany other party shall bear all costs and expenses incurred by such other partyin compelling arbitration of any dispute. Nothing contained herein shall bedeemed to be a waiver by any party that is a bank of the protections affordedto it under 12 U.S.C. §91 or any similar applicable state law.

 

(c)                                  No Waiver of Provisional Remedies, Self-Helpand Foreclosure. Thearbitration requirement does not limit the right of any party to (i) forecloseagainst real or personal property

 

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collateral;(ii) exercise self-help remedies relating to collateral or proceeds ofcollateral such as setoff or repossession; or (iii) obtain provisional orancillary remedies such as replevin, injunctive relief, attachment or theappointment of a receiver, before during or after the pendency of anyarbitration proceeding. This exclusion does not constitute a waiver of theright or obligation of any party to submit any dispute to arbitration orreference hereunder, including those arising from the exercise of the actionsdetailed in sections (i), (ii) and (iii) of this paragraph.

 

(d)                                 Arbitrator Qualifications and Powers. Any arbitration proceeding in which theamount in controversy is $5,000,000.00 or less will be decided by a singlearbitrator selected according to the Rules, and who shall not render an awardof greater than $5,000,000.00. Any dispute in which the amount in controversyexceeds $5,000,000.00 shall be decided by majority vote of a panel of threearbitrators; provided however, that all three arbitrators must activelyparticipate In all hearings and deliberations. The arbitrator will be a neutralattorney licensed in the State of Utah or a neutral retired judge of the stateor federal judiciary of Utah, in either case with a minimum of ten yearsexperience in the substantive law applicable to the subject matter of thedispute to be arbitrated. The arbitrator will determine whether or not an issueis arbitratable and will give effect to the statutes of limitation indetermining any claim. In any arbitration proceeding the arbitrator will decide(by documents only or with a hearing at the arbitrator’s discretion) anypre-hearing motions which are similar to motions to dismiss for failure tostate a claim or motions for summary adjudication. The arbitrator shall resolveall disputes in accordance with the substantive law of Utah and may grant anyremedy or relief that a court of such state could order or grant within thescope hereof and such ancillary relief as is necessary to make effective anyaward. The arbitrator shall also have the power to award recovery of all costsand fees, to impose sanctions and to take such other action as the arbitratordeems necessary to the same extent a judge could pursuant to the Federal Rulesof Civil Procedure, the Utah Rules of Civil Procedure or other applicable law.Judgment upon the award rendered by the arbitrator may be entered in any courthaving jurisdiction. The institution and maintenance of an action for judicialrelief or pursuit of a provisional or ancillary remedy shall not constitute awaiver of the right of any party, including the plaintiff, to submit thecontroversy or claim to arbitration if any other party contests such action forjudicial relief.

 

(e)                                  Discovery. In any arbitration proceeding discovery will be permitted inaccordance with the Rules. All discovery shall be expressly limited to mattersdirectly relevant to the dispute being arbitrated and must be completed nolater than 20 days before the hearing date and within 180 days of the filing of the disputewith the AM. Any requests for an extension of the discovery periods, or anydiscovery disputes, will be subject to final determination by the arbitratorupon a showing that the request for discovery is essential for the party’s presentationand that no alternative means for obtaining information is available.

 

(f)                                    Class Proceedings and Consolidations. The resolution of any dispute arisingpursuant to the terms of this Agreement shall be determined by a separatearbitration proceeding and such dispute shall not be consolidated with otherdisputes or included in any class proceeding.

 

(g)                                 Payment Of Arbitration Costs And Fees. The arbitrator shall award all costs andexpenses of the arbitration proceeding.

 

(h)                                 Real Property Collateral: Judicial Reference. Notwithstanding anything herein to thecontrary, no dispute shall be submitted to arbitration if the dispute concernsindebtedness

 

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secureddirectly or indirectly, in whole or in part, by any real property unless (i)the holder of the mortgage,lien or security interest specificallyelects in writing to proceed with the arbitration, or (ii) all partiesto the arbitration waive any rightsor benefits that might accrue to them by virtue of the single action rule statute of Utah, thereby agreeing thatall indebtedness and obligations of the parties, and all mortgages, liens andsecurity interests securing such indebtedness and obligations, shall remainfully valid and enforceable. If any such dispute is not submitted toarbitration, the dispute shall be referred to a master in accordance with UtahRule of Civil Procedure 53, and this general reference agreement is intended tobe specifically enforceable. A master with the qualifications required hereinfor arbitrators shall be selected pursuant to the AAA’s selection procedures.Judgment upon the decision rendered by a master shall be entered in the courtin which such proceeding was commenced In accordance with Utah Rule of CivilProcedure 53(e).

 

(i)                                     Miscellaneous. To the maximum extent practicable, the AAA,the arbitrators and the parties shall take all action required to conclude anyarbitration proceeding within 180 days of the filing of the dispute with theAAA. No arbitrator or other party to an arbitration proceeding may disclose theexistence, content or resultsthereof, except for disclosuresof information by a party required in the ordinary course of its business or byapplicable law or regulation. If more than one agreement for arbitration by or between the parties potentiallyapplies to a dispute, the arbitration provision most directly related to the Loan Documents or thesubject matter of the dispute shall control. This arbitration provision shallsurvive termination, amendment or expiration of any of the Loan Documents or any relationship between the parties.

 

INWITNESS WHEREOF, the parties hereto have caused this Agreement to be executedas of the day and year firstwritten above.

 
| EVANS  & SUTHERLAND COMPUTER  CORPORATION |                               | WELLS  FARGO BANK,  NATIONAL ASSOCIATION |
|-----------------------------------------------|------------------------------------|------------------------------------------|
|                                          |                               |                                     |
| By:                                           | /s/  Kevin A. Papryzycki           |                                     |   | By: | /s/  Troy Akagi |   |
|                                          | Kevin  A. Paprzycki, CFO/Secretary |                                     |   | Relationship  Manager |
|                                               |                                    |                                          |  |  |  |  |  |  |

 

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