Document:

Exhibit 10.6

 

LINE OF CREDIT

NOTE

 

	
  Maximum Credit Limit: Up to $3,000,000.00

  	
   

  	
  Date: April 28, 2006

  

 

FOR VALUE RECEIVED, WITHOUT DEFALCATION AND INTENDING TO BE LEGALLY
BOUND HEREBY, SPITZ,
INC., a Delaware corporation (hereinafter referred to as the “Debtor”),
promises to pay to the order of FIRST
KEYSTONE BANK, a corporation organized and existing under the laws
of the United States of America (hereinafter “Bank”), at its offices located at
22 West State Street, Media, Pennsylvania,19063, or such other place as the
holder hereof may from time to time direct, the sum of up to Three Million Dollars ($3,000,000.00), or
so much thereof as may be advanced from time to time, and remain unpaid, under
that certain Line of Credit Agreement dated even date herewith between Debtor,
Guarantor (hereinafter defined), and Bank (the “Line of Credit Agreement”),
together with interest from the date hereof at the per annum rate of one-half
of one (.50%) percent above the Wall Street Prime Rate (hereinafter defined) in
effect from time to time (the “Rate”), the effective date of any change in the
Rate to be the first day next succeeding the day on which the Wall Street Prime
Rate changes. Bank extended to Debtor and Transnational Industries, Inc. a line
of credit facility on June 12, 1997, evidenced by that certain Line of Credit
Note executed by Debtor and Transnational Industries, Inc. and delivered to
Bank on June 12, 1997 (the “Line of Credit Note”). The obligations evidenced by
the Line of Credit Note were subsequently modified, increased, extended and
renewed by the following: (i) a Modification Agreement dated July 7, 2000 (the “First
Modification Agreement”);  (ii) a Renewal
Line of Credit Note (the “First Renewal Note”) dated July 7, 2000; (iii) a
Second Modification Agreement dated July 18, 2002 (the “Second Modification
Agreement”); a Second Renewal Line of Credit Note (the “Second Renewal Note”)
dated July 18, 2002; (iv) an Amendment No. 1 to Second Modified Line of Credit
Agreement dated as of September 15, 2003 (“Amendment No .1 to Second Modified
Line of Credit Agreement”); (v) a Third Modification Agreement dated July 14,
2004 (the “Third Modification Agreement”); and (vi) a Third Renewal Line of
Credit Note (the “Third Renewal Note”) dated July 14, 2004. The Line of Credit
Note, the First Modification Agreement, the First Renewal Note, the Second
Modification Agreement, the Second Renewal Note, Amendment No. 1 to Second
Modified Line of Credit Agreement, Third Modification Agreement and the Third
Renewal Note are herein collectively referred to as the “Existing Line of
Credit”. As of the date of this line of credit note (“Note”) the outstanding
balance of the Existing Line of Credit is Two
Million Two Hundred Twenty Four Thousand Nine Hundred Eighty Dollars and Six Cents
($2,224,980.06). This Note is executed and delivered in substitution
and replacement of the Debtor’s obligations under and the indebtedness
evidenced by the Existing Line of Credit and stands in the place and stead of
the documents evidencing the Existing Line of Credit and is not an additional
indebtedness or a satisfaction of the indebtedness evidenced by the documents
executed in connection with the Existing Line of Credit. The indebtedness and
obligations evidenced by the Existing Line of Credit are continued, renewed,
extended and modified by this Note. The indebtedness evidenced by this Note is
to be paid as follows:

 

 

	
  JONES,
  STROHM & GUTHRIE

  	
   

  	
  10 Beatty Road

  
	
  A
  Professional Corporation

  	
   

  	
  Media, Pennsylvania 19063

  
	
  Attorneys
  At Law

  	
   

  	
  Telephone (610) 565-7100

  
	
   

  	
   

  	
  Fax (610) 565-7180

  

 

 

(i)                                    On May 1, 2006, a payment of interest only on
the daily principal balance outstanding from the date hereof to April 30, 2006, and thereafter a payment
of interest only (the “Interest Installment”) on the daily principal balance
outstanding from the date hereof in monthly installments of said interest
payable on the first day of June, 2006,
and on the same day of each month thereafter until the earlier to occur of (a)
demand by Bank upon the occurrence of an Event of Default (as hereinafter
defined), (b) demand by Bank in the event of the retirement, termination,
departure from the employ of Debtor or the substantial diminution of the
management authority or responsibilities of either Jonathan Shaw or Paul Dailey
in the operations of Debtor unless otherwise reasonably consented to by Bank;
(c) demand by Bank in the event of the retirement, termination, departure from
the employ of Debtor or the substantial diminution of the management authority
or responsibilities of both Jonathan Shaw and Paul Dailey in the operations of
Debtor, (d) thirty (30) days after demand by Bank; or (e) June 30, 2007 (the “Maturity Date”), at which time the
entire indebtedness evidenced by this Note, including, without limitation, the
entire outstanding principal balance and accrued interest thereon, together
with any other sums due and payable hereunder, shall be due and payable in
full;

 

(ii)                                Notwithstanding
anything herein to the contrary, in the event the outstanding balance of this
Note exceeds the Maximum Credit Limit because of a reduction in the Maximum
Credit Limit by reason of a reduction in the amount of Qualified Accounts
Receivable or Qualified inventory (as those terms are defined in the Line of
Credit Agreement) or otherwise, Debtor will immediately pay to Bank the amount
necessary to reduce the outstanding balance of this Note to a sum equal to or
less than the Maximum Credit Limit;

 

(iii)                            The
Wall Street Prime Rate is the “Prime Rate” published in the “Money Rates”
section of The Wall Street Journal, Eastern Edition, or the average “Prime
Rate” if more than one is published. If The Wall Street Journal ceases
to be published or goes on strike or is otherwise not published for any period
of time, or if it ceases to publish a “Prime Rate”, then Bank may use any
similar published prime or base rate; and

 

(iv)                               The amount of any
monthly installment shall be the result obtained by multiplying the product of
the outstanding balance on any day times the applicable Rate by a fraction, the
numerator of which is the actual number of days during the period for which the
calculation is being made that any given outstanding balance is applicable, and
the denominator of which is three hundred sixty-five (365).

 

I.                                         ADVANCES: 
Subject to the terms and conditions of this Note and the Line of
Credit Agreement, Bank agrees to advance to Debtor from time to time and until
the Maturity Date, such sums as Debtor may request, in writing, not to exceed
at any time outstanding, the Maximum Credit Limit (as defined in the Line of
Credit Agreement). Within the limits of this Note and the Line of Credit
Agreement and prior to the Maturity Date Debtor may borrow, repay, and borrow
again.

 

II.                                     SECURITY: The payment of this Note is
secured by, inter  alia: (i) 
that certain second-lien priority Open-End Mortgage and Security
Agreement dated even date herewith (the “Mortgage”) encumbering that certain
real estate known as Route 1, Chadds Ford, Chadds Ford Township, Delaware
County, Pennsylvania (the “Mortgaged Premises”); (ii)  that certain Security Agreement between Bank
and Debtor and UCC-1 Financing Statements of even date herewith (the

 

2

 

“Security
Agreement”) encumbering the Collateral as defined in the Security Agreement;
(iii) a guaranty and suretyship agreement of Evans & Sutherland Computer
Corporation, a Utah corporation (hereinafter the “Guarantor”); and (iv) that
certain Pledge Agreement between bank and Guarantor respecting all of the
issued and outstanding shares of stock of Debtor (the “Pledge Agreement”).

 

III.                                 ADVANCES FOR
PROTECTION OF SECURITY INTEREST: 
In the event Debtor fails to pay any cost or expense relating to the
protection of the Mortgaged Premises or the Collateral (as defined in the
Security Agreement), then Bank may, at its option and without prior notice,
advance sums on behalf of Debtor in payment of any of the aforesaid, including,
without limitation, charges and claims, prior liens and insurance premiums
without prejudice to the right of enforcement of the within indebtedness or the
other remedies of Bank as hereinafter set forth by reason of the failure of
Debtor to make payment of the same; and all such sums so advanced by Bank shall
be added to and become part of the within indebtedness, with interest on each
advance at the Rate, from the dates of the respective expenditures, shall be
secured by the security for this Note, and shall be payable by Debtor to Bank
upon demand. The production of a receipt by the Bank shall be conclusive proof
of a payment or advance authorized hereby and the amount and validity thereof. The
provisions of this paragraph shall apply after the entry of a judgment in any
collection action based upon this Note or the security for this Note and Debtor
shall be obligated to pay to Bank any post judgment advances made by Bank
pursuant to this paragraph.

 

IV.                                REPAYMENTS:  Debtor may at any time prepay the
principal outstanding balance hereof in whole or in part without penalty or
premium, provided that Debtor gives written notice to Bank prior to or
contemporaneously with any such prepayment of principal. Partial prepayments
shall be applied first on account of interest, then on account of other sums
due under this Note, other than principal, and then on account of principal.

 

V.                                    DEFAULT RATE OF
INTEREST:  In the event Debtor
fails to pay any amount due under this Note when due or as demanded, then
interest shall at all times during the continuance of such payment default
accrue on all sums due under this Note at the Rate plus five (5%) percent per
annum (the “Default Rate”).

 

VI.                                LATE CHARGE:  In the event any Interest Installment shall
become overdue for a period of fifteen (15) days, Debtor shall promptly pay to
Bank a late charge of five (5) cents for each dollar so overdue. This shall not
be construed to obligate Bank to accept any overdue installment (i.e., any
payment remaining unpaid for a period of five (5) days after written notice of
failure to pay the same when due) nor limit Bank’s rights and remedies for
Debtor’s default, as hereinafter set forth.

 

VII.                            DEFAULT:  (a)  Each of the following shall constitute an
event of default by Debtor (“Event of Default”) hereunder:

 

(i)                                    any interest
installment, or principal payment, or any other sum required hereunder remains
unpaid for the period of ten (10) days after written notice to Debtor of
failure to pay the same after it shall become due in accordance with the
provisions hereof; or

 

3

 

(ii)                                the
failure to cure any event of default under the provisions of the Mortgage, the
Security Agreement, the Pledge Agreement, the Line of Credit Agreement or any
other document executed by Debtor and or Guarantor in connection with this Note
after the expiration of any applicable cure period (collectively the “Loan
Documents”); or

 

(iii)                            the failure to cure an
event of default under any other obligation or indebtedness of Debtor or
Guarantor to Bank after the expiration of any applicable cure period.

 

(b)                                  Upon
and after the occurrence of an Event of Default, the entire unpaid principal
balance hereof, together with interest accrued thereon at the Rate hereinbefore
specified to the date of Event of Default and thereafter at the Default Rate,
and all other sums due by Debtor hereunder or under the other Loan Documents
together with reasonable attorney’s fees, shall, upon the declaration of Bank,
immediately become due and payable without presentment, demand or further
action of any kind, and payment of the same may be enforced and recovered in
whole or in part at any time by the entry of judgment on this Note or any other
judicial proceeding and the issuance of a writ of execution thereon upon any
real or personal property of Debtor; and Bank may also recover all costs of
suit and other expenses, including reasonable attorney’s fees and the cost of
the title search, in connection therewith.

 

(c)                                  Upon
the occurrence of an Event of Default and the acceleration of the entire unpaid
balance of principal of this Note, interest shall continue to accrue thereafter
at the Default Rate until this Note, and all sums due hereunder, are paid in
full, including the period following the entry of any judgment. Interest after
default at the Default Rate shall be calculated on the basis of a three hundred
sixty-five (365) day year, but charged for the actual number of days elapsed.

 

(d)                                  The
rights and remedies provided herein or in the other Loan Documents shall be
cumulative and concurrent and shall not be exclusive of any right or remedy
provided by law, in equity or otherwise. Said rights and remedies may, at the
sole discretion of Bank, be pursued singly, successively or together as often
as occasion therefor shall arise, against Debtor and/or the Mortgaged Premises
or the Collateral or any other security for this Note, as applicable. No
failure on the part of Bank to exercise any of such rights or remedies shall be
deemed a waiver of any such rights or remedies or of any Event of Default
hereunder.

 

(e)                                  Upon
the occurrence of an Event of Default, Bank shall have the right, but not the
duty, to cure such default, in part or in its entirety, and all amounts
expended or debts incurred by Bank, including reasonable attorneys’ fees, shall
be deemed to be advances to Debtor, shall be added to the principal due under
this Note, shall be secured by the security for this Note, and shall be payable
by Debtor to Bank upon demand with interest at the Default Rate.

 

VIII.                        WARRANT OF ATTORNEY. THE
FOLLOWING SECTION SETS FORTH WARRANTS OF ATTORNEY FOR ANY ATTORNEY TO CONFESS
JUDGMENTS AGAINST DEBTOR. IN GRANTING THESE WARRANTS OF ATTORNEY TO CONFESS
JUDGMENTS AGAINST DEBTOR, DEBTOR HEREBY KNOWINGLY, INTENTIONALLY, VOLUNTARILY,
AND UNCONDITIONALLY WAIVES ANY AND

 

4

 

ALL
RIGHTS DEBTOR MAY HAVE TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE
RESPECTIVE CONSTITUTIONS AND LAWS OF THE COMMONWEALTH PENNSYLVANIA AND THE
UNITED STATES OF AMERICA.

 

UPON
THE OCCURRENCE OF AN EVENT OF DEFAULT, DEBTOR DOES HEREBY IRREVOCABLY AUTHORIZE
AND EMPOWER ANY ATTORNEY OF THE PROTHONOTARY OF ANY COURT OF RECORD OF THE
COMMONWEALTH PENNSYLVANIA OR ELSEWHERE TO APPEAR FOR DEBTOR IN ANY SUCH COURT,
AND WITH OR WITHOUT A COMPLAINT OR DECLARATION FILED, IN AN APPROPRIATE ACTION
BROUGHT AGAINST DEBTOR ON THIS NOTE, TO ENTER AND CONFESS JUDGMENT AGAINST
DEBTOR IN FAVOR OF BANK OR ITS SUCCESSORS AND ASSIGNS, FOR THE ENTIRE AMOUNT
DUE TO BANK UPON SUCH EVENT OF DEFAULT AS PROVIDED HEREIN, TOGETHER WITH COSTS
OF SUIT AND AN ATTORNEY’s COMMISSION EQUAL TO THE LESSER OF THE ACTUAL ATTORNEYS’ FEES INCURED OR
TEN PERCENT OF THE OUTSTANDING BALANCE HEREOF; AND FOR SO DOING THIS NOTE OR A
COPY HEREOF VERIFIED BY AFFIDAVIT SHALL BE A SUFFICIENT WARRANT. THE AUTHORITY
HEREIN GRANTED TO APPEAR, ENTER AND CONFESS JUDGMENT SHALL NOT BE EXHAUSTED BY
ANY ONE OR MORE EXERCISES THEREOF OR BY ANY DEFECTIVE EXERCISE THEREOF, BUT
SHALL CONTINUE AND BE EXERCISABLE FROM TIME TO TIME UNTIL THE FULL PAYMENT OF
ALL AMOUNTS DUE FROM DEBTOR TO BANK HEREUNDER AND UNDER THE LINE OF CREDIT
AGREEMENT IS MADE.

 

DEBTOR
ACKNOWLEDGES THAT IT HAS HAD THE ASSISTANCE OF LEGAL COUNSEL IN THE REVIEW AND
EXECUTION OF THIS NOTE AND FURTHER ACKNOWLEDGES THAT THE MEANING AND EFFECT OF
THE FOREGOING PROVISIONS CONCERNING CONFESSION OF JUDGMENT HAVE BEEN FULLY
EXPLAINED TO DEBTOR BY SUCH COUNSEL AND AS EVIDENCE OF SUCH FACT SIGNS ITS
INITIALS.

 

(Initials
of Officer of Debtor)

 

IX.                                WAIVER OF BENEFIT AND DEFECTS. Debtor hereby waives the benefit
of any laws now or hereafter enacted providing for any stay of execution,
marshaling of assets, exemption from civil process, redemption, extension of
time for payment, or valuation or appraisement of all or any part of the
Collateral or any other security for this Note, exempting all or any part of
the Collateral, or any other security for this Note from attachment, levy or
sale upon any such execution or conflicting with any provision of this Note.
Debtor waives and releases Bank and said attorney or attorneys from all errors,
defects and imperfections whatsoever in confessing any such judgment or in any
proceedings relating thereto or instituted by Bank hereunder. Debtor hereby
agrees that any property that may be levied upon pursuant to a judgment
obtained under this Note may be sold upon any execution thereon in whole or in
part, and in any manner and order that Bank, in its sole discretion may elect.

 

5

 

X.                                    MISCELLANEOUS: 
Debtor hereby waives protest, notice of protest, presentment,
dishonor, notice of dishonor and demand. Debtor agrees to reimburse Bank for
all costs and expenses including reasonable counsel fees incurred by Bank in
connection with the enforcement hereof. The rights and privileges of Bank under
this Note shall inure to the benefit of its successors and assigns. All
representations, warranties and agreements of Debtor made in connection with
this Note shall bind Debtor’s successors and assigns. If any provision of this
Note shall for any reason be held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect any other provision hereof, but
this Note shall be construed as if such invalid or unenforceable provision had
never been contained herein. This Note has been delivered in, and shall be
governed by the laws of the Commonwealth Pennsylvania. Notwithstanding anything
herein to the contrary, upon the occurrence of an Event of Default and prior to
Banks acceleration of the sums due or exercise of any other remedy of Bank,
Debtor does not have the right to cure the Event of Default, and Bank shall not
be obligated to accept any payment or other performance tendered to cure the
Event of Default. Further, in the event Bank waives an Event of Default and
permits Debtor to cure such Event of Default, such waiver shall not constitute
a waiver of any subsequent Event of Default or create or be interpreted to
create any right of Debtor to cure any subsequent Event of Default.

 

XI.                                NO WAIVER.
The granting, with or without notice, of any extension or extensions of
time for payment of any sum or sums due hereunder, or for the performance of
any covenant, provision, condition or agreement contained herein, in the other
Loan Documents, or the granting of any other indulgence, or the taking or
releasing or subordinating of any security for the indebtedness evidenced
hereby, or any other modification or amendment of this Note, or the other Loan
Documents will in no way release or discharge the liability of Debtor, whether
or not granted or done with the knowledge or consent of Debtor.

 

XII.                            NOTICES:  All invoices
shall be sent by regular first class mail to Debtor and the Guarantor at the
addresses set forth in the Line of Credit Agreement. All other notices,
requests and other communications hereunder shall be in writing and shall be
sent in the manner set forth in the Line of Credit Agreement.

 

XIII.                        GOVERNING
LAW:  This Note shall be governed
by and construed in accordance with the laws of the Commonwealth Pennsylvania.

 

XIV.
JOINT AND SEVERAL LIABILITY:
Each and every maker and guarantor signing this Note is fully and personally
obligated to keep all of the promises made in this Note including, without
limitation, the promises to pay the full amount owed. Bank may enforce its
rights under this Note against each maker and guarantor signing this Note
jointly and severally.

 

XV.                           WAIVER OF JURY
TRIAL:   BY ITS EXECUTION
AND DELIVERY OF THIS NOTE, THE DEBTOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY

 

6

 

LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS NOTE, THE
MORTGAGE, THE SECURITY AGREEMENT, THE PLEDGE AGREEMENT, THE LINE OF CREDIT
AGREEMENT, ANY OTHER DOCUMENT OR INSTRUMENT RELATED HERETO OR THERETO, ANY OF
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT,
COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE
BANK OR THE DEBTOR IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A
MATERIAL INDUCEMENT FOR THE BANK TO ENTER INTO THIS NOTE.

 

IN
WITNESS WHEREOF, and intending to be legally bound
hereby, Debtor has duly executed this Note the day and year first above written
and has hereunto set its hand and seal.

 

 

	
  WITNESS:

  	
  DEBTOR:

  
	
   

  	
  SPITZ, INC.

  
	
   

  	
  A Delaware
  Corporation

  
	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Donn L.
  Guthrie

  	
   

  	
  BY:

  	
  /s/   Jonathan
  Shaw   (SEAL)

  	
   

  
	
  (As to Both)
  Witness

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  ATTEST:

  	
  /s/   Paul
  L. Dailey   (SEAL)

  	
   

  
	
  Witness

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  [Corporate Seal]

  	
   

  
								

 

7

 

GUARANTOR

 

For valuable
consideration, the undersigned does hereby acknowledge its liability as
endorser, surety and guarantor of this Note, and does hereby waive and release
any right to require that the holder hereof first proceed against the maker
hereof. The undersigned does hereby agree that the terms of this Note may be
modified, waived, released and extended, and that the rights of any holder
hereof may be modified, waived, released or extended, all without notice to the
undersigned, without its approval, and without affecting its liability
hereunder. The undersigned does further waive all notices, including, but not
limited to, notices of default under this Note.

 

	
  Witnesses:

  	
  GUARANTOR:

  
	
   

  	
  EVANS & SUTHERLAND COMPUTER

  CORPORATION

  
	
   

  	
  A Utah
  Corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/  Analisa
  Marquardt

  	
  BY:   

  	
  /s/  David
  Bateman (SEAL)

  	
   

  
	
  Witness    

  	
   

  
	
   

  
	
   

  
	
  /s/  Analisa
  Marquardt

  	
  ATTEST:   

  	
  /s/  Lance
  Sessions (SEAL)

  	
   

  
	
  Witness

  	
   

  	
   

  	
    [Corporate Seal]

  	
   

  
						

 

8Exhibit 10.7

 

GUARANTY

 

THIS GUARANTY
is made this 28th  day
of April, 2006, by
EVANS & SUTHERLAND COMPUTER CORPORATION, a Utah corporation (hereinafter the
“Guarantor”).

 

W I T N E S S E T H:

 

WHEREAS, SPITZ, INC., a Delaware corporation
(hereinafter the “Borrower”), has requested FIRST
KEYSTONE BANK (hereinafter the “Lender”), to lend it the sum of Three Million Dollars ($3,000,000.00)
(hereinafter the “Loan”), to be advanced pursuant to that certain Line of
Credit Agreement between Borrower, Guarantor and Lender dated even date
herewith (the “Loan Agreement”), to support Borrower’s working capital needs;
and

 

WHEREAS, Borrower
has executed even date herewith and delivered to Lender a Line of Credit Note
in the amount of up to Three Million Dollars
($3,000,000.00) (hereinafter the “Note”), secured by, among other
things, a Security Agreement of even date herewith granting to Lender a
security interest in all personal property of Borrower (hereinafter the
“Security Agreement”) and that certain Open-End Mortgage and Security Agreement
dated even date herewith (hereinafter the “Mortgage”) encumbering the premises
known as Route 1, Chadds Ford Township, Delaware County, Pennsylvania; and

 

WHEREAS, Lender has
agreed to extend the Loan to Borrower in consideration, among other things, of
the covenants and obligations made and assumed by Guarantor as herein set
forth; and

 

WHEREAS, Guarantor
has consented to the execution and delivery of the Note, Mortgage and Security
Agreement; and

 

WHEREAS, the
outstanding principal balance of the Note, together with interest and all other
sums due or to become due thereunder is referred to herein as the
“Indebtedness”; and

 

WHEREAS,  Guarantor has agreed to make this Guaranty in
consideration of the agreement of Lender to make the Loan to Borrower evidenced
by the Note, as hereinafter provided; and

 

 

	
  JONES,
  STROHM & GUTHRIE

  	
   

  	
  10 Beatty Road

  
	
  A
  Professional Corporation

  	
   

  	
  Media, Pennsylvania 19063

  
	
  Attorneys
  At Law

  	
   

  	
  Telephone (610) 565-7100

  
	
   

  	
   

  	
  Fax (610) 565-7180

  

 

 

WHEREAS, in order to
induce Lender to accept the Note, Mortgage and Security Agreement, the
Guarantor herein executes this Guaranty.

 

NOW THEREFORE, for
good and valuable consideration, intending to be legally bound hereby,
Guarantor agrees as follows:

 

1.                                       Guaranty of Performance. Guarantor
absolutely and unconditionally, jointly and severally, guarantees to Lender the
payment and performance of the conditions of the Note, pursuant to the terms
and conditions set forth therein, together with all reasonable legal and other
expenses of collection, and hereby expressly and unconditionally waives demand,
notice of presentment and non-payment, protest and notice of protest, of the
Note, and agrees that the time for payment thereof may be extended by Lender
without notice to or further consent from the Guarantor. Guarantor further
agrees to pay the full unpaid principal, interest and other charges due under
the Note when owing immediately upon written notice of an Event of Default as
to any one or more of the terms and conditions of the Note, Security Agreement,
Mortgage, Loan Agreement or any other document executed by Borrower and/or
Guarantor and delivered to Lender in connection with the Loan (collectively
referred to herein as the “Loan Documents”), it being agreed between the parties
hereto that the full balance when due and owing on the Note shall become due
and payable upon acceleration by the Lender in accordance with the terms of the
Note.

 

2.                                       No Waiver. Any waiver by Lender of an
Event of Default under the Loan Documents, and any failure on the part of
Lender to enforce its rights against Borrower, or its successors or assigns,
shall not affect the absolute and unconditional liability of the Guarantor. Any
extensions of time granted by Lender to Borrower, or its successors or assigns,
shall not release the Guarantor from its obligations hereunder.

 

3.                                       Actions Not Affecting Guarantor’s Liability. In addition to (but not in
limitation of) all of the foregoing provisions, Lender may take any of the
following actions (with or without notice to the Guarantor) without affecting
the liability of the Guarantor in any way:

 

a.                                       release,
exchange, increase or decrease, or surrender all or any part of the security
held by it for the Indebtedness, or substitute new security for all or any portion
thereof, whether or not the new security shall be equal in value with the
security substituted;

 

b.                                      recast,
extend or modify all or any portion of the Indebtedness;

 

c.                                       grant
waivers, extensions, renewals or other indulgences under the Note;

 

 

d.                                      modify
or amend any of the terms, provisions or agreements contained in the Note;

 

e.                                       vary,
exchange, release or discharge, wholly or partially, or delay in or abstain
from perfecting or enforcing any security or guaranty of the Note;

 

f.                                         accept
partial payment or performance of the Note from the Borrower; or

 

g.                                      compromise
or make any settlement or other arrangement with the Borrower.

 

4.                                       Direct Proceedings Against Guarantor. This
shall be an agreement of suretyship as well as of guaranty. Liability on this
Guaranty shall not be conditional or contingent upon the pursuance by Lender or
anyone else of whatever remedies it may have against Borrower, or its
successors or assigns, nor shall Lender be required to foreclose, exhaust, or
in any other way look for the security which it now has or which it may obtain
or in the future may acquire. Not in limitation of the generality of the
foregoing, the liability of Guarantor hereunder shall remain effective and
enforceable even though Borrower’s liability under the Note may be
unenforceable, or recovery against the Borrower may be barred by the statute of
limitations or otherwise, it being further understood and agreed that Guarantor
waives any defense arising by reason of any disability or other defense of
Borrower or by reason of the cessation from any cause whatsoever of the
liability of Borrower. The obligations and liabilities of Guarantor hereunder
and any other guarantor/surety of the Borrower’s liabilities and obligations
under the Note, the Security Agreement, the Mortgage and other Loan Documents,
and all extensions, modifications and/or renewals thereof, shall be joint and
several.

 

5.                                       Extensions or Renewals. Liability of
the Guarantor hereunder shall be a continuing one and shall extend to any and
all notes or other evidences of indebtedness which may be given in extension,
modification, increase or renewal of the present indebtedness of the Borrower
evidenced by the Note.

 

6.                                       Representations and Warranties  The Guarantor hereby represents and warrants
that:

 

a.                                       The
Guarantor has no offsets, counterclaims or defenses against the Indebtedness or
this Guaranty, and has the legal capacity to enter into this Guaranty and to
perform Guarantor’s obligations hereunder.

 

3

 

b.                                      This
Guaranty constitutes the legal, valid and binding obligation of the Guarantor
enforceable against Guarantor in accordance with its terms.

 

c.                                       There
is no action, suit, proceeding, inquiry or investigation, at law or in equity,
or before or by any court, public board or body, pending, or within the
knowledge of the Guarantor threatened, wherein an unfavorable decision, ruling
or finding would adversely affect the validity or enforceability of this
Guaranty or any of the Loan Documents.

 

d.                                      Neither
the execution and delivery of this Guaranty, the consummation of the
transactions contemplated hereunder nor the fulfillment of or compliance with
the terms and conditions obtained herein is prevented or limited by, or would
be prevented or limited by, or conflict with, or breach, the terms, conditions
or provisions of any law, rule, regulations, order of any court or governmental
agency, or any evidence of indebtedness, agreement or instrument of whatever
nature to which the Guarantor (or any company, corporation or other business
entity controlled by the Guarantor or affiliated with any one of them) is now a
party, or to which the Guarantor or any such entity is bound, or constitutes a
default under any of the foregoing. Such execution, delivery, consummation and
performance will not result in the creation or imposition of any lien, charge
or encumbrance upon any of the property or assets of the Guarantor or any such
entity, except as contemplated in the Loan Documents.

 

e.                                       The
assumption by the Guarantor of its obligations hereunder will result in
material benefits to the Guarantor.

 

f.                                         Neither
this Guaranty nor any other document, certificate or statement furnished to the
Lender by or on behalf of the Borrower or the Guarantor contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein and therein not misleading or incomplete. The
financial statements and tax returns of Guarantor delivered to Lender prior to
the date hereof are Guarantor’s most current financial statements and tax
returns available for public distribution and fully and accurately present the
financial condition and income of Guarantor as of the date thereof, in
accordance with generally accepted accounting principles consistently applied.

 

g.                                      As
provided in the Loan Agreement, the proceeds of the Note are to be applied by
the Borrower to its business purposes and no part thereof shall be used for the
personal, household or consumer purposes of the Borrower or the Guarantor.

 

4

 

7.                                       Compliance With Loan Documents. The
Guarantor shall cause the Borrower to fully perform and observe all of the
covenants, agreements and obligations of the Borrower under the Note, Security
Agreement, the Mortgage and all other Loan Documents.

 

8.                                       Waiver of Subrogation. The Guarantor
waives and relinquishes any right of subrogation or other right of
reimbursement, contribution or indemnification from the Borrower or the
Borrower’s estate and any other right or payment from the Borrower or the
Borrowers’ estate, arising out of or on account of any sums paid or agreed to
be paid by Guarantor under this Guaranty, whether any such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, secured, or unsecured. The provisions of this
subparagraph are made for the express benefit of Borrower as well as Lender and
may be enforced independently by Borrower and Lender.

 

9.                                       Event of Default. Any one or more of
the following shall constitute an “Event of Default” hereunder:

 

a.                                       Failure
of the Guarantor to make any payments or perform Guarantor’s obligations
pursuant to the terms hereof, provided, however, Lender shall, in accordance
with the terms of the Loan Agreement, give to Guarantor all notices of default
under the Loan, and Guarantor shall have the same opportunity to cure, if any,
as are applicable with respect to the Borrower under the Loan Documents with
any applicable cure period running concurrently with any cure period applicable
to Borrower.

 

b.                                      If
any representation or warranty made by the Guarantor pursuant to or in
connection with this Guaranty or any report, certificate, financial statement
or other instrument or document furnished by the Guarantor hereunder shall
prove to be false or misleading in any material respect.

 

c.                                       After
the giving of any applicable notice and expiration of any applicable cure
period, the occurrence of an event of default under the Note, the Security
Agreement, the Mortgage or any of the other Loan Documents.

 

10.                                 Remedies. Lender shall provide
Guarantor with notice of the occurrence of any Event of Default in accordance
with the Notice provisions contained in the Note. If any one or more Events of
Default shall occur under this Guaranty, 
then in each case, the Lender shall have all rights and remedies,
including, but not limited to, the right to (i) cause all amounts payable

 

5

 

hereunder and pursuant to the Note to be immediately due and payable,
whereupon the same shall become immediately due and payable; (ii) take any
other action available either in law or in equity to enforce performance or
collect any amounts due or thereafter to become due under this Guaranty, the
Note, the Security Agreement, the Mortgage or other Loan Documents and exercise
all rights and remedies of the Lender thereunder; or (iii) enforce the
observance of any of the covenants or obligations of the Guarantor under this
Guaranty, Note, Loan Agreement, Security Agreement, Mortgage or any other Loan
Document.

 

11.                                 Indemnification.
The Guarantor shall defend, hold harmless, and indemnify the Lender from and
against any and all claims, liabilities, judgments, liens, losses, damages, costs,
expenses, attorneys fees, and consultants fees incurred by or imposed upon the
Lender relating to any obligations on the part of the Borrower as set forth in
an Environmental Indemnity Agreement of even date herewith.

 

12.                                 Costs of Suit.
This Guaranty shall include all reasonable attorneys’ fees, expenses, and
disbursements incurred by Lender in the collection or enforcement of payment or
performance by Borrower of any obligation of Borrower to Lender, and in the
collection or enforcement of payment or performance by Guarantor hereunder.

 

13.                                 Forbearance.
Neither the failure nor any delay on the part of Lender to exercise any right,
remedy, power or privilege under this Guaranty (a “Right”) shall operate as a
waiver thereof, nor shall any single or partial exercise of any Right preclude
any other or further exercise of the same or of any other Right, nor shall any
waiver of any Right with respect to any occurrence be construed as a waiver of
such Right with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.

 

14.                                 Warrant of
Borrowers Agreements and Representations. The Guarantor further
unconditionally guarantees to the same effect as above stated, the proper
performance of any and all agreements, representations, warranties and
undertakings given to Lender by Borrower in connection with the Loan by way of
collateral security.

 

15.                                 Bankruptcy.
This Guaranty shall be a continuing Guaranty and (whether or not Guarantor
shall have any notice or knowledge of any of the following) the liability and
obligation of Guarantor hereunder shall be absolute and unconditional and shall
remain in full force and

 

6

 

effect without regard to, and shall not be released, discharged, or in
any way impaired by any bankruptcy, insolvency, reorganization arrangement, or
similar proceeding relating to Borrower or any co-Guarantor, or their
properties.

 

16.                                 Waiver of Notice
and Defense. The Guarantor hereby consents to all of the terms
and provisions of the Note, as the same may be from time to time amended or
modified. The Guarantor hereby irrevocably waives:

 

a.                                       Notice
of acceptance of this Guaranty and notice that the Note has been accepted by
the Lender in reliance hereon;

 

b.                                      Notice
of any amendment or any change in the terms of the Note or any of the other
Loan Documents or any other present or future agreement relating directly or
indirectly thereto;

 

c.                                       Notice
of any default under the Note or any other Loan Document, or any other present
or future agreement relating directly or indirectly thereto;

 

d.                                      Demand
for performance or observance of and enforcement of any provisions of the Note,
the Security Agreement, the Mortgage or any other Loan Document or any pursuit
or exhaustion of any rights or remedies against the Borrower thereunder, or any
other obligor who becomes liable in any manner for any of the Indebtedness, and
any requirement of diligence or promptness on the part of the Lender in
connection therewith;

 

e.                                       Diligence,
presentment, protest, notice of dishonor and notice of default in the payment
of any amount at any time payable by the Borrower under or in connection with
the Note;

 

f.                                         The
benefit of any statute of limitations affecting its liability hereunder or the
enforcement thereof, and agrees that any payment of any indebtedness or other
act which shall toll any statute of limitations applicable to the Note shall
similarly operate to toll such statute of limitations applicable to Guarantor’s
liability hereunder; or

 

g.                                      The
benefit of laws exempting property from levy or execution.

 

17.                                 Successors and
Assigns. The parties hereto agree that this Guaranty shall bind
and inure to the benefit of the Lender and its successors and assigns.

 

18.                                 Governing Law.
This Guaranty shall be governed by the substantive law of the Commonwealth of
Pennsylvania.

 

7

 

19.                                 Assignment.
Lender may assign this Guaranty in whole or in part to a party to whom the Note
is assigned.

 

20.                                 Set-Off.
In addition to all liens upon, and rights of set-off against the monies,
securities, or other property of Guarantor given to Lender by law, Lender shall
have a lien upon and a right of set-off against all monies, securities and
other property of Guarantor now or hereafter in the possession of Lender. Every
such lien and right of set-off may be exercised without demand upon or notice
to Guarantor, no lien or right of set-off shall be deemed to have been waived
by any act or conduct on the part of Lender, or by any neglect to exercise such
right of set-off or to enforce such lien, or by any delay in so doing, and
every right of set-off and lien shall continue in full force and effect until
such right of set-off or lien is specifically waived or released by an
instrument in writing executed by Lender.

 

21.                                 Subordination of
Indebtedness. Any indebtedness of Borrower now or hereafter held
by Guarantor is hereby subordinated to this Guaranty, the Note, the Mortgage
and the Security Agreement. Any such indebtedness of Borrower to Guarantor is
assigned to Lender as security for this Guaranty and the Note and, if upon an
Event of Default under this Guaranty, Lender so requests, shall be collected,
enforced and received by Guarantor as trustee for Lender and be paid over to
Lender on account of the amounts due under the Note but without reducing or
affecting in any manner the liability of Guarantor under the other provisions
of this Guaranty. Any such notes now or hereafter evidencing such indebtedness
of Borrower to Guarantor shall be marked with a legend that the same are
subject to this agreement and, if Lender so requests, shall be delivered to
Lender.

 

22.                                 Intent of Language.
Reference to the Guarantor shall mean each Guarantor named above. The
obligations of the Guarantor hereunder shall be joint and several. When such
interpretation is appropriate, all words in the singular used herein shall
include the plural, and all words in the masculine shall also mean the
feminine, as the case may be.

 

23.                                 Severability.
If any term, provision, covenant or condition hereof should be held by a court
of competent jurisdiction to be invalid, void or unenforceable, all other
provisions, covenants and conditions hereof not held invalid, void or
unenforceable shall continue in full force and effect and shall in no way be
affected, impaired or invalidated thereby.

 

8

 

24.                                 No Set-Off.
The Guarantor shall make all payments required hereunder, free of any
deductions, and without abatement, deduction, or setoff.

 

CONFESSION
OF JUDGMENT

 

25.                                 THE
FOLLOWING SECTION SETS FORTH WARRANTS OF ATTORNEY FOR ANY ATTORNEY TO CONFESS
JUDGMENTS AGAINST GUARANTOR. IN GRANTING THESE WARRANTS OF ATTORNEY TO CONFESS
JUDGMENTS AGAINST GUARANTOR, GUARANTOR HEREBY KNOWINGLY, INTENTIONALLY,
VOLUNTARILY, AND UNCONDITIONALLY WAIVE(S) ANY AND ALL RIGHTS GUARANTOR MAY HAVE
TO PRIOR NOTICE AND AN OPPORTUNITY FOR HEARING UNDER THE RESPECTIVE
CONSTITUTIONS AND LAWS OF THE COMMONWEALTH OF PENNSYLVANIA AND THE UNITED
STATES OF AMERICA.

 

9

 

UPON THE OCCURRENCE OF AN EVENT OF DEFAULT, GUARANTOR HEREBY AUTHORIZES
ANY ATTORNEY OF ANY COURT OF RECORD IN PENNSYLVANIA, OR ELSEWHERE, TO APPEAR FOR
GUARANTOR IN ANY ACTION BROUGHT ON THIS GUARANTY, AND TO CONFESS JUDGMENT
AGAINST GUARANTOR FOR ALL PRINCIPAL AND INTEREST AND ALL OTHER SUMS THEN DUE
PURSUANT TO THE TERMS OF THE NOTE, SECURITY AGREEMENT, LOAN AGREEMENT, AND SUCH
OTHER LOAN DOCUMENTS, OR ANY OF THEM, AND FOR COSTS OF SUIT AND AN ATTORNEY’S
COMMISSION OF THE LESSER OF THE ACTUAL FEES INCURRED, OR TEN PERCENT (10%) OF
THE AMOUNT CONFESSED, TOGETHER WITH INTEREST ON ANY JUDGMENT OBTAINED BY LENDER
AT THE RATE OF INTEREST SPECIFIED IN THE NOTE AFTER DEFAULT, INCLUDING INTEREST
AT THAT RATE FROM AND AFTER THE DATE OF ANY SHERIFF’S SALE UNTIL ACTUAL PAYMENT
IS MADE BY THE SHERIFF TO LENDER OF THE FULL AMOUNT DUE LENDER, AND FOR SO
DOING THIS SHALL BE A GOOD AND SUFFICIENT WARRANT. GUARANTOR WAIVES AND
RELINQUISHES ALL ERRORS, DEFECTS, AND IMPERFECTIONS IN THE ENTRY OF JUDGMENT AS
AFORESAID, OR IN ANY PROCEEDING PURSUANT THERETO, AND ALL BENEFITS UNDER ANY
LAW OR RULE OF COURT RELATING TO A STAY OF EXECUTION OR EXEMPTING ANY PROPERTY
FROM LEVY OR SALE UNDER EXECUTION. THE AUTHORITY HEREIN GRANTED TO CONFESS
JUDGMENT SHALL NOT BE EXHAUSTED BY ANY EXERCISE THEREOF BUT SHALL CONTINUE FROM
TIME TO TIME AND AT ALL TIMES UNTIL ALL OBLIGATIONS OF BORROWER TO LENDER HAVE
BEEN FULLY DISCHARGED.

 

	
   

  	
   

  	
  /s/ DHB

  	
   

  
	
   

  	
  (Initials
  of Officer of Guarantor)

  

 

10

 

WAIVER
OF JURY TRIAL

 

26.                                 GUARANTOR
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT GUARANTOR MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING
OUT OF, UNDER OR IN CONNECTION WITH, THIS GUARANTY, OR THE BORROWER’S
OBLIGATIONS UNDER THE NOTE, THE SECURITY AGREEMENT, THE LOAN AGREEMENT, ANY
OTHER DOCUMENT OR INSTRUMENT RELATING HERETO OR THERETO, ANY OTHER TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE BORROWER OR THE
GUARANTOR IN CONNECTION HEREWITH OR THEREWITH. THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDER TO MAKE THE LOAN EVIDENCED BY THE NOTE.

 

	
   

  	
   

  	
  /s/ DHB

  	
   

  
	
   

  	
  (Initials
  of Officer of Guarantor)

  

 

IN WITNESS WHEREOF,
Guarantor has executed and sealed this Guaranty the day and year first above
written.

 

 

	
  WITNESS:

  	
  GUARANTOR:

  
	
   

  	
  EVANS & SUTHERLAND COMPUTER

  CORPORATION, a Utah Corporation

  
	
   

  
	
   

  
	
  /s/ Leng Lee

  	
  BY:  

  	
  /s/ David H.
  Bateman

  	
   

  
	
  Witness

  	
   

  
	
   

  
	
  /s/ Leng Lee

  	
  ATTEST:  

  	
  /s/ Lance
  Sessions

  	
   

  
	
  Witness

  	
   

  
						

 

11

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